Daejan Properties Limited v Bellringer Investments Limited

Under section 42(3)(c) of the Leasehold Reform, Housing and Urban Development Act 1993, a tenant’s notice seeking a new long lease must specify a premium which is both genuinely proposed and realistic. A merely nominal or wholly unrealistic figure is not an offer within the meaning of the Act. The assessment is fact-sensitive and should ordinarily be undertaken robustly, without becoming enmeshed in detailed evidence. The Court of Appeal will adopt the exceptional course of permitting an appeal to the House of Lords on the basis that its own binding decision is wrong only where it considers that decision obviously wrong.

The tenant served a notice under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993, proposing a premium of £12,000 for a new long lease. The landlord challenged the notice as invalid because the proposed premium was wholly unrealistic. The Central London County Court, after hearing evidence, declared the notice invalid. The tenant renewed an application for permission to appeal, arguing that Cadogan v Morris required only a genuine proposal, or that its wider realism requirement was obiter and wrong. The central issue was whether the notice contained an offer within section 42(3)(c).

1. The application for permission to appeal was dismissed, and permission to rely on further evidence was refused.
2. Lord Justice Tuckey held that Cadogan v Morris made the position clear. The premium specified in a section 42 notice must be realistic in two respects: it must be a genuine offer, and it must make a realistic attempt to put forward the sum proposed for the grant of the new long lease.
3. Unless those requirements are met, the stated sum is not an offer within the meaning of section 42(3)(c) of the Leasehold Reform, Housing and Urban Development Act 1993. The statutory wording therefore does not require the court to read in a particular figure, but it does require the tenant to specify a realistic proposal.
4. The judge below had taken the robust approach invited by the Court of Appeal. His conclusion that the tenant’s proposed premium was unrealistic could not be faulted. The court did not need to become involved in detailed valuation evidence as a general matter; a brief inquiry with limited evidence should ordinarily suffice.
5. It would be wholly exceptional for the Court of Appeal to permit an appeal to the House of Lords merely to raise a challenge to its own binding decision. That course would be available only if the court considered its earlier decision obviously wrong. Lord Justice Tuckey did not hold that Cadogan v Morris was obviously wrong.

• Court of Appeal (Civil Division): The renewed application for permission to appeal from the Central London County Court was dismissed. Permission to rely on further evidence was also refused.
• Central London County Court: His Honour Judge Hallgarten QC declared the tenant’s notice under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 invalid.