Howard De Walden Estates Ltd. v Malekshad

Under paragraph 6(3) of Schedule 3 to the Leasehold Reform Act 1967, a notice of claim which extends to property not properly included requires amendment before it can support enfranchisement of the correct property. Permission to amend is discretionary, not merely administrative. An honest drafting error will normally be corrected without conditions unless the landlord proves relevant prejudice caused by the defective notice.

Paragraph 3(1) continues the whole tenancy where a claim concerns only part of the demised property. A tenant may serve a further notice while that statutory continuation remains in force, and the continuing tenancy remains a long tenancy.

The landlord appealed from a decision of the Central London County Court concerning notices served under the Leasehold Reform Act 1967. The tenant’s 1997 notice sought enfranchisement of a main house and an associated mews house. Earlier litigation established that the two properties could not be enfranchised together, but that the main house could in principle be enfranchised.

The tenant sought to amend the 1997 notice by deleting the mews house. He had also served a further notice in 2003 concerning the mews house. The issues included whether amendment was necessary, the principles governing the discretion to amend, whether the valuation date should change, whether the tenancy had continued over the whole property, and whether the 2003 notice was valid.

1. Amendment. The 1997 notice extended to property not properly included in the relevant house and premises. Under paragraph 6(3) of Schedule 3 to the Leasehold Reform Act 1967, that error required amendment. It was not merely an inaccuracy or misdescription. The court therefore had discretion whether to permit amendment and on what terms.

2. The discretion should not be reduced to inflexible rules. Normally, where the error was honest, amendment should be granted without conditions unless the landlord established relevant prejudice. Relevant prejudice meant prejudice caused by receiving a defective notice rather than a valid notice, not the mere loss of the opportunity to avoid enfranchisement. Where established, prejudice would ordinarily be compensated by appropriate terms.

3. The valuation date should remain 4 April 1997. The delay was not shown to have resulted from the inclusion of the mews house in the notice. The proceedings concerning enfranchisement of the main house would have arisen in any event. A change in valuation date was therefore unjustified.

4. Paragraph 3(1) continued the tenancy as a whole, including the mews house, although the claim could ultimately extend only to the main house. The expression “the tenancy in that property” was descriptive rather than limited to the claimed property. This construction produced a more coherent result with paragraphs 1 and 2 of Schedule 3 and avoided problems concerning access, easements and rent apportionment.

5. The tenant could serve the 2003 notice while the tenancy continued under paragraph 3(1). The Court of Appeal’s contrary obiter conclusion in Duke of Westminster v Oddy [1984] 1 EGLR 83 was wrong. The continuing tenancy remained the same long tenancy for the purposes of section 3(1), and section 3(5) was not exhaustive.

6. Because the tenancy of the mews house had continued and the 2003 notice was valid in principle, the landlord’s proposed conditions requiring withdrawal of that notice and payment of a market rent were rejected. The appeal was dismissed.

Central London County Court: Judge Cooke held that the 1997 notice did not require amendment and rejected the proposed conditions concerning valuation, the 2003 notice and rent.

High Court (Chancery Division): The appeal was dismissed. The court held that amendment was necessary, but upheld the refusal to impose the proposed conditions.