What constitutes a reasonable offer?

In Leasehold reform by Mark Chick

The case of Westbrook Dolphin Square (see http://www.leaseholdreformnews.com/westbrook-dolphin-square-ltd-v-friends-life-ltd-2014-ewhc-2433-ch/)  is a long decision of the High Court and has been appealed by the landlord on what might be termed the ‘policy point’ – i.e the question of whether the creation of a scheme that successfully avoids Section 5 of the 1993 Act actually offends public policy. We will have to see how this particular aspect plays out.

What is more interesting and in my view the most interesting aspect of the case is the discussion of what constitutes a ‘valid’ offer figure for the purposes of a notice of claim. The Court was at pains to point out (and as the decision shows) that there is not an ‘objective’ benchmark of what constitutes a reasonable offer. Rather it must be an offer that is a genuine opening shot in negotiations. It is acceptable for the tenant to view this as being a figure that will be ‘knocked back’ but it cannot be a purely nominal figure.

For all of the unique features of the Dolphin Square case this is the point that is likely to have the widest effect in practice.

It was interesting to hear the views of opposing valuers in the discussion at the 15th ALEP Conference (http://www.alep.org.uk) on 21st October 2014, in a debate that I was pleased to chair.

Mark Chick

Mark Chick is a solicitor dealing with leasehold issues. This note (being very general in its nature) is not a complete statement of the law in this area.  It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.

If you require legal advice please visit www.bishopandsewell.co.uk or email leasehold@bishopandsewell.co.uk