Long Acre Securities Ltd v Karet

Claimant holding underlease of estate comprised of four blocks of flats and shared areas — Claimant notifying tenants of proposed disposal of estate — Whether estate constituting “building” for purposes of section 5(3) of Landlord and Tenant Act 1987 — Validity of notice — Claim allowed The claimant held an underlease of a predominantly residential estate, consisting of 55 residential flats within four apartment blocks, together with various commercial shop premises. A single access way, car-parking areas, a central forecourt, paths, roadways and an amenity space were also managed as part of the estate, and were used in common by the residents of the flats. The claimant planned to dispose of its leasehold interest in the underlease by granting a sub-underlease at public auction. It accordingly served a notice on the residential tenants, as required by sections 5 and 5B of the Landlord and Tenant Act 1987, informing them of its intentions and offering to sell instead to a requisite majority of the qualifying tenants. The defendant tenant objected to the notice, maintaining that it was invalid because each individual structure within the estate had not been the subject of a separate notice. She relied upon section 5(3) of the 1987 Act, which provided that a landlord that was proposing a transaction involving the disposal of an estate or interest in more than one building was required to sever the transaction so as to deal with each building separately. The claimant brought Part 8 proceedings in which it sought the guidance of the court as to the validity of the notice. It contended that the term “building” in the 1987 Act could be construed to include a “building scheme” consisting of buildings that had been constructed at the same time as part of a single development. Held: The claim was allowed. In determining the meaning of “building” in the Act, it was necessary to have regard to the purpose of the legislation. Section 5(3) was not intended to require integrated developments to be split into inappropriate and unwieldy sections. Parliament could not have intended that common yards, gardens and other appurtenant areas should have to be split in order to satisfy the legislation. Rather, it must have intended that the term “building”, as used in the Act, would include more than one structure in some, albeit limited, circumstances. The Act could make sense only if it were construed to mean either a single building, or one or more buildings where the occupants of the qualifying flats in each of those buildings shared the use of the same “appurtenant premises”, as that term was defined in section 4(4). Although many building schemes would fall within that definition, there was no warrant for construing “building” to include all such schemes, as advocated by the claimant. To do so would be artificial, and would cross the boundary between construction and legislation: 30 Upperton Gardens Management Ltd v Akano [1990] 2 EGLR 232, Denetower Ltd v Toop [1991] 1 EGLR 84, Belvedere Court Management Ltd v Frogmore Developments Ltd [1996] 1 EGLR 59 and Kay-Green v Twinsectra Ltd [1997] 1 EGLR 219 considered. On the evidence, the qualifying flats on the estate shared the use of the same “appurtenant premises”. Accordingly, in planning to dispose of them, the claimant was not proposing a transaction involving the disposal of more than one building within the meaning of section 5(3). The subject premises in the notice likewise consisted of the whole or part of a “building” within the meaning of section 1(2)(a). The notice was therefore valid. Philip Jones (instructed by Mackrell Turner Garrett) appeared for the claimant; Simon Adamyk (instructed by Adler & Adler, of Dorking) appeared for the defendant. Sally Dobson, barrister