Leasehold Reform, Housing and Urban Development Act 1993 – Collective enfranchisement – Section 13 notice served and registered on behalf of qualifying tenants – Appellant landlord granting long lease of basement flat to nominee – Whether lease void as disposal of acquirable common parts under sections 19(1)(ii) and 2(1)(b) – Lease held to be void – Appeal dismissed
In 2006, three out of the five qualifying tenants in a building served notice on the appellant landlords, under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993, to acquire the freehold of the building; the respondents were the nominee purchasers for that purpose. The appellants did not seek a leaseback of any part of the building in the counternotice that they served under section 21. The section 13 notice was registered. Thereafter, the appellants notified the respondents of their intention to grant to a nominee a lease of the caretaker’s flat, which had been vacated by the caretaker. The respondents objected to the lease and registered a caution against first registration; they maintained that the grant of the lease would fall foul of the anti-avoidance provisions in section 19 of the 1993 Act. Two of the tenants had a legal entitlement to the services of a resident caretaker under their leases and one of those was a participating tenant on the enfranchisement claim.
In March 2008, the first defendant formally granted the lease to the second defendant for a term of 999 years at a peppercorn rent; the lease comprised the caretaker’s flat and the adjacent light well. The respondents objected to the appellants’ application to register the lease and issued proceedings to determine the effect of section 19 of the 1993 Act with regard to the lease. In the courts below, it was held that, inter alia, the lease was void under section 19(1)(a)(ii) as a lease of common parts that it was necessary for the respondents to acquire for their proper management or maintenance within section 2(1)(b): see [2009] PLSCS 159 and [2010] EWHC 422 (Ch); [2010] PLSCS 79. The appellants appealed. The issues were whether: (i) the caretaker’s flat consisted of or included common parts of the building; and (ii) the acquisition of the lease of that flat was reasonably necessary for the proper management or maintenance of those common parts.
Held: The appeal was dismissed.
Common parts constituted areas of a building that were available for shared use or benefit, such that an area did not comprise a common part if it was used in conjunction with a particular dwelling. The common benefit from the caretaker’s flat consisted primarily in the services of the caretaker as a person, rather than the use of the flat itself. However, since section 101(1) defined common parts as including any common facilities within them, the provision of resident caretaker and a flat for that caretaker’s use could reasonably be regarded as a “facility” within that definition. A common part did not depend on it being accessible by the tenants. It was sufficient that the tenants shared the benefit of the caretaker’s flat by enjoying the services for the purposes of which it was provided. Moreover, although there was force in the contention that a legal entitlement to the facility was not necessary for it to be a common part, that was not an issue in the instant case because there was a specific legal entitlement by two of the tenants, one of which was participating in the enfranchisement. Accordingly, the caretaker’s flat consisted of “common parts” within section 2(1)(b) of the 1993 Act: Oakwood Court (Holland Park) Ltd v Daejan Properties Ltd [2007] 1 EGLR 121 distinguished; McGuckian v 29 Eaton Place Management Co Ltd LRA/85/2006 not followed.
It was also necessary for the respondents to acquire those common parts for their proper management or maintenance. If they did not acquire the leasehold interest in the caretaker’s flat, they would be unable to use that flat to accommodate a caretaker and it would not be maintained as a common part. It was irrelevant that the appellants might be willing to negotiate terms to make it available or that a caretaker could be accommodated in another flat. The willingness of the freeholders to negotiate alternative terms could not be relevant in determining the extent of the statutory right. Moreover, once the caretaker’s flat had been identified as “common parts”, the only issue was whether the acquisition of that part was necessary for its management; the fact that the service might be provided elsewhere was irrelevant.
Kenneth Munro (instructed by Pemberton Greenish LLP) appeared for the appellants; Andrew Walker (instructed by Bircham Dyson Bell LLP) appeared for the respondents.
Sally Dobson, barrister
