Sarah Thompson-Copsey is a solicitor at Denton Hall.
The recent Court of Appeal decision in Zipporah Mainwaring and Yeoman's Row Management Ltd v The Trustees of Henry Smith's Charity highlights the difficulties landlords and tenants face in interpreting the Landlord and Tenant Act 1987.
The court looked at the ability of tenants to make arrangements between themselves when exercising their right to buy under the act. The right can only be exercised if a requisite majority of qualifying tenants (i) accepts the offer to buy that the landlord is obliged to make to them and (ii) serves notice on the landlord nominating a purchaser.
The dispute arose from the proposed disposal by Smith's Charity of its South Kensington estate to The Wellcome Trust. An acceptance and nomination notice was served on Smith's Charity by Mainwaring and Yeoman's Row Management, apparently on behalf of a requisite majority, purporting to accept the landlord's offer and to nominate Mainwaring and the company as purchaser of the building.
The tenants had entered into written agreements, which were expressed to be irrevocable, to accept the landlord's offer and to nominate Mainwaring and the company as purchasers.
The matter came before the court when one of the tenants said he no longer wished to support the purchase. The support of that tenant was vital if the requisite majority was to be maintained. The court had to decide the effect of this change of support on the ability of Mainwaring and the company to complete the purchase.
The court rejected the argument that the agreement, being expressed to be irrevocable, meant that the tenant was unable to withdraw his support. It held that, as Mainwaring knew when the acceptance and nomination notice had been served that the tenant no longer supported the purchase, such notice was invalid.
But the court did not accept that agreements made between tenants supporting a proposed purchase were necessarily void as being contrary to the policy of the act. It did not consider what agreements may be void or the effect of breaches of such agreements.
There therefore remains uncertainty on the question of what agreements tenants can enter into between themselves to regulate the exercise of their rights to purchase granted to them by the act.