Landlord and tenant: Leasehold Reform Act

Leasehold Reform Act 1967 - lessee of house serving notice to enfranchise - lessee purporting to assign benefit of notice to intended buyer of house - lessor claiming benefit of notice extinguished - lessee claiming earlier assignment a nullity - lessee's claim upheldSouth v Chamberlayne: Chancery Division: Mr Justice Lightman: 7 September 2001At all material times the claimant occupied a house under a 75-year lease that expired on 25 March 1997.

On 11 March 1997, the claimant served a notice upon the defendant freeholders seeking to acquire the freehold under the Leasehold Reform Act 1967.In consequence of that notice and of a later adjudication by the Leasehold Valuation Tribunal (affirmed by the Lands Tribunal upon appeal) the freeholders became statutorily obliged to convey their interest to the claimant for the price of 2.395 million.

In July 2001 the claimant contracted to sell her interest in the property (including her statutory rights) to E for 4.5 million.

Later that month the claimant purported to assign to E her rights under the notice.The freeholders refused to convey, relying upon section 5(2) of the Act, which states that the notice shall cease to have effect if the lease is assigned without the benefit of the notice.

It was argued that that provision applied because the July assignment had operated to sever the claimant's statutory rights from the lease.

The claimant brought summary proceedings for specific performance, contending that the July assignment was a nullity.Held: The claimant's action succeeded.It was clear elsewhere in section 5(2) that the statutory rights could not subsist as separate to the lease, and it followed that they could not legally be assigned apart from the lease.The July assignment was of no legal effect.

Moreover, a contrary conclusion would be inconsistent with the decision of the House of Lords in Linden Garden Trust v Lenesta Sludge Disposals [1994] 1 AC 85, to the effect that an assignment executed in breach of a prohibition (in that case contractual) against such an assignment was ineffective in vesting the right in the purported assignee.Anthony Radevsky (instructed by Piper Smith & Basham) for the claimant; Judith Jackson QC (instructed by Forsters) for the defendants.