Interface Properties Ltd v 307 Barking Road RTM Co Ltd

Landlord and tenant – Right to manage – Commonhold and Leasehold Reform Act 2002 – Appellant owning freehold of building with non-residential parts – First-tier Tribunal holding respondent entitled to acquire right to manage as internal floor area of non-residential parts exceeded 25% – Whether roof voids part of “internal floor area” within paragraph 1(1) of schedule 6 to 2002 Act – Appeal dismissed The appellant was the freeholder of 307 Barking Road, London E13. The property was a three-storey nineteenth-century end of terrace building. On the ground floor were commercial premises and a ground floor flat at the rear. On the first and second floors were three flats and two roof voids. There were common parts, including a staircase by which the flats were reached. The staircase was narrow and steep; outside the second floor flat was a landing big enough for one person to stand. The right-hand roof void could be accessed using a step-ladder through a hatch in the ceiling of the second floor flat. But it was not demised with the flat so the lessee of the flat had no right to go up there. Equally, the landlord had no access without the tenant’s permission. The respondent RTM company sought to acquire the right to manage the property on behalf of three of the four residential tenants. If the internal floor area of the whole building was taken to include the roof voids, and those were regarded as non-residential areas, the proportion of non-residential areas in the building was more than 25%, pursuant to paragraph 1(1) of schedule 6 to the Commonhold and Leasehold Reform Act 2002, and the respondent could not acquire the right to manage. The First-tier Tribunal found that the roof voids were not part of the internal floor area of the building and that the right to manage was acquired. The appellant appealed against that decision. Held: The appeal was dismissed. (1) The issue for determination was whether a non-residential part of premises falling within section 72(1) of the 2002 Act, that was inaccessible to the landlord and unfloored as at the “relevant date”, should be treated as part of the “internal floor area” of the premises for the purposes of paragraph 1(1) of schedule 6 to the 2002 Act. The use of the definite article before “internal floor area” in paragraph 1(1) did not mean that it was assumed that all parts of the building had a floor. Rather, it was for the parties and the FTT to ascertain what that area was for the calculation required by paragraph 1. “Floor area” was not defined, and paragraph 1(4) was a deliberately wide provision which provided: “For the purpose of determining the internal floor area of a building or of any part…, the floor or floors… shall be taken to extend (without interruption) throughout the whole of the interior of the building or part, except that the area of any common parts of the building… shall be disregarded”. (2) There was no express stipulation that the space concerned had to be in use, or potentially useful, and such a stipulation should not be implied or inferred; had parliament wanted to make that a requirement it would have said so. Therefore, although at least the right-hand void could potentially be used for storage if access were constructed via the landing or the next-door roof, that was not relevant to the decision whether that void was now part of the internal floor area of the premises. The purpose of paragraph 1 was to protect the landlord’s right to manage the non-residential areas when they were substantial, and therefore parts of the building that were not usable were irrelevant. The minimum requirement to be part of the internal floor area was the presence of a floor which was a continuous surface. Its presence or absence was obvious, without importing any technical language or specification, or any requirement about the extent of the load that a floor would bear. Paragraph 1(4) was a deeming provision. But it was aimed at interruptions such as non-structural partitioning. It might be aimed at temporary interruptions, so that an area that was normally floored but had had its floor taken up for repair would be included. That was what was meant by paragraph 1(4) which did not encompass areas without a floor. A space that might have a floor one day, or even a space that was going to have a floor because planning permission had been granted for development, was not part of the internal floor area of the premises: Indiana Investments Ltd v Taylor [2004] 3 EGLR 63 and Connaught Court RTM Co Ltd v Abouzaki Holdings Ltd [2008] 3 EGLR 175 considered. (3) That construction did not cause any difficulty in the context of section 103(4) of the 2002 Act which used the term “internal floor area” as the reference point by which the proportion of service charges payable by a lessee who was not a qualifying tenant was calculated; the idea that “internal floor area” referred to areas that had, or normally had, a floor was likely to be as appropriate in the context of service charges as in the assessment of the non-residential parts of the building for the purpose of the right to manage.  That eliminated the right-hand roof void in the present appeal, and therefore the appeal failed because it was agreed that, if either roof void was taken out of the calculation, the respondent was entitled to acquire the right to manage. It also eliminated the left-hand roof space, to which no access at all was possible at present and whose internal condition could not be known; it was most unlikely to have a floor, and the appellant could not show that it had one. (4) Potential usefulness was not a criterion that could be extracted from paragraph 1 of schedule 6 and the absence of legal access for the landlord to the right-hand roof was not relevant; to import such a requirement would contradict the deliberately wide wording of paragraph 1(4). As regard physical accessibility, arguably an area to which there was no present access and to which access could not be gained without making physical changes to the building was not within the natural meaning of  “internal floor area”. Accordingly, the appeal failed. Neither of the roof voids had a floor and therefore neither was part of the internal floor area of the premises taken as a whole. Thomas Cockburn (instructed by Lester Dominic Solicitors) appeared for the appellant; Stan Gallagher (instructed by Salisbury Law) appeared for the respondent. Eileen O’Grady, barrister Click here to read a transcript of Interface Properties Ltd v 307 Barking Road RTM Co Ltd