Tenant exercising right to acquire new lease and giving landlord notice – Landlord serving counternotice – Judge declaring landlord’s counternotice valid and effective – Tenant appealing – Whether counternotice valid – Section 45 of Leasehold Reform Housing and Urban Development Act 1993 – Appeal allowed
The appellant was the tenant of a flat let by the respondent landlord. The tenant held the flat under a long lease at a low rent, and by the provisions of the Leasehold Reform Housing and Development Act 1993, she had the right to acquire a new lease of the flat by payment of a premium.
In October 1999 the tenant gave notice to the landlord, under section 42 of the 1993 Act, setting out: (i) the premium she proposed to pay in respect of the grant of a new lease; (ii) the terms she proposed should be contained in the lease; and (iii) the date by which the landlord had to respond to the notice by giving a counternotice under section 45 of the Act. Section 45(2) required counternotices to: “(a) state that the landlord admits that the tenant had on the relevant date the right to acquire a new lease of his flat; (b) state that, for such reasons as are specified in the counternotice, the landlord does not admit that the tenant had such a right on that date; [or] (c) contain such a statement as is… mentioned above but state that the landlord intends to make an application for an order under section 47(1)…”.
By section 45(3)a and (b), a counternotice under subpara (a) had to specify which of the tenant’s proposals were, and were not, accepted, and had to set out the landlord’s counterproposals.
In December 1999 the landlord gave written notice to the tenant, headed “Landlord’s Counternotice Section 45”. The notice contained a statement that the landlord did not accept the tenant’s proposed premium and specified a counterproposal in that respect. However, it did not contain a statement as to whether the landlord did, or did not, admit that the tenant had the right to acquire a new lease, nor did it contain a statement as to which, if any, of the tenant’s proposals were accepted.
The tenant took the view that the counternotice was invalid, and made an application for an order under section 49 of the Act. Under that section, the court had the power to determine the terms of the acquisition in accordance with the proposals in the tenant’s notice. By counterclaim, the landlord sought a declaration that the counternotice was valid. The judge stated the question to be: “whether a reasonable tenant could be misled into thinking that the landlord’s counternotice did not admit the right to a new lease”. He answered that question in the negative, dismissed the tenant’s claim, and made a declaration that the notice was a valid and effective counternotice under section 45(2)(a) of the Act. The tenant appealed.
Held: The appeal was allowed.
The landlord’s counternotice was integral to the proper working of the statutory scheme and had to comply with the requirements in any of paras (a), (b) or (c) of section 45(2). In order to comply with section 45(2)(a), the notice had to state whether the landlord admitted, or did not admit, that the tenant had the right to acquire a new lease. The scheme required that the tenant be left in no doubt as to what the landlord admitted, the extent to which the tenant’s proposals were accepted, and what, if anything, the landlord counterproposed.
There was no doubt as to what was required in order to comply with section 45(2)(a), and, in this case, the counternotice did not comply with that requirement and was invalid. The fact that it did not fall within section 45(2)(b) or (c) did not mean that it had to be a valid notice under section 45(2)(a). Nor did it become such a notice simply because it purported to be so by its heading. It did not follow from the fact that the notice contained some of the information that a valid notice would contain, namely the landlord’s rejection of the tenant’s premium, that the notice was valid: Speedwell Estates Ltd v Dalziel [2001] EWCA Civ 1277; [2001] PLSCS 191 applied.
Edwin Prince (instructed by Wallace & Partners) appeared for the appellant; Anthony Radevsky (instructed by Speechly Bircham) appeared for the respondent.
Sarah Addenbrooke, barrister
