Jones & Ors v Mahmut & Anr

Where a court orders a purchaser to comply with tenants’ statutory acquisition rights under the Landlord and Tenant Act 1987, the order controls the timetable and manner of performance. While that order remains to be worked out, the purchaser cannot use section 17(4) to extinguish the tenants’ rights.

An application is not determined for that purpose merely because the substantive order has been made. The court retains control where consequential steps remain outstanding. Public policy may also prevent a purchaser from acquiring a statutory advantage through deliberate disobedience of the mandatory order whose performance would have prevented that advantage.

A landlord sold the freehold reversion of a mixed-use building before expiry of the tenants’ statutory acceptance period. The tenants served the purchasers with a purchase notice under section 12B of the Landlord and Tenant Act 1987. When the purchasers did not comply, District Judge Lightman ordered them to transfer the freehold on the original acquisition terms.

The purchasers failed to execute and deliver the transfer by the ordered deadline. More than two months after the order, they served a notice under section 17(4), purporting to terminate the statutory acquisition process. District Judge Lightman and His Honour Judge Gerald held that the notice was ineffective.

The central issue on the second appeal was whether the section 17(4) notice discharged the purchasers from the court order and from any further obligation to transfer the freehold.

1. Appeal dismissed unanimously. The statutory notice under section 17(4) of the Landlord and Tenant Act 1987 did not discharge the purchasers from the mandatory transfer order or their obligation to transfer the freehold.
2. The Act contemplates two means of vindicating the tenants’ rights: voluntary entry into a contract after those rights have been established, or a court order compelling compliance. An order under section 19 is therefore the statutory equivalent of a voluntarily concluded contract for this purpose. Although it enforces statutory rather than contractual rights, it closely resembles an order for specific performance.
3. Once an order for specific performance has been made, the order’s provisions govern how the transaction is to be completed. Contractual machinery cannot supersede or interfere with those directions. The same approach applies to a section 19 order. Section 19(1) permits the court to fix the period for performance, placing the timetable under judicial control. A purchaser who has resisted the statutory process cannot obtain a more favourable position than one who complied voluntarily.
4. While District Judge Lightman’s order remained to be worked out, the tenants’ application had not been determined for section 17(4). This conclusion was reinforced by the express liberty to apply and the court’s continuing power to address non-performance. The purchasers could have sought discharge of the order if the tenants had been culpably dilatory.
5. Boyle v Horsebay Ltd [2002] EWHC 970 (Ch) was distinguishable because no section 19 order had been made there.
6. Public policy supplied an additional reason why the notice was ineffective. A person may be prevented from acquiring a statutory advantage through wrongful conduct sufficiently connected with the statutory purpose. Permitting the purchasers to benefit from deliberate disobedience of the mandatory order would frustrate the Act: compliance would have prevented the asserted section 17(4) right from arising.

1. Court of Appeal (Civil Division): The second appeal was dismissed unanimously. The section 17(4) notice did not discharge the purchasers from the mandatory transfer order.
2. High Court: Asplin J amended His Honour Judge Gerald’s order to record permission to appeal from District Judge Lightman, but refused permission for a further appeal. Henderson LJ subsequently granted permission for the second appeal.
3. County Court, His Honour Judge Gerald: The judge’s refusal of permission was treated as a dismissal of the appeal because District Judge Dight had intended to grant permission on the papers.
4. County Court, District Judge Lightman: The purchasers were ordered to transfer the freehold to the tenants on the terms of the original acquisition. It was subsequently held that the section 17(4) notice did not discharge that obligation.