Ackerman & Anor v Lay & Ors

Where a tenant gives a section 42 notice claiming a new lease of one flat, paragraph 5(1) of Schedule 12 to the Leasehold Reform, Housing and Urban Development Act 1993 continues only the lease insofar as it relates to that flat. It does not preserve the tenant’s lease of other flats or parts of the building. Those parts may terminate by effluxion of time. Statutory construction begins with the statutory language, followed by consideration of the Act’s other provisions and practical consequences. A decision concerning materially different statutory wording may be distinguished. Difficulties in severing a lease, including issues concerning easements, do not justify rejecting a construction otherwise required by the legislation.

The appellants held a 50-year lease of a building containing five flats and other premises. They served a notice under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 claiming a new lease of Flat 3. After the original term expired, they served notices under section 8 of the Leasehold Reform Act 1967 seeking to acquire the freehold.

HHJ Cowell accepted the respondents’ argument that the section 42 notice continued only the lease of Flat 3. The appellants appealed, contending that it preserved the whole lease. The central issue was whether paragraph 5(1) of Schedule 12 prevented termination of the lease as a whole or only insofar as it related to the flat identified in the notice.

The appeal was dismissed. Sir William Aldous gave the judgment. Lord Justice Jacob and Lord Justice Tuckey agreed.

1. Construction of Schedule 12. Paragraph 5(1) of Schedule 12 to the Leasehold Reform, Housing and Urban Development Act 1993 prevents termination during the currency of a section 42 claim and for three months afterwards. The protection is confined to the lease of the flat that is the subject of the claim. Where one lease covers several flats, a notice relating only to one flat does not preserve the lease of the other flats or parts of the building.
2. Statutory context and practical consequences. Sections 39 and 42 identify the right claimed and require the notice to identify the relevant flat. Section 56 provides for a new lease in substitution for the existing lease. Those provisions support a construction confined to the flat identified in the notice. The purpose of paragraph 5(1) is to preserve the position pending determination of the claim. Preserving unclaimed flats would provide no corresponding benefit and could keep the landlord out of possession for years. If the claim failed, section 61A could require compensation calculated by reference to the whole building. That consequence could also raise an issue under Article 1 of the First Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms.
3. Authorities. Malekshad v Howard De Walden Estates Ltd. (No.2) ([2003] EWHC 3106; [2004] 1 WLR 862) concerned materially different wording and did not support the appellants’ construction. The decision was finely balanced and would be suitable for reconsideration in an appropriate case. Howard De Walden Estates Ltd v Aggio & others ([2008] 3 WLR 244) did not construe paragraph 5(1), but its reasoning indicated that alleged difficulties concerning severance and easements were not insurmountable.
4. Other submissions and disposition. The Landlord and Tenant Act 1954 operated under a different regime and did not assist in construing Schedule 12. Section 2 of the 1993 Act, concerning intermediate leases, did not indicate that severance was excluded. The judge below was correct, and the appeal was dismissed.

1. Court of Appeal (Civil Division): In [2008] EWCA Civ 1428, the appeal was dismissed and the decision below upheld.
2. Central London Civil Justice Centre: HHJ Cowell held that the lease had expired by effluxion of time, apart from the protection applicable to Flat 3 under the section 42 notice.
3. Earlier proceedings: The appellants’ collective enfranchisement claim was dismissed on 18 January 2002. Permission to appeal was refused by the Court of Appeal on 19 March 2002.