Leasehold enfranchisement — Landlord and Tenant Act 1987 — Collective enfranchisement — Tenants’ right of first refusal on disposal by landlord — Block of flats — Disposals including garages, basement and roof space — Whether relevant disposal — Extent of “premises” affected by disposal — Whether items disposed of forming part of a building
Qualifying tenants in a block of 72 flats brought proceedings through the claimant company. They claimed that two disposals made by the landlord to the defendant in 2003 had attracted their right of first refusal under Part I of the Landlord and Tenant Act 1987, such that the defendant was obliged to make an onward disposal to the claimant. The property comprised a main building together with a garage block, drives, pathways and gardens. The garage block contained 20 garages, some of which were let to tenants of the flats on separate leases, an electricity sub-station that served the property, a caretaker’s office and a mobile phone plant room. The latter served a mobile phone mast that was fixed to the flat roof of the main building and belonged to a mobile phone service provider. In addition to the flat area of roof, a higher mansard roof contained a water storage tank that served the flats. Chimneys projected from various points on the roof. The main building also contained a light well, basement rooms, which extended beyond the rest of the building, and the usual common parts such as halls and corridors.
The two contentious disposals were: first, a transfer of three garages, the plant room, the caretaker’s office and the sub-station; and, second, a lease of the airspace above the roof, the light well, the basement rooms and a small area of land adjoining the wall of the main building to the rear, above the basement rooms. In determining whether the claimant could exercise Part I rights in respect of those disposals, issues arose as to whether: (i) the “premises” affected by the disposals were confined to the area proposed to be disposed of by the landlord or a more objectively ascertainable unit; and (ii) the premises in question could be said to “consist of the whole or part of a building” within section 1(2)(a) of the 1987 Act.
Held: The claim was allowed in part. (1) The “premises” affected by a disposal, within the meaning of sections 1(1) and 4(1) of the 1987 Act, are not confined to the property of which the landlord is disposing, but are to be ascertained in an objective way, disregarding the disposal in question. The premises affected by the landlord’s disposals to the defendant constituted the entire block of flats, which was a clear physical entity, the entirety of which was owned by the landlord. (2) Once the relevant “premises” have been ascertained, the requirements of section 1(2) must be applied to see whether they are premises to which Part I applies. The block of flats fulfilled the requirements of section 1(2)(a), (b) and (c) because it formed an entire building, contained two or more flats that were held by qualifying tenants and the number of such flats exceeded 50% of the flats in the premises. (3) For the purposes of section 1(2)(a), the word “building” can include appurtenances to the building; what is and is not appurtenant will be a matter of fact and degree in any given case and will not necessarily include everything within the curtilage of the building. The concept of “appurtenant” reflects the definition of “appurtenant premises” in section 4(4), namely any appurtenance “which belongs to, or is usually enjoyed with” the flat. The wider meaning given to “appurtenant” under the Leasehold Reform Act 1967 is not applicable to the 1987 Act. The 2003 transfer did not attract Part I rights because the items disposed of were not appurtenant to the main building. The disposal under the 2003 lease attracted Part I rights in respect of all the items disposed of, which all fell to be treated as part of the main building.
The following cases are referred to in this report.
Bernstein v Skyviews & General Ltd [1978] QB 479; [1997] 3 WLR 136; [1977] 2 All ER 902; [1977] 1 EGLR 96; (1977) 241 EG 917
Denetower Ltd v Toop [1991] 1 WLR 945; [1991] 3 All ER 661; [1991] 1 EGLR 84; [1991] 20 EG 194, CA
Kay-Green v Twinsectra Ltd (No 1) [1996] 1 WLR 1587; [1996] 4 All ER 546; [1996] 2 EGLR 43; [1996] 38 EG 136
Methuen-Campbell v Walters [1979] QB 525; [1979] 2 WLR 113; [1979] 1 All ER 606; (1978) 38 P&CR 693; [1978] 2 EGLR 58; 247 EG 899, CA
St Thomas‘s Hospital (Governors of) v Charing Cross Railway Co (1861) 1 John & H 400; 30 LJ Ch 395; 25 JP 771; 7 Jur NS 256; 9 WR 411
This was the hearing of a claim by the claimant, Dartmouth Court Blackheath Ltd, seeking to exercise tenants’ rights under Part I of the Landlord and Tenant Act 1987 in respect of two disposals by the landlord to the defendant, Berisworth Ltd.
Anthony Radevsky (instructed by Trowers & Hamlins) appeared for the claimant; Gary Lidington (instructed by Child & Child) represented the defendant.
Giving judgment, Warren J said:
Introduction
[1] This is a claim by the claimant (DCB) against the defendant (Berisworth) under Part I of the Landlord and Tenant Act 1987 (the 1987 Act), which, broadly speaking, gives tenants in a block of flats the right of first refusal when their landlord wishes to make a relevant disposal. The claim concerns two disposals made by Branchpoint Ltd (the landlord), the freehold owner and landlord of Dartmouth Court, Dartmouth Grove, London SE10 (the property), which expression I use to include the entirety of the property of which the landlord is the registered proprietor, thus including the gardens and garages. I shall refer to the block of flats on the property as “the main building” and to the separate building, comprising a terrace of garages and other spaces, as “the garage block”, each of which is described in more detail later in this judgment. References to statutory provisions relate to the relevant provisions of the 1987 Act unless otherwise stated. |page:142|
Statutory framework
[2] Section 1 provides for a right of pre-emption as follows:
1 Qualifying tenants to have rights of first refusal on disposals by landlord
(1) A landlord shall not make a relevant disposal affecting any premises to which at the time of the disposal this Part applies unless —
(a) he has in accordance with section 5 previously served a notice under that section with respect to the disposal on the qualifying tenants of the flats contained in those premises (being a notice by virtue of which rights of first refusal are conferred on those tenants); and
(b) the disposal is made in accordance with the requirements of sections 6 to 10.
(2) Subject to subsections (3) and (4), this part applies to premises if —
(a) they consist of the whole or part of a building; and
(b) they contain two or more flats held by qualifying tenants; and
(c) the number of flats held by such tenants exceeds 50 per cent of the total number of flats contained in the premises.
(3) This Part does not apply to premises falling within subsection (2) if —
(a) any part or parts of the premises is or are occupied or intended to be occupied otherwise than for residential purposes; and
(b) the internal floor area of that part or those parts (taken together) exceeds 50 per cent of the internal floor area of the premises (taken as a whole);
and for the purposes of this subsection the internal floor area of any common parts shall be disregarded.
(4) …
(5) The Secretary of State may by order substitute for the percentage for the time being specified in subsection (3)(b) such other percentage as is specified in the order.
Since it is the position of the landlord and Berisworth that the two disposals that I have mentioned are not caught by section 1, paras (a) and (b) of section 1(1) have not been complied with. It is common ground that the landlord is a landlord within the definition found in section 2 and that the tenants of the main building are all qualifying tenants within the definition found in section 3 (so that the 50% qualifying level under section 1(2)(c) is met).
[3] Section 4 tells us what a relevant disposal is:
4 Relevant disposals
(1) In this Part references to a relevant disposal affecting any premises to which this Part applies are references to the disposal by the landlord of any estate or interest (whether legal or equitable) in any such premises, including the disposal of any such estate or interest in any common parts of any such premises but excluding —
(a) the grant of any tenancy under which the demised premises consist of a single flat (whether with or without any appurtenant premises); and
(b) any of the disposals falling within subsection (2).
…
(4) In this section “appurtenant premises”, in relation to any flat, means any yard, garden, outhouse or appurtenance (not being a common part of the building containing the flat) which belongs to, or is usually enjoyed with, the flat.
It is common ground that none of the exclusions found in section 4(2) applies in the present case, but I would none the less mention that one exclusion is the disposal of any incorporeal hereditament (suggesting that, absent the exclusion, such a disposal would fall within Part I).
[4] Section 11 applies where a landlord has made a relevant disposal without complying with section 5 or sections 6 to 10. In those circumstances, the requisite majority of qualifying tenants are given rights under sections 11A, 12A, 12B and 12 C to obtain information and, effectively, to obtain that which was disposed of to the purchase under the relevant disposal. In the present case, DCB has been nominated as the party to which the disposal envisaged by section 12B(2) is to be made. It is common ground that the obligations imposed on the tenants by these provisions have been met if, as DCB asserts, Part I applies to the disposals that the landlord has made to Berisworth. Accordingly, if the disposals to Berisworth fall within section 1, Berisworth is now obliged to make an onward disposal to DCB of what it received from the landlord.
[5] Section 60(1) is a definitions section. I need refer only to the definition of “common parts” that:
in relation to any building or part of a building, includes the structure and exterior of that building or part and any common facilities within it;
Property
[6] The property consists of the main building, the garage block, drives, paths and gardens.
[7] The main building is a single block built sometime before the second world war and comprising 72 flats on four floors. There are other rooms, including some basement rooms, that do not form part of any flat and that are not let to any of the tenants. There are halls, passages and corridors in the ordinary way through which tenants obtain access to the entrance doors of their flats. There is a light well (the light well) with its base at ground-floor level. The evidence is that there are doors from the ground-floor flats adjoining it that open onto the light well. I understand that the light well is accessible from the exterior of the building through a passageway and that it is the only pedestrian and tradesmen’s access to the rear entrances of a number of flats. Apart from that, the light well is entirely surrounded by the walls of the block, thus comprising a not very large open space within the walls of the block.
[8] The roof of the building is, for much of its area, a flat roof and there are pipes fixed to it that serve the flats. The remaining area of the roof is a mansard roof that is above the level of the flat roof. Within that roof sits a large water storage tank serving the flats. There are chimneys at various places on the roof, including the mansard roof. Many of these chimneys are still in use as flues for open fires and gas fires in the flats. The chimneys project several feet above the roof level. A parapet wall runs around the outside of the flat roof and the mansard roof. There is also a mobile telephone mast belonging to one of the providers of mobile telephone services fixed to the roof. It is a tall structure projecting above the height of the mansard roof.
[9] Two of the basement rooms are relevant to this action. They both form part of the building whatever view one takes of the meaning of the word “building”. As it has been explained to me and as I understand, part of one of the rooms is, however, outside the downward vertical projection of the main exterior wall of the block; it is under an area of concrete yard or path forming part of the rear courtyard or garden where it adjoins the outer wall. Immediately beyond the basement room is space that was once occupied by an old coal chute. Indeed, it may even be that part of what was the coal chute is now part of the basement room. I do not think that anything turns on that. The position today is that there is nothing beyond the basement room and the ground above is concreted over up to the wall of the block.
[10] The garage block is a row of single-storey garages to the rear of the property. I do not know when it was built, but it could well have been at the same time as the main building. I believe that there are 20 garages, but nothing turns on the number except to note that there are far fewer garages than flats: this is not a case where every flat has a garage that goes with it.
[11] The garage block contains at one end what is now an electricity sub-station. The relevant electricity company occupies the sub-station under a lease for a number of years and, presumably, owns the equipment in it — certainly none of the parties to this action has any interest in the equipment. The sub-station serves the property; there is no evidence to suggest that it serves any other premises.
[12] The garage block also houses, at the other end, a caretaker’s office and a mobile phone plant room. Cables run from the mast on the roof that I have already mentioned to this plant room.
[13] The garage block is physically detached from and behind the main building. The garage doors face the back entrance to the courtyard/garden of the main building, with a concreted area/road between the two.
Leases of flats and garages
[14] The flats are all let on leases in similar, if not identical, form. It is recited that the lessor is the registered proprietor of:
the freehold land comprised in [the title number] upon which are situate the block of Flats with appurtenances thereto known as Dartmouth Court. Dartmouth Grove aforesaid (hereinafter called “the Building”). |page:143|
[15] The tenant covenants to pay his contribution to various expenses, including the cost of insuring and the cost of maintaining, repairing and decorating and renewing the structure of the building and the entrance drives, pathways, driveways, entrance halls, staircases and landings of the building. Those expenses also include the cost of employing the service of a maintenance staff, including “the rent heating and lighting and telephone charges of accommodation in the Building (should they occupy such accommodation)”.
[16] The demise carries the easements, rights and privileges set out in Part II of the first schedule. These include the following:
(1) A right of way over and along the main pathways included in the title leading to and from the main entrance of the building and the passages, landing and staircase leading to the flat.
(2) A right of subjacent and lateral support and to shelter and protection from other parts of the building and from the site and roof thereof.
(3) An easement for water, soil, gas and electricity over relevant conduits then or at any time in, under or passing through the building.
(4) The right in common with the lessor and the other lessees in the building to use any communal gardens and the pathways leading thereto while the same shall remain as such.
[17] Clause 3 excludes any implied easements in relation to “land of the Lessor adjoining or near to the Building…”.
[18] The garages are also let on leases in similar form. Save in respect of the garages mentioned later, I understand that all garages are let to individuals who are also tenants of the flats. However, clearly not every tenant of a flat can have a garage since there are 72 flats but only 20 garages (and not all of those are available). The lease contains the same recital as the flat lease defining the building. The demised property is described in this way:
ALL THAT Garage Numbered [ ] situate within the curtilage of the Building shown on the plan…
The word “curtilage” is therefore being used in a sense that clearly includes the site of the garage that is leased. The demise is for a term of 125 years at a premium (£500 in 1979 for the lease that I have seen) and a modest annual rent starting at £5 and rising to £20 in 2077. The lease is a repairing lease, with the tenant being obliged to keep the demised premises in substantial repair. The lease contains an absolute covenant against assignment or subletting of part and an absolute covenant against subletting the whole. There is also a qualified covenant against assignment of the whole; assignment to the tenant of a flat in the building being permitted. The landlord covenants to insure against certain risks (fire, storm, tempest, aircraft and explosion). The cost of such insurance is recovered by the lessor as an additional rent.
[19] Both the flat leases and the garage leases contain the same opening recital. It seems to me that the “Building” referred to in the recital is the main building with its appurtenances (whatever they may be). This is clear in respect of the garage lease, since the garage in each lease is described as being situate within the curtilage of the building, which would be a curious use of words if the building were regarded as the entire registered title and thus already including the site of the garage block. That is, in any case, the natural reading of the recital and applies, therefore, equally to the flat leases. Accordingly, the building in the flat leases is also the main building and does not include the garage block.
Disposals: Transfer and lease
[20] The first disposal in time (although not in importance) was a transfer by the landlord to Berisworth dated 7 April 2003. It transfers:
Garage Numbers 1, 6 & 10 together with the equipment room, caretakers office and the electricity sub-station at Dartmouth Court…
together with certain easements and appurtenant rights.
[21] I do not know the purpose of or motive for this transfer; no evidence has been given concerning that.
[22] The second disposal in time was a lease dated 12 December 2003. This lease has been varied as I shall explain. I shall refer to the lease as varied as “the lease”.
[23] In outline, the lease demises to Berisworth four parcels: first, the airspace above the roof (although there is a dispute about precisely what is covered by the demise and, in particular, whether it includes the mansard roof and its interior); second, the light well; third, the basement rooms; and, fourth, a small area adjoining the wall at the rear of the building over the disused coal chute to which I have referred and extending a short way further over the concrete area.
[24] In more detail, the lease (that is, as amended) starts with “Particulars”, which contain definitions of certain terms.
[25] First, there is a definition of “the Demised Premises”:
(1) The space above the roof together with the fittings screwed or fixed thereto or to the roof or other roof structures (“the roof”) [I interpose here to remark that the lease itself refers in its body to the roof with an upper-case “R”: This is clearly a reference to the roof as just defined.]
(2) The lightwell shown hatched black on the plan annexed hereto which for this purpose shall include the lightwell through the whole height of the building including the space above and the earth beneath (“the Lightwell”) [This is the lightwell as I have already defined it.]
(3) The basement room or rooms shown edged red on the said plan (“the Basement Rooms”).
(4) The rear garden shown hatched black on the plan within the red boundary.
[26] Paragraph (4) was not included in the original lease and the plans attached to the original lease did not show it. No plan has been produced that has been attached to the lease showing this area nor has it been provided to DCB. There is, however, a plan in the bundle that Mr Gary Lidington, who appeared for Berisworth, informed me, on instructions, is to be taken as the relevant plan. It contains a plan of the basement rooms, one of which extends, as I have explained, beyond the external wall of the main building. That part is described on the plan as “Old coal chute (basement level)” and appears on the plan without any hatching. An area at ground level is shown hatched in black: together with the area of the basement room outside the main wall, it forms a rectangle. For the purposes of these proceedings, I take that hatched land to be the property comprised in para (4).
[27] I note that no reference is made to the chimneys in the demise. The chimneys themselves are clearly not included, but whether the airspace above them is included is not clear. It would be included only if “the space above the roof” includes the space above the chimneys.
[28] Other definitions in the particulars are as follows:
(a) “Building” means “Dartmouth Court and curtilage being [title number]”;
(b) “Dartmouth Court” means “the block of flats and building known as Dartmouth Court constructed and forming part of the Building”;
(c) “Curtilage” means “the curtilage of Dartmouth Court forming the land surrounding the same and forming part of the Building”.
[29] These definitions refer to each other, but I think that the scheme is tolerably clear. “Dartmouth Court” appears to be a reference to the main building and no more. The “Building” means Dartmouth Court and curtilage “being [title number]”. The “Building” thus comprises more than just the main building because it includes the curtilage. Curtilage in turn means the curtilage of Dartmouth Court, by which is meant the land surrounding “Dartmouth Court”, that is, surrounding the main building. It seems tolerably clear that the “Building” includes the entire registered title so that “curtilage” is being used to include the entirety of the title except for the site of the main building itself. This is consistent with the garage leases, where “curtilage” clearly encompasses the sites of the garage block.
[30] Clause 1 of the body of the lease after the particulars contains further definitions, in particular:
(a) “the Included Rights” means the easement rights and privileges specified in the second schedule; and
(b) “the Common Parts” means entrance passages etc “and other areas” provided for the common use of residents and occupants, including “the driveways paths gardens and all areas forming part of |page:144| the Curtilate [sic but clearly meaning curtilage] including access to the garages”.
[31] By clause 2 of the lease, the landlord demises to Berisworth the demised premises (expressly stated to mean the premises described in the particulars) together with the included rights.
[32] Clause 3 contains certain tenant’s covenants with the landlord. Paragraph (c), as varied, appears to be restricted to a covenant relating to the basement room forming part of the demised premises. However, it contains a proviso excluding the covenant in some respects, as follows:
but for the avoidance of doubt not the Roof itself or mansard roof or anything below it or them or any structure now erected thereon or the parapet walls thereof or any fixture tank of [sic] equipment fixed to or above the Roof or any fixture pipework tank work pipe cabling or equipment of any nature whatsoever housed therein or thereon or fixed to or above the Roof…
[33] Clause 4 contains further tenant’s covenants, including repairing obligations. Rights of access for repair are reserved to the landlord and tenants of the building over the demised premises (including the roof). Paragraph (c) envisages that the tenant under the lease might carry out a development to the roof, including additional residential accommodation. In that event, a service charge is to become payable with any dispute as to its amount being referred to a leasehold valuation tribunal.
[34] By clause 6(a), the parties agree that the tenant “shall be entitled to use the premises for any purpose whatsoever…”.
[35] The first schedule is headed “the Demised Premises”. I have not found a reference to the first schedule in the particulars or the body of the lease, but it is clear to me that the demised premises as defined in the first schedule put slightly more flesh on the definition than is found in the particulars by expressly including coverings and plaster work of walls and ceilings of and all fixtures and fittings in or about the basement room. Paragraph (2) of the first schedule includes the following as part of the demised premises:
All the space above the roof including the space from roof level occupied by the mansard roof and above together with any fixtures and fitting in or around the roof which shall form part of any structure placed hereafter on the roof.
[36] The rights included in the second schedule include the following:
(a) The right to install a lift in the Lightwell or on the exterior of Dartmouth Court or some other convenient place.
[37] It might be thought that there is an inconsistency, so far as concerns the roof, between the definition of the demised premises in the particulars and the definition in the first schedule. In the latter, the roof space within the mansard roof and the mansard roof itself appear to be included, whereas in the former those items might be said not to be included, since it is only the space above the roof that is included and, in that definition, the roof might be taken as referring to the mansard roof. However, reading the lease as a whole, I consider that there is not really an inconsistency. It is not stretching the words in the particulars very much, and certainly not impermissibly, to read them as meaning the airspace above the level of the flat roof, regarding the mansard roof as sitting, as it were, on top of the “roof”. However, even if that is wrong, I would give effect to the first schedule by including in the demise any property that is included in that schedule but not in the definition in the particulars.
[38] In this context, it is relevant to note Mr Bunker, who (or whose family interests) owns the landlord and Berisworth has acknowledged that the purpose of the grant of the lease is to facilitate the development of the roof space by the construction of a number of flats, something that, indeed, appears from the lease itself. It is, I think, wholly unrealistic to think that any planned development would exclude the area covered by the mansard roof and, indeed, plans that are included in the court bundle clearly include that area in the hoped-for development. The conclusion that I have reached is consistent with the intention to effect the development of the roof space as planned; a construction that limited the property demised in such a way that only the space above the mansard roof was demised would not give Berisworth the property that it needs to carry out the development. I reach the construction that I do without reference to this aspect, but I mention it in this context to record that the conclusion accords with reality.
[39] Planning permission for the development of the roof has been refused on a number of occasions, but Mr Bunker hopes that one day an application will succeed. Since the tenants (or some of them) may hereafter seek compulsorily to acquire the freehold of the main building, the lease is designed to ensure that Berisworth has an interest that will enable it to continue with any development notwithstanding any enfranchisement. The tenants are opposed to any such development; they may have ways in which they can properly oppose or frustrate any development. I do not need to consider those any further. What is at issue in the present case is the extent to which the tenants can invoke the 1987 Act to acquire the subject matter of the demise (or at least part of it).
Law: Relevant premises
[40] A preliminary point arises in respect of the identification of the premises referred to in sections 1(1) and 4(1). The difference between the parties is most easily illustrated by taking a simple example. Consider a small purpose-built block of flats comprising nine flats on three floors, with three flats on each of the three floors. The building is in the ownership of a single landlord, L, which has let all the flats on the ground and first floors on leases under which each tenant is a qualifying tenant. It lets the second floor on short furnished lettings under which the tenants are not qualifying tenants. Suppose that L wishes to dispose of its interest in the second floor by granting a long reversionary lease at a premium but wishes to retain its reversionary interest in the ground and first floors. According to Mr Lidington’s approach, section 1 does not apply so that L can grant such a reversionary lease without being required to serve a notice under section 5. The approach of Mr Anthony Radevsky, who appeared for DCB, leads to precisely the opposite conclusion.
[41] Mr Lidington submitted that the focus of sections 1 and 4 is on the property in which the interest of which the landlord is disposing subsists. In the example, this will be the second floor of the building. He identifies that property as the “premises” with which sections 1(1) and 4(1) are concerned. He said that it is those premises, and those premises alone, that are “affected” by the disposal that the landlord wishes to make. Having thus identified the premises concerned, it is then necessary to ask whether those premises fall within section 1(2). In the example, they do not because they do not contain any flats occupied by qualifying tenants, let alone flats held by qualifying tenants holding more that 50% of the total number of flats in the premises.
[42] In contrast, Mr Radevsky submitted that the correct approach is first to identify the relevant premises, since only then can one ask whether any particular disposal affects them. In the example, the relevant premises would be the entire block: that is, a clear physical unit the entirety of which is in the ownership of L. Having identified the relevant premises, it is then necessary to see whether Part I of the 1987 Act applies. In the example, it clearly would because each of paras (a) to (c) of section 1(2) is satisfied: the block of flats consists of the whole of a building, the building contains six flats held by qualifying tenants and those six flats exceed 50% of the total number of flats in the block. In contrast with Mr Lidington, Mr Radevsky said that a disposal can affect premises without that disposal needing to relate to each and every part of them. Thus, a disposal of the first floor in the example is a disposal that affects the block as a whole.
[43] Mr Lidington submitted that Mr Radevsky’s approach is not consistent with section 4(1). That provision, it is to be remembered, tells us to what the words “a relevant disposal affecting any premises to which this Part applies” are referring. That is the phrase that is found (with the addition of “at the time of the disposal”) in section 1(1) itself. The references are to “the disposal by the landlord of any estate or interest (whether legal or equitable) in any such premises”. Mr Lidington submitted that a disposal that “affects” premises must be |page:145| of an interest in those same premises. According to this argument, the relevant premises are precisely those, and no more, that the landlord has selected to form the subject matter of its disposal.
[44] He also pointed out that the construction for which Mr Radevsky contended has a rather surprising consequence. Suppose, he said, that a landlord owns a building consisting of retail shops on the ground floor and flats on a number of floors above. On the construction for which Mr Radevsky contended, and assuming that the flats are all subject to leases under which the lessees are qualifying tenants and that the floor area of the flats exceeds the percentage set out in section 1(3)(b), a disposal of any of the retail premises, for example, a new letting of a shop that had fallen vacant, would be subject to the provisions of Part I. He says that cannot possibly have been intended by parliament.
[45] For his part, Mr Radevsky submitted that if Mr Lidington is correct section 4(1)(a) is unnecessary: Part I of the 1987 Act could never apply to a single flat in the light of section 1(2)(b) and there would be no need to have an express exclusion of it. Similarly, the inclusion in section 4(1) of the words “including the disposal of any such estate or interest in any common parts of such premises” would be unnecessary since common parts, taken by themselves, could never be within Part I of the Act. As to common parts, Mr Lidington suggested that the words in the subsection were added out of an abundance of caution, and pointed to the judicial criticisms of the drafting of the Act in Denetower Ltd v Toop [1991] 1 WLR 945* and Kay-Green v Twinsectra Ltd (No 1) [1996] 1 WLR 1587†. He did not make the same submission in respect of para (a); but even if he had, it would have been one that I could not have accepted. It would be only if driven to it by a need to give sensible meaning to Part I that I would reject as otiose what the draftsman appears to have regarded as a matter of importance, devoting a specific paragraph to it.
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* Editor’s note: Also reported at [1991] 1 EGLR 84; [1991] 20 EG 194
† Editor’s note: Also reported at [1996] 2 EGLR 43; [1996] 38 EG 136
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[46] In my judgment, Mr Radevsky’s approach is to be preferred. The relevant premises are to be ascertained in an objective way, disregarding the disposal concerned; many factors may come into play in determining the extent of the relevant premises. The provisions of section 1(2) are then applied to those relevant premises to see whether they are premises to which Part I applies. On this construction of the 1987 Act, section 4(1)(a) plays a real and important part, permitting the landlord to lease a single flat without qualifying tenants having any right of pre-emption. Further, an intended disposal of common parts would also fall within Part I. That makes sense: it would be odd if a landlord could dispose of common parts separately from any flat without the qualifying tenants being able to acquire them. After all, one purpose of Part I is surely to bring within the control of the qualifying tenants the premises of which their flats form part, a purpose that could easily be defeated if a landlord could dispose of common parts to whomsoever it wished.
[47] On this approach, I regard a disposal of part of relevant premises as being a disposal affecting those premises within the meaning of section 4(1). In the context of Part I, it makes perfectly good sense, in my judgment, to speak of the disposal of an interest in part of a property as being a disposal of an interest in such property. In the example, the grant of the reversionary lease in the first floor would be “the disposal of an interest (whether legal or equitable)” in the block: the reversionary lease would not need to relate to the entire block in order to fall within the subsection.
Law: Building
[48] In order for Part I to apply to any premises, those premises must “consist of the whole or part of a building” and they must “contain two or more flats”. It is not the case, and Mr Lidington did not contend, that, in the present case, the relevant premises are confined to the bricks and mortar that make up the main block. He accepted that a building in this context can include the appurtenances (whatever that may mean) of the building.
[49] In that context, the decision in Denetower is of some relevance. In that case, two blocks of flats, each consisting of four flats with gardens, were let to tenants. Their leases included the relevant part of the garden and granted rights of way over the roadway running between the blocks and pathways leading to the flats and gardens. At the rear of the flats were eight garages accessible by the roadway, but these were not included in any of the flat leases. The garages were let on separate leases; most of the tenants held a long lease of a garage, but one garage was let to a non-tenant and the freehold of two of the garages had been sold to an outsider. There was a small piece of unused land over which the tenants had no rights.
[50] The landlord transferred the freehold to the plaintiff without first complying with section 1. The landlord contended that Part I did not apply to the gardens, garages, roadway and the unused land since they were not part of the building that, according to the landlord, was all that was within the scope of the statutory provisions. The tenants had two answers to that contention.
[51] The first answer was that the requirement for the relevant premises to “consist” of a building does not mean that the premises must consist only of the building; the word “consist” could be used as meaning “include”. The Vice-Chancellor (who gave the only reasoned judgment) doubted the correctness of that, drawing attention to section 3(2)(a) as it then stood, which showed that the draftsman has shown that where he means to say “consist of or include” he does so expressly. That provision has been replaced and the point may not be as strong as it was then. It has not, however, been raised before me, although I should say that I doubt that the point is a good one even in respect of the 1987 Act as it now stands. I do not propose to say anything more about it.
[52] The second answer, which the Vice-Chancellor accepted, was that the word “building” is not necessarily confined to bricks and mortar, reference being made, with obvious approval, to Governors of St Thomas’s Hospital v Charing Cross Railway Co (1861) 1 John & H 400, where it was held that section 92 of the Land Clauses Consolidation Act 1845 (which provided that the owner of land being compulsorily acquired could not be required to convey “part only of any house, or other building…”) required the purchase not only of the entire house but also of the gardens and appurtenances of the house. The Vice-Chancellor went on to say, at p952D-H:
In the present case, it would be to attribute to Parliament an entirely capricious intention if we were to hold that the tenants’ right to purchase did not extend to the gardens and other appurtenances of the flats which are expressly or impliedly included in the demises of the flats to the tenants. In my judgment we are not forced to adopt such an unreasonable construction since it is a perfectly legitimate meaning of the word “building” that it includes the appurtenances of the building.
…
I therefore reach the conclusion that the purchase notice under section 12 could have required the landlords to transfer not only the two buildings but also any appurtenances of those buildings.
What then are the appurtenances of the buildings? There can be no doubt that the gardens are included: they are expressly included in the leases of the flats which are part of the buildings. In my judgment the garages are not appurtenances. The tenants enjoy no rights over the garages under or by virtue of their leases of the flats. The garages are held under quite separate leases; not every flatholder has a garage; the freehold of all the garages is not vested in the landlords. In those circumstances is impossible to hold that the garages are appurtenant to the buildings. Similarly, the tenants of the building enjoy no rights over the unused land, nor is such land used in conjunction with the flats: therefore it is not an appurtenance of the building. As to the roadway and paths over which the tenants have either express or prescriptive rights of way, in my judgment they are appurtenances of the building.
[53] It must be remembered, in applying this decision, that the 1987 Act itself does not expressly include appurtenances as part of the building. What is and is not appurtenant in accordance with the judicial gloss that has been placed on the meaning of “appurtenant” is very much a matter of fact and degree. For example, ordinarily a garage built next to a single dwelling-house and owned and used by the owner and occupier of the house might be thought of as appurtenant to the house |page:146| and so pass with a transfer of the freehold of the house. It does not follow from that that a row of garages close to a block of flats where the garages are not let to the tenants of the flats as part of their flat tenancies, but rather let separately, is appurtenant (in the sense of the judicial gloss) to the block of flats. Rather, the concept of “appurtenant” is invoked in this context to avoid what would otherwise be a capricious result in the application of this particular piece of legislation. That, no doubt, is why the Vice-Chancellor in Denetower placed some emphasis upon the fact that the gardens and certain other appurtenances were expressly or impliedly included in the demises of the flats to the tenants; they were thus appurtenant to the building as that building was actually used. In contrast, the use of the garages was not by persons qua tenants of the flats.
[54] This approach reflects the meaning given to appurtenant in section 4(4) expressly referring to “appurtenant premises”, meaning “any yard, garden, outhouse or appurtenance… which belongs to, or is usually enjoyed with, the flat“.
[55] Mr Radevsky argued in favour of a different approach to identifying what is “appurtenant” to a building in this sense. He submitted that everything within the curtilage of a building is properly to be regarded as forming part of the building for the purposes of the Act. He refers to Methuen-Campbell v Walters [1979] QB 525*. That case related to the Leasehold Reform Act 1967 (the 1967 Act), which allowed certain tenants to acquire the freehold of relevant property. Section 2(3) of that Act provided that in the phrase “the house and premises” the reference to the premises is to be taken as referring to “any garage, outhouse, garden, yard and appurtenances which at the relevant time are let to him with the house and are occupied with and used for the purposes of the house…”. The Court of Appeal held that “appurtenances” was to be given a generous scope in the context of that Act, and was to include land within the curtilage of the house.
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* Editor’s note: Also reported at [1978] 2 EGLR 58; (1978) 247 EG 899
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[56] I do not derive any assistance from that decision in construing the 1987 Act. It is not at all surprising to find “appurtenances” being given a wide meaning in the context of the phrase “house and premises” and the definition of “premises”. There is no reason to adopt the extended meaning of “appurtenances” held to be applicable in the case of the 1967 Act when ascertaining the extent to which a building comprises more than merely its bricks and mortar in accordance with the approach of the Vice-Chancellor in Denetower. In any event, it is to be noted that the enfranchisement provisions of the 1967 Act apply only to premises that are let together with the house: even land within the curtilage would be included only if it were let to the tenant. That might be thought to support an approach to the 1987 Act — where the issue of “appurtenant” arises only as a matter of judicial interpretation of “building” — that sees the tenants’ rights as attaching only to land that is enjoyed with the actual building.
[57] Accordingly, I reject Mr Radevsky’s submission on this point, which makes it unnecessary for me to address whether the garages (or indeed the airspace above the roof) are included within the curtilage of the main block.
What is comprised in the building on the facts of this case?
[58] The question that now needs to be addressed is what, if any, parts of the property comprised in the transfer and demised by the lease form part of the “building”, that is to say, of the main building.
[59] Starting with the transfer, the garages in the garage block are not, in my judgment, appurtenant to the main building any more than the garages in Denetower were appurtenant to the blocks of flats in that case. The tenants of the garages do not enjoy the use of the garages as part of their enjoyment under their flat tenancies. The garages are held under quite separate leases and not every flat holder has a garage tenancy. Although the garage leases contain restrictions on assignment, so that only an assignment to a flat holder is permitted, the landlord is free to lease a garage to whomsoever it wishes. The flat tenants do not, in their capacity as tenants, contribute through the service charge to the maintenance of the garage block. The garages are not, I consider, enjoyed in such a way as to make them appurtenant to the main building.
[60] So far as concerns the mobile phone plant room, there is even less room for arguing that it is appurtenant to the main building than is the case in relation to the garages. The plant room houses equipment belonging to a third party in connection with a mast on the roof that serves mobile phone users in the area of coverage of the mast: the mobile phone provision has nothing to do with the use and enjoyment of the main building. In my judgment, the plant room is not appurtenant to the main building.
[61] The caretaker’s office and the electricity substation give rise to some different considerations. Taking the caretaker’s office first, it is said that this is appurtenant to the main building because the flat leases require the provision of maintenance staff. It is pursuant to that obligation that the caretaker’s services are provided. It does not, however, follow from that that the office provided for him is appurtenant to the main building. The landlord remains the exclusive owner of the office; the tenants have no interest in it at all. The landlord is not obliged to the tenants to provide an on-site office for any of the maintenance staff. The fact that it has chosen to do so clearly, in my view, does not result in the office that it does provide becoming appurtenant to the main building.
[62] The position in respect of the electricity substation is less clear. It is at least possible, and for the purposes of this case I assume it to be the case, that the sub-station serves only the property. Even so, I do not consider that the sub-station is appurtenant to the main building. The sub-station is let on a long lease to an electricity supplier. It houses the equipment belonging to that supplier. This may be a convenient arrangement, but there is no reason why electricity has to be supplied by means of a sub-station within the property. The tenants have no right to that particular method of supply and have no interest in the sub-station or the equipment. In my judgment, the sub-station is not appurtenant to the main building in the sense required for an appurtenance to be part of the building for the purposes of section 1(2).
[63] Turning to the lease, given my decision on the meaning of “relevant property” it is clear that Part I applies to the basement rooms that, as is accepted by Mr Lidington, form part of the main building.
[64] The area of land outside the main wall of the main building over the basement room must, I think, be treated as being part of the building in much the same way as a roof. However, there is more difficulty with the area of land hatched black forming part of the demise. As can be seen from a photograph, the area of land forms part of the concrete apron just outside the back entrance to the passageway between the back and front of the building. It just overlaps the actual passageway itself. The entirety of this concrete apron forms part of the pathways over which each tenant has a right to pass and repass; alternatively, it forms part of the communal gardens and the pathways leading to them over which the tenants have a right of use so long as the gardens remain as such. In my judgment, the area of land is appurtenant to the main building since the tenants have significant rights over it, rights that they enjoy by virtue of their tenancies. Even if the land is part of the gardens, rather than part of the drive/paths, it makes no difference that the gardens might cease to be gardens because unless and until they do the tenants have a common right to use them. It is the status of the gardens at the time of the relevant disposal by which the question of whether the gardens are appurtenant to the main building is to be answered.
[65] So far as concerns the light well, the demise relates not only to the airspace within the light well but also the ground and the earth beneath it. I think that there is much to be said for the view that, as a matter of ordinary language, the light well forms part of the main building (and thus part of the building). However, if that is not the case, it clearly is, in my judgment, appurtenant to the main building. The light well provides an amenity for all the tenants whose flats have windows looking out onto it and each of them will doubtless have rights of light as well. The light well is obviously, to my mind, enjoyed with those flats and to view the small area of land and the air above it as other than so closely connected with the bricks and mortar of the main building |page:147| as to form part of the building within section 1(2) would be to produce a capricious result. That is enough to bring the light well within the “building”. However, in addition, the use as access to the rear entrances of a number of flats would itself produce the same result.
[66] That leaves the roof for consideration. For reasons already given, I think that the mansard roof and the space within it are included in the demise. That roof and space clearly form part of the main building and thus part of a building that falls within Part I.
[67] The question then is whether the airspace above the flat roof and above the mansard roof forms part the building, either as a matter of the ordinary use of language or applying the approach of the Vice-Chancellor in Denetower or otherwise. If it is, the lease of that airspace will be a disposal of part of the building and thus fall within section 1(2). However, if it is not, the question would then arise as to whether the airspace, at least to some height above the roof, is part of the “common parts” of the building.
[68] Generally speaking, a transfer of freehold land will carry with it the earth below and the air above that land. That is a general principle not without limits. As the decision of Griffiths J in Bernstein v Skyviews & General Ltd [1978] QB 479* shows, an owner’s rights in airspace about its land are restricted to such height as is necessary for the ordinary use and enjoyment of the land and structures upon it and above that height it has no greater rights than any other member of the public. Mr Radevsky suggested, on the basis of that decision, that a building includes the airspace above it at least to that extent. In the present case, the building — that is, the main building — would therefore include the airspace above at least to the height necessary to construct a new floor of flats on the roof space, if not considerably further. Alternatively, such airspace is appurtenant to the building and, in the further alternative, is part of the “common parts” as defined.
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* Editor’s note: Also reported at [1977] 1 EGLR 96; (1977) 241 EG 917
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[69] I do not dissent from the view that a transfer of the main building (whether with or without the remainder of the property) would indeed carry with it the airspace above at least to the height described by Griffiths J. However, that is because a landowner transferring an area of land together with the building standing on it is presumed to be transferring everything that it owns, which will include the airspace that forms part of what it owns. It is an entirely different question whether “building” in section 1(2) includes the airspace above the bricks, mortar and tiles that comprise the physical building.
[70] As to that, the tenants have no rights under their leases to access the roof. I understand that occasionally in the past, a representative of the tenants has gone onto the roof and into the mansard roof to deal with emergencies such as burst pipes and leaking water tanks. I do not think that that would be sufficient to turn any of the airspace into part of the building if, in the absence of such activity, it would not otherwise be part of the building. However, that is not the only consideration. The fact is that the landlord is under an obligation to keep the structure of the main building (including the roofs and chimney stacks) in repair. The landlord certainly requires access to carry out its obligations in respect of those structures, as well as in respect of the pipes and tanks that are to be found on the roof and within the mansard roof. The airspace is not, I accept, appurtenant to the building in the same sense that the gardens were appurtenant to the buildings in Denetower; the tenants having no rights over the airspace. However, or so it seems to me, the airspace, at least the height of the chimneys (but see [73] below), is an essential part of the space over which any owner of the main building with repairing obligations would need to have adequate rights of access. At a time when the airspace is actually owned by the owner of the building, I consider that it is correct to regard the airspace up to that height as being appurtenant to the building if not actually part of it. To echo the words of the Vice-Chancellor in Denetower, it would be to attribute to parliament an entirely capricious intention if I were to hold that the tenants’ rights to purchase did not extend to the airspace above the roof the enjoyment of which is necessary to maintain the structure, including the roof and chimneys, in the state of repair in which the landlord is obliged to keep it. In my judgment, it is a perfectly legitimate meaning of the word “building” that it includes the airspace necessary to enable maintenance to be carried out.
[71] If that is wrong, I would conclude that the airspace above the roof to that height is a “common part”, being part of the exterior of the building. Mr Lidington submitted that “exterior” cannot be given such a wide meaning and is referring simply to non-structural external surfacing such as cladding or render and paint. However, I would not restrict the meaning of the word in that way in the context of Part I. It makes perfectly good sense, in my judgment, to include the airspace above the roof as part of the exterior when the enjoyment of that space is from time to time necessary for the protection of the building, that is, by repairing it. I would accordingly hold that the airspace is part of the common parts and, as such, a disposal of it will be a relevant disposal within section 1.
[72] The leasehold valuation tribunal (Ms Siobhan McGrath and Ms Frances Silverman) has reached a similar conclusion on the identical definition of common parts in the Leasehold Reform, Housing and Urban Development Act 1993; Mr Michael Mark, sitting as a deputy adjudicator in respect of the Land Registry has reached the same conclusion. It has been urged on me that I should follow those decisions. I am, however, reluctant to place any reliance upon them; although the definition is the same, it is contained in a very different Act in a very different context and it does not follow that the same interpretation should be adopted in respect of the 1987 Act. However, for the reasons that I have given, I do reach the same conclusion in respect of the 1987 Act.
[73] Although I have said that the relevant airspace would extend at least to the height of the chimneys, I have not actually heard argument on that. As a practical matter, if any part of the airspace falls within the Act, it becomes impossible for the roof development to proceed. It may then be a matter of indifference to Berisworth whether or not it can retain some of the airspace. However, I will hear further argument, if requested, on the height to which DCB’s rights in respect of the airspace should extend.
Conclusion
[74] None of the property transferred by the transfer is within the scope of the Act. All the property demised by the lease is within the scope of the Act, subject to the resolution of how far above the roof the airspace that DCB is entitled to acquire should extend.
Claim allowed in part.
