Leasehold Reform, Housing and Urban Development Act 1993 — Collective enfranchisement — Counternotice held invalid in earlier proceedings — Landlord ordered to serve further counternotice admitting claim within time limit — Second counternotice not admitting entitlement to enfranchise — Whether landlord able to serve second counternotice denying entitlement — Whether nominee purchaser entitled to order under section 25 that premises be acquired on terms of initial notice — Whether landlord entitled to order varying time limit to serve third counternotice admitting entitlement
In February 2004, the participating tenants of a block of flats served on the defendant landlord an initial notice of collective enfranchisement, under the Leasehold Reform, Housing and Urban Development Act 1993, and nominated the claimant as the nominee purchaser. In April 2004, the defendant served a counternotice denying that the tenants were entitled to enfranchise because the landlord was a charitable housing trust. Stanley Burnton J determined that issue against the landlord in earlier proceedings (see [2005] EWHC 1650 (QB); [2005] 3 EGLR 57), and ordered the defendant to serve a further counternotice by 9 September 2005. In purported accordance with that order, the defendant served a further counternotice prior to that date; this contended that the tenants were not entitled to acquire the premises since the building did not satisfy the requirements of section 3 of the Act. The claimant issued proceedings under section 22, seeking an order that the defendant had not served a counternotice admitting the claim and that the claimant should be entitled to acquire the premises on the terms of the initial notice as provided for under section 25(1). In response, the defendant applied to vary the original order of Stanley Burnton J so as to extend the time and allow it to serve a further alternative counternotice in a form that would admit the tenants’ claim should the court not accept its contention that the second counternotice was valid.
Held: The claimant’s claim for relief was granted; the defendant’s application was dismissed. The September 2005 notice was not a valid counternotice. Where a court has held that the tenants are entitled to acquire the premises, and ordered the landlord to serve a further counternotice admitting that entitlement, the landlord cannot bring a further challenge to the tenants’ right to enfranchise. On the authority of Willingale v Globalgrange Ltd [2000] 2 EGLR 55, the court had no discretion other than to make an order under section 25 that the claimant should acquire the premises on the terms of the tenants’ initial notice. The 1993 Act confers no discretion on the court to vary the time within which a counternotice is to be served. CPR 3.1(2)(a) did not confer jurisdiction to vary the order of Stanley Burnton J since that order was made under a statutory scheme. If CPR 3.1(2)(a) had applied, discretion to extend the time limit would have been exercised against the defendant.
The following cases are referred to in this report.
Brick Farm Management Ltd v Richmond Housing Partnership Ltd (No 1) [2005] EWHC 1650 (QB); [2005] 1 WLR 3934; [2005] 3 EGLR 57; [2005] 48 EG 224 |page:47|
Burman v Mount Cook Land Ltd [2001] EWCA Civ 1712; [2002] Ch 256; [2002] 2 WLR 1172; [2002] 1 All ER 144; [2002] 1 EGLR 61; [2002] 06 EG 156; [2002] HLR 45
Knibb v Knibb [1987] 2 FLR 396, CA
Sayers v Clarke Walker (permission to appeal: extension of time limits) [2002] EWCA Civ 645; [2002] 1 WLR 3095; [2002] 3 All ER 490
Willingale v Globalgrange Ltd; sub nom Willingale v Global Grange Ltd (2000) 80 P&CR 448; [2000] 2 EGLR 55; [2000] 18 EG 152, CA
This was the hearing of a claim by the claimant, Brick Farm Management Ltd, for relief under section 25 of the Leasehold Reform, Housing and Urban Development Act 1993, and an application by the defendant, Richmond Housing Partnership Ltd, for a variation of an earlier court order.
Anthony Radevsky (instructed by Wallace LLP) appeared for the claimant; Jonathan Manning (instructed by Devonshires) represented the defendant.
Giving judgment, Hart J said:
[1] This is a hearing of a claim by the claimant under section 25 of the Leasehold Reform, Housing and Urban Development Act 1993 (the 1993 Act), pursuant to a claim form issued on 7 November 2005, and also an application by the defendant for an extension of time to serve a further alternative counternotice, that application having been issued on 16 December 2005. The two matters are interlinked in that if the court were to accede to the defendant’s application to extend time in order to serve a further alternative counternotice, the effect would be to cut the ground from under the claim by the claimant for an order under section 25 of the 1993 Act. Indeed, it would render that claim unnecessary since, under the proposed alternative counternotice, the defendant/applicant landlord would be admitting the tenant’s right to enfranchise.
[2] Before describing the facts that give rise to the dispute, it is convenient to set out the statutory background against which the dispute arises. Part I of the 1993 Act grants to long lessees of residential flats two important rights. The first, in Chapter 1, is the right of collective enfranchisement entitling the lessees to acquire the freehold of their block provided that at least half of them join together to make such a claim. The second, set out in Chapter 2, is the individual right to a new lease of the tenant’s flat. These proceedings concern a claim under Chapter 1 for collective enfranchisement, the claimant representing the long lessees of a block of flats at 10-17 Brick Farm Close, Kew Gardens, Richmond, Surrey. The claimant is in fact Brick Farm Management Ltd, which is the nominee purchaser of the long lessees who have made the claim.
[3] Section 1 of the Act confers the right. It is relevant to mention that the right extends not only to the premises in respect of which the long leases exist but, under subsection (3), to a property that, at the relevant date, is either:
(a)… appurtenant property which is demised by the lease held by a qualifying tenant of a flat contained in the relevant premises; or
(b) it is property which any such tenant is entitled under the terms of the lease of his flat to use in common with the occupiers of other premises (whether those premises are contained in the relevant premises or not).
That point is relevant in the present case because the block of flats concerned is situated on an estate of which the freehold is vested in the defendant and in relation to which there are common areas used by the lessees in common with the occupiers of other premises on the estate. The right to enfranchise in respect of such additional property is qualified in the subsequent provisions of Chapter 1, in that it is open to the landlord to make alternative proposals for the grant of equivalent rights in lieu of the freehold. That is provided for by section 1(4):
The right of acquisition in respect of the freehold of any such property as is mentioned in subsection (3)(b) shall, however, be taken to be satisfied with respect to that property if, on the acquisition of the relevant premises in pursuance of this Chapter, either –
(a) there are granted by [the person who owns the freehold of that property]
(i) over that property, or
(ii) over any other property,
such permanent rights as will ensure that thereafter the occupier of the flat referred to in that provision has as nearly as may be the same rights as those enjoyed in relation to that property on the relevant date by the qualifying tenant under the terms of his lease; or
(b) there is acquired from the [person who owns the freehold of that property] the freehold of any other property over which any such permanent rights may be granted.
[4] The right of enfranchisement is exercised by the service of a notice provided for by section 13 of the 1993 Act. So far as material, section 13 is in the following terms:
(1) A claim to exercise the right to collective enfranchisement with respect to any premises is made by the giving of notice of the claim under this section.
(2) A notice given under this section (“the initial notice”) –
and there follow provisions that prescribe the requirements on those serving the initial notice, as to which there is no dispute in this case.
[5] Subsection (3) prescribes what the contents of the initial notice must be. It is unnecessary to refer to those in detail, but one of the requirements is that the notice must, in the words of subsection (3)(g), “specify the date by which the reversioner must respond to the notice by giving a counter-notice under section 21”. Subsection (5) provides: “The date specified in the initial notice in pursuance of subsection (3)(g) must be a date falling not less than two months after the relevant date.”
[6] Subsection (9) provides:
Where any premises have been specified in a notice under this section and –
(a) that notice has been withdrawn, or is deemed to have been withdrawn, under or by virtue of any provision of this Chapter or under section 74(3), or
(b) in response to that notice, an order has been applied for and obtained under section 23(1),
no subsequent notice which specifies the whole or part of those premises may be given under this section within the period of twelve months beginning with the date of the withdrawal or deemed withdrawal of the earlier notice or with the time when the order under section 23(1) becomes final (as the case may be).
[7] The 1993 Act then sets out a detailed procedure that is to follow the service of the initial notice, in relation to which there is a strict timetable that will lead either to the acquisition of the freehold or the withdrawal of the initial notice. What those steps are will depend upon how the reversioner responds to the initial notice.
[8] Section 21(1) provides that the reversioner must give a counternotice under the section to the nominee purchaser by the date specified in the initial notice in pursuance of section 13(3)(g). Subsection (2) provides:
The counter-notice must comply with one of the following requirements, namely –
(a) state that the reversioner admits that the participating tenants were on the relevant date entitled to exercise the right to collective enfranchisement in relation to the specified premises;
(b) state that, for such reasons as are specified in the counter-notice, the reversioner does not admit that the participating tenants were so entitled;
(c) contain such a statement as is mentioned in paragraph (a) or (b) above but state that an application for an order under subsection (1) of section 23 is to be made by such appropriate landlord (within the meaning of that section) as is specified in the counter-notice, on the grounds that he intends to redevelop the whole or a substantial part of the specified premises.
Thus, para (c) deals with the case where the appropriate landlord intends to redevelop. That is not material in this case and attention can, therefore, be focused upon the alternatives in (a) and (b).
[9] Subsection (3) provides:
If the counter-notice complies with the requirements set out in subsection (2)(a), it must in addition –
(a) state which (if any) of the proposals contained in the initial notice are accepted by the reversioner and which (if any) of those proposals are not so accepted, and specify –
(i) in relation to any proposal which is not so accepted, the reversioner’s counter-proposal, and |page:48|
(ii) any additional leaseback proposals by the reversioner;
(b) if (in a case where any property specified in the initial notice under section 13(3)(a)(ii) is property falling within section 1(3)(b)) any such counter-proposal relates to the grant of rights or the disposal of any freehold interest in pursuance of section 1(4), specify –
(i) the nature of those rights and the property over which it is proposed to grant them, or
(ii) the property in respect of which it is proposed to dispose of any such interest,
as the case may be;
There are further requirements that I do not think it is necessary for me to read into this judgment.
[10] Subsection (4) provides:
The nominee purchaser may be required to acquire on behalf of the participating tenants the interest in any property of [any] relevant landlord if the property –
(a) would for all practical purposes cease to be of use and benefit to him, or
(b) would cease to be capable of being reasonably managed or maintained by him,
in the event of his interest in the specified premises or (as the case may be) in any other property being acquired by the nominee purchaser under this Chapter.
[11] Subsection (5) provides:
Where a counter-notice specifies any interest in pursuance of subsection (3)(c), the nominee purchaser or any person authorised to act on his behalf shall, in the case of any part of the property in which that interest subsists, have a right of access thereto for the purpose of enabling the nominee purchaser to obtain, in connection with the proposed acquisition by him, a valuation of that interest; and subsection (3) of section 17 shall apply in relation to the exercise of that right as it applies in relation to the exercise of a right of access conferred by that section.
[12] That deals with the case in which the landlord has admitted the right of the participating tenants to enfranchise. Section 22 deals with the case where it does not so admit. Subsection (1) provides:
Where –
(a) the reversioner in respect of the specified premises has given the nominee purchaser a counter-notice under section 21 which (whether it complies with the requirements set out in subsection (2)(b) or (c) of that section) contains such a statement as is mentioned in subsection (2)(b) of that section, but
(b) the court is satisfied, on an application made by the nominee purchaser, that the participating tenants were on the relevant date entitled to exercise the right to collective enfranchisement in relation to the specified premises, the court shall by order make a declaration to that effect.
[13] Subsection (2) provides:
Any application for an order under subsection (1) must be made not later than the end of the period of two months beginning with the date of the giving of the counter-notice to the nominee purchaser.
Subsection (3) provides:
If on any such application the court makes an order under subsection (1), then (subject to subsection (4)) the court shall make an order –
(a) declaring that the reversioner’s counter-notice shall be of no effect, and
(b) requiring the reversioner to give a further counter-notice to the nominee purchaser by such date as is specified in the order.
[14] Subsection (4) is relevant only to counternotices under section 21(2)(c) and can be ignored for present purposes.
[15] Subsection (5) provides:
Subsections (3) to (5) of section 21 shall apply to any further counter-notice required to be given by the reversioner under subsection (3) above as if it were a counter-notice under that section complying with the requirement set out in subsection (2)(a) of that section.
[16] Subsection (6) provides:
If an application by the nominee purchaser for an order under subsection (1) is dismissed by the court, the initial notice shall cease to have effect at the time when the order dismissing the application becomes final.
[17] Section 24 contains provisions for the resolution by the leasehold valuation tribunal (LVT) of disputes that arise on the proposals contained in the tenants’ initial proposal and the counter-proposals made under either a section 21(2)(a) counternotice or a further counternotice that is required, inter alia, by section 22(3). That section is in the following terms:
(1) Where the reversioner in respect of the specified premises has given the nominee purchaser –
(a) a counter-notice under section 21 complying with the requirement set out in subsection (2)(a) of that section, or
(b) a further counter-notice required by or by virtue of section 22(3) or section 23(5) or (6), but any of the terms of acquisition remain in dispute at the end of the period of two months beginning with the date on which the counter-notice or further counter-notice was so given, a leasehold valuation tribunal may, on the application of either the nominee purchaser or the reversioner, determine the matters in dispute.
(2) Any application under subsection (1) must be made not later than the end of the period of six months beginning with the date on which the counter-notice or further counter-notice was given to the nominee purchaser.
I do not need to read further from section 24.
[18] I would make the general observation that failure by the tenants to make the application to the court or the LVT within the time provided for by the statute has the consequence, under section 29, of causing there to be a deemed withdrawal of the initial notice.
[19] Section 25 deals with the case where the reversioner has failed to give a counternotice or further counternotice:
(1) Where the initial notice has been given in accordance with section 13 but –
(a) the reversioner has failed to give the nominee purchaser a counter-notice in accordance with section 21(1), or
(b) if required to give the nominee purchaser a further counter-notice by or by virtue of section 22(3) or section 23(5) or (6), the reversioner has failed to comply with that requirement,
the court may, on the application of the nominee purchaser, make an order determining the terms on which he is to acquire, in accordance with the proposals contained in the initial notice, such interests and rights as are specified in it under section 13(3).
[20] I interpose that although the language there is in terms of conferring a discretion on the court, it has been held by the Court of Appeal in Willingale v Globalgrange Ltd [2000] 2 EGLR 55 that the court does not have a discretion in such a case but has to make an order under section 25 on an application on behalf of the tenants in accordance with the proposals contained in the initial notice.
[21] Subsection (3) of section 25 provides:
The court shall not make any order on an application made by virtue of paragraph (a) of subsection (1) unless it is satisfied –
(a) that the participating tenants were on the relevant date entitled to exercise the right to collective enfranchisement in relation to the specified premises; and
(b) if applicable, that the requirements of Part II of Schedule 3 were complied with as respects the giving of copies of the initial notice.
[22] Subsection (4) provides:
Any application for an order under subsection (1) must be made not later than the end of the period of six months beginning with the date by which the counter-notice or further counter-notice referred to in that subsection was to be given to the nominee purchaser.
Once again, the penalty for non-compliance with that time limit is deemed to be the withdrawal of the initial notice by virtue of section 29(3).
[23] In the present case, the participating tenants served an initial notice on 19 February 2004, under which they appointed the claimant as the nominee purchaser. On 21 April 2004, the defendant served a counternotice under section 21(2)(b). That counternotice disputed the right to enfranchise for a single reason, namely that because the defendant was a charitable housing trust the participating tenants were not qualifying tenants. The claimant duly applied to Wandsworth County Court under section 22(1) of the 1993 Act for a declaration that |page:49| the participating tenants were entitled to enfranchise. That case was transferred to Central London County Court for trial, and, on 5 January 2005, Judge Levy QC granted the claimant the declaration sought and, in accordance with section 22(3), declared that the counternotice was invalid and required the defendant to serve a further counternotice by a date specified in his order. He refused permission to appeal, but permission to appeal was granted by the High Court, which also granted a stay pending the appeal on the order for the service of the further counternotice.
[24] The appeal was heard by Stanley Burnton J and determined by him on 28 July 2005. His judgment is reported at [2005] EWHC 1650 (QB); [2005] 1 WLR 3934*. His order, so far as material, was in the following terms:
1. The appeal be dismissed and the order of Judge Levy shall stand.
2. It be declared that the appellant’s counternotice shall be of void effect.
3. The appellant be required to give further counternotices to the respondent by 9 September 2005.
There is then a provision for costs. The reason for the reference to further counternotices was that the block with which I am concerned, in respect of which an application was made by the qualifying tenants, was not the only block in respect of which other qualifying tenants had served a section 13 notice and in relation to which the defendant had taken the same point. Both applications were before Judge Levy, and, on appeal, before Stanley Burnton J. Thereafter, however, so far as the other block is concerned, matters have taken a different course from that which has obtained in the case of the block with which I am concerned. On 9 September, a purported counternotice in relation to the block with which I am concerned was served by the defendant. That counternotice purported to raise a new challenge to the tenants’ right to enfranchise, the ground being that the building did not satisfy the requirements, which I have not set out, of being premises to which Chapter 1 applied, as defined in section 3 of the 1993 Act. As far as concerned the other block, the defendant served a notice that complied with the requirements of subsections (3) to (5) of section 21 of the 1993 Act, in particular by making, as I understand it, counter-proposals in relation to the alternative rights to be granted to the applicant in that case in lieu of the freehold as far as the land used in common was concerned. The latter counternotice has resulted in a dispute between the landlord and the claimant, which is also the nominee purchaser, in relation to the other block, which, I am told, is to be resolved by the LVT, pursuant to section 24, at a hearing fixed for later this year.
—————————————————————————————————-
* Editor’s note: Also reported at [2005] 3 EGLR 57
—————————————————————————————————-
[25] The claimant has taken the point that the counternotice dated 9 September 2005, which was served in relation to this block, is not a notice that complies with the requirements of the 1993 Act and, therefore, the defendant landlord has failed to serve a further counternotice by the date specified in the order of Stanley Burnton J, and, on that basis, has made its application by its claim form dated 7 November 2005 for an order under section 25(1) of the 1993 Act. That application was made to Wandsworth County Court, but has been transferred to this court for hearing, together with the defendant’s application.
[26] The defendant’s response has been to seek a variation of Stanley Burnton J’s order so as to allow an extension of time to serve a further alternative counternotice. The alternative form of counternotice was supplied to the claimant by the defendant in draft form under cover of a without-prejudice letter dated 31 October 2005. The application for extension of time was, as I have indicated, issued on 16 December 2005. That draft is exhibited in the evidence filed in support of the application. The draft admits the tenants’ right to enfranchise and makes counter-proposals in a manner that purports to comply with the provisions of section 21(3) to (5). It will thus be seen that should permission be given to the defendant to serve a counternotice in that form, and should a counternotice pursuant to such permission then be served, the issue as to the tenants’ right to enfranchise will no longer subsist. Nevertheless, as far as concerns the applications before me, the defendant seeks to argue, in case its application for an extension of time should fail, that its counternotice dated 9 September 2005, which sought to call into question the tenants’ right to enfranchise, was a valid notice and, therefore, that the claimant’s claim for a declaration should not, at least at this stage, be granted.
[27] It is convenient to deal with that point first. It seems to me that that is a point on which the statute gives a clear answer. The question as to what form of counternotice is contemplated is dealt with in section 22(3)(b), which authorises and obliges the court, which pursuant to subsection (1) has declared that the participating tenants are entitled to exercise the right to collective enfranchisement, to require the reversioner to give a further counternotice to the nominee purchaser by such date as is specified in the order.
[28] The submission of the claimant is that, plainly, a further counternotice cannot seek to resurrect the very question that the court has decided, namely whether the participating tenants were entitled to exercise the right by their initial notice. Not only would a construction that permitted that be wholly at odds with the declaration that the court has, ex hypothesi, already made to the contrary effect in general terms, but subsection (5) of section 22 is plainly premised on the assumption that that declaration has been made and that no further controversy can exist as to the existence of the right in question. That is why subsections (3) to (5) of section 21 apply to the further counternotice “as if it were a counter-notice under that section complying with the requirements set out in subsection (2)(a) of that section”.
[29] Moreover, section 25(3) makes the same assumption, since it provides that “the court shall not make any order on an application made by virtue of paragraph (a) of subsection (1) unless it is satisfied” as to the right dealt with in (a), which is concerned with the case where a reversioner has failed to give a section 21(1) counternotice. However, it makes no similar provision for the court to be satisfied on an application where the reversioner has failed to comply with a requirement to give a further counternotice. It is obvious, submitted Mr Anthony Radevsky, on behalf of the claimant, that the 1993 Act is framed in that way because the assumption has been made that, since the court has made a general declaration of the right, that question has been stilled for all time as between the claimant and the defendant.
[30] He made the additional point in support of that submission that section 24(1) of the 1993 Act, providing for a reference of matters in dispute to the LVT, applies that procedure in terms both to the case where a section 21 counternotice has been given and to the case where a further counternotice required by section 22(3) has been given, but he pointed out that the same technique is not used in section 22(1), which provides the jurisdiction for the court to resolve disputes as to the right of collective enfranchisement and refers only to the case of a counternotice under section 21 having been given. It makes no reference to the case that, on Mr Radevsky’s submission, is an impossible one, where a further counternotice has been given pursuant to section 22(3).
[31] Although Mr Jonathan Manning, on behalf of the defendant, sought valiantly to counter those submissions, it did not seem to me that there really is any answer to them. The 1993 Act makes sense only on the footing of Mr Radevsky’s analysis of it, and, indeed, that analysis, which seems to me entirely straightforward, is supported by dicta of the Court of Appeal in Burman v Mount Cook Land Ltd [2001] EWCA Civ 1712; [2002] Ch 256*, where Chadwick LJ, in expounding the corresponding procedure under Chapter 2 of the 1993 Act, said:
13. Where under section 46(4) the court requires a further counter-notice to be given, the counter-notice must comply with the requirements of section 45(3) of the Act; that is to say, it must state which if any of the proposals it contains are accepted by the landlord and which if any of those proposals are not so accepted and must specify in relation to each proposal which is not accepted the landlord’s counter-proposal “as if the further counter-notice were a counter-notice under section 45 complying with the requirements set out in subsection (2)(a) of that section”: see section 46(6) of the Act. It is, I think, |page:50| implicit in section 46(6) that the further counter-notice is not required to state that the landlord admits the tenants’ right to acquire a new lease so as actually to comply with section 45(2)(a) of the Act. That question having been determined by the court on the application under section 46, no such statement is needed.
—————————————————————————————————-
* Editor’s note: Also reported at [2002] 1 EGLR 61
—————————————————————————————————-
[32] Given that conclusion, it follows that the notice dated 9 September was not a valid further counternotice. It does not, in any significant respect, pretend to do anything more than challenge the right to enfranchise and it does not contain material sufficient to satisfy the requirement in section 22(3) for fulfilling the conditions set out in subsections (3) to (5) of section 21. Accordingly, the claimant was entitled to issue the application that it did under section 25(1) for the court to settle the terms of its acquisition of the freehold and, as already indicated, on the authority of Willingale, the court has no discretion but to make an application under section 25 in accordance with the proposals contained in the tenants’ initial notice.
[33] All that is, however, by the way if the defendant is entitled to obtain an order for the court that will enable it retrospectively to contest the proposition that it has failed to comply with the requirement to serve a further counternotice. The defendant’s application is mounted for that purpose, namely to obtain a variation of the order of Stanley Burnton J extending the time for service of a further counternotice sufficiently to enable a further counternotice to be served that will comply with the requirements of section 21(3) to (5). The questions that arise, therefore, on the defendant’s application are whether: first, I have jurisdiction to make any such order; second, if I do have such jurisdiction, I should exercise it.
[34] As far as concerns the existence of jurisdiction, the first point to note is that nothing in the 1993 Act itself confers any power upon the court to interfere with any of the time limits laid down by the 1993 Act and to which that Act attaches important consequences. Thus, for example, if the landlord fails to serve a counternotice under section 21(1) within the time specified in the initial notice, whether the failure is for good reasons or bad, there is no jurisdiction in the court to extend the time for the service of such a counternotice, whether an application is made to the court during the period when a counternotice could have been validly served or outside the period.
[35] The defendant, therefore, has to look elsewhere for jurisdiction in the court to vary the time limits laid down in the 1993 Act. Mr Manning, on behalf of the defendant, relied upon the provisions of the CPR 3.1(1), under the heading “The court’s general powers of management”, is in the following terms:
The list of powers in this rule is in addition to any powers given to the court by any other rule or practice direction or by any other enactment or any powers it may otherwise have.
(2) Except where these rules provide otherwise, the court may
(a) extend or shorten the time for compliance with any rule, practice direction or court order (even if an application for extension is made after… the time for compliance has expired);
Mr Manning’s submission is that that is a quite general provision. Stanley Burnton J’s order is a court order and, therefore, the court can, even at this date, extend the time for compliance.
[36] The claimant resists that submission essentially on the basis that CPR 3.1(2)(a) is a rule given to the court for the purposes of case management and that the order made by Stanley Burnton J was not a case-management order but an order made pursuant to a statutory authority specifying a date for the purposes of the particular statutory timetable. The point is a very short one and not capable of much elaboration.
[37] There is little authority directly on the point, but Mr Radevsky was able to refer me to an analogous situation that arose under the old County Court Rules in Knibb v Knibb [1987] 2 FLR 396, where an issue arose in relation to a property adjustment order made on a divorce between husband and wife, the terms of which permitted the wife to buy out the husband’s interest in the matrimonial property at a particular price if she gave notice within a specified period. The question was whether, although it was conceded that the court had no jurisdiction to vary the property adjustment order under the provisions of section 31 of the Matrimonial Causes Act 1973, the court could nevertheless achieve the same result by resorting to r 4 of order 13 of the County Court Rules, which provided:
(1) Except as provided otherwise, the period within which a person is required or authorised by these rules or by any judgment, order or direction to do any act in any proceeding may be extended or abridged by the consent of all the parties or by the court on the application of any party.
(2) Any such period may be extended by the court although the application for extension is not made until after the expiration of the period.
[38] The Court of Appeal rejected the suggestion that that rule could be resorted to on the ground that it was a procedural provision and no more, and there was, therefore, no jurisdiction conferred by the rule. The analogy is not, in my judgment, an exact one, and I do not wish to say anything that would unnecessarily circumscribe the width of the case-management powers given to the court under CPR 3.1. I do, however, accept Mr Radevsky’s submission that the order made by Stanley Burnton J is not a court order of the kind that is contemplated by CPR 3.1(2)(a). It was in no sense a case-management order. The order was made in the terms that it was because the statute required the court to specify a date in the order. Having complied with that statutory requirement and made the other declarations that the statute required the court to make, the court’s function under the statute was exhausted as far as the application before it was concerned. There was nothing left to manage. If the defendant was unhappy with the order that the court had made, as indeed it was, its remedy was to appeal that order. No doubt, in connection with the timetable for an appeal, there were matters in relation to which the court retained jurisdiction, subject to the provisions of the rules, that would entitle it to modify time limits, but that is not this case.
[39] I am therefore of the view that CPR 3.1(2)(a) does not give me the jurisdiction to interfere with or vary the order of Stanley Burnton J. I add that it would not be consonant with the statutory scheme were it to do so, because that would then expose this particular element – and this element alone – in the statutory timetable to the possibility of variation by the court where parliament has otherwise provided strictly for the consequences of failure to comply with the timetable laid down in the 1993 Act. It is difficult to see any reason why parliament should have contemplated that, in this particular case, the court should have jurisdiction that it has not thought fit to bestow on the court in any other corresponding context in the statutory machinery.
[40] For that reason, I would dismiss the defendant’s application. If, however, I am wrong on the question of jurisdiction, it is necessary for me to consider, in accordance with the guidance given by the Court of Appeal in Sayers v Clarke Walker (permission to appeal: extension of time limits) [2002] EWCA Civ 645; [2002] 1 WLR 3095, the checklist contained in CPR 3.9. That invites me to consider a list of considerations before granting relief from sanctions or, in this case, varying an order that something should be done by a particular time. I will take them in turn: “(a) the interests of the administration of justice”: Mr Manning agreed that there is nothing in that circumstance that resonates in this particular case: “(b) whether the application for relief has been made promptly”. As far as that is concerned, the defendant invites me to say that its application was made promptly, but I have difficulty in reaching that conclusion. The possible invalidity of its 9 September notice was drawn to its attention by letter from the claimant’s solicitor dated 23 September. It appears that it was not until 31 October at the earliest that any intimation was given that an alternative counternotice might be served, and not in fact until 16 December that the application was made. There seems to be nothing very prompt about that.
[41] Paragraph (c) is “whether the failure to comply was intentional”. I can take that together with (d), which is “whether there is a good explanation for the failure”. The evidence before me is that the defendant proceeded on a genuine view of what a further counternotice might contain. That view may or may not have been encouraged or supported by a note in the Encyclopaedia of Housing Law and Practice, but it is not one that is supported by other textbook writers. As Mr Manning submitted, it was not motivated by any desire unnecessarily |page:51| to spin out or wear down the claimant in its application, as evidenced by the fact that, in relation to the other block, the course taken had been to serve a counternotice that did comply with the provisions of section 21(3) to (5).
[42] All that may be true, but a deliberate decision was nevertheless made to serve such a notice and not to serve a notice that complied with the provisions of section 21(3) to (5). For the life of me, I cannot see how anybody can come to the conclusion, even if he supposes that he is entitled to challenge the right to enfranchisement again and again, that section 22(5) does not require the counternotice to contain the reversioner’s counter-proposals, even if only on an alternative basis.
[43] Accordingly, I am certainly not satisfied that there was a good explanation for the failure. I would comment, in that connection, that even if the defendant had had some good cause to serve the notice that it had, it might have avoided the need to make this application in relation to an as yet unserved counternotice had it not waited until the very end of the period specified in Stanley Burnton J’s order before serving its bad notice.
[44] Paragraph (e) is “the extent to which the party in default has complied with other rules, practice directions, court orders and any relevant pre-action protocol”. I do not think that anything turns on that in this case. Paragraph (f) is “whether the failure to comply was caused by the party or his legal representative”. It seems that the rule has in mind that if the failure to comply were caused by the party or its legal representative, that would, as it were, weigh in the balance against the grant of relief. Here, the failure plainly was so caused. Paragraph (g) is “whether the trial date or the likely trial date can still be met if relief is granted”. That is not a circumstance that is relevant in the present case, save, as Mr Manning submitted, that if relief were granted there would no doubt have to be, in the event of further dispute between the parties, a reference to the LVT under section 24; and, in respect of the other block, that hearing has not yet taken place. Were I to make the order in relation to this block, it could no doubt catch up. Therefore, he submitted, nothing, as far as timing was concerned, was likely to be lost by my making the order.
[45] Paragraph (h) is “the effect which the failure to comply had on each party”, and para (i) is “the effect which the granting of relief would have on each party”. Mr Manning submitted that, as far as that was concerned, the claimant would not really suffer anything that could not be compensated for by way of costs. It would have lost the right to have the terms settled by the court on the terms proposed by the qualifying tenants in their initial notice, but that, he said, was not a real loss to them because, as far as the land used in common is concerned – that is really the point in issue in this case – the 1993 Act did not, in any event, give an unqualified right. He submitted that it was appropriate that the merits of that particular dispute should be determined as the 1993 Act contemplated, by the LVT as the appropriate forum in which to resolve it.
[46] Moreover, he submitted that the court should be slow to suppose that his client would not suffer a detriment if not allowed to serve a counternotice. His client was a social landlord, a charity, charged with the management of a large estate and so charged following a large-scale voluntary transfer from the local council to it that took place only as a result of a vote of the residents. Therefore, he said that the court should not minimise the effect upon such a social landlord of losing the right to control the common land by its ownership of the freehold.
[47] Those points that were developed eloquently by Mr Manning in his submissions are not supported in any detail in the evidence before the court, and it seems to me that they somewhat overlooked the fact that the task of the LVT would not be to enquire into the general merits as to who was the more appropriate freeholder in relation to the land concerned, but would simply be concerned to see whether the rights being offered by the defendant to the claimant in lieu of the freehold were adequate.
[48] On the other side of the scales is the fact that the claimant has been innocent of any fault whatsoever in relation to this matter. It arrived at a position on 10 September 2005 where, under the statutory machinery, it was entitled to make to the court the application that it did under section 25, and, upon the basis of the decision of the Court of Appeal in Willingale, it was entitled to invite the court to settle the terms of the acquisition in accordance with the proposals in its initial notice given as long ago as February 2004 and contemplated by the statutory machinery as capable of implementation at a much earlier date. Why, asked Mr Radevsky on its behalf, should it be deprived of that vested right by the court’s exercise of a power not expressly conferred by the statute? Moreover, it would be an exercise that would be effective only for the purpose, if given retroactively, of putting this non-compliant reversioner in the position of one who might yet comply.
[49] Weighing all those competing considerations in the balance, if I had the jurisdiction that is contended that I do have, I have not been persuaded by Mr Manning that this is an appropriate case in which to exercise it.
Claimant’s relief granted; defendant’s application dismissed.
