![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales High Court (Chancery Division) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Villarosa v Ryan [2018] EWHC 1914 (Ch) (25 July 2018) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2018/1914.html Cite as: [2019] 1 WLR 515, [2019] 1 P &CR 7, [2018] EWHC 1914 (Ch), [2018] HLR 38, [2018] L &TR 33, [2018] WLR(D) 512 |
[New search]
[Context]
[View without highlighting]
[Printable RTF version]
[View ICLR summary: [2018] WLR(D) 512]
[Help]
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (CHD)
7 Rolls Building London, EC4A 1NL |
||
B e f o r e :
____________________
EUGENIA ![]() | Appellant |
|
- and - |
||
ROBERT ![]() | Respondent |
____________________
Stephen Acton (instructed by Kenneth Elliott & Rowe Solicitors) for the Respondent
Hearing dates: 28 and 29 June 2018
____________________
VERSION
OF JUDGMENT APPROVED
Crown Copyright ©
MR JUSTICE MORGAN:
Introduction
The facts
"3. The Executors were granted probate on 27 April 2010. Accordingly, the Executors are entitled to, and do, serve this notice in exercise of their right to claim a lease extension under the 1993 Act on the basis that they have been the qualifying tenant of the Flat for the whole of the two year period preceding its service, namely, at all times since they were granted probate with the result that, by operation of law, the legal title to the Existing Lease then becamevested
in them without the need for the registration of the disposition at HM Land Registry (as need be section 27(5)(a) of the Land Registration Act 2001 and section 1(1) of the Administration of Justice Act 1925 shall be relied on on point).
4. As said, the Executors have been the qualifying tenant (within the meaning of and for the purposes of the 1993 Act) of the Flat for the whole of the period of two years immediately preceding the giving of this notice. Accordingly, the Executors are entitled to be granted a lease extension that is claimed under the 1993 Act."
The first issue: relevant background
"PROBLEMS WITH EXISTING REGIME
1. The right to acquire a new lease, which adds 90 years to the term remaining on the original lease, is an individual right. It provides a useful alternative to the right of collective enfranchisement in cases where (for example) there are insufficient qualifying tenants in the block or there is insufficient support for enfranchisement. In such circumstances, this right is the only available answer to the problem that the lease is a wasting asset.
2. The Government believes that the current rules for acquiring a new lease are too restrictive. For example, to qualify for the right to buy a new lease a leaseholder has to have occupied their flat as their only or main home for the last three years, or periods that add up to three years in the last ten. This contrasts with the current residency rule for collective enfranchisement, which is that the flat has only to be occupied for one year or three years in the last ten. The rules for acquiring a new lease also exclude from the right, for example, those who occupy a flat as a second home or who sub-let their flat.
3. In addition, personal representatives of deceased leaseholders who take over responsibility for leasehold flats with a short remaining term are often placed in a difficult position. They are unable to sell the flat (or at least, get a reasonable price for it) and are unable to qualify for a new lease because of the residence test. This provides an opportunity for landlords to demand an unreasonable price for renewal or extension of the term.
…
6. We have proposed the abolition of the residence test for collective enfranchisement because it has proved to be a major obstacle to the exercise of the collective right. The situation with lease renewals is different. If we were to simply abolish the test, it could open the door to speculative investment in short lease properties, with a prospect of a short-term windfall gain. We only want to help those who have a genuine long-term interest in their property. We have therefore proposed a compromise, replacing a minimum requirement of residence with a minimum (and shorter) term of ownership. We have also proposed specific measures to help personal representatives of deceased leaseholders.
…
9. We propose to abolish the residence test for the right to acquire a new lease bringing it in line with the proposal to abolish the test for collective enfranchisement. It would, however, be replaced by a provision requiring the qualifying tenant at the relevant date to have held the long lease for a period of at least two years. This should ensure that people who occupy leasehold flats as second homes, or sub-let them, have a remedy to the wasting asset problem. It would not prevent investors from securing a windfall gain completely. But it would restrict the scope for short-term speculative gains.
…
10. We propose to give the personal representative of a deceased leaseholder the right to acquire a new lease where the leaseholder would have qualified for the right to a new lease immediately before they died. This right would only be exercisable in the period of six months following the grant of probate or letters of administration."
"INTRODUCTION
PROBLEMS WITH EXISTING REGIME
1. The Leasehold Reform Act 1967 already gives a member of a deceased's family a right to succeed to the tenancy of a house (and qualify for enfranchisement or lease extension). The right applies if, at the time of the leaseholders death, the family member was resident in the house as their only or main place of residence. This is avery
specific and restrictive right.
2. Where flats are concerned, we have put forward the proposal that the personal representative of a qualifying tenant, who, at the time of death, had held the lease for at least two years, be given the right to acquire a new lease within six months of the granting of probate or letters of administration (paragraph 10 of Section 3 Chapter III). This is because personal representatives who take over a flat which has a short remaining term are often placed in a position where they cannot sell the flat (or cannot get a reasonable price for it). There would on that basis be an inconsistency between the rules for houses and flats in relation to who actually qualifies for the right to seek a lease renewal (flats) or lease extension (houses).
3. Where enfranchisement is concerned, no special provisions are needed to allow a person inheriting a long lease on a flat to participate in collective enfranchisement. Where a participating tenant dies after the serving of the initial notice, personal representatives already have a right to take over.
4. For houses however, specific provision would be needed to allow the deceased leaseholders personal representatives the right to enfranchise without having to meet the proposed requirement that they hold the lease for at least two years in their own name.
OVERALL OBJECTIVE OF PROPOSALS
5. We therefore have two main objectives. Firstly, to give the same right to obtain a lease extension to the personal representatives of houses as are proposed for flats. Second, to give the personal representative of a qualifying tenant who, at the time of death had held the lease for at least two years, the right to acquire the freehold within a limited period after the granting of probate or letters of administration.
Proposals for legislation
6. We propose to amend the Leasehold Reform Act 1967 to give personal representatives of qualifying tenants who, at the time of death, had held the lease for at least two years, the right to extend their lease within six months of the granting of probate or letters of administration. This will harmonise the rights for flats and houses, and would also help personal representatives who did not meet the definition of "family".
7. We also propose to provide a right to enfranchise for the personal representative of a qualifying tenant who, at the time of death had held the lease for at least two years. This would also have to be exercised within six months of probate or letters of administration.
8. However, for houses, the present rights for a member of the deceased leaseholders family to acquire the freehold or extend their lease (see paragraph 1. above) are not time limited and can be exercised at any time. We do not propose to take away or reduce any existing rights that a personal representative may already have. Where these are more favourable, these rights would continue to apply."
"Clause 103 makes special provision for the benefit of those who inherit leases. Provided that the deceased had been a qualifying tenant for at least two years (see clause 101), their personal representative will have the right to a new lease notwithstanding the fact that they have not, themselves, held the lease for at least two years. This right will be limited to a period of six months starting from the date of the grant of probate or of letters of administration."
The 2002 Act
"132 Personal representatives
(1) In section 39 of the 1993 Act, after subsection (3) insert—
"(3A) On the death of a person who has for the two years before his death been a qualifying tenant of a flat, the right conferred by this Chapter is exercisable, subject to and in accordance with this Chapter, by his personal representatives; and, accordingly, in such a case references in this Chapter to the tenant shall, in so far as the context permits, be to the personal representatives."
(2) In section 42 of the 1993 Act (notice by qualifying tenant of claim to exercise right), before subsection (5) insert—
"(4A) A notice under this section may not be given by the personal representatives of a tenant later than two years after the grant of probate or letters of administration." "
"Section 132 makes special provision for the benefit of those who inherit leases. Provided that the deceased had been a qualifying tenant for at least two years (see section 130), their personal representatives will have the right to a new lease notwithstanding the fact that they have not, themselves, held the lease for at least two years. This right can only be exercised during a period of two years starting from the date of the grant of probate or of letters of administration"
"142 Personal representatives
(1) After section 6 of the 1967 Act insert—
"6A Rights of personal representatives(1) Where a tenant of a house dies and, immediately before his death, he had under this Part of this Act—(a) the right to acquire the freehold, or(b) the right to an extended lease,the right is exercisable by his personal representatives while the tenancy isvested
in them (but subject to subsection (2) below); and, accordingly, in such a case references in this Part of this Act to the tenant shall, in so far as the context permits, be to the personal representatives.
(2) The personal representatives of a tenant may not give notice of their desire to have the freehold or an extended lease byvirtue
of subsection (1) above later than two years after the grant of probate or letters of administration."
(2) In paragraph 6(2) of Schedule 3 (particulars to be contained in notice), after "6" (in both places) insert ", 6A". "
"Section 142 amends section 6 of the 1967 Act. It improves the rights of those who inherit leasehold houses. Where the deceased leaseholder qualified for the right to extend the lease and/or enfranchise at the time of death, personal representatives would be able to exercise those rights within two years of the grant of probate or letters of administration. …"
The relevant provisions of the 1993 Act as amended by the 2002 Act
"39.— Right of qualifying tenant of flat to acquire new lease.
(1) This Chapter has effect for the purpose of conferring on a tenant of a flat, in the circumstances mentioned in subsection (2), the right, exercisable subject to and in accordance with this Chapter, to acquire a new lease of the flat on payment of a premium determined in accordance with this Chapter.
(2) Those circumstances are that on the relevant date for the purposes of this Chapter—
(a) the tenant has for the last two years been a qualifying tenant of the flat;
(3) The following provisions, namely—
(a) section 5 (with the omission of subsections (5) and (6)),
(b) section 7 ,
shall apply for the purposes of this Chapter as they apply for the purposes of Chapter I; and references in this Chapter to a qualifying tenant of a flat shall accordingly be construed by reference to those provisions.
(3A) On the death of a person who has for the two years before his death been a qualifying tenant of a flat, the right conferred by this Chapter is exercisable, subject to and in accordance with this Chapter, by his personal representatives; and, accordingly, in such a case references in this Chapter to the tenant shall, in so far as the context permits, be to the personal representatives.
(4) For the purposes of this Chapter a person can be (or be among those constituting) the qualifying tenant of each of two or more flats at the same time, whether he is tenant of those flats under one lease or under two or more separate leases.
(7) The right conferred by this Chapter on a tenant to acquire a new lease shall not extend to underlying minerals comprised in his existing lease if—
(a) the landlord requires the minerals to be excepted, and
(b) proper provision is made for the support of the premises demised by that existing lease as they are enjoyed on the relevant date.
(8) In this Chapter "the relevant date", in relation to a claim by a tenant under this Chapter, means the date on which notice of the claim is given to the landlord under section 42. "
"42.— Notice by qualifying tenant of claim to exercise right.
(1) A claim by a qualifying tenant of a flat to exercise the right to acquire a new lease of the flat is made by the giving of notice of the claim under this section.
(2) A notice given by a tenant under this section ("the tenant's notice") must be given—
(a) to the landlord, and
(b) to any third party to the tenant's lease.
(3) The tenant's notice must—
(a) state the full name of the tenant and the address of the flat in respect of which he claims a new lease under this Chapter;
(b) contain the following particulars, namely—
(i) sufficient particulars of that flat to identify the property to which the claim extends,
(ii) such particulars of the tenant's lease as are sufficient to identify it, including the date on which the lease was entered into, the term for which it was granted and the date of the commencement of the term,
(c) specify the premium which the tenant proposes to pay in respect of the grant of a new lease under this Chapter and, where any other amount will be payable by him in accordance with any provision of Schedule 13, the amount which he proposes to pay in accordance with that provision;
(d) specify the terms which the tenant proposes should be contained in any such lease;
(e) state the name of the person (if any) appointed by the tenant to act for him in connection with his claim, and an address in England and Wales at which notices may be given to any such person under this Chapter; and
(f) specify the date by which the landlord must respond to the notice by giving a counter-notice under section 45.
(4A) A notice under this section may not be given by the personal representatives of a tenant later than two years after the grant of probate or letters of administration.
(5) The date specified in the tenant's notice in pursuance of subsection (3)(f) must be a date falling not less than two months after the date of the giving of the notice.
(6) Where a notice under this section has been given with respect to any flat, no subsequent notice may be given under this section with respect to the flat so long as the earlier notice continues in force.
(7) Where a notice under this section has been given with respect to a flat and—
(a) that notice has been withdrawn, or is deemed to have been withdrawn, under or byvirtue
of any provision of this Chapter, or
(b) in response to that notice, an order has been applied for and obtained under section 47(1),
no subsequent notice may be given under this section with respect to the flat within the period of twelve months beginning with the date of the withdrawal or deemed withdrawal of the earlier notice or with the time when the order under section 47(1) becomes final (as the case may be).
(8) Where a notice is given in accordance with this section, then for the purposes of this Chapter the notice continues in force as from the relevant date—
(a) until a new lease is granted in pursuance of the notice;
(b) if the notice is withdrawn, or is deemed to have been withdrawn, under or byvirtue
of any provision of this Chapter, until the date of the withdrawal or deemed withdrawal; or
(c) until such other time as the notice ceases to have effect byvirtue
of any provision of this Chapter;
but this subsection has effect subject to section 54.
(9) Schedule 12 (which contains restrictions on terminating a tenant's lease where he has given a notice under this section and makes other provision in connection with the giving of notices under this section) shall have effect."
The positions of the parties in relation to the first issue
Discussion of the first issue
"I therefore reach the conclusion, subject to any question of Parliamentary privilege, that the exclusionary rule should be relaxed so as to permit reference to Parliamentary materials where (a) legislation is ambiguous or obscure, or leads to an absurdity; (b) the material relied upon consists of one or more statements by a Minister or other promoter of the Bill together if necessary with such other Parliamentary material as is necessary to understand such statements and their effect; (c) the statements relied upon are clear."
"It might be helpful to begin with a little background to amendment no. 44, which relates to the right to new longer leases for flats. Under existing law, when leaseholders die, their personal representatives can be left in a difficult position. Their inheritance may consist of a lease that is too short to sell easily, and the freeholder may insist that they pay over the odds for an extended lease. The Bill provides that, when the deceased leaseholder would have qualified for the right to a new longer lease, that right will pass to the personal representatives, but that they will have to exercise that right within a year of the grant of probate or letters of administration. The amendment will extend that period to two years.
Arguments have been made previously for a longer extension, but it is worth noting that, after holding the lease for two years, the personal representatives will qualify for the right to a new longer lease in the normal way, and, for the information of the Hon. Member for Stone (Mr. Cash), clauses 129, 137 and 138 will apply. Personal representatives will no longer need to rely on the special rights granted to them.
Amendment No. 45 makes an equivalent change to clause 141 [which was enacted as section 142], which pertains to the right to a lease extension and the right to enfranchise as it relates to personal representatives of leaseholders of a house.
I commend the amendments to the House. They will make a welcome addition to the rights of leaseholders."
The second issue
"43.— General provisions as respects effect of tenant's notice.
(1) Where a notice has been given under section 42 with respect to any flat, the rights and obligations of the landlord and the tenant arising from the notice shall enure for the benefit of and be enforceable against them, their personal representatives and assigns to the like extent (but no further) as rights and obligations arising under a contract for leasing freely entered into between the landlord and the tenant.
(2) Accordingly, in relation to matters arising out of any such notice, references in this Chapter to the landlord and the tenant shall, in so far as the context permits, include their respective personal representatives and assigns.
(3) Notwithstanding anything in subsection (1), the rights and obligations of the tenant shall be assignable with, but shall not be capable of subsisting apart from, the lease of the entire flat; and, if the tenant's lease is assigned without the benefit of the notice, the notice shall accordingly be deemed to have been withdrawn by the tenant as at the date of the assignment.
(4) In the event of any default by the landlord or the tenant in carrying out the obligations arising from the tenant's notice, the other of them shall have the like rights and remedies as in the case of a contract freely entered into.
(5) …
(6) … "
(1) the executors of the deceased tenant executed a TR1 in relation to the lease in favour of Ms Villarosa
on 6 April 2016;
(2) legal title to the lease remained with the executors after 6 April 2016;
(3) on 6 June 2016, the executors served the section 42 notice;
(4) on 7 or 8 June 2016, the executors assigned to Ms Villarosa
the benefit of the section 42 notice so that the benefit of the notice would pass when the legal title to the lease
vested
in Ms
Villarosa;
(5) on 27 June 2016, legal title to the lease vested
in Ms
Villarosa
and at the same time the benefit of the notice passed to Ms
Villarosa.
The overall result