S Franses Limited & Anor v Block 6 Ashley Gardens Roof Gardens Limited & Ors

Under Part I of the Landlord and Tenant Act 1987, a default notice need not follow a prescribed form. It is sufficient if, read purposively, it clearly informs the purchaser that the statutory duty to comply with a purchase notice has not been performed and that enforcement proceedings may follow.

The discretion under section 19 is narrower than a general discretion to grant or refuse relief. Once the qualifying tenants’ statutory right is established, the court should give effect to it unless doing so would be inequitable in the sense of being unfair or unjust. The statutory scheme requires the qualifying tenants to acquire the interest on the terms of the original disposal, including relevant non-monetary obligations and the purchaser’s corresponding expenditure.

The appellants acquired leases of roof space in a block of flats. The leases were granted without the qualifying tenants first being served notices under section 5 of the Landlord and Tenant Act 1987. The respondent nominee company later served purchase notices and default notices, seeking to compel transfers under section 12B.

The County Court found that the default notices were valid, declined to refuse relief under the section 19 discretion, and ordered transfers subject to determination by the First-tier Tribunal of the consideration payable. The appellants challenged those conclusions. The respondent also challenged the inclusion of expenditure on works and common-part contributions in the consideration.

The central issues were the validity and scope of the default notices, the proper approach to the section 19 discretion, the relevance of human-rights and illegality arguments, and the meaning of the original disposal’s terms for section 12B.

1. Appeals dismissed. The respondent’s challenge to the order was also dismissed.
2. A default notice under section 19(2) of the Landlord and Tenant Act 1987 requires no particular form. It must convey the overall meaning required by the provision. The notices, read with the purchase notices and the threat of enforcement proceedings, clearly notified the appellants that they had failed to comply with section 12B and were required to remedy that default. The notices were valid even though the accompanying TR1 reflected the respondent’s position that the consideration was £1 and identified an earlier deadline. Jones v Mahmut and the purposive approach in Pollen Estate Trustee Co Ltd v Revenue and Customs Commissioners supported that conclusion. The statutory notice requirements differed materially from those considered in Burman v Mount Cook Land Ltd.
3. Section 19 confers a discretion, but it is not a general fairness discretion comparable to the discretion exercised in ordinary injunction or costs applications. The relevant question is whether, having established the statutory right, it would be inequitable in the sense of unfair or unjust to give effect to it. The judge was entitled to consider all relevant circumstances, including delay, the AGM resolution, the parties’ conduct, expenditure on works, and the structure of the participation agreement. He correctly treated the statutory duty to convey under section 12B as a powerful countervailing consideration.
4. The appellate court should show a high degree of deference to the first-instance exercise of discretion. The judge was not required to address each of 44 factors separately. His reasons adequately explained why the appellants had lost. The factual finding that disclosure of the statutory right of first refusal might have led to a different course of events was not plainly wrong.
5. The Human Rights Act 1998 did not require relief to be refused. The discretion required a balance between the appellants’ A1P1 rights and the qualifying tenants’ legitimate interest in enforcing a statutory duty pursuing a legitimate aim. The judge had taken the appellants’ property rights into account.
6. The illegality arguments failed. The respondent, rather than the freeholder, sought enforcement of the purchase notices, the corporate entities could not be conflated on the evidence, and any benefit to the freeholder was uncertain and modest. The principles in Patel v Mirza and Welwyn Hatfield Borough Council v Secretary of State for Communities and Local Government were not engaged.
7. For section 12B(2), “terms” were not confined to legally enforceable terms. The oral agreement to make the common-parts contribution fell within section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989, but the statutory wording and purpose of section 12B required the expenditure to remain relevant. The covenant to perform works was also a term of the leases, even if it was not “consideration payable”. The relevant measure was the appellants’ actual cost, not the value of the works to the freeholder. The order was therefore not varied, subject to an agreed amendment preventing double counting under section 12B(7).

• Chancery Appeals (ChD): The appeal was brought from orders of HH Judge Dight CBE in the County Court at Central London. The appeal and the respondent’s notice were dismissed.