Annington Property Limited & Ors, R (on the application of) v Secretary of State for Defence

A public authority may exercise a statutory right to enfranchise where the statutory conditions are met. The constitutional principle governing compulsory purchase does not apply because enfranchisement is a private law right, not a discretionary compulsory acquisition power.

Where a subtenant holds from the Crown, sections 33 of the Leasehold Reform Act 1967 and 88 of the Leasehold Reform, Housing and Urban Development Act 1993 do not require the consent of an intermediate landlord where the statutory conditions for enfranchisement are satisfied.

A company incorporated and controlled by a Minister remains a separate legal entity for these purposes. Under section 56 of the Landlord and Tenant Act 1954, occupation is assessed from the perspective of the actual occupier. The single business tenancy principle prevents both a subtenancy and the superior tenancy covering the same premises.

The claimants owned long leasehold interests in service-family accommodation previously sold and leased back to the Secretary of State for Defence. The Secretary of State transferred the freeholds of eight houses to Defence Infrastructure Holdings Limited, a company under his control, and served notices under section 5 of the Leasehold Reform Act 1967 seeking to enfranchise.

The claimants brought two judicial review claims and related Part 8 proceedings. They argued that their consent was required, that the transfers were ineffective under Gratton-Storey v Lewis, that the underleases were business tenancies, that the notices were motivated by improper purposes, breached legitimate expectations and violated Article 1 of the First Protocol to the ECHR.

The central questions were whether the notices were valid and whether the Secretary of State could lawfully exercise the statutory right to enfranchise in these circumstances.

1. Validity of notices. Each of the eight notices was valid and effective. The Secretary of State was entitled to rely on section 33(1) of the Leasehold Reform Act 1967. Section 88 of the Leasehold Reform, Housing and Urban Development Act 1993 applies where a tenant lacks a statutory right and relies on the Crown’s undertaking. It did not require APL’s consent here.
2. Crown indivisibility and separate corporate personality. Crown indivisibility is a context-dependent public law doctrine. It does not extend, without statutory justification, to a company incorporated under the Companies Act 2006 merely because a Minister controls it. DIHL’s freehold was therefore separate from the Crown. The notice concerning 1 Sycamore Drive was also valid because the Secretary of State held the legal estate as bare trustee for DIHL and did not own the freehold absolutely in the sense relevant to Gratton-Storey v Lewis.
3. Business tenancies. Under section 56(3) of the Landlord and Tenant Act 1954, the relevant question is whether the actual occupier occupied premises for the purposes of a Government department. Service personnel occupied their homes exclusively for residential purposes. Private subtenants occupied sublet units residentially. Void units and garages were unoccupied. The contact houses were occupied by a charitable service fund, not the Secretary of State. None of those uses made the superior underleases business tenancies.
4. DIHL occupied the common parts under its sub-underlease for the purposes of its own business, including the artificial purpose of enabling enfranchisement. Section 56(3) applied, if at all, to DIHL’s sub-underlease and not to the Secretary of State’s superior underlease. The single business tenancy principle prevented both interests from attracting protection under Part II of the 1954 Act.
5. The adjoining land test in section 1AA(3)(b) of the Leasehold Reform Act 1967 was not satisfied. The amenity land immediately adjoining the houses was occupied for residential purposes. More distant woodland was not sufficiently near to be adjoining land. The Cranwell tenancies were therefore not excluded tenancies.
6. The constitutional compulsory-acquisition principle in Prest v Secretary of State for Wales did not apply. The 1967 Act confers a private law right on qualifying tenants and does not require a public-interest authorisation or case-specific merits assessment.
7. The Secretary of State’s purposes, including value for money, improving bargaining leverage and addressing an economically disadvantageous lease-and-sale arrangement, were not improper. The decisions did not breach legitimate expectations or Article 1 of the First Protocol. The judicial review claims were dismissed, and the Secretary of State was entitled to declarations that the notices were valid.

First instance decision. The judgment records related judicial review claims in the Administrative Court and consolidated Part 8 proceedings in the Chancery Division, determined together.