The leaseholders of 1 Palace Gate, W8, an exclusive mansion block overlooking the gardens of Buckingham Palace, have succeeded in their legal battle to get control of the freehold.
A High Court judge ruled today that a lower court was correct to rule that the tenants were entitled to exercise their right of collective enfranchisement, despite claims from the freeholder that the decision was “draconian and disproportionate”.
According to the ruling, handed down today, the tenants’ decision to take control of the freehold is “part of a longer story of disharmony between [freeholder] Winchester Park and the tenants of 1 Palace Gate”.
The tenants have already taken Winchester Park to court over the management of the building.
In the current case, the tenants of 2, 3, 4 and 5 1 Palace Gate served Winchester Park with notice in September 2020 that they intended to exercise their right of collective enfranchisement.
According to today’s ruling, it emerged that there was a single issue that could decide whether their claim should succeed: the status of flat 6.
Winchester Park maintained that flat 6 was an office, and thus used for commercial purposes. The tenants disagreed.
“The significance of the point is that there is no right of collective enfranchisement if more than 25% of the space in 1 Palace Gate was used for commercial (rather than residential) purposes,” the judge said in his ruling today.
Ahead of a trial of the issue, scheduled for December 2022, the court ordered the freeholders to disclose various sources of information to help decide the issue.
However, according to the ruling, the freeholders disclosed 40 documents just two days before the trial and the judge at the December trial concluded that the court could have no confidence in the disclosure process and dismissed the freeholders objections. This effectively meant that the leaseholders had succeeded.
At a hearing earlier this month, Winchester Park challenged the 2022 decision, saying that the disclosure issues were caused by mistakes made by their solicitor.
However, in his ruling today, High Court judge Mr Justice Adam Johnson dismissed their appeal. He said the 2022 judge was entitled to make his decision.
Winchester Park Ltd v 1 Palace Gate Freehold Ltd
Business and Property Courts; Chancery Appeals (Mr Justice Adam Johnson) 22 March 2024
