Landlord and tenant – Leasehold enfranchisement – Procedure – Respondent lessees applying to county court for amendment of notice to acquire freehold and determination of terms of acquisition – Judge holding county court having jurisdiction to determine terms of acquisition – Appellant appealing – Whether county court being appropriate tribunal under section 24(1) of Leasehold Reform, Housing and Urban Development Act 1993 – Appeal allowed
The respondents were the lessees of two flats let on long leases that formed part of a building in east London. The appellant was the freeholder. In March 2017, the appellants gave an initial notice under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993 stating that they wished their nominee purchaser to acquire the freehold, and proposed terms of acquisition. The respondent gave a counter-notice admitting the right to acquire but disputing some of the suggested terms of acquisition.
The respondents took the view that the initial notice needed to be amended, which required the leave of the county court under section 90(1). They issued an application under CPR part 8 in the county court seeking an order that the initial notice be amended, the terms of acquisition determined and further or consequential directions made as required.
The appellant argued that there was no need to amend the initial notice and the county court was the wrong place for determining the terms of acquisition because it did not have jurisdiction to do so. Section 24(1) provided that such an application could only be determined by “an appropriate tribunal”, which, in relation to premises in England, was the First-tier Tribunal (FTT). Since the application was not made to the FTT by the end of six months from the date of the counter-notice as required by section 24(2), the initial notice was deemed to have been withdrawn by virtue of section 29(2).
The court held that, although the FTT had jurisdiction to determine the terms of acquisition, the application to amend had been properly made to the county court, which also had jurisdiction to determine the terms of acquisition by virtue of section 90(4), which provided that, where proceedings were commenced in the county court, it had jurisdiction to determine other proceedings joined with that application. The appellant appealed.
Held: The appeal was allowed.
(1) Section 24(1) of the 1993 Act was permissive in the sense that neither the nominee purchaser nor the reversioner could be compelled to make any application at all. The lessees might, for example, propose an acquisition price in the initial notice which was contested by the reversioner’s counter-notice. The lessees might, on reflection, accept that the reversioner’s counter-proposal was closer to the real value of the freehold, and decide to let the matter drop. But the natural or ordinary meaning of the relevant words in section 24(1) was that the application was to be made (if at all) to the appropriate tribunal, since it was that tribunal which had the power to make the relevant determination. It would make little sense if the section were interpreted to mean that the appropriate tribunal might, on the application of the nominee purchaser to the county court, determine the terms of acquisition. Not only was “the appropriate tribunal” defined three times in the Act in identical terms, but the powers of transfer clearly recognised that the court was not the appropriate tribunal, as defined. Therefore, the FTT, not the county court, was the appropriate tribunal: R (on the application of Spath Holme Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] 2 AC 349; [2000] PLSCS 283 considered.
(2) Section 91(1) provided that certain matters “shall be determined” by the appropriate tribunal. Under section 91(2) those matters included the terms of acquisition. On the face of it, that excluded the power of any other tribunal to make that determination. In addition, the only permitted application under section 24(1) was an application for the appropriate tribunal to make the determination. The respondents’ reliance on section 90(4) contradicted the clear instruction in section 91(1), and evaded the exclusion from the county court’s jurisdiction in section 90(2). That argument also created a wide gulf between the powers of the county court and the powers of the High Court. Section 90(3) enabled the High Court to hear joined proceedings which were within the jurisdiction of the county court under section 90(1) and (2). The High Court’s jurisdiction to determine the terms of acquisition was excluded by section 90(2). But section 90(4) applied only to the county court. It permitted the county court to deal with any other type of joined application that would normally be outside its jurisdiction but not those matters reserved to the First-tier Tribunal, including the terms of acquisition. On the respondents’ argument, the county court would have more extensive powers than the High Court, which was an unlikely intention to impute to parliament.
(3) In the present case, both the condition to be satisfied and the effect of a failure to comply were clear. The condition was that no application was made under section 24(1) by the cut-off date. An application under section 24(1) was an application to the appropriate tribunal. The appropriate tribunal (in England) was the FTT. An application made elsewhere did not satisfy the condition. The consequence of a failure to satisfy the condition was also spelled out in the legislation: the initial notice was deemed withdrawn.
Parliament had set up a highly prescriptive procedure containing many time limits affecting both lessee and reversioner, and in each case had spelled out in terms the consequences of a failure to comply. That language was simply too clear to allow of a different interpretation. Accordingly, the application to the county court was not valid and the notice deemed withdrawn.
(per Arnold LJ) The 1993 Act clearly differentiated between the functions of the First-tier Tribunal (in England) or the Leasehold Valuation Tribunal (in Wales) and those of the county court. That legislative policy was not irrational and the courts should be careful not to subvert it under the guise of interpretation. Nevertheless, the division of jurisdiction might in some circumstances present an obstacle to efficient dispute resolution. It was therefore 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.
Richard Alford (instructed by Thirsk Winton LLP) appeared for the appellant; Mark Galtrey (instructed by Rossides Caine Solicitors) appeared for the respondent.
Eileen O’Grady, barrister
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