Craftrule Ltd v 41-60 Albert Place Mansions (Freehold) Ltd

A self-contained part of a building for collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993 need not be the smallest such part. A claim may cover a larger self-contained part which contains smaller self-contained parts, provided the statutory conditions and participation threshold are met. Sections 13(8)–(10) and section 4(3A) support that construction. Parliamentary material is unavailable as an aid to construction where the statutory language is clear, neither obscure nor productive of absurdity.

The freeholder challenged a collective-enfranchisement notice served by qualifying tenants of 20 flats. The premises comprised two adjoining halves, each of which was itself capable of satisfying the statutory test for a self-contained part of a building.

HH Judge Madge in the Central London County Court held the notice valid. Henderson J dismissed the freeholder’s first appeal on 27 May 2010. The freeholder brought a second appeal, contending that the tenants could claim only the smallest possible self-contained unit and that the notice should therefore have covered each half separately.

Decision

Appeal dismissed unanimously. Lady Justice Smith gave the judgment, with which Lady Justice Black and the Chancellor agreed. The declaration made by HH Judge Madge was upheld.

1. The phrase “a self-contained part of a building” in section 3 does not contain an unstated requirement that the premises be the smallest possible self-contained part. The relevant premises may be a larger self-contained part which is capable of division into smaller self-contained parts.

2. Sections 13(8), (9) and (10) of the Leasehold Reform, Housing and Urban Development Act 1993 contemplate that a notice for self-contained premises X may be replaced, in the circumstances specified, by a notice for smaller premises Y within X. Both X and Y must therefore be capable of being valid relevant premises. Section 1(5) also permits tenants to choose the extent of the premises in which they exercise the right, provided they are entitled to do so.

3. Section 4(3A), introduced when the single-freeholder requirement was removed, supported the same conclusion. It would have been unnecessary if a valid claim could concern only an indivisible self-contained part. It was permissible to consider that amendment when construing the resulting statutory scheme.

4. The authorities concerning shared services, a non-vertical boundary, and rights of first refusal under different legislation did not address the divisibility issue and gave no assistance. The suggested practical consequences did not justify adding a restriction which Parliament had not enacted. Parliament had accepted that a qualifying majority might enfranchise despite opposition from other tenants within the relevant premises.

5. Under Pepper v Hart [1993] AC 593, Hansard could be considered only if the legislation were ambiguous, obscure, or productive of absurdity. The statutory language had its ordinary and clear meaning. The court was therefore not entitled to rely on Lord Strathclyde’s speech; in any event, it would not have resolved the alleged ambiguity.

• Court of Appeal (Civil Division). By [2011] EWCA Civ 185 , dismissed the freeholder’s second appeal and upheld the declaration that the collective-enfranchisement notice was valid.
• High Court, Chancery Division. Henderson J dismissed the freeholder’s first appeal on 27 May 2010.
• Central London County Court. HH Judge Madge held that the tenants’ notice seeking acquisition of the freehold of flats 41–60 was valid.