The clever scheme to acquire the freehold of Dolphin Square has been held at a red light since September 2011 when the High Court struck out proceedings to uphold the validity of a collective enfranchisement claim on a procedural technicality.  However the light turned amber on 18 May 2012 when the Court of Appeal decided the High Court was wrong to say those proceedings were an abuse of process, overturned its decision and reinstated the proceedings.

To recap, Westbrook, an overseas investment company, owns a headlease and underlease of the substantial Dolphin Square Development in Pimlico which comprises over 1200 flats in all.  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 then granted new long leases to a series of newly formed Jersey companies, each owning no more than two flats and thereby, they say, met the qualification rules and made a claim to purchase the freehold under the 1993 Act.  Friends Provident, the freeholder, says the scheme is a sham and that the Jersey companies should be disqualified from making the claim.

The Court of Appeal has now cleared the path for the proceedings to determine the validity of the claim to go ahead.  We shall have to wait and see whether the largest collective enfranchisement claim to date finally gets the green light.

Law:  Westbrook Dolphin Square Ltd v Friends Life Ltd [2012] EWCA Civ 666 (18 May 2012)

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 24/05/2012.