enfranchisement - avoiding costly between mandatory statutory requirements and eligibility criteria

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    - Avoiding Costly Mistakes


    Piers Harrison Tanfield Chambers

    for the Property Litigation Association Annual Conference Keble College, Oxford – Friday, 27 March 2015

    Piers' practice covers all areas of property law. He has a particular interest in leasehold

    enfranchisement. He is the co-author of “Megarry’s Manual of the Law of Real Property”

    (Sweet & Maxwell 9th edition) and “Leasehold Enfranchisement Law and Practice”

    (Wildy’s 1st edition). He sits on the editorial board of Landlord and Tenant Review. He

    recently appeared in Natt v Osman [2014] EWCA Civ 1520 the leading case on the

    validity of notices in this field.

    TANFIELD CHAMBERS 2 - 5 Warwick Court London WC1R 5DJ Tel: 020 7421 5300 Fax: 020 7421 5333 Email: piersharrison@tanfieldchambers.co.uk

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    1. In this seminar we will look at the provisions of the 1993 Act in relation to notices

    and then look at a problem question. Although we will not look at the statutory

    provisions of the 1967 Act I will identify parallels.

    Meeting the Eligibility Criteria

    Collective Enfranchisement

    Qualifying tenant

    2. A qualifying tenant is a Tenant of a flat under a long lease (s.5). For most

    purposes that means a term certain exceeding 21 years (s.7). For collective

    enfranchisement purposes (but not individual lease extension claims) a tenant

    ceases to be a qualifying tenant if he is the tenant of 3 or more flats (s. 5 (5).

    That rule is easily circumvented by use of nominees.

    Qualifying premises

    3. Under section 3(1) three conditions must be satisfied for premises to qualify for

    collective enfranchisement. These are:

    (1) the premises must consist of a self-contained building or part of a


    (2) the premises must contain two or more flats held by qualifying tenants;

    (3) the total number of flats held by such tenants must not be less than

    two-thirds of the total number of flats contained in the premises.

    4. S. 4 provides:

    “(1) This Chapter does not apply to premises falling within section 3(1) if

    (a) any part or parts of the premises is or are neither-

    (i) occupied or intended to be occupied for residential purposes, nor

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    (ii) comprised in any common parts of the premises; and

    (b) the internal floor area of that part or those parts (taken together)

    exceeds 25 per cent of the internal floor area of the premises (taken as a


    Individual lease extension

    Qualifying tenant

    5. A qualifying tenant is a tenant of a flat held on a long lease (s. 39 (3)). But there

    is an additional requirement that he has been a qualifying tenant for two years (s.

    39 (2)). The “three flats rule” (s. 5 (5) does not apply.

    Getting the notice right

    Distinguishing between mandatory statutory requirements and eligibility criteria

    6. In Sinclair Gardens Investments (Kensington) Ltd v Poets Chase Freehold Co.

    Ltd [2007] EWHC 1776 Morgan J drew a distinction between a notice which is

    void for failure to comply with the statutory requirements and a notice which is

    potentially valid, but which will ultimately fail because the eligibility criteria are not


    7. The statutory requirements are set out in s. 13 (3) (for collective

    enfranchisement) and s. 42 (3) (for individual lease extensions). They are very

    similar. S. 13 (3) is set out below.

    “(3) The initial notice must—

    (a) specify and be accompanied by a plan showing—

    (i) the premises of which the freehold is proposed to be acquired by virtue

    of section 1(1),

    (ii) any property of which the freehold is proposed to be acquired by virtue

    of section 1(2)(a), and

    (iii) any property over which it is proposed that rights (specified in the

    notice) should be granted in connection with the acquisition of the freehold

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    of the specified premises or of any such property so far as falling within

    section 1(3)(a);

    (b) contain a statement of the grounds on which it is claimed that the

    specified premises are, on the relevant date, premises to which this

    Chapter applies;

    (c) specify—

    (i) any leasehold interest proposed to be acquired under or by virtue of

    section 2(1)(a) or (b), and

    (ii) any flats or other units contained in the specified premises in relation to

    which it is considered that any of the requirements in Part II of Schedule 9

    to this Act are applicable;

    (d) specify the proposed purchase price for each of the following,


    (i) the freehold interest in the specified premises [, or if the freehold of the

    whole of the specified premises is not owned by the same person, each of

    the freehold interests in those premises ,

    (ii) the freehold interest in any property specified under paragraph (a)(ii),


    (iii) any leasehold interest specified under paragraph (c)(i);

    (e) state the full names of all the qualifying tenants of flats contained in the

    specified premises and the addresses of their flats, and contain in relation

    to each of those tenants, —

    (i) such particulars of his lease as are sufficient to identify it, including the

    date on which the lease was entered into, the term for which it was

    granted and the date of the commencement of the term,

    (f) state the full name or names of the person or persons appointed as the

    nominee purchaser for the purposes of section 15, and an address in

    England and Wales at which notices may be given to that person or those

    persons under this Chapter; and

    (g) specify the date by which the reversioner must respond to the notice

    by giving a counter-notice under section 21.”

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    Void or simply invalid?

    8. A notice which fails to meet the mandatory statutory requirements will be void ab

    initio i.e. it will be of no effect and the position is as if no notice has been served.

    This tends to favour the person who served it, as it means that the tenant can

    immediately serve a fresh notice which does comply.

    9. In contrast where a notice which meets the mandatory statutory requirements

    has been served, but the tenant or tenants do not meet the eligibility criteria that

    no notice will need to be withdrawn and that withdrawal will trigger the statutory

    “cooling off” period whereby a new notice cannot be served for 12 months (s. 13

    (9) and s. 42 (7)). Take for example a case where a tenant claims a lease

    extension but he has not owned the property for two years. Such a notice will

    need to be withdrawn and the tenant will have to wait a year before serving


    What mistakes will lead to invalidity?

    10. In the past we would have talked about which provisions are mandatory and

    which directory but those labels are now frowned upon:

    “24 Where a statute lays down a process or procedure for the exercise or

    acquisition by a person or body of some right conferred by the statute,

    and the statute does not expressly state what is the consequence of the

    failure to comply with that process or procedure, the consequence used to

    be said to depend on whether the requirement was mandatory or

    directory. If, on the proper interpretation of the statute, it was held to be

    mandatory, the failure to comply was said to invalidate everything which

    followed. If it was held, on the proper interpretation of the statute, to be

    directory, the failure to comply would not necessarily have invalidated

    what followed.

    25 That approach is now regarded as unsatisfactory since the

    characterisation of the statutory provisions as either mandatory or

    directory really does no more than state a conclusion as to the

    consequence of non-compliance rather than assist in determining what

    consequence the legislature intended. The modern approach is to

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    determine the consequence of non-compliance as an ordinary issue of

    statutory interpretation, applying all the usual principles of statutory

    interpretation. It invariably involves, therefore, among other things

    according to the context, an assessment of the purpose and importance of

    the requirement in the context of the statutory scheme as a whole.”

    Natt v Osman [2014] EWCA Civ 1520

    Saving notices

    11. There is a statutory saving clause which covers “any inaccuracy in the

    particulars” or “any misdescription of the property” (Sched. 3 para. 15 (collective

    claims) and Sched. 12 para. 9 (individual claims)). Ironically the existence of the

    saving clause is a factor which makes the court lean towards a tougher approach

    in applying the test in Natt. “Inaccuracy in the particulars” has been construed

    narrowly (Cadogan v Morris (1999) 31 HLR 732). Where the notice omits to

    include property or includes the wrong property it is probably not a case of

    misdescription and the notice will need to be amended (Malekshad v H


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