England and Wales Lands Tribunal

[2000] EWLands LRA_3_2000 (05 December 2000)

LRA/3/2000

LANDS TRIBUNAL ACT 1949

LEASEHOLD ENFRANCHISEMENT – whether terms of acquisition other than premium agreed for purposes of Leasehold Reform, Housing and Urban Development Act 1993 Schedule 13 para 1 – earlier decision of County Court on application under s 48(3) that no terms agreed – held that issue estoppel arose – terms other than premium agreed at hearing before LVT

IN THE MATTER of an APPEAL against a DECISION of a

LEASEHOLD VALUATION TRIBUNAL of the LONDON RENT ASSESSMENT PANEL

BETWEEN ELIAS KADOORI ELLIS and Appellants

ROGER ALAN DINES

and

OLGA LOGOTHETIS Respondent

Re: Flat 17

Elgin Court

London W9

Before: The President

Sitting at 48/49 Chancery Lane, London WC2

on 1 December 2000

The following cases are referred to in this decision:

Re Sarum Properties Ltd [1999] 17 EG 136

Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853

Robert Levy instructed by Saunders Bearman for the appellants.

Jonathan Small instructed by Harkavys for the respondent.


 


DECISION

1. This is an appeal from the determination by a Leasehold Valuation Tribunal of the London Rent Assessment Committee of a preliminary application in proceedings under section 48 of the Leasehold Reform, Housing and Urban Development Act 1993 relating to flat premises at 17 Elgin Court, Elgin Avenue, Paddington, London W9. The tenant, Olga Logothetis, on 17 September 1996 gave notice of claim to exercise her right to a new lease under section 42 of the Act. The notice set out the terms that she proposed should be contained in the new lease. The landlords, Elias Kadoori Ellis and Roger Alan Dines, on 21 November 1996 served a counter-notice under section 45 of the Act. It stated that they did not accept the proposals in the tenant's notice in respect of the premium, the ground rent, and all other terms, and they made counter-proposals. On 16 May 1997 the tenant made application to the LVT under section 48(1) to determine the matters in dispute.
2. At the time of the tenant's application to the LVT the parties were in negotiation on the terms of the new lease. Correspondence passed between their respective solicitors between 26 November 1996 and 31 October 1997. On 24 December 1997 the tenant applied to the Central London County Court under section 48(3) for an order that the landlords grant her a new lease. Her case was that all the terms of the new lease had been finally agreed on 31 October 1997. The Deputy District Judge on 4 August 1998 refused the application, acceding to the landlords' argument that the terms had been finally agreed on 29 May 1997, so that the application of 24 December 1997 had not been made, as required by section 48(5), within two months of the end of the appropriate period as defined in subsection (6). The tenant appealed, and her appeal was heard by Mr Recorder Behar, who, on 29 June 1999, dismissed it. He held that the parties did not at any time reach final agreement on the terms of acquisition for the purposes of section .
3. Following the decision of the recorder, the tenant revived the LVT proceedings, which had been stayed pending the determination of her application to the county court. On 29 October 1999 the LVT heard a preliminary application to determine whether the LVT was the appropriate forum to determine the valuation date for the purpose of the tenant's application under section 48(1) and, if it held that it was the appropriate forum, to determine the valuation date. Under Schedule 13 of the Act the premium for the new lease must be determined by reference to the valuation date, which is defined in paragraph 1 as the date when all of the terms of the acquisition, other than the premium, have been determined either by agreement or by the LVT. In its decision of 29 November 1999 the tribunal held that it had the power to determine the valuation date, and it determined that date to have been 29 May 1997. It concluded that that was the date, notwithstanding the recorder's conclusion in the county court proceedings that the parties had not reached a final agreement on the terms, because in its view different considerations applied to what constituted an agreement of terms for the purposes, on the one hand, of section 48(6) and, on the other, of Schedule 13.
4. The landlords now appeal against the LVT decision. I raised with the parties the question whether the Lands Tribunal has jurisdiction to hear an appeal against a decision that falls short of disposing of the original application to the LVT. The right of appeal under paragraph 2 of Schedule 22 to the Housing Act 1980 is a full right of appeal, so that in hearing an appeal against a decision that disposes of the whole of the subject-matter of the application the Lands Tribunal considers the merits of the application afresh and does not confine itself to a review of the LVT's decision. In Re Sarum Properties Ltd [1999] 17 EG 136 I held that there was no right of appeal in relation to an interlocutory matter and I suggested that no right of appeal arose where the decision of the LVT did not dispose of the application. Both parties in the present case are anxious that I should entertain the appeal and they invite me to do so. They point out that, in contrast to Sarum Properties, the issue is not a procedural one but is a substantive point on the subject-matter of the application; and they say that the Tribunal is simply being asked to determine it now rather than at a later stage. It seems to me appropriate that I should determine the issue now.
5. Section 48 provides:

"(1) Where the landlord has given the tenant –

(a) a counter-notice under section 45 which complies with the requirement set out in subsection (2)(a) of that section, or

(b) a further counter-notice required by or by virtue of section 46(4) or section 47(4) or (5),

but any of the terms of acquisition remain in dispute at the end of the period of two months beginning with the date when the counter-notice or further counter-notice was so given, a leasehold valuation tribunal may, on the application of either the tenant or the landlord, determine the matters in dispute.

(2) Any application under subsection (1) must be made not later than the end of the period of six months beginning with the date on which the counter-notice or further counter-notice was given to the tenant.

(3) Where –

(a) the landlord has given the tenant such a counter-notice or further counter-notice as is mentioned in subsection (1)(a) or (b), and

(b) all the terms of acquisition have been either agreed between those persons or determined by a leasehold valuation tribunal under subsection (1),

but a new lease has not been entered into in pursuance of the tenant's notice by the end of the appropriate period specified in subsection (6), the court may, on the application of either the tenant or the landlord, make such order as it thinks fit with respect to the performance or discharge of any obligations arising out of that notice.

(4) Any such order may provide for the tenant's notice to be deemed to have been withdrawn at the end of the appropriate period specified in subsection (6).

(5) Any application for an order under subsection (3) must be made not later than the end of the period of two months beginning immediately after the end of the appropriate period specified in subsection (6).

(6) For the purposes of this section the appropriate period is –

(a) where all of the terms of acquisition have been agreed between the tenant and the landlord, the period of two months beginning with the date when those terms were finally so agreed; or

(b) where all or any of those terms have been determined by a leasehold valuation tribunal under subsection (1) –

(i) the period of two months beginning with the date when the decision of the tribunal under subsection (1) becomes final, or

(ii) such other period as may have been fixed by the tribunal when making its determination.

(7) In this Chapter 'the terms of acquisition', in relation to a claim by a tenant under this Chapter, means the terms on which the tenant is to acquire a new lease of his flat, whether they relate to the terms to be contained in the lease or to the premium or any other amount payable by virtue of Schedule 13 in connection with the grant of the lease, or otherwise."

6. As I have said, the premium falls to be assessed in accordance with Schedule 13 by reference to the valuation date, and the definition in paragraph 1 of Schedule 13 is in these terms:

"...'the valuation date' means the date when all of the terms of acquisition (apart from those relating to the premium and any other amounts payable by virtue of this Schedule in connection with the grant of the new lease) have been determined either by agreement or by a leasehold valuation tribunal under this Chapter."

7. The issues are these. Firstly, do different tests apply under section 48(6) and Schedule 13 paragraph 1 for the purpose of determining whether terms have been agreed? Secondly, if not, does the recorder's decision in the county court create an issue estoppel in the landlords' favour? Thirdly, have all terms other than the premium been agreed, and, if so, when?
8. For the tenant, Mr Jonathan Small submits that three possible forms of agreement might be sufficient for the purposes of paragraph 1 of Schedule 13 – an agreement made expressly for the purpose of the LVT proceedings, an open unconditional agreement, and an agreement made subject to lease. He rejects the first for the reason that the Act does not provide in terms for it. He rejects the second for a number of reasons, including the obviously compelling reason that if all terms were unconditionally agreed there would be nothing left to determine. He says that an agreement made subject to lease would satisfy the provisions; and that the agreement reached by the parties on 29 May 1997 was on this basis. On that date Loxleys, the solicitors then acting for the landlords, wrote to the tenant's solicitors enclosing a counterpart lease for execution by the tenant. They enclosed a letter for the tenant's solicitors to send to the LVT with their consent to "confirm that terms have been agreed between the parties" and to consent to an adjournment of the proceedings "while the formalities are completed."
9. Mr Small argues that different tests apply for the purposes of section 48(6) and paragraph 1 of Schedule 13. He points to the words in section 48(6)(a): "…the date when those terms were finally so agreed." These are to be contrasted, he says, with the words in paragraph 1: "…the date when all of the terms…have been determined either by agreement or by a leasehold valuation tribunal…" This wording shows, he argues, that terms have to be "finally", or unconditionally, agreed for the purposes of section 48(6), but that an unconditional agreement is not required for the purposes of paragraph 1.
10. I am unable to accept Mr Small's submissions. The way in which section 48 is intended to operate is, in my judgment, clear. It establishes two procedures where the landlord has given a counter-notice. One is the determination by the LVT of any terms of acquisition that are in dispute between the parties. The other lies with the county court, which is given the power in effect to order specific performance in relation to the new lease once the terms of the acquisition have been determined. The terms are determined either by agreement between the parties or by the LVT. So long as any of the terms of acquisition are not agreed those terms remain in dispute and it is for the LVT to determine them. Terms which are agreed cease to be in dispute. The LVT only has jurisdiction where there are terms that are not agreed, and the county court only has jurisdiction where all the terms have been agreed or determined by the LVT. Any agreement reached is necessarily reached in the context of the provisions of section 48. Any terms agreed are "terms of acquisition" of the new lease to which the tenant is entitled under the Section. Any agreement reached which is not intended to create rights independent of the statutory provisions is thus an agreement made for the purpose of those provisions. It has to be a complete agreement in the sense that each party commits itself unconditionally to such of the terms as are agreed.
11. I cannot accept Mr Small's contention that the reference in section 48(6)(a) to "…the date when those terms were finally agreed…" implies that something less than complete agreement on the terms is sufficient for the purposes of paragraph 1 of Schedule 13. The adverb "finally" is in my judgment there for the purpose of identifying the time of agreement for the purpose of the commencement of the two month period within which application to the county court must be made. The terms may all have been agreed at one time or they may have been agreed at different times. The words "…the date when those terms were finally agreed…" are simply the short way of saying "…the date when all the terms of acquisition were agreed, if they were all agreed at one time, or the date when the last of the terms was agreed, if they were agreed at different times." In paragraph 1 the use of the perfect tense "…the date when all the terms…have been determined…" makes the insertion of "finally" unnecessary.
12. The two procedures created by section 48 are complementary and mutually exclusive. The LVT procedure applies where not all of the terms of the acquisition have been agreed, and the county court procedure applies where all the terms have been agreed or have been determined by the LVT. There is no scope within the scheme of the provisions, in my judgment, for terms to be agreed for the purposes of the application of one procedure but not of the other.
13. The effect of the judgment of the recorder in the county court proceedings falls to be considered in the light of this conclusion. Issue estoppel arises where (1) the same question has been decided in some earlier proceedings; (2) the judicial decision that is said to create the estoppel was final; and (3) the parties to the judicial decision were the same persons as the parties to the proceedings in which the estoppel is raised: see Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853, per Lord Guest at 935. In the county court proceedings the issue was whether all the terms of acquisition had been agreed between the parties; and, in particular, whether, on a proper construction of the correspondence, agreement on the terms had been reached on 29 May 1997 or alternatively on 31 October 1997. The recorder held, in a decision that was final, that none of the terms had been agreed. He said this:

"In my judgment, the terms of acquisition were not finally agreed as at 29 May 1997. It is clear from the solicitors' letters of 29 May 1997 and 17 June 1997 that each party was reserving the right to go back to the Leasehold Valuation Tribunal, if the new lease was not completed. There would have been no need to reserve this right, unless there was a prospect of matters remaining in dispute, which might have to be determined by the Tribunal. If Loxleys had considered there was binding agreement, it is inconceivable that they would have written to Harkavys on 11 August 1997, pointing out that 'negotiations for the lease have now been ongoing for some months', and stating that they were instructed to ask the London Rent Assessment Panel to re-list the hearing. When Loxleys wrote to the Tribunal on the same date, they stated in terms that the Lease had not as yet been agreed."

14. The recorder's conclusion that the terms of acquisition were not finally agreed is a conclusion that applies to all the terms. He was not saying that each party was reserving the right to go back to the LVT on the issue of the premium alone. The parties in the present proceedings are the same as in the county court, although it is now the tenant that advances the argument that terms were agreed on 29 May 1997. In my judgment that question has been concluded by the decision of the recorder. Issue estoppel applies.
15. I would add that Mr Small is confronted with a particular difficulty on the facts. He places reliance on the letter of 29 May 1997 from the landlords' solicitors as showing that agreement was reached on terms of the acquisition for the purpose of the application to the LVT. But the terms so agreed were all the terms, including the premium, without distinction between them. The LVT only had power under section 48(1) to determine the matters in dispute. I do not see how, if the letter of 29 May 1997 established what terms were agreed between the parties, there would be anything for the LVT to determine. On the other hand, if the letter did not amount to agreement on the premium, it did not amount to agreement on any of the other terms.
16. The next question is whether, although no agreement on any terms had been reached on 24 June 1999 (the date of the recorder's judgment), there has since then been agreement on all of the terms other than the premium. Mr Robert Levy for the landlords says that no agreement has yet been reached. Indeed he argues that no agreement will have been reached until the completion date has been determined, even if all other terms have been agreed. The answer to this particular point, however, is that the completion date is not one of the terms of the acquisition within the meaning of the provisions. Its determination is one element of the procedure for giving effect to the tenant's notice under section 42. Under section 98(1), the procedure for giving effect to the tenant's notice is such as may be prescribed by regulations; and the Leasehold Reform (Collective Enfranchisement and Lease Renewal) Regulations 1993 prescribe that procedure, including, in paragraph 7 of Schedule 2, the preparation of the lease and, in paragraph 8, completion. It is not necessary, therefore, for there to have been agreement on the completion date.
17. In its decision the LVT said:

"It has not been suggested that there is any issue as to the terms of acquisition, other than the premium; and no proposed terms other than those agreed by 29 May 1997 have been advanced on the landlord's behalf, either in the correspondence or before us.

Mr Small did not argue that the premium was agreed: indeed it would almost certainly not have been open to him to do so in the light of the Recorder's decision from which there has been no appeal. That issue therefore remains to be decided."

18. Mr Levy confirmed that the LVT had correctly understood the stance that the landlords took at the hearing on 29 October 1999 - that there was no issue as to the terms of the acquisition other than the premium. The adoption of that stance at the hearing amounts, in my judgment, to acceptance on the landlords' part of the terms agreed by 29 May 1997 other than the premium. At that point, therefore, those terms ceased to be in dispute, and there was agreement on them. Accordingly in my judgment the valuation date for the purposes of determining the premium under Schedule 13 is 29 October 1999. The appeal is allowed on this basis.
19. I invited the parties to address me on costs. Mr Levy submitted that if I determined the valuation date to be 29 October 1999 I should make no order as to costs. Mr Small reserved his submissions. It appears to me, in the light of Mr Levy's submission, that the right order is likely to be that there should be no order as to costs, but before coming to a decision on the matter I would wish to take account of any representations that may be made on behalf of the tenant. A letter giving the procedure for this accompanies this decision. This decision will only become final, and the appeal provisions of section 3(4) of the Lands Tribunal Act 1949 will only arise, when the question of costs is determined.

DATED 5 December 2000

George Bartlett QC, President

ADDENDUM ON COSTS

20. The parties have been given the opportunity to make representations on the suggested order on costs. No representations have been received on behalf of the tenants disagreeing with the landlords' submission, which I have said that I am minded to accede to, that there should be no order as to costs. Accordingly there will be no order as to costs.

DATED 26 February 2001

George Bartlett QC, President