Wallace's High Court win for Brick Farm Management has implications for future collective enfranchisement claims
June 2006
In June 2005 the leaseholders of a housing estate in Richmond owned by a charitable housing trust won their High Court bid to purchase the freehold of their flats in accordance with the Leasehold Reform Housing and Urban Development Act 1993 (“the 1993 Act”). The case raised an important issue as to the scope of the exclusion of charitable housing trusts from collective enfranchisement provisions under the act.
As a result of the High Court decision the charitable housing trust, The Richmond Housing Partnership argued that with respect to one of the blocks forming part of the housing estate the tenants were not entitled to purchase the freehold of their block because it was not a self-contained building or part of a building. In effect the High Court having determined that the tenants were entitled to the right to collective enfranchisement The Richmond Housing Partnership attempted to circumvent the High Court decision by arguing that the tenants of one of the blocks were not entitled to acquire the freehold of the block because the block was not a self-contained building or part of a building. As a result of the action taken by the Richmond Housing Partnership the tenants were once again required to issue proceedings seeking declaration that they were entitled to collective enfranchisement and/or that the Richmond Housing Partnership in denying their entitlement had not served a valid counter-notice as required by the 1993 Act.
During the course of the proceedings the Richmond Housing Partnership also attempted to circumvent the fact that they failed to serve a valid counter-notice by making an application for an extension of time for service of a further and positive counter-notice granting to the tenants the right to collective enfranchisement.
The High Court upheld the tenant’s right to collective enfranchisement on the basis that once the court had ordered that the tenants had the right to collective enfranchisement the Richmond Housing Partnership was not able to resurrect the question of entitlement that had already been previously decided by the court.
Case background
Brick Farm was originally a large local authority housing estate of the London Borough of Richmond. Over the years a number of the borough’s tenants exercised the “right to buy” and purchased long leases of their flats. In August 2000 the borough transferred all its housing stock to a charitable housing association (Richmond Housing Partnership).
In February 2004 tenants from two of the blocks at Brick Farm served notices claiming the right to acquire their freeholds. Richmond Housing Partnership denied entitlement on the grounds that none of the tenants were qualifying tenants under the 1993 Act. The issue of entitlement was determined at the hearing in the Chancery List of Central London County Court in January 2005 by His Honour Judge Levy. Richmond Housing Partnership acknowledged that the individual flats of the tenants were not themselves provided in pursuit of their charitable purposes. They sought to argue nonetheless that the block as a whole was to be regarded as part of the accommodation provided by it in pursuit of its charitable purpose. Richmond Housing Partnership acknowledged that the tenants had been qualifying tenants when the freehold was owned by the London Borough of Richmond. Richmond Housing Partnership argued that they lost their qualifying status once London Borough of Richmond sold its housing stock to Richmond Housing Partnership. His Honour Judge Dennis Levy found in favour of the tenants. Richmond Housing Association appealed to the High Court. The appeal was heard in the High Court on 23rd June 2005 and the appeal was dismissed.
In September 2005 the Richmond Housing Partnership once again denied entitlement to the right of collective enfranchisement to once of the blocks seeking to acquire the freehold. On this occasion the denial of entitlement was on the basis that the premises were not a self-contained building or part of a building. In November 2005 and as a result of the service by the Richmond Housing Partnership of a counter-notice denying entitlement the tenants were compelled to issue County Court proceedings seeking a declaration that no counter-notice had been served because the defendant had served a negative counter-notice or alternatively that the tenants were entitled to the right to collective enfranchisement. As a result of the issue of the proceedings the Richmond Housing Partnership sought within the proceedings an extension of time for service of a further positive counter-notice admitting the tenant’s entitlement to collective enfranchisement. The matter was heard on the 31 March 2006 before Mister Justice Hart who determined that once the court had determined that the tenants were entitled to the right to collective enfranchisement a landlord was precluded from denying the right to enfranchisement for any other reasons and also determined that the court did not have jurisdiction to extend a time limit prescribed by statute.
Relevant legislation
The Leasehold Reform Housing and Urban Development Act 1993 gives to qualifying tenants of flats the right to acquire extended leases and collectively the right to acquire the freehold of their blocks. The general definition of a qualifying tenant is any tenant who has a lease of a flat which when granted was for a term of more than 21 years.
The relevant provisions of the 1993 Act were Section 22 under which the tenants are entitled to seek a declaration from the court that on the relevant date they were entitled to collective enfranchisement and Section 25 under which the tenants can make an application to the County Court seeking a declaration that the Reversioner had not served a counter-notice.
The High Court also ruled that the Richmond Housing Partnership was not entitled to an extension of time because the service of a counter-notice in accordance with the provisions of the 1993 Act had a strict time limit imposed by this statute and the court could not extend this time limit under its powers of management pursuant to part 3 of the Civil Procedure Rules.
Samantha Bone, Partner at Wallace, said: “This judgment was important for two reasons, firstly it established once the court had determined that the tenants were entitled to collective enfranchisement the landlord could not deny entitlement on another ground and secondly and with more far reaching implications the court determined that where there are statutory time limits the court did not have the jurisdiction to vary those time limits.”
Wallace instructed Anthony Radevsky to appear for the leaseholders.