Landlord and tenant – Leasehold enfranchisement – Notice – Leasehold Reform, Housing and Urban Development Act 1993 – Appellant nominee purchaser seeking to acquire freehold of property by leasehold enfranchisement – Appellant serving notices on respondent landlord – Respondent serving counternotices – High Court dismissing appellant’s claim for declaration of entitlement to exercise right of collective enfranchisement – Whether each premises “constructed or adapted for use for the purposes of a dwelling” – Whether premises constituting “flat” – Whether notices valid – Appeal allowed
The appellant, as the nominee purchaser of participating tenants, issued a claim to establish its entitlement to acquire the freehold of Aldford House, Park Street, London, under the Leasehold Reform, Housing and Urban Development Act 1993. The first respondent owned the freehold. The original headlease, which was due to expire in 2100, was vested in the second respondent.
The appellant served two notices on the first respondent, pursuant to section 13(1) of the 1993 Act, which required that notice be given by not less than one half of the total number of flats. The first notice was given on the basis that there were, on the relevant date, 26 flats in the building. The second notice was given, without prejudice to the validity of the initial notice, on the basis that there were on the relevant date 30 flats in the building, the respondent having asserted that there were four new flats on the sixth and seventh floors. The notices were signed by a solicitor purportedly on behalf of 17 participating tenants.
On 25 September 2015, the first respondent gave counternotices pursuant to section 21 of the 1993 Act in response to both notices. The first counternotice stated that the initial notice was wrong to state that there were 26 flats in the building and asserted that the correct number was 30. In other respects, both counternotices stated that the first respondent did not admit that on the relevant date the participating tenants were entitled to acquire the freehold. They both asserted that three of the participating tenants were not qualifying tenants.
An issue arose whether there were 26 flats or 30 flats because the sixth and seventh floors were undergoing substantial works of construction at the date when the relevant notice was served. The High Court held that there were 30 flats (including two flats on each of the sixth and seventh floors), and that the notice failed to comply with statutory requirements: [2018] EWHC 3430 (Ch); [2019] EGLR 10. The appellant appealed.
Held: The appeal was allowed.
(1) Section 101 of the 1993 Act defined a flat as a separate set of premises constructed or adapted for use for the purposes of a dwelling. It was probable that what was said to amount to a separate set of premises had to be an objectively recognisable physical space, rather than simply a red line drawn on a plan. The relevant question was whether there was or was not physical separation between the various spaces. In the present case, the physical separation between the areas was enough for each area to amount to a separate set of premises. The fact that the separation was potentially reversible with little effort did not mean that the two areas were not in fact separate on the relevant date. Accordingly, the judge had been right to hold that each of the areas comprised in the underleases of the sixth and seventh floors were a “separate set of premises”.
(2) The definition of “flat” started with a set of premises that had been “constructed”. If a putative flat was in the course of construction, it had not yet been “constructed” for any purpose. A flat had to be constructed “for use for the purposes of a dwelling”. That was more than simply requiring that a flat had to be constructed for the purposes of a dwelling. It also had to be constructed for use for that purpose. A purpose might be a future purpose. But if a separate set of premises was to be constructed “for use” as a dwelling, it had to be in a state in which it was suitable for use as a dwelling. If, as the judge rightly held, flats in the course of construction were left out of account in counting the number of qualifying tenants, they had to equally be left out of account in counting the number of flats in the building: Day v Hosebay Ltd [2012] UKSC 41; [2012] 3 EGLR 33 applied.
In the present case, it was not possible to go back to the use of the sixth and seventh floors before the works of construction were undertaken because the original flats had lost their identity. The premises were in the course of construction, which were intended to be used for residential purposes but which, at the relevant date had not in fact been used for that purpose and were incapable of use for that purpose. It was important to stress the narrowness of the issue. On the judge’s findings in this case, the physical condition of the areas on the sixth and seventh floors precluded actual use for residential purposes. In the light of that finding it could not be said that they were suitable for use for the purposes of a dwelling.
(3) Accordingly, a separate set of premises was not a flat within section 101(1) of the 1993 Act, unless at some stage in its history it had reached a stage of construction to be suitable for use for the purposes of a dwelling. On the judge’s findings the intended flats on the sixth and seventh floors had not reached that stage so that they were not flats. It followed that at the relevant date the building contained 26 flats rather than 30. The initial notice was therefore not required to name the lessees of what would become the remaining four flats. In all the circumstances, since the initial notice had been authorised by 13 qualifying tenants or more, it had been validly served.
Edwin Johnson QC (instructed by Forsters LLP) appeared for the appellant; the first respondent did not appear and was not represented; Stephen Jourdan QC and Thomas Jefferies (instructed by Stephenson Harwood LLP) appeared for the second respondent.
Eileen O’Grady, barrister
