Craftrule Ltd v 41-60 Albert Palace Mansions (Freehold) Ltd  EWHC 1230 (Ch) is the first higher court decision on the meaning of “self-contained part of a building” in the Leasehold Reform, Housing and Urban Development Act 1993.
Qualifying long leaseholders of flats are, in general terms, entitled to collectively enfranchise (i.e. force the landlord to sell) the building containing their flats. However, not all buildings can be enfranchised. The building has to be either self contained (s.3, 1993 Act) – basically, vertically detached – or a self-contained part of a building (s.3(2), 1993 Act). That requires the self-contained part to be capable of vertical division and the services (water, electricity etc) to be provided – or capable of being provided – separately from the remainder of the building.
The main building in the present case was a mansion block containing 160 flats. It was then divided into eight sub-blocks of 20, each of which had its own path to the street. In turn, the blocks of 20 further divided into groups of 10 flats, each of which had their own front door and, to all intents and purposes, were completely separate developments; they were capable of vertical severance and had most of their services provided independently. This is, I realise, not the most beautiful prose – perhaps it’s easier to look at Google Streetview, here.
The leaseholders of one of the blocks of 20 formed the respondent company and sought to enfranchise their block of 20. The landlord argued that they could not do so, essentially on the basis that each unit of 10 was capable of being enfranchised and that it was the units of 10, not 20, that were the “self-contained part of the building.”
Both the county court judge (HHJ Madge) and the High Court Judge (Henderson J) rejected this argument; there was nothing in the 1993 Act that prevented enfranchisement merely because a smaller (or larger) unit could also be enfranchised. If the block of 20 met the statutory criteria, then that was sufficient.