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Court of Appeal - Collective Enfranchisement Notices
The Court of Appeal has recently underlined the importance of getting your Initial Notice accurate in its judgement in Natt and another v Osman and another [2014] EWCA 1520 Civ.
Briefly, the subject building comprised 4 flats all of which were held by qualifying tenants. Two of the qualifying tenants purported to exercise their right to collectively acquire the freehold of the building by serving an Initial Notice under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”).
The 1993 Act requires certain information be included in an Initial Notice, including full details of all the qualifying tenants within the building (s.13(3)(e)). In this case, the Initial Notice omitted details of one of the qualifying tenants, being the tenant of Flat 4. This was deliberate as at the time of drafting the Initial Notice there was doubt as to whether Flat 4 fell within the definition of a “flat” as set out in the 1993 Act. However, this was clarified by the Court and the parties accepted that the tenant of Flat 4 was indeed a qualifying tenant.
The issue before the Court of Appeal was whether the Initial Notice was invalidated by this omission. The appellants argued that the Court should consider the gravity of the non-compliance and its practical consequences. In this case, the tenant of Flat 4 was in fact the daughter of the landlord and therefore the landlord was fully aware of her interest. The appellants also argued that, notwithstanding the validity of the Initial Notice, they clearly qualified under the 1993 Act to acquire the freehold of the building.
The Court of Appeal rejected the appellants’ arguments and held that the failure to comply with s.13(3)(e) invalidated the Initial Notice. Their reasoning was based on three factors:
- The information required by s.13(3)(e) was very important. The landlord must be able to check important qualification criteria such as the proportion of flats held by qualifying tenants and the proportion of qualifying tenants who were participating in the claim;
- Paragraph 15 of Schedule 3 to the 1993 Act sets out saving provisions whereby minor inaccuracies in the Initial Notice would not result in invalidity. The information required by s.13(3)(e) is not covered by this saving provision; and
- There is no restriction on the service of a new Initial Notice after a previous notice is found to be invalid.
Although the Court’s decision may appear harsh in this case, it does provide a degree of certainty. It appears that the Court will not consider the knowledge of the recipient of a notice, but will rely on the wording and consequences of the relevant statutory scheme.
Whilst it is true that qualifying tenants are able to serve a fresh Initial Notice if they have previously served an invalid notice, it is hardly ideal to have to do so. This is especially the case in a steeply rising market where the delay in the valuation date could have serious consequences. As such, this case provides a useful reminder of the importance of accuracy when serving an Initial Notice in a collective enfranchisement claim.
