Collective enfranchisement – Internal floor area – Common parts – Building having both residential and commercial lessees – Residential lessees serving notice to acquire freehold – Whether common parts including areas serving exclusively commercial lessees – Preliminary issue determined
The claimant was established by the residential lessees of a property for the purpose of acquiring the freehold of the building under the Leasehold Reform, Housing and Urban Development Act 1993. The premises comprised 14 floors, with 168 residential flats and 20 shops at ground level; both the flats and the shops had been sold on long leases. The defendant had purchased the freehold of the property in 1995, subject to the various leases.
The claimant served a collective notice on behalf of the residential lessees under section 13 of the 1993 Act. The defendant served a counternotice disputing the claimant’s entitlement to acquire the freehold. It argued that the building did not qualify under the 1993 Act since, at the date of the notice, more than 25% of the internal floor area of the building was occupied, or intended for occupation, for commercial or non-residential use.
The court ordered the trial of a preliminary issue as to whether the premises were excluded from the right of collective enfranchisement, by virtue of section 4(1) of the 1993 Act, on the ground that the internal floor area of those parts of the premises that were neither occupied, nor intended to be occupied for residential purposes nor comprised in any common parts of the premises exceeded 25% of the entire internal floor area taken.
A central issue for determination was whether “common parts” in section 101(1) of the 1993 Act extended to those parts of the premises that were used exclusively by commercial lessees.
Held: The preliminary issue was determined in favour of the claimant.
It fell to the landlord to prove that the exception to the general right to acquire the freehold of a property was applicable.
The term “common parts” as used in the 1993 Act meant any part of the building that was not let and was used in common by more than one occupier of the building. Common parts did not have to be common to both residential and commercial occupants in order to be common parts for the purposes of the 1993 Act: Indiana Investments Ltd v Taylor [2004] 3 EGLR 63; [2004] 50 EG 86 considered.
Any other interpretation could result in complex analyses and divisions of common parts as parties, and the courts, struggled to classify the different areas. If residential and non-residential common parts were to be treated differently, it would distort the ratio of commercial-to-residential use to the detriment of the residential element and significantly upset the balance of the formula for measuring internal floor area. This could not have been the legislature’s intention.
Furthermore, under the terms of their leases, residential lessees were obliged to contribute to the maintenance of the commercial common parts, an inclusive and all-embracing view of the common parts that supported the interpretation contained in the 1993 Act.
Mark Sefton (instructed by Mayo Perkins, of Eastbourne) appeared for the claimant; Michael Buckpitt (instructed by Coole and Haddock, of Worthing) appeared for the defendant.
Eileen O’Grady, barrister
