The last two months have seen two key appeals in which the court was required to decide whether the tenant of a particular type of building should enjoy the statutory right to acquire the freehold of a house. This right is enshrined in the Leasehold Reform Act 1967.
The properties, and the questions for the court in each case, were quite different. What the judgments had in common was a purposive approach to interpretation of the Act.
In Jewelcraft, the court was required to revisit the question of whether a property was a “house” within the meaning of the Act. Though the same question had come before the Supreme Court quite recently – in Hosebay and Lexgorge – the property here (a shop with accommodation above, in a purpose-built terrace) was quite different.
The need to derive from the Act a rule which captures houses of all descriptions is clear. This is why the courts have promoted a purposive interpretation, especially since the case of Tandon, 9 years ago. It also explains how the court was able to conclude that the property in Jewelcraft was a “house” for the purpose of the Act, when the contrary decision had been reached for a similar property in last year’s case of Henley v Cohen.
Birchlea’s end of terrace house was a “house” within the meaning of the Act, but the landlord argued that it should be excluded on the basis that its flank wall rose higher than its two storeys, to form the flank wall of a taller building next door. That meant, they said, that it fell under an exclusion in the Act where a “material part” lay below another building. Again, this has already been the subject of judicial scrutiny at the highest level (in the House of Lords case of Malekshad) but, again, the facts were different in the Birchlea case, so no direct comparison could be drawn.
Taking the purposive approach, the judge in Birchlea decided that questions of materiality should be read in light of Parliament’s original intention: to empower tenants of houses to acquire their freeholds, and only exclude properties for which the right was plainly not intended. As Lord Nicholls said in Malekshad, the purpose of the exclusion is simply to avoid certain absurdities. The caveats and conditions in the Act are not meant to cause the right to be lost entirely by reason of a triviality.
The drive towards a purposive construction of enfranchisement legislation is both fair and sensible. Some landlords have caused mischief by challenging their tenants’ right to enfranchise, using a literal interpretation of the Act and knowing that the facts of their case will never match precisely those that have already come before the courts. The message is clear: the policy of the statutes should be carried into effect, without enfranchisement being thwarted by an unimportant feature or statutory technicality.
Hogan Lovells acted for Birchlea Limited in its successful first instance and appeal cases.