In relation to the pre-emptive notices served when disposing of a freehold, whether blocks constituted separate buildings is very fact-sensitive and the evidence to decide the issue had not been available at a first hearing.
In FSV Freeholders Ltd v SGL1 Ltd [2022] EWHC 3336, Mr Justice Fancourt allowed an appeal against a declaration that there had been compliance with section 5 of the Landlord and Tenant Act 1987 and directed that the issue of whether two sets of notices had been correctly served should be tried.
The premises at 30 Fox Street, Liverpool L3 3BQ comprised blocks A-E. The 1987 Act requires a landlord who wishes to make a relevant disposal to serve notice on relevant tenants. Section 5(3) requires that if the proposed transaction involves the disposal of more than one building then the landlord shall sever the transaction so as to deal with each building separately.
Fox Street Village Ltd, by its administrators, wished to dispose of the freehold. Block D did not fall within the pre-emption rights of the 1987 Act and it believed that the other blocks formed two buildings – one building comprising Block A and the other comprising B, C and E. Accordingly, on 11 February 2020 two sets of notices were served on the qualifying tenants – one set in respect of Block A (which they offered to sell for £350,000) and the other for Blocks B, C and E together (which they offered to sell for £1,050,000).
Despite FSV Freeholders Ltd (FSV) raising various issues as to the validity of the notices, on the first hearing of the Part 8 claim the district judge declared that there had been compliance with s5 of the Act.
It is right that at such a hearing the court is entitled to consider whether the claim can be disposed of there and then, in accordance with the overriding objective rather than give directions for a trial.
The district judge did not err in principle by looking to see whether any point of substance was raised by FSV. However, there had been an error. The question of whether blocks constitute a separate building or not is very fact-sensitive. Examples of the factors relevant to whether a building is separate or not were given in Long Acre Securities v Karet [2005] Ch 61 and included the plans of the building, the underlying structural support for blocks, lessees’ rights to use the appurtenant premises, connections at any levels, the dates of construction of the blocks, how the blocks are managed, how the service charge is operated and visual impressions.
FSV had raised sufficient evidence to suggest that treating blocks B, C and E as a single building was doubtful. On the evidence before the district judge, it was neither right nor possible to conclude that there was no possible issue that block B, and also possibly each of blocks C and E, were to be treated as separate buildings (which conclusions would have obliged the administrators when serving the notices to have separated them out).
Elizabeth Haggerty is a barrister
