Abacus Land 1 (Holdco 1) Limited and Others & Ors v Secretary of State for Housing, Communities and Local Government

A court may entertain a challenge seeking a declaration of incompatibility in respect of primary legislation which has received Royal Assent but has not yet commenced. Whether proceedings should be stayed is a case-management question governed by the overriding objective. The possibility that later commencement regulations may affect the proportionality assessment is ordinarily a matter of substance, not jurisdiction or procedure. At an early stage, the court should weigh the risk of delay and irrecoverable losses against the procedural benefit of avoiding separate proceedings. Where the claimants may already be suffering significant financial prejudice, and a declaration of incompatibility would not itself provide damages for past losses, the balance may favour allowing the claims to proceed to permission. A stay may be reconsidered after the arguability of the claims has been determined.

Seven groups of claimants brought judicial review claims challenging provisions of the Leasehold and Freehold Reform Act 2024 as incompatible with Article 1 of Protocol 1 to the ECHR. Four claims had been stayed, while three remained unstayed.

The Secretary of State applied to stay the three unstayed claims until commencement regulations had been made, including regulations prescribing deferment and capitalisation rates. The principal issue was whether the court should defer consideration of the challenges until the legislative scheme was complete, or allow the claims to proceed to a permission hearing.

1. The court had jurisdiction to entertain a challenge seeking a declaration of incompatibility against primary legislation which had received Royal Assent but had not yet commenced. The stay applications therefore engaged the case-management discretion under Civil Procedure Rules 1998, rule 3.1(1)(g), to be exercised consistently with the overriding objective in rule 1.1.
2. The Secretary of State intended to make commencement regulations, but their preparation involved policy decisions likely to take many months or years. The argument that the court could not assess proportionality without knowing the deferment and capitalisation rates was an argument about the substance and arguability of the claims, not a reason automatically requiring a stay.
3. The court had to compare the consequences of granting and refusing a stay. The claimants’ evidence indicated potentially considerable financial losses and could not, at this early stage, be dismissed as fanciful or implausible.
4. A declaration of incompatibility under section 4 of the Human Rights Act 1998 would trigger a power to make a remedial order, but would not itself give a domestic right to recover losses incurred before that order. That made timely determination important.
5. The procedural benefit of avoiding potentially separate challenges was real but limited, since an initial judgment would substantially reduce the issues in any later challenge. The applications to stay the three unstayed claims were refused. The stays in the four stayed claims were lifted, and directions were given leading to a permission hearing.