In a recent enfranchisement decision of the Upper Tribunal (Lands Chamber) (“the UT”) two important issues were considered: first, if a flat leaseholder fails to protect claim notice by registration, does this invalidate the notice itself?; second, can either the landlord or the leaseholder withdraw from an agreement on price or other terms of the transfer? These were the issues considered in Curzon v Wolstenholme and others [2015] UKUT 0173 (LC); [2015] PLSCS 122. It concerns a long-running enfranchisement claim which started, it is reported, started more than 10 years ago.
Registering claim notices
A group of leaseholders who want to acquire the freehold to their building must give the landlord notice of their claim. Part I of the Leasehold Reform, Housing and Urban Development Act 1993 governs such claims and the procedures involved. It provides that leaseholders can protect the claim notice by registration (see section 97 of the Act). In this case the enfranchisement claim notice was not, to begin with, so protected. This omission allowed the landlord to transfer the title to the property (a converted block of six flats) to his wife (for a nominal consideration) free from the claim. Shortly afterwards she transferred it back to him. It was common ground that failure to protect a claim notice allows the landlord to dispose of the property free of the claim. But does such a failure also invalidate the claim notice itself? In other words, when the freehold was transferred back did the landlord also take free of the claim notice?
On this point the UT upheld the decision of the First-tier Tribunal that the claim notice is not invalidated simply because the leaseholders failed to protect it. Though this failure meant that the landlord’s wife took the freehold of the property free of the claim once she transferred it back off the landlord, the claim continued (and this time, it appears that the leaseholders took steps to protect it by registration).
To what extent can a party withdraw when the price to be paid has been “agreed”?
If the leaseholders and the landlord do not agree about the price to be paid or on another term of the transfer, application must be made to what is now known as the First-tier Tribunal (previously the leasehold valuation tribunal) for the dispute to be determined. In this case the parties agreed on the premium to be paid but not on the terms of the transfer. Those advising the landlord argued that, until the parties have agreed on everything, any previous “agreement” is not binding. Here the UT upheld the decision of the First-tier Tribunal and applied the conclusions of another UT decision (City of Westminster v CH Ltd [2009] UKUT 174) that once an acquisition term has been unconditionally agreed (the purchase price in that case) neither party can depart from that agreement. The landlord’s submission that this only applied once all of the acquisition terms are agreed was rejected. (The UT noted that it might be appropriate to re-open a previously agreed term on the basis of an estoppel or a waiver.)
Professor James Driscoll is a solicitor and a writer
