Tibber v Buckley and another

Collective enfranchisement – Leasehold Reform, Housing and Urban Development Act 1993 – Leaseback – Respondents claiming right to acquire freehold of property under Part I of 1993 Act – Appellant freeholder serving counternotice claiming leaseback of top flat in the property – Appellant later seeking to extend leaseback to include roof and airspace of building plus mezzanine landing and front garden – Whether extent of demise to be confined to premises specified in counternotice – Appeal allowed in part The appellant owned the freehold of a terraced property containing three flats arranged over five floors. The lower two flats were let on long leases to the first and second respondents respectively, while the third flat, comprising the original top floor of the building and the converted loft space, was retained by the appellant, who let it out on assured shorthold tenancies. In 2010, the respondents gave an initial notice to the appellant of their claim to acquire the freehold of the property pursuant to the collective enfranchisement provisions in Part I of the Leasehold Reform, Housing and Urban Development Act 1993. By her counternotice, the appellant admitted the respondents’ right to acquire the freehold and sought a leaseback of the top flat, pursuant to Schedule 9 to the 1993 Act. She specified the extent of the proposed demise as the top two floors of the building, including all roofs and windows therein, and the staircase leading to the top flat from the floor below. She further claimed the right to undertake future development of the upper flat by enlarging or adding to the dormer windows and/or converting the property into two separate units, with any consequential alterations to the roof line. On an application to the leasehold valuation tribunal (LVT) to determine the terms of the leaseback, the appellant sought to extend the leaseback demise to include other parts of the building not mentioned in her counternotice, including the roof of the building and the airspace, a mezzanine landing used for storage and the front garden. The LVT held that the leaseback should be confined to the top flat itself and should be granted on the standard terms provided for in Part IV of Schedule 9 to the 1993 Act, since the appellant’s proposed departures from those terms were not reasonable or practical. It accordingly held that the demise would be of the existing structure of the top flat, with rights over the common parts and a term forbidding alterations to the flat without the consent of the landlord. The Court of Appeal subsequently upheld that decision on a different basis, holding that, on the proper interpretation of the statute, any proposed departures from the Part IV provisions had to be specified in the counternotice, such that the appellant could not subsequently seek a more extensive leaseback than she had originally proposed: see [2014] UKUT 74 (LC); [2014] PLSCS 86. The appellant appealed. Held: The appeal was allowed in part. (1) As a matter of law, a reversioner had only one chance of claiming a leaseback, namely in the counternotice. The reversioner had to identify in the counternotice the flat or other unit that was the subject of the leaseback claim but that should not ordinarily be a difficult exercise. The reversioner should identify the physical limits of the flat or unit with as much precision as possible, although, in most cases, it would be enough to describe the flat or unit in general terms, such as by number and address, or otherwise in terms that left the nominee purchaser in no reasonable doubt as to what flat or other unit was being referred to. If, in the subsequent drafting of the lease, there emerged unresolvable differences between the parties as to the precise limits of the flat or unit the subject of the leaseback, then that was a dispute that could be resolved by the LVT (now the first-tier tribunal (FTT)) under section 91(2)(b) of the 1993 Act, which empowered it to determine any question arising, in default of agreement, as to “the terms of any lease which is to be granted in accordance with Section 36 and Schedule 9”. There might, however, be cases in which the counternotice misdescribed the true extent of the relevant flat or unit, such as where its express description of the physical limits omitted part of what was in fact comprised within the flat or unit. While the consequences of such an omission would be likely to turn on the particular facts of the case, it would be relevant to take into account, as a good starting principle, that: (i) section 36 imposed a mandatory obligation on the tenants to grant leasebacks of such flats or units as were required to be granted by Parts II and/or III of Schedule 9; and (ii) the flats or units there referred to had to mean the whole of the relevant flats or units. Those considerations tended to indicate that an erroneous misdescription of the extent of the relevant flat or unit in the counternotice should not stand in the way of the reversioner’s right to have a leaseback of the whole flat or unit. Beyond identifying in the counternotice the flat or other unit of which a leaseback was sought, there was no need for a reversioner also to spell out in the counternotice any of the proposed terms of the leaseback. It was notable that the tenants were not obliged, in their initial notice, to set out the terms of any mandatory leasebacks to be granted pursuant to Part II of the 1993 Act. Once such a leaseback had been identified in the initial notice, the negotiation of its terms then fell to be worked out in the usual way between the tenants and the reversioner, with the FTT able to resolve any differences in default of agreement. There was no reason why the reversioner should be under a more extensive duty with regard to leasebacks requested in the counternotice. There was no logical reason why the reversioner should have to spell out in the counternotice any proposed “departures” from the Part IV provisions since, even in the absence of any such departures, the parties would still have to seek to reach agreement on the precise implementation of many of the matters raised by them. (2) Applying those principles to the instant case, the leaseback to be granted to the appellant should be confined to the top flat, not including the exterior structural elements of the flat, namely the exterior walls, window frames, roof, and roof structure, or the airspace contiguous to the roof. Under para 5 of Part III of Schedule 9 to the 1993 Act, the reversioner was entitled to a leaseback of any relevant unit falling which was not, immediately before the appropriate time, let to a qualifying tenant. The top flat was such a unit; it was let to an assured shorthold tenant, who was not a qualifying tenant. In those circumstances, the identity of the unit would ordinarily be derived from a consideration of the tenancy agreement. It was improbable that an assured shorthold tenancy agreement would have included any part of the exterior structure in the premises let to the tenant. On the balance of probabilities, and in the absence of any material to show the contrary, the appropriate finding was that the structure and exterior of the top flat, including the walls, window frames, roof and roof structure, were not including in its letting. The mezzanine landing should also be excluded from the leaseback since it was not “let with” the top flat and so could not be an “appurtenance” belonging to that flat within the meaning of para 1(2) of Schedule 9. Consequently, it was not necessary to decide whether the appellant’s failure to mention the mezzanine landing in the counternotice was fatal to its inclusion in the leaseback. The appellant’s claim to a leaseback of the front garden failed for the same reason. (3) It was however appropriate to include in the leaseback an easement for the top flat to use the relevant part of the mezzanine landing for the storage of one bicycle, in circumstances where the tenants of the flat had been exercising a right to leave bicycles three and such a right could reasonably be regarded as necessary for the enjoyment of the top flat. The user covenant in the leaseback should also be phrased to permit use as a “residential flat or flats” so as to permit the appellant to sublet part of the top flat as a separate residential unit if she so wished. The appeal was allowed to that extent only. Per curiam: The better view was that, if the mezzanine landing and front garden had been an appurtenance to the top flat for the purposes of para 1(2) of Schedule 9, then the failure to refer to them in the leaseback proposals would not be fatal to the appellant’s claim. There was much to be said for the view that the right to a leaseback of a particular flat or unit under section 36 and paragraph 5 of Schedule 9 was a right in respect of the whole flat or unit, such that, if the flat or unit was sufficiently identified in the counternotice, a leaseback of the entire flat should be granted whether or not its limits had been misdescribed: Cawthorne v Hamdan [2007] EWCA Civ 6; [2007] Ch 187; [2007] 1 EGLR 67; [2007] 11 EG 162 distinguished. Benedict Sefi (instructed by Derrick Bridges & Co, of Barnet) appeared for the appellant; Nicola Muir (instructed by direct access) appeared for the respondents. Sally Dobson, barrister Read a transcript of Tibber v Buckley and another here