Howard De Walden Estates Ltd v Les Aggio & Ors

A head lessee of a building containing flats and common parts is not generally a qualifying tenant entitled to an individual lease extension under the Leasehold Reform, Housing and Urban Development Act 1993. Although the legislation allows a lease of a flat to include some other property, its detailed scheme contains no adequate machinery for separating common parts, modifying covenants, apportioning rent or defining the flat’s curtilage in a head-lease case. The absence of such machinery is significant where the statutory wording is ambiguous and the effect on existing property rights is substantial. The earlier decision in Maurice v Hollow-Ware Products Ltd was overruled. A tenant’s notice remains effective while its validity is disputed, so a deposit should ordinarily be ordered.

Two appeals concerned long head leases of buildings containing flats, other premises and common parts. In each case the head lessee served a notice claiming an individual lease extension under the Leasehold Reform, Housing and Urban Development Act 1993. The freehold owners disputed that a head lessee was a qualifying tenant. The Central London County Court followed Maurice v Hollow-Ware Products Ltd [2005] 2 EGLR 71 and accepted the claims. The Court of Appeal considered whether Chapter II of Part I of the 1993 Act applied to a head lessee, and, in one appeal, whether a deposit was payable while entitlement remained disputed.

Disposition. Both appeals were allowed on the principal issue. Permission to appeal was granted and the Howard de Walden appeal was also allowed on the deposit issue.

1. Meaning of qualifying tenant. The 1993 Act contemplates that a lease of a flat may include some other property. That does not establish that a head lessee of a building containing several flats and common parts is a qualifying tenant. The Act is a detailed scheme and provides no coherent machinery for separating common parts, preserving or remodelling covenants, apportioning rent, defining the flat’s curtilage or regulating the resulting direct and indirect relationships with the freehold owner. Negotiation cannot supply essential elements of a statutory conveyancing scheme.
2. Construction. The expression qualifying tenant of a flat refers to a tenant of that flat and that flat alone, whether under one or more leases, subject to the statutory treatment of appurtenances, another flat whose extension is not then claimed, and specified minerals. The expression in section 56 permitting a new lease in substitution for the existing lease allows partial substitution where property is omitted; it does not resolve the wider head-lease difficulties. The ambiguity and considerable interference with existing property rights required clear statutory language before the right could be conferred on head lessees.
3. Authorities and Convention argument. Maurice v Hollow-Ware Products Ltd [2005] 2 EGLR 71 was wrongly decided and was overruled. The Convention argument did not require determination, although the court expressed provisional reservations about whether the legislation would satisfy the quality-of-law requirement if it applied to head leases.
4. Deposit. Under section 42(8), a tenant’s notice continues in force until the statutory event terminating it. The court should therefore proceed on the basis that the notice is valid unless the court orders otherwise and should ordinarily order payment of the prescribed deposit under the 1993 Regulations, even while entitlement is disputed. Different treatment may be justified by mitigating circumstances, but none was shown.
5. Precedent. In the accompanying judgment, the court held that the County Court is bound by decisions of the High Court, including first-instance decisions exercising the same statutory jurisdiction. The two courts are not courts of co-ordinate jurisdiction merely because appeals from both lie to the Court of Appeal.

1. Court of Appeal (Civil Division) — Both appeals allowed on the main issue; permission to appeal granted and the Howard de Walden appeal allowed on the deposit issue: [2007] EWCA Civ 499.
2. Central London County Court — HHJ Crawford Lindsay QC followed Maurice v Hollow-Ware Products Ltd [2005] 2 EGLR 71 in the Cadogan case on 19 July 2006. HHJ Collins CBE adopted the same approach in the Howard de Walden case on 14 December 1996.