Summary

There had to be continuity on the part of the freeholder or, if the freehold was held on trust, on the part of the person having an interest under the trust, in order to satisfy the test of continuity of ownership in the Leasehold Reform, Housing and Urban Development Act 1993 s.10 for the purpose of establishing the resident landlord exception to collective enfranchisement.

Facts

The appellant leaseholders (S) appealed against a decision that the premises of the respondent landlord (P) fell within the resident landlord exception in the Leasehold Reform, Housing and Urban Development Act 1993 as amended by the Commonhold and Leasehold Reform Act 2002 . S were the long leaseholders of two flats in a house and sought to acquire the freehold of the house, which was owned by P. The house had been in P's family since 1980 and from at least December 1980 P had held a one-third beneficial interest in the house under a trust. The conversion of the house into flats had been completed at some time between 1987 and 1991. At the date of S's notice under the 1993 Act, P was sole legal and beneficial owner of the house. However, in the middle of the period from before the conversion to the date of S's notice, P had had at most only a beneficial interest on trust. P sought to resist collective enfranchisement of the house by relying on the occupation of a third flat by her mother over the year prior to S's notice, together with her own interest in the freehold of the house over the period back to before the conversion. The issue was whether P had continuity of interest either under s.10(1) as freeholder or under s.10(4) as a person with an interest under a trust. The judge decided that as the 1993 Act took property away from an owner it should be read in a way that favoured the landlord, that s.10(1) and (4) should be read together and accordingly the words "where the freehold is held on trust" in s.10(4) meant "was at any time held on trust". S submitted that, contrary to the judge's interpretation, s.10(4) applied if the freehold was held on trust at the date of the notice and P had to show that she had held an interest under that trust since before conversion and if not held on trust P had to show under s.10(1) that she had owned the freehold since before conversion. S contended that whether s.10(4) or s.10(1)(b) applied, P could not bring herself within the resident landlord exception as her interest in the house from the date of the notice to the date of conversion lacked continuity. P contended that S's proposed approach to the statutory test of continuity of ownership was contrary to the purpose of the continuity requirement.

Held

The judge's approach did not reflect what the statute said or could fairly be made to say. Parliament's intention was liable to be flouted if the legislation was to be construed favourably to the landlord save in a case of genuine ambiguity. It was from the time of the notice, backwards to a time before the conversion, that the same person had to own the freehold. The trust test supplanted, rather than supplemented the test under s.10(1). Whatever interest was relied on had to be continuous, there was no indication that the interests could be mixed with each other to result in continuous whole. There had to be continuity on the part of the freeholder or, if the freehold was held on trust, on the part of the person having an interest under the trust. In the present case there was continuity of neither kind.

Appeal allowed.