Howard De Walden Estates Ltd. v Malekshad [2003] EWHC 3106 (Ch) (19 December 2003)

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England and Wales High Court (Chancery Division) Decisions

You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Howard De Walden Estates Ltd. v Malekshad [2003] EWHC 3106 (Ch) (19 December 2003)
URL: http://www.bailii.org/ew/cases/EWHC/Ch/2003/3106.html
Cite as: [2003] EWHC 3106 (Ch), [2004] WLR 862, [2004] 4 All ER 162, [2004] 1 WLR 862

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		Neutral Citation Number: [2003] EWHC 3106 (Ch)
		Case No: CL757662, Appeal Reference: CC/2003/PTA/0641

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

19th December 2003

B e f o r e :

THE HONOURABLE MR JUSTICE NEUBERGER
____________________

Between:

	HOWARD DE WALDEN ESTATES LIMITED	Appellant/ Defendant
	- and -
	NASSER MALEKSHAD	Respondent/Claimant

____________________

Miss Judith Jackson QC and Mr Timothy Harry (instructed by Speechly Bircham) for the Appellant.
Mr Paul Morgan QC (instructed by Messrs. Mishcon De Reya) for the Respondent.
Hearing dates : 27th, 28th November 2003
____________________

HTML VERSION OF JUDGMENT
____________________

Mr Justice Neuberger:

The Facts

This is an appeal brought by Howard de Walden Estates Limited ("the Landlord"), in its capacity as the landlord under a lease made on 6^th July 1948 for a term expiring on 6^th April 1997 ("the Lease"). The Lease related to a large house (now converted into flats) at 76 Harley Street ("the main house"), and an associated smaller house, 27 Weymouth Mews ("the mews house"), in London W1. A small part of the basement of the main house (amounting to 27.3 square metres) extends under the mews house. The issues raised concern the meaning and application of certain provisions of the Leasehold Reform Act 1967 as amended ("the 1967 Act"). All references to sections or Schedules hereafter are to sections of, or Schedules to, the 1967 Act, unless the contrary is stated.

At all material times, the tenant under the lease was Mr Nasser Malekshad ("the Tenant"). On 4^th April 1997, he served on the Landlord a notice in the prescribed form (a "notice of claim") giving "notice of [his] desire to have the freehold of the house and premises" described in the schedule to the notice. In that schedule "the address of the house" was given as 76 Harley Street and 27 Weymouth Mews. The "Particulars of the house and premises sufficient to identify the property to which your claim extends" were stated to be "The house and premises… are the whole of the premises demised by the Lease…". In his notice of claim, the Tenant said that he resided in a flat in the main house.

On 28^th August 1997, the Landlord served a counter-notice challenging the Tenant's claim for the freehold on the grounds that:

i) The main house and the mews house did not "taken together amount to a house" within the meaning of… the1967 Act;

ii) Neither the main house nor the mews house could, "taken separately", constitute a "house" within the meaning of the 1967 Act;

iii) If the main house did constitute such a "house", the mews house could not be acquired with it;

iv) The Tenant did not occupy any part of the main house as his residence, as he claimed.

The Tenant then applied to the Central London County Court for a declaration that he was entitled to acquire the freehold of the property comprising the main house and the mews house pursuant to the provision of the 1967 Act. In its answer in those proceedings ("the first proceedings"), the Landlord challenged the Tenant's claim, essentially on the same grounds as those raised in its counter-notice. It was agreed that the questions raised by the first three grounds of opposition, i.e. whether there was any property which was in principle enfranchiseable, and if so what property, should be determined as a preliminary issue.

The issues between the parties arose in this way. Section 1 entitles "a tenant of a leasehold house… to acquire… the freehold or an extended lease of the house and premises where… his tenancy is a long tenancy" provided that certain conditions are fulfilled. Over the 35 years or so since the 1967 Act has been passed, it has been subject to a considerable number of amendments a fair proportion of which have involved relaxing, or even removing, many of those conditions. At the time of the 1997 Notice, one of the conditions which a tenant had to fulfil was to establish that he resided in the house, and had done so for a total of three years in the previous ten years.

Section 2 is concerned with the meaning of "house" and "house and premises". Section 2(1) gives the word "house" a generally fairly wide meaning. Section 2(2), however, excludes from the ambit of the 1967 Act "a house which is not structurally attached and of which a material part lies above or below a part of the structure not comprised in the house". Section 2(5) entitles a landlord, within two months of the service of a notice of claim, to serve a counter-notice objecting to the inclusion in the enfranchisement of "any part of [the house and premises] which lies above or below other premises". Given the terms of section 2(2), this provision applies only where the "part" of the house concerned was not "material". (For completeness, it should be mentioned that paragraph 7(2) of Schedule 3 gives the Landlord the alternative right of giving a counter-notice within the two month period which reserves his position on this point).

So far as the first proceedings were concerned, the position in summary in the County Court was as follows. In light of the wide definition of "house" in section 2(1), the first question was whether the main house and mews house, taken together, constituted a "house" within the 1967 Act, as the Tenant contended. If they did not, the next question was whether the main house alone was disqualified from constituting a "house", in light of the provisions of section 2(2), as the Landlord contended. If, as the Tenant contended, the main house did constitute such a "house", the third question was whether the Tenant could nonetheless enfranchise the mews house together with the main house, on the basis that the mews house constituted "premises", given that the right to enfranchise extends to the "house and premises".

On 28^th February 2000, His Honour Judge Ryland held that:

i) The Tenant could not enfranchise the main house and the mews house because, taken together, they did not constitute a "house" within section 2;

ii) The Tenant could not enfranchise the main house, because a "material part" of its structure was under the structure of the mews house. In reaching this conclusion the Judge followed the decision of the Court of Appeal in Duke of Westminster –v- Birrane [1995] QB 262;

iii) If the Tenant could have enfranchised the main house, he could not also enfranchise the mews house, as the latter did not constitute "premises".

The Tenant appealed. The Court of Appeal disagreed with Judge Ryland's first conclusion, and held that the property as a whole constituted a "house", and that, consequently, subject to the outstanding issue of residence, the Tenant was entitled to acquire the main house and the mews house pursuant to the 1967 Act. However, if that was wrong, they agreed with Judge Ryland on his other two conclusions: like him, they were bound by Birrane.

The decision of the Court of Appeal, reported at [2002] QB 364, was appealed to the House of Lords by the Landlord. The decision of the House of Lords, reported at [2002] 3 WLR 1881, resulted in yet another permutation of views on the first two points, and yet again the same view on the third point. In agreement with Judge Ryland, the House of Lords held that the two houses taken together were not a "house" within the 1967 Act. However, in disagreement with both Judge Ryland and the Court of Appeal, the House of Lords, effectively overruling the reasoning in Birrane, held that the Tenant could, in principle, enfranchise the main house, although the mews house was not enfranchiseable with it.

Accordingly, as at the date of the House of Lords' decision, 5^th December 2002, the position was as follows. First, the Lease had contractually expired (indeed the contractual term date was more than 5 years passed). Secondly, before the expiry of the Lease, the Tenant had served a notice of claim in the appropriate form seeking the freehold of the main house and the mews house. Thirdly, the House of Lords had held that, subject to any other ground of opposition which the Landlord could raise, the Tenant could enfranchise the main house, but not the mews house. The position was alluded to in the speech of Lord Scott of Foscote at paragraph 113 in the following terms:

"[The 1997 Notice seeks] enfranchisement of 76 Harley Street and 27 Weymouth Mews together. There is, at present, no notice that seeks enfranchisement of 76 Harley Street alone. If [the notice] is proposed to be amended so as to exclude reference to 27 Weymouth Mews, the amendment should not, in my opinion, be permitted otherwise and on terms that allow the freeholders a reasonable period, not exceeding two months, within which to serve a sub-section (5) notice relating to the 27.3 square metres."

Lord Hope, at paragraph 18, agreed with Lord Scott. It appears from paragraph 1 that Lord Nicholls of Birkenhead agreed with Lord Scott generally, save in respect of one point not relevant to these proceedings. From paragraph 74, it seems that Lord Millett agreed generally with Lord Nicholls (and hence with Lord Scott), and indeed his observations at the end of that paragraph suggest specific agreement with what Lord Scott said in paragraph 113.

In February 2003, the Tenant served a second notice of claim ("the 2003 Notice") on the Landlord, seeking to enfranchise the mews house pursuant to the 1967 Act. The present application was issued by the Tenant in the Central London County Court. In these proceedings, the Tenant seeks permission to amend his notice of claim of 4^th April 1997 ("the 1997 Notice") so as to limit its ambit to the main house, or, to put it another way, to delete the reference to the mews house from the 1997 Notice. That application came before His Honour Judge Cooke.

The issues

As the case developed orally and in writing, the issues became crystallised as follows:

i) Does the Tenant need to amend the 1997 Notice at all?

If, as he contends, the Tenant does not need to amend the notice, then that is the end of the matter. Subject to the question of residence, the 1997 Notice is valid, and, in light of the decision of the House of Lords, he is entitled to rely on it to enfranchise the main house, but not the mews house, always subject to the question of residence. However, if the Tenant needs to amend, the following questions arise.

15. ii) Should the amendment of the 1997 Notice be treated as little more than an administrative act?

If the amendment of the 1997 Notice would, as the Tenant contends, be little more than an administrative act, then the consequences are effectively the same as if the notice does not need amending at all, and the remaining questions become irrelevant.

iii) If the 1997 Notice needs amendment, and an amendment is not an administrative act, what is the correct approach to the application to amend?

I turn to the conditions which the Landlord contends should be imposed.

iv) Should the valuation date for the freehold of the main house be moved from 4^th April 1997 to a date in 2003?

v) In relation to the 2003 Notice served by the Tenant (to enfranchise the mews house):

a) Is it a valid notice of claim despite having been served after the Lease contractually expired, and, if so

b) Should the court require it to be withdrawn as a condition of giving permission to amend the 1997 Notice?

vi) Also in relation to the mews house:

a) Is the Tenant liable to pay a rack rent from 6^th April 1997, and, if not,

b) Should the Tenant be required to pay such a rent as a condition of being permitted to amend the 1997 Notice?

Judge Cooke decided that the 1997 Notice did not in fact require amendment. He also decided that the effect of the 1997 Notice was to continue the Lease, so that the 2003 Notice was valid in principle, and that the Tenant was not obliged to pay a rack rent for the mews house. Although he decided that the 1997 Notice did not require amendment, he considered the three conditions for amendment for which the Landlord contended, i.e. issues (iv), (v)(b), and (vi)(b), and concluded that he would not impose any of those conditions.

The Landlord now appeals, with the permission of Hart J. The issues other than the three issues to which I have just referred, are all issues of law, raising points of some difficulty under the 1967 Act. However, the three issues to which I have referred, namely issues (iv), (v) b) and (vi) b) above involved an exercise of discretion. As Mr Paul Morgan QC, who appears for the Tenant, says, it is important to bear in mind that, when considering those issues, my jurisdiction is limited because I am reviewing the Judge's discretion. In other words, it is not enough for me to reach a different view from that of Judge Cooke. I must be satisfied that he erred in the exercise of his discretion, either by taking into account something he ought not to have taken into account, or by failing to take into account something he ought to have taken into account, or by failing to apply the right principles, or by reaching a conclusion which, properly advised, no reasonable judge could have reached.

The 1967 Act

In order to understand the various issues that need to be decided, it is necessary to set out some of the provisions of the 1967 Act. I have already dealt, so far as necessary, with the question of what constitutes a "house". Until 2002, the 1967 Act required a tenant who wished to enfranchise a house to be residing in the house (or part of it) at the date of service of the notice, and for a minimum specified period prior to such service. As I have mentioned, there remains an issue between the Landlord and the Tenant in this case as to whether the Tenant satisfied that requirement at the date of the service of the 1997 Notice. The Tenant did not reside in the mews house before 6^th April 1997. It has not been necessary for the purposes of the present application to investigate the question whether he moved into the mews house after that date. It does not matter for the purposes of the 2003 notice whether the Tenant did reside in the mews house before he served the 2003 notice because by virtue of section 140 of the Commonhold and Leasehold Reform Act 2002 ("the 2002 Act"), the residence requirement was removed prior to service of the 2003 notice.

As I have mentioned, in order to qualify under the 1967 Act, the Tenant must hold the house concerned under "a long tenancy", which is defined in section 3(1) as:

"Subject to the provisions of this section, a tenancy granted for a term of years served and exceeding 21 years…"

Section 3(5) provides:

"References… to a long tenancy include any period during which the tenancy is or was continued under Part I or II of the Landlord and Tenant Act 1954 under Schedule 10 of the Local Government and Housing Act 1989 or under the Leasehold Property (Temporary Provisions) Act 1951."

There are detailed provisions in the 1967 Act relating to the contents and consequences of service of a notice by a tenant claiming the freehold, and they are to be found in Schedule 3. All references hereafter to paragraphs are to paragraphs of that Schedule.

Paragraphs 1 and 2 are concerned with the interrelationship of the Landlord and Tenant Act 1954 ("the 1954 Act") and the 1967 Act. Part I of the 1954 Act gives protection to an occupying residential tenant of premises held under a long lease, provided the value of the property is within certain limits. Part II of the 1954 Act gives protection to tenants of business premises (irrespective of the length of the lease or the value of the property concerned). Both Parts of the 1954 Act have the effect, in general terms, of continuing a tenancy within their ambit, unless and until either the landlord or the tenant serves a notice, in the prescribed form, terminating the tenancy (in which case certain consequences apply). However, the two Parts work in different ways where the tenant is occupying part only of the premises. Part I continues a tenancy, by virtue of section 3, but only in so far as it relates to that part of the demised premises which the tenant is occupying - see section 3(2)(b) – until the tenancy is determined by a notice from the landlord under section 4, or by the tenant under section 5, of the 1954 Act. Part II continues the tenancy in respect of the whole of the demised premises, by virtue of sections 23 and 24, even where the tenant is only occupying part, until determined by a notice from the landlord under section 25, or by the tenant under sections 26 or 27, of the 1954 Act.

Paragraph 1(1) of Schedule 3 to the 1967 Act effectively precludes a tenant from serving a notice of claim in respect of "any property" under a tenancy after he has already given notice to terminate "the tenancy of that property". Paragraph 1(3) provides that a notice under section 26 or section 27 in Part II of the 1954 Act is to be treated as a notice to terminate. It is also clear that a notice under section 5 in Part I of the 1954 Act is included in paragraph 1(1).

Paragraph 2(1) effectively invalidates a notice of claim for the "freehold… of any property" if it is served more than two months after the service of a landlord's notice "terminating the tenancy of that property" under section 4 or section 25 of the 1954 Act.

Paragraph 2(2) provides that a landlord's notice under the 1954 Act terminating "a tenancy of any property" is to be "of no effect if given… during the currency of a claim made in respect of a tenancy to acquire the freehold… of that property", and that such a notice "shall cease to have effect on the making of such a claim". Paragraph 2(3) provides that, where a landlord's notice under the 1954 Act ceases to have effect because of a claim made by the tenant for the freehold, then, if and when that claim fails, the landlord may serve a fresh notice under the 1954 Act, providing for termination in three months time, rather than the normal six months time.

Paragraph 3(1) is in these terms:

"Where a tenant makes a claim to acquire the freehold… of any property, then during the currency of the claim and for three months thereafter the tenancy in that property shall not terminate either by effluxion of time or in pursuance of a notice to quit given by the Landlord…; but if the claim is not effective and but for this sub-paragraph the tenancy would have so terminated before the end of those three months, the tenancy shall so terminate at the end of the three months."

Section 37(1)(c) defines "notice to quit" as "a notice to terminate a tenancy… given in accordance with provisions (whether express or implied) of that tenancy".

I must also mention paragraph 5(1). Subparagraph (a) makes it clear that references to claims to acquire the freehold in Schedule 3 apply to invalid claims. Subparagraph (b) states that a claim is "effective" when the freehold is acquired pursuant to it. Subparagraph (c) provides that for the purposes of Schedule 3:

"References to the currency of a claim shall be taken as references to the period from the giving of a notice which has effect or would, if valid, have effect to the time when the notice is effective or ceases to have effect, or (not being a valid notice) is set aside by the court or withdrawn or would, if valid, cease to have effect…"

Paragraph 6 is concerned with the tenant's notice of claim. Paragraph 6(1) is in these terms:

"A tenant's notice… of his desire to have the freehold… of a house and premises shall be in the prescribed form, and shall contain the following particulars:-

(a) the address of the house and sufficient particulars of the house and premises to identify the property to which the claim extends

(b) such particulars of the tenancy and… of the rateable value of the house and premises as serve to identify the instrument creating the tenancy and show that… the tenancy is and has at the material time been a long tenancy at a low rent;

(c) the date on which the Tenant acquired the tenancy;

(d) the period for which… the Tenant has and has not occupied the house as his residence [and stating] what parts, if any, of the house have not been in his own occupation and for what periods…"

Paragraph 6(3) provides:

"The notice shall not be invalidated by any inaccuracy in the particulars required by this paragraph or any misdescription of the property to which the claim extends; and where the claim extends to property not properly included in the house and premises, or does not extend to property that ought to be so included, the notice may with the leave of the court and on such terms as the court may seek fit to impose, be amended so as to exclude or include that property."

Paragraph 7 requires a landlord to give a counter-notice within two months of the service of a notice of claim. In such a counter-notice, the landlord must say whether or not he admits the tenant's right to acquire the freehold, and if he does not admit it, on what grounds. As I have mentioned, paragraph 7(2) entitles the landlord, albeit within two months, to preserve his position in relation to the possible exercise of a right under section 2(5).

Section 1(1) entitles a qualifying tenant to acquire the freehold of the house and premises "on fair terms". Those terms include "the price payable" being determined in accordance with section 9(1) or (1A), depending on the value of the house. Whichever sub-section applies (and it is section 9(1A) which applies in relation to the main house) the valuation exercise is to be carried out by reference to a notional sale of the freehold of the relevant house and premises "at the relevant time", an expression defined in section 37(1)(d) as the date, in effect, of the notice of claim.

Section 9(3) enables the tenant to withdraw the notice of claim if he finds, or expects to find, the price determined unacceptable. However, in such a case, section 9(3)(b) precludes the service of a further notice of claim for three years.

Finally, I should refer to section 20. Section 20(5) provides that where a notice of claim is not served in good faith or was in some other way dishonest, the Court may award the landlord compensation. Section 20(6) further entitles the Court in such a case to forbid the tenant from serving a fresh notice of claim for five years.

I can now turn to the various issues which have to be determined, and which have been ably argued by Miss Judith Jackson QC and Mr Timothy Harry for the Landlord, and by Mr Morgan for the Tenant.

Does the 1997 Notice require amendment

The 1997 Notice, upon which the Tenant relies for the purpose of enfranchising the main house, seeks to enfranchise the mews house as well as the main house. Miss Jackson contends that, unless the notice is amended pursuant to the second part of paragraph 6(3), the Tenant cannot enfranchise the main house, because there is no notice of claim seeking to enfranchise the main house. This is on the basis that the notice he relies on seeks to enfranchise a different entity, albeit a composite entity which includes the main house, namely the main house and the mews house. For the Tenant, Mr Morgan, on the other hand, relies on the familiar proposition that the greater includes the less, and that the there is nothing wrong in the Tenant relying on a notice of claim which seeks to enfranchise the mews house as well as the main house, in order to support his claim to enfranchise the main house alone. He draws support from the first part of paragraph 6(3), on the basis that the reference to the mews house in the 1997 Notice and "inaccuracy in the particulars" or a "misdescription of the property", which does not invalidate the notice. Judge Cooke agreed with the Tenant on this point.

I take a different view. Where an applicant serves a notice seeking to enforce certain rights in relation to property, and the notice refers to more property than that to which his rights extend, it seems to me that there are arguments, based both on practicalities and on principle, which could be fairly invoked to support such a notice being valid or invalid. In broad terms, the applicant can say that the greater includes the less, and that the respondent can scarcely complain if the applicant is ultimately seeking less than what was being asked for in the notice. On the other hand, the respondent can contend that the applicant should not be allowed to claim something different from that which he asks for in his notice, and that the respondent may well have acted to his detriment on the justified assumption that the applicant was seeking that which he stated in his notice.

In the present context, one is concerned with the effect of a notice seeking to invoke a statutory right, and whose form, content, and consequences are statutorily prescribed. In those circumstances, it appears to me that the consequences of a tenant including more property in his notice of claim than he is entitled to claim, must primarily be governed by the relevant statutory provisions. In that connection, it appears to me that the only provision which directly bears on the present issue is paragraph 6(3).

In my judgment, in this connection, the natural and sensible reading of paragraph 6(3) as a whole is as follows. The paragraph distinguishes between "any inaccuracy in the particulars" and "any misdescription of the property", on the one hand, and, on the other hand, the exclusion (or inclusion) of property which ought (or ought not) be included as part of the relevant house and premises. The former types of error are of a nature which will not invalidate the notice: that is what the first part of paragraph 6(3) provides. The second type of error will, unless the notice is appropriately amended, invalidate the notice: that is implicit.

It seems to me that the way in which paragraph 6(3) is worded effectively drives one to this conclusion. If the wrongful inclusion or exclusion of property constitutes an "inaccuracy" or "misdescription", then it would not invalidate the notice, and I cannot see any sensible reason why the notice would need to be amended. Mr Morgan suggests that it might be a sensible tidying up, or that it would be required if the tenant applied to the court for a declaration that he was entitled to acquire the relevant house and premises and the landlord did not attend. I am unpersuaded by that. Either the parties will agree the extent of the house and premises, in which case amendment of the notice is pointless, or the court will declare the extent of the house and premises, in which case an amendment is also pointless, unless of course an amendment is necessary to validate the notice.

Quite apart from this, it does not seem to me that, as a matter of ordinary language, the inclusion of the mews house in the 1997 Notice constituted an "inaccuracy in the particulars" or "misdescription of the property", as those terms are commonly used. The reference in the notice to the mews house as well as the main house "accurately" "described" the property to which the Tenant intended his claim to extend: there was therefore neither an "inaccuracy" nor a "misdescription". What the claim under the 1997 Notice undoubtedly did was to "extend… to property not properly included in the house or premises".

It is true that there is nothing in the second part of paragraph 6(3) which provides that, if a notice of claim extends to property not properly included in the house or premises, or does not extend to property that ought to be so included, it will be invalid in the absence of an appropriate amendment. However, it appears to me that it is effectively implicit in the second part of paragraph 6(3) that, unless a notice of claim which claims too much or not enough, is amended appropriately, it will be invalid.

It is hard otherwise to understand what the purpose of the amendment provision towards the end of paragraph 6(3) is. Further, there is the contrast between the terms and effect of the two parts of paragraph 6(3). I think it is important to emphasise that it is not merely a question of trawling through the detailed provisions of schedule 3, and alighting upon the second part of one sub paragraph, to reach such a conclusion. As I have indicated, it appears to me, in the absence of a provision such as paragraph 6(3), that there are arguments both ways as to whether a notice which claimed too much or little, or indeed was otherwise defective because of an inaccuracy or misdescription, could, without more, be valid. In the absence of a provision such as paragraph 6(3), there would be a powerful argument for saying that, if the notice did not comply with paragraph 6(1)(a) and inaccurately specified the "particulars of the house and premises" and "the property which to which the claim extends" it would be an invalid notice, and therefore could not give rise to a valid claim under the 1967 Act.

A number of miscellaneous points appear to me to support this conclusion. First, at the time the 1967 Act came into force, the common law relating to notices was believed to be more strict than it is now: contrast Hankey v Clavering [1942] 2 KB 26 with Mannai Investment Co. Ltd -v- Eagle Star Life Assurance Co. Ltd [1997] AC 749. Accordingly, the legislature would probably have envisaged that, in the absence of a provision such as paragraph 6(3), a notice which failed to comply relatively strictly with all the requirements of paragraph 6(1) would be likely to be ineffective.

Secondly, the effect of a notice of claim is to create a "statutory contract" between the Landlord and the Tenant for the transfer of the freehold "of the house and premises" by the Landlord to the Tenant. In this connection, see section 8(1) of the 1967 Act and Collin v Duke of Westminster [1985] QB 581 at 595C per Oliver LJ. In my view, if the effect of a notice of claim is to give rise to this statutory contract, one would expect it, either by virtue of its initial drafting, or by an amendment, accurately to reflect the house and premises the subject matter of the contract.

Thirdly, there is the effect of a notice of claim. The relationship of landlord and tenant gives rise to many types of notice, some under common law, some pursuant to the contract, and some pursuant to statute. There can be few types of notice which impinge more greatly on a landlord's rights than a tenant's notice of claim under the 1967 Act: if valid, its effect is to deprive the Landlord, against his will, of the whole of his interest in a substantial part (indeed, normally all) of the property comprised in the tenancy. In those circumstances, it is, to put it at its lowest, unsurprising that the law should require such a notice, either in its original form or by amendment, to reflect wholly accurately that which the tenant is entitled to acquire.

Finally, although the point was not argued in any detail in the House of Lords, and although the passage is (unsurprisingly) not wholly unequivocal on the point, it appears to me, in paragraph 113 of his speech Lord Scott proceeded on the assumption that, before the 1997 Notice in this case could be valid, it would have to be amended.

Is the amendment to the 1997 Notice purely an administrative act?

On behalf of the Tenant, Mr Morgan contends that, if the 1997 Notice requires amendment in order to be effective (as I have concluded that it does), the amendment is little, if anything, more than a "tidying up operation". It seems to me that that amounts to saying the amendment is little more than an administrative act. In my opinion, while in some, indeed in many, cases under the second part of paragraph 6(3), an amendment will be permitted without difficulty and without conditions, it would be wrong to treat the jurisdiction as being no more than a tidying up operation. In my judgment, the paragraph makes it clear that a necessary amendment might be refused, in light of the word "may", and also by providing that the amendment may only be allowed "on … terms". Furthermore, whether to allow the amendment is a matter "for the Court", as is the question of the terms on which the amendment is to be allowed.

Quite apart from this, the condition proposed by Lord Scott in the House of Lords in paragraph 113 of his speech is difficult to reconcile with the notion that any necessary amendment should be allowed effectively as a matter of course. More generally, a landlord might establish that, if a necessary amendment sought by the tenant were granted, it would cause the landlord substantial prejudice for which the landlord himself could in no way be held responsible, and for which the tenant could fairly be blamed because of the way in which the defective notice was drafted. In such a case, it would seem quite unfair if the Court had no jurisdiction to refuse a necessary amendment, or at least to permit such an amendment only on terms that the tenant fully compensates the landlord for any loss he suffers thereby.

Principles upon which an amendment would be permitted

Given that I am satisfied that the wording of paragraph 6(3), and the application of normal principles, indicate that the Court has a discretion whether, and if so in what terms, to permit a necessary amendment to a tenant's notice, it appears to me that it could be dangerous to seek to lay down any general rules upon which the Court should exercise its statutory discretion.

Where a statutory provision appears to give the Court a wide and unfettered discretion, I would have thought it inappropriate for any Court to lay down any rules, other than of the most general nature, as to how that discretion is to be exercised. The circumstances in which an amendment is sought can be so infinitely various. The laying down of general rules, which may well seem appropriate in light of the facts of one particular case, may lead, in light of the unforeseeable facts of the later case, either to an unjust result in the later case or to a rewriting of those rules. That point is all the more telling in the present instance, because this appears to be the first case in which an application of the second part of paragraph 6(3) has had to be directly considered.

Having said that it is dangerous, indeed inappropriate, to lay down any rules, other than of the most general nature, I think it is possible to make one or two general points, albeit that even they cannot be regarded as absolute rules.

First, except where the amendment is required because of dishonesty, or something akin thereto, on the part of the tenant, I believe that the Court should normally grant the amendment without conditions, unless the landlord can establish any relevant prejudice as a result of the amendment. As with amendments to statements of case in proceedings (the analogy proffered by Mr Morgan), it would appear disproportionate and unfair to refuse a tenant permission to amend his notice of claim so as to enable him to obtain the freehold, in circumstances where the need for the amendment arises from an honest error in drafting the notice, which the Court can permit to be put right, and as a result of which the landlord can show no relevant prejudice.

Secondly, what I have called "relevant prejudice", which the landlord can invoke, is not the prejudice which he suffers as a result of an invalid notice becoming a valid notice. It is the prejudice which reasonably arises from the fact that he was served with the invalid notice which is now to be validated, rather than having been served with a valid notice initially. Thirdly, even when the landlord can show relevant prejudice, it may, depending on the circumstances, be appropriate to permit an amendment without terms, or at least without terms which fully compensate the landlord for all the relevant prejudice. However, in the absence of special factors, it seems to me that it would normally be unfair not to impose terms which effectively compensate the landlord for all the relevant prejudice he suffers, unless he can be said to be in some way to blame for some or all of that relevant prejudice.

Fourthly, when considering what, if any terms to impose, I would have thought that the Court would normally be restricted to compensating the landlord for some or all of the relevant prejudice he had suffered. In that connection, it again appears to me that the fact that the amendment converts an invalid notice into a valid notice, with the result that the tenant can now acquire the freehold of the relevant house and premises, is not in itself relevant prejudice. Miss Jackson argues that it does constitute relevant prejudice because, in the absence of permission to amend the notice, the tenant would have no right to acquire the freehold. That submission overlooks the point that it is inherent in every notice of claim that it can be amended by the Court under paragraph 6(3). Accordingly, to be a little pedantic, what was served by the Tenant in this case on 4^th April 1997 was not an invalid notice pursuant to which he could not acquire the freehold, but a notice which, if unamended, would not enable him to acquire the freehold, but which always had the potential to be amended so that he could acquire the freehold. I return to Mr Morgan's analogy. When considering whether to give permission to amend a claimant's statement of case to add a new claim, and if so on what terms, the Court will rarely (save where there is a limitation factor) take into account in favour of the defendant the fact that, without the amendment, the defendant may escape liability.

It cannot be too strongly emphasised that even the general observations, which I have set out above as to the exercise of the discretion under the second part of paragraph 6(3), cannot be treated as general rules as to how the discretion conferred by that paragraph should be exercised. Each case must turn on its own particular facts. However, as there has been a debate between counsel as to the general approach to be adopted in a case such as this, it seemed to me to appropriate to discuss the issue generally, before turning to the specific issues before me.

In that connection, the Landlord maintained the position which it took before Judge Cooke, namely that, realistically, it did not object to the Tenant amending the 1997 Notice, so as to limit it to the main house, provided that certain conditions were imposed. One condition was that the valuation date should be varied, and I shall consider that first. The second and third conditions related to the mews house, and, before considering whether it is right to impose those conditions, it will be necessary to consider two points of principle, relating to the effect of notices under the 1967 Act. I shall accordingly consider those two points of principle after discussing the proposed change to the valuation date, and before turning to the two conditions which the Landlord contends should be imposed in relation to the mews house.

Should the valuation date be varied?

As I have explained, the effect of sections 9(1A) and 37(1)(d) is that, unless a term to the contrary is imposed through the medium of the Court's discretion under paragraph 6(3), the valuation date in the present case will be 4^th April 1997. As Judge Cooke said, house prices, especially in central London, have notoriously and substantially increased since then.

On behalf of the Landlord, Miss Jackson contends, as did Mr Harry before Judge Cooke, that it would be unfair on the Landlord if the 1997 Notice were amended to limit it to the main house, without a term bringing forward the valuation date from 4^th April 1997 to the date on which the 1997 Notice is amended (and if necessary, served) pursuant to the permission of the Court.

Judge Cooke refused to impose any such term. In my view, he was right to take that course, and, indeed, I agree with his reasoning. The essential point is this. If the 1997 Notice had been limited to the main house, as the Landlord says it ought to have been, then the delay which had occurred would have happened in any event. As the Judge said, there is no explanation for the delay between the service of the 1997 Notice and the issue of the first proceedings. However, in that connection, I consider that the important point is that there is nothing which even begins to suggest that any part of that delay was attributable to the fact that the 1997 Notice referred to the mews house as well as to the main house. Accordingly, if the 1997 Notice had not needed amendment, and had correctly referred to the main house alone, there is no reason for believing that this initial period of delay would not have occurred anyway.

The delay following the issue of the first proceedings was occasioned by a dispute between the parties on two issues, namely whether the Tenant could enfranchise the main house and the mews house, and whether the Tenant could enfranchise the main house alone. Both issues went to the House of Lords. It is obvious that the first issue would not have arisen, let alone have gone to the House of Lords, if the 1997 Notice had referred to the main house alone. However it also seems clear that the second issue would have been raised, and would have gone to the House of Lords, even if the 1997 Notice had referred to the main house alone. If the notice had referred to the main house alone, the Landlord would have been entitled, almost as of right, to defeat the claim to enfranchise, at first instance and in the Court of Appeal, as in fact happened in light of the reasoning in Birrane. It would thus have been necessary, as it was in fact necessary, for the Tenant to take the matter to the House of Lords in order to proceed with his claim to enfranchise the main house. Accordingly, as I see it, there is no reason to think that the delay following the issue of the first proceedings which went to the House of Lords was significantly different from what it would have been if the 1997 Notice had been limited to the main house.

As indicated in the previous section of this judgment, I do not accept Miss Jackson's contention that the valuation date should be moved to the date of the amended notice, on the basis that, in the absence of the amendment to the 1997 Notice, the Tenant would not be able to enfranchise at all. The 1997 Notice, when served, was inherently capable of amendment because of the provisions of paragraph 6(3). Indeed, as Mr Morgan points out, from the date of the Landlord's counter-notice, the parties proceeded on the basis that there were two issues of principle in relation to the property which was enfranchiseable, namely whether it was both houses or the main house alone. In other words, the parties were proceeding on the basis (which was correct) that (albeit perhaps subject to the question of amendment) the 1997 Notice was in principle capable of triggering the right to purchase either both houses or the main house. To impose a term with regard to the valuation date for which the Landlord contends would appear to me to involve the wrong assumption that there had to be a new notice served by the Tenant before he had a right to enfranchise the main house.

Quite apart from this, it seems to me that, even it were right to impose some sort of valuation-related term in connection with the delay resulting from the proceedings, it would be wrong to impose the type of term for which the Landlord contends. Once the 1997 Notice was served, the Tenant was entitled, subject to establishing his case, and subject to any amendment to the notice, to acquire the freehold of certain property (the precise identity of which was to be determined by the Court) at a price which the statutory formula required to be fixed as at 4^th April 1997. If there was a substantial delay in that price being fixed, and therefore received by the Landlord, due to the defective notice, I would have thought that it would be more appropriate to compensate the Landlord for that delay through the medium of interest, rather than through the medium of moving the valuation date. If a notice of claim seeking to enfranchise the main house alone had been served on 4^th April 1997, and if (which would not have happened) that notice would immediately have led to the Landlord accepting the Tenant's right to enfranchise, then the valuation date would have been 4^th April 1997, and the Landlord would presumably have received his money substantially earlier than is actually to be the case.

However, for the reason accepted by Judge Cooke, with which I agree, that line of argument does not need to be developed.

The conditions relating to the mews house

As I have mentioned above, the Landlord argued for two terms to be imposed in relation to the mews house, both of which terms Judge Cooke rejected. Those terms were:

i) That the 2003 Notice served in relation to the mews house should be withdrawn by the Tenant;

ii) That the Tenant should be required to pay a full market rent in respect of the mews house from 6^th April 1997 (the contractual term date) until the tenancy finally expires pursuant to the provision of the 1967 Act.

Before turning to the question of whether those terms should be imposed, I have to deal with two questions of principle. The first question, raised by both proposed conditions, is whether the effect of the 1997 Notice, if it had related to the main house alone, would have been to continue the tenancy in relation to the whole of the property comprised in the Lease (i.e. the main house and the mews house) or whether it would have continued the tenancy only in relation to the main house. The second question, which is only raised by the first proposed condition, is whether it was, in fact, open to the Tenant to serve the 2003 Notice in respect of the mews house at all.

Each of those questions (especially the latter) encapsulates an issue of some complexity and real difficulty under the 1967 Act. I shall deal with them in turn, including explaining how they impinge on the terms which the Landlord is seeking to impose in relation to the mews house.

Would the tenancy of the mews house have continued if the 1997 Notice had referred to the main house only?

The Tenant served a notice in 1997 to enfranchise the main house and the mews house. It is common ground that the effect of paragraph 3(1) is that the tenancy of the whole of the property comprised in the Lease continued as a result of that notice, because that notice referred to the whole of the property comprised in the Lease. The Tenant contends that, even if the 1997 Notice had referred to the main house alone, as it ought to have done, the tenancy of the whole of the property, including the mews house, would have continued as a result of the notice. The Landlord, on the other hand, contends that, if such a notice had been served, it would only have continued the tenancy in so far as it related to the main house, and the tenancy in relation to the mews house would not have continued.

If the Tenant is right on this issue, then he can say that neither of the two proposed terms relating to the mews house should be imposed, because the effect of serving a notice of claim relating to the main house alone would have had exactly the same result, in relation to the mews house, as the effect of the notice of claim which the Tenant did serve, namely a notice relating to both the main house and the mews house. On the other hand, if the Landlord is correct on this issue, it can argue that it was unfairly prejudiced by the service of a notice of claim relating to the main house and the mews house together, because, had it been served with the correct notice of claim, namely one referring to the main house alone, the tenancy of the mews house would not have been continued beyond 6^th April 1997 (with the consequence, so at least it is argued, that the Tenant would have had to give up possession of the mews house on that date, and would not have been able to serve the 2003 Notice).

The issue between the parties in this connection turns on the proper meaning of paragraph 3(1), which I should set out again, albeit with certain added emphasis:

"Where a tenant makes a claim to acquire the freehold … of any property, then during the currency of the claim and for three months thereafter the tenancy in that property shall not terminate …; but if the claim is not effective and but for this sub-paragraph the tenancy would have so terminated before the end of those three months, the tenancy shall so terminate at the end of the three months."

The Landlord's argument is that it is not "the tenancy" which is prevented from terminating for the relevant period, but "the tenancy in that property", and that the reference to "that property" is clearly a reference back to "any property", which is self-evidently the property, and only the property, which the tenant is, by his notice of claim, seeking to enfranchise. Accordingly, runs this argument, where a tenant serves a notice of claim seeking to enfranchise only part of the property comprised in his tenancy, paragraph 3(1) applies so as to continue the tenancy beyond its contractual term date in relation only to that part of the property which the tenant is seeking to enfranchise, with the consequence that the tenancy of the balance of the property is not prevented from expiring on the term date.

As a matter of language, it seems to me that the expression "the tenancy in that property" could either mean "the tenancy in so far as it relates to that property" or "the tenancy which includes that property". To put it another way, the words "in that property" could, as the Landlord contends, be limiting in their effect, or they could, as the Tenant contends, be descriptive in their effect.

There are powerful reasons for concluding that paragraph 3(1) has the effect for which the Landlord contends. First, when reading paragraph 3(1) it strikes me that the words "in that property" more naturally suggest a limiting effect on the words "the tenancy" rather than being merely descriptive. Otherwise, they could be said to be unnecessary words. Secondly, given that paragraph 3(1) represents a statutory interference with a contractual relationship, one should lean in favour of an interpretation of such a provision which represents a lesser, rather than a greater, interference with the contractual relationship. Thirdly, given that, as at 6^th April 1997, the contractual term date, the tenant was seeking only to enfranchise "that property", and had no claim under the 1967 Act to any other land comprised in the relevant tenancy, it is not immediately apparent why the tenant should have the benefit, and the landlord the disadvantage, of the tenancy continuing at a low rent, not merely in respect of the property sought to be enfranchised, but also in respect of the other land comprised in the tenancy. In a sense, it may be said that this third point is an aspect of the second point, but I think it goes a little further, because it shows that, on the Tenant's construction, paragraph 3(1) appears to confer an adventitious benefit or disadvantage on the Tenant or Landlord respectively, for which there is no apparent justification in the 1967 Act itself.

Fourthly, in the Tenant's reading of paragraph 3(1) there could be said to be a lacuna in the second part of that paragraph. Thus, if the 1997 Notice had been served in respect only of the main house, on the Tenant's case it would have continued the tenancy of the main house and the mews house. If that is correct and the notice had been valid, there is nothing in the second part of paragraph 3(1) to indicate when the tenancy of the mews house would determine: that second part would only apply if the notice had been invalid. It would not be necessary for the second part of the paragraph to deal with a case of a valid notice of claim on the Landlord's case because the freehold would become vested in the Tenant, who also has the tenancy. Thus, the tenancy would either merge, or it would be under the control of the Tenant.

However, there are also strong arguments the other way. First, it is clear that, in a case such as the present, although the claim to enfranchise could only apply to the main house, namely to part of the property comprised in the tenancy, there is a single tenancy which applies to the mews house as well as the main house. Accordingly, there is force in the point that, if "the tenancy in that property", i.e. on the assumption of a notice of claim for the main house alone, the tenancy in the main house, is "not [to] terminate" until a certain date, then, absent a clear provision to the contrary, the tenancy would not terminate in relation to any other property comprised therein, i.e. the mews house.

When enacting the 1967 Act, the legislature plainly had in mind the provisions of Part 1 of the 1954 Act (which are referred to in a number of places in paragraphs 1 and 2, and indeed in paragraphs 3(2) and (3), of Schedule 3 to the 1967 Act). In this context, it is significant that, where the legislature intended a tenancy to continue only in respect of part of the property comprised in the tenancy, the point was spelt out in clear terms in the 1954 Act. In this connection, section 3(2) of the 1954 Act provides:

"Where by virtue of the last foregoing sub-section a tenancy is continued after the term date then –

(a) If the premises qualifying for protection are the whole of the property comprised in the tenancy, the tenancy shall continue… on the same terms…;

(b) If the premises qualifying for protection are only part of the property comprised in the tenancy, the tenancy while continuing after the term date shall have effect as a tenancy of those premises to the exclusion of the remainder of the property, and at a rent to be ascertained by [an appropriate apportionment], and in other respects on the same terms (subject to any necessary modifications) as before the term date."

Secondly, if, as the Landlord contends, the effect of paragraph 3(1) would be to continue the tenancy only in respect of part of the whole property comprised in the tenancy, Mr Morgan argues that there is nothing in the 1967 Act, or indeed in any other statute or in any principle of land law, which would enable the tenant or the landlord to claim easements (such as rights of way) which may be desirable, or even necessary, for the enjoyment of either or both parts of the property once the right to possession is severed. For instance, if a notice of claim was served in respect of the main house, and it served to continue the tenancy, but only in so far as it related to the main house, and the only means of access to the mews house was through the main house (or vice versa), there would seem to be no way in which the Landlord could obtain access to the mews house (or, as the case may be, the Tenant could obtain access to the main house) while the tenancy of the main house alone was continuing under paragraph 3(1). The problem could also arise under section 3(2)(b) of the 1954 Act, but, in that case, the legislature has specifically dealt with the matter by including the words "(subject to any necessary modifications)". Further, in the 1967 Act itself, the legislature has dealt in some detail with the rights and easements which are to be included with, and reserved over any property acquired pursuant to its provisions: see section 10.

Miss Jackson has not identified any statutory provision, or any principle of property law, whereby any easements or rights could be implied to deal with this problem. However, she points out that the legislature presumably envisaged the problem lasting for a relatively short time, although, as the facts of this case (and indeed of a number of reported cases relating to enfranchisement) show, the gap between the service of a notice of claim and actual enfranchisement can be many years.

Thirdly, the Landlord's contention involves reading "the tenancy in that property" in paragraph 3(1) as being strictly limited to the tenancy in so far as it relates to the property referred to earlier in that paragraph. However, when one considers some other sub-paragraphs of Schedule 3, it appears to me that the expression "that property" is used in a somewhat looser way. Indeed, it is used so as to be plainly capable, in an appropriate case, of meaning the property previously referred to together with other land comprised in the tenancy (i.e. as the Tenant contends here), and even of meaning part of such property.

Paragraph 1(1) applies to a case under Part I of the 1954 Act, where the demise extends to a house and the tenant occupies a flat constituting part only of the house. In such a case "the tenancy of that property" extends to less property than the "any property" referred to earlier in the subparagraph. Even more in point, paragraph 1(1) also applies to a case under Part II of the 1954 Act, where the property comprised in the tenancy is more extensive than the house and premises which the tenant was seeking to enfranchise. In such a case, "the tenancy of that property" would clearly extend to premises over and above the "any property" referred to earlier in the subparagraph. (As with paragraph 3(1), there would, of course, be many cases where the two sets of property were identical, but the essential point is that the same expression in paragraph 1(1) can have the meaning which the Tenant gives that expression in a very similar context in paragraph 3(1)).

The same points may be made about these expressions in paragraph 2(1). As to paragraph 2(2), effectively the same points may be made about the meaning of "that property" in so far as it relates back to "a tenancy of any property".

Indeed, and fourthly, consideration of the effect of paragraphs 1 and 2 appears to me to suggest that the Tenant's construction of paragraph 3(1) results in a somewhat more consistent result than that of the Landlord. Where a notice of claim extends to the whole of the demised property, then, whether Part I or Part II of the 1954 Act apply, or neither Part applies, the tenancy of the whole continues. Where Part II applies, and the notice of claim extends to only part of the demised property, the effect of paragraph 2(2) is to continue the tenancy of the whole, not just the part to which the claim extends. Consistency would tend to suggest that one would expect the same result where Part I, or where neither Part, applies. The same result does obtain on the Tenant's case (because either Part I does not apply at all so paragraph 3(1) applies, as here, or Part I applies only to a part of the demised property, in which case paragraph 3(1) applies to the rest), but not on the Landlord's case.

The point can be overstated, because, as I have mentioned, any difference would have its origin in the different ways in which the two Parts of the1954 Act work. Nonetheless, one is here concerned with the operation of the 1967 Act, not the 1954 Act, and if one reading of paragraph 3(1) produces a consistent result in all types of case, and the other does not, I consider that tends to favour the former reading.

Fifthly, it is worth considering the effect of an amendment to a notice of claim, pursuant to paragraph 6(3). If the notice does not claim enough, and it is amended by adding property after the contractual term has expired, it could lead to obvious difficulties if the added property had reverted to the landlord, as it would have done on the Landlord's case, as the landlord may have sold or re-let the added property.

While the landlord would no doubt say that that should result in the court refusing to amend the notice, the tenant might well say that the landlord should not have taken the risk of selling or re-letting the added property, for instance, if the tenant had already warned the landlord that he would or might apply to amend the notice by adding the property in question. In any event, it might seem a little harsh that a tenant, who had served a notice of claim which extended to insufficient property in good faith, could lose his rights under the 1967 Act in their entirety. The uncertainty and risk of injustice just described would be avoided if the Tenant's construction of paragraph 3(1) is adopted.

I turn to the position where, as here, the notice of claim is amended to delete property. On the Tenant's construction of paragraph 3(1), it makes no difference: the tenancy is continued with regard to the deleted property whether it is included in the notice or not. On the Landlord's construction, the tenancy will continue in relation to the deleted property while it is included in the notice. When it is deleted from the notice the Landlord would presumably argue that the tenancy of the deleted property will cease pursuant the second part of paragraph 3(1). That would mean that paragraph 5(1), when referring to the currency of a claim or a claim being effective, can apply to part of the rest of the property comprised in the notice of claim. That would not, of itself carry the issue I have to determine any further, save that as I understood it, one of Miss Jackson's criticisms of the Tenant's case, at least on one point, was that it involves reading paragraph 5(1) in such a way that it could apply to part of the property comprised in a notice of claim.

Although the wording of paragraph 4, whose general effect is to stay forfeiture proceedings during the currency of a claim under the 1967 Act, does not shed any direct light on the proper construction of paragraph 3(1), it can be said to lend a little support for the Tenant's construction in this case. It is clear from paragraph 4(1) that, where a tenant serves a notice of claim in respect of part only of the property comprised in a lease, the landlord is precluded from taking steps to forfeit the lease, and not merely that part of the lease which applies to the property the subject of the claim. It may be said with some force that the concept of forfeiture of part (unlike relief from forfeiture in respect of part) is not possible in common law, but it would have been quite possible for the legislature to have permitted a landlord to seek forfeiture of that part of the premises comprised in the lease which the tenant was not seeking to enfranchise. The fact that it is the whole of the lease which is protected from forfeiture, can be said to be at least consistent with the notion of paragraph 3(1) continuing a tenancy in its entirety, and not merely is so far as it relates to the property the subject of the notice of claim.

With these arguments in mind, I turn back to the central issue. The arguments appear to me to be fairly finely balanced, and it is idle to pretend that either answer is plainly correct. Having said that, I have reached the conclusion that the Tenant's construction of paragraph 3(1) is to be preferred on this point. First, while first impressions should not be disregarded, they cannot be given great weight, particularly once one accepts that, on a fair reading, a particular provision could have more than one meaning.

Secondly, the fact that the Tenant's construction involves a greater interference with, and prejudice to, the Landlord's contractual rights, and can work to the Landlord's detriment, appears to me to be answered, albeit only to some extent, by Miss Jackson's own point that the legislature would have anticipated a tenancy continuing under paragraph 3(1) for a relatively short time in most cases. In any event, the fact that the whole of the tenancy will continue, while a claim for the freehold of the whole or part of the demised property is current, is justifiable as a convenient and simple, if somewhat rough and ready, piece of machinery. Further, as paragraph 5(1) (a) makes clear, the legislature contemplated and intended that a wholly invalid notice of claim (even if served in bad faith, apparently) would have the effect of prolonging the tenancy. That makes the Landlord's argument based on prejudice a little weaker.

The fact that there are no provisions such as the relatively detailed ones contained in section 10 of the 1967 Act, or the much more abbreviated reference in section 3(2)(b) of the 1954 Act, directed to the implied grant or reservation of easements and similar rights, may well be explained by it being more trouble than it was worth for the parties to have to negotiate, or even litigate, such provisions for the relatively short period during which the paragraph 3 continuation might be expected to apply. Accordingly, the legislature could well have concluded that it would be easier to continue the tenancy as a whole rather than having to solve such problems for a relatively short time.

Indeed, if the Landlord's construction is correct, it would not only be necessary to provide for such easements and similar rights: it would also be necessary to apportion the rent between the property the subject of the notice of claim and the remainder of the demised property. Although Mr Morgan accepts that such apportionment could be effected pursuant to section 10 of the Inclosure Act 1854, it seems unlikely that the legislature would have had that in mind, partly because this legislation is rather abstruse, and partly because the apportionment would have to be effected by the Secretary of State.

Fourthly, as to the point that (on the Tenant's construction) the second part of paragraph 3(1) does not deal with the determination of the tenancy in relation to the balance of the property comprised in the Lease, if the notice of claim relates only to part of that property, I think there is an answer, albeit that it is not wholly satisfactory. By reference to the facts of this case, that answer is as follows. If a notice of claim extending to the main house were served, the first part of paragraph 3(1) would prohibit the tenancy as a whole expiring during "the currency of the claim and for three months thereafter". By virtue of paragraph 5(1)(c) that prohibition expires three months after a valid notice of claim "is effective". Accordingly, the tenancy would continue as a whole under paragraph 3(1), and, in so far as it relates to the mews house, it would expire three months after the notice of claim is effective. On the other hand, if the notice of claim was ineffective, the second part of paragraph 3(1) would apply. The consequence in such a case would be the continuation of the tenancy in relation to both houses for three months after the notice ceases to have effect. That analysis does not provide a complete answer to the point, because it results in the second part of paragraph 3(1) being unnecessary or only explicable as being included for the avoidance of doubt. Nonetheless, it is not as if there is anything inconsistent between the first and second parts of paragraph 3(1) on the Tenant's case.

Furthermore, while it is rather an esoteric point, it can be said that, where the notice of claim is effective in circumstances where a tenant acquires the freehold with a provision against merger, there is the same problem with paragraph 3(1) on the Landlord's case (as well as on the Tenant's case) as there is (on the Tenant's case) if the notice of claim is effective in respect of part only of the property comprised in the tenancy. An enfranchising tenant may acquire the freehold with a provision against merger (which is a practical possibility for the reasons discussed in Hague on Leasehold Enfranchisement (3^rd Edition 1999) at paragraph 6-36). In such a case, the tenancy will continue despite the fact that the freehold and the tenancy are vested in the same person. On the Landlord's argument, the absence of a reference to an effective notice in the second part of paragraph 3(1) means that, if the tenancy was at that time being continued by that paragraph, it could not end. On the Tenant's case, no such problem arises: the first part of paragraph 3(1) ensures the determination of the tenancy.

In light of this discussion it clearly cannot be said that the Tenant has fully satisfactory answers to all the Landlord's points. Nonetheless, one has to weigh those points against the various points which I have identified as calling the Landlord's construction into question. Adopting that approach, it appears to me that, taken together, the points in favour of the Tenant's construction, are more powerful, and less easily answered.

In those circumstances, I conclude that, if the Tenant had served a notice of claim relating only to the main house, the effect of paragraph 3(1) would nonetheless have been to continue the tenancy, not merely in respect of the main house, but also in respect of the mews house.

Can the Tenant serve a notice of claim after the contractual term date of the Lease?

It will be recalled that the Tenant served a notice of claim in 2003 in respect of the mews house. This was, of course, long after the contractual term date of the Lease. Accordingly, unless the tenancy under the Lease was being continued in some way in respect of the mews house, the service of the 2003 Notice would not have been by "a tenant of a leasehold house [whose] tenancy is a long tenancy at a low rent", within the meaning of section 1(1).

The Landlord accepts that the tenancy of the whole property comprised in the Lease, namely of the main house and of the mews house, was continued beyond the contractual term date, and was continuing as at the date of the service of the 2003 Notice, by virtue of the provisions of paragraph 3(1). However, the Landlord does not accept that the Tenant was entitled to serve the 2003 Notice, or indeed any notice of enfranchisement relating to any part of the property comprised in the Lease, once the contractual term date of the Lease expired. In this connection, the Landlord's argument is put in two alternative ways.

The Landlord's first argument is based on the closing words of paragraph 3(1), which provide that, where a tenancy is continued pursuant to that paragraph as a result of a notice of claim, and that notice turns out to be ineffective, "the tenancy shall… terminate at the end of… three months [after the notice ceases to have effect]". The Landlord argues that, if a second notice of claim (such as the 2003 Notice) could be served after an earlier notice of claim (in this case the 1997 Notice) has been held to be invalid, then it would conflict with those closing words. That is because the effect of the second notice of claim, according to paragraph 3(1) itself, would be to continue the tenancy beyond the date upon which it is required to "terminate" by paragraph 3(1), as a consequence of the first notice ceasing to have effect.

The Landlord's second argument is that, in order to be able to serve a valid notice of claim, a tenant must, at the time, hold under "a long tenancy", and a tenancy which was a long tenancy under section 3(1) ceases to be a long tenancy once it is being continued by virtue of the provisions of paragraph 3(1). In this connection, the Landlord relies on the fact that section 3(5) provides that, where a contractual long tenancy is extended pursuant to certain statutory provisions, it is treated as remaining a long tenancy, but those statutory provisions, which include Parts I and II of the 1954 Act, do not include paragraph 3(1). Accordingly, runs the argument, it is not open to a tenant to serve a notice of claim during a period of continuation effected by a statutory provision, such as paragraph 3(1), which is not expressly referred to in section 3(5) of the 1967 Act.

These two arguments were briefly ventilated in the judgment of Eveleigh LJ (with whom Kerr LJ agreed) in Duke of Westminster -v- Oddy [1984] 1 EGLR 83 at 87C ff. The second argument was raised, but the Court of Appeal did not "obtain much assistance" from the way in which section 3(5) was expressed. The Court, however, accepted the first argument. Nonetheless, as Miss Jackson and Mr Morgan agree, the observations on both points were obiter. Indeed, they could be said to be "doubly obiter", because the issue was the third point in the case, and the Court's decision on the first point rendered any decision on the second and third points obiter, and, over and above that, the Court's decision on the second point would itself have rendered any determination on the third point obiter.

Miss Jackson, I think, accepts that the Landlord's first argument, which found favour with the Court of Appeal in Oddy has problems. Carried to its logical conclusion, once one gets near the contractual term date, it would invalidate a second, protective, notice of claim served by a tenant after he has served a first notice of claim which might be invalid. Examples where that might happen come readily to mind. A tenant might serve a notice of claim a couple of years before the contractual term date in circumstances where he had arguably not yet achieved the period of residence required by the 1967 Act (initially 5 years, then reduced to 3 years, until it was abolished in 2002). Subsequently, he may serve a second "protective" notice of claim a year later, on the basis that he has, by then, undoubtedly satisfied the residency requirement. Or a tenant might serve a notice of claim a couple of years before the contractual term date, where the particulars in the notice are so defective that it may invalidate the notice. In such a case, the tenant may wish to serve a second, protective, notice of claim when the point is taken by the landlord. Another possibility is that a tenant may serve a notice of claim which (as in this case) seeks to enfranchise more property than he is entitled to enfranchise, again a couple of years before the contractual term date. Such a tenant may then wish to serve a second notice, in case the court, in its discretion, does not permit him to amend the first notice. In each such case, the tenant would normally want to hold on to the first notice if he can, because the date of valuation is the date of the notice of claim, and the residential property market generally rises over time, sometimes quite sharply.

In each of those cases, unless the tenant unreservedly withdraws the first notice at least three months before the contractual term date, then, if and when the first notice is held to be invalid, the logic of the Landlord's first argument is that the tenancy must come to an end three months thereafter. In those circumstances, there would be a logical paradox, because, on the one hand paragraph 3(1) absolutely requires that the tenancy comes to an end three months after the first notice is held to be invalid or is withdrawn, while on the other hand, paragraph 3(1) equally requires the tenancy to continue because the second notice is current.

Miss Jackson suggests that the answer to this apparent conundrum is that the tenant in such a case would effectively have to elect between the two notices on or before the date which is three months before the contractual term date. I do not find that a very attractive contention. A tenant entitled to serve a notice (whether under a contract or statute) cannot usually be limited to one notice or be required to elect between notices, when he has served two notices, the latter without prejudice to the validity of the former. Further, it is not clear what happens if the tenant does not make an election as Miss Jackson suggests.

In my view, this line of argument does cause one to revisit the brief reasoning which was put forward by the Court of Appeal in Oddy for accepting the Landlord's first argument. One is, I think, faced with two alternatives. The first involves implying a restriction on a tenant's freedom to rely, at least after a date three months before the contractual term date, on two notices of claim, one served without prejudice to the other. The second is that the obiter conclusion on this point in Oddy is wrong. I have reached the conclusion that the latter alternative is correct.

First, it is not merely a question of it being unusual for a person in a landlord and tenant relationship being precluded from serving a second, protective, notice. So long as the contractual term date is more than three months away, the Landlord's first argument would not prevent a tenant serving, and relying on, such a notice. It would, to my mind, be very peculiar, if a tenant could rely on a protective notice, but only until his contractual tenancy had more than three months to run. It appears especially unlikely that this could have been intended, if one considers a case where the protective notice is served, say, some six years before the contractual term date. The tenant's ability to rely on the notice would depend solely on how long it took to sort out his claims, a matter which would turn on the issues, the landlord's attitude, and, quite possibly, the Court and Valuation Tribunal procedures.

Secondly, if it is not open to a tenant to rely upon a second notice of claim, if the first notice of claim has not been withdrawn or held invalid by the commencement of the last three months of the contractual term, it would represent something of a trap for tenants. The reasoning which would give rise to such a conclusion is extremely subtle and could not reasonably occur to a tenant or his advisers, based as it is on a fairly obscure inference from paragraph 3(1). It seems unlikely that the legislature could have intended this result.

Thirdly, as I indicated in the previous section of this judgment, a degree of consistency is to be expected as to the way in which the provisions of Schedule 3 work in different types of case. Paragraph 2 is concerned with cases where the 1954 Act applies, which would have been the great majority of cases, when the 1967 Act was originally enacted, applying as it did to relatively low value houses. Paragraph 2(2) is not only concerned with a case where the landlord has served the 1954 Act notice before the tenant has served a notice of claim. It also prohibits the landlord from serving a 1954 Act notice "during the currency of a claim". It seems to me that those words are quite unambiguous, in a case where the tenant serves more than one notice of claim. So long as there a notice of claim that is current, the landlord cannot serve a 1954 Act notice, even though one or more other notices of claim may have been withdrawn or been ineffective. In my view, that provides a degree of support for the view advanced by the Tenant in this case, namely that so long as there is a current notice of claim, the first part of paragraph 3(1) applies.

Fourthly, it appears to me that, without doing significant violence to the words, paragraph 3(1) can be read in such a way as to permit of the possibility of a tenant serving two successive notices of claim, and with the result that paragraph 3(1) does not result in a tenancy determining until the fate of the later of the notices has been determined. The first way in which paragraph 3(1) can be read is on the basis that the singular includes the plural, as is the prima facie position in any Statute. This would involve paragraph 3(1) having the following effect:

"Where a tenant makes claims to acquire the freehold… then during the currency of the claims or any of them… the tenancy… shall not terminate…; but if the claims are not effective… the tenancy shall so terminate…"

The only criticism that can be made of this reading is that the second "claim" in the paragraph extends not merely to "claims", but to "claims or any of them". In my view, that is a small departure from the literal meaning of paragraph 3(1), and is a permissible departure in light of the problem which would otherwise arise.

An alternative way of construing paragraph 3(1), while it also involves implying words, is to read the second part of the paragraph in this way:

"But if the claim is not effective and, but for this sub-paragraph in so far as it relates to that particular claim, the tenancy would have so terminated before the end of those 3 months, the tenancy shall also terminate at the end of the 3 months."

In other words, if the tenancy is being continued under paragraph 3(1) by virtue of a second notice, then the second part of paragraph 3(1) is not engaged by the fact that the first notice was not effective.

I believe that the same points may be made about the effect of paragraph 2(2) and (3) where 1954 Act notices have already been served.

Fifthly, if a tenant serves two notices of claim sequentially, one without prejudice to the validity of the other, the basic structure of the Act would suggest that, if the first notice is not valid, the second notice should be valid, whereas if the first notice is valid, the second notice should be invalid. That is because, as I have mentioned, the effect of section 8(1) is that, when a valid notice of claim is served, it gives rise to a statutory contract. If the first notice is valid, a statutory contract comes into existence, and it is difficult to see how the second notice could be valid, because there cannot sensibly be two contracts between the same parties to buy the same property on different terms. On the other hand, if the first notice is invalid, no statutory contract can arise under section 8, and it is therefore hard to see why the second notice should not be valid, because there is nothing in section 8 to prevent it giving rise to a statutory contract. That would tend to suggest that the legislature intended a tenant to be able to serve a second notice of claim, without prejudice to the validity of a first notice, to protect the tenant in case the first notice turns out to be invalid.

Sixthly, where the legislature intended a tenant (or indeed a landlord) not to be able to serve an effective statutory notice, whether under the 1967 Act or another Act, it expressly said so. Thus, paragraphs 1(1) and 2(1) effectively render invalid a notice of claim, if served after a 1954 Act notice has already been served. Similarly, paragraphs 1(2) and 2(2) effectively render invalid a 1954 Act notice, if served after a notice of claim. Furthermore, as I have mentioned, sections 9(3)(b), and 20(6) give the Court power to preclude a tenant from serving a second notice of claim for a specified period, namely 5 years, where a first notice of claim, which suffers from bad faith or dishonesty, has been served. It is true that none of these provisions is directed towards a notice of claim served during the currency of (and without prejudice to the validity of) an earlier notice of claim, but they do suggest that, where the legislature intended notices, including notices of claim, which are valid on their face, to be rendered ineffective, that intention was spelt out. That would suggest that the absence of any specific provision precluding a tenant from serving a second notice of claim, without prejudice to the validity of the first, is supportive of the conclusion that such a course is permissible.

I turn to the Landlord's second argument, namely that, once a tenancy is being continued pursuant to paragraph 3(1), it is no longer open to a tenant to serve a notice of claim. In principle, in a case such as the present, where the 1954 Act does not apply, the tenancy in question would normally come to an end on its contractual term date, namely 6^th April 1997. Accordingly, it would not, on the face of it, be open to the tenant to serve a notice of claim after that date, because he would no longer be the tenant, let alone would he be holding under a long tenancy.

The contention that he could nonetheless serve a notice of claim because his tenancy was being continued under paragraph 3(1), can be said to involve his pulling himself up by his own boot straps. The only reason he could argue that he was permitted to serve a notice of claim after the contractual term date of the tenancy was because the tenancy is being continued thanks to an earlier, and, indeed invalid, notice of claim. After all, the only circumstances in which he would normally require to serve a second notice of claim, and have to argue the point, would be because the earlier notice of claim was invalid. The notion that a tenant is entitled to serve a notice of claim and to acquire his landlord's freehold, because he had previously served an invalid notice of claim, does not strike me as a particularly attractive contention.

A particularly stark example would be in a case where the residence requirements applied (as they did until 2002). A tenant who had not resided long enough by the contractual term date could serve a dishonest notice of claim, which would serve to extend his tenancy under paragraph 3(1), thereby enabling him to clock up the requisite period of residency. Of course, the fact that it is not a particularly attractive contention does not mean that it is wrong.

Further, it is a less surprising result than might first appear, essentially for three reasons. The first is that I rather doubt that the legislature directed its mind to this rather abstruse issue and therefore the point may be something of a casus omissus. Secondly, the legislature has said that the terms on which the tenant can acquire the freehold are "fair terms", irrespective of when he serves the notice of claim, which indicates fairness to the landlord as well as to the tenant, a point which I accept can be characterised as lacking in reality. Perhaps a more attractive way of putting essentially the same point is that the legislature plainly thought that justice required that certain tenants should be able to enfranchise, and if, in somewhat unusual circumstances, this leads to the result for which the Tenant contends on the present issue, it should not cause much surprise. Thirdly, I refer again to paragraph 5(1)(a), which shows that the legislature intended a tenant to be able to benefit from the service of an ineffective, and even, it appears, a dishonest, notice of claim.

As to the dishonest (and ineffective) notice of claim which a tenant might use as a springboard for a second (and effective) notice, the landlord would not be without a remedy. On any view, that notice would, sooner or later, cease to have effect. As it would have been a dishonest notice, section 20(5) would be engaged. Accordingly, if, by having served that notice, the tenant has thereby been able to enfranchise (by serving a later notice), I consider that any damage that the landlord has suffered as a result of the tenant's acquiring the freehold would be recoverable from the tenant: considerations of remoteness and foreseeability would not apply, as the damages claim would be based on dishonesty.

It cannot be pretended that, even taken together, these various points provide a complete answer to the "boot straps" argument, but, in my judgment, they do blunt its effect.

As paragraph 3(1) provides that the effect of the first notice of claim is to continue the tenancy, it would seem, at least on the face of it, that if, as in the present case, the tenancy in question is a long tenancy within section 3(1), then the continuation tenancy, being the same tenancy as the original tenancy (albeit a statutory continuation thereof) must be a long tenancy. The argument the other way is that section 3(5) specifically deals with statutory continuations, and it does not include the continuation pursuant to paragraph 3(1). That is an attractive argument for the reasons I have just been discussing. Nonetheless, I have ultimately decided that it is to be rejected.

First, as I have said, paragraph 3(1) has the effect of continuing the tenancy, and, therefore, as a matter of ordinary language and legal concept, it is the same tenancy granted by the original lease, in this case the Lease, and it is hard to see how a tenancy which was originally a long tenancy can stop being a long tenancy.

Secondly, although section 3(5) does not refer to continuation under paragraph 3(1), it does provide that references to a long tenancy "include" any continuation under the 1954 Act. I accept that the word "include" can effectively be exclusive, but that is not its sole, or, ultimately, its more natural meaning, as Eveleigh LJ appears to have thought in Oddy.

Thirdly, I return to the provisions of paragraph 2(1) and 2(2). It seems to me that, where (as frequently could be the case) either Part II of the 1954 Act applies, or Part I of the 1954 Act applies to the whole of the property sought to be enfranchised, the tenant could pull himself up by his own boot straps, using a first, invalid, notice of claim to prolong his tenancy in order to enable him to serve a second, valid, notice. For instance, before the contractual term date, the tenant could serve a notice of claim, whose effect would be to prevent the landlord from serving a 1954 Act notice, so long as the notice of claim was current, and this would, in light of section 3(5), have the effect of continuing his tenancy (under section 4 or section 24 of the 1954 Act) with the consequence that he could then serve another notice of claim. Accordingly, where the 1954 Act applies (as it would have done in the great majority of cases when the 1967 Act was passed) a first, invalid notice of claim could be used as a springboard for a second, valid, notice. That not only weakens the Landlord's bootstraps argument, as the legislature was prepared to let a tenant pull himself up by his bootstraps in certain circumstances. It enables the Tenant to raise a pretty strong argument in favour of its case, based on the expectation that Schedule 3 would adopt a consistent approach to all types of tenant.

This point goes a little further. There will be cases where both paragraph 2 and paragraph 3 apply to a tenancy. Consider the case of a house whose value is such that it is within the ambit of Part I of the 1954 Act, but which has been converted into flats, in one of which the tenant lives. In the absence of any notice of claim being served, with effect from the contractual term date, the tenancy would continue solely in respect of the flat: see section 3(2)(b) of the 1954 Act. Once the tenant has served a notice of claim, the effect of paragraph 2(2) would be to prevent the landlord from serving a notice under section 4 of the 1954 Act. However, paragraph 3(1) will also be engaged, because it will prevent the tenancy, in so far as it relates to the rest of the house, expiring "by effluxion of time".

If a second notice of claim is served in such a case, and the first notice of claim is ineffective, it is instructive to consider the effect of the second notice. Under paragraph 2(2), as I have said, it seems fairly clear that, so long as the second notice of claim was current, it would not be open to the landlord to serve a notice under section 4 of the 1954 Act in respect of the flat: a second notice of claim would prevent that. If that is right, it would seem something of a nonsense if the effect of paragraph 3(1), in relation to the rest of the house, was different. If paragraph 3(1) had the effect which the Landlord's second argument suggests, then the tenancy, in so far as it related to the rest of the house, would expire three months after the first notice was held to be invalid. However, there is nothing in the 1967 Act to suggest that that would thereby invalidate the second notice of claim. Accordingly, the second notice of claim would still remain current, so that the tenancy of the flat occupied by the tenant would continue under section 3(3)(b) of the 1954 Act, because of paragraph 2(2). It seems to me far more likely that, in such a case, paragraph 3(1), in relation to the rest of the house, would have the same effect that paragraph 2(2) has in relation to the flat occupied by the tenant.

One practical argument raised by Miss Jackson is that it would be open to a tenant holding a lease of a number of houses to invoke the provisions of paragraph 3(1) to enable him to enfranchise successive houses. By serving a notice in respect of one house, he could prolong the tenancy in respect of all the houses, and could thereby serve notices in respect of each house successively. I am not persuaded that that is a telling argument. Under the 1967 Act, as originally enacted, a tenant could not acquire the freehold of a house unless, at the date of the notice of claim, he was residing in it, and had resided in it for at least 5 years in the previous 10 years. If a tenant served a notice of claim in respect of one house, he would have to be living in that house at the time he served the notice, and, if he wished to enfranchise another house, he would not merely have to move into it before he served a notice of claim in respect of it: he would have to have lived there for 5 years in the past 10 years. While I accept that the first notice of claim could continue the tenancy for more than 5 years (and the present case is an example of precisely that happening), that would only occur either in an exceptional case or where the landlord had let it happen. That suggests that, when the 1967 Act was enacted, this would not have been seen as a problem.

Further, if one looks at the 1967 Act in its present form, there does not seem to me to be anything to prevent a tenant, who holds a lease of several qualifying houses at a low rent, from enfranchising all of them, now that the residence requirement has gone altogether. All that is required is that the tenant has been a tenant of the house under a long tenancy, not that he resides, or has resided, there. Accordingly, whether one looks at the 1967 Act in its original form, or in its present form, Miss Jackson's point does not establish that my conclusion is wrong.

These rather esoteric arguments ultimately persuade me that, on this very difficult point, both the Landlord's arguments are to be rejected and that the Tenant's case is to be preferred. I am conscious that this involves deciding that the obiter conclusion reached by the Court of Appeal in Oddy is wrong. I draw some comfort from the fact that the leading text book in this field, namely Hague on Leasehold Enfranchisement (3^rd Edition, 1999), appears to take the same view: see at page 106, note 57.

The conditions in relation to the mews house

My conclusions on the two questions of principle therefore are:

i) If the 1997 Notice had referred only to the main house, it would still have extended the tenancy of the mews house, under paragraph 3(1); and

ii) It is open to a tenant to serve a notice of claim while his tenancy is being continued by paragraph 3(1),

In light of that, it appears to me that the Landlord's proposed two conditions in relation to the mews house must be rejected. If the Tenant had, in April 1997, served a notice of claim limited to the main house, it would have continued the tenancy of the main house and the mews house, and that continuation would have been up to and including the time when the 2003 Notice was served, which was a notice of claim which the Tenant was entitled to serve. Accordingly, it would be inappropriate to impose a condition either that the Tenant is required to pay a full market rent for the mews house from 7^th April 1997, or that he should be required to withdraw the 2003 Notice, as a condition of being given permission to amend.

However, it is right to add this. First, if I am right in my conclusion that the notice of claim relating to the main house alone would nonetheless have continued the tenancy in relation to the mews house, but I am wrong in my view that it is open to a tenant to serve a notice of claim once his tenancy has been continued pursuant to paragraph 3(1), then that would not cause me to alter my view that the two conditions sought by the Landlord in relation to the mews house should not be imposed. On this hypothesis, it would plainly be wrong to require the Tenant to pay a rack rent for the mews house, because the service of a notice of claim relating to the main house alone would still have continued the tenancy of the mews house. The reason it would be inappropriate to impose a condition that the 2003 Notice be withdrawn is that, on this hypothesis, I would have concluded that that Notice was invalid. In those circumstances, there would be no reason to require the Tenant to withdraw it.

However, if I am wrong in my conclusion that a notice of claim relating to the main house would continue the tenancy in relation to the mews house as well, then, whether or not I am right about the ability of a tenant to serve a notice of claim while the tenancy is continuing under paragraph 3(1), the imposition of the two conditions relating to the mews house becomes a more difficult question. On the face of it, the Landlord has a powerful case along the following lines. The only notice of claim which the Tenant was entitled to serve was a notice relating to the main house alone. On the hypothesis under which I am proceeding, such a notice would not have continued the tenancy of the mews house. In those circumstances, with effect from 7^th April 1997, the Landlord would have been entitled to possession of the mews house, and therefore to receive a rack rent in respect thereof, and the Tenant would not have been entitled to serve a notice of claim in respect of the mews house, and in particular would not have been entitled to serve the 2003 Notice. In those circumstances, given that, without amendment, the 1997 Notice will be ineffective, and that the Tenant is seeking to amend it to limit it to the main house alone, it appears to me that there is a powerful case for imposing the two conditions. To put the matter shortly, if the Tenant wants the Court's discretion to be exercised so as to amend the Notice so that it is treated as applying to the main house alone, then that benefit should only be accorded to him if he and the Landlord are put in the same position as if the 1997 Notice had so provided when it was served. After all, it was only a couple of days after it was served that, on this hypothesis, it became impossible for the Tenant to serve any further notice of claim.

Mr Morgan has put forward two reasons as to why such terms should not be imposed on this hypothesis. First, he relies on the fact that the Tenant might have served two notices of claim in April 1997. The first is the notice that was actually served, namely seeking the freehold of the main house and the mews house; the second, which would have been secondary and without prejudice to the first, would have sought the freehold of the main house alone. Mr Morgan argues that, if the Tenant had taken that course, which is a course he would have been quite entitled to take, then the first notice (although ultimately invalid) would have continued the tenancy of the mews house as well as the main house, so that the Tenant would not have had to pay a full market rent and would have been entitled to serve the 2003 Notice, and the second notice would have enabled the Tenant to acquire the freehold of the main house. In those circumstances, there would have been no question of the Court imposing the conditions which the Landlord seeks in relation to the mews house, because there would have been no application by the Tenant to amend either of the two notices of claim served in 1997. The notice relating to the main house and the mews house would simply have been invalid, and that relating to the main house alone would have been effective.

That argument is beguiling, but I do not accept it. It may well be that, if I am wrong on the question of whether the Tenant could have served a notice while the tenancy was continuing under paragraph 3(1), it would not have been open to him to serve two notices of claim a few days before the contractual term date of the Lease (in light of the reasoning which found favour with the Court of Appeal in Oddy). However, even ignoring that point, I think that the simple answer to Mr Morgan's first point is that, assuming that the Tenant could have served two such notices of claim, thereby avoiding the need for any amendment, he did not do so: he only served one notice of claim, namely the 1997 Notice. In those circumstances, it appears to me that, if that notice is not amended by the Court, the Tenant would lose his right to enfranchise the main house, at any rate by reference to values in 1997. The fact that the Tenant could have arranged things so that he did not need an amendment to a notice of claim in order to enfranchise is therefore simply not in point.

Mr Morgan's second argument rests on the proposition that, even though I might have thought it right to impose either or both the two conditions sought by the Landlord in relation to the mews house, this is not a case where I am exercising a discretion. It is a case where I am reviewing the exercise of Judge Cooke's discretion. That is obviously right, but I can, indeed should, interfere with the exercise of his discretion if I am of the view that he reached a conclusion which he could not reasonably have reached, or that he was wrong when considering the relevant factors. On the hypothesis upon which I am proceeding, I think it would be right to interfere with Judge Cooke's decision not to impose the two conditions.

The Court has a discretion whether or not to amend the 1997 Notice so that it applies only to the main house. If that discretion is not exercised in the Tenant's favour, he will have no right to enfranchise the main house. The amendment will, to all intents and purposes, be retrospective to the date on which the 1997 Notice was served, both in the technical sense (because the 1997 Notice is being made effective, and there is no other notice which is going to be served) and in the practical sense (because the price payable for the main house will be by reference to 1997 market values). In those circumstances, I consider that, in the absence of special factors to the contrary, it would be indefensibly unfair on the Landlord that the Tenant should have the indulgence of such an amendment, without the Landlord being placed in the same position as it would have been in if the 1997 Notice had been served in the form in which it is now to be retrospectively amended, i.e. in a form seeking only the freehold of the main house.

As I understand it, Judge Cooke considered that (on the basis of the hypothesis under which I am proceeding) the fact that, by extending to the mews house, the 1997 Notice enabled the Tenant to remain in occupation of the mews house at a very low rent and to serve the 2003 Notice (neither of which would have been possible if the 1997 Notice had only referred to the main house) was a consequence of the relevant provisions of the 1967 Act, and that therefore it would be inappropriate to impose the conditions. I do not agree with the logic of that analysis. Indeed, it seems to me that it is inconsistent with the logic of what Lord Scott said in paragraph 113 when the first proceedings went to the House of Lords. It could just as well be said that the Landlord's inability to serve a section 2(5) counter notice by the time the case had gone to the House of Lords was just as much a consequence of the 1967 Act as the ability of the Tenant to remain in occupation of the mews house at a low rent and to serve the 2003 Notice. Yet the House of Lords considered that the amendment to the 1997 Notice should only be permitted if time was extended to the Landlord to serve a section 2(5) counter notice.

Accordingly, if, contrary to my view, the effect of a notice of claim relating to the main house alone would not have been to continue the tenancy of the mews house, I would have thought it appropriate to allow the Landlord's appeal, but only in so far as it relates to the two conditions sought to be imposed in relation to the mews house.

Conclusion

In the event, however, for the reasons which I have expressed at regrettable length, I would dismiss this appeal.

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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Howard De Walden Estates Ltd. v Malekshad [2003] EWHC 3106 (Ch) (19 December 2003) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2003/3106.html Cite as: [2003] EWHC 3106 (Ch), [2004] WLR 862, [2004] 4 All ER 162, [2004] 1 WLR 862

		Royal Courts of Justice Strand, London, WC2A 2LL
		19th December 2003