Landlord and Tenant Act 1954 — Lease and sublease — Sublessor serving notice to terminate sublease — Sublessee applying to court for renewal of sublease — Sublessor serving notice on lessor claiming renewal of lease — Sublessor ceasing to be “competent” landlord at time of sublessee’s court application — Whether competent landlord should be joined as second defendant — Whether competent landlord should be substituted as defendant — Whether time-limits should be extended
The plaintiffs have occupied one floor of a building, Mortimer House, London W1, since January 1984 under a sublease expiring on June 20 1988. In turn the defendant sublessors were tenants of Benesco Ltd of the whole building under a 21-year lease expiring on June 24 1988. On July 28 1987, the defendants served on the plaintiffs a notice under section 25 of the Landlord and Tenant Act 1954 to terminate the sublease. On July 30 1987 the defendants served on their own landlords, Benesco, a notice under section 26 of the Act requesting a new tenancy and a letter exercising an option to take a further lease. The plaintiffs served a counternotice within the time-limit stating that they were not willing to give up possession and, again within the time-limit, made an application to the court for a new tenancy on October 22 1987, naming their immediate landlords as the the defendants.
In February 1988 the defendants denied that they were the competent landlord under the 1954 Act. They contended that they ceased to be the competent landlord when they served a section 26 notice on July 30 and that thereafter the superior landlord, Benesco Ltd, was the competent landlord for the purposes of the 1954 Act, the plaintiffs not having served a notice under section 40(2) to protect themselves as to the proper identity of the competent landlord.
Held 1. The defendants ceased to be the competent landlord on July 30 when they served their section 26 notice, as they specified a date for a new tenancy less than 14 months ahead. It followed from sections 26(5) and 44(1) of the 1954 Act that Benesco Ltd and not the defendants were the competent landlord at the time of the plaintiffs’ application to the court in October 1987. The exercise by the defendants of their option to take a new lease did not effect an enlargement of the original tenancy, as it was only the first step towards making an agreement for a lease that would become enforceable only in accordance with a timetable set out in the option clause.
2. The defendants were not estopped from denying that they were not the competent landlord despite the realisation of their solicitors in November 1987 that the plaintiffs had named the wrong landlord. It would not be unconscionable, as the plaintiffs might have learnt of the identity of the competent landlord had they served a notice under section 40(2) of the 1954 Act.
3. There was no ground for substituting Benesco Ltd as the defendants and the Rules of the Supreme Court were of no assistance. With the expiry of the time-limit, Benesco Ltd have a vested right not to be sued: Bar v Pathwood Investments Ltd [1987] 1 EGLR 90. The plaintiffs had made no mistake about the identity of the defendants they intended to sue: Evans Construction Co Ltd v Charrington & Co Ltd [1983] QB 810.
David Neuberger QC and William Elland (instructed by Romain Coleman & Co) appeared for the plaintiffs; Gavin Lightman QC and Elizabeth Jones (instructed by Wright Webb Syrett) appeared for the defendants; and Michael Briggs (instructed by Chethams) appeared for Benesco Ltd.
