Pre-emptive notices were invalid

To decide whether structures constitute separate buildings, the court conducts a multi-factorial evaluation exercise – although in any particular case a particular factor or factors may exert a magnetic attraction in favour of a certain conclusion. The tenants’ right of first refusal under the Landlord and Tenant Act 1987 requires a landlord who wishes to make a relevant disposal to serve notice on relevant tenants. Section 5(3) requires that if the proposed transaction involves the disposal of more than one building, the landlord shall sever the transaction so as to deal with each building separately. In SGL1 Ltd v FSV Freeholders Ltd and others [2025] EWHC 3 (Ch); [2025] PLSCS 11, Judge Hodge KC considered the two pre-emptive notices served in relation to Fox Street Village (FSV) and concluded that the notices were invalid. FSV is a residential development in Liverpool comprising five blocks. Prior to the claimant acquiring FSV, its predecessor, Fox Street Village Ltd (acting by its joint administrators), served two notices purporting to comply with section 5 of the Act. One notice concerned Block A and one was for Blocks B, C and E. As the leaseholders contended that the notices were not valid, the claimant issued a Part 8 claim seeking a declaration that the statutory provisions had been complied with and that its acquisition of FSV had been lawful. The first hearing of this Part 8 claim had been treated as a disposal hearing, at which the leaseholders’ arguments were dismissed as being totally without merit. This was set aside by Fancourt J ([2022] EWHC 3336(Ch)) on the basis that the issue of whether structures constitute separate buildings is very fact-sensitive and not suitable for disposal without evidence. An appeal of that decision was rejected by the Court of Appeal, with the Supreme Court refusing further permission to appeal. The issue therefore came before Judge Hodge KC to be determined. While the claimant maintained that serving two notices had been correct, the leaseholders argued that as FSV’s blocks share appurtenances (such as a car park) they in fact constituted one building, such that only one notice should have been served. Alternatively, if all of FSV was not to be considered one building, then there should have been three offer notices – one for Block A, a second for Block B and a third for Blocks C and E. Notwithstanding Judge Hodge KC’s concerns about the decision of Long Acre Securities v Karet [2005] Ch 61, in order to decide whether more than one structure constituted a single building for the purposes of the Act, he carried out the multi-factorial evaluation exercise it requires. These considerations included the plans of the structures, the underlying structural support for the structures, lessees’ rights to use appurtenant premises, connection at any levels, the dates of construction of the structures, how the structures were managed, how the service charge operated, visual impressions, how the structures were serviced, the sharing of common facilities and amenities, the planning history of the structures and the requirements of housing legislation and building and other applicable regulations (and the measures necessary for compliance with them). The issue which exerted a magnetic attraction to his conclusion was the shared use of a street as the only means of access to the car parking spaces outside Blocks C and E (and possibly B)  that had been demised to the leaseholders of flats in Block A. Although the focus on previous authorities had been on the rights of leaseholders of structures generally to access and make use of appurtenant premises, there was no reason why the court should not afford equal weight to the rights of particular individual leaseholders to access and make use of appurtenant premises in the form of individual car parking spaces that have been demised to them. In the case of FVL, when this was added to the other factors which pointed to the existence of a single building, it outweighed all countervailing factors and considerations. Blocks A, B, C and E constituted a single building. The claimant’s application for declaratory relief was dismissed. Elizabeth Haggerty is a barrister