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It’s easier to get forgiveness than permission

By J

Westbrook Dolphin Square Ltd v Friends Provident Life and Pensions Ltd [2011] EWHC 2302 (Ch)

This is probably one of the most factually complicated collective enfranchisement cases imaginable. In outline, as you know, qualifying tenants of flats have the right to force their landlord to sell them the freehold of the property containing their flats. They have to appoint a nominee purchaser for this purpose, which, in practice, is usually a company formed by the leaseholders for this purpose. The process involves the leaseholders serving an initial notice, setting out why they say that they are entitled to acquire the freehold. The freeholder then has an option to serve a counter-notice, in which he can admit or deny the right. If there is a dispute about the entitlement to enfranchise, then the nominee purchaser may apply to the court to have the matter determined: see generally, Leasehold Reform, Housing and Urban Development Act 1993.

In the present case, Friends Provident owned the freehold of Dolphin Square, London. It contained over 1200 flats, together with leisure facilities. A headlease as granted to a third party who, in turn, had granted an underlease to Westbrook. Then, under that, Westbrook had granted leases of the flats to some 600-0dd companies. Those companies were partially owned/controled by Westbrook.

The companies served an initial notice, naming Westbrook as the nominee purchaser. Friends Provident served a counter-notice, in which they disputed the entitlement to collective enfranchisement, taking a number of points, including that the leases to the companies were a sham. Proceedings were issued and subsequently discontinued shortly before trial.

A year or so later, the companies served a new initial notice, in largely the same terms as the original notice. Friends Provident served another counter-notice, taking almost entirely the same points as before. Westbrook issued proceedings seeking to determine that it had the right to enfranchise the property.

Now, at this stage, we have to turn to CPR 38.7. Where a claimant has discontinued a claim, then he needs permission to issue a second claim against the same defendant, if that second claim arises out of the same (or substantially the same) facts. Friends Provident claimed this rule applied and that no permission had been given. Westbrook denied that it did, but applied for permission retrospectively in any event. In short, Westbrook said that they had served a new notice so as to address a point taken against them on the manner in which the first notice was signed and because the valuation had changed.

This didn’t persuade the High Court. The factual basis of the case was significantly similar so as to engage CPR 38.7 and that no permission should be given. The underlying issues between the parties had not changed significantly. What Westbrook could (or should) have done on the first claim is proceeded to determine whether they had the right to acquire the freehold. Having done that, it could have declined to actually proceed with the purchase, and if, say, it was concerned about the purchase price, could have served a new notice later. On that second notice, the issue of entitlement would, of course, have been res judicata as between the parties.

Given the quite eye-watering sums of money involved here, I cannot imagine this case will stop here.

J is a barrister. He considers housing law to be the single greatest kind of law known to humankind and finds it very odd that so few people share this view.

1 Comment

  1. chief

    Hat-tip to Christian Metcalfe over at the Property Law Blog, Arnold J has himself given permission to appeal.


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