Westminster City Council v CH2006 Ltd

Leasehold Reform, Housing and Urban Development Act 1993 – Collective enfranchisement – Terms of acquisition – Premium payable – Whether agreement reached on price for part of specified premises and common and appurtenant land such as to deprive leasehold valuation tribunal (LVT) of jurisdiction to determine that element of premium – LVT so holding – Appeal dismissedThe respondent company was the nominee purchaser for the purposes of acquiring the freehold of premises on a collective enfranchisement, by 16 of the 21 qualifying lessees, under the Leasehold Reform, Housing and Urban Development Act 1993. The appellant were the freeholders and the immediate landlords of six flats within the premises that were let on secure tenancies. In response to the respondent’s initial notice, they served a counternotice, in which they countered the respondent’s proposed purchase price with a figure of £37,560, including four car-parking spaces at £7,500 each. By implication, therefore, the suggested price for the remaining common and appurtenant parts was £7,560. In subsequent correspondence between the parties’ solicitors, the respondent indicated its acceptance of the £7,560 figure but disputed, inter alia, the value of the car-parking spaces.The respondent applied to the leasehold valuation tribunal (LVT), under section 24 of the Act, to determine the disputed terms of the acquisition, including the amount of the premium. Prior to the hearing, the parties entered into negotiations on various aspects of the transfer terms, including the price of the car-parking spaces, but that and other matters remained unresolved by the hearing date. The appellants also reviewed their valuation of the relevant premises and the common and appurtenant land and suggested a different figure. An issue arose as to whether the parties had agreed the £7,560 figure such as to deprive the LVT of jurisdiction to determine that element. The LVT held that the parties had agreed that it had jurisdiction to determine only those terms of acquisition that were not agreed and that such terms could include constituent elements of the purchase price where some but not all had been agreed between the parties. It went on to determine the price for the car-parking spaces at £20,000 and the total premium for the freehold at £28,060.The appellants appealed on the agreement issue. They further challenged the LVT’s rejection of a term that they had sought to include in the leaseback of the flats subject to the secure tenancies, which would have limited the appellants’ liability for service charges in the event of any exercise by the secure tenants of the right to buy under the Housing Act 1985.Decision: The appeal was dismissed. (1) The legislation provided that the elements that comprised the total purchase price for the freehold could be agreed or determined by the LVT separately. Section 13(3)(d) of the 1993 Act required the initial notice to provide a breakdown of the proposed price, setting out separate figures for the specified premises and any common and appurtenant land. The counternotice had to respond to those proposals and, where they were not agreed, put forward counter-proposals. The LVT’s jurisdiction under section 24 was to determine the terms of acquisition that remained in dispute, including the “interests” to be acquired and the “amounts payable” for them; the use of the plural indicated that the purchase price for different interests and different parts of the property could be agreed or determined separately. That was consistent with the LVT’s power to determine issues in stages: Goldeagle Properties Ltd v Thornbury Court Ltd [2008] EWCA Civ 864; [2008] 3 EGLR 69; [2008] 45 EG 102 considered.(2) There was no basis for distinguishing between the status of an agreement reached as to a term of acquisition at different times in the process of negotiation, namely the application to the LVT, the determination of matters in issue by the LVT and the application for a vesting order. To hold that a party could resile from an earlier agreement would result in uncertainty and would potentially render the enforcement mechanism ineffective. An agreement reached at any time after completion of the statutory formalities of initial notice and counternotice was binding, not in the sense of a binding contract, which would occur only after all the terms were agreed or determined, but in the sense that it could be enforced by an application for a vesting order if the parties failed to conclude a formal contract: Broomfield Freehold Management Ltd v Meadow Holdings Ltd LRA/148/2006 unreported 13 November 2007 and Ellis v Logothetis LRA/3/2000 unreported 26 February 2001 considered. Accordingly, the formalities for a binding contract at common law, such as consideration flowing from one party to the other, were not required. Instead, it had to be clear that negotiations had been completed and a final agreement reached, either orally or in writing and on a specific term or terms, that was not in any way contingent on agreement or determination of some other term or terms. It remained open to the parties to express any agreement as being conditional on the acceptance of other terms.In the instant case, the parties had agreed that the price to be paid for the specified premises and the common and appurtenant land, excluding the car-parking spaces and certain other areas, was £7,560. No element of contingency was expressed in the correspondence between the parties and the subsequent negotiations between them had not included the price payable for the specified premises and the common and appurtenant land. There was no indication that that price depended on the outcome of the other matters in dispute. The parties could have, but had not, indicated that agreement was conditional on agreement or determination of other terms. The LVT had correctly concluded that they had clearly and unconditionally agreed the price of part of the specified premises and part of the common and appurtenant land, excluding the car-parking spaces, and that that deprived it of jurisdiction to determine that term.(3) The LVT had further been entitled to reject the appellants’ proposed leaseback term as unfairly devolving the appellants’ responsibility under section 125 of the 1985 Act to the respondent.Nicola Muir (instructed by Judge & Priestley LLP, of Bromley) appeared for the appellants; Christopher Heather (instructed by Sheppersons, of Horley) appeared for the respondent.Sally Dobson, barrister