Kateb v Howard De Walden Estates Ltd & Anor

Under the Leasehold Reform Housing and Urban Development Act 1993, the competent landlord generally has authority to conduct proceedings and agree terms binding on intermediate landlords. A notice seeking separate representation in tribunal proceedings does not remove that authority or give the intermediate landlord a veto over settlement.

The intermediate landlord’s protections are the ability to seek directions from the court and to claim for loss caused by bad faith, negligence or lack of reasonable care. This statutory arrangement does not unlawfully impair access to a court under Article 6 or provide disproportionate protection under A1P1.

Accordway sought new leases of a flat and garage under the Leasehold Reform Housing and Urban Development Act 1993. Howard de Walden Estates Ltd was the competent landlord and Stella Kateb was an intermediate landlord entitled to compensation under Schedule 13.

After Kateb had served notice of her intention to be separately represented in proceedings before the tribunal, Howard de Walden agreed with Accordway the total premium and the apportionment payable to Kateb. The First-tier Tribunal held that the agreement did not bind her. The Upper Tribunal reversed that decision in [2014] UKUT 0486 (LC). The central issue was whether paragraph 7 of Schedule 11 qualified the competent landlord’s authority to settle the compensation payable to an intermediate landlord.

1. Statutory authority. Section 40(2) of the Leasehold Reform Housing and Urban Development Act 1993 gives the competent landlord general authority to conduct all proceedings arising from the tenant’s notice, including tribunal proceedings and negotiations about the new lease and Schedule 13 compensation. Section 40(3) makes that authority subject to Schedule 11, but paragraph 6 confirms that agreements between the competent landlord and tenant bind the other landlords.
2. Effect of separate representation. Paragraph 7 of Schedule 11 qualifies the authority only to the extent expressly stated. It gives an intermediate landlord a right to separate representation and audience in relevant legal proceedings, and a right to receive compensation directly. It does not confer a right to participate in or veto settlement negotiations. The tenant is entitled to rely on an agreement made by the competent landlord unless a court has directed otherwise.
3. Protective remedies. The intermediate landlord may seek directions from the County Court before the competent landlord acts. If the act has already occurred, paragraph 6(4) provides protection against loss caused by lack of good faith, reasonable care or diligence. The competent landlord therefore owes the equivalent of a fiduciary duty and must exercise due skill and care, but retains authority to bind the other landlords.
4. Statutory comparison. The parallel collective-enfranchisement provisions in Schedule 1 are materially different because they expressly allow a relevant landlord to deal directly with the nominee purchaser and become a party to the agreement. The absence of equivalent wording in Schedule 11 supports the conclusion that a paragraph 7 notice does not remove the competent landlord’s authority.
5. Convention rights. The scheme does not impair the essence of the right of access to a court under Article 6. It pursues the legitimate aim of facilitating lease acquisition while avoiding multiple proceedings and strikes a reasonable balance between the parties. The method of determining compensation is also within the State’s margin of appreciation under A1P1 and is not arbitrary or disproportionate. The appeal was dismissed.

• Court of Appeal (Civil Division): dismissed Kateb’s appeal against the Upper Tribunal’s decision.
• Upper Tribunal (Lands Chamber): in [2014] UKUT 0486 (LC), allowed Howard de Walden Estates Ltd’s appeal and held that the agreement with the tenant bound the intermediate landlord.
• First-tier Tribunal Property Chamber: held that the agreement was not binding on Kateb and that it retained jurisdiction to determine her Schedule 13 compensation.