Trumros Ltd v Khan

Business premises – Lease – Right to buy – Claimant being unable to serve notice on defendant landlord – Freehold being vested in claimant in absence of defendant – defendant applying to set aside order – Whether defendant acting promptly – Whether defendant having good reason for not attending – Whether defence having reasonable prospect of success – Application dismissedThe claimant was the tenant of premises owned by the defendant under a 99-year lease from December 1910 at a ground rent of £17 per annum. The property was sublet to C for a term of 16 years from September 1993. The defendant acted as guarantor. In 2005, the claimant wanted to acquire the freehold under the Leasehold Reform Act 1967. It was unable to serve the requisite notice on the defendant since he was believed to be living abroad and could not be contacted. The claimant therefore applied to the court, under section 27 of the 1967 Act, on the basis that the person upon whom the notice should be served could not be found and his identity could not be ascertained. The application was supported by a witness statement from the claimant’s solicitor.The district judge was satisfied, on the basis of the solicitor’s evidence, that the claimant was entitled to rely upon section 27. Pursuant to the court’s order, the claimant applied to the leasehold valuation tribunal for a determination of the price payable for enfranchisement and paid into court the sum of £63,302. The district judge subsequently executed the transfer on 20 June 2006.On 20 July 2007, the defendant applied to set aside the court’s order. Supported by a statement from his solicitor, he said that the claimant’s claim had come to his attention only on or around 14 March 2007. Questions arose as to whether the defendant had: (i) acted promptly in making his application when he discovered that the order had been made (CPR 39.3(5)(a)); (ii) a good reason for not attending the hearing at which the order was made (CPR 39.3(5)(b)); and (iii) a reasonable prospect of success at trial (CPR 39.3(5)(c). Held: The application was dismissed.(1) The word “promptly” in CPR 39.3(5)(a) required the applicant to have acted with all reasonable speed in the circumstances. In the instant case, the period between the defendant’s knowledge and the issue of the application exceeded four months. The chronology of events demonstrated that the defendant had failed to act promptly. “Acting” in this context included making the application. Although the defendant needed to have all the evidence to show that his defence had a reasonable prospect of success before the hearing, there was nothing to prevent him from issuing his application quickly, supported by his own evidence that he had been unaware of the proceedings, and disputing the claimant’s right to a transfer of the freehold: Regency Rolls Ltd v Carnall [2000] EWCA Civ 379 considered.(2) That was sufficient to dispose of the application in favour of the claimant, which made it unnecessary to make a distinct finding in respect of CPR 39.3(5)(b). Prima facie, the defendant could have said that he had a good reason for not attending the hearing because he had been unaware of the claimant’s proceedings, but only if he had demised a reasonable system for ensuring that he would become aware of any event that was likely to affect his interest in the property.(3) The defendant’s proposed defence did not have a reasonable prospect of success within CPR 39.3(5)(c). The court was satisfied that the claimant had made sufficient enquiries in all the circumstances to justify a claim under section 27. A freeholder, such as the defendant, that had provided no current address and that had chosen not to collect ground rents could not reasonably expect his leaseholder to take every conceivable step to discover his whereabouts. Furthermore, the premises were properly treated as being suitable for treatment under the 1967 Act. Whatever use was in place, the upper floors were capable of being used for residential purposes and showed evidence of such use in the past: Boss Holdings Ltd v Grosvenor West End Properties [2008] UKHL 5; [2008] 1 WLR 289 applied. Anthony Radevsky (instructed by Wallace LLP) appeared for the claimant; Tamsin Cox (instructed by Penn Legal) appeared for the defendant.Eileen O’Grady, barrister