Case Law

Daejan Investments Ltd v Benson Podcast - PublicIn this podcast Justin Bates and Nicolas Shulman discuss the case of Daejan Investments Ltd v Benson which is a
case about section 20 consultation requirements. Listen using our podcast player:

Shared ownership leases usually provide for the tenant to acquire an initial interest in the property and then to purchase the remainder over a period of time. In appropriate circumstances it may be possible for someone to be a “shared ownership” tenant and, at the same time, be entitled to exercise a right to enfranchise under the Leasehold Reform Act 1967. That could mean that they can acquire the freehold of their house at – potentially – a much lower price. Schedule 4A of the 1967 Act sought to prevent that from happening by excluding shared ownership leases granted by certain public bodies and housing associations from the provisions of the 1967 Act. Paragraph 3A of Schedule 4A of the 1967 Act was inserted by s.301 Housing and Regeneration Act 2008 so as exclude certain shared ownership leases granted by any landlord in certain prescribed conditions. The intention was to stimulate the private sector interest in offering shared ownership leases. The  Housing (Shared Ownership Leases) (Exclusion from Leasehold Reform Act 1967) (England) Regulations 2009 set out those circumstances in which such a shared ownership lease is excluded from the scope of the 1967 Act. Paragraph 4A of Schedule 4A of the 1967 Act was likewise inserted by s.302, 2008 Act. It provides that certain areas of England and Wales may be treated as “protected areas” where houses (or types of houses) can be offered for sale on shared ownership leases and the enfranchisement provisions of the 1967 Act. The Housing (Right to Enfranchise) (Designated Protected Areas) (England) Order 2009 gives the (lengthy) list of areas where the right to enfranchise is now excluded in respect of shared ownership leases.The Housing and Regeneration Act 2008 (Commencement No. 6 and Transitional and Savings Provisions) Order 2009. The effect of this is, as of September 7, 2009:(a) s.300, 2008 Act will be in force, which repeals s.1(1)(a) 1967 Act. This provided that only houses at a low rent were capable of being enfranchised under the 1967 Act. Over the years that provision had gradually been relaxed and is now killed off in the interests of legal certainty;(c) ss.301 and 302, 2008 Act are in force. They’re discussed above.

In 2005, the Respondent freeholder had indicated that it was minded to carry out significant repair works to the building. These works were “qualifying works” within the meaning of s.20 Landlord and Tenant Act 1985, such that, if the Respondent did not adequately consult, then the amount that it could recover by way of service charges was capped at £250 per leaseholder unless the LVT gave dispensation from the consultation requirements.The Respondent engaged surveyors to prepare the s.20 notice. The notice was sent to the Appellant at Flat 3, 36 Bensing Road. It was known to the Respondent that the Appellant in fact lived in Forest Hill, London and not at Flat 3 (although she was the leasehold owner of the same).The Appellant contended that she had not been served with the s.20 notice. The LVT found as a fact that the s.20 notice had been sent by post to the Appellant at Flat 3 and that this was service within the meaning of the lease and, hence, good service.The LVT also found that, in any event, there was a “reasonable chance” that the Appellant had, in fact, received the notice.The Appellant appealed to the Lands Tribunal.The appeal was allowed. The flat was not the last known place of abode of the Appellant, nor was it her place of business nor was it an address that she had agreed could be used as a postal address. In any event, the was no evidence that the notice had actually made it to the flat as opposed to being left in the common parts. This was not a technical distinction but a point of substance. There was a real and significant difference between a letter which arrived in the communal areas and one which was actually put through the door of a demised property.As regards the “puzzling phraseology” that there was a “reasonable chance” that the Appellant had received the s.20 notice, this was a decision reached without considering all the relevant material. It was unclear what a “reasonable chance” actually meant. Something could be less than 50% likely (and, hence, not proved on the balance of probabilities) and yet still have a “reasonable chance” of being true.In the light of these decisions, the appropriate route was for the Lands Tribunal to reconsider the point. It was therefore found that the Appellant had not received the s.20 notice and the question of dispensation was remitted to the LVT.The summaries contained in this document are not intended to be taken or used as substitutes for legal advice. Nothing in this document should be relied upon as a definitive statement of law or practice. Parties should always seek legal advice on the specifics of their cases.