Holding & Management (Solitaire) Ltd v Finland Street 1-16 RTM Co Ltd
Mr George Bartlett QC, president
Right to manage – RTM company claiming right to manage part of a building on behalf of tenants – Chapter 1 of Part II of Commonhold and Leasehold Reform Act 2002 – Appellant landlord disputing right – Whether premises comprising vertical division of a building as required by section 72(3)(a) – Leasehold valuation tribunal finding deviation from vertical not material and right to manage established – Appeal allowed
The appellant was the landlord of flats 1-16 in a property comprising one end of a purpose-built block that was interspersed with two-storey town houses. Flats 1-16 had their own separate entrance to the internal common parts and to the basement parking area, although the latter entrance, the security door and the two nearest parking spaces ran beneath the town house at no 17. The tenants of flats 1-16 claimed the right to manage the premises through a company formed for the purpose (the RTM company), pursuant to the provisions of Chapter I of Part II of the Commonhold and Leasehold Reform Act 2002. The appellant disputed the right to manage. The RTM company therefore applied to the leasehold valuation tribunal (LVT), under section 84(3) of the 2002 Act, for a determination that it was entitled to acquire that right.
The appellant contended that the statutory requirements were not fulfilled because the premises in question did not consist of a “self-contained building or part of a building” within the meaning of section 72. It submitted that the provisions of section 72(3), which determined whether a part of a building was “self-contained” for the purposes of the statute, were not met because, inter alia, the premises did not constitute a vertical division of the building as required by section 72(3)(a). The LVT found that there was a vertical division, save in respect of the parking area under no 17, and noted that some minor deviation from the strict concept of vertical severance had been permitted under other enfranchisement provisions, namely the Leasehold Reform Act 1967. It concluded that the area in question, which represented 2% of the floor area of the premises, was minimal and not material for the purposes of the 2002 Act. Accordingly, it found that section 72(3)(a) was satisfied and that the right to manage existed. The appellant appealed.
Right to manage – RTM company claiming right to manage part of a building on behalf of tenants – Chapter 1 of Part II of Commonhold and Leasehold Reform Act 2002 – Appellant landlord disputing right – Whether premises comprising vertical division of a building as required by section 72(3)(a) – Leasehold valuation tribunal finding deviation from vertical not material and right to manage established – Appeal allowed The appellant was the landlord of flats 1-16 in a property comprising one end of a purpose-built block that was interspersed with two-storey town houses. Flats 1-16 had their own separate entrance to the internal common parts and to the basement parking area, although the latter entrance, the security door and the two nearest parking spaces ran beneath the town house at no 17. The tenants of flats 1-16 claimed the right to manage the premises through a company formed for the purpose (the RTM company), pursuant to the provisions of Chapter I of Part II of the Commonhold and Leasehold Reform Act 2002. The appellant disputed the right to manage. The RTM company therefore applied to the leasehold valuation tribunal (LVT), under section 84(3) of the 2002 Act, for a determination that it was entitled to acquire that right.The appellant contended that the statutory requirements were not fulfilled because the premises in question did not consist of a “self-contained building or part of a building” within the meaning of section 72. It submitted that the provisions of section 72(3), which determined whether a part of a building was “self-contained” for the purposes of the statute, were not met because, inter alia, the premises did not constitute a vertical division of the building as required by section 72(3)(a). The LVT found that there was a vertical division, save in respect of the parking area under no 17, and noted that some minor deviation from the strict concept of vertical severance had been permitted under other enfranchisement provisions, namely the Leasehold Reform Act 1967. It concluded that the area in question, which represented 2% of the floor area of the premises, was minimal and not material for the purposes of the 2002 Act. Accordingly, it found that section 72(3)(a) was satisfied and that the right to manage existed. The appellant appealed.Held: The appeal was allowed. The requirement in section 72(3)(a) for a vertical division of the building was unqualified. Although de minimis deviations from the vertical could be ignored, the question was not whether the area outside a vertical line through the building was small in relation to the total floor area, but whether, including the area in question, the part of the building was, physically, a vertical division. Further, the LVT had erred in incorporating a test of materiality by reference to provisions in the 1967 Act that applied only in respect of a house and served a different purpose. No such qualification appeared in section 72 of the 2002 Act, and none was to be implied. On the facts found by the LVT, there was mostly vertical severance but also some horizontal severance. The departure from the vertical was not de minimis, and, accordingly, the part of the building in respect of which the claim was made did not constitute a vertical division of the building and was not a self-contained part of the building for the purpose of Chapter 1 of Part II. It followed that the RTM company was not therefore entitled to the right to manage.Justin Bates (instructed by Graham Harvey) appeared for the appellant; the respondent did not appear and was not represented.Sally Dobson, barrister
