Collective enfranchisement – Qualifying tenant – Claimant tenants serving initial notice – Defendant freeholder serving counternotice before being registered as owner – Predecessor still holding registered title – Claimants applying to court to set out terms for acquiring freehold – Defendant applying to strike out claim – Whether defendant serving effective counternotice – Application dismissed
The claimants were the tenants of a house containing four flats. In September 2006, as qualifying tenants, they served notice on the defendant’s predecessor in title, the then registered owner, of their claim to exercise the right to acquire the freehold of the house under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993. The notice specified 26 November 2006 as the last date upon which a counternotice under section 21 of the 1993 Act could be served.
On 8 November 2006, the defendant completed the purchase of the reversion from its predecessor although it did not register that acquisition until 12 January 2007. Meanwhile, on 20 November 2006, the defendant served a counternotice under the Act, although its predecessor remained the registered owner. The claimants’ initial notice sought acquisition at a price of £27,799 plus £1, whereas the counternotice suggested that the appropriate price was £120,000.
The claimants issued an application, under section 25(1) of the 1993, Act for the court to determine the terms upon which they were to acquire the freehold of the property in the absence of a valid counternotice. The defendant applied for the claim to be struck out and/or summary judgment since the claim was misconceived in law.
The claimants argued that the only person on whom notices were to be served, and who could serve notices under the 1993 Act, was the registered proprietor, and that position was not affected in the present case by section 19 of the Act. Section 19 addressed the possibility of one or more disposals of the reversion during the tenant’s initial notice period.
Held: The application was dismissed.
The basic principle underlying the law of land registration, which applied equally in the present case, was that a purchaser, even with actual notice of an encumbrance that needed to be registered, took free of that encumbrance unless it was registered. A tenant had to know on whom he was to serve notice, and who was serving notices on him. In principle, the reversioner for the purposes of both receiving and giving notices had to be the registered proprietor: Smith v Express Dairy Co [1954] JPL 435 applied.
By section 19(3) of the 1993 Act, at the date of the disposal on 12 January 2007, the defendant, having acquired the reversion and legally perfected its title, took over everything that had been done up to that date by its predecessor. The legal status of what had or had not been done enured to the benefit or disadvantage of the new owner.
It was not sensible to hold that the defendant could do something prior to 12 January that it had no legal right or power to do and could have it validated retrospectively. The position had to be clear as at the date upon which the notice was served. Once that position was clear and regularised, a purchaser merely acquired a clear and regularised position from its vendor, which was the way in which section 19 operated.
Anthony Radevsky (instructed by Wallace LLP) appeared for the claimants; David Lonsdale (instructed by the Kidd Rapinet, of Maidenhead) appeared for the defendant.
Eileen O’Grady, barrister
