Price payable under s13 for landlord’s leasehold interest in premises at Kensington, London W14 — Two disposals in quick succession — No previous notice in either case to qualifying tenants under s5 — Lease first assigned (by ‘Melbury’ to ‘ADC’) in September 1988 for £15,000 — Further assignment to respondent company (‘Carlisle’) in October, 16 days later, for £20,000 — Notice of both transfers subsequently given to tenants by ADC’s solicitors, who later also gave notice under s16(1)(a)(ii) that ‘the subsequent purchaser’ was Carlisle — Whether price payable was £15,000 or £20,000
for applicant nominated person that there had been two relevant disposals: the
first established ADC as ‘the new landlord’ under s11 and the second (together
with ADC’s solicitors’ notice under s16(1)(a)(ii)) established Carlisle as ‘the
subsequent purchaser’ — By s16(2) the s16(1)(a)(ii) notice applied to Carlisle
as if it were transferee under ‘the original disposal’ — Argument for Carlisle
that ‘the original disposal’ was that effected by the October transfer under
which Carlisle had become ‘the new landlord’ — S16, which relates to a
subsequent sale by ‘the new landlord’, would not apply, it was submitted, as
there had been no such sale by Carlisle, the (second) ‘new landlord’
observed that, to extent that the Act’s mandatory requirements as to service of
notice conferring rights of first refusal were not complied with, the
transactions were made contrary to law — Affairs in present case were at
variance with sequence of events contemplated by s16 — Tribunal did not,
therefore, find it surprising that the applicant’s solicitors found it necessary
to adapt s16 somewhat to position facing them and serve purchase notice not on
first ‘new landlord’, ADC, but on ‘the subsequent purchaser’, Carlisle, partly
on ground of nemo dat quod non habet — On balance, ‘and not without
difficulty’, tribunal found applicant’s case more persuasive — Held, ‘the
original disposal’ was September transfer — That conclusion resulted from ‘a
reasonable and literal interpretation of the words used in the Act’ and
fortuitously prevented respondent company from benefiting at applicant’s
expense from unlawful acts of Melbury and ADC of which it knew or ought to have
known — Determination of £15,000
No cases are
referred to in this report.
P A McAndrews,
solicitor (of Radcliffes & Co) appeared for the applicant nominated person,
Daphne Tyson; Michael P Keane (instructed by Wright-Morris & Co) for the
respondent landlord company.
Giving their
decision, THE TRIBUNAL said: This decision is made on the application
under section 13 of the Landlord and Tenant Act 1987 (‘the Act’) by Miss Daphne
Tyson (‘the applicant’), the nominated person within the meaning of section 13,
for determination of the price to be paid for the estate or interest of
Carlisle Estates Ltd (‘the respondent’) in the land and premises known as
Redlynch Court, 70 Addison Road, Kensington, London W14 (‘the subject
premises’), consequent upon the service upon the respondent of a purchase
notice under section 12.
The following
facts were not in dispute between the parties:
(i) The subject premises are premises to which
Part I of the Act applies.
(ii) The tenants of the subject premises are
qualifying tenants under section 3 of the Act.
(iii) The landlord’s estate or interest in the
subject premises arises under a lease granted on July 10 1961 to Melbury
Properties Ltd for a term of 99 years from September 29 1958 at an annual rent
of £720.
(iv) By transfer dated September 28 1988 Melbury
Properties Ltd assigned the said lease to ADC Settlement Ltd for £15,000 but
did not give previous notice under section 5 to the qualifying tenants. This
was a relevant disposal under section 4.
(v) By transfer dated October 14 1988, ADC
Settlement Ltd assigned the said lease to Carlisle Estates Ltd for £20,000 but
did not give prior notice under section 5 to the qualifying tenants. This, too,
was a relevant disposal under section 4.
(vi) By letter dated November 11 1988 Denton Hall
Burgin & Warrens, solicitors for ADC Settlement Ltd, gave notice to all
tenants at the subject premises of the said transfers of September 28 1988 and
October 14 1988.
(vii) On December 7 1988 the qualifying tenants
served notices under section 11 of the Act upon both ADC Settlement Ltd and
Carlisle Estates Ltd.
(viii) On December 12 1988 ADC Settlement Ltd
by their solicitors, Denton Hall Burgin & Warrens, complied with the said
section 11 notice and, in addition, in accordance with section 16(1)(a)(ii)
gave notice that the ‘subsequent purchaser’ for the purposes of the Act was
Carlisle Properties Ltd*.
(ix) On December 19 1988 Carlisle Estates Ltd by
their solicitors, Wright-Morris & Co, complied with the said section 11
notice.
(x) On January 30 1989 the qualifying tenants
served a valid purchase notice under section 12.
*Editor’s
note: It is understood that this name was stated in error in the letter
concerned and that the reference should have been to Carlisle Estates Ltd.
At the hearing
both parties were in agreement that the only matter before the tribunal was the
price to be paid, in accordance with the Act, by the applicant for the
respondent’s estate in the subject premises. In this regard, Mr McAndrews,
representing the applicant, urged that his client and the other qualifying
tenants were entitled on a proper construction of the Act to treat the
respondent as if it had been the original purchaser of the subject premises
from Melbury Properties Ltd on September 28 1988. As we understood his
argument, Mr McAndrews may be summarised as saying that there had been two
relevant disposals; that the first in time of these established the identity of
ADC Settlement Ltd as ‘the new landlord’ under section 11; that the second one
(together with the notice from ADC’s solicitors dated December 12 1988)
established the respondent as ‘the subsequent purchaser’ under section 16(1)(a)(ii);
and that by section 16(2) the notice under section 16(1)(a)(ii) applied
to the respondent as if it were the transferee under the original disposal.
Thus the price to be paid should be that under the disposal to ADC Settlement
Ltd, viz £15,000.
Mr Keane,
representing the respondent, urged that, on a proper construction of section 11
of the Act, the ‘original disposal’ referred to in subsection (1)(a)
was, in the context of the present
respondent had become ‘the new landlord’ under that subsection. There was no
indication in section 11, construed literally and reasonably, which tended away
from the conclusion that the respondent qualified as ‘the new landlord’. On
this view, section 16, which relates to a subsequent sale by ‘the new
landlord’, would not apply, as there had been no such sale by the respondent,
the (second) ‘new landlord’. Consequently, the ‘original disposal’ referred to
in subsection (1) of section 11 would be that of October 14 1988 aforesaid and
the price payable by the applicant would be £20,000.
Section 5 of
the Act requires that a landlord proposing to make a relevant disposal of
premises to which Part I applies shall serve notice upon qualifying tenants
conferring rights of first refusal in accordance with a procedure contained in
sections five to 10 inclusive. In the present case no notices to qualifying
tenants were served in respect of either of the transfers affecting the subject
premises previously referred to. To the extent that the mandatory requirements
of the Act were not complied with, these transactions were made contrary to
law.
Sections 11,
12 and 16 are exclusively concerned with the means whereby qualifying tenants
are enabled to enforce rights which would otherwise be denied to them by a
landlord’s wrongful act. In the circumstances of this case, involving two
successive disposals, the first disposal (of which no immediate notice was
given to the tenant) was followed so quickly by the second (following which a
combined notice was served advising of both the first and the second disposals)
that by the time the applicant had been notified of the first disposal the
second had already taken place. Affairs were at variance with the sequence of
events contemplated by section 16 of the Act. It does not seem to us
surprising, therefore, that the applicant’s solicitors found it necessary to
adapt section 16 somewhat to the position they were faced with and serve the
purchase notice not on the first ‘new landlord’, ADC Settlement Ltd, but on the
respondent as ‘the subsequent purchaser’ on the grounds, among others, that nemo
dat quod non habet.
With regard to
the case for the respondent, while we were impressed by Mr Keane’s closely
reasoned argument, he seemed to us to be looking at the second disposal in
isolation rather than as part of a sequence of two disposals. Moreover, he
conceded in response to questions from the tribunal that if he were right it
followed (1) that the section 11(1) notice served on ADC was a nullity and (2)
that it was difficult to envisage circumstances in which section 16(2) would
have effect. We were not happy with these implications.
On balance,
therefore, and not without difficulty, we came to the conclusion that Mr
McAndrews’ case was the more persuasive and that ‘the original disposal’
referred to in subsection (1) of section 11 was the transfer of September 28
1988 when the consideration passing was £15,000. In our view, this conclusion
results from a reasonable and literal interpretation of the words used in the
Act and in addition it fortuitously prevents the respondent benefiting at the
expense of the applicant from unlawful acts on the part of both Melbury Properties
Ltd and ADC Settlement Ltd of which it knew or ought to have known.
We accordingly
determine that the respondent, Carlisle Estates Ltd, is required, in accordance
with the said purchase notice and section 12 of the Act, to transfer to Miss D
Tyson, the applicant, the estate or interest in the subject premises for the
consideration of £15,000 and the other terms upon which the original disposal
thereof was made by Melbury Properties Ltd to ADC Settlement Ltd on September
28 1988.
