Panagopoulos and another v Earl Cadogan and another

Her Honour Judge Hazel Marshall QC:

This case concerns the scope of the anti-avoidance provisions of s. 19 of the Leasehold Reform (Housing and Urban Development) Act 1993 (“the 1993 Act”).

The Claimants are the nominee purchasers on behalf of three of the five qualifying tenants of flats in 51 Cadogan Square (“No 51”), a substantial brick built Victorian house on the east side of Cadogan Square. The Respondents are Earl Cadogan as the present legal freeholder, and Cadogan Estates Limited (“CEL”), a company connected with the Cadogan Estate which I am told enjoys the benefit of a contract for sale by the Earl of property including the freehold of this property, which contract remains uncompleted.

CEL is also tenant under a 999 year lease of the basement flat in this property, recently granted by the Earl. This effect of this transaction is at the heart of the present application.

The property

The property faces west and is terraced. It comprises five converted flats or maisonettes on the ground floor and upper floors, and a basement in which there is, below the rear of the main part of the building, a flat hitherto used as a caretaker’s flat. The front of the basement is a storage area, with a front exit door into an open area with a staircase up to the street, and access to vaults under the pavement.

The various flats are accessed internally by a staircase in the centre of the property beside its north party wall. The only other material feature of the configuration of the property is a light well in the rear of the property, open to the sky from basement floor level. This light well is on the southern side of the property and mirrors a similar light well in the adjacent property (No 53) to the south. There is a boundary wall between the two light wells about 10 ft high, topped off with railings. The flats in No 51 wrap around three sides of the light well in No 51.

Background

The dispute arises as follows. On 25^th April 2006, three of the five qualifying tenants in the building – a sufficient majority to exercise the right of collective enfranchisement under the 1993 Act – served notice on the Defendants under s. 13 of the Act seeking to acquire the freehold of No 51. On 30^th June 2006, the Defendants served a counter-notice under s. 21. That notice did not include any proposals for any leaseback of any part of the building to the freeholder.

On 13^th July 2006, the applicants’ s. 13 Notice was registered under s. 97 of the 1993 Act. The registration therefore took effect as provided in that section.

On 13^th October 2006, the Claimants made an application to the Leasehold Valuation Tribunal (“LVT”) under s. 24 of the Act, to determine the terms of acquisition.

On 25^th March 2007, the Defendants notified the Claimants of their intention to grant a lease of the basement caretaker’s flat (“the Lease”) to a nominee. This is the origin of the dispute with which I am now concerned. The Claimants objected to this grant, seeing it as a device by which the freeholder was seeking to extract value out of the freehold to which he was not entitled. They contended that any such grant would be void under s. 19 of the 1993 Act, which, where a s. 13 Notice has been registered under s 97 (as here), (i) renders void certain transactions entered into by the freeholder or a superior lessor, and also (ii) provides that other such transactions shall be dealt with as if they had been entered into before the s.13 Notice had been served and shall consequently be liable to acquisition by the applicants in any event. As a precaution the Claimants also registered a caution against first registration on 28^th June 2007.

The issue of the potential validity of the intended Lease was raised in the LVT proceedings and dealt with as a preliminary issue. At a hearing in December 2007, with reasons published in February 2008, the LVT concluded that it had no jurisdiction to make any declaration on that issue. Terms of acquisition were therefore agreed between the parties on 26^th March 2008, on alternative bases, according to whether the lease of the caretaker’s flat should be void or not. On 27^th March 2008, the matter was brought to a head by the Earl formally granting the Lease to CEL.

The Lease is a lease for 999 years and comprises the caretaker’s flat and the light well adjacent to it. The rent is a peppercorn, if demanded. No premium is mentioned. The demise is a “shell” demise, expressly limited only to the surfaces of the relevant enclosing walls, floors and ceilings of the premises, and excluding the structural elements. It is also skeletal in that there are very limited covenants on the part of either landlord or tenant. In particular, the Lease contains no proviso for re-entry in case of breach of condition.

The Defendants applied to the Land Registry to register the Lease. The Claimants were duly notified, and objected. Their objection was referred to the Land Registry Adjudicator. The Claimants then issued this application to the court on 11^th June 2008, and after various procedural steps to co-ordinate this with the Land Registry’s position, which I need not rehearse, the matter came before this court on 16^th February 2009 for trial.

The issue in the trial is whether or not the Lease is void, in which case it can be ignored, or, alternatively, whether it was created subject to the rights of the Claimants, such that the Claimants are entitled to acquire it under their Notice of 25^th April 2006.

The legal context

The process of collective enfranchisement under the 1993 Act is well known, albeit the provisions of the Act are very intricate. The variety of circumstances in which collective enfranchisement claims may take place are legion. The properties may vary from small converted houses to large blocks of purpose built accommodation. Greater or lesser proportions may be let to long leaseholders who are entitled to exercise the relevant rights. Parts of the property – which may or may not be residential – may be retained by the landlord for it/himself. There may be intermediate superior leasehold interests, which may, or may not, be held by parties independent of either freeholder or tenants. The tenants may need, or enjoy, many different kinds of rights with their leases, over property within or outside the relevant premises, and possibly solely for their own benefit, or possibly shared with others not concerned in the enfranchisement. The Act has sought to lay down provisions which lead to the appropriate result between tenants and their landlords according to the policy of the Act in all these potentially different combinations of circumstance. The result is a set of very complex provisions, which require careful working through. It is not surprising that their application to any individual set of circumstances may not always be free from question or doubt.

The Claimants represented by Mr Andrew Walker of Counsel, very helpfully reminded me of the basic concepts, insofar as they affect the present dispute, and I will summarise them.

Section 1 of the Act defines the freehold property which the applicants (in effect the participating qualifying tenants) are entitled to have acquired on their behalf pursuant to their desire to acquire the freehold of the property of which their flats form part. This is, basically, the freehold of the building in which their flats are comprised: see s. 1(1), and also of any further premises which are not comprised in that building, but which are either appurtenant to any of their leases, or are property over which any (emphasis added) of their leases grants rights of use in common with anyone else: see s. 1(3). I will call this “shared use property”. In this latter case, however, the participating tenants’ right of acquisition can be satisfied, alternatively, by the grant or procurement, of adequate appropriate easements: see s. 1(4).

Section 2 of the Act defines the leasehold interests which participating tenants are also entitled, or obliged, to acquire: see s. 2(1). They are obliged to acquire any superior intermediate leasehold interest: see s. 2(2). They are entitled to acquire any other leasehold interest which consists of or includes either (a) common parts of the relevant premises themselves or (b) other premises with the functions described in s. 1(3), namely that they are either (a) appurtenant to any participating tenant’s lease, or (b) shared use property in relation to any tenant: see s. 2(3). However, such leasehold interests can only be acquired if

“the acquisition of that interest is reasonably necessary for the proper management or maintenance of those common parts or [other property] [on their behalf]”: (s2 (3)).

Thus, there is a two stage test with regard to the entitlement to acquire, under s. 2 (3) leasehold interests other than intermediate leasehold interests. The relevant leasehold interest must not merely be of the qualifying type of property, but its acquisition must satisfy the “reasonably necessary” test, before it can be acquired.

In addition, if a relevant leasehold interest which might be acquired contains premises other than either a qualifying tenant’s flat, or common parts or shared use property, then by s. 2(4), the applicants are not entitled to acquire the leasehold interest in that other property. This provision protects the landlord’s interest in, and its right to retain for its own benefit, other property which may be commercially exploitable.

Section 13 confers the qualifying tenants’ right to serve the necessary notice of their wish to acquire the specified property, which must be detailed in their notice. The service of their Notice defines the subject of their claim and determines the property which they are seeking to acquire (subject to any adjustments as a result of subsequent agreement, or the resolution of any dispute).

Since amendment of the law on 28^th February 2005, it is now also the valuation date for the purchase price. Formerly, the valuation date was the date on which the terms of the acquisition were finally fixed under s. 24 of the Act, either by agreement between the parties or by order of the LVT. This gave rise to the possibility of a shifting valuation date, and consequent scope for manipulation of the purchase by one party or the other in a moving market. That has now been removed, although plainly the possibility of delay arising from any dispute or adjustments to the extent of the property to be acquired still remains.

The next material provision is s. 19. This is central, and I need to set out the first two sub-sections in full.

“19 (1) Where the initial notice has been registered in accordance with section 97(1), then so long as it continues in force–

(a) the person who owns the freehold of the specified premises shall not–

(i) make any disposal severing his interest in those premises or in any property specified in the notice under section 13(3)(a)(ii), or

(ii) grant out of that interest any lease under which, if it had been granted before the relevant date, the interest of the tenant would to any extent have been liable on that date to acquisition by virtue of section 2(1)(a) or (b); and

(b) no other relevant landlord shall grant out of his interest in the specified premises or in any property so specified any such lease as is mentioned in paragraph (a)(ii);

and any transaction shall be void to the extent that it purports to effect any such disposal or any such grant of a lease as is mentioned in paragraph (a) or (b).”

The broad effect and intention of s. 19(1) thus appears to be, in summary, after registration of a s. 13 Notice, to render void the creation of any acquirable interest (ie one which would have been acquirable under the s. 13 Notice if it had then existed). It does not, however, render void the creation of any interest which would not have been acquirable, if it had existed.

By contrast s. 19(2) reads

“(2) Where the initial notice has been so registered and at any time when it continues in force–

(a) the person who owns the freehold of the specified premises disposes of his interest in those premises or in any property specified in the notice under section 13(3)(a)(ii), or

(b) any other relevant landlord disposes of any interest of his specified in the notice under section 13(3)(c)(i),

sub-section (3) below shall apply in relation to that disposal”

Section 19(3) then lays down that after any such disposal, all parties shall be treated as being in the same position as if the disposition had been made before the service of the notice and the disponee had taken any effective steps that have in fact been taken. In effect, the disponee is treated as being placed, vis-à-vis the applicant tenants, precisely in the shoes of the disposing party. Thus, ss 19(2) and (3) are aimed at dispositions of existing acquirable interests following a registered s. 13 Notice, and these are not avoided, but are simply made subject to acquisition from the disponee on the same basis as they would have been from the disponor.

By way of completing the context, ss 19 (4)-(6) deal with the position where there is a binding contract for a disposition of an interest liable to be acquired by the applicants at the time of their s. 13 Notice. They broadly provide that the operation of such a contract is suspended until the outcome of the qualifying tenants’ application is determined, and if this results in a binding contract for collective enfranchisement, then that earlier contract is discharged.

Thus, subject always to registration of the applicant tenants’ s. 13 Notice, s. 19 prohibits certain dispositions by parties with superior interests outright, (s. 19(1)), but permits others whilst dictating their consequences by subjecting them to the tenants’ claim (ss. 19(2) and(3)).

Mr Walker submits that these provisions are intended to protect the rights of the acquiring tenants in accordance with the policy of the Act by preventing the creation of any new interests for which there is unlikely to be any proper purpose, and which would limit, prevent or just make difficulties for the exercise of the tenants’ rights of acquisition. I did not understand Mr Munro, appearing for the Defendants, to dissent from this, except to protest that it was not always, or even necessarily, the landlord who might seek to manipulate the situation, and that in any event, a landlord was plainly entitled to engage in such transactions as the Act did permit, the question merely being what these truly were.

Under s. 21, the landlord is required to react to the tenants’ s.13 notice by a counter-notice, and in this context, Mr Walker further invited me to consider the provisions of s. 36 of the Act and its associated Schedule 9. These relate to leasebacks. The nominee purchaser is obliged to grant leasebacks to the freeholder of any flats held on public sector residential tenancies (Schedule 9 Part II), and also, at the request of the landlord, of any flats or other units in the premises where there is (broadly) no qualifying tenant or where the flat is occupied by a resident landlord. (Schedule 9 Part III). The terms of any such leaseback are to be as provided in Part IV of Schedule 9 except insofar as varied by agreement between the parties, or ordered by the LVT as being reasonable in the circumstances.

Although, therefore, the terms of Part IV are ultimately only advisory, they provide the benchmark for what the Act envisages. The principal terms are that the leaseback lease shall be for 999 years, at a peppercorn rent, shall replicate the rights, easements, obligations and restrictive covenants previously enjoyed with or affecting the premises, shall oblige the lessor to repair the exterior of the premises upon payment contributions from the lessee, shall be freely assignable, and,

“shall not include any provision for the lease to be terminated otherwise than by forfeiture on breach of any term of the lease by the lessee.”

In Cawthorne v Hamdan [2007] Ch 187 the Court of Appeal approved a decision of the Lands Tribunal made shortly before the tenants’ s. 13 Notice in this case, to the effect that a landlord who wished to require a leaseback under s. 36 must state this in the proposals in his s. 21 counter-notice, and could not (as had been otherwise contended) issue a notice requiring such a leaseback at any time before a binding contract had been agreed. Mr Walker submits that this requirement is entirely sidestepped if the landlord can, as the landlord here claims to be entitled to do, simply grant a lease to a nominee after failing to stipulate for a leaseback – and indeed do so on any terms he chooses without regard to Part IV of Schedule 9 – and thus impose the reversion on that lease on the nominee purchaser. Mr Munro says that if that is what the Act in fact permits when its restrictive operation is examined carefully, then so be it; the Applicants have no right to object.

General approach

This is a point of general approach. Mr Walker invites me, in effect, to approach this case on the basis that Parliament cannot have been intending that a freeholder can effectively enter into a transaction such as the present, ie a long lease of a flat in the building of which the freeholder has control, at all, not having requested a leaseback.

Mr Munro, however, points to the fact that in Cawthorne v Hamdan itself, the Court of Appeal noted that there were constraints on the freeholder’s rights to deal with his property after a s. 13 Notice had been served, but said that these

“do not appear to preclude the landlord from granting a lease of one flat; see Hague on Leasehold Enfranchisement 4^th Ed at para 25-15 fn 117”,

a learned opinion on which Mr Munro also relies. Mr Munro submits that, following the amendment to the Act to fix the valuation date as being the date of service of the s.13 notice, the inconvenience and delay which might be caused by a subsequent transaction requiring a revaluation of the property was limited, and why (he asked rhetorically) should a landlord not be free to grant a long lease of a flat hitherto let on a weekly tenancy which (say) unexpectedly fell in after service of the s. 13 Notice, just because he might not previously have wanted, or thought, to ask for a leaseback?

He referred, in support of this, to the decision upholding the two leases in Forman v Timro Investments Ltd (Re Daphne Court, 56 St John’s Avenue London NW3) (London LVT, 25^th January 2008) (“the Daphne Court case”) in support of this being the correct view, and likewise to BCLA Ltd v Demetriou (Dep. Land Reg. Adjudicator; 17^th March 2006). However, in this latter case, as Mr Walker pointed out, the point was conceded and not argued.

Mr Walker submitted that Mr Munro’s approach was incorrect. The s. 13 Notice fixes, subject to any permitted adjustment deriving from the s. 21 counter-notice, or unforeseen circumstances, the extent of the interest to be acquired, but Mr Munro’s argument, by definition, entailed that the landlord could, after the notice was served, grant interests which were not avoided by the Act but which nonetheless would amend the extent of the interests capable of being acquired (and therefore also the purchase price).

Such a supposed ability, he submitted, did not sit happily with the powers available to the LVT under s. 24 of the Act to resolve disputes about the terms of the acquisition or arising from a failure to enter into a contract. This was because the only mechanism expressly provided to take into account any “change in circumstances” was that of s. 24 (4)(b), but this was provided in order to implement s. 24(3), and related only to a change which occurred, after the terms of acquisition had been agreed or determined but no contract had been entered into. There was no provision to take into account any change of circumstance which might occur after a notice was served but before an LVT hearing. Yet Mr Munro’s argument drew no distinction between any periods of time subsequent to the service of the s. 13 Notice and the eventual completion of the transaction. Whilst it might be said that any such change of circumstance taking place before an LVT hearing would be taken into account naturally, because it would be known about, it would still involve the strange situation that an interest which had only been created after a valuation date would have to be valued at an earlier date at which it had not existed. This suggested, therefore, that “changes in circumstances” in s. 24 was not intended to deal with the creation of new interests, but only with extraneous factors such as fire damage. Mr Munro’s argument, taken to its logical extreme, meant that the landlord could grant a succession of new leases of “non acquirable” parts with impunity – always so long as they did not infringe s. 19 – and require yet another exercise in valuation or reference back to the LVT on each occasion. That, he submitted, could not be right.

I prefer Mr Munro’s basic approach. To my mind, Mr Walker’s argument seeks to prove too much by imposing a restriction on the lessor as a matter of supposed necessary implication from other parts of this very complex legislation, and I simply do not think that approach will bear such weight.

First, whilst I acknowledge that Mr Walker’s argument from s. 24 has some force with regard to practical implementation of the Act if the landlord is able to grant or dispose of any interests subsequent to the s.13 Notice, to my mind it overlooks the fact that this provision was originally drafted to apply in a situation where the purchase price was determined only after all the interests to be acquired had been agreed or determined. In the original context it worked quite coherently even if there were changes in the interim, because the price would only be fixed by reference to a date at the end of the process, after any dispute about the extent of the acquirable interests or the terms of acquisition had been resolved. (Of course, changes could delay the process, and thus be a tool for manipulation, but that does not alter the basic coherence of the original scheme.) Section 24 was not amended when the valuation date was amended to the date of the giving of the s. 13 Notice, and that amendment was introduced in the untidy situation that other amendments to the enfranchisement process made by the Commonhold and Leasehold Reform Act 2002 (in particular the introduction of the “RTE company” and its duties) had not been introduced because they had been discovered to be unworkable in practice. Against this background, it seems to me that any argument of logic from the effects of s. 24 based on how it must be taken to harmonise with the operation of the rest of the Act is on somewhat unsafe ground.

Second, the Act is a form of compulsory purchase. Its purpose is to enable certain qualifying tenants to obtain control of their long term residential property by acquisition. The landlord’s legal right to deal with his own property as he sees fit for his own benefit is being infringed in order to implement that policy, and in my judgment it is to be assumed initially that Parliament will have intended that infringement to be the minimum needed to implement the policy of the Act. Therefore, only where Parliament has clearly decreed that a landlord should be prevented from exercising his rights is it appropriate to find such a constraint. If a transaction is apparently open to the freeholder under the Act, then it does not seem to me that the court should be astute to find some prohibition being implied.

Third, the granting of a lease, assuming it to be a transaction which is not, on its face, proscribed by the Act, is not simply “sidestepping” the leaseback process, because it is actually a different form of transaction. A leaseback will place the landlord in the position of tenant of the nominee purchaser, whereas the grant of a lease will place some other person in that position. This is a different situation, and therefore a general analogy cannot simply be assumed.

Fourth, the avoidance provisions of s. 19 of the Act with which I am concerned expressly apply only if the s.13 Notice has been registered under s. 97(1) of the Act, and therefore do not necessarily apply in every case. This seems to me to weaken Mr Walker’s argument that the combination of the avoidance provisions and the availability of the leaseback procedure show that only the latter is intended to be available to the lessor.

Fifth, the Act is a very complicated piece of drafting, intended, as I have already pointed out, to apply in a host of different sets of circumstances, and this means that points of difficulty are all too likely to arise in practice. In my judgment, in that situation, the right course is to approach the Act on the basis that it means what it says unless there is a very obvious reason for concluding that that cannot be literally intended, and to follow the Act’s wording, rather than agonise over refined arguments as to purpose and effect, and therefore what Parliament “must have” intended, in precise circumstances which very possibly were not directly considered.

I therefore approach the matter without any predisposition in favour of holding that the fact that the court has held that the Act means that a landlord can only ask for a leaseback in his s. 21 counter-notice must support there being other constraints on any other freedom of disposition which the terms of the Act appear to leave to him.

Issue (1) Is the Lease void under s. 19(1)(a)(i)?

The first ground on which the Claimants challenge the Lease is that it constituted a “disposal severing” the freehold interest in the premises within the meaning of s. 19(1)(a)(i) and is void accordingly. This is argued by Mr Walker on three different bases.

He refers first to the definition of “disposal” in s. 101(1) of the Act.

“’disposal’ means a disposal whether by the creation or the transfer of an interest, and includes the surrender of a lease and the grant of an option right of pre-emption, and ‘acquisition’ shall be construed accordingly (as shall expressions related to either of these expressions)” [emphasis added].

He submits that this is both an exhaustive definition and clearly intended to be widely construed. He also refers to the definition of “interest” in the same section noting that it “includes ‘estate’”.

Mr Walker’s first submission is that the word “disposal” in s. 19(1)(a)(i) expressly includes the creation of an interest such as a lease, and that the words “severing his interest” must therefore likewise be construed widely, so as to include the grant of a lease, as well as a severance by the splitting of the freehold interest itself into more than one share. He submits that a “disposal severing his interest” is any disposal which “diminishes the freeholder’s estate and interest in the property”; and he relies on notes to the 1994 Edition of Current Law Statutes as apparently endorsing this interpretation.

On this basis he argues that the grant of any lease of any duration is a “severing of” the relevant interest and is void accordingly. He accepts that this probably deprives s. 19(1)(a)(ii) of practical content, but submits that in the context of the obvious intention to give wide protection to the tenants’ interests, this construction is nonetheless to be taken to be what Parliament intended.

I reject this submission. I accept Mr Munro’s submission that the phrase “a disposal severing his interest” is, in this context, confined to disposals which split the freehold reversion in the manner normally understood as a severance, ie by creating more than one reversion. In my judgment the distinction drawn in subs 19(1)(a) between a “grant out of” an interest and a “disposal severing” it shows that the narrower construction is intended.

First, Mr Munro’s construction is not at all inconsistent with the wide and exhaustive definition of “disposal” in s. 101 (1), and, in my judgment, is actually consistent with it. Giving the word “disposal” in s. 19(1) its full definition meaning, the following words (“severing his interest”) qualify this by specifying the sub-set of such disposals which are intended to be caught by s. 19(a)(i). That sub-set is those disposals which effect a “severance” of the interest in the normally understood meaning of that term in a conveyancing context.

I accept that this construction means that the words “or any such grant of a lease” in the closing words of s 19(1) are rendered strictly unnecessary, and are even (it might be said) inconsistent with the point made at the end of Paragraph 45 above. However, it seems to me that this repetition arises from the structure of the sub-section with two separate sub-paragraphs and is attributable to the draftsman wishing to avoid doubt. It does not affect my general impression.

Second, the wide construction contended for by Mr Walker would render s. 19(1)(a)(ii) quite unnecessary, and, indeed, bring into the operation of s. 19(1)(a)(i) interests which s. 19(1)(a)(ii) expressly excludes, by its closing words, for no obvious reason. Given the careful structure of the subsection, I find it most unlikely that this effect would either not have been appreciated by the draftsman or was simply ignored. A construction of s.19(1)(a)(i) which leaves some operational content for s. 19(1)(a)(ii) is more likely to have been intended than one which does not.

There was some discussion as to where the construction which I prefer left the treatment of the grant of overriding leases of part of the property, or the severance (in the purer sense) of intermediate leasehold interests. It seems to me that the former is potentially covered by s.19(1)(a)(ii), and the latter is either within s. 19(2) (b) or is simply not covered, as I refer to further below. The working out of those detailed situations is not directly in issue before me however, and I can see nothing in the possible implications of the construction which I prefer for other situations which is so outlandish as to make me think I should reconsider.

Mr Walker’s second, alternative, submission is that this particular “disposal” is one which has the effect of “severing” the respondents’ interest when one examines its terms, because it is such an extensive disposition as to be tantamount to a disposal of part of the freehold.

In support of this proposition, he relies, by analogy, on the analysis by Lord Neuberger of the provisions in Schedule 3 of the Act relating to “hope value” in Earl Cadogan v Sportelli and others [2009] 2 WLR 12 (see Paragraph 104), where he concluded that a references to “with[out] the tenant … buying or seeking to buy” the interest must be apt to include also acquiring or seeking to acquire a long lease at a peppercorn rent. There are other situations, familiar to conveyancers (such as a mortgagee’s power of sale) where the “sale” of an interest in property has been held apt to include a disposition by way of a long lease at a premium.

Mr Munro retorts that the analysis in Cadogan v Sportelli was being made in a quite different context, and was in any event a consideration of the word “buy” and not of the word “severing [his interest]”. He also took me to the speech of Lord Hoffmann, at paragraph 14, where, coming to a different conclusion from Lord Neuberger, Lord Hoffmann questioned how there could be any proper justification deriving from the statute for distinguishing (as Lord Neuberger then did) a 999 year lease from a shorter lease. Mr Munro submits that in this context there is, likewise, no properly rigorous justification for making any such distinction – and at what arbitrary point on the spectrum? he also asks rhetorically.

On balance, and not without some hesitation, I accept Mr Walker’s submission on this point in preference to Mr Munro’s, although I think Mr Munro’s criticism of reliance on Lord Neuberger’s dictum in Cadogan v Sportelli is well founded. In my judgment, the correct approach, on any particular set of facts, is to consider the substance of the particular transaction, and to ask whether it “severs” the freehold as a matter of practical effect. The residual freehold reversion on the caretaker’s flat in this case is so small as, in my judgment, to be negligible for all practical purposes. I therefore conclude, that it can and should be ignored for having no practical substance, when considering whether it is properly regarded as “severing” (in the required sense) the freeholder’s freehold interest in the Building as a whole.

However, my decision does not depend on this point because, in my judgment, Mr Walker’s third argument is in fact his strongest and really puts the position beyond doubt. This is the argument from the statutory effect of s. 153 of the Law of Property Act 1925.

Section 153 applies to a leasehold interest with the following characteristics. It must be a lease

(a) with a remaining residue of at least 200 years,

(b) where the original term was granted for at least 300 years,

(d) at rent of no more than a peppercorn,

(e) without any right of re-entry for condition broken, and

(f) not granted out of a superior interest which would not itself meet those qualifying conditions.

In such a case, the term may be enlarged into a freehold merely by the unilateral declaration of the tenant, made by Deed.

The Lease fits all this description. Thus, Mr Walker submits, the tenant, CEL, is in a position to have the freehold simply by its own act. In that circumstance he submits that there has been a severance of the freehold, relying , by analogy on Bosomworth v Faber (1992) 69 P&CR 288 where, in the context of the obtaining of easements by prescription, the principle that a tenant is not entitled to prescribe for such rights against his own landlord was held not to apply because the lessee

“has the unilateral right by statute at any time and without anyone else’s consent to enlarge his leasehold interest into the fee simple” (see per Dillon LJ at 293).

Mr Munro submits that all that that case decided was that the common law rule and reasoning in such cases as Wheaton v Maple [1893] 3 CH 48 (under which a tenant cannot prescribe rights for his own benefit against his landlord) did not apply to those particular circumstances, and it is of no weight or assistance in this case.

He submitted that in any event s. 153 should not be construed as intending to apply to leases, even if literally within its terms, if they would have the effect of creating a “flying freehold”. Since this particular freehold would in fact be a basement, it hardly appeared to fit the term “flying,” but Mr Munro explained that, by this, he meant a freehold interest against which positive covenants could not be enforced. He was not, however, able to give any convincing reason, to my mind, why the basement flat should not be “land” within the meaning of s. 153, nor any reason why, if it were, the terms of the statute did not apply to any conforming lease relating to it.

In my judgment, therefore, certainly for the reasons advanced in this third argument, (and even if I were wrong to accept his second argument), Mr Walker is correct, and the grant of the Lease was “a disposal severing” the freehold interest within the meaning of s. 19(1)(a)(i) and is void accordingly. Even if the transaction itself has not finally sundered the last thread of connection between the two parts of the freehold of the property, it has put it out of the freeholder’s power to resist and prevent such a severance taking place at the tenant’s will. In my judgment this is therefore as good as an actual completed severance. That is all the more so in the context of the transactions at which s. 19(1)(a)(i) is clearly and expressly aimed as a matter of policy.

I should mention here that no real argument was directed to whether the issue of severance was affected by the fact that the freehold interest in the property is stated to be held by the Earl merely as qualified trustee for CEL, under the mysterious uncompleted contract for sale of property, of which Mr Munro rather coyly declined to provide any details. I have not, therefore, been asked to consider any argument that there could be no severance because the material beneficial interest was already vested in CEL as contractual transferee of the freehold. Given the apparent artificiality of the situation, in my judgment, it would not be open to the defendants to take any such point without having revealed the full details of this transaction.

It follows that I will declare that the Lease is void. However, in case I am wrong, and because it has been fully argued, I turn to Mr Walker’s second broad basis of challenge to it.

Issue (2) – is the Lease void under s. 19(1) (a) (ii)?

Mr Walker argues in the alternative that the Lease falls within s.19(1)(a)(ii), because it is an interest which, had it been granted before the service of the applicant tenants’ s.13 Notice, would have been liable to be totally or partially acquired under s. 2(1)(b) of the Act. Interests falling within s. 2(1)(b) are, by s. 2(3) of the Act, the interests of a tenant under any lease (other than leases superior to any lease held by a qualifying tenant of a flat) under which the demised premises are, or include,

(a) any common parts of the “relevant premises” [ie the premises of which the applicant tenants are entitled to have the freehold under s. 1] or

(b) any appurtenant or shared use property as described in s. 1 (3) of the Act (see Paragraph 16 above).

Mr Walker submits that if the Lease had been granted before 25 April 2006, it would have been subject to the acquisition rights of the tenants because it was a lease of property either (i) consisting of common parts as such (ie the caretaker’s flat itself),or (ii) including common parts, namely (a) the light well area and/or (b) certain service media (namely pipes and conduits such as down pipes, drainage and foul water pipes, electric cables, and NTL phone/TV cables) within the demise, and that, in either case, that the acquisition of the Lease is reasonably necessary for the proper management or maintenance of those common parts.

Issue 2(i)(a) Is the Lease a lease of “common parts”?

This turns on whether the caretaker’s flat itself comprises “common parts” of the Building of which the applicants are entitled to acquire the freehold.

The place of the caretaker’s flat in the leasehold scheme of the property as a whole is material here. The earliest of the residential leases in the Building were granted as underleases under a headlease which has since been surrendered. Nothing turns directly on this because, after the surrender, those underlessees are held from the freeholder on the same terms as before.

Both the leases of Flat 1 (non-participating) and Flat 5 (participating) include

(a) A recital of the landlord’s intention to let off flats in the building other than the flat “occupied by the caretaker hereafter mentioned”;

(b) A covenant by the lessor to

“provide and use his best endeavours to maintain the services of a full time caretaker resident in the caretaker’s flat”

for the performance of specified duties;

(d) and an obligation on the tenant to contribute by way of service charge to the costs of

“employing maintaining and providing within the Building accommodation for the caretaker hereinbefore referred to”

The lease of Flat 4 (non-participating) contains similar provisions but by reference merely to the provision of a full time caretaker, and not a resident caretaker. The landlord’s maintenance obligation is related to “any” flat in the building occupied by the caretaker.

Within the leases of Flats 2 and 3, the later leases granted by way of lease extension, there is no obligation on the landlord to provide caretaking services, at all, although he may do so. In that case, the expense of his doing so, and of any accommodation which might be provided for a caretaker are expressly recoverable items of service charge.

The original headlease previously obliged the intermediate landlord to employ a resident caretaker and to use the basement only for the purposes of the caretaker’s flat and storage. Mr Munro submits that this is now irrelevant, the head lease having been surrendered. I agree that it is of no direct relevance, but it does assist as context in identifying clearly what is meant by the term “the” caretaker’s flat in the landlord’s obligation in the Leases of Flats 1 and 5. It is the basement flat.

The evidence is that the caretaker’s flat was used for the purposes of housing a resident caretaker until very recently, when the current caretaker left. It was being so used when the s.13 Notice was served. When I inspected the flat during the trial, it was in the course of refurbishment/redecoration.

The nominee purchaser of the freehold will assume the obligations imposed on the lessor under the leases of Flats 1 and 5. This will involve an obligation to provide, and use best endeavours to maintain, a resident caretaker in the caretaker’s flat in the Building which obligation is enforceable by one participating and one non- participating lessee. It will also assume an obligation to provide a “full time” caretaker to the tenant of Flat 4. Although it will have no obligation to provide a caretaker vis-à-vis Flats 2 and 3, it will have the right to recover the costs of providing a caretaker, resident or non-resident, from Flats 2, 3 and 4.

Against this background, Mr Walker submits that the caretaker’s flat is part of the “common parts” of the Building, and Mr Munro submits that it is not.

“Common parts” are defined the Act in a not particularly helpful way, by an “inclusive” definition in s. 101:

“common parts”, in relation to any building, or part of a building, includes the structure and exterior of that building or part and any common facilities within it”

All one can derive from this definition, therefore, is that it is non-exhaustive and the draftsman thought that the reader would already have in mind a sufficiently clear concept of “common parts” such that all he needed to do was to resolve any doubt which might be entertained as to whether or not “structure and exterior” or “common facilities within” the relevant building were intended to be included. Therefore, how far this takes the concept beyond the immediately obvious flavour of entrances and exits, corridors and staircases, is a matter of impression. I accept, however, as Mr Walker submits, that the definition is inclusive and does not rule out anything which might fairly be considered to be a “common part” on examination of particular circumstances.

Mr Walker submits that the definition is thus capable of being wide enough to include the caretaker’s flat. He submits that anything which is “shared …or is in some way of benefit or concern to the occupiers” is a working description of “common parts”: see dicta in the Scottish case of Marfield Properties v Secretary of State for the Environment [1996] SCLR 749 at 752.

Mr Munro points out that this is a case in a wholly different context and concerning different words, namely the scope of the residual category of matters labelled “common parts” in the parcels clause of the transfer of a Scottish building development. He submits that, fairly viewed, the caretaker’s flat is not “common parts”, within the meaning of this Act, both because it is in fact a flat, and because in any event the tenants do not use the caretaker’s flat in common or indeed at all.

He draws an analogy with my own decision in Oakwood Court (Holland Park) Limited v Daejan Properties Limited [2007] 1 EGLR 121, in which I held that a boiler house was not property which enfranchising tenants were entitled to acquire because it was not property which the tenants had the right to use, applying s. 1(3)(b) of the Act; it was used by the landlord to supply hot water, and not by the tenants. Mr Munro also referred to the Daphne Court case above) in which the LVT concluded that a lease of roof space was not a lease of “common parts” where it housed two water tanks serving the whole Building.

He further relied on the decision of the Lands Tribunal in McGuckian v 29 Eaton Place Management Company Ltd [2007] EWLands LRA/85/2006 in which the President held, reversing the decision of the LVT, that a caretaker’s flat, occupied as such by a superior lessor holding an intermediate headlease, was not a “common part” of the premises, (and therefore could not be acquired by the enfranchising tenant), on the grounds that “flats” and “common parts” were mutually exclusive concepts in the Act, and that a residential unit could not, therefore, be part of the “common parts”.

Mr Walker argued that Oakwood Court v Daejan is not in point because it was an application of the concept in s. 1(3)(b) of the Act of “shared use property”, being property which was not part of the Building which the enfranchising tenants were entitled to acquire. The concept of “common parts” within the Building, he submits, is not necessarily identical, and, given the policy of the Act to enable the qualifying tenants to acquire and control the freehold of their building, it is entirely reasonable that “common parts” should have a wider scope. As regards the Daphne Court case, he pointed out that even if – which he did not accept – the LVT was correct in its characterisation of the lease, it had relied on the fact that the lessor was entitled to move the water tanks, and had also decided, in any event, that acquisition of the lease was not “reasonably necessary” for the enfranchising tenants, so that its reasoning on the classification point had not been decisive.

With regard to McGuckian he submitted that this case was wrongly decided in the Lands Tribunal, and the LVT decision had been correct,

The LVT in McGuckian held that the caretaker’s flat, although residential and occupied by the head lessee as a “qualifying tenant”, was nonetheless acquirable by the enfranchising tenant as part of the “common parts” of the Building because two of the three sub-leases in the premises contained an obligation on the landlord to employ a resident caretaker; which made the caretaker’s flat a “common facilit[y] within [the building]” within the definition of “common parts” in s. 101 of the Act (see the LVT decision quoted at Paragraph 16 of the report cited above) . In doing so, the LVT held that the lack of access to the flat for tenants was not determinative, because a plant room within the building would plainly be “common parts” even if only the landlord held a key. It also distinguished the case where a landlord’s obligation was merely to provide caretaker services which it then chose to fulfil by employing a resident caretaker, from that where the obligation was to provide a resident caretaker, holding that only in the latter case would the caretaker’s flat be a “common part”.

Mr Walker submitted that the LVT’s reasoning was to be preferred, pointing out that the Respondent had not been represented in the Lands Tribunal, which had regretted the absence of assistance on both sides of what were “complex and potentially controversial matters”. He pointed out that two of five residential tenants in this case were entitled to the benefit of a full time residential caretaking service provided from the actual caretaker’s flat. (He was attracted by the suggestion from the bench that for a caretaker to be “full time”, as required by the Lease of Flat 4 must impliedly mean “resident”, but Mr Munro submitted that “full time” merely meant a full working day and, on reflection, I think the expression is ambiguous even in the context of a caretaker.) Under the other flat leases, caretaking services could be provided, and it was plainly envisaged that a flat – and the only possibility was the caretaker’s flat – might be provided for this mutually beneficial purpose, and if so, the costs of maintaining it were recoverable from all tenants under the service charges. Those circumstances rendered the facility a “common facility”.

I prefer Mr Walker’s argument for the following reasons.

First, I do not find the limited reasoning in the Daphne Court case of any material assistance.

Second, the position in Oakwood is entirely distinguishable. There, the property in issue was a building outside “the Building” and consequently the test was whether the lease of any participating tenant gave him a right to “use” that property “in common” with anyone else. That is not the same definition as that of “common parts” within the building itself, and I accept Mr Walker’s argument that the policy of the Act is to try to produce a reasonably simple structure under which qualifying and participating tenants take over the building and its management, whilst protecting the landlord’s legitimate residual interests, and that in that context it is natural that the definition of “common parts” of the building itself should be of a wide compass and potentially wider than the test for other property to which the enfranchising tenants may lay claim.

Third, McGuckian is not binding on me and, having considered the reasoning in both the Lands Tribunal and the LVT, I much prefer the latter. The arguments which persuaded the Lands Tribunal that the concept of “flat” and “common parts” were somehow mutually exclusive appear to rest on parts of the Act (in particular s. 4), and other authorities (Gaingold Ltd v WHRA RTM Company Ltd [ 2006] 1 EGLR 81 and Indiana Investments Ltd v Taylor [2004] 50 EG 86), which were concerned with determining what parts of a property were occupied “non-residentially” for the purpose of applying the rules about whether such occupation was less than 25% of the whole “building” so as to qualify for enfranchisement at all. That formula requires considering which parts of the building are “neither” residential “nor” common parts (s 4(1)(a)) but this does not mean that those descriptions are mutually exclusive, and I cannot see why premises such as a caretaker’s flat could not be both.

The reasoning of the LVT was that if the tenants were entitled to receive the benefit of residential caretaking services, this was a common facility, and its provision from a part of the building which was required for this purpose made that part of the building a “common part”. I find this eminently persuasive; I cannot see why a caretaker’s flat should be any less a “common part” than a boiler room.

Mr Munro argued that the obligation to provide a resident caretaker is not absolute, because it provides only for “best endeavours to maintain” this service, so that the nominee purchaser would not be in breach of the obligation if it could not do so because it had no available premises. I do not accept that as a matter of construction of the flat leases. The obligation to “provide” the resident caretaker is absolute, only the obligation to “maintain” is qualified by “best endeavours”, no doubt to avoid a breach if there is a hiatus during illness or a change of staff. Even if Mr Munro’s construction of the lease obligation was right, however, I do not accept that this argument could change the nature of the caretaker’s flat as an available common facility in any event. At the time when the s. 13 Notice was served, the flat was being used for the purpose of performing the relevant obligation, and its character must, in my judgment be assessed at that time.

Mr Munro also argued that even if it is an absolute obligation, it does not have to be fulfilled from the basement flat, and the acquiring tenants could always create a caretaker’s flat and install a caretaker in another flat over which they have control. As set out above, I do not accept that this is an available construction of the landlord’s obligation but in any event I find this further argument absurd. The object of the Act is to enable participating qualifying tenants to acquire the building in aid of continuing and managing their own rights of beneficial residential occupation under their qualifying tenancies, without having to alter or abandon those rights in order to perform landlord’s obligations which have hitherto been performed, as obviously always envisaged, from other parts of the building.

Because I am departing from the Lands Tribunal decision in McGuckian I have carefully considered other possible situations which might arise. In McGuckian two of the three flats appear to have had the benefit of a right to have a resident caretaker, all being obliged to pay for the service if it were provided. Here the numbers are two out of five. I cannot see that this makes any difference in principle, even if the obligation is owed to less than a majority of the residential units in the building. It is certainly not necessary, in my judgment, that in order to amount to “common parts” the benefit of a “common facility” in the building should be owed to or received by all the residential units. It is not uncommon in large buildings for “common parts” such as staircases to benefit only particular clusters of units – sometimes with the definition of the rights granted individually applying only to those particular parts rather than generally throughout the building. That does not, in my judgment, make such a staircase any less a “common part” when it comes to enfranchisement rights. Throughout the Act, the word “common” appears to me to carry the connotation of “shared” without necessarily going so far as to require that the sharing be between every potentially interested party. It follows that the fact that the service is enjoyed as a matter of right by at least two flats makes the necessary source of that service a “common facility”, and therefore within the definition of “common parts”.

It is not necessary in the present circumstances, for me to consider what the position would be if the resident caretaker service were only being provided in the landlord’s discretion, or if it were being provided as a matter of obligation to one flat only. The LVT in McGuckian took the view that in the former case, with no obligation, the caretaker’s flat would not amount to a “common part”. I am not necessarily convinced of this, although the simplicity of the distinction has obvious attraction. However, if it is correct, then the “one flat only” case would seem to pose a very difficult question, depending on whether some obligation was the crucial point, or whether it also had to be an obligation owed, to some degree, collectively. Practicality, common sense and the policy of the Act would, to my mind, suggest that the former should suffice. However, that difficult point can and should, in my view, be left for decision in a case in which it actually arises.

I therefore hold that the Lease of the caretaker’s flat as a whole is a lease of “common parts” of the Building. It serves the Building in that it provides a facility for common use (and to which there is certainly a sufficiently “common” right), namely the service of a resident caretaker which is not capable of provision without it.

Issue 2(a)(ii) – “Reasonably necessary”

The next question is therefore whether it is reasonably necessary for the acquiring tenants to acquire also that part of the freehold for the purpose of the management or maintenance of that “common part” (ie the common facility which that part of the Building enables to be provided): see the combined effects of s. 19(1)(a) (ii), s. 2(1)(b) and s. 2(3). In my judgment the answer is plainly that it does, and I did not understand Mr Munro to contend otherwise.

Viewed as a “facility” it is obviously necessary to have the flat in order to be able to manage and maintain the provision of that “facility”. Indeed, even viewed as physical property, it seems to me that possession is necessary in order to be able to maintain the fabric of the demise itself, even confined, as it is, to surfaces. However, I do not rest my decision on that ground.

It follows that I would declare the grant of the Lease void also on the alternative ground that the Lease falls under s. 19(1)(a) (ii) of the Act because it is a lease of “common parts” of the Building, which it is reasonably necessary for the tenants to acquire. That is a further freestanding reason for holding the Lease to be void, but in case that too is wrong I will consider the next basis on which the Claimants put their case.

Issue 2(b) (i) Alternatively, does the Lease include “common parts”?

The first question here is: exactly what does the Lease demise? The demise is “defined” in the First Schedule, but that also refers to a plan on which the demise is “delineated”. As already mentioned, the demise is very precisely drawn, and in summary and so far as material, provides as follows. The demise includes the rooms comprising the flat, and the external light well area, as a “patio”. However the written definition of the demised premises in the First Schedule (and supported by careful delineation on the plan) specifies the inclusion only of the actual internal surfaces (plaster and decorative finishes) of the walls and any structural members or pillars internal to the premises, the floor finishes, and the ceiling finishes. It includes only the finishes of the doors and door frames which divide the flat from the rest of the Building, and all the windows and window frames, but the whole of the “other” doors and door frames. (This therefore would seem to include the door to the patio, even though that gives onto the open air, and is in contrast to the windows.) It includes all the locking and opening mechanisms of the doors and windows, and their glass. It includes all service media that exclusively serve the Demised Premises.

Mr Walker submits that the demise therefore includes “common parts” namely (i) the light well itself and/or (ii) certain service media which fall within the demise. Mr Munro says that it does not; the careful drawing of the Lease and its limitations means that no “common parts” are in fact included, either at all or perhaps otherwise than de minimis. I have had the benefit of a view of the premises, in order to consider the parties submissions under this head.

The light well

I shall consider the light well first, because it seems to me that this is different in character from the service media, because the light well is an envelope of space. It is not within the actual Building, although in the context of the Building as a whole, I would have thought that the light well was clearly appurtenant to it. However, it has (rightly) not been argued that that is material, because the relevance of land being “appurtenant property” under the Act arises only in relation to an individual flat (see s. 1 (3)(a)), and not in relation to the relevant “building” in s. 3.

The definition of the demise does not deal with the light well except through its delineation on the plan. As to its horizontal limits, it was agreed that only its surface was demised, as a kind of “floor finish”. It has, however, no ceiling. Mr Walker was inclined to argue that it must therefore, in accordance with the common law, extend “up to the sky”. Mr Munro argued that this was obviously not intended; the demise extended only to the height which one reasonably needed in order to enjoy the light well as a patio. In the circumstances, this would conveniently be something like the same height as the ceiling of the demise inside.

In my judgment, as a matter of impression, Mr Munro is correct on this point. The verbal terms of this particular demise have not been tailored to the inclusion of a patio; the lexicon used is appropriate only to premises entirely inside the envelope of a building. However, the plan shows the extent of the demise quite clearly, and the terms used and their effect must therefore be interpreted so as to fit the patio in the way which seems best to fit the scheme which the draftsman had in mind. Thus, as agreed, the demise of the patio includes only the surface as equivalent to a “floor finish”, but its height must be supplied as a matter of impression, and my impression is that the demise is limited to the space and the extent of physical features which the tenant of the inside would reasonably expect to make use of as part of everyday living, but no further. In my judgment, therefore, the height of the demise of the patio is, as Mr Munro submits, such height as will reasonably fulfil that use requirement and, in the circumstances, I find that it is a similar height to that demised within the Building itself.

The next question is therefore whether this area is a “common part”. There is no direct authority, but Mr Walker submits that it is, because it is part of the “exterior” of the Building, by analogy with three cases.

First, in Kintyre Ltd v Romeomarch Property Management Ltd, [2006] 1 EGLR 68, a lease of the roof of a block of flats and the structure below and airspace above was granted three months after the registration of a qualifying tenants’s.13 notice, for the purpose of enabling the lessee company to erect mobile phone masts and add a top floor of flats. The Deputy Land Registry Adjudicator held that the lease was void under s.19(1) of the Act. His reasoning rested primarily on his judgment that even though rights of access for maintenance and repair of the building were reserved, the nominee purchaser would be unable effectively to manage the roof of the block (plainly a “common part”) if the acquiring Lessee were able at any time to demolish the roof structure and reconstruct and reconfigure the roof of the building. The right of access on reasonable notice was also an inhibition on the proper management of the lift motor room which was freely required at all times.

Second, in Meadowside (Freehold) Ltd v Shellpoint Trustee Ltd (London LVT, 25^th May 2005), the LVT held that an existing “airspace” lease of the airspace above the roof of the relevant building was an interest which the enfranchising tenants were entitled to acquire under s. 2(1)(b) of the Act. The reasoning was that (i) the airspace was part of the “exterior” of the building, which was not confined to the physical fabric of the building, (ii) in the normal course a party who acquired the building itself would acquire the airspace above the physical structure, (iii) the proper management and maintenance of the roof of the building (for which the enfranchising tenants would have responsibility) required entering that airspace, an activity which would have to be properly managed, and therefore (iv) proper management of that airspace itself (which was the “common part” in question for the purpose of applying s. 2(1)(b)) was therefore necessary for the enfranchising tenants, and finally (v) it was reasonably necessary for them to acquire the airspace lease for this purpose.

The above decision and reasoning were recently followed with approval in respect of another airspace lease by a differently constituted LVT in Buttermere Court Freehold Ltd v Heritage Land plc (London LVT, 29^th May 2008).

Lastly, in Dartmouth Court Blackheath Ltd v Berisworth Ltd [2008] 2 P&CR 3, Warren J applied similar reasoning, albeit in the different context of ss. 1 and 4 of the Landlord and Tenant Act 1987 (disposal of airspace above a building was within the tenants’ right of first refusal), referring to the two LVT cases with no suggestion of disapproval.

Mr Walker submits that the common parts comprising the “exterior” of the Building are thus not confined to the exterior physical fabric (to whatever depth) but include the adjacent airspace so far as naturally usable and necessary. He submits that there is no difference in principle between airspace above a building, and airspace around the sides of a building.

Mr Munro submits that there is a great deal of difference, because in the horizontal plane a transfer will normally take all the space above the footprint of the property up to what is required for reasonable use, whereas in the vertical plane it extends only to the delineated boundary of the property. The airspace cases, he submitted, are therefore unpersuasive – and also, Warren J in Dartmouth Court Blackheath Ltd v Berisworth Ltd (above) expressly refused to hold that there was any analogy between the 1987 Act and the 1993 Act (see Paragraph 72). Mr Munro submits that, in any event, the Kintyre case involved very different premises including space both within and outside the roof-structure of the relevant building, and a lease intended for development purposes.

In my judgment, the caretaker’s flat lease is a lease which includes “common parts”, because it does involve a lease of part of the “exterior” of the “Building”.

In view of the authorities, the argument on this point was focussed on the airspace contained in the demise of the patio, ie the bottom of the light well. I was not really addressed as to the extent to which any surfaces of the construction surrounding the light well/patio might technically be within the demise. I think it was mutually assumed that nothing was so included. I do not think this is quite correct. It is correct that the three house walls are demised only as to their internal finishes, and the fourth wall, between the two light wells, is not a wall “of the building”. The windows and frames are demised only as to their internal finishes. However, the door leading out on to the patio appears to be demised, as is all glass in windows and doors. It seems to me that, technically, these would be part of the “exterior” of the Building in a physical sense.

More significantly, though, I am also of the view that Mr Walker is correct in submitting that the light well itself is part of the “exterior of the Building”, and therefore within the meaning of “common parts” in the context of the configuration of this particular property.

I do not accept the extreme of either party’s argument (Mr Walker: that there is simply no difference between airspace above a roof and airspace around walls; Mr Munro: that airspace around walls is so different that it really cannot be viewed as part of the exterior of a building). In my judgment it is a matter of fact and degree, according to how closely and exclusively the airspace in question is linked to the use, fabric or configuration of the building itself. In the case of airspace above a roof, its only use would be for the purpose of repairing, maintaining or developing the roof, roofspace or airspace. Airspace, or even structures, adjacent to the walls of a building may well have other potential uses making it less natural to consider them part of the “exterior” of the building itself. However, the present case is that of a light well, entirely enclosed within the building fabric originally constructed for the very purpose of enabling the better enjoyment of the Building, and whose only use is to facilitate the use of the Building and its exterior maintenance and repair. Anyone buying the whole Building would expect to get the light well as well.

In my judgment that brings the light well quite naturally within the concept of the “exterior” of the Building for the purposes of the Act, and therefore within the umbrella concept of “common parts”. Indeed, it seems to me that a light well, (which, as I have already commented, I would regard as clearly “appurtenant” to the building) would fall very comfortably within the concept of “common parts” on this basis, were it not for the fact that it is incapable of being such within the direct meaning of the Act because it is not inside the actual Building. However, this serves to reinforce my view that the light well is fairly regarded as part of the “exterior” of the Building.

If follows, in my judgment, that the Lease includes part of the “exterior” of the Building, and therefore of “common parts” by virtue of its inclusion of the airspace at the bottom of the light well. Before I consider the second stage of the test under s.19(1)(a) (ii), however, I will turn to consider the service media.

The service media

It is common ground that any such media (pipes, wires, conduits) which are within the demise and which serve other flats in the building in common would be “common parts”.

As to the interior, it was said by Mr Panagopoulos for the Clamants, in his witness statement of 25^th November 2008, that the main riser containing water gas electricity services to the upper floors was within the caretakers’ flat. However, it was apparent on comparing the plan with the configuration of the premises that this riser is excluded from the demise itself, and remains in the undemised “walls” of the premises. The only candidate for being common services within the internal parts of the demise is some vertical surface mounted trunking in the bedroom of the flat which contains the NTL cables providing telephone line services (and possibly also TV cables) which are then tacked round the wall at skirting level. Mr Munro said that whilst he would not concede that these were common parts, he was not going to argue that they were not. Whilst this initially seemed rather enigmatic, I understand that this was because it was not possible to tell, visually, whether the cables provided a shared service or individual services, so that it could be said that there was no evidence of their being “common”. However, in view of his semi-concession, and since in my judgment the trunking at least would be “common”, I proceed on the basis that those wires and trunking are common services, and therefore “common parts”, and I find that they are within the demise. In the end, though, this is not decisive.

Externally, the main foul water drain stack to the whole building runs vertically in the north western corner of the light well, beside a downpipe taking water from the gutters higher up, both pipes dropping into a sealed drain. A set of other pipes or conduits, looking to me like gas pipes, also descends in this corner, but turns and enters the building above head height, and then apparently remaining behind the wall surface (presumably in the main riser area) thus not being within the actual demise of the Lease. Higher up the light well, other wires and pipes, the function of which could not be identified from basement level were also visible. In the rest of the light well, there are one (or two) other storm water downpipes dropping into drains, which appear to take water from other parts of the building, and three manhole covers provide access to whatever drains run beneath the paved surface of the light well. Beneath one of the windows of the flat, the outside of a pipe exiting the building just above the ground and turning downwards is visible, but this appears to serve only the caretaker’s flat itself.

Of the above features, therefore, the manhole covers, which provide important access to the building’s drainage system are clearly within the demise at least to the extent of their surface material, but owing to its “shell” nature, the drains beneath are not. As a matter of common sense and natural interpretation, I also find that the various foul and storm water downpipes which drop through the vertical extent of the patio area are included in the demise. They are within the red edging on the plan. The only argument that they are not part of the demise arises from the fact that, there is no access to the interior of such pipes within the demise itself, and the rather technical argument that they have therefore not been demised in fact. However, I do not think that that kind of refined argument is enough to displace what I regard as the practical and common sense interpretation of what is (or is not) within the demised premises, which it is appropriate to apply in this context. Mr Walker points to the lessor’s reservation of a right of passage of running water, etc, through such pipes as showing that the lessor does not claim to retain the space they occupy. Whilst I find some force in this point, I do not find it necessary to rely on it to reach my decision.

The same point applies to the set of pipes curving in to the building at high level, although their position is such that only a pretty minimal part of their run is within the envelope of the demise as I find it to be, and it is not totally clear that they are actually in use.

I conclude, therefore, that, disregarding the light well, the demise includes the following items which are “common parts”, namely the surface of the drain manhole covers, the foul drainage stack and the storm water down pipes, some small run of the set of what I believe to be gas pipes in the top north east corner of the light well (assuming these are in use) and the NTL telephone/TV wires and trunking internally.

Issue 2(b)(ii) “Reasonably necessary”?

The next question is, therefore, whether it would be reasonably necessary for the claimants’ nominee purchaser to acquire title to these common parts for the purpose of their maintenance or management. If so, the Lease is void under s.19(1)(a)(ii).

I will deal with one general point here. Mr Munro submitted that the Lease would only be void to the extent that the need to acquire those parts or premises were found. Mr Walker submits that that is not correct. Once it is established that a transaction offends the principles of s. 19(1)(a), even if only by including common parts in some degree, the transaction is avoided in its entirety, and not pro tanto. I agree with Mr Walker.

As regards whether it is “reasonably necessary” for the matters comprising common parts within the demise of the Lease to be acquired, Mr Walker argues that it is. He submits that the “reasonably necessary” test must be a relatively low test in the light of the purpose of these provisions in the Act, which he submits is to “take out of the equation rights of control which interfere with a sensible regime of management”.

He submits that the ground surface of the light well itself provides the base from which other works of maintenance, etc, for the rest of the building above it will have to be done, and control of the entire light well including its base is therefore necessary for a sensible regime of management of it, and thus of other common parts even if not included in it (by analogy with the arguments in the Kintyre case). The drainage systems, in particular, are common parts which require maintenance and management, and access is not adequately available for that purpose without the ability to manage and maintain the patio area. The NTL/TV cables are within the building and are otherwise inaccessible.

Mr Munro argues that it is not “reasonably necessary” for the enfranchising tenants to acquire any part of the premises comprised in the Lease for management purposes because perfectly adequate rights of access, for all or any such possible purposes, are reserved by the Lease. These are rights of access

“at reasonable times and on reasonable notice except in cases of emergency” to enter the Demised Premises in order

“To inspect cleanse connect to repair replace alter, add to or execute any works to the wires cables pipes channels drains sewers and other service media …

To view the state and condition of and repair maintain alter extend and rebuild the Building….. ” [emphases added]

and a right to execute all such works as above on the demised premises, including the erection of scaffolding. Mr Munro argues, therefore that these rights are sufficiently wide and comprehensive to embrace anything which, as freehold owners, the tenants are conceivably going to wish to do for the purpose of managing the Building and any common parts for their general benefit, and so it is not “reasonably necessary” for them to acquire the Lease in order to do so.

Mr Walker argues that those rights are not good enough. In particular, with changing times, he argues that possession, rather than merely a right of access is necessary, because it is not just repair and maintenance for which access to the relevant airspace, and/or the particular media, is necessary, but also for changing the systems and the conducting media (perhaps), as times change and bigger, or different, facilities or installations may come to be regarded as normal and necessary communal services in the future. The policy of the Act is to give the tenants control over their building to enable such matters to be managed easily for the benefit of all the resident tenants and this supports the approach that the tenants should have control by way of property interests which will enable them to carry out any such works in the future without difficulties.

He relies again on the Kintyre case in support of his argument that the court should be readily disposed to find that acquisition is reasonably necessary for management purposes, and rights of access insufficient. That case, he submitted, demonstrates that rights of access are not adequate when they are still likely to lead to possible dispute. He submits that that is the case here, in that although the rights were widely framed, there was still scope for argument, for example as to what was “reasonable time”, or “reasonable notice” or an “emergency”.

I have come to the conclusion that the acquisition of the property comprised in the Lease which I have held to be “common parts” of the Building on the principles discussed above is reasonably necessary for the management of those common parts on behalf of the enfranchising tenants such that this is a further ground on which the whole Lease is void pursuant to s. 19(1)(a)(ii) of the Act. However, I reach this conclusion because of the inclusion of the light well area within the Lease.

I have already accepted that airspace around a building can be regarded as part of its “exterior” in an appropriate context, and that the context is here appropriate because of the intimate relationship between the use of the Building and this airspace. In my judgment, the breadth of the matters for which the light well will require to be used (maintenance of building surfaces, accommodation, maintenance and repair of service media which do use the light well, maintenance of drains beneath its surface at basement level, to name the obvious ones) is such that control by ownership is reasonably necessary for the enfranchising tenant’s ability to manage, directly, the airspace of the light well as a whole, and the foot of it in particular.

Had the Lease demised only the caretaker’s flat within the actual Building, and not included the patio, my decision would have been different. Insofar as there would then have been common parts within that demise (apparently only – possibly – the NTL/TV trunking/cabling), acquisition of the Lease would not have been reasonably necessary for the purpose of management or maintenance of those common parts on behalf of the enfranchising tenants. I would in fact, also, although only on balance, have reached the same conclusion if the light well itself were not correctly classed as a “common part” of the Building so that the only common parts included in the Lease would have been the relevant service media outside as well. My reasons would again have been that the rights of access conferred were sufficient, in that particular situation, to enable the nominee purchaser reasonably to manage those (reduced) common parts included in the Lease. It is perfectly common for landlords to manage the maintenance and repair of a building in several occupations and their common services by reserving rights of access over individual demises for this purpose, and in this scenario the position would not, in my judgment, have been anything out of the ordinary run of such situations.

In summary, the inclusion of the light well in the demise, being a common part, therefore provides a third reason why I conclude that the grant of the Lease is void under s.19(1) of the Act.

Issue 3 Tenants’ right to acquire the Lease under s. 19(2) of the Act

Having reached the above conclusions, it is really unnecessary for me to decide the third issue, namely whether, if the grant of the Lease is not void, it is nonetheless within s. 19(2) of the Act and consequently an interest which the enfranchising tenants are entitled to acquire from CEL. Although it is academic to my actual decision, I have had to look at the operation of s. 19(2) as part of the context for s.19 (1), and since the point was argued, and in case the matter goes further, I will indicate my view.

As s.19(2) would only come into play on the basis that the Lease was not void under s 19(1), I approach this issue on the footing that the Lease is merely a lease and does not sever the freehold, and that it does not include any common parts. This makes the position tantamount to that of a freeholder granting a long lease of an ordinary flat in the building after service and registration of a s. 13 Notice, – which is, of course, exactly what Mr Munro has been arguing to be this case

Section 19 as a whole deals with changes of the landlord(s)’ interests in the property which are instigated after service of a s 13. Notice (s. 19 (1)-3)) or which are in train but uncompleted when the Notice is served (s. 19 (4)-(6)). As to the former, the broad intention appears to be simple. If the s. 13 Notice is not registered under s. 97(1), any disposition of a relevant landlord’s interest is apparently free to take effect under the general law. (This is presumably because the interest of a purchaser for value is thought to deserve priority over the rights of acquiring tenants who do not give notice to the world by registration.) Once the notice is registered, the subsequent creation of any new acquirable interest in the relevant property is prohibited (see subs. (1)) and the subsequent alienation of an existing acquirable interest is treated as if the disponee stepped into the shoes of the disponor (see subss. (2) and (3)). However, whilst the principle is clear and simple, the drafting of s.19 (2) in particular does not readily vouchsafe how it is intended to work in complex situations such as partial dispositions or the creation of a new but non-acquirable interest. The obvious example of the latter is a long lease of an ordinary residential flat.

Section 19(2) applies (a) where a freeholder “disposes of his interest in” the whole or any part of the premises or any property which the claiming tenants have specified in their s.13 Notice as being property which they claim to acquire, (s 13 (3) (a)), and/or (b) when any other relevant landlord (ie an intermediate leaseholder) “disposes of any interest of his” specified in the notice( ie as an interest which the tenants claim to acquire): see s 13(3)(c). The reason for the difference in structure and wording between (a) and (b) is not immediately apparent, but draws attention to the fact that part disposals are not clearly dealt with, if at all.

However, the definition of “disposal” in s. 101(1) is

“a disposal by the creation or the transfer of an interest”

and expressions related to that term shall be “construed accordingly”. Mr Walker therefore submits that “disposes” in s. 19(2) must at least include not just a simple outright transfer of an existing interest, but also the creation, out of it, of another interest.

He also submits that s 19(2) is apt to include a partial assignment of a leasehold, on the basis that the subsection should be construed widely in order to implement the overall policy of the Act and the general scheme of subss.19(1) and (2) in particular, because, if it is not so construed, such an assignment is caught neither by s. 19(1) (as it is not the severance of a freehold, nor the creation of a lease), nor by s. 19(2). This would, he submits provide a relatively obvious and easy means of manipulating or avoiding the effects of s 19. However, this is not a point arising in this case, and I do not decide it.

Mr Walker then argues that s. 19 is intended to prevent subsequent transactions by the freeholder or intermediate leaseholders from prejudicially affecting the acquiring tenants’ rights to have their freehold and its ancillary interests (at least once their claim is protected by registration), and it should be construed with this object in mind. The justification for the distinction between s.19(1) and s.19(2) may be that if a transaction can be regulated so as not to affect the tenants’ position materially (ie simply by substituting a different party as respondent) then this is not objectionable, and indeed it may be right to permit this so as, for example, to enable the landlord to raise money if he requires it urgently.

The guiding principle must be, however, that such rights as the tenants have asserted in their s. 13 Notice are preserved. Therefore s. 19(2) should be construed so as to catch any and all subsequent transactions by relevant landlords which affect those rights, but which are not avoided outright by s. 19(1) for being intrinsically objectionable. He submits that unless this is the case it is difficult to see the point of the voluntary leaseback provisions, which are designed to enable a landlord to retain such parts of the property as he has a legitimate interest in keeping even if the acquiring tenants take over (but he must put this in his counter-notice: see Cawthorne v Hamdan above).

Mr Munro argues that this all embracing construction of s 19(2) cannot be right, bearing in mind the principle that the superior owner is not to be deprived of his property rights except insofar as Parliament has clearly laid down in order to implement the policy of the Act. The enfranchising tenants are entitled to acquire, compulsorily, only the property to which the Act entitles them, “no more and no less”. A superior owner is therefore entitled to make dispositions which do not prejudice the enfranchising tenants’ right to have that entitlement, and a disposal consisting of the grant of a long lease of an available flat, not being or including common parts – and not, therefore, being a lease which the tenants would have been able to acquire in the first place – does not prejudice their entitlement. The tenants may lose the windfall opportunity of gaining control of a residential unit, but this would be reflected in the purchase price, and it is not, anyway, the purpose of the Act to provide such opportunities. There is, therefore, no reason why such a disposition should be caught by s 19(2) any more than s 19(1), and a construction favouring this result is to be preferred.

Because Mr Walker pleaded his case as being that the registration of the Notice made the Claimants’ rights under it “binding on …the Second Defendant as lessee … with the result that the Claimants are entitled to acquire the Lease…” as part of their enfranchisement acquisition, Mr Munro directed part of his argument to the effects of s 4(6) of the Land Charges Act 1972, contending that this did not support the applicants’ claim to acquire the Lease. He also submitted that this argument, based on the effect of registration, therefore really deprived s 19 of effect and must be wrong.

I am not sure that I followed Mr Munro’s arguments exactly, but in my judgment the effects of the Land Charges Act 1972 in general are not here material. Section 97 (1) lays down the circumstances in which the enfranchising tenants’ rights are capable of registration and provides that for that purpose they shall be deemed to be an “estate contract”, even though there is in fact no contract until after the terms for acquisition are finalised. It then lays down the consequences of such registration, and these are tailor-made to the leasehold enfranchisement situation. These provisions are what have to be applied, and the effects of the Land Charges Act 1972 are therefore, in my judgment, beside the point.

It seems to me that the essential difference between Mr Walker’s approach and Mr Munro’s approach lies in their differing submissions as to exactly what rights the service (and registration) of a s. 13 Notice establish. Mr Walker’s approach is that the s.13 Notice establishes the acquiring tenants’ right to acquire the property which they specify in their s 13 Notice, (obviously so long as this is property which the Act gives them the right to acquire) testing this at the date of service of their s 13 Notice, albeit it may be subject to any adjustments which the procedures under the Act, or unforeseen circumstances, may subsequently bring about. Mr Munro’s approach is that the s.13 Notice establishes the tenants’ right to implement the Act by acquiring that which the Act entitles them to acquire in principle, which is therefore the minimum which the Act lays down in order to implement its policy. In other words, the issue is: does s. 19 operate on interests acquirable under the actual Notice, or merely on those necessarily acquirable under the Act?

I have some sympathy with Mr Munro’s argument. The Act operates to dispossess landlords of their property against their wishes. The justification for this is that of protecting the position of long term residential occupiers, and enabling them collectively to manage their own destiny as such, and not (one would have thought) of enabling them to appropriate the right to another’s valuable property such as a vacant flat, and exploit it for themselves by way of sale or investment. There seems no reason, therefore, to deprive landlords of commercial control over such property, even if there has been a claim to collective enfranchisement. Mr Walker’s response to this, however, is that this situation is recognised and provided for perfectly properly and adequately by the voluntary leaseback provisions, and that if the superior owner’s property rights are not corralled into those arrangements, the ability to grant a lease of a vacant flat on uncontrolled terms could be manipulated to the prejudice of the enfranchising tenants.

I have concluded, although not without some hesitation, that Mr Walker’s argument is correct, even though it poses at least three problems of interpretation. In the end I consider that the key to resolving the difference between him and Mr Munro lies in the interrelationship of the terms of s. 19 and s. 13, and particularly by considering the latter, as I will mention.

The two initial difficulties with Mr Walker’s construction of s. 19 (2) are these. First, it requires giving a wide application to the word “his” in the phrases “disposes of his interest” , and “disposes of any interest of his” in s.19(2), so as not to confine this to the very interest owned by the relevant superior lessee or freeholder. However, in the context of the objectives of the Act, and the deliberately wide definition of “disposes”, this seems to me to be correct, and a lesser act of disposal, provided it is within the definition, should be taken to fall within the subsection.

Second, and more problematic to my mind, is that it results in an apparent overlap of the application of s 19(1) and s 19(2) as regards interests “disposed of” by the creation of a lease out of them. This is because s. 19 (2) simply operates on any “disposal”, and insofar as this covers the creation of a lease, it does not, in contrast to s 19(1), distinguish between leases liable to acquisition and leases not liable to acquisition. However, as against that, any other approach must involve modifying the definition of “disposal” in s. 101 to some extent, even though this definition is absolute and is not mitigated by any saving provision such as “save where the context otherwise requires”. I can see no justification for doing so.

Given this conflict, I return to the approach of simply looking at the wording of the sections, and considering, not so much the effects laid down by s 19 and the nature of the transactions described, but also examining the subject matter stated to be in issue. This takes one back to s.13, and on this basis I think it in fact becomes clear that the “interests” on which the provisions of s.19 operate are those which comprise the property and/or interests “specified” in the s 13 Notice under ss 13 (3)(a)(i) and (ii) and 13(3) (c)(i).

The terms of the s. 13 Notice fix the property interests which the tenants are entitled to acquire in any particular case – subject to any later adjustments which the Act itself envisages or authorises, see, for example s 1 (4). They do so both as to physical extent and quantum of interest, (since “specifying” the particular “premises” or “property” of which the “freehold” is claimed and showing it on a plan (see s 13 (3)(a)(i) and (ii)) will naturally include the freehold interest so far as in possession or pro tanto in reversion) and they thus do so as at the date of giving the notice. This is reinforced by the way in which the s.13 notice procedure then operates (see eg s. 13 (12)). It is also reinforced by s. 1(8) of the Act, defining the “relevant date” for a claim to enfranchise as that of the giving of the s. 13 Notice, and thus showing that this is the key operative date (see for example s. 13(3)(b)).

The fact that flats which are not held on qualifying tenancies can be part of the property “specified” in a s.13 Notice is not only clear from the terms of the Act and the detail which has to be given, but is shown by the fact that the s 13 Notice is required to specify

“any flats or other units contained in the specified premises in relation to which [the applicants consider Part II of Schedule 9 may apply]” (see s 13(3)(c)(ii)).

Part II of Schedule 9 deals with public sector tenancies, for which there will be compulsory leasebacks. The possibility of their being other such flats or units is therefore acknowledged. Voluntary leasebacks authorised by Part III in relation to these will take place only if requested, but this all underlines the principle that the property which will be acquired is that which is the specified subject matter of the s 13 Notice, and where this includes some non-qualifying flats, those flats become part of the subject matter of the prospective acquisition.

The relevant property interests for the purpose of “disposals” within s 19 are therefore, in my judgment, the property, and therefore the recipient’s interests within the description of that property, specified in the s.13 Notice, and any subsequent “disposal” of any such interest is within the terms of s 19, regardless of how the result of it could be categorised afterwards. If any subsequent disposition is not avoided by s 19 (1) – which would have prior effect – it potentially falls within the application of s 19(2), applied in accordance with the definition of “disposal”. This means that the grant of a long lease of a vacant flat out of a specified freehold interest is caught. As I have said, I express no view regarding partial assignments of leaseholds.

It might be said, in favour of Mr Munro, that s. 19(2) cannot be intended to apply to a transaction which creates a “non-acquirable” interest, because the machinery which it lays down just does not contemplate this. This argument would run as follows. Section 19 (3) directs one to consider what the position would have been if the transaction in question had taken place before the s. 13 Notice had been served. Thus, if the interest created would not have been acquirable at that time, then, applying the direction in s.19 (3), that interest would not have been a valid subject of any s.13 Notice and it is thus taken outside the property which the tenants are entitled to acquire.

Thus, 19 (3) provides that the disposition shall be treated as if the new owner had become the owner before the s 13 Notice had been served

“and was accordingly a relevant landlord in place of the person making the disposal”: (s 19 (3) (a)).

However, there would never be any “relevant landlord” in respect of a non-acquirable interest, whether at the time the Notice had been served or otherwise and so, it could be said, if the creation of a new long lease of a vacant flat is treated as taking place before the service of the s.13 Notice, it would not be held by a “relevant landlord” and therefore the direction in s. 19 (2) to apply s. 19 (3) cannot, or more accurately, just does not operate in respect of such a transaction.

This is the third possible problem of construction raised by Mr Walker’s argument mentioned above, but whilst superficially it seems to provide some support for Mr Munro I do not, in the end, find it sound or persuasive. The reference to a “relevant landlord” in s, 19(3)(a) is being used in the context of describing the machinery by which a disposition falling within the words of s 19(2) is subsequently dealt with conveniently. On that basis, it is easily seen to be equivalent to

“and shall be treated accordingly in the same way (ie as if he were the relevant landlord) as the person making the disposal…”.

That is how I would read the closing words of s 19(3)(a).

Neither is this result inconsistent with the approval by the Court of Appeal of the opinion expressed in Hague on Leasehold Enfranchisement at Paragraph 25-15, referred to above (Paragraph 30), that the grant of such a long lease remains open to the landlord. It does; it is simply within the ambit of s. 19(2) if it is granted. The Court of Appeal was not considering that section of the Act, and the learned authors of Hague were considering s. 19(1)(a)(ii).

Lastly, I have considered, but do not accept, Mr Munro’s argument that to give s. 19(2) such a wide construction effectively renders any transaction by the landlord impossible, and that cannot be intended. First, I am not sure that it in fact does so; the practicable possibility of a transaction is always a matter of value for money and even the acquisition of a lease liable to be compulsorily purchased may, in some circumstances, have value. But even if that is so, the solution lies in the landlord’s own hands. He needs to request a voluntary leaseback in a counter-notice. If hard cases arise where the wish or need to do so does not occur to the landlord at the time but arises only after service of the counter-notice, this may just be unfortunate. He will at least still get the purchase price.

Miscellaneous

Mr Walker raised the further issue that the above argument was in any event not open to Mr Munro because the decision of the LVT to decline jurisdiction in this matter was predicated on a holding that the interests to be acquired had indeed been fixed at the valuation date, thus giving rise to an issue estoppel. In the event, this point was not really argued, and has in any event been overtaken by my considering it.

Result

In the event, therefore I will declare that the Lease dated 27^th March 2008 is void. The Claimant is entitled to exercise its right to acquire the freehold of No 51 Cadogan Square free from that Lease as if it had never been made.

Hazel Marshall QC