Landlord and Tenant Act 1987 – Disposal of freehold – Tenants’ right of first refusal – Defendant’s father purchasing freehold of building in 1997 – Neither he or vendor giving requisite notice to appellant tenants of statutory right to acquire freehold – Appellants serving notice in 2009 requiring sale to them at 1997 price – Claim under section 19 for order requiring defendant to sell – Whether claimants entitled to purchase – Whether increase in property prices in intervening period a change in circumstances to be reflected in price under section 12B(7) – Claim allowed
The claimants were the tenants of two flats in a building. In 1997, the defendant’s father purchased the freehold title to the building for £100,000. The vendor did not give prior notice to the claimants of the intended transfer and their statutory right to purchase the property on the same terms, contrary to section 5 of the Landlord and Tenant Act 1987. Nor did the defendant’s father serve a notice, under section 3A of the Landlord and Tenant Act 1985, notifying the tenants of their right to acquire the property.
The tenant of the ground-floor flat died in 2007 and the flat remained unoccupied thereafter. The defendant’s father died in 2008. In 2009, the claimants gave a notice under section 12B of the 1987 Act to the defendant, as executor of his father’s estate, requiring him to transfer the freehold of the building to them at the same price that his father had paid in 1997. That notice was followed by a default notice under section 19. The claimants then brought proceedings against the defendant, to compel him to proceed with the sale. They contended that, since no section 3A notice had been served on them in respect of the 1997 sale, no time limit applied to the service of their notice to compel a sale; they maintained that they had acted promptly after discovering in early 2009 that they might have a remedy under section 19 requiring the defendant to make good his father’s default of 1997.
The defendant contended that if he were required to sell to the claimants, the price should be increased above the 1997 figure on the ground that the property had increased in value “owing to any change in circumstances (other than a change in the value of money)”, within the meaning of section 12B(7) of the 1987 Act. The changes of circumstances relied on were the vacation of the ground-floor flat and the increase in property prices over the relevant period. The claimants submitted that the former matter had not affected the value and the latter was not a change in circumstances that fell within section 12B(7).
Held: The claim was allowed.
The claimants had been unaware of their right to acquire from the defendant’s father, and later from the defendant, until they retained solicitors in early 2009. Once they found out, they had acted promptly and had served the appropriate section 12B notice and later default notice. Had the requisite notice been served on them in 1997, they could and would have exercised their right. The defendant was the party in default and could have remedied the default at any time by serving a section 5 notice so as to make time of the essence. The claimants should be granted an order under section 19. It was not unfair to the defendant that the claimants should be able to take the property at a price to be determined by the leasehold valuation tribunal (LVT).
The LVT determined the purchase price as £130,000, holding that: (i) the vacation of the ground-floor flat was a change in circumstances resulting in an increase in value of the property; and (ii) any increase in the market value of the property since 1997 was not a change in circumstances within the meaning of section 12B(7) of the 1987 Act.
Stephen Boyd (instructed by Hopkin Murray Beskine) appeared for the claimants; Nicholas Trumpeter (instructed by Churchill Solicitors) appeared for the defendant.
Sally Dobson, barrister
