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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.
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