Majorstake Ltd v Curtis

The House of Lords held that the phrase "the whole or a substantial part of any premises in which the flat is contained" in section 47(2)(b) of the Leasehold Reform, Housing and Urban Development Act 1993 must be read objectively with reference to the existing, recognisable state of the building at the time the tenant serves his notice. The present tense of the word "is" directs attention to what can be seen on the ground rather than to an imagined unit defined by the landlord's redevelopment plans. Accordingly a landlord cannot defeat a tenant's right to a new lease simply by defining an artificial unit (for example by drawing an imaginary line around contiguous flats) which suits his proposed development. The court emphasised the statutory balance between landlord and tenant and treated the question whether proposed works affect a "substantial part" as one of fact and degree.

The appellant tenant served a notice under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 claiming a new lease. The respondent landlord served a counter-notice under section 45 asserting an intention to apply under section 47(1) to prevent the grant of a new lease on grounds of redevelopment. The landlord intended to combine the appellant's flat (Flat 77) with the flat below (Flat 74) to create a duplex apartment, involving substantial construction works which could not be carried out without possession.

The central issue before the court was the construction of the phrase "any premises in which the flat is contained" in section 47(2)(b) and whether Flats 74 and 77 together could be treated as "the premises" such that the proposed works would be to "the whole or a substantial part" of them.

The House of Lords considered the procedural history: the respondent's application was heard in the Central London County Court (where the judge rejected the landlord's case that the premises could be less than the whole block) and then in the Court of Appeal where a majority accepted that the landlord could treat contiguous flats as constituting the premises for section 47 purposes. The tenant appealed to the House of Lords.

The House of Lords analysed the words of section 47(2)(b) in context. It concluded that "premises" denotes an objectively recognisable physical unit as it exists at the time the tenant serves notice (for example the block or a self-contained part of it) and does not permit the landlord to define an ad hoc unit for redevelopment purposes. The court relied on: (i) the use of the present tense directing attention to the existing state of the premises; (ii) the statutory purpose of the 1993 Act to protect long leaseholders' rights; and (iii) the need to preserve a reasonable balance between landlord and tenant. The court further held that whether proposed works are to a "substantial part" is a question of fact and degree, with both qualitative and quantitative elements.

As a result the House of Lords allowed the tenant's appeal, dismissed the landlord's claim under section 47(1) and declared the counter-notice ineffective so that the statutory process for granting the new lease could proceed.

Appeal allowed. The House of Lords held that "any premises in which the flat is contained" must be identified by reference to the existing, objectively recognisable state of the building at the date the tenant serves his notice; the landlord may not define an artificial unit (by drawing his own lines around a flat and adjoining parts) to satisfy section 47(2)(b). The question whether works affect "a substantial part" is one of fact and degree. Applying these principles the landlord's section 47(1) application failed and the counter-notice was of no effect.

Appeal from the Court of Appeal, Civil Division ([2006] EWCA Civ 1171; [2007] Ch 300). The respondent's section 47 application was first heard in the Central London County Court where the judge dismissed the landlord's application.