[2024] UKUT 335 (LC)

As I mentioned above, counsel for both parties made further written submissions in the light of the Supreme Court’s decision in A1 (Sunderland), as it had been agreed that that decision was likely to be important in the context of the second issue in the appeal, namely the consequences of failure to serve a qualifying tenant. The submissions made on behalf of the appellant did indeed touch only on the second issue. But Mr Jacob argued that the Supreme Court’s decision was also relevant to the first issue and supported the respondent’s analysis.

He referred in particular to the contrast drawn by the Supreme Court between landlords, and other “stakeholders” who are entitled to receive the claim notice, and qualifying tenants, in terms of visibility. Landlords (etc) may not be able to be found; landlords who are entitled to a claim notice may have granted short leases which are necessarily unregistered, and “there is no register of all leases covered by this provision nor any simple and conclusive way of checking who every such landlord might be” (paragraph 2). That is why section 79(7) provides that the RTM company is not required by section 79(6) to give the claim notice to “a person who cannot be found or whose identity cannot be ascertained.” There is no such saving or dispensing provision for qualifying tenants:

“69.

…There will ordinarily be no difficulty in finding or identifying qualifying tenants. The absence of any saving or dispensing provisions of the type found in section 79(7) suggests that this was well understood by Parliament .”

So the Supreme Court took the view that qualifying tenants will be easily identifiable from the Land Register because their leases will ordinarily be registered. The Supreme Court set out, and therefore was aware of, section 112(2) and referred to it in the context of landlords but not of qualifying tenants. The Supreme Court’s reasoning, leaning heavily as it did upon the discoverability of qualifying tenants and the contrast with landlords who may be undiscoverable, would break down, said Mr Jacob, if tenants under long equitable leases were included in the definition of qualifying tenants; they would be as difficult to find as landlords, yet the statute makes no provision for dispensation when they cannot be found. The Supreme Court’s reasoning only works if section 75(2) is read so that only a person with a legal lease can be a qualifying tenant.

Mr Bates KC in response stressed that the Supreme Court in A1 (Sunderland) was not making a decision about qualifying tenants, and anything it said about them is obiter. However, its reference to section 112(2) makes it clear that the Supreme Court was aware that a lease in section 75 includes an equitable lease.