Was a flat a dwelling?
 EWCA Civ 1848
Flats in the process of construction had each amounted to a separate set of premises for the purposes of s101 of the Leasehold Reform, Housing and Urban Development Act 1993, but had not reached the stage of being constructed or adapted for use for the purposes of a dwelling. Accordingly, the Initial Notices had been served by the requisite majority of qualifying tenants.
Before 2008 there was a single flat on each of the sixth and seventh floors of a building known as Aldford House, Park Street, London W1. Leaving aside the sixth and seventh floors, there were 26 flats in the building.
The sixth and seventh floors were eventually redeveloped, with varying plans and planning permission. The plans settled on saw those floors each being divided into two separate flats. Whilst the redevelopment was happening, the existing underleases of the old flats were surrendered and on 24 July 2013 the long lessee granted new underleases of each of the four intended new flats, numbered 61, 62, 71 and 72. Each new underlease was granted to a different corporate tenant. At that time, there was no physical division between the two flats on each floor. The new underleases did, however, contain plans that showed that there was to be a dividing wall between them.
In December 2014 the long lessee became aware that the lessees were planning to claim the freehold. In consequence, they carried out further work. Dividing walls were erected on the sixth and seventh floors to separate the two intended flats, and a partition screen was erected on the balconies on the Park Lane side on both levels. Further, work was done to install suspended ceilings and new boarding for the floors. The new dividing walls each had two pairs of large doors in them, intended to facilitate access by builders and others from the northern side to the southern side of the building in connection with the future fitting out of the premises.
On 23 July 2015 the nominee purchaser purported to give an initial notice under section 13 of the 1993 Act claiming to exercise the right of collective enfranchisement. Seventeen of the lessees claimed to participate in the giving of the notice. The initial notice in this case did not state the names of the tenants of the areas described as flats 61, 62, 71 and 72 which were on the sixth and seventh floors of the building. These were the areas in dispute.
- Whether or not the sixth and seventh floors had become sufficiently developed to be considered a separate set of premises; and
- Whether they were sufficiently constructed for the purposes of a dwelling; and
- The correct number of participating tenants that were qualifying tenants.
The judge held that one of the lessees had not given authority for the notice to be given and three were not qualifying tenants; and therefore, there were only thirteen participating lessees who were qualifying tenants.
The judge also held that the areas on the sixth and seventh floors were "flats" within the definition in s101 of the Leasehold Reform, Housing and Urban Development Act 1993, as they amounted to “a separate set of premises ... which is constructed or adapted for use for the purposes of a dwelling”.
He held that each part of each floor had a separate identity because a partition screen had been constructed on each balcony, each area had its own separate front door leading off the common parts, there was a dividing wall on each floor (albeit with a door to enable access for fitting out works), and each had functional identity by the terms of new underleases that had been granted. He therefore concluded that there were 30 flats in the building, and that the initial notice was invalid as it had failed to name the lessees of the sixth and seventh floors as required by the Act (see Natt v Osman  EWCA Civ 1520).
The respondents further argued that the individuals who had signed the notice on behalf of a corporate lessee of one of the flats had not been authorised to do so on behalf of the lessee's two corporate directors.
Decision on appeal
The Court of Appeal considered that the first-instance Judge appeared to have applied the wrong test – one that was a mix of title, future intention and physical configuration. The relevant question was in fact whether there was physical separation between the various spaces.
On the facts, the physical separation between the areas was enough for each area to amount to a "separate" set of premises. The fact that the separation was potentially reversible with little effort did not mean that each area was not in fact separate on the relevant date. Therefore, the judge had reached the right conclusion on separation
However, a separate set of premises was not a flat unless at some stage in its history it had reached a stage of construction to be suitable for use for the purposes of a dwelling. If a putative flat was in the course of construction, it had not yet been “constructed” for any purpose. To be constructed “for use” as a dwelling it had to be in a state in which it was suitable for use as a dwelling. That coincided with the interpretation given to "adapted" in Day v Hosebay Ltd  UKSC 41 and would therefore achieve consistency in the definition.
On the judge's findings, the intended flats on the sixth and seventh floors had not yet reached that stage. Accordingly, they were not flats. At the relevant date the building contained 26 flats rather than 30, and the initial notice had not therefore been required to name the lessees of what would become the remaining four flats. In those circumstances, the notice was valid, and a sufficient number of the qualifying tenants were participating in the enfranchisement.
With regards to the suggestion that some participating tenants had not been properly authorised, the relevant requirements of the corporate lessee’s articles of association had been complied with and it had validly authorised the giving of initial notice on its behalf. It counted as one of the participating lessees and the minimum statutory requirement was therefore satisfied.
It was emphasised that in some cases it may be difficult to determine whether or not a flat can properly be called a dwelling. However, this is a factual issue that will have to be determined in each case as it arises.
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