Majorstake Ltd v Curtis [2008] UKHL 10, [2008] All ER (D) 70 (Feb)
House of Lords
Lord Hope, Lord Scott, Lord Walker, Baroness Hale and Lord Carswell
6 February 2008
The phrase “any premises in which the flat is contained” in s 47 of the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993) has to be an objectively recognisable physical space, something which the landlord, the tenant, a visitor or the prospective purchaser would recognise as “premises”.
Edward Denehan (instructed by Freeman Box) for the tenant. Derek Wood QC and Emily Windsor (instructed by SJ Berwin LLP) for the landlord.
The tenant held a lease of 51 years from March 1957 in respect of one flat in the B block of a block of flats. The landlord was the freehold owner of the entire block. The tenant gave notice to the landlord under LRHUDA 1993, s 42 claiming to exercise his right to acquire a new lease in September 2003.
The landlord served a counter-notice under s 45 in which it admitted the tenant’s right to claim a new lease, but stated that it intended to apply for an order under s 47(1) that that right should not be exercisable, on the basis that it intended to redevelop the premises. It was the landlord’s intention to create a single maisonette out of the tenant’s flat and the flat immediately below. Section 47(1) provided that the court might “by order declare that the right to acquire a new lease shall not be exercisable by the tenant by reason of the landlord’s intention to redevelop any premises in which the flat is contained”.
Section 47(2)(b)(ii) provided that the court would not make an order under s 47(1) unless satisfied that the landlord intended upon the expiration of the lease “to carry out substantial works of construction on, the whole or a substantial part of any premises in which the flat is contained”.
The dispute concerned the definition of “any premises”. The tenant argued that it meant a single recognisable unit of space containing the tenant’s flat within the building or the whole building. The judge accepted that submission. The Court of Appeal allowed the landlord’s appeal, holding that any part of the block which comprised contiguous flats could constitute premises in which, for s 47 purposes, each of the flats was contained. The tenant appealed to the House of Lords.
BARONESS HALE:
It was common ground that the phrase “any premises in which the flat is contained” in s 47(2)(b) could not simply mean the flat itself. But the landlord argued that it meant the tenant’s flat together with any other part of the building which was capable of being identified by a continuous line drawn on a three-dimensional plan of the building; that is, it was a space which was defined by the landlord when making its plans to develop within the building.
In this case, the landlord wished to convert the tenant’s flat and the one immediately below it into a single duplex flat or maisonette over the two floors. There could be no doubt about what LRHUDA 1993 was designed to achieve. It was designed to give long-leaseholders of flats rights as close as possible to those of freeholders, at a price approximating to the market price, though subject to some statutory assumptions. That purpose would be frustrated if the landlord could defeat either of those rights by proposing to do comparatively minor works to the building involved.
Her ladyship accepted that the definition of premises in Ch I of LRHUDA 1993 was not applied in Ch II, but it was legitimate to look at the scale of redevelopment which would defeat the right of collective enfranchisement in Ch I in order to consider what scale of redevelopment would defeat the right to a new lease in Ch II. Section 23(2) was in almost identical terms to s 47(2).
It contemplated demolition or reconstruction of or substantial works of construction to a whole or a substantial part of a whole building or self-contained part of a building. Those were major works, requiring a large investment in proportion to the value of the premises, not simply the reconstruction of a small part for the purpose of making a profit on that part.
A new lease
Nor could it have been Parliament’s intention to allow the landlord to define the “premises” for itself. That would in many cases allow it to defeat the right to a new lease. The purpose of granting the right to buy a new lease was to support the value of the old.
The final years of long leases could now be bought and sold with a reasonable expectation that they could be extended when they came to an end. There had to be some objective way of estimating how likely it was that the landlord would be able to prevent that.
Hence it was clear that “any premises in which the flat is contained” had to be an objectively recognisable physical space, something which the landlord, the tenant, the visitor, or the prospective purchaser would recognise as “premises”. Her ladyship had little doubt that, if one asked a visitor, “in which premises [is the flat] contained?”, the visitor would say block B.
The visitor would not further sub-divide the space. In a row of terraced houses, or in a pair of semi-detached houses, the visitor would regard each house as the “premises”. In a single block of flats with several entrances leading to separate staircases, the visitor might also say block B rather than the whole building. Much would depend upon the physical facts on the ground. That was a much more objective test than that proposed by the landlord and in most cases would lead to very similar results to those in collective enfranchisement cases in Ch I.
The appeal would therefore be allowed. Lord Hope, Lord Scott, Lord Walker and Lord Carswell delivered concurring opinions.
