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

Collective enfranchisement – Leasehold Reform, Housing and Urban Development Act 1993 – Application to acquire part of building containing 20 flats – That part divisible into two sets of 10 flats – Whether property a “self-contained part of a building” within section 3 – Whether that term denoting a part incapable of further subdivision into smaller self-contained parts – Appeal dismissedThe respondent was the nominee purchaser for the purposes of an application by 10 tenants to acquire, by collective enfranchisement, the freehold of the property in which their flats were located under the Leasehold Reform, Housing and Urban Development Act 1993. The flats formed part of a five-storey, terraced mansion building in London SW11. The tenants’ initial notice, served on the appellant freeholder under section 13, specified the property to be enfranchised as the part of the building containing flats 41-60. This consisted of a vertically divided section of the building, itself divided into a left-hand and right-hand half, each containing 10 flats, with separate entrances and common parts.The appellant served no counternotice. However, it disputed the right to enfranchise on the ground that the property did not qualify as a “self-contained part of a building” for the purposes of sections 3 and 4 of the Act. It contended that the property comprised two parts, containing flats 41-50 and 51-60 respectively, each of which would itself qualify as a self-contained part. It submitted that the statutory right to collective enfranchisement was exercisable only in respect of a self-contained part of a building that could not be further subdivided into smaller self-contained parts.The respondent brought proceedings in the county court to determine that issue. Ruling in favour of the respondent, the judge granted a declaration that the participating tenants were entitled to enfranchise the entire property specified in the initial notice. He made an order, under section 25(1) of the Act, that, in the absence of any counternotice served by the appellant, the respondent was entitled to acquire the whole of the freehold interest in the property on the terms proposed in the initial notice. The appellant appealed. It relied, inter alia, on decisions under the 1993 Act and the Landlord and Tenant Act 1987 and on ministerial statements, which it claimed were admissible to resolve ambiguity as to the meaning of section 3.Held: The appeal was dismissed.There was no relevant authority determinative of the point in issue. Cases concerning section 3 of the 1993 Act, and the similarly-worded provisions of the Commonhold and Leasehold Reform Act 2002, were decisions of the county court or the Lands Tribunal, and related to different issues; they shed no light on the question in issue: Oakwood Court (Holland Park) Ltd v Daejan Properties Ltd [2007] 1 EGLR 121 and Holding & Management (Solitaire) Ltd v Finland Street RTM Co Ltd [2008] 1 EGLR 107; [2008] 2 EG 152 considered. Likewise, decisions relating to the tenants’ right of first refusal on a sale of the freehold, under Part I of the Landlord and Tenant Act 1987, provided no useful assistance owing to the major differences between those provisions and the scheme of the 1993 Act: Denetower Ltd v Toop [1991] 1 EGLR 84; [1991] 20 EG 194, Green v Twinsectra Ltd (No 1) [1996] 2 EGLR 43; [1996] 38 EG 136 and Long Acre Securities Ltd v Karet [2004] EWHC 442 (Ch); [2004] 2 EGLR 121 distinguished.The language of section 3 was clear. Neither expressly nor by necessary implication did it require that a self-contained part of a building should be indivisible into smaller parts. Where, as in the instant case, a property satisfied the statutory definition of a self-contained part of a building, and none of the exclusions in section 4 applied, that was the end of the matter. It was not appropriate to seek to invent a gap in the legislation where none existed: Howard de Walden Estates Ltd v Aggio [2008] UKHL 44; [2008] 2 EGLR 57; [2008] 34 EG 94 applied. The literal construction of section 3 was not contrary to the statutory purpose and did not produce absurd or anomalous results, so as to require the court to adopt a more purposive construction: Majorstake Ltd v Curtis ]2008] 1 EGLR 44; [2008] 14 EG 102 considered. The literal construction was further supported by sections 4(3A) and 13(8) to (10) of the 1993 Act, since the natural implication of both was that, in the absence of special provision to the contrary, an initial notice could relate to a self-contained part of a building that was capable of further subdivision. Since the legislation was neither ambiguous nor obscure, there was no need or justification to have recourse to Hansard to consider ministerial statements made during debate on the legislation.Kenneth Munro (instructed by Olswang LLP) appeared for the appellant; Philip Rainey (instructed by Butcher Burns LLP) appeared for the respondent.Sally Dobson, barrister