Notice to enfranchise — Reversion held by single trustee — Consent to sell required — Appointor of second trustee unwilling to appoint — Restriction on registered title — Whether transaction void under section 23 of the Leasehold Reform Act 1967 — Whether enfranchising tenants were persons interested for purposes of section 30 of the Law of Property Act 1925 — Appeal by landlord dismissed
By a lease of April 1 1982 the Wrotham Park Settled Estates granted a 99-year term of Ganwick Cottage, Great North Road, Potters Bar, to the respondents at a rent of £50 per annum and for a substantial premium. By a transfer of March 7 1985 executed in consideration of a leaseback, Wrotham transferred to Proma Ltd the reversionary interest in the cottage subject to Proma’s holding the cottage upon trust for sale exercisable with the consent of Mr Byng, the second appellant. Proma already held property on similar terms under a deed of 1982, which provided that the statutory power of appointing trustees should be exercisable by Mr Byng; the 1985 transfer was subject to the trusts of the 1982 deed. The leaseback in favour of Wrotham was executed and on March 18 1985 Proma was registered as proprietor at HM Land Registry subject to restrictions that no disposition of the title could be registered during Mr Byng’s lifetime without his consent or, as Proma was a single proprietor (and not a trust corporation), without an order of the registrar or the court.
On February 21 1986, the respondents purportedly exercised their rights under the Leasehold Reform Act 1967 and gave notice to acquire the freehold in the cottage; Proma, although accepting the validity of the notice of enfranchisement, pointed out that no second trustee would be appointed to give a receipt permitting the beneficial interests under the trust to be overreached and that Mr Byng would not consent to a sale; accordingly no transfer could be registered. His Honour Judge Goldstone in the Barnet County Court held (November 1 1988) that the requirement in the 1985 transfer of Mr Byng’s consent to a sale was invalidated by section 23 of the 1967 Act and that the respondent tenants were persons interested under the trust for sale for the purposes of section 30 of the Law of Property Act 1925 entitling them to apply to the court for an order vesting the property in them as they were entitled to acquire the freehold.
Held The appeal was dismissed.
1. The arrangements in 1985 between Wrotham and Proma were a relevant agreement that related to the tenancy for the purposes of section 23 of the 1967 Act. Any provision of any agreement which, but for its avoidance by section 23(1) of the 1967 Act, would have the effect of rendering specifically unenforceable the statutory contract between the tenant and his landlord excludes or modifies the right of enfranchisement within the meaning of section 23(1). The arrangements for Mr Byng’s consent, but not those for the appointment of a second trustee, were therefore invalidated.
2. The respondents, although having an interest in a tenancy of the cottage, had no interest under the trust for sale affecting it; therefore it could not be said they were persons interested for the purposes of section 30 of the 1925 Act. However, the court was in a position to order that the restrictions in the proprietorship register be set aside and that Proma execute a transfer of its rights to the respondents. The transfer will then overreach the beneficial interests under the trust.
Leolin Price QC and Sonia Proudman (instructed by Farrer & Co) appeared for the appellants; and Quintin Iwi (instructed by Percy Short & Cuthbert) appeared for the respondents.
