Majorstake Ltd v Curtis

JurisdictionUK Non-devolved
JudgeLORD HOPE OF CRAIGHEAD,LORD SCOTT OF FOSCOTE,LORD WALKER OF GESTINGTHORPE,BARONESS HALE OF RICHMOND,LORD CARSWELL
Judgment Date06 February 2008
Neutral Citation[2008] UKHL 10
Date06 February 2008
CourtHouse of Lords
Majorstake Limited
(Respondents)
and
Curtis
(Appellant)

[2008] UKHL 10

Appellate Committee

Lord Hope of Craighead

Lord Scott of Foscote

Lord Walker of Gestingthorpe

Baroness Hale of Richmond

Lord Carswell

HOUSE OF LORDS

Appellants:

Edward Denehan

(Instructed by Freeman Box)

Respondents:

Derek Wood QC

Emily Windsor

(Instructed by S J Berwin LLP)

LORD HOPE OF CRAIGHEAD

My Lords,

1

I have had the advantage of reading in draft the speeches of my noble and learned friends, Lord Scott of Foscote and Baroness Hale of Richmond. I am grateful to Lord Scott for setting out the facts and the procedural history and to Baroness Hale for her explanation of the wider context in which the legislation that we are concerned with needs to be viewed. For the reasons Baroness Hale gives I would allow the appeal and make the order that she proposes.

2

The question is whether the phrase "the whole or a substantial part of any premises in which the flat is contained" in section 47(2)(b)(ii) of the Leasehold Reform, Housing and Urban Development Act 1993 enables the landlord, unconstrained by their existing state, to identify the premises by drawing his own line around the tenant's flat in support of his counter-notice or whether it refers to the existing and objectively recognisable state of the premises. No direct assistance can be gained from the provisions in Chapter I of Part I of the Act, and the interpretation provisions in section 62 at the end of Chapter II, of which section 47 forms part, do not help either. The answer to the question must be found in the words used in section 47, read in the context in which they appear.

3

I think that the use of the present tense, indicated by the word "is", provides the best guide to what the phrase means. It directs attention to what can be seen on the ground at the time when the tenant serves his notice. What can be seen on the ground is not what is to be found only in the mind of the landlord. Of course, it is for the landlord to decide the extent of the development which he wishes to carry out. As the statute recognises, it is his intention with regard to this part of the statutory test that needs to be demonstrated. So long as the intended development extends to the whole or a substantial part of the premises in which the flat is contained, this requirement for the making of an order under section 47(1) of the Act will be satisfied. But the extent of the intended development is not determinative of the extent of "any premises in which the flat is contained". The context indicates that the extent of those premises does not depend on the intention of the landlord. On the contrary, it is something to be determined objectively by examining the existing state of the building within which the tenant's flat is situated.

4

This interpretation has the merit of preserving an appropriate balance between the tenant's interests as against those of the landlord. It gives due weight to the requirement that the redevelopment which the landlord wishes to carry out must extend, if not to the whole, at least to a substantial part of the premises. The right to acquire a new lease of a flat is given to the tenant by section 39 of the Act on payment of a premium. This right would be seriously undermined if all that the landlord needed to do to defeat the tenant's right was to declare his intention to redevelop the flat. That is why an intention to redevelop something more than the flat itself is required. Section 62(3) also makes it clear that it will not be enough for the landlord to declare an intention to redevelop a garage or outhouse let with the flat. The argument that it is open to the landlord to determine the extent of the premises in which the tenant's flat is contained by drawing an imaginary line around it of his own choosing and which suits his own interests is objectionable for an analogous reason. As May LJ said in the Court of Appeal, units of that kind would be artificial: [2006] EWCA Civ 1171, [2007] Ch 300, para 65. They would have been put together simply to achieve the statutory requirement. They could not, in the proper sense of the phrase, be said to be premises in which the flat is contained.

5

The tenant's concession that one floor in a block of flats, and even adjoining flats on the same floor, could be regarded as premises within which his flat was contained seems to me to be open to question. But it does not help the landlord, as his intention to redevelop does not extend in that direction. His case is that the premises extend to the flat immediately below and contiguous to the flat which the tenant occupies. In agreement with May LJ, I would hold that it overstrains the statutory language to say that two flats on different floors, and those two flats only, are premises in which the tenant's flat is situated. Unless there is some other obvious subdivision within Boydell Court, the premises in which the flat is situated would seem to me to mean the entire structure of Block B. But each case must, inevitably, depend on its own facts.

LORD SCOTT OF FOSCOTE

My Lords,

6

This appeal raises a short issue of construction of section 47(2)(b) of the Leasehold Reform, Housing and Urban Development Act 1993 ("the 1993 Act"). On this issue turns the question of whether the appellant, Monty Curtis, is entitled to acquire a new lease of his flat, Flat 77, on the seventh floor of Block B, Boydell Court, St John's Wood Park, London NW8.

7

Boydell Court consists, for relevant purposes, of two blocks of flats, Block A and Block B. Block A contains sixty flats on eleven floors; Block B contains fifty flats on nine floors. The ground floor of Block B includes a caretaker's flat and storage and other communal facilities. Lifts and a stairway run from the ground floor to the upper floors. The eight upper floors contain six flats each and common parts such as corridors. Flat 77 contains two bedrooms, one reception room, a kitchen, bathroom and a second toilet. The demise includes one-half in depth of the joists between the floor of Flat 77 and the ceiling of the flat beneath and one-half in depth of the joists between the ceiling of Flat 77 and the floor of the flat above. Mention needs to be made not only of Flat 77 but also of two other flats in Block B. Flat 79 is a flat on the seventh floor adjoining Flat 77. Flat 74 is the flat on the sixth floor immediately below Flat 77.

8

Mr Curtis holds Flat 77 under an Underlease dated 22 July 1957 which demised the flat for a term of 51 years from 25 March 1957 reserving a ground rent of £440 per annum.

9

Chapter II of the 1993 Act gives a tenant of a flat who holds a lease granted for a term of more than 21 years the right to claim from the landlord a new lease of the flat for a term expiring 90 years after the expiry date of the current lease. The right is exercised by the service of a notice of claim under section 42 of the Act. The landlord must respond to the tenant's notice by serving a counter-notice stating whether or not the tenant's entitlement to a new lease is accepted (section 45). But, if the lease has less than five years to run when the tenant's claim is made, the landlord may state in his counter-notice that he intends to apply to the court for an order under section 47(1) of the Act "on the grounds that he intends to redevelop any premises in which the flat is contained" (section 45(2)(c)). Where such a counter-notice has been served

"…the court may…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…" (section 47(1)).

However, section 47(2) of the Act provides as follows:

"(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 [date on which the section 42 notice of claim was given to the landlord]; 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 the premises in which the flat is contained; and

(c) that he could not reasonably do so without obtaining possession of the flat."

10

On 16 September 2003 Mr Curtis gave notice to the respondent, Majorstake Ltd, claiming to exercise his right to acquire a new lease of Flat 77. It is accepted that the notice was a valid one. Majorstake responded by serving on 21 November 2003 a section 45 counter-notice stating its intention to apply to the court for an order under section 47(1) that Mr Curtis' right to acquire a new lease should not be exercisable on the ground that it, Majorstake, intended to redevelop premises in which Flat 77 was contained. It is accepted that the section 45 counter-notice was a valid one. Majorstake then duly commenced proceedings in the Central London County Court for a declaration that Mr Curtis' right to a new lease was not exercisable. Attention must now shift to section 47(2) of the Act.

11

Majorstake's original redevelopment intention had been to combine Flat 77 and Flat 79 so as to create a single larger flat on the seventh floor. But by the time the case came to be heard in the Central London County Court the intention had changed to an intention to combine Flat 77 with Flat 74, the flat beneath Flat 77, so as to form a larger flat of the sort apparently known in the jargon of the trade as a "duplex" apartment. The intention was that the former Flat 74 would contain four bedrooms and three bathrooms and be connected by a stairway to the former Flat 77 which would contain a reception room, a kitchen and dining area, a...

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