Enfranchisement case law roundup

The first concerns a lease extension claim under Part 1, Chapter 2 of the Leasehold Reform, Housing & Urban Development Act 1993 (“the Act”). It is not uncommon for a claim to be issued in circumstances where there are several landlords (e.g. a freeholder and intermediate leaseholder). S.40(2) of the Act provides that one of those landlords (the “competent” landlord - often the freeholder) shall conduct all proceedings arising out of the tenant’s notice, on behalf of all other landlords.

By Para.6, Schedule 11 of the Act, acts of the competent landlord are binding on the other landlords. Importantly, in Howard de Walden Estates v Accordway [2014], the UT found that the competent landlord has the authority to bind the other landlord(s) (e.g. by agreeing the terms of the new lease, or the premium) even if one of the other landlords has served a notice of intention to be separately represented under Para.7(1), Schedule 11 of the Act.

In Columbia House Properties (No.3) Limited v Imperial Hall Freehold Limited [2015], the appellant landlord contended that it was entitled to recover the fees of its managing agents, in connection with a collective enfranchisement claim to acquire the freehold of a mixed use block of flats and commercial units in London.

The FTT decided that none of those fees were recoverable. The UT disagreed. There was no reason in principle why managing agents’ fees should not be recoverable under s.33 of the Act. This will be an important decision for managing agents, many of whom spend a not inconsiderable amount of time assisting their clients with collective enfranchisement and right to manage claims.

Finally, in Curzon v Wolstenholme [2015], the UT considered two separate, but important issues. The first was whether, in circumstances where an Initial Notice pursuant to s.13 of the Act had been served, but not registered, the right of the participating tenants to acquire the freehold by collective enfranchisement could be defeated by a transfer of the freehold to a third party (in this case, the freeholder’s wife - avoiding the right of first refusal in the process); followed, shortly thereafter, by its transfer back to the original freeholder.

The UT came to the conclusion that the right could not be defeated in this way. The notice was still binding on the original freeholder. Secondly, and perhaps of wider significance, it would appear that, once the terms of acquisition have been agreed, it is not possible to “un-agree” those terms. Once a matter has been agreed, it becomes incapable of determination by an appropriate tribunal which has jurisdiction only over matters which have not been agreed.

This is a sensible decision. If it were possible to resile from an earlier agreement, the strict timeframe and enforcement mechanism in the Act would become uncertain and potentially ineffective.