CA-2024-002828 - [2025] EWCA Civ 1016

As the Judge put it at [61]:

“In the paradigm case where all the flats in a building are let on long leases which are registered, the RTM company will be able to look at the freeholder’s registered title, read the names of the lessees of each flat, and know that they are the qualifying tenants.”

The Judge then considered the position where, as in the present case, there is no legal lease but only an equitable one: [62]. In such a case, as she said at [63], “either the equitable lessee is the qualifying tenant, or there is no qualifying tenant of the flat in question”. She then asked herself whether the need to construe against absurdity ruled out a reading of section 75 that takes the qualifying tenant to be the equitable lessee where there is no legal lessee (my emphasis), and answered that question as follows at [64]:

“I do not think it does. The fact that such leases are not visible on the Land Register is not fatal to their inclusion, because some of the legal leases within the definition in section 76 are equally hard to discover. Some are set out in section 76(2). Another is the case – not so unusual – where the qualifying tenant has died and the legal estate passes to her personal representatives despite their not being registered as proprietors (7 Sunny Gardens). Yet another is the case where a legal lease has been granted out of an unregistered estate, which takes immediate effect at law despite being initially unregistered … That legal lease is undiscoverable until registered, but there is no escape from the conclusion that the lessee is a qualifying tenant.”

After some further discussion of the last of those examples, the Judge considered at [68] whether there was any reason why a lessee (such as Ms O’Connor) whose lease was granted out of a registered estate, taking effect in equity until registered, should not be the qualifying tenant. The Judge continued:

“I think not. The mischief avoided by excluding such tenants is insignificant, first because there are already and necessarily a small number of qualifying tenants who are not visible on the Land Register, and second because such tenants will in many cases be readily discoverable because they live at the property (as does Ms O’Connor) and may even be in touch with the RTM company (as Ms O’Connor was in this case). The counter-mischief (to use the language of Bennion …) of excluding them is as Mr Bates KC describes; for some time, possibly quite a long time depending on the state of business at HM Land Registry, some or all of the lessees in a new building, whose leases are newly granted, will not be qualifying tenants when clearly they should be.”

The Judge then stated her final conclusion at [69]:

“Accordingly I find that where a flat is let on an equitable lease, and there is no legal lease of the flat, the lessee is a qualifying tenant if the statutory definition of a “long lease” is met. For the avoidance of doubt I repeat: where there is both a legal and an equitable long lease, the legal lessee is the qualifying tenant.”

It followed from this conclusion that Ms O’Connor was a qualifying tenant at the relevant time, and she was therefore a person on whom section 78 required a participation notice to be served: [70].