Reiner and Others v Triplark Ltd [2018] EWCA Civ 2151

The facts

1. The appellant tenant was a long leasehold of a flat managed by a RTM Company in accordance with the Commonhold and Leasehold Reform Act 2002 (the 2002 Act). The tenant wished to sell the flat to Mr Wismayer, but required the landlord’s consent under her lease to do so. Under the 2002 Act, responsibility for giving or withholding consent was therefore vested in the RTM Company, subject to giving 30 days’ notice to the landlord, thereby enabling the landlord to object. The RTM Company, of which at that time Mr Wismayer was the sole director, did not give notice to the landlord. This was a deliberate decision by Mr Wismayer who was concerned that the landlord would object. RTM Company neither refused consent, nor gave consent for the assignment.

2. The tenant contracted to assign her interest to Mr Wismayer whether or not consent was given. The contract provided for completion on that basis to be at Mr Wismayer’s risk. The assignment was completed pursuant to the contract, the purchase price paid, the tenant vacated and Mr Wismayer took control of the occupation of the flat. Before the assignment was registered, the landlord applied for a restriction preventing registration and made an application to the First-tier Tribunal for a determination under s 168 of the 2002 Act that the tenant had parted with possession of her flat in breach of the covenant. The landlord succeeded before the FTT and the Upper Tribunal.

The issues

3. The two principal issues for the Court of Appeal were:

I. did Ms Reiner part with possession of the flat?

II. If she did part with possession, was the failure of the RTM Company to give consent an unreasonable withholding of consent within section 1 of the Landlord and Tenant Act 1988 (LTA 1988)?

The court’s decision

4. After analysing the meaning of “parting with possession” and applying the analysis set out in Clarence House to the facts the Mr LJ Richards (who LJ Holroyde and LD Arden agreed with) held that “the inescapable” conclusion was that the tenant parted with possession on completion of the sale of the flat. She had given up physical possession and control of the flat by removing all her belongings and delivering the keys to Mr Wismayer. Equally comprehensively, she ceded all legal right to possession of the flat by completing the contract to assign her interest as lessee; the flat was expressly sold with vacant possession. The fact she still held the legal title as bare trustee did not mean she could not have parted with possession.

5. The Court of Appeal also found that the RTM Company had not unreasonably refused to give consent. Section 98(4) of the 2002 Act prohibits an RTM company from giving consent to a proposed alienation without having first given 30 days’ notice to the landlord. No such notice had been given to the landlord in this case. The Court of Appeal therefore held that the Upper Tribunal had been correct to “[accept] Ms Stevens-Hoare’s argument that if on a particular date the RTM Company is subject to a statutory prohibition that it must not grant an approval for an assignment, it cannot be said on the self-same date that the RTM Company is unreasonably withholding consent to such an assignment”. Any other conclusion would deprive a landlord of the protection which section 98(4) is clearly intended to provide.”

6. The Appeal was therefore dismissed.