:
JUDGE COWELL:
01 On 13th November 1997 the father of the Defendant, Mr Santok Singh Gosal, who was in fact to die on 15th July 2008 and whose Executor the Defendant is, acquired the freehold of 66 Crouch Hill from Circle View Ltd. The inhabitants of 66 Crouch Hill at the time were: on the ground floor and basement in that flat a Miss Bowcock and indeed she was later to die on 13th August 2007; she had been there since 1947 and her tenancy was protected by the Rent Act 1977. On the first floor at the time of the transfer there lived the first two Claimants, who are twin sisters; they had lived on the first floor in that flat since 25th July 1970 and they too had a tenancy protected by the Rent Act 1977. Also at the time of the transfer on the second and top floor was a self-contained flat occupied by the Third and Fourth Claimants, and they then occupied that flat under a long lease of 99 years which had been granted to them on 16th January 1992. Only the second floor flat was what one might call a self-contained flat. The other flats formed what had been the floors of what I might call a fairly ordinary house, and there were of course impliedly granted over the hallway and the stairs the appropriate easements.
02 I have already given a short judgment, as I did on Monday of this week, to the effect that all three of the flats, whether self-contained or not, come within the definition of ‘flat’ within the meaning of Section 60 Landlord and Tenant act 1987. It is and was the law, and I summarise it because there is no dispute about its application, that the transferor Circle View Ltd ought to have given all the occupiers who were qualifying tenants a notice under Section 5 Landlord and Tenant Act 1987 immediately before the transfer of 13th November 1997 giving them the opportunity within two months to accept the statutory offer of the transferor to sell to them the property on the same terms that the transferor intended to dispose of the property to a purchaser, colloquially called ‘the tenant’s right of first refusal’ or if you like ‘of pre-emption’. Furthermore, after the purchase, the Defendant’s father ought to have served a notice under Section 3A Landlord and Tenant Act 1985 on the tenants notifying the tenants of their right to acquire the property from him. No notice of either kind was served on the tenants by either the transferor or the transferee.
03 It was not until just over 11 years later, on 19th February 2009, that the Claimants gave notice under Section 12B of the 1987 Act requiring the Defendant as Executor of his father the transferee or purchaser of 1997, to transfer the freehold to them. That notice was followed by what is called a default notice under Section 19 of the 1987 Act, which was served on 28th April 2009, which was not complied with but which is an essential precondition of making the application to the court. The application to the court was made on 9th June 2009, an earlier application seeking an injunction to restrain the Defendant from making any disposal and which gave rise to undertakings having been made on 1st May 2009; both of those applications have been consolidated. The reasons for the gap of over 11 years lie at the heart of this case. This court has the jurisdiction conferred by Section 19(1) and the reasons for and the consequences of the gap are crucially determinative of the discretion of the court which stems from the words:
‘(1) The court may, on the application of any person interested, make an order requiring any person who has made default in complying with any duty imposed on him by any provision of this Part to make good the default within such time as is specified in the order.’
It is a discretion and the Section has not been construed so that ‘may’ is to be read, as sometimes the context and circumstances require, as ‘must’.
04 I pay tribute first to the efforts of both counsel; first to Mr Stephen Boyd for his skill in presentation and his concern not to dwell on matters of little consequence; and secondly to Mr Trumpeter for his excellent judgment in knowing how far to go, which I can only properly explain by pointing out that his client Dr Gosal I find to be a man whose evidence is very unreliable and whose reputation as a landlord can only be described as very poor. In a statement of 17th November 2009, served well after the original timetable for the service of such things, he said many things which were conclusively refuted by later statements and authentic contemporary documents. The Claimants were transparently honest and accurate in their written statements and in their oral evidence. For example, their accounts of the want of repair work for years amounting to a clear breach by the Defendant’s father of the well-known Section 11 was so evident from such things as the letters written by Miss Bowcock and the notices served by the local authority that Mr Trumpeter did not, and in my judgment was not in a position to, challenge the Claimants’ evidence on such matters, which is in fact voluminous. Such cross-examination as he did of the Claimants as he was bound to do only confirmed my view of their truthfulness and he kept it properly short. Mr Boyd limited his cross-examination of the Defendant to what was necessary.
05 I should also pay a compliment to the solicitors who prepared the trial bundle for in Section I they set out in strict chronological order, which was very helpful, every document whether relevant or irrelevant to the case. The only reason I say that any of the documents became irrelevant was because ultimately there was no dispute about the works that were done, the delays occasioned before the works were done, and about the local authority notices. In short, the later statements of the Claimants are there to be read; so are the documents; but the entire history of the property and its repair and want of repair is not a matter of enormous significance and I will refer to its limited significance in due course.
06 I also gave a very short judgment on the first day of the trial dealing with the objection of the Defendant’s solicitors to my seeing the written statements responding to the Defendant’s statement of 17th November 2009. The objections were little short of outrageous and I have no doubt they were motivated by the realisation that the Defendant’s written statement would by the Claimants’ further statements and the many documents exhibited to them be shown to be in many respects untrue. I shall where necessary give examples. Perhaps I need hardly say, but I do say, that whenever the evidence of the Defendant conflicts with that of the Claimants I unhesitatingly prefer the Claimants’ evidence.
07 One example well illustrates the approach of Dr Gosal. It is to be found in paragraph 13 of his statement of November 2009 in the course of which, having referred to the First and Second Claimants as having made themselves deliberately non-contactable, not an issue that I had to decide, he says as follows:
‘No complaints were ever made to my late father and I about any outstanding or necessary works and noticeably the Claimants have not provided any shred of evidence by letters, emails or otherwise to substantiate such a claim.’
When Dr Gosal began his evidence, he was asked by his own counsel whether he wished to correct anything in that paragraph. He turned down the opportunity. There were a plethora of documents showing complaints made to his father throughout the period, and in short that passage in paragraph 13 of his statement is typical of the tendentious way in which his statement reads. I came to the conclusion that Dr Gosal was shifty and evasive, and I can well imagine that the Claimants must have found him extraordinarily difficult to deal with.
08 What used to happen was this. Miss Bowcock in the ground floor and basement was a retired lady and she effectively acted on behalf of all the others in writing many letters. Miss Margaret Maloney was a conscientious primary school teacher who retired recently, and who was out during the day. Miss Mary Maloney was profoundly deaf and she had last worked in 1999. The other two Claimants in the top floor flat had work to do and so it was generally Miss Bowcock who wrote the many letters that she did on behalf of all of them. All of them got on well and were united in their determination to ensure so far as they could that their landlord complied with his obligations. Eventually they were so exasperated by his failures and unfulfilled promises that Mr Lloyd no longer considered that the adage ‘better the devil you know’ would apply if the Defendant were to sell to another, but that was a second best solution; their ideal was that the freehold should be owned by them or by some of them who lived there.
09 I will at this stage summarise the principal issues which arose and then turn to the facts as I find them to be. The Claimants say they started the actions promptly after discovering in February 2009 that they might have a remedy under Section 19 requiring the Defendant to make good his father’s default in November 1997. The Defendant says that the Claimants must have known or at any rate ought to have known of the existence of that remedy at a much earlier date: first, because they had had experience of receiving a Section 5 notice, as indeed they had, even before the transfer of November 1997; secondly, because they received some notice of the transfer in November 1997, even if not the right kind of notice; thirdly, because they received a booklet in the year 2000 about tenants’ rights of first refusal; and fourthly, that they were alerted five years earlier to the fact by something that was said by the Defendant on 31st January 2004 to expect that a disposal by him of the freehold would occur. Then the Defendant next says that had he complied with the 1987 Act in November 1997 the Claimants would not have exercised the right anyway. Lastly, the Defendant says that he changed his position over the period of more than 11 years and that it would now be unfair and inequitable for him to be ordered to transfer to the Claimants because of his expenditure on the property and on its insurance and because of its increase in value.
10 The next thing to mention is the previous Section 5 notice which had been served upon all the Claimants by two separate letters, one to the Maloneys and one to the Third and Fourth Claimants, and no doubt there was one served on Miss Bowcock too. This was a notice dated 15th April 1997 and it was given by Messrs Teacher Stern Selby, solicitors for a company called Introgold Ltd, and it is a perfectly proper notice under Section 5 of the 1987 Act and it proposed a disposal at the figure of £50,000 and the notice stated that the notice constituted an offer by the landlords to dispose of the property accordingly. It also mentioned the qualifying tenants and it pointed out that there was a period of two months beginning with the date of service of this notice within which to accept the offer or to make a counter offer. So that was a perfectly valid notice.
11 What the Defendant said about that is to be seen in paragraphs 6 and 7 of his witness statement of November. He pointed out, as was the fact, that it appeared that no counter notice or acceptance was served within the two-month period. But then he says: ‘Contrary to what is stated by Miss Maloney, no such interest was registered by the First and Second Claimant.’ Then he says: ‘Miss Maloney suggests that she was still interested in purchasing the property and negotiating with the landlord. There is no evidence of this.’ In paragraph 7 he says: ‘It is clear that by this time, the Claimants interests would not proceed by virtue of their not having properly served a counter notice and the fact that they were clearly not interested.’ Then he says: ‘Accordingly, the property was correctly sold to my late Father in November 1997.’ That rather misses the point. In one sense, of course, the property was correctly sold in that no prior rights existed among the Claimants that took priority over the sale to his father. But if it is intended to indicate that there was no need for the transferor and his father to serve the appropriate notices, it is entirely a wrong conclusion in law.
12 Perhaps it means, but we do not know, that even if the appropriate notices had been served there would be no consequence that would follow from that because the Claimants would not have responded by purchasing the property in accordance with the notices. But the position is that he was entirely wrong in concluding on the material then available to him that the Maloneys were not interested in purchasing the property. First of all, Miss Bowcock wrote on 29 April 1997 to Teacher Stern Selby as appears at page 18A making an inquiry. It is not entirely clear whether she was inquiring who constituted the qualifying tenants. It may be that that is what she was inquiring. The reply has not survived. But what we do know is that Miss Maloney paid £176.25 for a survey to be done and a valuation to be done, and the property was valued subject to the tenancies that then existed on 30th May 1997 at the value of £65,000 and there was also an alternative basis for valuing it at £90,000. She also had a structural survey done for which she paid £250. That was quite plainly because she was particularly interested in following up the notice. She had the money available and at page 149B one can see that between July 1997 and April 1998 she had over £95,000 in a bank or building society account. Her sister, as appears from page 160B, had more than £29,000; so the money was available. So the various assumptions made by the Defendant in his witness statement at paragraph 7 are entirely wrong. When these matters were put to him, he made the comment, realising no doubt that he had been faulted: ‘I didn’t know about their financial position’ and he also said: ‘I didn’t know of the diary notes’ and that is a reference to a very full diary that the Third Claimant kept which was put in evidence where relevant after the statement of November 2009. In short, the Defendant’s assumptions were tendentiously put forward as facts justifying either his failure to serve notice under Section 3A of the 1985 Act or as demonstrating the futility of serving any such notice.
13 Why did no acquisition result as a result of the April notice of 1997? First of all, there was a misunderstanding among the Claimants which may have been corrected at a later stage but may very well not have been corrected until the two months’ period had expired. The Third and Fourth Claimants, because they held a 99-year lease, believed that as they were lessees they were not tenants within the meaning of the 1987 Act. That the Claimants and their solicitor even as late as 5th June 1997 were thinking along those lines is apparent from the letter at page 19 where the solicitor Miss Farmer advisedly distinguishes between her use of the words “Lessees” and “Tenant”. So the Third and Fourth Claimants did not regard themselves as qualifying tenants though they were, to use their own words in a letter which is to be found at pages 18G-18H, in full agreement that Mrs Maloney should go ahead with the purchase.
14 The other matter which caused concern was that substantially all the funds for the purchase would in practice come from the Maloneys, for they had, as I have indicated, the money available. Miss Bowcock was of very limited means, and had not any substantial sum of capital, and the Third and Fourth Claimants had recently purchased the 99-year lease and they had very little in terms of capital funds available. It seems to me that this was a matter that simply would have been answered by the ordinary law of resulting trusts had the freehold been acquired.
15 What one does know is that the Third and Fourth Claimants wrote a letter at page 19A saying that they did not wish to purchase the property but ‘We are in full agreement that the Misses Maloney should go ahead with the purchase’ and we know that Teacher Stern and Selby received a letter of 3rd July mentioned in their letter of 9th July. The letter of 3rd July has not survived but they then say: ‘We are instructed by our clients that they are not prepared to proceed with the sale of the property to your clients at the offer price of £50,000.’ That letter was, we know, written after the expiry of the two months’ period and it may very well be that they were taking the point that the letter of 3rd July was too late because it was sent to them after the two months’ period had expired. Then on 28th July 1997 Teacher Stern and Selby wrote saying they were instructed that they are only prepared to proceed with the sale of the property for an offer in excess of £80,000. So the situation was by the end of July that the Claimants believed that they had lost the opportunity to buy as a result of the April notice.
16 Miss Bowcock wrote a number of notes on a letter dated 8th September 1997 which had been sent to her. The letter itself was from Circle View Properties Ltd saying: ‘This letter is to basically introduce our company as your new landlords as of 31st November’ and she annotated that by saying ‘Correction 31 October 97’ and then at the bottom of the letter, having pointed out that the squiggle was not in her opinion a signature, she set out a number of events that occurred. Perhaps the only event that calls for any comment is at the very bottom when on what I think is the date of 6th October she wrote ‘Introduce the new landlords, “the Gosal family” which was a great surprise.’
17 Introgold Ltd wrote on 8th September 1997 to the Misses Maloney saying:
‘I am pleased to advise you that we have now exchanged contracts in the sale of our property. Completion is due at the end of October and you will be advised at that time of your new landlord for future rent payments. Until that time you should continue to make payments to us as before.’
It may well be that that letter is why Miss Bowcock noted “31 October 97” on the letter that she had received. On 14th November Teacher Stern Selby wrote to Miss Bowcock by the wrong name saying:
‘Please note that by a Transfer dated 13 November 1997, Introgold Limited have transferred their Leasehold interest in the above property to Circleview Properties Limited of …’ and they give the address: ‘… to whom all future payments of rent should be made….’
As we know now, though it does not appear from the letter, on the very same day Circle View Properties transferred the property to Dr Gosal’s father. It may be Teacher Stern Selby did not know that. Teacher Stern Selby also wrote the same letter to the Misses Maloney.
18 On 17th November another new firm of solicitors Lewis Lane & Co wrote to ‘The Tenant’:
‘Dear Sir/Madam, Please note that by a Transfer dated 13 November 1997 Circleview Properties Limited have transferred the above property in favour of Santokh Singh Gosal and all future payments should be made to him or to whom he may direct.’
That letter did not even comply with Section 3 of the 1985 Act because it did not give an address, if indeed it was written on behalf of the purchaser, but even if it was written on behalf of the vendor it did not give an address. One can then read at page 39 the letter of Miss Bowcock of 18 November 1997:
‘Mrs Gosal phoned again this evening. The rent is due to them from 6th October 1997? I said I thought contracts were not exchanged until 31/10/97. As we have not received an official letter from any solicitor we are not paying rent until we do so. I don’t want them calling for rent, having to wait for them. I’m feeling annoyed with them!’
I can well understand all that.
19 Then on 25th November 1997 at page 41 there is a note that ‘Mr Gosal phoned this evening would like to call and talk about rent. I told him, as far as I’m concerned, he’s not our landlord. He became our landlord 6th October?’ Strangely, on 28th November 1997 Teacher Stern wrote a further letter apologising for getting Miss Bowcock’s name wrong but then repeating that ‘… by a transfer dated 13 November 1997 Introgold Limited have transferred their Leasehold interest … to Circlview …’ They appear not to have known of the later transfer of which we now know to Dr Gosal and so that letter may have led to further perplexity on the part of the Claimants and Miss Bowcock.
20 Then Miss Bowcock wrote on 2 December 1997:
‘I have been advised the Misses Maloney and myself who reside at the above address require letters stating the name and address of the present owner, to where the rent has to be sent, cheques payable to whom presumably, commencement date of rent the 13 November 97 when the property was transferred from Circleview Properties to Mr Gosal.’
So by that stage she understood that there had been a transfer to Mr Gosal, but she needed the name and address. The address was eventually given (page 46) on 9th December 1997 by Lewis Lane & Co, as “149 Warwick Road, Warwickshire CV8 1HY”, which was not very helpful although a postcode was given; Kenilworth was omitted, as appears from page 47 a letter from the Defendant’s father in which he said that he had acquired the freehold interest; he wanted rent from 6th October; and he said he would like to come and see them on 6th January. The Misses Maloney wrote to tell him that that would not be convenient (page 48) and they pointed out the rent was paid up to and including 12th October 1997, after which date it was unclear who owned the house. Then eventually Circleview wrote (page 49) on 5 January 1998 to confirm that the property had now been sold to another party ‘and you will be notified accordingly by them and their solicitors.’
21 In case it matters, which probably it does not very much, there is a further letter of Miss Bowcock’s on 3 February 1998 at page 51, and then Miss Bowcock’s account of all the various things that had been happening is to be found in the letter of 24th March 1998 (pages 53-54).
22 So the position was, as I have indicated, that the Claimants had not succeeded in obtaining the property by virtue of the notice of April; they thereafter believed that they had lost their opportunity to buy. We now know, because we can see them in the bundle, of the two transfers of 13 November 1997 and then there are the letters to which I have already referred.
23 There is a further tendentious paragraph in the Defendant’s witness statement of November 2009. He draws the conclusion from Miss Bowcock’s letter of 2 December 1997 that because it was only about rent payments that none of the Claimants were concerned about any right of first refusal, and to suggest otherwise is “merely fictitious”. Then he points out that Miss Maloney had the use of a solicitor, and then he says she and indeed the other Claimants had no intention of doing so, i.e. pursuing the matter. Then he says:
‘There was no requirement for any such notice of the right of first refusal or otherwise to have been provided at this point in time. This is because such notice had already been served and acted upon by the proprietor at the time. The Claimants simply failed to serve a counter notice and accordingly, the sale to my father could proceed unhindered.’
All that is entirely wrong because of course there was an obligation on the transferor and the transferee to give the appropriate notices in respect of the transfer of 13th November 1997. It is tendentious, that statement, because it seeks, as I understand it, to indicate that there was no need to serve a notice because it would never have been followed up, just as in Dr Gosal’s understanding the earlier notice had not been followed up.
24 I move on to the year 2000. The Claimants were becoming more and more concerned to obtain the freehold if and when opportunity offered, and so they were sent by the Department of the Environment Transport and the Regions a leaflet on 17th January 2000. The leaflet is relied upon in particular by the Defendant because of the following passages in its many pages. Under the heading ‘Contents’ the fifth sub-heading is: ‘What happens if the property is sold without the tenants having first refusal?’ At internal pages 2-3 of the booklet there is the following:
‘The qualifying tenants have a statutory right, in most cases where the landlord has sold his interest without following the procedures in the 1987 Act, to buy the property from the purchaser at the same price as was paid and on the same terms. The purchaser must inform the tenants of their rights when he notifies them of the transaction. Failure to do so is a criminal offence…. The time limits for the tenants to exercise their rights do not start until they have been notified.’
There is in that paragraph an emphasis on notification, which of course had not occurred, and anyone studying the brochure with extreme care might conclude from the first sentence of the passage that I have read that there was a right to buy even if no notice had been served upon them. But that is at the nearest it comes to stating the point, but the emphasis on notification by the purchaser is apt to distract the reader from the point.
25 The other passage to which I have been referred is at internal page 13 of the booklet, which says
‘Most relevant disposals will result in the landlord’s interest being sold to someone else. In this case you will usually discover the property has been sold when the purchaser informs you of his name and address: failure to do this is a criminal offence…. The purchaser must also serve a notice (called a Section 3A notice) on you which says that the right to first refusal applies, and you may have the right to obtain the property and the time limits for exercising that right.The time limits do not start until the notice has been served’ [those words being in bold] ‘on the requisite majority of the qualifying tenants. ….. If a purchaser is convicted of not serving a Section 3A notice and still does not serve one after conviction, you can still exercise your rights to obtain information or purchase the property: the notice just gives you a final date for action.
There is a slightly different procedure where the relevant disposal does not transfer the property immediately, for example the grant of an option…..’ I think that is irrelevant. ‘Once you have received this Section 3A notice, a requisite majority of the qualifying tenants [etcetera etcetera].’
Again one can by very careful reading note that an exercise of the rights is possible in the absence of any notice, but when reading through that page there is a considerable emphasis upon the receipt of a Section 3A notice and of course no such notice was ever served on the Claimants in this case.
26 So nothing was done and nothing happened until the year 2004. On 31 January 2004 Dr Gosal himself came and inspected the property. Mr Lloyd, the Third Claimant, made a full note in his diary for that day and near the end he said as follows of Dr Gosal: ‘He said he is selling the freehold in the next four weeks – to himself, a management company.’ It was in fact that particular remark which alerted the Claimants to the probability of a sale in the near future. As I shall explain, it induced within a week a letter dated 7th February to the Land Registry and within a month a letter to Dr Gosal dated 28th February by a friendly adviser. But it is to be noticed that in paragraph 9 of Miss Maloney’s statement she said:
‘On 31st January 2004 Nrinder Gosal … came to the property in order to inspect some repairs that needed to be carried out. He informed the third claimant that he was considering transferring all his father’s property as he had a great deal elsewhere and that he intended to incorporate all these properties including 68 Crouch Hill into his own company.’
27 The remarkable thing is that in paragraph 11 of his November 2009 statement Dr Gosal says:
‘I do not recall having made this comment. I certainly do not believe that I would have done as this is nothing to do with the Claimants. This never happened and again is fictitious in the extreme albeit irrelevant to the issues at hand.’
Then he refers to the letter to which I am going to come of 28th February, which he calls an undated letter, and he says:
‘There was absolutely no evidence whatsoever at this time that I had made the remarks referred to at paragraph nine of Miss Maloney’s witness statement or that I had in fact taken any such action. There was therefore nothing whatsoever of substance upon which the Claimants could have approached anyone for advice on this issue.’
Then he points out that neither his late father nor he received the letter of 28th February 2004: ‘We moved from this address in about October 2004.’ When challenged about that in oral evidence Dr Gosal said that on reflection perhaps he did say what he was recorded in the diary as having said.
28 At any rate it was so obviously the alerting factor in the minds of the Claimants that on 7th February 2004 Miss Maloney wrote to the Land Registry. I will not read the full letter, but in the course of it she says this:
‘It seems that the current landlord may be in the process of selling the property on to another private landlord without offering the right of ‘first refusal to buy the freehold’ to the leaseholder in the top flat and the long-term regulated tenants of both floors of this property.’
Later she says:
‘As this is our home and we have lived here for so many years we are anxious that we are not thwarted yet again in our attempt to buy our homes as we were on two previous occasions in 1987 and again in 1997.’
She gave evidence about the 1987 occasion in her oral evidence though nothing really turns upon it. Then on the second page of the letter she says:
‘Since Mr S S Gosal, the owner has not informed any of us of his possible intention to sell 66 Crouch Hill, we wondered if there was any way we could prevent the house being sold without the leaseholders and regulated tenants being informed.’
She enclosed the right of refusal booklet or a photocopy of it.
30 The other letter, dated 28th February 2004, was written by a friendly legal adviser and the material part reads as follows. It is a letter to the Defendant’s father:
‘They have asked us to write on their behalf because they understand that you are intending to dispose of your interest in the property, as freeholder.
It is understood that the leaseholders of the top floor, Miss Veal and Mr Lloyd and Mrs Bowcock who has a longstanding tenancy and occupies the ground floor, are also interested in being served with the appropriate notice of your decision to dispose of your interest in the property of 66 Crouch Hill.’
31 In short, this appeared to all the Claimants to be the opportunity for which they were waiting. As Mr Lloyd put it in his oral evidence, they thought this was an opportunity to buy the freehold; they were going to see what they could do to make sure that Mr Gosal would serve a Section 5 notice. At this time I entirely accept the evidence of Miss Maloney that as she understood it at the time the events of November 1997 were a fait accompli and nothing could be done about it. It is quite clear from the passages I have read from those letters that the whole emphasis on the letters is looking to the future and to the opportunity which the intention of Mr Gosal to sell the property would give them to buy. In short, there is not the slightest hint that they believed that they had any remedy against Mr Gosal as a result of the events of 1997 or that they would have any remedy until Mr Gosal attempted to sell, and then it would be a remedy in respect of or in relation to an attempt by him to sell the property, which attempt they would want to restrain in the absence of the appropriate notice being served upon them at that time.
32 In terms of sheer chronology, the next thing that I should mention is that proceedings were taken on 27th August 2005 against the Maloneys for possession of the property based upon the proposition that they were no longer, as I understand it, resident at the property. This was one of the most extraordinary claims for possession that could have been made. The action was struck out on 9th September with costs and those costs due by Dr Gosal and his father have never been paid as such by the Defendant to the Claimants. Even this does not form part of what is otherwise a tendentious statement in the witness statement of November 2009 in which in paragraph 4 Dr Gosal says: ‘Presently, the First and Second Defendant are in arrears of rent in the sum of £4,540.’ There is no mention whatever of the fact that he owed costs to them in excess of £3,000 which in fact the Maloneys were very properly setting off against their rent payments, and so that part of paragraph 4 is a simple suppressio veri and suggestio falsi.
33 On 22nd September 2008 Dr Gosal wrote to the Misses Maloney saying: ‘… it is my intention to sell the freehold interest of 66 Crouch Hill’ and later he says: ‘I would be willing to accept £475,000.’ Mr Lloyd noted in the diary for 4th December 2008 two things. One was a message from Mr Gosal accusing him of having changed the locks when in fact Mr Gosal had given the wrong keys to the men who were to go in, and indeed in his oral evidence Dr Gosal said that later Mr Lloyd had admitted to him that he had changed the locks. I am quite sure that was entirely untrue. The other thing was mentioned at page 168 by the note in the diary: ‘Anyway Gosal says that he’s found a buyer for the freehold.’ At page 171 there is another entry from the diary of Mr Lloyd for 5th December 2008: ‘I also heard Gosal say that he expected to exchange contracts on Monday or Tuesday next week.’ Then Mr Lloyd on 2nd January 2009 went to the estate agents and discovered that the price for the property was £275,000. Then there was a message – a transcript of a message – left by Dr Gosal on an answering machine recorded by Mr Lloyd: ‘I was going to sell it but I’ve changed my mind now.’
34 Solicitors came on the scene on behalf of the Claimants and on 19th February 2009; the letter is at pages 182-3 and the notice is at page 184; they served the Section 12B notice under the Landlord and Tenant Act 1987. They sought a transfer of the freehold accordingly. A unilateral notice was then lodged at the Land Registry on 25th February 2002. It so happened that estate agents sent a letter to a Mr Millet and a Mr Selman and they sent it to 66 Crouch Hill, and it was about their applicant, a Mr Coulson, having been introduced and having agreed to purchase the property. This letter was opened by the Maloneys and lo and behold there was a sales memorandum; all that is to be seen between pages 226-230. That gave the name of the solicitors acting for the purchasers, and on 22nd April 2009 the Claimants’ solicitors wrote to the purchaser’s solicitors and set out what they had been told during a telephone conversation between the solicitors. Apparently there had been an agreement to grant a lease of the ground and first floors of the property to a Mr Rowatt who had in turn agreed to sell the lease to ‘your client’ Stephen Matie, and Mr Matie had agreed to sell or was negotiating a sale to a ‘new owner’; and in that letter they sought a great deal of information.
35 Dr Gosal’s evidence was that he did not understand any of that. The only thing he appeared to understand was that the grant of leases was a way round Section 5. It is absolutely clear that any lease of the reversion, which had to be involved in relation to any lease of the first floor flat occupied by the Maloneys, would trigger the obligation to serve a notice, and in that connection, as the solicitors for the Claimants rightly pointed out, the case is on all fours, or would have been on all fours had it gone ahead, with the case of Belvedere Court Ltd v Frogmore Developments [1997] QB 858; the particular passage in the judgment of Sir Thomas Bingham MR (as he then was) is to be found at pages 877F-878 for in that case there had been the grant of a lease of the reversion.
36 I shall come near the end of this judgment to say more about the letters that passed between the solicitors for the parties, for there is a question about reserved costs, but I now come back to the arguments of the parties and my conclusions on them. I begin by observing that it is a little rich that the party who ought to have served the Section 3A notice in November 1997 on the Claimants but who did not is the very same party who now complains that they ought to have known of the rights which the notice to them would have set out. I am quite satisfied that the Claimants did not know of their right to acquire from the Defendant’s father (and later from him), which right did arise in November 1997, and that they remained ignorant of that right until February 2009 when solicitors were on the scene. I am quite satisfied that to them the events of November 1997 were a fait accompli and that they thought nothing could be done about it. I accept their evidence about that, which is not only in the witness statements, but was also the oral evidence of Miss Maloney, and I have already said I regard her as a wholly truthful witness.
37 So it came about that they eagerly awaited what they understood would be their opportunity, i.e. a sale by the Defendant or his father, that being as they thought their only opportunity, and which lay in the future and was dependent upon some step to be taken in the future by the Defendant or his father. I also accept that because they were sick and tired of the landlord, who had only brought about frustration and misery by reason of broken promises and the like, and was very often only induced to take action because local authority notices were served on him, I am quite satisfied that they had every intention of acting upon any notice that would be served upon them, and so when they found out in February 2009 they acted promptly. The appropriate notice under Section 12B was served and then, because it is a precondition of the application, they served the default notice in April 2009. I also find that if they had been served in November 1997 or at any time thereafter they would and could have exercised their right. Miss Maloney had the money and the will to go ahead, and any misunderstandings and the like which precluded their exercising the right as a result of the April notice would by the time any further notice was served have been resolved. It seems to me that it is simply speculation to say that they would not have acted upon a notice served in or after November 1997.
38 Then there is the Defence of change of position. When asked how much he had spent on repairs Dr Gosal thought at most it was £2,000 or about £2,000. That I have to say was a proportionate and sensible answer. It certainly was not very much more, if it was anything more, and it may have been less. By contrast, the Miss Maloneys decided that the property was so out of repair that they spent at least £5,000 and it is highly likely that they would have a very good claim against the Defendant for breach of the well-known Section 11. But at any rate they spent very much more money on the property than he did, in putting it in repair even if ultimately it may be his liability. But as Miss Maloney said in relation to another bill which appeared to me to be the liability of Dr Gosal: ‘We didn’t trouble to do anything about it because he simply had not paid the costs of the 2005 proceedings.’ So it seems to me that that is not in any way a change of position. As Mr Boyd pointed out, what little the Defendant did was done because he had to under Section 11, and in short the Defendant is seeking to make a virtue out of necessity. The insurance payments are also relied upon, but that of course is a matter that is for the joint benefit of the landlord and the tenants and I do not regard that in any way as amounting to a change in position. Indeed, because it was for their joint benefit the tenants had to make a contribution towards it, so those were payments for the benefit of all the parties.
39 Then it is said that the property has increased in value. Under Section 12(7) an increase in value can be taken into account by the Leasehold Valuation Tribunal, who ought to determine the sum. It is bound to be at least £100,000 for that was the figure paid in November 1997 and it may very well be considerably more. I do not need to say to what extent the exception that stems from the increase in value of money is going to have upon the matter. It may very well be that the view of Mr George Bartlett QC expressed in paragraph 7 of Okonida v Kirby EW Lands LRX/15/2006 may have overemphasised the degree to which the exception plays a part, for there is a later decision which goes into the matter in more detail, for what Mr George Bartlett said was obiter in that case. But my ultimate conclusion is that there is nothing or nothing substantially unfair to the Defendant in the Claimants taking the freehold at the price determined by the LVT, which as I say cannot be less than £100,000. The fact remains that the Defendant was the party in default, not the Claimants, and he could at any time have remedied his default by serving a Section 5 notice so as effectively to make time of the essence, and to put the Claimants to proof, as it were, of their desire to purchase the property.
40 There is also the fact, which I cannot overlook, and it seems to me that it is one of the features that surely Parliament must have had in mind when conferring the discretion upon the court, of the appalling record of the landlord in that he has been in breach of Section 11 for many years, for one of the purposes of the Act itself was to enable tenants to acquire the freehold, and it must have been appreciated that many tenants would want to do so just because the landlord was not complying with his obligations.
41 Lastly, there is the question of the costs reserved, for when the application in the first action was made for an injunction undertakings were given. There is nothing more in that action that has to be done now, and so effectively the action has been dealt with. The matter was stayed by His Honour Judge Dight by the order at page A12 of the bundle, and what I have been deciding is whether the claim under 12B has been made out, and whether I should grant an order pursuant to Section 19, which I have no hesitation in granting. The costs were reserved, for undertakings were given before Judge Mitchell, and it is hardly surprising that as he had not, as it were, got into the case he reserved the costs. I do not want to make this judgment unduly long and so what I think I can do is simply refer the reader should this judgment ever be reduced to writing to read the letters passing at pages 227, 228 and 229, 230, 231, 232, 233, 234, 235, 236 and 237; there is the notice at page 238; then 239 through to 243. A passage from a book about Rights of First Refusal by Messrs Radevski and Clark is to be seen at pages 243-244 in support of the proposition that what the estate agents were offering, and that appears if one goes on reading pages 246, 247 and 248 and the estate agents’ particulars at page 249, and what was offered was a lease for 999 years of the two non self-contained flats. Whether they were to be granted together or not, the fact remains by reference to the Belvedere case to which I have just referred that it would have resulted in a disposal within the Act, and the passage in the book suggests that only a lease of one flat would come outside it, and then the reader should go on to read pages 252-257.
42 A number of points were taken by the Defendant which I consider to be wrong. One is that the application should have been made within six months of November 1997. It was said that the unilateral notice should have been withdrawn. Both those points, it seems to me, are wrong. The various points made by the Claimants’ solicitors in their letters appear to be correct. The point taken by the Defendant is that (page 234) because of the unilateral notice the purchaser is not prepared to proceed with the transaction, i.e. the purchaser who was going to take the long lease. The second point is that at page 240 it is said that Dr Gosal ‘is not disposing of the freehold.’ If that is an indication that he would not in the future dispose of the freehold, then he should have had no hesitation in giving an undertaking. I read that as a statement of his present intention, which of course he might change at any time. There are other passages at pages 254 that the purchasers’ solicitors had said that they would not be purchasing leases at the moment, and there are other statements that Dr Gosal was not intending to sell. As I say, if that really was his intention for the future I can see no reason why he should not have given an undertaking through solicitors at the time. Statements of intention made by Mr Gosal have been shown in the past to be either false or simply not followed up later, and of course he was free to change his intention without there being a binding undertaking to the court, and so it seems to me for the reasons that I have given that the Claimants were perfectly entitled to seek an injunction which at the last moment turned out to result in an undertaking, as so often happens. That I think is an end of this rather long judgment.
