Collective enfranchisement – Vesting order – Time limit – Acquisition of property under Leasehold Reform, Housing and Urban Development Act 1993 – Respondent nominee purchaser applying for vesting order under section 24 – Whether application made in time – Whether all terms of acquisition agreed for that purpose on date respondent positively acknowledging agreement or when no further prospect of resisting term proposed by appellant freeholder – Appeal dismissed
The respondent was the nominee purchaser on an acquisition of the freehold of a property by collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993. The appellant freeholder admitted the right to collective enfranchisement and the price was agreed in August 2006, whereupon the respondent sent a draft transfer to the appellant in Form TR/1. The appellant raised two points in respect of the draft transfer, namely that it: (i) omitted the statutorily required statement that the conveyance was executed for the purposes of Chapter I of the 1993 Act; and (ii) included a full title guarantee, whereas the appellant was willing to give only the limited title guarantee contained in Schedule 7 to the Act. It requested that those matters be amended.
In early September, the respondent sent a revised transfer, containing the required statement but continuing to refer to a full title guarantee, and requested the appellant’s approval. A few days later, the appellant informed the respondent that it had made one amendment to provide for limited title guarantee. In late October, the respondent acknowledged that all the terms of acquisition had been agreed.
On 10 January 2007, the respondent applied to the court for a vesting order transferring title to the property. The appellant contended that the time limit for making such an application, under section 24 of the Act, had expired since all the terms of acquisition had been agreed for that purpose prior to 10 September 2006. Its main argument was that the Act made a binary distinction under which terms were either agreed or disputed. It submitted that: (i) any departure from the limited title guarantee under Schedule 7 could be made only by agreement; (ii) the respondent could not compel the appellant to agree to a full title guarantee once it had indicated that it would not do so, and no further dispute could arise on that issue; and (iii) in the absence of any positive dispute or any prospect of the respondent resisting its proposed term, the parties should be deemed to agree. The judge rejected that argument and found for the respondent. The appellant appealed.
Held: The appeal was dismissed.
The date of agreement of all the terms of acquisition was important because the procedural clock then started to tick for the making of applications, including an application for a vesting order. Whether a term had been agreed was a question of fact and the Act did not deem a term to be agreed if it was not. A dispute could arise even if the result was a forgone conclusion. It would be a misuse of language to say that there was no dispute simply because the outcome was inevitable: Hayter v Nelson, Home Insurance Co [1990] 2 Lloyd’s Rep 265 and Halki Shipping Corporation v Sopex Oils Ltd (The Halki) [1998] 2 All ER 23 applied. Moreover, where it was open to the parties to agree to depart from Schedule 7, there was no reason why the proponent of a change had to take the other party’s initial refusal at face value and could not make a further attempt to secure agreement. The respondent had persisted in its attempt to secure a full title guarantee by submitting a second version of the transfer containing that covenant and asking for it to be approved. It had not by then given up hope of securing the appellant’s agreement to the full title guarantee.
What the Act required was positive agreement rather than implicit agreement by silence: Goldeagle Properties Ltd v Thornbury Court Ltd [2008] EWCA Civ 864; [2008] 3 EGLR 69; [2008] 45 EG 102 applied. That was the opposite of the position for which the appellant was contending. Assuming that there was a stark dichotomy between terms that were agreed and those that were in dispute, terms that had not been positively agreed were deemed to be in dispute, rather than the other way round. Such terms as were not so agreed would “remain in dispute” within the language of section 24(1). The relevant test was whether it was clear that negotiations had been completed and final agreement reached, either orally or in writing, on specific terms that were not contingent on agreement or determination of other terms: Westminster City Council v CH2006 Ltd [2009] UKUT 174 (LC) applied. In the instant case, the respondent had not given an express acknowledgement that the terms had been agreed until October 2006. In those circumstances, the terms had not been agreed prior to 10 September 2006 and the respondent’s application for a vesting order had been made in time.
Joshua Swirsky (instructed by Sheridan & Stretton) appeared for the applicant; James Fieldsend (instructed by Comptons Solicitors LLP) appeared for the respondent.
Sally Dobson, barrister
