Leasehold enfranchisement – Leasehold Reform Act 1967 – Acquisition of freehold – Purchase price – Respondent seeking to acquire freehold of property pursuant to 1967 Act – Respondent’s existing lease extended under 1967 Act before March 1986 – First-tier Tribunal valuing freehold subject to original lease – Upper Tribunal valuing freehold subject to extended lease – Appellant landlord appealing – Whether freehold to be valued on assumption that subject to lease as extended or original lease term – Appeal dismissed
The appellant was the freehold owner of a property in Maida Vale, London, W9. The respondent tenant validly exercised its right to acquire the freehold interest from the appellant by notice under section 8 of the Leasehold Reform Act 1967 but an issue arose about the price. The original lease of the property was due to expire in December 2016, but in the early 1980s the then tenants secured a 50-year extension under section 14 of the 1967 Act so that the lease would expire in 2066. The price for the freehold interest, subject to the extended lease, was £1.748m. The price for the same interest, subject to the original lease, was £2.866m.
The appellant argued that the freehold should be valued as subject to a lease expiring on the original term date in 2016 by the application of section 9(1AA)(a) of the 1967 Act, as amended by section 143 of the Commonhold and Leasehold Reform Act 2002, so far as it required the assumption, where the tenancy had been extended under the 1967 Act, that the tenancy would terminate on the original term date. That provision replicated an earlier amendment, introduced by section 23(1) of the Housing and Planning Act 1986, to section 9(1A)(a) of the 1967 Act. However, by section 23(3) of the 1986 Act, the earlier amendment had no application where, as with the respondent’s lease, the section 14 notice to extend the lease was given before 5 March 1986. The respondent contended that the freehold should be valued subject to the actual lease term as extended until 2066. Although the amendments by section 23(1) of the 1986 Act had been repealed by the 2002 Act, section 23(3) continued to apply to the new similar wording, which constituted a re-enactment of the relevant provisions within section 17 of the Interpretation Act 1978.
The matter was referred to the First-tier Tribunal which found in favour of the appellant. The Upper Tribunal allowed the respondent’s appeal, holding that the freehold interest was subject to the extended lease, expiring in 2066: [2015] UKUT 619 (LC); [2015] PLSCS 353. The appellant appealed.
Held: The appeal was dismissed.
In Mosley v Hickman [1986] 1 EGLR 161, the Court of Appeal held that, since the effect of obtaining an extended lease under the 1967 Act was entirely to replace the original lease, in a case where such an extension had been obtained, the only tenancy to which the freehold interest could be assumed to be subject within the meaning of section 9 (IA) had to be the extended lease. In the present case, the Upper Tribunal decided that the effect of section 17(2) of the 1978 Act was that the saving for the Mosley v Hickman class constituted by section 23(3)(c) of the 1986 Act was fully applicable to the determination of the price for enfranchisement to be made after July 2002 under section 9(1AA)(a) of the 1967 Act as amended, so that the class, including the respondent, continued to enjoy a right to enfranchisement at a price determined by reference to the much later determination date of their extended leases.
On its true construction, and in context, the 2002 Act had not taken away from the Mosley v Hickman class of potential buyers of the freehold interest in their houses the price advantage which they had secured by serving a section 14 notice calling for an extended lease before March 1986, when that advantage had previously been expressly preserved for them by the 1986 Act. Rights of that kind would not lightly be taken away by a subsequent Act, even if to do so might not be retroactive legislation in the fullest sense. Quite apart from the implications of section 17(2) of the Interpretation Act, the context of the 2002 Act did not create fertile ground for a conclusion that those rights were taken away, all the more so because section 23(3)(c) of the 1986 Act, which preserved them, had been left on the statute book.
It was clear that the concept of an enactment, as used in section 17, was not limited to whole Acts, parts or even sections of an Act. Any provision, long or short, which achieved a distinct objective might be an enactment. The appellant’s attempt to combine saving provisions with the provisions to which they were an exception or derogation as indivisible enactments was wrong in principle. To do so would deprive section 17(2) of much of its force. It applied to any reference in one enactment to another enactment. A reference by way of saving or exception was squarely within that framework.
Although the Commencement Order which applied the new section 9(1AA) was made pursuant to power conferred on Government in the 2002 Act, and related to transitional provisions and savings, that power was conferred in the most general terms, and did not disclose any intention, one way or the other, whether the rights of the Mosley v Hickman class were to be preserved. Those rights were preserved by the operation of section 17(2) of the Interpretation Act, by making applicable to section 9(1AA) of the 1967 Act, as amended, the unrepealed provisions of section 23(3)(c) of the 1986 Act.
Nicholas Dowding QC and Mark Sefton (instructed by Pemberton Greenish LLP) appeared for the appellant; Philip Rainey (instructed by Forsters LLP) appeared for the respondent.
Eileen O’Grady, barrister
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