Ordinarily, counting flats in a building should be as easy as pie, but in Aldford House Freehold Ltd v Grosvenor (Mayfair) Estate and another [2019] EWCA Civ 1848; [2019] PLSCS 209 this task proved difficult because of substantial works that were in progress on two floors in Aldford House, Park Street, W1. The number of flats contained in the building was relevant due to the lessees’ claim for collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993 (the 1993 Act).
The conundrum
Chapter 1 of Part 1 of the 1993 Act gives qualifying tenants of flats the right to acquire the freehold. A precondition for exercising such a right, under section 13, is that notice must be given by a number of qualifying tenants that is not less than half the number of flats contained in the building. The number of flats, therefore, matters.
On 23 July 2015, the nominee purchaser, Aldford House Freehold (AHF) gave an initial notice claiming a right to collective enfranchisement. This was the relevant date for determining the number of flats contained in the building.
The sixth and seventh floors of the building were undergoing substantial works of construction on the relevant date. Two new flats were being constructed on each of those floors. Further, in July 2013, the landlord, K Group had granted underleases for each of the intended new flats, numbered 61, 62, 71 and 72.
AHF claimed there were only 26 flats at the relevant date. K Group claimed there were 30 flats. If K Group was correct then the initial notice served by AHF had to be signed on behalf of at least 15 qualifying tenants.
In the High Court, Fancourt J determined that the sixth and seventh floors contained four flats and therefore the building comprised a total of 30 flats. The initial notice served was found to be invalid because it failed to meet the statutory requirements. AHF appealed.
What is a flat?
Section 101 of the 1993 Act defines a “flat” as “a separate set of premises (whether or not on the same floor) – (a) which forms part of a building, and (b) which is constructed or adapted for use for the purpose of a dwelling, and (c) either the whole or a material part of which lies above or below some other part of the building”.
A “dwelling” is defined in section 101 of the 1993 Act as “…any part of a building occupied or intended to be occupied as a separate dwelling…”
The Court of Appeal had to determine whether each area comprised in the underleases of the sixth and seventh floors was “a separate set of premises”; and, if so, whether each of those areas was constructed or adapted for use for the purpose of a dwelling.
The court emphasised that the definition was concerned with the physical configuration of the premises rather than its intended use. The premises had to be an objectively recognised physical space, rather than simply a red line drawn on the plan. In agreement with Fancourt J, the court found that the physical separation between the areas was enough for each area to be classified as a “separate” set of premises on the relevant date.
Constructed as a dwelling
Turning to the question of whether the spaces on the sixth and seventh floors were constructed for the use of the purpose of a dwelling, Fancourt J had found that they were. Relying on the cases of Boss Holdings Ltd v Grosvenor West End Properties Ltd [2008] UKHL 5; [2008] 1 EGLR 51 and Day v Hosebay Ltd [2012] UKSC 41; [2012] 3 EGLR 33, Fancourt J likened the definition of a “flat” in the 1993 Act to the definition of a “house” under the Leasehold Reform Act 1967 (the 1967 Act). Accordingly, he determined that the relevant factor was the purpose for which the premises had been constructed or subsequently adapted. It was irrelevant if, on the date the initial notice was given, the premises could not actually be used if the premises existed as a separate set of premises that were let for residential use and had been constructed or adapted for use as a dwelling and not for some other purpose.
The Court of Appeal noted that Fancourt J had found that the flats on the sixth and seventh floors had lost their identity during the course of the structural works. Based on Fancourt J’s findings, reliance could not be placed on Boss Holdings in support of his conclusions because in that case the building had never lost its identity as a house.
Further, the Court of Appeal highlighted that the statutory definition of a “house” in the 1967 Act differed to that of a “flat” under the 1993 Act. First, the definition of a “house” started with a building that had been “designed”. The definition of a “flat” started with a set of premises that had been “constructed”. If a putative flat was in the course of being constructed, it was not yet “constructed” for any purpose. Second, unlike a house, which need only be designed for “living in”, a flat had to be “constructed” for use as a dwelling. A separate set of premises was not a flat as defined under the 1993 Act unless at some stage in its history it had reached a stage of construction that rendered it suitable for use for the purpose of a dwelling. On the High Court’s findings, the four flats on the sixth and seventh floors had not yet reached that stage.
The Court of Appeal found that the building contained 26 flats and not 30. The initial notice given by AHF was valid as it had been given by the requisite number of participating lessees who were qualifying tenants and correctly stated their names.
Key points
- In defining a flat, whether a space is “a separate set of premises” depends on the physical configuration of the premises rather than its intended use
- The definition of a “house” under the Leasehold Reform Act 1967 differs to the definition of a “flat” under the Leasehold Reform, Housing and Urban Development Act 1993
Elizabeth Dwomoh is a barrister at Lamb Chambers
