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York House (Chelsea) Ltd v Thompson [2019] EWHC 2203 (Ch)

Stephen Jourdan QC and Anthony Radevsky acted for the successful defendants in this important case under Part 1 of the Landlord and Tenant Act 1987 in which judgment was handed down by the High Court on 15 August 2019.

The freehold of York House, a block of 42 flats in Chelsea, was held by Mr and Mrs Thompson.  In order to preserve the development value in various parts of the premises, they granted 14 leases to one or other of themselves.  No premium was payable and the rent was a peppercorn in each case.  No offer notices under s.5 of the 1987 Act were served.

A majority of the flat lessees claimed that the leases were relevant disposals and sought to acquire them by serving s. 12B notices under the Act.

Mr Justice Zacaroli rejected the lessees’ claim.  He held that each lease was a disposal by way of gift to a member of the landlord’s family, and so was excluded from the definition of ‘relevant disposal’ by s. 4(2)(e) of the Act.  Alternatively, he held that each lease was a disposal consisting of a transfer by two or more persons who are members of the same family to fewer of their number, and so fell within the exclusion in s. 4(2)(h) of the Act.  This is the first case in which those provisions have been considered.

Although that was sufficient to decide the case in the landlords’ favour, the Judge went on to consider further arguments as to whether the leases were disposals of parts of the premises to which the Act applied.  He held that Dartmouth Court Blackheath Ltd v Berisworth Ltd [2008] was correctly decided, and that all the leases demised parts of the building to which the Act applied, or appurtenances to the building.  If Dartmouth was not correct, he would have found that some parts of the premises demised would not have been relevant disposals.  A storeroom used together with the Thompsons’ own flat was appurtenant premises and part of that flat, even though it had in the past been used by a number of tenants for storage.

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