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Leasehold enfranchisement
Court of Appeal
11 November 2010
Sir Andrew Morrit C and Carnwath and Hughes UJ
[2010] EWCACiv 1259
[2011] 02 EG 76
Leasehold enfranchisement - Leasehold Reform, Housing and Urban Development Act 1993 - Collective enfranchisement - Initial notice served and registered on behalf of qualifying tenants under section 13 of 1993 Act - Landlord thereafter granting long lease of basement flat to nominee - Whether lease void under anti-avoidance provisions as disposal of acquirable common parts within sections 19(1 MiU and 2(1Ub)
In 2006, three out of the five qualifying tenants in a building served an initial notice on the appellant landlords, under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993, to acquire the freehold of the building; the respondents were the nominee purchasers forthat purpose. The appellants served a counternotice under section 21 in terms that did not include any requirement for a leaseback of any part of the building. However, after the initial notice was registered, the appellants notified the respondents of an intention to grant a lease to the second appellant of a basement flat that had previously accommodated a caretaker.
The respondents considered that the grant of the lease would fall foul of the anti-avoidance provisions in section 19 of the 1993 Act. Two of the tenants in the building had a legal entitlement to the services of a resident caretaker under their leases and one of those was a participating tenant on the enfranchisement claim. In March 2008, the first appellant formally granted the lease to the second appellant for a term of 999 years at a peppercorn rent; the lease comprised the caretaker's flat and an adjacent light well.
The respondents objected to the appellants' application to register the lease and issued proceedings to determine the effect of section 19 of the 1993 Act with regard to that lease. In the courts below, it was held that, inter alia, the lease was void under section 19(l)(a)(ii) as a lease of common parts that it was necessary for the respondents to acquire for their proper management or maintenance within section 2(l)(b): see C2010;3 EWHC 422 (Ch); C2010H 2 EGLR 151. The appellants appealed. The issues were whether: (i) the caretaker's flat consisted...