Leasehold reform

Leasehold reform

Leasehold reform

Viscount Chelsea v. Morris [1997] 46 EG 159

Although this case was only decided in the County Court, and therefore has little significance as a formal legal precedent, its facts (and the decision) may nevertheless be of interest to practitioners active in this field. Briefly: the tenant applied for an extension of his lease under the provisions of the Leasehold Reform (etc.) Act 1993; in the notice which he was required to serve on the landlord under s. 42 of that Act the tenant inserted the nominal figure of £100 as the suggested premium which would be payable to the landlord on the grant of the new extended lease; the landlord claimed that this was not a genuine bona fide proposal on the part of the tenant, and that in consequence the s.42 notice was invalid.

The court did not agree: the tenant had not been acting dishonestly or fraudulently, and he had not actually omitted to suggest any sum at all as the proposed premium. "It seems to me", said Mr Recorder Kallipetis QC, "that what is contemplated by the 1993 Act is that the tenant should if he qualifies and so wishes, initiate a process of negotiation which may result in a new lease being offered and accepted. At some stage during those negotiations, no doubt both the landlords and the tenant would seek the advice of valuers and/or surveyors. The provisions of section 42, although mandatory, clearly anticipate, in so far as they relate to premiums payable, a process of negotiation and, if the parties are unable to agree terms, an application to the valuation tribunal. If parliament had intended that the section 42(3)(c) proposal was to be "genuine", "realistic", "sensible" or "after a survey and valuation", it could have easily said so. I consider that all that was contemplated was that a proposal was to be made as part of the particulars. If the offer is woefully inadequate and as a consequence the landlord incurs the costs of a valuation, then there is provision in the 1993 Act and regulations for the valuation tribunal to order costs to be paid as a condition of a new lease."