Fluss v Queensbridge Terrace Residents Ltd, Court of Appeal - Lands Tribunal, August 17, 2011, [2011] UKUT 285 (LC)

Resolution Date:August 17, 2011
Issuing Organization:Lands Tribunal
Actores:Fluss v Queensbridge Terrace Residents Ltd

12© CROWN COPYRIGHT 20111UT Neutral citation number: [2011] UKUT 285 (LC)Case Number: LRA/129/2010 TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007LEASEHOLD ENFRANCHISEMENT - collective enfranchisement - immediate landlord of qualifying tenants was freehold owner of the residential block but leasehold owner of the amenity land over which rights granted under the leases - freeholder of amenity land relying on section 1(4) Leasehold Reform, Housing and Urban Development Act 1993 - parties agreeing that the nominee purchaser would not acquire the freehold of the amenity land but instead be granted rights under section 1(4) - dispute as to construction and application of section 1(4) and as to the terms of the grant to be made. IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE LEASEHOLD VALUATION TRIBUNAL OFTHE LONDON RENT ASSESSMENT PANELBETWEEN DANIEL FLUSS Appellant and QUEENSBRIDGE TERRACE RESIDENTS LIMITED RespondentRe: 3-15 Queensbridge Road,Haggeston,London E2 8NPAnd1-6 Dunloe Passage,London E2 8JS Before: His Honour Judge Nicholas Huskinson Sitting at: 43-45 Bedford Square, London WC1B 3AS on 11 July 2011Henry Webb, instructed by Bude Nathan Iwanier Solicitors, on behalf of the AppellantThe Respondent did not appear and was not represented.The following cases are referred to in this decision:Ulterra Limited v Glen Barr (RTE) Co Limited [2008] 1 EGLR 103McGuckian LRA/85/2006 - Lands Tribunal 3 January 2008Yorkbrook Investments Limited v Batten [1986] 52 P & CR 51 DECISIONIntroduction1. The Appellant appeals to the Upper Tribunal, with permission, from the interim decision of the Leasehold Valuation Tribunal for the London Rent Assessment Panel (``the LVT'') dated 11 May 2010 whereby the LVT made certain findings as to the nature of a deed of grant which the Appellant (as freeholder of certain land adjoining a block of flats) was to grant to the Respondent (as nominee purchaser of the freehold in this block of flats) over the Appellant's land.2. Stated shortly the problem which it fell to the LVT to consider arose in the following way. In 1983 Duskwood Limited owned two parcels of land, namely:(1) a freehold parcel of land on which there was constructed a substantial block of flats known as 1-27 Queensbridge Terrace, and(2) a leasehold parcel of land which can be referred to hereafter as the Amenity Land, which was held by Duskwood from the freeholder for a term of 99 years from 24 June 1982.In 1983 Duskwood granted long leases of various flats in the block on terms which granted the respective tenants not merely the long lease of their respective flat but also a right to use the Amenity Land. The terms of the leases are referred to in greater detail in due course.3. The freehold in the Amenity Land has become vested in the Appellant. The freehold of the block and the lease of the Amenity Land has become vested in Qadron Investments Limited (``Qadron''). Qualifying tenants within the block have served a notice under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993 as amended so as to exercise their right of collective enfranchisement. The right has been admitted. The proposed nominee purchaser is the Respondent.4. In the section 13 notice it was proposed that there should be acquired not merely the freehold of the block but also the freehold of the Amenity Land. However in the counter notice under section 21 Qadron, on behalf of the Appellant (who has subsequently become separately represented), indicated that it was not accepted that the freehold of the Amenity Land should be sold. Instead the counter notice made various counter proposals including the counter proposal that under section 1(4) of the 1993 Act the freehold owner of the Amenity Land (i.e. the Appellant):``.... shall grant such permanent rights (with all others now or at any time hereafter having the like right) in particular to use the same for quiet recreational purposes and such facilities (if any) as may from time to time be installed or available for use on the Amenity Land (subject to them making contributions towards the up-keep thereof) so as to ensure that thereafter the occupiers of the flats in the specified premises have as nearly as may be the same rights as those enjoyed in relation to such land by the qualifying tenants under the terms of their lease on the date on which the initial notice was given.''5. In due course the Respondent made an application to the LVT under the 1993 Act for the determination of certain matters. Before the LVT it was common ground that the above mentioned offer of rights contained in the counter notice defeated the Respondent's initial claim to purchase the freehold of the Amenity Land outright. However it was also common ground that the Respondent as nominee purchaser would acquire Qadron's long leasehold in the Amenity Land. Thus the matter proceeded before the LVT on the basis that section 1(4) operated, that the Respondent would not be entitled to acquire the freehold of the Amenity Land, and that it was necessary for the LVT to decide certain points of principle regarding the nature of the grant to be made by the Appellant to the Respondent of rights over the Amenity Land. There was a substantial dispute between the parties as to the terms which would be appropriate for this grant under section 1(4). The Respondent suggested a very simple document in what was referred to at the hearing as ``the Crews' draft'' (so called after Mr Crews who was the solicitor representing the Respondent). The Appellant put forward a much more detailed document including substantial covenants both positive and negative on the part of the grantee (i.e. the Respondent) - I will hereafter refer to that document as the ``BNI draft'' (the Appellant's solicitors who had drafted it being Messrs Bude Nathan Iwanier). In a little more detail the BNI draft proceeded on the following basis. The draftsman examined all the rights and obligations currently enjoyed by the tenants of the flats in respect of the Amenity Land, including the obligations to make payments through the service charge clause in respect of (inter alia) the cost of the administering the Amenity Land. The draftsman also noted certain powers in Qadron (as landlord) to make regulations concerning the use of (inter alia) the Amenity Land and to allow other persons also to use the Amenity Land. The BNI draft then seeks to ensure that the grant to the Respondent of the rights to use the Amenity Land is subject to the full package of obligations which bound the tenants so far as concerns the exercise under their leases of their right to enjoy the Amenity Land. Thus the BNI draft contains negative covenants regarding what the Respondent cannot do on the Amenity Land and positive covenants regarding what the Respondent must do in relation to the Amenity Land, including detailed provision for the payment of monies on the estimate of the Appellant in his absolute discretion whose decision it was provided should be entirely final and binding on the Respondent. The BNI draft also took the opportunity of laying down regulations. It did this on the basis that, although no such regulations have currently been made by the lessor under the leases of the flats, there is power to make such regulations. The BNI draft also provides that it is a condition precedent to the enjoyment of the rights granted by the Appellant that the Respondent shall comply with all of the covenants placed upon it in the document.6. There was of course an unusual feature so far as concerns this proposed grant of rights under section 1(4), namely that the Respondent is to acquire the leasehold interest (which expires in 2081) in respect of the Amenity Land. Thus until the expiry of this lease by effluxion of time or earlier determination the Respondent would enjoy rights to use the Amenity Land not by virtue of any grant of rights made by the Appellant but instead by virtue of being the leasehold owner of the Amenity Land and therefore having the right to possession thereof. However there would appear to be no legal objection to the grant now of an easements in reversion to take effect upon the determination of the lease, see Gale on Easements 18th edition paragraph 3-04 at footnote 26.7. The LVT in its interim decision reminded itself that the starting point was section 1(4) (a) of the Act. It observed that the BNI draft as proposed by the Appellant contained positive covenants and extended to regulatory matters controlling the use of the Amenity Land. The LVT observed that whilst those are perfectly normal covenants within a lease the issue was whether analogous provisions would be appropriate in the deed of grant, in particular having regard to the fact that although the leases gave a power to make regulations that power had never been used.8. The LVT appears to have been provisionally disinclined to accept that provisions such as those in the BNI draft were appropriate, but the LVT was concerned as to whether (supposing such provisions were omitted and the Appellant thereby suffered loss) the Appellant would have any right to payment of a price or compensation under the Act. The LVT asked for further submissions in writing after the conclusion of the hearing upon this question of compensation. Both parties put in submissions but, unfortunately, those submitted by the Appellant did not come to hand through some administrative error and the LVT gave its interim decision without taking these into account. In the light of this the LVT acceded to the Appellant's request that permission to appeal to the Upper Tribunal should be granted. 9. In its decision the LVT concluded that under the Sixth Schedule paragraphs 10 and following of the 1993 Act the Appellant would have the right to claim compensation for making the grant that is required of him under section 1(4). The LVT therefore concluded that the appropriate order was that the form of the deed of...

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