Enfranchisement — Definition of “long tenancy” — Amendment introduced by Housing Act 1980 — Whether lease granted after April 18 1980 was granted in pursuance of a contract before that date — Landlord’s appeal dismissed
In 1973 the Wrotham Park Settled Estates granted a 121-year building lease to Lowndes Securities Ltd. The lease contained a covenant by the lessee to erect three houses and not to sublet the completed buildings except in accordance with a draft underlease in the form set out in one of the schedules. The draft underlease made the term subject to a proviso permitting the underlessee to surrender the lease after the death of a defined party. Section 3(1) of the Leasehold Reform Act 1967, as originally drafted, excepted from the definition of a “long tenancy” “a tenancy granted so as to become terminable by notice after a death …”. The object of the proviso in the draft underlease was to ensure that the underleases were not long tenancies under the 1967 Act. The Housing Act 1980 amended section 3(1) by providing that the exception applied only where the death was that of the tenant or the tenancy “was granted before 18th April 1980 or in pursuance of a contract entered into before that date”.
The respondents, who in 1984 had acquired an underlease granted in February 1982, in the draft form, claimed they were entitled to acquire the freehold under the 1967 Act. Vinelott J ([1989] 10 EG 106) decided that the underlease had not been granted “in pursuance of a contract entered into before” April 18 1980 and that accordingly the respondents were entitled to enfranchise.
Held The appeal was dismissed.
Section 3(1) of the 1967 Act, as amended by the Housing Act 1980, contemplated a contract followed by completion; the question was whether there was an earlier contract. There was no such prior contract for the grant of the underlease in issue. The appellants could not rely on the terms of the headlease as, although this restricted the form of any underlease, it did not oblige the underlessors to let. Any underletting would not have been “in pursuance of a contract”. The amended proviso to section 3(1) was not satisfied; the underlease was a “long tenancy” and the respondents were entitled to enfranchise.
David Neuberger QC and Sonia Proudman (instructed by Farrer & Co) appeared for the appellants; and William Stewart-Smith (instructed by Male & Wagland, of Potters Bar) appeared for the respondents.
