Leasehold enfranchisement — Company “qualifying tenant” of flats — Whether possible for company also to be “tenant of house” — Whether company prevented from enfranchising by inability to satisfiy residence requirement — Construction of section 1(1ZB) of Leasehold Reform Act 1967 — Appeal allowed
The appellant held a 65-year lease of premises comprising six flats, five of which were sublet on short-term tenancies. The respondents owned the freehold reversion. The appellant applied to acquire the freehold, pursuant to section 1 of the Leasehold Reform Act 1967. The respondents served a notice objecting to the enfranchisement on the ground that the appellant did not satisfy the residence requirement in section 1(1ZB), as introduced by the Commonhold and Leasehold Reform Act 2002. That requirement applied to a “tenant of the house” in circumstances where “a flat forming part of a house is let to a person who is a qualifying tenant of the flat”.
The respondents brought proceedings seeking a declaration that the appellant had no right to enfranchise. They submitted that: (i) the appellant was a qualifying tenant of each of the flats; (ii) consequently, the tenant of the house, which the appellant also was, had no right to enfranchise unless it met the occupancy requirement; and (iii) being a company, the appellant could not meet that requirement. The appellant accepted the first and third points, but disputed the second, contending that, on a correct construction of section 1(1ZB), the tenant of the house could not be the same person as the qualifying tenant. The judge found in favour of the respondents, and the appellant appealed.
Held: The appeal was allowed.
One of the purposes of the changes introduced by the 2002 Act was to modify the law so as to allow companies to obtain enfranchisement. To do that, the residence requirement had been removed from most of the enfranchisement provisions, but had been retained in the special circumstances of section 1(1ZB) in order to resolve which of two or more people should have the right to seek enfranchisement. The reference in section 1(1ZB) to a situation “where a flat forming part of a house is let to a person who is a qualifying tenant of the flat” required that the “tenant of the flat” was someone other than the “tenant of the house”. Construed in this way, the section did not apply to the appellant and did not therefore prevent it from obtaining enfranchisement.
Jonathan Gaunt QC (instructed by Lawrence Jones) appeared for the appellant; Anthony Radevsky (instructed by Pemberton Greenish) appeared for the respondents.
Sally Dobson, barrister
