This page contains details of two cases:Common parts - caretaker's flat - Re 29 Eaton Place
Retained land - Ulterra Ltd v Glenbarr
Common parts
Caretaker’s flat
Re 29 Eaton Place
LRA 85 2006
Lands Tribunal,
Summary
The Lands Tribunal has decided that a caretaker’s flat was not to be acquired in a collective enfranchisement because a residential part cannot be part of the common parts.
Introduction
The case concerned a six-storey terraced house containing four flats. There was an unusually complex hierarchy of interests. The freehold was part of the Duke of Westminster’s estate but the real battle in this case was between two of the leaseholders. One of the flats was owned by Mr Reihill. Two of the flats were owned by Ms Szekeres. The fourth was held by a management company which held an intermediate lease and was obliged to provide a residential caretaker. Mr Reihill was the director and a member of the management company. Ms Szekeres was not a member. Ms Szekeres had launched a “hostile” initial notice seeking collective enfranchisement. Mr Reihill alleged that she sought to gain control of the caretaker’s flat and thereby realize a gain.
Issue
The issue was whether the interests to be acquired by Ms Szekeres included the caretaker’s flat.
Decision of LVT
The LVT had decided that the caretaker’s flat was part of the common parts of the building since s101 of the 1993 Act stated that the common parts included “common facilities”.
Decision of Lands Tribunal
The Lands Tribunal overturned the decision of the LVT. The Act made a distinction between “common parts” and parts “occupied, or intended to be occupied, for residential purposes” at s4. That section is concerned with whether a building qualifies under the Act by reason of the ratio of commercial to residential floor space. For the purpose of calculating that ratio common parts are excluded. The Tribunal referred to Indiana Investments Ltd v Taylor [2004] 50 EG 86 a case in which Judge Cooke had cause to examine s4. He said:“Residential parts need to be clearly identified because they form part of one side of the ratio. Common parts need to be identified because they have to be excluded from the calculation.” Counsel for Mr Reihill argued that it would be odd if the Act made such a clear distinction between common parts and residential areas for one part of the Act but required common parts to be construed as including residential areas for the purposes of another part. The Tribunal agreed and overruled the LVT.
Retained land
Ulterra Limited v Glenbarr (Rte) Company Limited
13 November 2007
LRA/149/2006
Introduction
Under s1 (4) (a) of the 1993 Act a freeholder is entitled to retain land which the tenant might otherwise be able to acquire under the Act if he grants the tenant rights over the land which replicate the rights enjoyed under his lease. Thus if the land is a garden the freeholder may retain the land and grant a right to use the land as a garden. Or if the land is used as an accessway to a garage he may retain the land and grant a right of way over it.
In Shortdean Place (Eastbourne) Residents Association v Lynari Properties [2003] 3 EGLR 147 (LT), the LT held that where the rights offered satisfy the test in s. 1 (4) (a) of the 1993 Act then the right of acquisition of the freehold "shall, however, be taken to be satisfied" by the grant of those rights i.e. the freeholder gets to keep the land.
This case
In this case the freeholder had sought to retain land by offering suitable rights over the land. The LVT expressly found that the rights offered would, with some differences in the wording, “in all practical effect render the leaseholders in the same or nearly the same position as they are currently enjoying”.
However, elsewhere in its counter notice the landlord had sought to retain a right to “rebuild build on or alter buildings or land forming any part of the retained land”. The exercise of such rights would, or may, substantially interfere with the rights granted over the retained land. The freeholder claimed the right to insert such rights under s21(3)(d) of the Act.
That subsection allows the freeholder to seek rights over the land which he is transferring to the nominee purchaser e.g. a right of access over the transferred land to his retained land. The section was inapposite to allow the freeholder to claim further rights over land which he was retaining.
Comment
One might have thought that these facts would result in the freeholder getting to keep the disputed land, as the rights offered to the tenants were apposite to protect the tenants’ existing rights and that the LVT would have disallowed the rights claimed under s21 (3) (d). In fact the LVT transferred the disputed land to the tenants. Surprisingly the LT upheld the decision although one senses it might have reached a different conclusion if it had been the court of first instance.
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