Price payable under section 12 for freehold of Streatham, SW London, three-storey semi-detached house subdivided into three self-contained flats — Flats held on 125-year leases from 1987 on FRI basis — Original disposal an auction sale at £5,000 of a lot which comprised subject property and four
submissions about price, neither party put forward any proposed terms of
conveyance — Landlords submitted that £1,750 was an arbitrary figure which did
not represent true value of subject property at relevant time — Under one of
the special conditions of the auction sale they had been obliged to take over
substantial arrears of service charges and ground rent — An attempt to rescind
the contract had not been accepted by the vendors — Tenants contended that
£1,750 shown in transfer was legally binding
opinion they did not have power under section 13 to settle disputes as to
whether sums are owing to new or former landlords in respect of service charges
or ground rent — Such sums are a collateral matter consequent upon completion
of land transaction and not directly relevant to service of purchase notice
under 1987 Act — Tribunal unable to inspect deed of transfer to new landlords —
In its absence they were entitled, they considered, to presume that the
contract’s requirements were duly complied with — New landlords not only would
have been parties to transaction but would themselves have executed it in order
to give effect to contractual condition — They were therefore unable to deny
that they were in agreement with vendors that price paid was £1,750 — Terms to
be those of original disposal — Price payable £1,750
No cases are
referred to in this report.
Miss S E
Venus, solicitor (of Bond Pearce), appeared for, and as one of, the applicants,
the nominated person; the first respondent landlord, Mr N H Khan, appeared in
person.
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 S E
Venus, Mr M C Mansell and Misses P H and S H Latham (‘the applicants’), the
nominated person within the meaning of the said section, to settle the terms of
the conveyance and the amount payable by way of apportionment of service charge
and ground rent upon the disposal of the freehold interest in the land and premises
known as 9 Tankerville Road, Streatham, London SW16 (‘the subject premises’),
by N H and J Khan (‘the new landlords’) to the applicants under Part I of the
Act.
Evidence
Miss Venus, a
solicitor with Bond Pearce, the applicants’ solicitors, stated that the subject
premises were a three-storey semi-detached house, which had been divided into
three self-contained flats. Long leases had been granted on a full repairing
and insuring basis of each flat, to the applicants respectively as mentioned
below, for terms of 125 years from August 14 1987 at ground rents totalling
£275 in the first 25 years of the term and doubling for each of the next two
25-year periods and the respective terms thereafter. Those parts of the subject
premises which are used in common by the lessees were retained by the landlord,
who covenanted in the said leases to perform certain obligations on behalf of
the lessees and in his turn being indemnified by the said lessees against the
cost of performing these obligations.
Flat A on the
ground floor is held by the Misses P H and S H Latham as joint tenants, paying
an initial ground rent of £100 pa and a 40% share of landlord’s expenditure
under the lease; flat B on part of the first floor is held by Miss S E Venus,
paying an initial ground rent of £75 pa and a 25% share of landlord’s
expenditure as aforesaid; and flat C on part of the first floor and the whole
of the second floor is held by Mr M C Mansell, paying an initial ground rent of
£100 and a 35% share of the landlord’s said expenditure.
Miss Venus
stated that on December 12 1989 a relevant disposal took place when the
freehold estate in the subject premises was sold at auction by Sarum Properties
Ltd to the new landlords and she produced a photostat copy of a memorandum
bearing that date signed by Barnard Marcus, the auctioneers, as agents for the
vendors, the said Sarum Properties, under which the new landlords had
undertaken to pay £5,000 for, inter alia, the subject premises, which
form part of contract lot no 100A subject to the conditions of sale referred
to. She also produced a copy of the relevant particulars of sale referring to
the properties included in lot 100A previously mentioned as follows:
|
Address |
No of flats |
Lease term |
Total ground rents |
|
9 Tankerville Road |
3 |
125 years from August 14 |
£275.00 |
|
Palm Court, The Lees |
4 |
199 years from March 25 1980 |
£160.00 |
|
138 Tinterton Avenue |
2 |
199 years from September 30 |
£150.00 |
|
32 Westbourne Grove |
2 |
99 years from December 25 |
£100.00 |
|
27 Dundonald Drive |
2 |
99 years from December 25 |
£100.00 |
With the sole exception of the subject premises, all these
properties are situated in Essex outside the London area. None of the lessees
of the subject premises were previously notified by Sarum Properties Ltd of their
intention to sell their freehold interest. Late in January or early February,
however, the tenants received in the post a rent direction notice from Sarum
Properties Ltd, dated January 10 1990, stating that with effect from that date
the freehold interest in the subject premises had been sold to the new
landlords. This was the first notice received by the lessees of the sale of the
subject premises and following its receipt the applicants’ solicitors by
letters dated February 23 and 27 1990 requested the new landlords to supply
details of the disposal.
In his reply
on behalf of the new landlords, Mr N Khan confirmed the date when the contract
to purchase the subject premises had been entered into as December 12 1989 and
that it included other properties. He stated that the consideration was £5,000
and that they had paid this sum, together with other moneys in respect of
apportioned items, to the vendor’s solicitors on January 9 1990. He added that
for a number of reasons, which he stated, he had decided to rescind the
contract and not to register the dealing at HM Land Registry. Miss Venus stated
that subsequently she discovered from the solicitors who had acted for Sarum
Properties Ltd that the total consideration of £5,000 had been apportioned as
to £1,750 for the subject premises and that this sum was the amount of the
consideration stated in the transfer of the subject premises.
Miss Venus
stated that a purchase notice under section 12 of the Act was served by the
applicants’ solicitors on the new landlords on March 29 1990 and that an
application to the tribunal had been made necessary because the new landlords
were contending that the £1,750 consideration stated in the transfer of the
subject premises was not the sum properly payable on a transfer to the
applicants under the said purchase notice. In her view, the sum of £1,750 shown
in the transfer was legally binding and was the amount properly payable by the
applicants under the purchase notice but that if the tribunal disagreed it was
open to them to apportion the total sum of £5,000. She did not consider that
the tribunal had power under section 13 of the Act to value the freehold
interest de novo and doubted whether they had the power to intervene in
the dispute between the parties regarding the service charge and ground rent.
Mr N H Khan
stated that everything which had been stated by Miss Venus was true except that
when he purchased the subject property it was one of five properties in one
indivisible parcel as shown in the copy memorandum for contract lot 100A which
he signed at the auction on December 12 1989 under which he agreed to pay a
purchase price of £5,000 for the five properties described in the particulars
of sale. He had been asked by the vendor’s solicitor how he would like the
purchase money apportioned between the different properties included in the
transaction. Mr Khan was of the opinion that he had been able to subdivide the
purchase price in any way he wished and stated that the sum of £1,750, which he
admitted to be the sum stated in the transfer as the consideration passing, was
an arbitrary figure given by him to the vendor’s solicitor without prior
consultation with one of his partners, which did not represent the true value
of the freehold estate in the subject premises at the relevant time. He added
that under the special conditions of sale affecting the purchase of lot 100A
aforesaid, a copy of which he produced, under special condition 7 he had been
obliged to take over from the vendor substantial arrears of ground rent and
service charge stated to be
the money was owing and because of other disputes with the vendor, he had on
March 2 1990 by letter to the vendor’s solicitors repudiated the sale of the
properties included in the said lot 100A and returned the transfers of the said
five properties. He admitted, however, that neither the vendor nor its
solicitors had accepted the rescinding of the contract and had not returned his
money.
Conclusions
The tribunal,
having retired to consider the matter, informed the parties at the hearing that
in their opinion the tribunal did not have the power under section 13 of the
Act to settle disputes as to whether sums are owing to the new landlord or a
former landlord in respect of service charge or ground rent as these are sums
which become due and owing under the terms of the leases and are, in their
opinion, a collateral matter, consequent upon the completion of a land
transaction and not directly relevant to the service of a purchase notice under
section 12(1). This matter was not proceeded with by either of the parties and
we did not hear any evidence respecting the disputed payments.
There remained
for our consideration, therefore, only that part of the application which
related to settling the terms of the conveyance by the new landlords to the
applicants. We were not supplied with particulars of the Land Registry title
and, apart from submissions with respect to the price to be paid, neither of
the parties put forward any proposed terms of conveyance. It appears that the
subject premises are registered at HM Land Registry under Freehold Title No SGL
135497 and any transfer thereof would be by Land Registry transfer. Consequently
the only dispute between the parties which remained for our determination was
whether the sum of £1,750, which the new landlords admitted was the
consideration stated in the deed of transfer to them, was the price to be paid
by the applicants under the said purchase notice or some other amount.
We were not
able to inspect the transfer to the new landlords and were not supplied by them
with a copy. We have noted, however, that special condition 13, subject to
which the subject premises were sold, required the new landlords to covenant in
the transfer of (inter alia) the subject premises to observe and perform
the landlord’s covenants in the said leases and to indemnify the vendor. In the
absence of the deed of transfer we consider that we are entitled to presume
that the requirements of the contract were duly complied with in this respect.
In this event the new landlords not only will have been parties to the transfer
but will themselves have executed it in order to give effect to the contractual
condition. We are therefore of the opinion that the new landlords are not now
able to deny that they were in agreement with Sarum Properties Ltd that the
price paid by them for the subject premises was £1,750. Furthermore, if as
seems likely the sale was effected by transfer under seal, the doctrine of
estoppel by deed may also prevent the new landlords disputing the amount of the
consideration stated therein.
Decision
We accordingly
determine that the respondents, N H and J Khan, are required, in accordance
with the said purchase notice and section 12 of the Act, to transfer to Miss S
E Venus, Mr M C Mansell and Misses P H and S H Latham, the applicants, the
freehold estate in the subject premises for the consideration of £1,750 (one
thousand seven hundred and fifty pounds) and upon the other terms as to title
upon which the original disposal thereof was made by Sarum Properties Ltd to N
H and J Khan on December 12 1989.
