Freehold Properties 250 Ltd v Field & Ors

Under Part I of the Leasehold Reform Act 1967, a tenant qualifies to enfranchise only where the tenant holds substantially the whole of a leasehold house. A lease of merely part of a house, even when accompanied by easements of support and protection, is insufficient. The statutory definition of “house” concerns the building’s physical characteristics and does not enlarge the legal extent of the tenant’s demise. Section 23(1) does not convert a limited demise into a qualifying leasehold interest: it voids provisions within its scope but does not authorise the court to rewrite the lease or insert additional rights.

The respondents were long leaseholders of properties owned by the appellant and sought to acquire the freehold under Part I of the Leasehold Reform Act 1967. The leases excluded structural parts of the buildings, including load-bearing walls, foundations and roofs, while granting related easements.

The County Court held that the properties were houses within section 2 and that the respondents were entitled to enfranchise. It also held, in the alternative, that section 23(1) was not engaged. The appellant appealed the substantive decision. The central issues were whether the respondents were “tenants of a leasehold house” under section 1(1), and whether section 23(1) could overcome the limited demise.

1. Appeal allowed. The respondents had no right to acquire the freehold under section 1 of the Leasehold Reform Act 1967.
2. The phrase “a tenant of a leasehold house” was ambiguous when read in isolation, but its statutory context resolved the ambiguity. Section 2 defined the physical unit capable of enfranchisement as a “house”. It would be anomalous, without clearer language, for an interest in substantially less than that house to qualify.
3. The correct construction was that the tenant must hold substantially the whole of a leasehold house. A lease excluding the roof, foundations and load-bearing walls did not satisfy that requirement. Easements of support and protection could not be combined with the demise to create the necessary leasehold interest.
4. The court considered the consequences of the rival constructions. The respondents’ construction would allow a tenant of part of a house to acquire the freehold of the whole. The appellant’s construction created a risk of avoidance, but that risk did not justify adopting an interpretation inconsistent with the statutory scheme.
5. Section 23(1) did not apply. A limited demise did not purport to exclude or modify an existing right under the Act; it meant that the tenant lacked the qualifying interest. In any event, section 23(1) voided provisions within its scope and did not permit the court to rewrite the lease or insert words expanding the demise.
6. The respondents’ notice failed. The relevant parts of the Recorder’s order were deleted, while the costs order below remained unvaried. The respondents were jointly and severally ordered to pay the appellant’s appeal costs of £14,000.

• County Court at Bristol: Mr Recorder Norman’s order dated 19 July 2019 held that the properties fell within the Leasehold Reform Act 1967 and that the respondents were entitled to acquire the freehold. He held, alternatively, that section 23(1) was not engaged.
• High Court (Chancery Division): The appeal was allowed. The respondents were declared not to be tenants of a leasehold house within section 1(1), and the relevant parts of the County Court order were deleted.