Second chance tribunal

A recent decision on the jurisdiction of the Leasehold Valuation Tribunal (LVT) preserves flexibility, perhaps at the expense of certainty and finality. Leasehold enfranchisement has been a growth area since the requirements for enfranchisement were relaxed by the Commonhold and Leasehold Reform Act 2002, but, as practitioners will be aware, it is a field not without its pitfalls. There are strict requirements for the content and service of notices, and numerous time limits. Non-compliance can result in sudden death and the need to restart the entire process.

In this context, the recent decision of the Lands Tribunal in Sinclair Gardens Investments Kensington Ltd v Eardley Crescent No 75 Ltd [2006] EWLands LRA/77/2005 (judgment 7 July 2006) may come as something of a relief to the busy practitioner. Two key points were decided by HHJ Huskinson:

• first, that on an application to determine matters in dispute, there is no need for those matters to be precisely pleaded; and
• secondly, that the LVT is not restricted to determining the disputed terms of acquisition on a single occasion.

It appears that the parties can return for as many bites of the cherry as they need until all of the terms have either been agreed or determined.

No need for precise pleading

Where the tenants have served an initial notice claiming the right to collective enfranchisement, and the landlord has served a counter-notice admitting the right, the parties will usually negotiate in order to agree the terms of the proposed acquisition. If agreement cannot be reached, either party has the right to apply to the LVT under s 24 of the Leasehold Reform, Housing and Urban Development Act 1993 for a determination of the matters in dispute.

Dismissing the landlord's appeal, HHJ Huskinson took the view that there was no need for the application to the LVT to be precisely pleaded. There is no prescribed form for a s 24 application, though the LVT will send out guidance notes on request. There are some things that do have to be included, namely, the address of the premises, names and addresses of interested parties, copies of notices and a statement of truth. These requirements are specified in the Leasehold Valuation Tribunals (Procedure) (England) Regulations 2003 (SI no 2099), but can be dispensed with or relaxed if the application contains sufficient information and no prejudice would be caused to either party.

Significantly, HHJ Huskinson held that the LVT has jurisdiction under s 24 to determine the matters in dispute between the parties, not just those specifically identified in the application. His view that an applicant was not required to identify the matters in dispute on the face of the application was reinforced by the fact that there is no provision in the 2003 Regulations for amending an application to the LVT.

This is a practical decision that recognises the realities of the enfranchisement process. The reason for the application is that the parties are in negotiations, but are unable to agree all of the terms. The matters in dispute could be changing day by day. There is no point in trying to pin them down at a moment in time (the date of the application) when, if negotiations continue, the matters in dispute may be entirely different as at the date of the LVT hearing. The decision may also encourage both parties to such an application to be proactive in identifying what is in dispute when preparing for and attending the hearing.

Disputed terms of acquisition do not have to be determined on a single occasion

In Sinclair Gardens, some matters were determined by the LVT on a first hearing, but other matters remained in dispute. The parties were unable agree the outstanding issues and the tenants sought to return the s 24 application to the LVT for a further determination. The landlord argued that this could not be done but the LVT and, on appeal, the Lands Tribunal disagreed. There is no reason in principle why the LVT's jurisdiction under s 24 has to be exercised in a single once-and-for-all decision rather than being dealt with in stages by way of two or more decisions. This had been previously recognised by the Court of Appeal in Penman v Upavon Enterprises Ltd [2001] EWCA Civ 956; [2002] L&TR 10, where the LVT had failed to determine all of the matters that had been placed before it. The Court of Appeal held that the county court had no power to make a vesting order until all of the terms of acquisition had either been agreed by the parties or determined by the LVT, and referred the matter back for a further determination. Where Sinclair Gardens goes further is in holding that the matter can be remitted to the LVT for it to determine matters in dispute that were not put before it on the first application.

Pragmatic approach

Some might criticise this decision because it could allow either party to raise new issues before the LVT rather than in advance, potentially taking the other side by surprise. It also discourages finality because both sides will know that if everything is not agreed, they can return to the LVT for a further ruling. However, there are many parts of the enfranchisement provisions that allow one party to gain a significant advantage simply by reason of a minor oversight or omission by the other side. It is refreshing to see a decision which takes a pragmatic approach and which may encourage both parties to be more proactive in negotiations.

Copyright & permissions