Court of Appeal Says Yes to Successive Freehold Applications

Tenants wanting to acquire the freehold of their properties under the Leasehold Reform, Housing and Urban Development Act 1993 may now be permitted to make more than one application, following a recent ruling by the Court of Appeal.



The case involved a social housing company, Westbrook Dolphin Square Limited, which appealed against a decision that had prevented tenants of Dolphin Square in Pimlico, South West London, from jointly acquiring the freehold of their properties. The tenants were all companies that had been set up by Westbrook in order to take advantage of legislation allowing tenants of residential property to take joint action to acquire the freehold of their properties from the main landlord, in this case Friends Life Limited.



Dolphin Square occupies a substantial area of land, and includes several large buildings containing a total of 1,223 flats. The tenants served an initial notice on the landlord in September 2007, with Westbrook being nominated by the tenants as the buyer. Friends Life opposed the claim, but the action was in any event discontinued by Westbrook following a fall in the property market. Westbrook paid costs of £470,000.



When Westbrook made a further attempt to secure the freehold in May 2010, Friends Life objected and won an order from the High Court to strike out the application on the ground that the facts were the same as the earlier application. The High Court also considered that permission to reapply should not be given, as the second application amounted to ‘an abuse of process’ because Westbrook should have pursued the first application to trial to establish the entitlement of the tenants to acquire the freehold. Having failed to do so, the Court decided that Westbrook’s action did not justify forcing Friends Life and the Court to expend further time and resources rehearing the question.



The Court of Appeal did not agree and made reference to the provisions of the 1993 Act which allow tenants that have served a notice to acquire a freehold to withdraw their application at any time. If this is done, the tenants are not allowed to make a further application within a year. After that period of time, they are free to serve notice and apply again without restriction.



On this basis, the appeal was allowed and Westbrook is now free to pursue the application on behalf of the tenant companies.