England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH WYCOMBE COUNTY COURT
(HIS HONOUR JUDGE BISHOP)

		Royal Courts of Justice The Strand London Wednesday 13 June 2001

Wednesday 13 June 2001

1. LORD JUSTICE TUCKEY: Lady Justice Arden will give the first judgment.
2. LADY JUSTICE ARDEN: This is an appeal against the order of His Honour Judge Bishop dated 29 January 2001, whereby the judge allowed an appeal against the order of District Judge Sonnex dated 14 December 2000. The District Judge made an order in these terms:

"IT IS ORDERED THAT:

1. A Vesting Order in respect of the property Flat 2, Belle Court, Bell Lane, Little Chalfont, Bucks be made in favour of the applicant pursuant to S24 of the Leasehold Reform Housing and Urban Development Act 1993.

...."

3. The background is that the appellant owns a freehold interest in Flat 2, Belle Court ("Belle Court"). The respondent is the owner of the freehold interest. On 26 March 1998, the tenants of Belle Court together gave a collective enfranchisement notice under section 13 of the Leasehold Reform Housing and Urban Development Act 1993 ("the 1993 Act") and served it on the landlord, who is the respondent to this appeal. In that notice they stated their intention to purchase the freehold of Belle Court. The notice appointed "a nominee purchaser" for the purposes of the Act. That person is the appellant.
4. On 22 May 1998, the landlord served a counter-notice in which was set out its requirement that the transfer deed between the landlord and the tenants should contain an indemnity clause by which the tenants would agree to indemnify the landlord against any claim in respect of its obligations under the lease.
5. The relevant clause can be found in the counter-notice. It reads:

"The Transferees hereby covenant with the Transferors to observe and perform the Covenants on the part of the Lessor and the conditions contained in the Leases to which the Specified Premises is subject and to indemnify the Transferor at all times against any liability costs or expenses arising by reason of any breaches or non-observance there or whether arising before or after the date hereof."

6. In November 1998, the tenants made an application to the leasehold valuation tribunal for determination of the price to be paid on the collective enfranchisement of Belle Court and also the terms of the conveyance.
7. Section 24(1) of the 1993 Act, under which the application was made, provides:

"Where the reversioner in respect of the specified premises has given the nominee purchaser --

(a) a counter-notice under section 21 complying with the requirements set out in subsection 2(a) of that section, or

(b) a further counter-notice required by or by virtue of section 22(3) or section 23(5) or (6),

but any of the terms of acquisition remain in dispute at the end of the period of two months beginning with the date on which the counter- notice or further counter-notice was so given, a leasehold valuation tribunal may, on the application of either the nominee purchaser or the reversioner, determine the matters in dispute."

8. That provides that the application shall not be made before the expiration of two months after the service of the counter-notice or further counter-notice.
9. Subsection (2) provides:

"Any application under subsection (1) must be made not later than the end of the period of six months beginning with the date on which the counter-notice or further counter-notice was given to the nominee purchaser."

10. That subsection stipulates a six-month window within which the application to the leasehold valuation tribunal must be made. There is no doubt that that time limit was duly observed.
11. The hearing took place on 19 May 2000. Both parties were represented by their surveyors. The leasehold valuation tribunal delivered its decision in which it determined only the price which was to be paid on collective enfranchisement and not any further terms of the conveyance.
12. Correspondence took place between the parties. The form of the conveyance was not agreed, and so the tenants were concerned to apply for a vesting order under the further provisions of section 24 which provides so far as relevant as follows:

"(3) Where --

(a) the reversioner has given the nominee purchaser such a counter-notice or further counter-notice as is mentioned in subsection (1)(a) or (b), and

(b) all of the terms of acquisition have been either agreed between the parties or determined by a leasehold valuation tribunal under subsection (1),

but a binding contract incorporating those terms has not been entered into by the end of the appropriate period specified in subsection (6), the court may, on the application of either the nominee purchaser or the reversioner, make such order under subsection (4) as it thinks fit.

(4) The court may under this subsection make an order --

(a) providing for the interests to be acquired by the nominee purchaser to be vested in him on the terms referred to in subsection (3);

(b) providing for those interests to be vested in him on those terms, but subject to such modifications as --

(i)may have been determined by a leasehold valuation tribunal, on the application of either the nominee purchaser or the reversioner, to be required by reason of any change in circumstances since the time when the terms were agreed or determined as mentioned in that subsection, and

(ii)are specified in the order; or

(c) providing for the initial notice to be deemed to have been withdrawn at the end of the appropriate period specified in subsection (6);

and Schedule 5 shall have effect in relation to any such order as is mentioned in paragraph (a) and (b) above."

13. We have not been referred to any part of Schedule 5 and I need not go to it.

"(5) Any application for an order under subsection (4) must be made not later than the end of the period of two months beginning immediately after the end of the appropriate period specified in subsection (6).

(6) For the purposes of this section the appropriate period is --

(a) where all of the terms of acquisition have been agreed between the parties, the period of two months beginning with the date when those terms were finally so agreed;

(b) where all or any of those terms have been determined by a leasehold valuation tribunal under subsection (1) --

(i)the period of two months beginning with the date when the decision of the tribunal under that subsection becomes final, or

(ii)such other period as may have been fixed by the tribunal when making its determination.

(7) In this section 'the parties' means the nominee purchaser and the reversioner and any relevant landlord who has given to those persons a notice for the purposes of paragraph 7(1)(a) of Schedule 1.

(8) In this Chapter 'the terms of acquisition', in relation to a claim made under this Chapter, means the terms of the proposed acquisition by the nominee purchaser, whether relating to --

....

(c) the amounts payable as the purchase price for such interests,

....

(e) the provisions to be contained in any conveyance,

or otherwise, and includes any such terms in respect of any interest to be acquired in pursuance of section 1(4) or 21(4)."

14. Accordingly, under section 24(8)(e) "the terms of acquisition" would include the indemnity which the landlord was seeking.
15. It is to be noted that several of these subsections lay down strict time limits. Subsection (1) lays down a period of two months before which any determination can be made by the leasehold valuation tribunal. Subsection (2) lays down a six-month window in which an application may be made to the leasehold valuation tribunal. Subsection (5) sets out a period within which an application may be made to the court for a vesting order, which is a period of not more than two months after the end of the appropriate period. Subsection (6) defines the appropriate period. It is either two months after the final agreement of all terms or two months after the leasehold valuation tribunal's decision becomes final. Those are strict time limits in section 24 which have been relied on by Mr Harrison.
16. The principal term outstanding and not agreed between the parties was whether the conveyance should include a term as to indemnity in the terms that the landlord had sought from the leasehold valuation tribunal. That dispute continued. The tenant then applied to the court within what it saw as the time period stipulated by section 24, and the District Judge made an order vesting the reversion in the nominee purchaser. The landlord appealed to the judge. The question was whether the leasehold valuation tribunal had still jurisdiction to determine the outstanding issue. The landlord submitted that, until the leasehold valuation tribunal determined the outstanding issue, the court had no jurisdiction to make a vesting order. There was also an issue as to whether the District Judge had had before him simply an application for directions or an application for a vesting order. That lead to submissions, which have not been pursued on this appeal, as to whether it was right for the District Judge to make a vesting order at a directions hearing.
17. The judge accepted the submission on behalf of the landlord that time on the making of the vesting order under section 24(6) had not begun to run and that the matter should be remitted back to the leasehold valuation tribunal to determine the outstanding issues. He did not make any order for remittal, but allowed the appeal so as to leave open for the parties the possibility of raising the matter with the leasehold valuation tribunal. The judge dismissed the application for a vesting order.
18. The tenants have appealed against the judge's order on three grounds. First, they contend that the judge was wrong to hold that where the leasehold valuation tribunal did not consider all the issues before it, its decision was not final; the judge should have found that the decision was final, even though they accept there was an issue which the leasehold valuation tribunal did not resolve. Second, they contend that the judge was wrong to hold that the tribunal had power to review the decisions. Third, they contend that the judge should have held that the respondents were estopped from denying that the terms of acquisition had been fully determined.
19. There is a respondent's notice which deals with the question whether the District Judge should have made an order in the circumstances that I have already mentioned and there is also a respondent's notice dealing with the District Judge's further order as to service charges, with which I am not concerned at this point.
20. I turn to the appellant's submissions on this appeal. The appellant accepts that the leasehold valuation tribunal did not decide all the issues which were before it, but contends, as I have said, that the decision was final. In this connection we were referred to section 101(9) of the 1993 Act which provides:

"For the purposes of this Part an order of a court or a decision of a leasehold valuation tribunal is to be treated as becoming final --

(a) if not appealed against, on the expiry of the time for bringing an appeal;

...."

21. Mr Harrison for the claimant submits that the leasehold valuation tribunal could not amend its decisions. In this connection he relies for a correct statement of the law on the submission made by Mr Diplock (as he then was) in In re 56 Denton Road, Twickenham [1953] 1 Ch 51 at 52-54, that where Parliament confers upon a body the duty of deciding or determining any question, the deciding or determining of which affects the rights of the subject, such decision or determination made and communicated in terms which are not expressly preliminary or provisional is final and conclusive, and cannot in the absence of express statutory power or the consent of the person or persons affected be altered or withdrawn by that body. The authorities cited in support of that submission were: Livingstone v Westminster Corporation [1904] 2 KB 109 and Robertson v Minister of Pensions [1949] 1 KB 227. Mr Harrison accepts that the leasehold valuation tribunal could give provisional or preliminary rulings, but he submits that they could not decide issues sequentially; they were only entitled to one bite of the cherry.
22. The second submission for the appellant is that the respondent had to appeal or bring its entire case forward before the Lands Tribunal. He referred us to R v Nat Bell Liquors Limited [1922] 2 AC 128, 151-152, which is authority for the proposition that a decision of a court once made, even if made in error, is binding until set aside. He submits that that shows that the respondent's only course was to appeal the matter (assuming that it had not taken the obvious course of bringing its entire case forward at the hearing). There is no evidence before this court as to the course which the proceedings took before the leasehold valuation tribunal.
23. Third, the appellant submits that the judge's decision could lead to great uncertainty. Mr Harrison persuasively submits that there is a strict timetable in section 24 to prevent landlords who may very well be willing to sell the property from dragging out the proceedings. This is exemplified by the fact that under section 24(6)(b) time begins to run from the determination of the leasehold valuation tribunal even if there are outstanding issues yet to be argued between the parties.) He further submits, with cogency, that if the decision becomes final only when all the terms of acquisition have been determined, that could produce great uncertainty and make it unclear when the procedure starts and finishes, most particularly as to when the tenant is entitled to make his application for a vesting order. If he does not make that application, the risk for him is that the landlord will make an application to have the notice dismissed under section 24(4)(c), which enables the court to make an order providing for the initial notice to be deemed to have been withdrawn.
24. Mr Harrison further relies on section 11, paragraph 2, of the Rent Assessment Committee (England and Wales) (Leasehold Valuation Tribunal) Regulations 1993, which gives the tribunal power to correct clerical errors and accidental slips and omissions. He argues that, since there is an express power to deal with those sorts of slips, there is no further power to review decisions. He also submits that the question of the indemnity would impact on the question of valuation; that if the question of indemnity were to be taken up now by the tribunal, the question of valuation would have to be reopened; and that it is contrary to the public interest that there should be re- litigation in this matter.
25. In support of his submission that the question of the indemnity is relevant to valuation, he took us to Schedule 6, paragraph 3(1)(d) to the 1993 Act which provides:

".... the value of the freeholder's interest .... is the amount which at the valuation date that interest might be expected to realise if sole on the open market by a willing seller .... on [various] assumptions --

....

(d) on the assumption that (subject to paragraphs (a) and (b)) the vendor is selling with and subject to the rights and burdens with and subject to which the conveyance to the nominee purchaser of the freeholders' interest is to be made ...."

26. That submission raises an issue which this court cannot determine on this occasion, but that is the way in which the appellant puts the case on valuation. It has the consequence that if the appellant is right on that point, he may also need to find a way of ensuring that there can be a re-litigation of the question of the price which the tenants are bound to pay on collective enfranchisement of Belle Court.
27. Mr Harrison relies on the principle in Henderson v Henderson, which was considered recently in Johnson v Gore Wood & Co (a firm) (HL) [2001] 2 WLR 72. He submits that the landlord should have brought this point forward and that it is not now open to him to raise the matter again. However, we have no evidence on the course that matters took on the hearing before the leasehold valuation tribunal; the question of the indemnity was certainly a matter placed before the tribunal in the tenant's application. Mr Harrison further submits that the omission can form the basis of an estoppel and refers to Fidelitas Shipping v VO Exportchleb [1966] 1 QB 630. Mr Harrison submits that the Act imposes a rigid timetable for applications to apply for vesting orders; that the judge's construction is capable of abuse by the landlord where the tenant omits to apply for some essential term of acquisition to be determined under some representation from the landlord that the matter can be dealt with subsequently by negotiation and the landlord then drags the matters out. Mr Harrison further submits that section 24(6) may lead to the effect if there are sequential hearings the time for making an application for a vesting order can expire before the right to apply for the order accrues. He directs attention to the words "all or any" in subsection (6)(b), and states that where some only of the terms have been determined by the leasehold valuation tribunal who go on to hear and determine other issues, then there is a risk that the appropriate period will commence under subsection (6) and indeed expire before the leasehold valuation tribunal has completed its work and indeed in particular has completed the ascertainment of the price. This would be an absurd result for the section to reach, and the conclusion he draws is that there cannot be sequential ruling by the leasehold valuation tribunal. It would put the tenant at risk that the landlord would apply for an order under section 24(3) for the withdrawal of the initial notice.
28. The respondent, for whom Mr Fancourt appears, made a number of submissions. First, he submitted that the 1993 Act laid down a strictly sequential mandatory code. In that regard Mr Fancourt relies on the decision in Willingdale v Global Grange Limited [2000] 2 EGLR 55, a decision of the Court of Appeal under section 25 of the Act, deciding that where a landlord has failed to serve a counter-notice, the court cannot take account of the matters he would have raised in that counter-notice in the exercise of its powers under that section.Mr Fancourt submits that the expression "all or any terms" in subsection (6), where all the terms have been referred to the tribunal for determination, must mean "all those terms", and the word "any" must mean those which have been referred to the tribunal and are required to be determined by it. It is only at the point in time when the leasehold valuation tribunal has completed its task that the decision can be said to have become final and the appropriate period starts to run. He submits that the leasehold valuation tribunal was not functus; that the situation was distinguishable from that contemplated in the citation from In re 56 Denton Road because that case concerned a single issue. He submits that effectively there would be no re-litigation because the issue to be determined is a separate one. On that particular point there is an issue between the parties. Mr Harrison contends that the question of the indemnity would throw doubt on the question of valuation. Mr Fancourt further submits that it was the appellant's responsibility as nominee purchaser to ensure that the tribunal determined all the issues because it was only at that point in time that the jurisdiction under section 24(4) to make a vesting order would arise.
29. Mr Fancourt also submits that there can be no question of an estoppel; the court cannot determine the question of estoppel because there is simply no evidence before the court as to what took place before the tribunal. Mr Fancourt took us to the provisions for appeal to the Lands Tribunal. Permission would not be required in order to appeal. The appeal would be by way of re-hearing: see Maryland Estates Ltd v 63 Perham Road Ltd, a decision of the Lands Tribunal dated 27 March 1997 reported in [1997] 35 EG 94. Mr Fancourt draws attention to the fact that the rules stipulate that the appeal should be entered within 28 days, but the rules provide that this time can be extended on application to the registrar for the Lands Tribunal. However, he submits that an appeal to the Lands Tribunal in connection with the indemnity would not be appropriate as the leasehold valuation tribunal has yet to make a determination on that rule.
30. Mr Fancourt referred to Schedule 22 to the Housing Act 1996, which shows that an appeal can be made by either party on the ground that they are a person dissatisfied. It does not have to be on any specific ground; it is not restricted to an error of law.
31. Having set out the arguments of the parties fully and the provisions of the Act, I can state my conclusions shortly. In my judgment, the correct approach to section 24 is to work through the subsections in order to find the applicable provisions to resolve this case. Under subsection (1), once an application is made to the leasehold valuation tribunal, that tribunal has power to determine all the matters in dispute.
32. The jurisdiction of the court will only arise if there is an application for a vesting order. The conditions which entitle the court to make a vesting order are those set out in subsection (3). In particular paragraphs (a) and (b) must be considered. They provide:

"(a) the reversion has given the nominee purchaser such a counter-notice or further counter-notice as is mentioned in subsection (1)(a) or (b), and

(b) all of the terms of acquisition have been either agreed between the parties or determined by a leasehold valuation tribunal under subsection (1)."

33. The terms of paragraph (b), in my judgment, are critical. They make it clear that before the court can make a vesting order (or indeed any other orders provided for in subsection (4)), the situation must have been reached where not just some, but all, of the terms of acquisition have either been agreed between the parties or determined by the leasehold valuation tribunal. It must therefore follow, in my judgment, that in his case the court had, as the judge held, no jurisdiction to make a vesting order when some of the terms of acquisition correctly placed before the leasehold valuation tribunal had not yet been determined by it (unless they had become the subject of some agreement between the parties).
34. With that knowledge one turns to subsection (6). It is said that subsection (6) prevents the tribunal from deciding issues sequentially because the appropriate period can be triggered by the determination by the leasehold valuation tribunal of "all or any" of the terms of acquisition. As to that, it seems to me that the controlling provision to subsection (3) and that it must follow that subsection (6) must be construed consistently with subsection (3) so that the scheme of the section works coherently. Accordingly, in my judgment, Mr Fancourt must be right in saying that when subsection (6) speaks of any of those terms, it means (in a case where not all the terms are placed before the tribunal) all the terms which the leasehold valuation tribunal has to determine. Thus the opening words of that subsection will not be satisfied until all those terms have indeed been determined by it. On that basis the appropriate period would not start until that process had been completed and the "decision" for the purpose of subsection (6)(b)(i) would in effect be the last decision of the leasehold valuation tribunal in any case where it had given more than one decision.
35. It may very well be that in some cases the tribunal may find it convenient to decide the issues in stages. If it does so, it may very well take the course that Mr Harrison has suggested of making provisional or preliminary rulings and then making one final ruling at the end; alternatively, it has another option provided by subsection (6)(b)(ii), namely of extending the time when the appropriate period would begin. If it takes that course, then under subsection (6)(b)(ii) it must extend the time when it makes its determination.
36. In the previous case, the tribunal has not yet determined all the issues that need to be determined according to the application placed before it. Therefore the appropriate course is for either party to seek the determination of the leasehold valuation tribunal of the outstanding issue, or at least the decision of the tribunal as to whether it is prepared to entertain that issue. If dissatisfied, either party can then appeal to the Lands Tribunal. It is not, as I see it, a question of the leasehold valuation tribunal being invited to review a decision already given, but rather of its determining (or deciding whether to determine) afresh for the first time an issue placed before it but not determined by it. I appreciate that in this particular case the tenants may wish to run the argument that the landlord is estopped from raising the point at this stage, but I see no reason why the tenant should not raise that point before the tribunal. Indeed, as I understood it, Mr Harrison was prepared to accept that that was so. Nor do I see that this approach gives rise to uncertainty because the issues to be decided by the tribunal must have been identified in the application to it.
37. There is the possibility in this case that the tribunal accepts the tenants' submission based on estoppel and determines that it is no longer open for the landlord to seek to have an indemnity clause inserted in the conveyance or to seek the determination of the leasehold valuation tribunal to that effect. As I have said, we have no evidence about the hearing before the tribunal and we can express no view upon that point. If the tribunal were to accept that point, there would be the risk that the tenant would find that the appropriate period had indeed expired through no fault of their own. In those circumstances, in my judgment, while the appeal should be dismissed, it should be allowed to the extent of enabling the existing application, which they have already made, to be left on the file and adjourned without a return date, just in case it should be determined by the leasehold valuation tribunal that it was no longer open to have this further issue determined. The conveyance must then take place without any indemnity clause. In those circumstances the application could then be resuscitated and a vesting order made by the court on that application and the tenant would not be prejudiced by the dismissal of the application; otherwise the application would in due course have to be dismissed. Subject to that qualification, however, in my judgment the judge reached the right conclusion. I would add that it would be open to tenants in any case where there was for any reason doubt as to whether the appropriate period had commenced to issue an application under subsection (4) as a matter of caution, and in view of the terms of subsection (5) it may well be prudent for them to do so.
38. There is one more point to which I would draw attention. Under subsection (4)(b)(i), which enables the tribunal to hear the matter if there has been a change of circumstances, it may be suggested that that ought to lead to the conclusion that the matter can never return to the leasehold valuation tribunal. In my judgment, that is not so because in this particular case the leasehold valuation tribunal appears to have dealt with only one of the issues placed before it. In those circumstances, save to the extent indicated, I would dismiss the appeal.
39. LORD JUSTICE TUCKEY: I agree that the appeal should be dismissed for the reasons given by my Lady. I also agree that the order below should be varied as she has said.
40. The combined effect of subsections (3) to (5) of section 24 of the 1993 Act is that a court cannot make a vesting order unless all the terms of the acquisition have either been agreed or determined by a leasehold valuation tribunal. It is accepted that this condition had not been met in this case at the time when the tenant applied to the court for a vesting order. The only question is whether the tenant can get over this apparently insuperable obstacle by saying that the leasehold valuation tribunal's decision must in some way be taken as having decided all outstanding issues because it is final and/or because the landlords have waived their right to have the outstanding issue decided, or are estopped from contending that it has not been.
41. I do not think the obstacle can be overcome by saying that the leasehold valuation tribunal's decision is final. The tribunal's decision may be final as to what it did decide, but it cannot be final as to what it did not. I can see no reason in principle why the Tribunal cannot still decide the outstanding issue. The statute requires it to decide all matters in dispute and it has not yet done so.
42. Waiver and estoppel are matters which it may still be open to the tenant to raise before the tribunal if so advised. But they are not matters which assist the tenant in this court for the reasons given by my lady.
ORDER: (Not part of judgment) Appeal dismissed, save that the appellant's application to the County Court to be resurrected and stayed for the reasons given; the respondent to have his costs of the appeal against the appellant, assessed in the sum of £6,000 inclusive of VAT; any application to lift the stay to be made to the County Court.