Poets Chase Freehold Company Ltd v Sinclair Gardens Investments (Kensington) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 26 July 2007 |
| Neutral Citation | [2007] EWHC 1776 (Ch) |
| Date | 26 July 2007 |
| Court | Chancery Division |
| Docket Number | Case No: CHY06252 |
[2007] EWHC 1776 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Morgan
Case No: CHY06252
Mr Timothy Fancourt QC (instructed by Paul Chevalier & Co) for the Appellant
Ms Lana Wood (instructed by Parrott & Coales) for the Respondent
Hearing dates: 27 th & 29 th June 2007
The Issue
The issue in this case arises out of the right to collective enfranchisement conferred
by the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”), Part I, Chapter I. In a case where qualifying tenants of flats, contained in premises to which Chapter I applies, serve a notice which purports to be given under Section 13 of the 1993 Act, but which in fact fails to comply with the requirements of Section 13(3), what, if any, is the effect of that notice? If the landlord points out that the notice does not comply with Section 13(3), or if the tenants realise this for themselves, are the tenants able without delay to serve a further notice which does comply with Section 13(3) and which will unquestionably be an effective notice under Section 13? Or does the service of the first purported notice under Section 13 mean that the tenants are not able to serve a second notice until they withdraw the first notice and, when they withdraw the first notice, is there a period of twelve months from such withdrawal within which there is a statutory prohibition on serving a second notice?
The Facts in Outline
Sinclair Gardens Investment (Kensington) Limited is the freehold owner of 9 blocks of flats at Poets Chase, Aylesbury, Buckinghamshire. The point arising in this appeal relates to each of these 9 blocks. There are altogether some 9 actions in the County Court, one action relating to each block. The County Court has ordered that one of these actions should be the lead action and this appeal is brought in the lead action. The lead action concerns a block of 12 flats, the flats being numbered 1, 3, 5, 7, 9, 11, 15, 17, 19, 21, 23 and 25 Poets Chase, Aylesbury.
The block of flats, the subject of this appeal, comprises premises to which Chapter I of Part I of the 1993 Act applies. The other conditions as to the entitlement of the tenants to give notice seeking collective enfranchisement under Chapter I, Part I of the 1993 Act are satisfied. As it happens, it does not strictly matter for the purposes of this appeal whether these qualifications are met or not as the point does not turn upon the entitlement to exercise a right to collective enfranchisement but relates to the form of the document served for the purpose of seeking to exercise that right.
In the first instance, I will describe the various notices in this case only briefly as it will be necessary to return to those notices and discuss their detailed provisions after I have described the relevant statutory provisions.
On or about the 19 th December 2005, the tenants of 8 out of the 12 flats in the relevant block served on the landlord a notice which purported to be a notice under Section 13 of the 1993 Act. The notice referred to a company known as Poets Chase Freehold Company Limited. The notice stated that the date by which the landlord was to serve any counter-notice under Section 21 of the 1993 Act was 28 th February 2006.
On about the 22 nd February 2006, the landlord gave to Poets Chase Freehold Company Limited a notice dated 22 nd February 2006, which notice purported to be a counter-notice under Section 21 of the 1993 Act. In summary, this counter-notice asserted that the purported Section 13 notice dated 19 th December 2005 did not comply with the requirements of Section 13(3) of the 1993 Act.
On the 20 th April 2006, the solicitors for the tenants wrote to the landlord. The letter stated that the tenants had considered the counter-notice served by the landlord and the tenants now accepted that the purported Section 13 notice dated 19 th December 2005 was invalid for the reasons given in the counter-notice. The letter dated 20 th April 2006 went on to say that the tenants were entitled to, and sought to, serve a fresh Section 13 notice.
On or about 20 th April 2006, the same 8 tenants in the block in question served a further notice purporting to be given under Section 13 of the 1993 Act. This notice corrected the matters complained of in the landlord's counter-notice of 22 nd February 2006 in respect of the original purported Section 13 notice dated 19 th December 2005.
On or about 26 th June 2006, the landlord gave to Poets Chase Freehold Company Limited a further purported counter-notice. The document contained a number of legal contentions as to the ability of the tenants to serve a Section 13 notice on the 20 th April 2006 in view of the fact that they had earlier served a purported Section 13 notice dated 19 th December 2005.
On 31 st July 2006, Poets Chase Freehold Company Limited, as nominee purchaser, brought the present proceedings. In its Particulars of Claim, that company pleaded the sequence of notices, contended that the notice dated 19 th December 2005 did not comply with Section 13 of the 1993 Act so that that notice was not a notice under Section 13 of the 1993 Act and, accordingly, that the tenants were not precluded from serving a valid Section 13 notice on 20 th April 2006. The Particulars of Claim claimed declaratory relief and the claim was said to be made under Section 22 of the 1993 Act.
On or about 21 st August 2006, the landlord served a witness statement from its solicitor. The witness statement referred to the sequence of notices and contended that the notice dated 19 th December 2005 failed to comply with Section 13(3) of the 1993 Act. The witness statement then contended that the service of the purported Section 13 notice dated 19 th December 2005 meant that the tenants were not able to serve a Section 13 notice on the 20 th April 2006.
The issue as to the effect of the notice of 20 th April 2006 came before His Honour Judge Collins (in the Central London County Court) and he gave judgment on 15 th December 2006. At the hearing in the County Court, the nominee purchaser maintained the stance that the purported Section 13 notice of 19 th December 2005 did not comply with Section 13 of the 1993 Act. However, the landlord appears to have changed its position. Notwithstanding the landlord's contentions in the counter-notice of 22 nd February 2006 and in the solicitor's witness statement, the landlord appears to have argued that the notice dated 19 th December 2005 did sufficiently comply with Section 13.
In the end, the Judge held that the notice 19 th December 2005 did not comply with Section 13(3)(d) of the 1993 Act although he held, notwithstanding the nominee purchaser's submissions to the contrary, that the notice sufficiently complied with Section 13(3)(f) of the 1993 Act. The Judge next held that because the notice dated 19 th December 2005 did not comply with Section 13 of the 1993 Act, it was invalid and so it did not preclude the tenants from serving a notice on 20 th April 2006 which did comply with Section 13 of the 1993 Act.
The Judge then considered arguments put forward by the landlord that the tenants and the nominee purchaser were estopped from challenging the efficacy of their own notice of 19 th December 2005. The Judge rejected the landlord's case on estoppel.
The result of the hearing in the County Court was that the Judge declared that the relevant tenants were entitled to exercise the right to collective enfranchisement in relation to the premises specified in the notice dated 20 th April 2006, that the counter-notice dated 26 th June 2006 was of no effect and that the landlord should serve a further counter-notice if so advised by 1 st March 2007. Judge Collins granted permission to the landlord to appeal.
The issue as to the effect of the notice dated 20th April 2006 is of particular relevance to the parties because of the provisions of paragraph 4(2A) of Schedule 6 to the 1993 Act. That paragraph applies where, at the date of service of a Section 13 notice, the unexpired term of the lease held by any of the participating members exceeds 80 years. In such a case, the requirement that the tenant pay a share of marriage value pursuant to paragraph 4 of Schedule 6 to the 1993 Act is removed. On 20 th April 2006, the participating tenants who served the notice of that date had leases with terms exceeding 80 years but on the 1 st September 2006 those terms became shorter than 80 years. Accordingly, the tenants wish to establish, and the landlord wishes to deny, that the notice dated 20 th April 2006 was an effective notice under Section 13 of the 1993 Act.
The Statutory Provisions
Before considering the submissions of Counsel, it is appropriate to refer to the statutory provisions. It is necessary to review many of the statutory provisions to form a clear picture as to how the provisions are intended to operate. The provisions are too lengthy to be set out verbatim. Accordingly, in relation to the majority of the provisions, I will attempt only a paraphrase of them. It must be recognised that my paraphrase is for the purposes of giving judgment on the specific issue in this case and is not by way of exhaustive annotation of the statutory provisions. I will refer to the provisions in force at the relevant time although it should be remembered that some of these provisions are the subject of prospective amendment where the amendments had not been brought into effect at the relevant time, nor indeed since that time.
Section 1(1) of the 1993 Act provides that Chapter I of Part I has effect, for the purpose of conferring on qualifying tenants of flats, contained in...
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