Majorstake Ltd v Curtis
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice May,Lord Justice Neuberger |
| Judgment Date | 08 August 2006 |
| Neutral Citation | [2006] EWCA Civ 1171 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: C1/2005/2758 |
| Date | 08 August 2006 |
[2006] EWCA Civ 1171
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
(HIS HONOUR JUDGE COWELL)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice May
Lord Justice Neubergerand
Lord Justice Moore-Bick
Case No: C1/2005/2758
4CL50276
Mr. Jonathan Brock Q.C. and Miss Emily Windsor (instructed by SJ Berwin LLP ) for the appellant
Mr. Edward Denehan (instructed by Freeman Box) for the respondent
This appeal raises a short point of statutory construction of some importance to landlords and tenants of residential flats. As with many issues of this kind, the question is easier to pose than to resolve.
The appellant, Majorstake Ltd ("the landlord"), is the freehold owner of Boydell Court, St John's Wood Park which comprises two blocks of flats known as Block A and Block B. The respondent, Mr. Curtis ("the tenant"), is the lessee of Flat 77 on the 7 th floor of Block B under an underlease dated 22 nd July 1957 for a term of 51 years from 25 th March 1957. The contractual term of the lease expires on 25 th March 2008.
One of the many purposes of the Leasehold Reform, Housing and Urban Development Act 1993 ("the Act") was to confer on tenants of flats held under long leases the right to obtain a new lease on payment of a premium determined in accordance with the terms of the Act, subject to certain provisions to safeguard the interests of landlords in redeveloping their property. The right to obtain a new lease is exercised by the service on the landlord of a notice under section 42 of the Act. On receipt of such a notice the landlord is required to give a counter-notice under section 45 stating that he admits (or does not admit, as the case may be) that the tenant has a right to acquire a new lease but (if it be the case) that he intends to make an application to the court for an order under section 47 declaring that the right to acquire a new lease shall not be exercisable by the tenant by reason of his intention to redevelop any premises in which the flat is contained.
On 16 th September 2003 the tenant gave notice to the landlord under section 42 that he claimed the right under the Act to acquire a new lease. It is not disputed that he was a qualifying tenant within the meaning of the Act and was therefore entitled to do so. On 21 st November 2003 the landlord served a notice under section 45 admitting the tenant's right to claim a new lease but stating that it intended to apply for an order under section 47 that that right should not be exercisable on the grounds that it intended to redevelop premises in which the flat was contained. It is accepted that the notice complied with the requirements of section 45(2)(c).
On 20 th January 2004 the landlord issued proceedings in the Central London County Court seeking a declaration that the tenant's right to acquire a new lease of Flat 77 Boydell Court was not exercisable by reason of the landlord's intention to redevelop premises in which the flat was contained. In his witness statement filed in support of the application one of the landlord's directors, Mr. Elan Sasha, explained that it was the landlord's intention to redevelop Flat 77 by combining it with the next door flat, Flat 79, to create a single large apartment containing four reception rooms, four bedrooms, kitchen and three bathrooms. The plan was to reduce each flat back to a shell by removing all internal walls and then to fit new windows, erect new internal partition walls, rewire, replumb, fit new bathrooms, lay new floors and redecorate. By the time the application came to be heard, however, the landlord's plans had changed. In a witness statement dated 1 st December 2004 another director, Mr. Sony Douer, explained that it was now the intention to combine Flat 77 with Flat 74, which is situated immediately below it and is owned by a subsidiary of the landlord, to form a single duplex apartment. That also involved reducing each flat back to a shell, installing a staircase between the two levels, renewing the windows, reordering the interior on both levels and replacing the services. It was accepted before the judge that the landlord had established its intention to redevelop Flat 77 as part of the plan described by Mr. Douer, that it involved substantial works of construction in both flats and that it was necessary for the landlord to obtain possession of both flats to enable it to carry out the proposed works. The main issue between the parties, and the only issue that arises on this appeal, is whether that part of Block B which comprises Flats 77 and 74 constitutes "any premises in which [Flat 77] is contained" within the meaning of section 47(2)(b).
Section 47 therefore lies at the heart of this appeal. It forms part of Chapter II of the Act which comprises those sections dealing with the right of certain tenants holding under long leases as defined by the Act to acquire new leases of their flats giving them an additional term of 90 years. Chapter I, to which it will be necessary to refer in a moment, is concerned with the right of collective enfranchisement by which, subject to certain conditions, tenants may obtain the transfer of the freehold of the building containing their flats to a nominated third party to be held on their behalf.
Section 47 itself provides as follows:
" 47.— Application to defeat tenant's claim where landlord intends to redevelop.
(1) Where the landlord has given the tenant a counter-notice under section 45 which complies with the requirement set out in subsection (2)(c) of that section, the court may, on the application of the landlord, 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 tenant's flat is contained; and on such an order becoming final the tenant's notice shall cease to have effect.
(2) The court shall not make an order under subsection (1) unless it is satisfied—
(a) that the tenant's lease of his flat is due to terminate within the period of five years beginning with the relevant date; and
(b) that for the purposes of redevelopment the landlord intends, once the lease has so terminated—
(i) to demolish or reconstruct, or
(ii) to carry out substantial works of construction on, the whole or a substantial part of any premises in which the flat is contained; and
(c) that he could not reasonably do so without obtaining possession of the flat."
The critical expression in each case is "any premises in which the [tenant's] flat is contained".
The landlord's case before the judge, as before this court, was that the expression "any premises" is perfectly general and is therefore apt to refer to the whole or any part of a building. (Indeed, before us Mr. Brock Q.C. initially submitted that it was apt to refer to two or more flats in widely separated parts of a building, but in the context of the expression as a whole which carries with it the idea of containment, I do not think that they can extend quite as far as that.) The tenant's case was that, having regard to the context in which it is found, the expression taken as a whole was intended to refer to the building as a whole or a self-contained part of it.
The judge preferred the tenant's construction for three reasons. His first and main reason was that he believed it to be consistent with the use of the same expression elsewhere in the Act. He noted that under section 41(4) the tenant is entitled to obtain from persons with a superior interest in his flat information about a number of matters likely to affect his claim, including the service of a claim under section 13 to purchase the freehold of the building containing his flat pursuant to the collective enfranchisement provisions of Chapter I. Section 41(4) provides as follows:
"(4) Any notice given by a qualifying tenant under this section shall, in addition to any other requirement imposed in accordance with subsections (1) to (3), require the recipient to state—
(a) whether he has received in respect of any premises containing the tenant's flat—
(i) a notice under section 13 in the case of which the relevant claim under Chapter I is still current, or
(ii) a copy of such a notice; and
(b) if so, the date on which the notice under section 13 was given and the name and address of the nominee purchaser for the time being appointed for the purposes of section 15 in relation to that claim."
The judge noted that subsection (4)(a) also contains the expression "any premises containing the tenant's flat" and refers back to section 13. That led him back into Chapter I and to section 3(1)(a) which provides that the provisions of that chapter apply to premises which consist of a self-contained building or part of a building. In the light of that he concluded that the expression "any premises in which the [tenant's] flat is contained" in section 47 was to be construed in the same way and thus meant the building as a whole or any self-contained part of it, in this case Block B.
The judge's second reason for preferring the tenant's case was his instinctive feeling that the landlord's proposals were simply a device to frustrate the tenant's lawful expectation. He pointed out that the landlord did not need possession of Flat 77 to carry out work to Flat 74 as such (although it could not, of course, carry out the particular work it had in mind without obtaining possession of Flat 77) and it appears that he thought that the landlord was taking advantage of the fact that it...
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