There have been a number of decisions around the question of whether flat owners’ rights operate on a block by block basis or in respect of a number of blocks via single claim in connection with collective enfranchisement, the enfranchisement of the freehold to a single house, the right to manage and the right of first refusal.
In a recent county court decision the position in connection with a flat owners’ claim to collectively acquire the freehold to a “building” that comprised a number of blocks has been clarified.
In the case of Palgrave Gardens Freehold Company Limited v Consensus Business Group (Ground Rents) Limited (claim D10CL219) flat owners within a building containing several blocks sought to acquire the freehold to it as one.
It comprised four curved residential blocks (A-D), a single lenticular plan residential block, a single storey building containing two commercial units and a single storey leisure centre, a single basement car park that ran underneath all of the residential blocks extending out beyond the footprint of them along with gardens and access way lying above that footprint overlap. The access way was from one end of the development through the entire length of the plot to the underground car park entrance ramp. Vehicles would then drive through the basement car park without being able to tell which block they were beneath. The development comprised 288 flats.
The joint structural engineer describes the blocks as separated by movement joints and so in purely structural engineering terms independent, self-supporting structures, while acknowledging that the operation of the building relied on the inter-connection of the parking facilities and so redevelopment of a single structural part would be impractical although structurally possible.
In the view of the expert engaged by the claimant, a building would have a consistent or complimentary structural form, be constructed on a single site, be separate only by structurally required joints and be of contemporaneous construction (extensions aside) and be planned and used as a single entity.
So for the purpose of making a freehold enfranchisement claim did the development comprise a single “building” so enabling a single claim to be made in respect of it or was it a number of independent blocks that fell to be claimed separately?
The right to collectively enfranchise the freehold only applies to premises that consist of either a “self-contained building” or “part of a building” amongst other criteria. Those claiming premises under the second alternative as “part of a building” have to satisfy further criteria which they may therefore fall foul of i.e. that there is a clear vertical division of the relevant part, that it is structurally capable of being independently developed and that the services can be separated without causing significant interruption to the larger building.
The flat owners bringing the claim via their above nominee company asserted that the development constituted the “building” for the purpose of the claim. The landlord defending contended that each component block was a separate “building” such that a single claim could not be made in respect of all of them together.
The flat owners succeeded.
The arguments had to be considered under the guidance as to the interpretation of the Act given in Majorstake Limited v Curtis (2008) AC 787 and Cadogan v McGirk [1996] 4ALL ER 643 and Panagopoulos v Earl Cadogan (2011) CH.177 that the legislation must be construed in a way to give effect to its purpose “to confer rights to collective enfranchisement and lease renewal on tenants of flats…”.
It was noted there is very little guidance directly on the meaning of “building”. The defendants’ reliance on a case that indicated that the legislation’s reference to building was singular and so a claim couldn’t include a number of buildings together was discounted as it related to a house freehold claim where there is such a restriction.
The “Craftrule” case relating to Albert Palace Mansions was found not to be helpful as it determined the meaning of the second alternative “self-contained…part of a building” as opposed to the meaning of “self-contained building” that was in issue in this case. In that case it fell to be determined whether the claim must be made in respect of the smallest part of a “Building” that could be enfranchised.
The only other authority was an unreported county court decision that was said to lean in favour of the defendant.
The right to manage decision of 90 Broomfield Road RTM Company Limited v Triplerose [2015] EWCA Civ 282 that favoured the landlord was distinguished on the basis that the judgment in that case was based on three cases that involved structurally detached blocks of flats. It was also swayed by a concern that allowing the RTM to be exercised in respect of a number of blocks together might enable larger blocks to dominate decision making and oppress the minority so depriving smaller blocks of the objective of self-management which was the purpose of the legislation.
In this case the court found the same point played in the opposite direction in that enabling a number of blocks to proceed via a single claim would increase their ability to take up the right of enfranchisement. If it were to determine that separate claims needed to be made in respect of each block then Palgrave Gardens might be enfranchiseable or it “might lead to chaos in relation to the provision of services in the event that one block sought enfranchisement and another or all the others did not”.
The presentation of the development “to the eye of a non-engineer [as] a single albeit very large and irregular shaped building” was found to be persuasive and while expert evidence revealed the number of self-supporting units behind that the claimant’s expert described it as “part of a coherent building of consistent structural form and fabric clearly designed as a single entity”.
As regards the break off point where a development does not meet this test it was determined that it is left to common sense and analysis to determine where a development that constitutes a single “building” becomes a number of separate “buildings” for the purpose of the Act.
As regards the inclusion of the car park and potentially creating a flying freehold above it if any of the blocks above that level were to be acquired the court rejected the applicability of the decision in Albion Residential Limited v Albion Riverside Residents RTM Company Limited (2014) UKUT 0006 (LC) where the deputy president commented that “the car park itself would not ordinarily be regarded as part of the building (although that part of it which lies beneath the structure of the building probably would be)…”. The air space above the car park within the footprint of it but outside the envelope of the blocks was determined to be enfranchiseable just like a ground floor single storey entrance vestibule attached to a tower with multiple floors.
So the hand of flat owners enfranchising their freehold in a multi-block development situation has been strengthened but there will no doubt be difficult cases where common sense and evidence need to be exercised and analysed to assess whether a number of blocks in the development constitute a “building” for the purpose of the Act so as to be capable of being enfranchised via a single claim.
Mark Vinall, Partner, Lease Extension and Enfranchisement at Winckworth Sherwood
