James Fieldsend successfully represented the Respondent in an important decision of the High Court on appeal concerning how terms of acquisition are agreed in leasehold enfranchisement.

On the 14th October 2010 Mr Justice Lewison gave his judgment in the case of Felix Avenue London Limited v Pledream Properties Ltd [2010] EWHC 3048 (Ch).

In this case the Court was asked to consider the test to be applied when considering whether, and if so when, terms of acquisition are agreed for the purposes of s.24 of the Leasehold Reform Housing and Urban Development Act 1993. 

The effect of section 24 is as follows:
(i) Where following service of a counter-notice any terms of acquisition in a collective claim remain in dispute after two months from the date the counter-notice is given, the nominee purchaser or the reversioner may apply to the LVT for a determination of the matters in dispute.  Such an application must be made within 6 months of the date the counter-notice was given. 
(ii) Where however the terms have been agreed or determined by the LVT but a binding contract incorporating those terms has not been entered into within 2 months of the date they were agreed or determined, the nominee purchase may within the following two month period apply to the Court for a vesting order.
(iii) If an application under s.24 is not made to the LVT or the Court (as applicable) by the stated deadline the Initial Notice will be deemed withdrawn (s.29).
(iv) “Terms of acquisition” include the provisions to be contained in any conveyance or otherwise (s.24(8)).

The terms of the conveyance are to conform with Schedule 7, except to the extent any departure is agreed (s.34(9)).  The conveyance shall also include a statement that it is a conveyance executed for the purposes of Chapter I (s.34(10)).

A question that is often asked is, how do I know whether the terms have been agreed.  The importance of fixing the date is clear; if there is uncertainty as to whether, and if so as at what date, terms have been agreed, there is the real risk that the wrong application will be made or the right application will be made but be out of time.

In answer to this question Mr Justice Lewison held as follows:
1. Whether a term is agreed is a question of fact.  There is no provision in the 1993 Act deeming a term to be agreed.
2. There may be a dispute in fact even if the outcome is a foregone conclusion.  This is consistent with the ordinary meaning of the word “dispute” (Hayter v Nelson [1990] 2 Ll.Rep 265 and Halki Shipping Corporation v Soapex Oils Ltd [1998] 1 W.L.R. 726).
3. In a case where there are default provisions there is no reason why the proponent of a change to those provisions must take an initial refusal at face value and cannot make another attempt to secure agreement.
4. There must be positive agreement rather than silence (Gold Eagle Properties Ltd v Thornbury Court Ltd [2008] 3 EGLR 69).
5. A workable test for determining whether terms have been agreed is, “It must be clear that negotiations have been completed and final agreement has been reached either orally or in writing on a specific term or terms that is not in any way contingent on agreement or determination of some other term or terms.” (City of Westminster v CH (2006) Ltd [2009] UK Upper Tribunal 174 (lands chamber)).

For further information regarding the High Court’s decision and its application to leasehold enfranchisement please contact Chambers.