Collective enfranchisement: only FTT in England can determine acquisition terms

In GR Property Ltd v Safdar and others [2020] EWCA Civ 1441; [2020] PLSCS 198 the Court of Appeal has sent another shot across the bow to parties that a failure to adhere to the “highly” prescriptive procedure for collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993 (the Act) will trigger the requisite sanctions for non-compliance. The respondents were long leaseholders of two flats that formed part of a building in east London. The freeholder was GR Property Ltd. On 21 March 2017, the lessees gave the freeholder initial notice under section 13 of the Act that they wished to exercise their right to collective enfranchisement. On 25 May 2017, the freeholder served a counter-notice admitting the lessees’ right but disputing some of the terms of acquisition. Under section 24 of the Act, the lessees had a period of six months from the date the counter-notice was given to apply for a determination of the terms of acquisition from the “appropriate tribunal”. If the time limit was exceeded then under section 29(2) of the Act the initial notice would be deemed withdrawn. Following receipt of the counter-notice, the lessees realised that their initial notice claimed more property than they were entitled to acquire. They sought to amend their notice. In accordance with schedule 3, paragraph 15 (2) and section 90(1) of the Act, the lessees applied to the county court to amend the same. Additionally, the lessees also applied to the county court for an order determining the terms of the acquisition of the freehold. The freeholder argued that only the First-tier Tribunal (FTT) had jurisdiction to determine the terms of acquisition and that the initial notice was deemed withdrawn as the lessee had failed to apply to the FTT in time. At first instance and on appeal both DDJ Ackland and HHJ Gerald held that the application to amend the notice had been correctly made to the county court. Further, pursuant to section 90(4) of the Act, the county court had jurisdiction to determine other proceedings joined with an application to amend the notice. On appeal, HHJ Gerald found that such an approach had a number of practical advantages such as avoiding a proliferation of applications, simplifying proceedings and keeping costs down. The freeholder appealed. In allowing the freeholder’s appeal, the Court of Appeal was unyielding in its strict approach to interpreting the relevant provisions of the Act. The words of the Act had to be given their natural and ordinary meaning. Under section 24(1) of the Act, an application to determine the terms of the acquisition had to be made to the “appropriate tribunal”. Section 91of the Act provided that the “appropriate tribunal” to determine the terms of acquisition in England was the FTT. Lord Justice Lewison had some sympathy with the approach adopted by the judges below, which attempted to “avoid potential pitfalls for the unwary, and to simplify the overall procedure”. Lord Justice Arnold, however, observed that the Act clearly differentiated between the functions of the FTT and the county court for understandable reasons, and the legislative policy reason for doing so was not irrational and “the courts should be careful not to subvert [the policy] under the guise of interpretation”. Yet, he did see scope for possible legislative amendment and observed “…the division of jurisdiction may in some circumstances present an obstacle to efficient dispute resolution. It is 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.”   Elizabeth Dwomoh is a barrister at Lamb Chambers