Leasehold enfranchisement – Right to lease extension – Respondent landlord opposing grant of new lease on ground of intention to redevelop premises – Proposal to combine appellant’s flat and flat below to create duplex – Section 47(2) of Leasehold Reform, Housing and Urban Development Act 1993 – Meaning of “premises” – Whether apt to describe part of building consisting of two vertically adjacent flats as “premises” – Whether “premises” required to constitute recognisable unit within building – Appeal allowed
The respondent landlord was the freeholder of a property comprising two blocks of flats. The appellant was the tenant of flat 77 in Block B, under a lease the contractual term of which was due to expire in March 2008. In September 2003, he served a notice, under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993, claiming a new extended lease. The respondent served a counternotice admitting the appellant’s right to claim a new lease but stating that it intended to apply to the county court for an order, under section 47 of the 1993 Act, declaring that the right was not exercisable because it intended to redevelop the premises in which the flat was situated.
In the county court, the respondent adduced evidence of a scheme of redevelopment whereby flat 77 would be combined with flat 74, which lay below it, to form a single duplex flat over two floors. Dismissing the respondent’s application, the judge held that the part of the building comprising flats 77 and 74 could not amount to “any premises in which the tenant’s flat is contained” within the meaning of section 47(2)(b). That decision was reversed on an appeal by the respondent. The Court of Appeal accepted the respondent’s contention that “premises” meant the tenant’s flat together with any other part of the building, as defined by the landlord, that was capable of being identified by a continuous line drawn on a three-dimensional plan of the building. It held that the word “premises” in section 47(2)(b) could refer to any part of the building that included the tenant’s flat, even where that part was not a recognisable unit, such as an entire floor.
The appellant appealed. He submitted that the “premises” in question had to be either the entire building or a physical space within it that was objectively recognisable at the time the tenant served notice.
Held: The appeal was allowed.
The scale of redevelopment contemplated by the legislation as defeating the right to a new lease had to involve major works. It would require a large investment in proportion to the value of the premises, not merely the reconstruction of a small part for the purpose of making a profit on that part. It could not have been intended that the landlord should be free to define the “premises” for itself; that would in many cases allow it to defeat the right to a new lease. Furthermore, some objective measure was needed for estimating how likely it was that the landlord would be able to prevent the extension of the lease. Accordingly, “any premises in which the flat is contained” referred to an objectively recognisable physical space, which the landlord, the tenant, a visitor or a prospective purchaser would recognise as “premises”. Much would depend upon the physical facts on the ground in any given case.
Per Lord Hope, Lord Scott and Baroness Hale: On the facts of the instant case, the relevant premises were Block B.
Note: The question of whether flats 77 and 74 could amount to a “substantial part of” the premises for the purposes of section 47(2)(b), assuming those premises to be the entire block of 50 flats, was not conclusively answered, owing to the absence of argument on that issue.
Edward Denehan (instructed by Freeman Box) appeared for the appellant; Derek Wood QC and Emily Windsor (instructed by SJ Berwin LLP) appeared for the respondent.
Sally Dobson, barrister
