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Leasehold Enfranchisement Update – Natt v Osman

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28th November 2014

Natt v Osman [2014] EWCA 1520 Civ

Where a the statute confers a property or similar right on a private person and there has been a failure to comply with a statutory requirement of a notice, the court has to interpret the notice to see whether it actually complies with the strict requirements of the statute; if it does not, then the notice will be invalid. The outcome does not depend on the particular circumstances of the actual parties, such as the state of mind or knowledge of the recipient or the actual prejudice caused by non-compliance on the particular facts of the case.

Facts

An initial notice served under s. 13 LRHUDA 1993 failed to identify one of the qualifying tenants and give particulars of her lease, because it was disputed whether the lease was of a “flat”. The qualifying tenant was the daughter of the landlord and therefore the landlord knew the information which should have been included and had suffered no prejudice by the omission to include the relevant information.

Issue

The court had to determine whether the failure to identify the qualifying tenant and give particulars of her lease invalidated the notice. The Appellant tenant argued that it was permissible for the court to take into account the consequences of non-compliance.

First Instance

The judge held that the provisions of s. 13 LRHUDA 1993 which provide for what should be included in an initial notice had to be strictly complied with.

Decision on Appeal

The court referred to the criticism of the classification of statutory provisions as mandatory or directory in R v Soneji [2005] UKHL 49. In a number of cases following Soneji the courts had held that where there is a failure to comply with a statutory provision it is permissible to look at the actual consequences of the failure in the case and ask whether Parliament could have intended that the consequence of non-compliance was that the step taken was a nullity. The court rejected that approach in the case of statutory notices.

The court distinguished two lines of authority as follows:

“…[A] distinction may be made between two broad categories: (1) those cases in which the decision of a public body is challenged, often involving administrative or public law and judicial review, or which concern procedural requirements for challenging a decision whether by litigation or some other process, and (2) those cases in which the statute confers a property or similar right on a private person and the issue is whether non-compliance with the statutory requirement precludes that person from acquiring the right in question.”

In relation to the second category the Chancellor said as follows:

“The Court of Appeal cases show a consistent approach in relation to statutory requirements to serve a notice as part of the process for a private person to acquire or resist the acquisition of property or similar rights conferred by the statute. In none of them has the court adopted the approach of “substantial compliance” as in the first category of cases. The court has interpreted the notice to see whether it actually complies with the strict requirements of the statute; if it does not, then the Court has, as a matter of statutory interpretation, held the notice to be wholly valid or wholly invalid: see, for example, Burman, Newbold v The Coal Authority [2013] EWCA Civ 584, [2014] 1 WLR 1288, Keepers and Governors of John Lyon Grammar School v Secchi.

On that approach, the outcome does not depend on the particular circumstances of the actual parties, such as the state of mind or knowledge of the recipient or the actual prejudice caused by non-compliance on the particular facts of the case: Tudor at [27], Speedwell Estates at [24]. Insofar as Chadwick LJ may have thought otherwise in obiter remarks in Cadogan v Strauss at [48], I respectfully do not agree. This is consistent with the policy of providing certainty in relation to the existence, acquisition and transfer of property interests.”

The Chancellor then analysed the provisions of s. 13 LRHUDA 1993 and found that strict adherence to its requirements was necessary. He accepted that the participating tenants would not always be in a position to identify in advance who were the qualifying tenants, but found that this point did not outweigh the cumulative indicators of the legislative intention.

Comment

This is an important case which is relevant beyond the field of leasehold enfranchisement. There have been a slew of cases at first instance where judges have approached non-compliance with the requirements of a statutory notice on the basis that the question is one of whether there has been substantial compliance.

That approach no longer represents the law. Any mistake in a notice which is not caught by a statutory saving clause or by the Mannai approach will now call into question the validity of the notice. It is a harsh approach and a boon to pedants but it does afford a measure of certainty and it avoids the possibility that identically drafted notices could be held valid or invalid depending on the knowledge of the recipient.

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