Villarosa v Ryan

A limitation on personal representatives serving a lease-extension notice applies only where they rely on the special right conferred by section 39(3A) of the Leasehold Reform, Housing and Urban Development Act 1993. It does not prevent them relying on the general two-year ownership requirement in section 39(2). Parliamentary material may be used where the legislation is ambiguous or obscure and the statutory conditions for doing so are met. For registered leases, an assignment occurs when legal title passes on registration, not when the transfer is executed. A tenant’s notice is therefore not deemed withdrawn where the notice and the lease pass together on registration.

The appellant acquired a registered lease from the personal representatives of the former tenant. Before registration, the personal representatives served a notice under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 and assigned its benefit to the appellant. The landlord sought a declaration that the notice was invalid because it was served more than two years after probate, or had been withdrawn because the lease had been assigned without its benefit.

The County Court accepted the first argument but would have rejected the second. The appeal concerned the construction of section 42(4A) and, by respondent’s notice, the operation of section 43(3).

1. Appeal allowed on the first issue. Section 42(4A) of the Leasehold Reform, Housing and Urban Development Act 1993 was not to be read in isolation. Section 132 of the Commonhold and Leasehold Reform Act 2002 created both a special right for personal representatives under section 39(3A) and a time limit on that special right.
2. The two-year limit after probate applies where personal representatives rely on the deceased tenant’s qualifying ownership under section 39(3A). It does not apply where the personal representatives themselves satisfy the general two-year ownership requirement in section 39(2). The analogous provisions of the Leasehold Reform Act 1967, the consultation material and the legislative history supported that construction.
3. The legislation was ambiguous or obscure. The court could therefore consider Parliamentary material under the rule stated in Pepper v Hart [1993] AC 593. The Minister’s statement made clear that personal representatives would qualify in the ordinary way after holding the lease for two years, without relying on the special right.
4. The second issue was determined in favour of the appellant. Under section 43(3), the relevant assignment of a registered lease occurs when legal title passes on registration. The execution of the TR1 created a beneficial interest and enabled an application for registration, but did not itself assign the lease for this purpose. The reasoning in Brown & Root Ltd v Sun Alliance Ltd [2001] Ch 733 applied.
5. The notice and the lease remained vested in the executors until registration and then passed together to the appellant. The notice was therefore not deemed withdrawn. The County Court declaration was set aside, with the precise declaration and consequential order to be settled.

• High Court (Chancery Division): Appeal from the County Court decision allowed. The declaration that the section 42 notice was invalid was set aside.