Flats — Roof space and garden — Lease at peppercorn rent — Right to compel sale to majority of qualifying tenants — Whether respondent serving notice of original disposal on requisite majority — Whether appellants serving purchase notices within time limit — Appeal allowed
The appellants were the lessees of four residential flats. The respondent was a former lessee of the first floor-flat and a director and shareholder of the former freeholder (J Ltd). J Ltd had granted leases to the respondent of the front garden and of the roof space in the property for a term of 125 years at a peppercorn rent of £1 each.
Those leases were covered by Part 1 of the Landlord and Tenant Act 1987 and the majority of the qualifying tenants had a right of first refusal prior to the disposal to the respondent. Pursuant to section 5 of the 1987 Act, J Ltd was required to serve a notice on the qualifying tenants before making the disposal. However, the appellants alleged that no such notice had been served. Accordingly, they contended that the 1987 Act had been breached and that this entitled them to rely upon the rights contained in sections 11 and 12 thereof against the respondent, that is, a right to obtain information (section 11) and a right to compel the purchaser to sell to a majority of the qualifying tenants on the original terms (section 12). Both sections were subject to time limits, which were triggered by the service of a notice under section 5.
In May 2003, the appellants served purchase notices on the respondent under section 12, requiring him to surrender or otherwise transfer the leases. The question was whether the notices had been served on behalf of the appellants within a three-month period running from the date upon which documents indicating the original disposal “had been served on the requisite majority of qualifying tenants of the constituent flats”. Service on the requisite majority had to have been given before 16 February 2003 in order to render the purchase notices ineffective and out of time.
The county court found that, although no formal document had been served on any of the qualifying tenants, service had been effected for the purposes of the 1987 Act, either by a letter from their own solicitor or by the Land Registry sending office copy entries of the freehold title. The appellants appealed.
Held: The appeal was allowed.
The judge had been wrong to hold that the requisite service on the appellants had taken place and that a document, wherever it originated from, if received by a person, had been served. That was not a reasonable interpretation of the statute, either on the ordinary meaning of the word “service” or in context.
The concept of service required a formal and specific step that would alert the reasonably informed tenant to its significance. It was not intended to refer to documents emanating from the world at large. It had to come from one of the opposing parties, either the transferor or the transferee, and required that the person in receipt of the documents was made aware that rights under the 1987 Act had arisen and had to be exercised. The facts of the present case did not meet that test.
Section 3 of the Landlord and Tenant Act 1985 specifically required the service of a notice to be in writing, and if the draftsmen of the 1987 Act had intended “service” to be interpreted as “received by any means”, a clear contrast in the language would have been expected.
The respondent would therefore be required to transfer the leases of the front garden and the roof space at a consideration to be determined by the leasehold valuation tribunal.
Charles Douthwaite (instructed by Georgiou Nicholas Solicitors) appeared for the appellants; Anthony Radevsky (instructed by Baron Grey, of East Twickenham) appeared for the respondent.
Eileen O’Grady, barrister
