Jonathan Upton successful in High Court appeal on the right to enfranchise under the 1967 Act
14th April 2020
In Freehold Properties 250 Ltd v Field and others  EWHC 792 (Ch) (Marcus Smith J) the court considered: (i) whether a tenant has a right to enfranchise under the Leasehold Reform Act 1967 (“the 1967 Act”) where the structural parts (i.e. the roof, foundations and load-bearing walls) of the house are excluded from the demise; and (ii) whether the exclusion of the structural parts is void under s.23(1) of the 1967 Act.
The tenants of 11 properties each served a notice claiming the right to enfranchise their house under the 1967 Act. The properties were on the same development and were demised by leases in similar form. Importantly, the structural parts of the house (i.e. the roof, foundations and load-bearing walls) were excluded from the demised premises. The landlord, Freehold Properties 250 Ltd, served notices not admitting the claim. At first instance, the landlord argued that the houses were not houses for the purposes of s.2(1) of the 1967 Act by reason of the exception in s.2(2) (i.e. a material part lies above or below a part of the structure not comprised in the house). The judge rejected this argument and declared that the tenants were entitled to enfranchise.
Jonathan Upton (who did not represent the landlord at trial) was instructed in the appeal. Jonathan argued that the right to enfranchise in s.1(1) applied only to a tenant of the whole of a leasehold house and, accordingly, as the structural parts of the houses in the instant case were excluded from the demised premises, the tenants were tenants of part only of a house and did not have the right to enfranchise. The tenants argued the phrase “a tenant of a leasehold house” in s.1(1) included “a tenant of part of a leasehold house”. The tenants also argued, in the alternative, that the exclusion of the structural parts engaged the “avoidance” provisions in s.23(1) of the 1967 Act.
The court held: (1) a tenant does not fall within the enfranchisement regime of the 1967 Act unless he or she is the tenant of substantially the whole of a leasehold house. If a tenant qualifies for enfranchisement under the 1967 Act, then the statutory obligation to convey under s.8 is of the “house” and not of that part of the house that was demised. That being so, it would be curious if some legal interest less than an interest in substantially the whole of the leasehold house would suffice to qualify for enfranchisement. Parliament intended to enable a lease to be turned into a freehold, thereby extending indefinitely the “term of years” that is the defining characteristic of a lease. It did not intend to expand the physical reach of a demise, so that a lease of part of a house is converted to the freehold of the whole of it. (2) the “avoidance” provision in s.23(1) of the 1967 Act is insufficiently wide to embrace a limitation on a tenant’s demise. A limited demise in no way affects a tenant’s rights under the 1967 Act. It is simply that the property interest acquired by the tenant is insufficient to give rise to a right under the 1967 Act. Section 23(1) causes provisions within its scope to be voided. It does not permit the court to insert new words or re-write the terms of the Lease.