Date 4 December 2009
This was the message from the Court of Appeal in Littlewood v Radford and Boston (formerly t/a Boston Carrington Pritchard) [2009] EWCA Civ 1024 case. This case concerned a professional negligence claim against a firm of surveyors made by a leaseholder who had instructed them to act on their behalf in the extension of the lease of a flat.
A lease extension is processed by a qualifying leaseholder serving notice on their landlord proposing the terms on which a new lease is to be granted. If the landlord disagrees with the lessees proposed terms then they may serve a counter-notice setting out their terms.
If the terms of the new lease remain in dispute 6 months after service of the notice then the leaseholder must apply to the Leasehold Valuation Tribunal or the notice is withdrawn. Once withdrawn, the lessee is prevented from serving a fresh notice for a period of 12 months, although it may be possible to negotiate informally. In this case the notice expired on 8 November 2000, unless an application was made to the Leasehold Valuation Tribunal before that date.
As is often the case all of the terms of the lease extension were agreed with the landlord quite early on, save for the premium to be payable for the lease extension. However, the lessee and the surveyors had a disagreement over the payment of their fees and surveyors refused to carry out any further work until they were paid. Unsurprisingly, the lessee missed the 8 November 2000 deadline and the notice was deemed withdrawn. Now deprived of the right to extend the lease under the legislation for a 12 month period the lessee agreed informally with the landlord to extend the lease for a premium of £485,000. This was found to have been £104,100 more than the lessee could reasonably have expected to have paid if the process had been completed under the legislation.
The lessee sued the surveyors for damages because the surveyors failed to remind the lessee of the deadline or apply to the Leasehold Valuation Tribunal. On appeal, the lessee was successful in establishing that in this case the surveyors had been under a continuing retainer as at 8 November 2000 and in the circumstances a reminder was necessary as the lessee would not have appreciated the importance of the deadline.
While this decision may seem a little unfair on the surveyors who had made the lessee aware of the deadline at the outset, it does demonstrate the potentially expensive consequences for failing to adhere to the strict deadlines set out in the Leasehold Reform Housing and Urban Development Act 1993 and the importance of the duty of professional advisers in advising on the deadlines.
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© SA LAW 2009
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