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Tenants can make successive enfranchisement applications, Lord Neuberger says

The Master of the Rolls has made it clear that tenants wanting to enfranchise under the Leasehold Reform, Housing and Development Act 1993 can make successive applications.

22 May 2012

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The High Court struck out an application by a company representing tenants in London’s Dolphin Square, seeking a declaration that they were entitled to the freehold.

Delivering the leading judgment in Westbrook Dolphin Square v Friends Life [2012] EWCA Civ 666, Lord Neuberger said Dolphin Square occupied a substantial area of land, including 1,223 flats.

The court heard that the tenants served an initial notice on the freeholder in 2007, claiming the right to buy the freehold and nominating Westbrook as the purchaser. Friends Life served a counter-notice.

Proceedings reached the High Court, but Westbrook discontinued the proceedings because the central London property market had fallen and paid Friends Life’s costs of £470,000.

In May 2010, the tenants served a fresh notice under section 13 of the Act, followed by a fresh application for a declaration that the tenants were entitled to the freehold.

Mr Justice Arnold struck out the application under CPR 38.7 on the grounds that it arose out of substantially the same facts as the first application, which had been discontinued.

Lord Neuberger said it was clear from section 13 of the Act that the tenants could withdraw at any time, and although they could not serve another notice for one year from the date of withdrawal, they were free after that to serve another one.

“The 1993 Act was not enacted in order to give qualifying tenants of flats the bare right to serve an initial notice under section 13. Its purpose was to give such tenants the right, if they satisfy certain substantive and procedural requirements, of acquiring the freehold of their premises.”

Lord Neuberger said the notion of “one strike and you’re out” appeared to be “wholly antithetical to the thrust of section section 13(9) and the 1993 Act as a whole”.

He said it was true that landlords could be “bothered” by applications from tenants if CPR 38.7 did not apply, but the legislature had decided on the degree of protection which should be afforded to landlords.

He said the occasions on which notices could be served were limited and the landlord could recover costs where a notice was withdrawn.

Lord Neuberger said counsel for Friends Life raised the “spectre of tenants harassing their landlord with successive notices” but this seemed to be “most unlikely” given the costs consequences.

He said that, at the time the 1993 Act came into force, there was no provision in the county court equivalent to CPR 38.7. He said it was “untenable” to argue that by introducing the civil procedure rule, parliament intended to cut down the rights of tenants under the Act.

He added that even if CPR 38.7 had been in force when the Act was passed, he would have reached the same conclusion.

Lord Justice Lewison allowed the appeal, for his own reasons. Lord Justice Longmore agreed.