Leasehold enfranchisement — Leasehold Reform, Housing and Urban Development Act 1993 — Collective enfranchisement — Right to amend initial notice — Whether claim including property that no right to acquire — Whether self-contained part of a building — Provision of “relevant services”
The claimant was the nominee purchaser specified by the participating tenants in a collective enfranchisement claim under Part I of the Leasehold Reform, Housing and Urban Development Act 1993. The claim related to a property in London W14, comprising 14 flats, that, together with the adjoining property, formed a mansion block owned by the defendant landlord. The defendant supplied hot water and central-heating services to the entire block under the terms of the tenants’ leases by means of a separate boiler house to the rear. One-half of the boiler house was included within the collective enfranchisement claim in the claimant’s initial notice. By its counterclaim, under section 21, the defendant denied the right to collective enfranchisement. It argued that the premises in question were not a self-contained part of a building within the meaning of section 3 of the Act, since the requirement under section 3(2)(b)(ii), that the “relevant services” could be provided to that part independently, without significant interruption in the provision of those services to the remainder of the building, could not be fulfilled.
The claimant applied to amend the initial notice to omit the boiler house and sought a declaration that it was entitled to acquire the freehold of the premises specified in the amended notice. It contemplated solving the problem of supplying “relevant services” to the 14 flats either by building a new boiler house within the curtilage of that part of the building or by installing individual systems in each flat. The defendant contended, inter alia, that: (i) the amendment was not authorised by para 15(2) of Schedule 3 to the Act since the initial notice did not specify any property that the claimant was not entitled to acquire; and (ii) the relevant services could not be provided within the terms of section 3(2)(b)(ii) either at all or without significant disruption.
Held: The claim was dismissed. (1) Para 15(2) cannot be read purposively to permit amendments in cases other than those specified. It applies only where the initial notice either specifies property or an interest that the claimant is not entitled to acquire under sections 1 or 2 of the Act or fails to specify property or an interest that the claimant is entitled to acquire. (2) The claimant was entitled to amend its notice, which included property that it was not entitled to acquire under sections 1 or 2. The boiler house was not demised by any of the tenants’ individual leases and was not property that any tenant was entitled to use in common with the occupiers of other premises: see section 1(3)(b). The tenants’ rights in relation to the boiler house were confined to receiving a supply of hot water from it pursuant to the landlord’s covenant; the landlord used the boiler house exclusively for its own purposes in fulfilling that covenant. (3) The premises specified in the notice as amended, excluding the boiler house, did not qualify as a self-contained part of a building since the requirements of section 3(2)(b) were not fulfilled. The “relevant services provided for occupiers of that part” within section 3(2)(b) are the service systems actually provided; the Act looks at alterations to the configuration of those existing services. Section 3(2)(b)(ii) was not fulfilled where the relevant services were to be provided to the enfranchising part by some separate means, different from the existing means and not in existence or available. The claimant had not shown that the relevant services could be provided independently either at all or without significant disruption.
The following case is referred to in this report.
Malekshad v Howard de Walden Estates Ltd (No 2) [2003] EWHC 3106 (Ch); [2004] 1 WLR 862; [2004] 4 All ER 162
This was a claim for declaratory relief and an amendment to the initial notice in a collective enfranchisement claim by the claimant, Oakwood Court (Holland Park) Ltd, under Part I of the Leasehold Reform, Housing and Urban Development Act 1993, against the defendant, Daejan Properties Ltd.
Kenneth Munro (instructed by Terence St J Millett & Co) appeared for the claimant; Timothy Fancourt QC (instructed by Wallace LLP) represented the defendant.
Giving judgment, HH Judge Hazel Marshall QC said:
[1] The claimant, Oakwood Court (Holland Park) Ltd, is the nominee company for the purpose of a purchase, by way of collective enfranchisement under Part I of the Leasehold Reform, Housing and Urban Development Act 1993 (the Act), of a building known as 1-14 Oakwood Court, Abbotsbury Road, London W14, to which I shall refer either as “the building” or as “nos 1-14”, where necessary, for clarity. By this Part 8 claim, it seeks a declaration of its entitlement to exercise the right to purchase the relevant property in the face of objection from the freeholder landlord.
[2] That landlord is the defendant, Daejan Properties Ltd, which is the freehold owner of the building and the long leasehold owner of the adjoining property, 15-30 Oakwood Court. These two properties (as I shall refer to them when I refer to them together) each comprise a mansion block of flats. They are individually separate, but are not detached, being vertically divided by a shared party wall.
[3] The long leaseholders of flats in the building came together in sufficient numbers to be qualified for the purpose of purchasing the freehold of the building under the Act. On 27 June 2005, they served on the defendant an initial notice under section 13 of the Act, with the claimant as the purchasing vehicle.
[4] On 7 September 2005, the defendant served a counternotice, under section 21 of the Act, denying the claimant’s entitlement to exercise the right of collective enfranchisement in respect of the specified premises. The defendant’s stated reasons, pursuant to section 21(2)(b), are as follows: |page:122|
The Specified Premises do not consist of a self-contained building or part of a building as defined by section 3 of the Act because the specified premises are part of a building and the relevant services provided for the occupiers of that part are not provided independently of the relevant services provided for occupiers of the remainder of the building nor could they be so provided without involving the carrying out of any works likely to result in a significant interruption in the provision of any such services for occupiers of the remainder of the building.
This is a reference to the statutory requirements for premises to qualify as being capable of collective enfranchisement under the Act and, in particular, the requirement at section 3(2)(b). I will return to this later, but it is first necessary to explain how this objection has arisen.
[5] The 30 flats in both properties, that is, in the whole of 1-30 Oakwood Court, are held on long leases by individual flat owners, and the leases make provision for, among other things, the supply by the landlord of hot water and central-heating services to flats. This service is supplied from plant situated in a separate boiler house, which is a building comprising a ground floor and basement. This boiler house is at the rear of the site of the two properties, positioned between two parts of a row of garages, and located more or less opposite the end of the party wall between nos 1-14 and 15-30.
[6] The plan that the claimant served with its initial notice, in order to specify the property that it claimed to acquire, included the building of nos 1-14 and some garden land, but did not include any of the garages. None of this is contentious. However, the proposed site boundary between nos 1-14 and 15-30 was simply an extrapolation of the line of the party wall between those two properties, projecting forwards and backwards to the boundaries of the site. The effect of this was that it dissected the boiler house, including one-half of it but not the other half.
[7] The boiler house is not divided internally at this position, or at all. Moreover, the plant that provides the hot water and central-heating services is common plant for both parts of the property. In other words, plant supplying both nos 1-14 and 15-30 Oakwood Court is contained in both halves of the boiler house, rather than plant serving each such property being separately positioned in the relative half of the boiler house.
[8] The defendant objected to the claimant’s initial notice on the grounds set out above, arguing that the premises specified in the initial notice were not premises to which Chapter 1 of the Act applied at all because they failed to meet the qualification contained in section 3(2)(b) of the Act.
[9] Section 3 reads, so far as material, as follows:
3 Premises to which this Chapter applies
(1) … this Chapter applies to any premises if —
(a) they consist of a self-contained building or part of a building…
…
(2) For the purposes of this section… a part of a building is a self-contained part of a building if —
(a) it constitutes a vertical division of the building and the structure of the building is such that that part could be redeveloped independently of the remainder of the building; and
(b) the relevant services provided for occupiers of that part either —
(i) are provided independently of the relevant services provided for occupiers of the remainder of the building, or
(ii) could be so provided without involving the carrying out of any works likely to result in a significant interruption in the provision of any such services for occupiers of the remainder of the building;
and for this purpose “relevant services” means services provided by means of pipes, cables or other fixed installations.
[10] The claimant understood that the defendant’s objections arose from the shared heating/hot water system referred to above, but took the view that this did not present a valid objection to the claim to enfranchise. Although it accepted that the services were currently shared, it considered that the requirement at section 3(2)(b)(ii) was met, as a matter of fact.
[11] Whether because it had by then examined the configuration of the boiler-house plant in more detail, or for some other reason, the claimant also decided that it ought not to have included half of the boiler house in its claim. It sought to progress the matter by bringing the present claim, which it commenced on 4 November 2005.
[12] The first head of relief claimed seeks leave to amend the claimant’s initial notice by substituting a new plan, which omits the half of the boiler house originally included. The effect is that the claimant seeks to acquire only the building, with the garden area previously indicated.
[13] The second head of relief claimed is a declaration that the claimant is entitled to acquire the freehold of the premises specified in the notice as (presumptively) amended. Although the claim does not refer expressly to section 22(1) of the Act, it seems that this is the relevant section under which that claim is made.
[14] The remaining heads of relief seek a declaration that the defendant’s counternotice dated 7 September 2005 is of no effect, an order that the defendant should serve a further counternotice within a specified time and all further consequential relief.
[15] The claimant’s case for this relief has been advanced by Mr Kenneth Munro, of counsel. Until the exchange of skeleton arguments, it seems that the claimant had believed that the amendment of the notice was not contentious, and the only outstanding issue was that relating to the independence of the service installations. However, it became apparent from the defendant’s skeleton argument that the dispute was not that simple, and that the defendant was taking further points relating to the amendment proposed by the claimant, and its procedural consequences.
[16] The defendant resists the claimant’s claim on both procedural and substantive grounds. Mr Timothy Fancourt QC, on its behalf, argued as follows:
(1) The amendment of the initial notice proposed by the claimant is not one that is authorised by para 15(2) of Schedule 3 to the Act. Leave to make the amendment sought cannot therefore be granted.
(2) If that is right, this claim must fail. The claimant has brought its proceedings only in respect of the premises specified in the amended notice, and if the amendment cannot be made, it has no vehicle for any claim.
(3) This position cannot be saved by the claimant abandoning its request to amend and seeking to rely upon its original notice, because it has not made any application for an order confirming its entitlement to enfranchise in respect of those specified premises. Such a change of stance would, in any event, require an application to amend the Part 8 claim form, which has not been made and which could not, or should not, be permitted if it were now made for the following reason.
(4) The effect of the failure to make a claim under section 22(1) to uphold the right claimed in an initial notice within the stipulated two months from a landlord’s counternotice is that the original notice is deemed to have been withdrawn on the expiry of that period (see section 29) and, thus, on 7 November 2006 in this case. The claimant would then have no right to serve another initial notice in respect of the property until after 7 November 2006 (although by the time of this hearing on 2 November 2006, that restriction was about to expire). As the amendment of the claim would be retrospective, permitting any amendment would thus deprive the landlord of its substantive right to insist upon such a time lapse and the receipt of a fresh notice, and should not therefore be permitted.
(5) If either of the above is wrong — that is, either the notice can be amended as the claimant claims, (contrary to point (1)), or it cannot but the claimant is allowed to proceed despite not having made a claim relying upon its original notice (contrary to points (3) and (4)), the claimant must still fail in any event because it cannot, on either basis, satisfy section 3(2)(b)(ii) of the Act with regard to its claim.
[17] The defendant’s case on the last point is that:
(i) the claimant has not proved that relevant services could be supplied to the occupiers of nos 1-14 by any means other than the existing plant room; and/or
(ii) the works required to disconnect nos 1-14 from the existing services supply would be likely to result in a “significant interruption” in the provision of services for occupiers of nos 15-30. |page:123|
[18] Having thus summarised the above issues now arising, I will deal with them in a convenient order.
1. Jurisdiction to amend section 13 notice
[19] This argument turns, first, on the true interpretation of para 15(2) of Schedule 3 to the Act and, second, on the application of section 1(2) and (3) of the Act (laying down what premises tenants are entitled to acquire by way of collective enfranchisement) to the facts of this case.
[20] Paragraph 15 of Schedule 3 to the Act deals with inaccuracies in an initial notice. It reads.
15.— (1) The initial notice shall not be invalidated by any inaccuracy in any of the particulars required by or by virtue of section 13(3) or by any misdescription of any of the property to which the claim extends.
(2) Where the initial notice —
(a) specifies any property or interest which was not liable to acquisition under or by virtue of section 1 or 2, or
(b) fails to specify any property or interest which is so liable to acquisition,
the notice may, with the leave of the court and on such terms as the court may think fit, be amended so as to exclude or include the property or interest in question.
(3) Where the initial notice is so amended as to exclude any property or interest, references to the property or interests specified in the notice under any provision of section 13(3) shall be construed accordingly; and, where it is so amended as to include any property or interest, the property or interest shall be treated as if it had been specified under the provision of that section under which it would have fallen to be specified if its acquisition had been proposed at the relevant date.
[21] Mr Fancourt said that, on analysis of para 15(2), it permits amendment only in limited situations. The first is where the notice specifies property or an interest that the claimant, exercising the tenants’ rights, is not entitled to acquire under sections 1 or 2 of the Act. The court may then permit the notice to be amended to exclude this ineligible property or interest. The second is where the notice fails to specify property or an interest that the claimant is entitled to acquire. The court may then permit the notice to be amended to include that property or interest.
[22] Here, the claimant is seeking to exclude property that it gave initial notice to acquire, and it can exclude property only by relying on the first limb of para 15(2). It must therefore demonstrate that it is seeking to exclude property that it was not entitled to acquire. If it was entitled to acquire that property, there is no jurisdiction to permit amendment of the notice because para 15(2) does not permit a claimant that has launched a claim to acquire property that it is entitled to acquire subsequently to change its mind and amend that claim to reduce the extent of the property it takes.
[23] I asked Mr Fancourt what could possibly be the logic behind such a distinction. He agreed that he could not advance any, but said that the words of section 15(2) were really so clear that they would allow no other interpretation.
[24] Mr Munro’s only answer to this was that such a limitation was capricious and absurd and, consequently, the words should be construed purposively so as not to prevent amendment in a situation such as this. Amending in the present situation could cause a landlord no more prejudice — and, in fact, probably less — than amendment in the situations expressly envisaged by para 15. The fact that amendment would be allowed only on terms, if necessary, emphasised this. There could easily be situations in which tenants might reasonably wish to reduce their aspirations in the course of the enfranchisement procedure. An example would be if it emerged that some piece of ancillary land was in fact worth significantly more than they had realised. It would be nonsensical if, in such a situation, the tenants could not amend their notice but were obliged to start again.
[25] I am in complete sympathy with Mr Munro’s argument, but I can see no answer to Mr Fancourt’s. Tempting though it is to suggest that a “purposive” approach to para 15(2) would produce the result that any form of amendment of the premises proposed to be acquired should be potentially capable of being made on fair terms, in my judgment, such a “purposive” approach is permissible only as an alternative to a “literal” approach where there is either an ambiguity or a patent mistake or inconsistency in the words of a statute. I can see none. I therefore hold that the claimant’s initial notice can be amended only in the manner sought if the effect of it is to exclude property, that is, half of the boiler house building, that the claimant is not entitled to acquire.
[26] It is therefore necessary to consider that issue. As to this, Mr Fancourt argued that the claimant is entitled to acquire this property because it is in fact entitled to acquire the whole of the boiler house building under section 1(2) and (3) of the Act, and the amendment therefore falls outside para 15(2). Mr Munro argued that, on the true construction of those sections applied to the facts of this case, the claimant was not entitled to acquire the boiler house building or any part of it at all, so that the amendment falls within the literal words of para 15(2).
[27] Mr Fancourt’s argument can be summarised as follows. The claimant, on behalf of the qualifying tenants, has the right to acquire the freehold, not only of the building (provided that it is self-contained (see section 3(1)(a))) in which their flats are contained but also of any other premises qualifying as “additional premises” under section 1(2)(a) and (3) of the Act. These subsections read:
(2) Where the right to collective enfranchisement is exercised in relation to any such premises (“the relevant premises”) —
(a) [the acquiring entity is entitled… to acquire] in like manner, the freehold of any property which is not comprised in the relevant premises but to which this paragraph applies by virtue of subsection (3)…
(3) Subsection (2)(a) applies to any property if… at the relevant date
either —
(a) it is appurtenant property which is demised by the lease held by a qualifying tenant of a flat contained in the relevant premises; or
(b) it is property which any such tenant is entitled under the terms of the lease of his flat to use in common with the occupiers of other premises (whether those premises are contained in the relevant premises or not).
[28] The boiler house is not demised by any of the tenants’ flat leases, of which I have been shown a typical example. If the boiler house is property that the tenants are entitled to acquire, this can be only under subsection 1(3)(b). Mr Fancourt argued that this subsection covers the case. In support of this, he pointed to the following facts.
[29] By clause 5(4) of the flat lease, the landlord covenants, subject to immaterial exceptions:
to use its best endeavours to maintain a reasonable supply of hot water by means of the communal boiler and/or heating installation to the Flat for domestic purposes and also during the winter months (to be identified by the Lessor) to supply hot water to any radiators which are at the date hereof in the Flat.
[30] In addition, each tenant is expressly granted the right, by para 3 of the first schedule to the lease, to:
… The free and uninterrupted passage and running of water soil gas and electricity from and to the Flat through the sewers drains and watercourses cables pipes and wires which now are or may at any time hereafter be in under or passing through the Buildings or any part thereof.
[31] The definition of the “Buildings” is:
the whole or such part or parts of the Estate (but in any event comprising not less than the Block [sc Nos 1-14] as the lessor may from time to time be able and/or choose in its absolute discretion to manage…; for the purpose of complying… with its obligations under Clause 5 hereof or otherwise,
which therefore includes the boiler house.
[32] Furthermore, the tenant covenants to pay, among the items included in its service charge in clause 2(2)(a) of the lease, its appropriate share of:
(i) the costs of maintaining, repairing, and replacing, inter alia, the “water pipes” in under and upon the buildings: clause 2(2)(a)(iii)(b);
(ii) the costs of “any other services or facility that the Lessor may in its absolute discretion provide for the comfort or convenience of occupiers…”: clause 2(2)(a)(xi);
(iii) the cost of all fuel required for the communal boilers supplying the heating and/or domestic hot water systems in the buildings: clause 2(2)(a)(xv)) and; |page:124|
(iv) the cost of maintaining, repairing and replacing the said heating and hot water systems including the boiler room or rooms: clause 2(2)(a)(xvi)).
[33] These facts, Mr Fancourt argued, amount to the tenants in effect having the use of the boiler room, in common with others, for the purpose of obtaining their supply of central heating and domestic hot water. Consequently, the tenants would have been able to claim to acquire the whole of the boiler house as part of their collective enfranchisement. He argued further that this conclusion is reinforced by the fact that if the landlord failed to use its best endeavours to supply the hot water and, for example, let the plant fall into disrepair or cease to be used, the tenants would, he submitted, have a self-help remedy entitling them to enter the boiler house for the purpose of putting the plant in proper working order.
[34] Mr Munro disputed this analysis, and said that the tenants are not given any entitlement to “use” the boiler room, as that word is properly understood, at all; Mr Fancourt’s argument confused the notion of using something with the concept of obtaining a benefit from that something. The only party with an entitlement to “use” the boiler house or plant room is the landlord, by virtue of its own property interest. The fact that it must or might use the property in order to fulfil its own obligations to the tenant under the lease is neither here nor there. He denied that the tenants could have the remedy of self-help suggested by Mr Fancourt, but, in any event, submitted that this does not amount to a right to use property, but merely to a possible remedy for a breach of covenant.
[36] In my judgment, Mr Munro’s argument is correct. The purpose of section 1(3)(b) is to enable tenants to acquire property that they have rights to use, but not exclusive rights to use, that is, property that would normally come under the description of “common parts” in a shared property development (although the concept is not confined to common parts used only by the tenants of the individual flats in premises being enfranchised). The tenants of flats 1-14 Oakwood Court are not entitled to “use” the boiler room itself in common with anyone. They are entitled to receive a supply of hot water from it, consistently with the landlord’s fulfilling its covenant to provide such a supply, but it is the landlord that is using the boiler room, and using it exclusively for its own purposes in fulfilling that covenant.
[37] It follows from the above, therefore, that the claimant’s proposed amendment to its initial notice comes, in my judgment, within para 15(2)(a) of Schedule 3 to the Act, and the court has express jurisdiction to allow the requested amendment. I will therefore make that order, on the usual terms as to costs thrown away — although, at present, I have difficulty seeing how any such costs could have arisen.
2. Timeousness of application
[38] The above conclusion also disposes of the further arguments relating to the timeousness of the present application, because Mr Fancourt accepted that if the proposed amendment is permissible, it has the effect, under para 15(3) of Schedule 3, of being read back into the initial notice, so that the issue of whether this application was brought within due time of the notice to which it relates does not arise.
[39] Mr Munro had not, in fact, made any application to amend the claimant’s proceedings and, in the light of my finding above, he has no need to do so. I will therefore say only that I find Mr Fancourt’s argument unattractive.
[40] This point relates, it must be remembered, not to the statutory power to permit amendment of a party’s unilateral notice (dealt with above) to make it conform to the property that the tenants are entitled, or wish, to acquire, but to the court’s inherent power to allow amendment of the claim before it to make it conform to the property specified in the claimant’s notice. This is a purely procedural point in this case, and it is difficult to see how it could ever be anything else.
[41] The purpose of section 29 is to ensure that tenants’ powers of collective enfranchisement are exercised only seriously and responsibly, by providing a sanction against frivolous, casual, half-hearted or ill-thought-through claims, and thereby protecting the landlord from being unreasonably vexed. Viewed in this light, section 29 does not confer any substantive right on the landlord, and its purpose is not served by preventing tenants who have been seeking to pursue a perfectly serious and genuine claim from proceeding with it just because they have made a procedural error, perhaps (as here) merely in how they may have worded their proceedings. There would be no prejudice to the landlord in permitting any such amendment, and refusing it would, in my judgment, provide it with an unjustified windfall, by forcing the tenants to start again with a later valuation date and, all too likely, a consequently higher purchase price.
[42] The court’s power of amendment can always be exercised on terms, and in the case where any real prejudice to the landlord could be demonstrated, arising out of a mistaken form of proceedings, appropriate terms can be imposed to deal with this, such as the provision for payment of interest suggested by Neuberger J in Malekshad v Howard de Walden Estates Ltd (No 2) [2003] EWHC 3106 (Ch); [2004] 1 WLR 862 (although that was, again, a case concerned with amendment of initial notices.)
3. Qualifying premises:”Self-contained”
[43] I turn, therefore, to consideration of the essential point in the case, which is whether the claimant is in fact entitled to exercise the right to collective enfranchisement at all, because of the objection made in the landlord’s counternotice. I do so on the basis that I have already held to apply above, namely that the claimant is not entitled to include the boiler house, or a half of it, in its claim to enfranchise nos 1-14 Oakwood Court, but can, and does, claim only those premises not including any part of the boiler house. I do not consider this question, therefore, on the alternative basis of an enfranchisement of the premises as originally specified on the plan, although this was addressed in the written submissions on this topic that I directed the parties to provide when the hearing overran the day originally fixed for it.
[44] The issue, therefore, is whether the premises specified in the amended initial notice are “a self-contained part of a building” within the meaning of section 3(2) of the Act, which I have quoted above, and, in turn, this depends upon the degree of independence of the provision of the “relevant services” to the occupiers of that part of the building comprising nos 1-14.
[45] It is common ground that such services are not provided independently of the relevant services provided for occupiers of the remainder of the building — more specifically the occupiers of nos 15-30 — within the meaning of subsection 3(2)(b)(i). The dispute between the parties is whether the alternative possibility of subsection 3(2)(b)(ii) applies, that is, whether the relevant services (namely, “services provided by means of pipes, cables or other fixed installations”) provided for the occupiers of nos 1-14:
could be so provided [ie, provided independently of the relevant services provided to occupiers of the remainder of the building] without involving the carrying out of any works likely to result in a significant interruption in the provision of any such services for occupiers of the remainder of the building.
[46] There is no authority that either counsel or I have been able to find on the application of this subsection, either in general or specifically as to what constitutes a “significant interruption”.
[47] The appropriate approach to deciding this issue under the Act is, in my judgment, to take the following five steps:
(1) Identify the services provided to occupiers of the enfranchising part that are in issue because they are not independently provided.
(2) Consider whether those services can be provided to the enfranchising part independently of the provision of the same service(s) to the remainder of the building.
(3) Ascertain the works required to separate the respective parts of the services supplying the enfranchising part and the remainder of the building, so that such services would thereafter be supplied to each such part independently of the other;
(4) Assess the interruption to the latter services (that is, those serving nos 15-30) that carrying out those works would entail.
(5) Decide whether this is “significant” within the meaning of the subsection. |page:125|
[48] The first issue is a question of plain fact. The second, third and fourth are matters of expert evidence. The fifth is a question of construction of the Act and the application of that construction as a matter of fact and degree.
(1) What services?
[49] With attention originally focused upon the issue regarding half of the boiler house, the claimant seems to have seen these as being simply the shared supply of domestic hot water and central heating. Subsequently, the provision of other services was put in issue by the defendant and came to be reviewed.
[50] In total, eight such relevant services appear to have been identified, namely: central heating; domestic hot water; mains cold water; cold water down service; cold-water feed to hot-water generator; gas; electricity; and the provision of a flue to remove gases from the combined boiler house.
[51] Gas, electricity and cold-water feed to the hot-water system ultimately played no part in the argument before me, since it was accepted that separating off these services could be effected without any disruption to nos 15-30. The remaining five matters figured more prominently in the dispute, but the inclusion of all of these has itself been the subject of dispute.
[52] By an order made in January 2006, each party was given leave to call expert evidence “in the field of heating engineering”. The claimant obtained expert evidence from from Mr Charles William Gray Eur Eng C Eng FEI FCIBSE FinstR MAE MEWI on the last day specified in the order. Mr Gray was asked:
(i) to report on whether the existing boilers could be altered to serve 15-30 Oakwood Court but not nos 1-14;
(ii) to confirm that there were alternative means of providing the services to nos 1-14; and
(iii) to confirm that certain assertions made in the claimant’s original evidence supporting its application were correct.
[53] This last was a reference to the evidence supporting the claimant’s claim, given by Mr Philip Hasler, solicitor, acting on its behalf, and submitting that the communal hot-water/central-heating system was no obstacle because he was informed that: (i) valve(s) that would isolate the water flow to each part of the building already existed; (ii) a permanent isolation of the two parts of the system could be effected within 24 hours; (iii) “a new dhw/ch system could be provided within the curtilage of no 1-14 serving only 1-14” without significantly interrupting the provision of services for nos 15-30; and (iii) “if no agreement can be reached in relation to the continuing use of the boiler room and plant therein”, a temporary boiler plant could be provided on completion of the purchase, pending the creation of a permanent alternative comprising either a permanent boiler house or the installation of individual systems in each flat.
[54] The defendant did not meet the time limit for exchange of expert reports but was given an “unless” extension until 26 May 2006. It did produce a report from Mr Henry Michel Eldred Eng Tech MIPHE MaPS ICIOB RP, dated 19 May 2006. Mr Eldred was apparently asked simply to consider whether the existing services (and, in particular, hot water and central heating) provided to flats 1-14 were provided independently of the services provided to the occuipers of flats 15-30 Oakwood Court, or could be so provided without the carrying out of works likely to cause significant interruption to the provision of those services to the occupiers of flats in 15-30 Oakwood Court, that is, directly reflecting the provisions of section 3(2)(b) of the Act. His report considered, therefore, not only the issues of central heating and domestic hot water but also the other services identified above, and, in particular, he raised issues about the mains cold-water supply and the “domestic” cold-water services that were supplied from a common cold water tank on the roof of nos 15-30.
[55] The expert evidence was presumably exchanged within the timetable laid down. No point was taken that Mr Eldred’s evidence had gone outside the precise terms of the original order for expert evidence. The two experts met and drew up, as directed, in August 2006, a schedule of points of agreement. As to central heating and hot water, this simply reiterated their respective reports. As to cold-water services, it recorded their agreement in principle of the description of those services given by Mr Eldred, and identified their points of disagreement as relating to the installation of necessary back-flow devices and the extent of disinfection that would be required if these services were to be separated. Although Mr Gray’s agreement was apparently somewhat cautious, since he had regarded these points as going outside his original instructions, no steps were taken by the claimant to get Mr Gray to carry out any survey of the cold-water installations, the absence of which had been the cause of his reluctance to do more than agree matters “in principle”.
[56] Matters rested there until shortly before the hearing (which took place on 2 November 2006, having had to be adjourned from an earlier trial date). In the interim, the defendant took the opportunity of seeking yet further evidence from Mr Eldred, this time with regard to the flue. It asked what disruption or effect upon the hot-water and heating service to nos 15-30 would be caused if the boiler house flue, the route of which went within and up the wall of nos 1-14, was diverted to discharge within the boundaries of nos 15-30. It also asked what would be the scope of works to decommission unwanted parts of the boiler plant.
[57] Mr Eldred provided a report on these aspects dated 25 October 2006. It was passed to Mr Gray on 30 October 2006. He prepared a brief response, but obviously without further research, on 1 November 2006, the day before the hearing.
[58] Mr Munro, for the claimant, has objected that the defendant ought not to be permitted, as it now does, to take any point as to the building not being “self-contained” on the basis of reliance upon either the non-independence of the cold-water services or the diversion of the flue (although he also argued that there is, in fact, no valid point in relation to the last in any event). He complained that these points were not part of the defendant’s original objection in its counternotice, but were merely an afterthought, produced late in the day. Mr Gray had not been able to deal with them properly, but could give only an off-the-cuff response in his latest report and in his evidence to the court. The defendant therefore ought not to be allowed to rely upon such points. Mr Munro did not wish, however, to seek an adjournment to deal further with these points because of his client’s understandable concerns about delay and rising costs; he simply wished to object that they should not be admitted.
[59] Mr Fancourt argued that these additional points were plainly material on the issue of whether the premises were self-contained, and it would be wrong to ignore them. They had been clearly raised sufficiently far in advance of any hearing that the claimant could have instructed Mr Gray to deal with them further in the intervening period. If it had not done so, it really had only itself to blame, but, in fact, Mr Gray was perfectly well able to deal with the points at the hearing, largely because, as his response of 1 November 2006 showed, he did not disagree materially with Mr Eldred.
[60] I decided that the defendant should be allowed to raise these points because it would be artificial to exclude them. The test under the Act is a practical test and all relevant practical matters should therefore be considered. Mr Gray had been aware of the cold-water systems issue for several months, and was able to give his answers in evidence. Although the precise point with regard to the flue had been raised only late in the day, Mr Gray had in fact made points about the flue in his original report, so that it was not entirely a surprise point. I was of the view that the case could still be fairly dealt with by my giving appropriate weight to the fact that Mr Gray had not actively considered these points in depth, when forming my view on their validity and I allowed the case to continue on that basis.
[61] The potentially problematic services are therefore identified as the provision of:
● central heating;
● domestic hot water;
● mains cold water;
● domestic cold-water supply;
● the presence, or diversion, of the boiler-house flue. |page:126|
(2) Can those services be provided to the enfranchising part independently of their supply to the remainder of the building?
[62] Before moving onto this point, it is convenient to refer to the expert evidence, of which I have, as mentioned above, received a great deal. This identifies the configuration of the plant providing these services and the media conducting them, and sets out the steps that the experts say would need to be taken in order to provide such services separately to nos 1-14 and 15-30, starting from the present physical situation. I will summarise this in non-technical terms.
[63] In essence, Mr Gray’s report concluded that, by means of closure of various existing valves and adjustment of settings, the present central-heating and hot-water system could be set so as to serve only nos 15-30, and a permanent separation could be effected by draining down the relevant parts of the system and capping off the pipes. Such work could be done, he said, causing no more than eight hours’ interruption of the heating service to nos 15-30 and no interruption of the hot-water supply. The result would be that nos 1-14 would cease to be supplied by the centralised boiler house. There would then be two possibilities for an alternative supply. Either the tenants could construct a new centralised boiler house for nos 1-14, on that property, or they could install individual electric- or gas-fuelled supplies in their own flats. Each solution had difficulties, and his ultimate recommendation was that the claimant and the defendant should seek to agree together, to continue to share the use of the existing boiler house. He also pointed out that the position of the flue would require to be considered. He thus broadly confirmed the accuracy of the statements made by Mr Hasler, although subject to a survey of underground services.
[64] Mr Eldred’s report reviewed each of the relevant services already mentioned. He gave more detail about the works required in practice, in his view, to effect a separation of each of them in respect of nos 1-14 and 15-30. He suggested a further theoretical alternative as regards the provision of central heating and hot water, namely the rearrangement of plant in the boiler house to provide for separate parts (there were two boilers) to be dedicated to the separate properties.
[65] Going on to deal with cold-water services, he indicated that the separation of the domestic cold-water feed would, first, require the installation of a separate cold-water cistern to feed nos 1-14, as the current cistern on the roof of flats 15-30 fed both blocks. A separate cold-water mains supply would also have to be installed. In each case, to a greater or lesser degree, questions of disinfection (chlorination) of the systems that had been disturbed, and the installation of back-flow devices, all as currently required by water regulations, would need to be effected.
[66] In his conclusions, he provided a list of his estimates of the disruption times for nos 15-30 if the various works of segregation were carried out. He dismissed the option of dividing up the boiler house on the ground that it was impractical, since it would cause at least six weeks of disruption. He then concluded with regard to the material services, that, with proper sequencing of works, the separation of each of the services could be effected, with the hours of disruption to nos 15-30 being: central heating (eight), hot water (two), cold-water down service (separation 10, chlorination 16) and cold-water mains (separation 10, chlorination 6). Given that some works could be done simultaneously, he concluded that the works ought to be capable of being done with a total of 50 hours’ actual disruption over the period of a works programme of around two months.
[67] As identified subsequently by the experts, there was thus agreement between them with regard to the position on central heating, and disagreement with regard to hot water merely as regards the need for two hours’ disruption, caused because Mr Eldred considered that back-flow devices would have to be installed.
[68] There was more disagreement with regard to cold-water services. As mentioned above, Mr Gray agreed with Mr Eldred’s description “in principle”, but although the experts were able to agree the general principles of requirement for back-flow devices and disinfection, Mr Gray was reluctant to agree with Mr Eldred’s view of the actual works required whether these would be appropriately regarded as “major extensions or alterations to existing systems” within the meaning of para 13 of the Water Supply (Water Fittings) Regulations 1999 (the 1999 Regulations). The materiality of this is that this paragraph states that such works require disinfection of the entire system, implying that otherwise such disinfection would or might not be necessary.
[69] This aspect of the matter proved to be the major point in the experts’ oral evidence, and I will return to this below.
[70] Mr Eldred’s late comments were directed at whether either diversion of the flue onto nos 15-30, or necessary decommissioning works for the existing boiler-room plant, would cause disruption to the heating and hot-water supply to nos 15-30. His conclusion was that moving the flue would require shutting down the boilers and cause a minimum of three days’ disruption, and that a further two eight-hour periods of disruption would be required to apply acoustic insulation to the flue. Decommissioning works would require a further two hours’ disruption.
[71] Although not accepting that diversion of the flue was required under the Act, Mr Gray accepted Mr Eldred’s methodology and his conclusions as to the length of disturbance for moving the flue, but disputed whether it was necessary to shut down the boilers while applying acoustic insulation. He disputed Mr Eldred’s views of necessary decommissioning works as an “overreaction”.
[72] Both experts were cross-examined, and I shall refer to this further below, but the first point made by Mr Fancourt in the above circumstances was a general one.
[73] He reminded me that the issue is not whether the tenants of the enfranchising part do or do not want the relevant services, but the ease with which the relevant services, as identified, are capable of being provided to the enfranchising part independently of the remainder of the building. This is ultimately tested by the stipulation that any works necessary to achieve this should not cause significant interruption to the supply of those services to the remainder of the building, but this must still be viewed in the context of the general reason for the test being applied at all. This is a consideration of whether the enfranchising part of the building can be viewed as being “self-contained”, and the question as to what the occupiers of that part could do, or even intend to do, with it is not the relevant test.
[74] Looking at the issues with regard to the central-heating and hot-water supply, therefore, he said that although the experts may have agreed that one possible option for providing central heating and hot water to the flats in nos 1-14 is that the flat owners can do so independently, that is not an option that fulfils the statutory test. It does not involve providing the relevant service to the occupiers at all.
[75] I agree with Mr Fancourt, but, in my judgment, this leads to a further point on the construction of section 3(2)(b) of the statute, namely what is meant by:
(b) the relevant services provided for occupiers of that part…
(Emphasis added.)
[76] On one view, that can simply mean services of the relevant generic type. On another view, it is looking at the services of that type actually provided, and looking at whether the actual service systems provided, although not themselves perfectly independent, can be made so with minimal work, tested by the degree of disruption to other parts of the overall property.
[77] In my judgment, Mr Fancourt’s point suggests that the proper conclusion is that it is the latter with which the statute is concerned, and not just the broad theoretical concept of the former. If it is the former, then, as illustrated by the material in this case, the issue divides into parts that become quite distinct from each other, namely: (a) whether relevant services (that is, the services currently required to enable the residential use of the flats in the enfranchising part) could be provided to the enfranchising part by some separate means or other, even if different from the existing means and not currently in existence or available; and (b) would the process of disconnecting the services to the enfranchising part from those to the remaining part cause significant interruption to the remainder of the building? |page:127|
[78] However, question (a) does not appear to me to be an appropriate test of whether the enfranchising part is “self-contained”. It must be remembered that section 3(2)(b)(ii) is actually a mitigation of the basic principle set out in subsection 3(2)(b)(i), that the badge of a:
“self-contained building” is that the “relevant services provided to the occupiers of that part are provided independently of the relevant services provided to the occupiers of the remainder of the building”.
Subsection 3(2)(b)(ii) mitigates the strictness of this by providing that if this result can be achieved with sufficiently little alteration work that it would not cause a significant interruption in the services to the other occupiers, that will still enable the enfranchising part to be regarded as sufficiently “self-contained” to qualify under the Act.
[79] The effect of approaching the issue on the other, twofold, basis is illustrated in this case. The claimant claims that the enfranchising part (nos 1-14) is “self-contained” notwithstanding that, for it to operate as such, works involving the erection of a new boiler house or the installation of individual central-heating/hot-water systems and the installation of a new cold-water mains supply will be required to the enfranchising part itself. This does not sit comfortably with the basic principle that one is looking to see if the part of the building as it exists is either clearly self-contained or so nearly self-contained that it can effectively be so regarded.
[80] My view that the Act is looking at alterations to the configuration of the existing services, rather than the possibility of providing alternative services, is fortified by considering the operation of the section in the context of the transaction that the Act contemplates, namely a simple sale of the enfranchising part by the freeholder (or other superior interests) to a separate nominee company. Such a transaction is plainly expected to take place on a particular completion day, which will then effect a transition of the enfranchising part from being a part of a building owned and operated by the freeholder (as part of a larger estate in cases like the present) to being a part of a building owned and operated on a separate and “self-contained” basis by the nominee company vehicle. This concept, again, does not work comfortably with a situation in which, in order to effect a separation of services to make the enfranchising part operate on a self-contained basis, a lengthy programme of works is required in practice, possibly involving the obtaining of planning permissions and entailing significant alterations to the enfranchising premises like erecting a boiler house or installing an entirely new cold-water main. Are such works to be effected before or after the sale? If before, by whose licence? If after, then by definition the enfranchising part is not self-contained at the time of the sale.
[81] In my judgment, the Act is looking, not at the possibility of the supply of independent relevant services in the abstract but at the possibility of effecting a separation of the existing relevant services as “provided to the occupiers of that part” from those “provided to the occupiers of the remainder of the building” with a minimal disruption to the latter. The works that would be required in the present case do not fall within that concept. They do not do so, in particular, with regard to the supply of central heating and hot water, with regard to the cold-water mains supply and, probably, with regard to the cold-water down system, because the necessary works do not, in my judgment, involve providing “the relevant services provided to the occupiers of that part” independently of those provided to the occupiers of the remaining part of the building at all, but rather, providing new “relevant services”.
[82] On that ground alone, I would hold that the claimant cannot establish that nos 1-14 qualify as a self-contained part of the building.
[83] Even if this were wrong, Mr Fancourt’s next point is that the claimant has failed to prove even as a matter of fact that the relevant services could be provided independently of those provided to nos 15-30 because there is no sufficient evidence that, for example, a new boiler house could be built on the land appurtenant to nos 1-14.
[84] I would uphold this argument also. In my judgment, it is not sufficient for the claimant to say that this could be done in principle; the claimant would at least have to demonstrate that it could in fact be done. At present, the evidence is purely theoretical and speculative and, in my judgment, insufficient to satisfy subsection 3(2)(b)(ii).
[85] In case both the above points are wrong, however, I turn to consider the question of whether the evidence shows that works required to separate (more accurately, to disconnect) the specified services can be effected in accordance with the requirement that the carrying out of those works must not result in “significant interruption” to the provision of those services to the occupiers of the remainder of the building.
(3) What works are required to separate the services?
(4) What interruption to the services to the remainder of the building will be occasioned?
[86] The works that the experts have identified as being required in order to provide nos 1-14 with services that can be operated entirely independently of those to nos 15-30 are largely agreed, as also are the relevant timings, and so these two points are conveniently considered together in relation to each relevant service.
Hot water
[87] The experts disagree as to the requirement for certain works associated with the disconnection of nos 1-14 from the system, namely the necessity to install back-flow devices (a point that I will consider in connection with the cold-water systems). However, they agree that these works would cause only a two-hour interruption to the hot-water service to nos 15-30 or more accurately to any individual occupier. The defendant does not contend that an interruption of that length would be significant, and although that does not make this point entirely immaterial, I can leave it for the moment.
Central heating
[88] Here, the experts agree that necessary works would cause an interruption to the service of eight hours, although the boilers would have to be shut down.
Cold-water services
[89] This is the greatest area of contention. Without going into all the detail of their evidence, the differences between the experts, as I understood it to emerge from their oral evidence, can be summarised as being, whether:
(i) draining and separating off the cold-water supply systems would entail the installation of back-flow prevention devices, notwithstanding that the 1999 Regulations (which now make these mandatory) are not retrospective and would therefore apply only if the current works were classed as “major”;
(ii) disconnection of nos 1-14 from the cold systems would create “dead legs” in the pipe system remaining connected to nos 15-30 (that is, where the branches serving nos 1-14 were capped off);
(iii) if they did, such dead legs would have to be removed; and
(iv) the entire cold-water system to nos 15-30 would require disinfection by chlorination treatment as a consequence of the disconnection works.
[90] Mr Eldred considered that the answer to all the above questions was “yes”. Mr Gray was prepared to support the view that the works would not be “major” because each individual capping-off operation was only minor and of no more effect than a repair function, and the plurality of those operations would not, therefore, turn the works into “major” works. He also appeared to be of the view that each capping off could be achieved with only a very small length of branch pipe to the capping off point, which would not really amount to a “dead leg” and, therefore, would not, or not necessarily, require removal. Consequently, wholesale chlorination, as opposed to mere localised disinfection of parts, would not necessarily be required either.
[91] Mr Fancourt invited me to prefer the evidence of Mr Eldred to that of Mr Gray where they do not agree, and he pointed out that Mr Gray’s willingness to accept that no dead legs would be created depended upon an assumption that the pipes could be capped off very close to the junction, with which Mr Eldred disagreed. Mr Munro argued that Mr Eldred’s evidence was based upon speculation as to the actual configuration of the cold-water systems since neither expert |page:128| had surveyed them, so that there was therefore no factual evidence that “dead legs” would be created. He also argued that the Water Regulations Guide indicated that some such structures were acceptable in any event, and that there was therefore no factual, or statutory, basis to justify Mr Eldred’s conclusion that a full disinfection of the system would therefore be required.
[92] Having heard from both witnesses, I prefer the evidence of Mr Eldred to that of Mr Gray. Although Mr Eldred’s greater confidence and assertiveness may have been just personality, I also felt that he had been rather more proactive than Mr Gray in thinking about the various points that might require consideration. Although he accepted that he had not surveyed the actual pipe system in the blocks, he stated that his views were formed confidently from having done extensive work on a block of similar age and identical configuration in Clapham. He also gave convincing explanations as to the practices at the time these blocks were being built and as to how the Water Regulations Guide was used. I found him to be impressive.
[93] As a result of the way the case had developed, Mr Gray had been left in a reactive position, but I formed the clear view that, underneath, he hardly disagreed with Mr Eldred at all. His apparent disagreements arose partly out of natural caution at agreeing something on the basis of mere likelihood (which I think he was secretly inclined to accept) rather than actual verification, but also because he felt he could and should point out, where it could be argued, that Mr Eldred’s suggested works might not, in fact, prove necessary. His disagreement was therefore justified more by hypothesis and interpretation than an assessment of practicalities and fact.
[94] The burden of proof is on the claimant to prove positively that the relevant services can be provided independently to nos 1-14 without the necessary works being likely to cause significant interruption to the services to the remainder of the building. Mr Gray’s evidence, even making allowances for his not having dealt directly with the matter until a late stage, does not convince me that Mr Eldred’s points are unfounded and, in fact, I positively prefer the evidence of Mr Eldred. I found his views more persuasive as to the practicalities of the situation.
[95] I am, on balance, satisfied that, in practice, the installations of back-flow devices would have to be undertaken, either as a matter of best practice or because the authorities would seek to require them and it would be impractical not to comply. I am even more satisfied that works to remove dead legs would be required. I am perfectly satisfied, on any basis, of the need to chlorinate the entire cold-water system following works necessary to separate both the cold-water down services and the mains cold-water service.
[96] As Mr Fancourt submitted, Mr Gray did not disagree with Mr Eldred about the length of disturbance time required for the relevant works to be carried out, although Mr Munro did seek to test these with Mr Eldred in cross-examination. I find, therefore, that the separation of the water services could be effected only with resulting periods of disturbance to water supplies to flats, totalling 42 hours.
Resiting of the flue
[97] The work involved here is work required to move the present combined flue that carries away smoke and gases from the plant currently serving both blocks. This is channelled into a brick flue that passes underground within the land adjacent to nos 1-14 and the subject of the claim to enfranchise and then passes into a metal chimney flue that is fixed to the side wall of nos 1-14, exiting to the atmosphere above roof level.
[98] The defendant says that this flue would have to be reconstructed and resited in order to separate off the services to nos 1-14, to lie wholly within the curtilage of nos 15-30 and to be reattached to the wall of nos 15-30. The experts agree, as indicated, that such works would entail closing down the boilers for three days, thus interrupting both the supply of hot water and central heating to nos 15-30. Mr Eldred said, but Mr Gray contested, that a further 16 hours’ closure would also be required to apply necessary acoustic insulation.
[99] The parties are both agreed that such an interruption could not be classed as insignificant. However, Mr Munro argued that this problem does not arise because the works are not works requiring to be done to separate off the services to nos 1-14 at all. This is because once the boiler plant is separated off, the flue will service only plant serving nos 15-30, and the defendant has an absolute right to an easement for the flue in its existing position, as against the enfranchising part, under paras 3(1)(c) and (2)(b) of Schedule 7 to the Act. These provide, in para 3(1)(c), for the reservation in the relevant transfer of the enfranchising part in effect of:
rights to the passage of water or of gas or other piped fuel or to the drainage or disposal of water sewage smoke or fumes or to the use or maintenance of pipes or other installations for such passage drainage or disposal.
[98] Mr Fancourt has argued that the above provision does not authorise the maintenance of the flue in this situation. His argument on this point was, though, combined with his arguments on the basis that the enfranchising premises were claimed to include half of the boiler house, and therefore having to be subject to a right for the defendant to operate the plant in that half. I am considering the situation with regard to the enfranchising premises not including any part of the boiler house, and I am therefore concerned only with the situation as to continuing the use of the existing flue to the existing boiler house, but such use now being solely for the benefit of services now being supplied to nos 15-30.
[99] I have therefore considered how Mr Fancourt would put his arguments in relation solely to the flue. He took two points in his submissions as to why para 3(1)(c) and (2)(b) of Schedule 7 did not assist the claimant. These were the basic propositions of the law of easements: first, that an easement had to be negative and could not be positive as “a right to have something done”; and, second, that an easement that amounts to a claim to exclusive use of a part of the property is not an easement at all.
[100] With regard to the metal chimney, I have no hesitation in rejecting Mr Fancourt’s argument. In my judgment, a right to have a chimney affixed to the wall of a property is a right plainly in the nature of an easement and is negative and not positive. I have had somewhat more hesitation about the part of the flue that is a brick-built underground channel but, in the end, I have concluded that I should reject his argument in relation to that part of the flue as well.
[101] There is always a problem in relation to easements for underground conducting media, that the medium itself occupies a part of the servient property. If the medium is not in any way connected to apparatus in the servient property, it amounts to the exclusion of the space occupied by it from the servient land. In the case of a simple length of straight drainpipe, for example, this would be a long thin cylinder. The law has never had any difficulty seeing this right as an easement, notwithstanding that it could be argued that it amounts to a claimed right to exclusive use of the part of the servient property occupied by the pipe itself.
[102] In this case, as I understand it, the enclosed channel of the existing flue is of brick construction, rather than a separately inserted chattel in the form of a pipe. However, I do not think that that makes any difference. Either the defendant is entitled to an easement for the presence of the brick flue, if the brick flue is properly regarded as being part of its own property, or it is entitled to an easement for disposal of fumes and smoke through the chamber of the brick flue, if that construction is treated as being part of the servient property. In my judgment, it cannot be argued that because this right might be said to be a claim to exclusive use of the airspace occupied by the brick flue construction in the ground of nos 1-14, that is a claim to exclusive possession of part of the property that prevents the right from being in the nature of an easement. This is a matter of fact and degree, but, in my judgment, the real test is whether the asserted easement in effect prevents any practical use being made of a sufficiently substantial or useful part of the dominant tenement that the claimed right cannot fairly be regarded as a mere incumbrance. I do not see that the presence of the brick flue for the benefit of nos 15-30 is anything more than an incumbrance, or comes anywhere near meeting the test that it sterilises a sufficiently substantial or important part of the property. |page:129|
[103] It follows, therefore, that I accept Mr Munro’s submission that this is a non-issue. I hold that it is not necessary to move the flue in order to effect the necessary separation of the services supplying nos 1-14 and 15-30. Consequently, the extent of any interruption to services that would be caused by such work does not arise.
[104] As to the disputed issue of whether it is necessary to do any decommissioning works to the boiler-house plant, these would cause only a two-hour closure of the boilers in any event, and I do not, in practice, need to decide whether or not this is necessary.
(5) Would the separation of the services cause a “significant interruption” to the services to nos 15-30?
[105] One comes finally, therefore, to the question of whether if such works as I am satisfied would be required to disconnect the relevant services to nos 1-14 from those supplied to nos 15-30 were to be carried out, this would cause a “significant interruption” to the provision of those services to nos 15-30, so as to show that nos 1-14 were not a self-contained part of the total building.
[106] As a general point, Mr Fancourt argued that “significant” is an unusual word in a statute, the more usual being “material” or “substantial”. He submitted that “significant” must, to be capable of reasonably easy and consistent application, be intended to contrast with “insignificant” or “de minimis“, and that it was referring to the duration of the interruption and not to the seriousness of any effect that it might have. However, if this were wrong, he suggested that the test would be met if any such interruption would cause considerable inconvenience to the occupiers of nos 15-30. On either basis, he submitted that the test was met in this case.
[107] I do not think that Mr Munro disagreed with this second basis, although he would dispute what would fairly be described as a “considerable inconvenience”. He submitted that, on any basis, any interruption that is no more than that which would be occasioned by normal maintenance procedures could not be regarded as significant.
[108] He also submitted that the interruption must be considered with regard to the actual cutting of the service occasioned to any flat owner, and not by reference to a general period of “disruption” (that is, not “interruption”) during which flat owners might have to wait around for engineers to come to a flat to effect works causing a particular “interruption”, properly so regarded, to their own services. I understood the times put forward by Mr Eldred and Mr Fancourt, particularly in relation to the time required to install back-flow devices, to take this point into account, although, in the end, I do not find that it is crucial.
[109] Neither counsel has addressed me expressly on whether the test is one of the overall interruption caused cumulatively to all relevant services or whether each service is to be considered individually, although they each dealt with each service individually. An obvious effect of this difference is that, for example, it is possible to envisage a situation in which no individual interruption might itself be seen as significant, but so many services are affected that the aggregated result could be regarded as a significant interruption. Conversely, if the interruption to one service were a significant interruption to that service alone, but no other services were affected, it might be said that, in the context of the overall supply of services to the flats, this was not “significant”.
[110] The answer to this point depends upon the true construction, in section 3(2)(b), of the phrase “the provision of any such services to the occupiers of flats in the remainder of the building”, that is, whether this phrase is to be read cumulatively, namely with the focus upon “the provision” of services in general, or distributively, that is, with the focus upon “any such service” individually.
[111] I would have expected the former meaning because the overall object of the test is to decide whether the enfranchising part of the building can fairly be regarded as self-contained with all its service systems cumulatively, and consequently the interruption of services to other occupiers cumulatively would be the appropriate method of applying the test. However, the wording in the Act uses the phrase “significant interruption in the provision of any such services…” (emphasis added), which, to my mind, carries the clear connotation of individuality, since otherwise it is superfluous.
[112] My ultimate conclusion, however, is that, on its true meaning, the qualification refers to both forms of the test, that is, “the provision of any such services” refers either to an individual such service or to the totality of such services. I reach this result as the most fitting interpretation of both the language of the provision and the purpose of the exception that it contains.
[113] As to the question of what is “significant” in applying this test, in my judgment, this must again be viewed against the background already mentioned, namely that one is looking at the extent of an interruption occasioned in the context of the effecting of a transaction (that is, the sale of the enfranchising property), which is intended to take place as a single and discrete transaction and not as part of a long-drawn-out process or programme. The emphasis is therefore upon the duration of the interruption, although, as the test is, in my judgment, a matter of fact and degree, the seriousness of the effect of any prospective interruption is also a factor to be taken into account.
[114] Dealing with the factual detail, Mr Munro’s first point was that the central heating could be disconnected in the summer, which would mean that there would be no interruption because the service would not be in use. Mr Fancourt objected that this is not the test, since the Act does not enable the time of the year to be taken into account when assessing the causing of a “significant interruption” in the service.
[115] I agree with Mr Fancourt that the occasioning of an “interruption” means an interruption in the availability of the service, if required. It does not depend upon the subjective fact of any actual inconvenience to any particular occupier and, that being the case, the fact that the work might occasion less inconvenience in practice during the summer months than the winter months must also be irrelevant. It is an arbitrary and extraneous factor, nothing to do with the physical state of “self-containedness” of the building. The test applied by the Act therefore does not, in my judgment, entitle that to be taken into account.
[116] With regard to water services, the preponderance of Mr Munro’s submissions was directed more at reasons why I should not accept Mr Eldred’s evidence as to the length and nature of any interruption to services, than to any argument that if I did accept Mr Eldred’s evidence those interruptions were not significant. Apart from the point with regard to “disruption” not being “interruption” mentioned above, Mr Munro submitted that, with regard to the water services, the evidence did not show that there was, in reality, any real interruption, since breaks in service in respect of potable mains water, on the one hand, and domestic cold water, on the other, would be effected at different times, so that there was no time at which there was no available cold water of any description to any flat in nos 15-30.
[117] The test of “significant” is a matter of fact and degree. Having preferred Mr Eldred’s evidence, I have examined it critically in the light of Mr Munro’s submissions as to the extent to which it suggests any actual interruption to relevant services. In the end, I am satisfied that the availability of central heating, mains cold water and domestic cold water to nos 15-30 would individually be subject to a “significant” interruption within the meaning of section 3(2)(b) should the works that I have found necessary to effect a separation of the services to nos 1-14 be carried out. If the test is applied cumulatively, this conclusion is even stronger. It is also fortified by the fact that the test in the Act is not even that the services “would” be so subject but only whether they would be “likely” to be so subject. On the state of the evidence before me, I consider that such likelihood is all too plain.
[118] I would add that I would have reached this conclusion in relation to the interruption to central heating alone and, in respect of the water systems, even if I had concluded that the fitting of back-flow devices was not necessary, since the difference made by this would not materially affect the degree of interruption.
Conclusion
[119] It follows that although I will permit the amendment of the claimant’s notice as already indicated, I will dismiss the claimant’s |page:130| claim based upon the amended notice, on the ground that nos 1-14 are not a qualifying building because it is not possible to provide the relevant services provided for the occupiers of that part without carrying out of works likely to result in a significant interruption to the provision of any such services for occupiers of the remainder of the building.
[120] I rest my decision primarily on the point that the works admittedly contemplated for the purpose of effecting the independent provision of such services do not amount to provision of “the” relevant services (that is, the currently existing relevant services) to the occupiers of nos 1-14 at all. However, I would come to the same conclusion even on the alternative approach, that is, even if it is only, effectively, the works necessary to disconnect the services to nos 1-14 from those for nos 15-30 that are material. This is because I find that, on the evidence, those works are likely to result in a significant interruption to the provision of some such service(s) to the occupiers of nos 15-30.
Claim dismissed.
