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“Pitfalls for the unwary”: the Court of Appeal stands firm on enfranchisement regime under the 1993 Act

On 03 November, the Court of Appeal handed down judgment in GR Properties Limited v Safdar [2020] EWCA Civ 1441, and gave a stark warning of the strictness of the enfranchisement regime under the Leasehold Reform Housing and Urban Development Act 1993.

The claimants were tenants of flats who wished to acquire the freehold of their building.  They made a slip in the details of their initial notice and applied (correctly) to the County Court to amend it. Thinking to save time and cost, they made a joined application at the same time to the County Court for an order determining the terms of acquisition of the freehold (a task normally carried out by the First-tier Tribunal), and for any necessary directions.

DDJ Ackland permitted the amendment of the notice, and transferred the question of the terms of acquisition to the First-tier Tribunal, being of the view that section 90(4) of the 1993 Act permitted her to deal with joined applications in this way. By the time that question reached the Tribunal, the statutory time limit for making the application had expired, so if the application to the County Court was not valid, the time limit had expired and the initial notice was deemed withdrawn.

The landlord appealed, but HHJ Gerald dismissed the appeal, saying that there was “a very good and… powerful practical reason” why this approach should be allowed: it would be “unwieldy and…ridiculous” to have to make a “proliferation of applications” to both the Court and the Tribunal.

The Court of Appeal, however, took a firmer line: an application to determine the terms of acquisition must be made to the First-tier Tribunal, and not to any other court. Section 90(4) permits the County Court to deal with any other type of joined application that would normally be outside its jurisdiction (such as a defamation claim), but not those matters reserved to the First-tier Tribunal, of which the terms of acquisition is one. The application to the County Court was not valid and the notice deemed withdrawn.

Practitioners should take note. Lewison LJ emphasized that the 1993 Act sets out a “highly prescriptive procedure” with many “pitfalls for the unwary”. Arnold LJ felt that “the division of jurisdiction may in some circumstances present an obstacle to efficient dispute resolution” and thought it was “worthy of consideration whether the Act should be amended either so as to confer jurisdiction on just one court or tribunal or in some other way.”

The recent Law Commission Report on enfranchisement made exactly the same point, making as one of its key recommendations that “all enfranchisement disputes and issues should be determined by the Tribunal, replacing the complex division of proceedings between the Tribunal and the county court under the current law.”

Perhaps there is some hope then of reform in the future to remove these pitfalls for the unwary, but until then, it is best to be wary and cut no corners when dealing with the 1993 Act.

Mark Galtrey appeared for the tenants at the first and second appeals.

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