Proper judicial consideration in the case of Westbrook Dolphin Square Limited -v- Friends Provident will be welcomed believes John Stephenson, senior partner at Bircham Dyson Bell LLP, when it is finally heard after a decision by the Court of Appeal to clear the path for the proceedings to go ahead.
The Court of Appeal decided the High Court was incorrect to assert that the original proceedings were an abuse of the court process, overturning its decision and reinstating proceedings.
"It's been an intricate case and one that seems to have had many twists and turns; but after two false starts, the Court of Appeal has decided that the substance of the case should be properly considered," explains John Stephenson, senior partner, Bircham Dyson Bell LLP.
"The use by a leaseholder not otherwise able to obtain the freehold of a building of multiple specially created companies to have long leases of individual flats is asserted by the landlords to be an abuse of the terms and purpose of the Leasehold Reform, Housing and Urban Development Act 1993, while the tenant says that it is fully entitled to put itself in a position to claim the freehold in this way.
"I don't think anyone would argue why the Jersey based companies were created, only whether or not it is legitimate to do so to create legal rights that would not otherwise exist."
Westbrook, an overseas investment company, owns a headlease and underlease of the substantial Dolphin Square Development in Pimlico which comprises over 1200 flats. When Westbrook purchased its interest in 2006 all the flats were let on short lets or secure tenancies. As none of the flats were held on long leases there was no right to enfranchise under the Leasehold Reform, Housing and Urban Development Act 1993.
Westbrook subsequently granted new long leases to a series of newly formed Jersey based companies, each owning no more than two flats and thereby, they assert, meeting the qualification rules. A claim was then made to purchase the freehold under the 1993 Act. Friends Provident, the freeholder, believes scheme is in effect a sham and that the Jersey based companies should be disqualified from making the claim. To add spice to the case, the value of the freehold, even as offered by the tenant, is well over £100m.
"This is a landmark case, the results of which will have repercussions for many blocks in similar positions. I can't wait to see the outcome of it," said John Stephenson.