Consensus Business Group (Ground Rents) Ltd v Palgrave Gardens Freehold Company Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Falk |
| Judgment Date | 23 April 2020 |
| Neutral Citation | [2020] EWHC 920 (Ch) |
| Docket Number | Case No: CH-2019-000101 |
| Date | 23 April 2020 |
| Court | Chancery Division |
[2020] EWHC 920 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Mrs Justice Falk
Case No: CH-2019-000101
Thomas Jefferies (instructed by Mills & Reeve LLP) for the Appellant
Philip Rainey QC & Jonathan Upton (instructed by William Sturges LLP) for the Respondent
Hearing date: 19 March 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an appeal relating to a claim for collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993 (the “1993 Act”) in respect of a residential development in London known as Palgrave Gardens. The Respondent is a nominee purchaser appointed by the relevant tenants to acquire the freehold on their behalf, and the Appellant is the freeholder. The Appellant appeals against an order made by Recorder Eaton Turner in the Central London County Court on 18 February 2019 (following a hearing on 16 and 17 April 2018). That order permitted the Respondent to amend the initial notice it had served and declared that the tenants named in the notice were entitled to exercise the right to collective enfranchisement.
The statutory scheme
The most relevant statutory provisions are set out in the Appendix to this decision. Unless otherwise indicated, statutory references are to provisions of the 1993 Act.
In very broad outline, the 1993 Act gives “qualifying tenants” of flats in “relevant premises” the right to have the freehold of those premises acquired on their behalf by a nominee purchaser. Qualifying tenants are, essentially, tenants under long leases (excluding business leases).
Section 1(1) contains the basic right to acquire the relevant premises, which is typically the building containing the flats but may in some cases be part of a building (as set out in s 3). In addition, under s 1(2)(a) qualifying tenants are entitled to acquire the freehold of other property falling within s 1(3), namely appurtenant property demised by a lease held by a qualifying tenant (s 1(3)(a)), or property which any such tenant is entitled to use in common with other occupiers (s 1(3)(b)). Where s 1(3)(b) applies, the freeholder can instead of conveying the freehold grant permanent rights in lieu or convey alternative property (s 1(4)).
In addition, under s 1(2)(b), qualifying tenants who exercise the right to enfranchise under s 1 are required or entitled to acquire leasehold interests as provided for in s 2. Superior leases of flats must be acquired (s 2(1)(a) and (2)) and leases of common parts, or of property within s 1(2)(a) which the tenants are opting to acquire, may be acquired (s 2(1)(b) and (3)).
The right to collective enfranchisement is exercised by qualifying tenants of at least one half of the flats in the building giving an initial notice pursuant to s 13. The notice must comply with s 13(3), and for the purposes of the legislation the “specified premises” are those specified in the initial notice under s 13(3)(a)(i) (see s 13(12)).
The reversioner (in this case the freeholder) must respond to the notice by giving a counter-notice under s 21, stating whether or not the right to collective enfranchisement of the specified premises is admitted. Disputes over whether or not tenants are entitled to acquire the specified premises are dealt with by the court under s 22, whereas disputes over the terms of the acquisition are determined by the First-tier Tribunal (Property Chamber) under ss 24 and 91.
Paragraph 15(1) of Schedule 3 provides that an initial notice shall not be invalidated by any inaccuracy in the particulars required by s 13(3) or by any misdescription of any property to which the claim extends, and paragraph 15(2) allows a notice to be amended with leave of the court to exclude property not “liable to acquisition” under ss 1 or 2, or to include property which is so liable. Paragraph 15 is considered further below.
Factual and procedural background
Palgrave Gardens is a development constructed in the late 1990s on the site of the former depot of the St Marylebone Railway. It is built on a long, relatively thin, plot adjacent to the railway lines. It comprises five residential blocks of varying heights (the “Blocks”). Looked at externally, each Block appears to be attached to the adjacent Block or Blocks. The development also includes a single-storey construction containing commercial units and a single-storey leisure centre, which similarly appears to be attached to one of the Blocks. I will generally not refer separately to this construction in this judgment.
There is a single basement car park that runs underneath all of the Blocks and, importantly for the purposes of the dispute, extends underground beyond the ground level footprint of the Blocks, covering most but not all of the remainder of the site.
At ground level, the area not covered by the Blocks and other above ground development comprises gardens, an access way leading from the sole entrance to the development over the entire length of the plot and down a ramp to the car park, and a turning circle. There is no internal access at ground level or above between the Blocks. However, there is direct lift and stair access to each of the Blocks from the car park. The basement also includes some plant rooms and refuse areas.
Each Block is, in structural engineering terms, an independent self-supporting structure supported on its own piled foundations. It sits on columns (and to some extent walls) that go through the car park and rest on large pile caps at basement level. There is a “podium slab” at ground level around the Blocks and above the car park, and a basement slab that runs the full length of the car park, including under the Blocks. That basement slab is generally ground bearing, although small parts of it are supported by the large pile caps which support the Blocks. There are movement joints filling what would otherwise be small gaps (usually 50mm in width) between the Blocks where they meet above ground, between the podium slab and the ground floors of the Blocks, and around the pile caps at basement level.
There are 288 flats in total in the Blocks, all let on long leases in similar form. The sample lease I saw demised the relevant flat and granted the right to exclusive use of a specific parking space in the basement car park. The freehold is also subject to separate superior leases of each of the Blocks, and the commercial unit, from ground level up.
The right to manage Palgrave Gardens as a whole has previously been acquired pursuant to Part 2 of the Commonhold and Leasehold Reform Act 2002.
On or around 22 December 2016, 182 of the tenants of Palgrave Gardens sought to exercise the right of collective enfranchisement by serving a notice pursuant to s 13 (the “Notice”). The Appellant served a counter notice pursuant to s 21 by which it did not admit that the tenants were entitled to exercise that right, on the basis that the premises specified in the notice did not consist of a self-contained building or part of a building.
The Respondent commenced proceedings for a declaration under s 22 on 3 May 2017. In its defence and counterclaim the Appellant alleged that the Notice was invalid, claiming that there were a number of defects including that it had failed to make clear whether the specified premises included or excluded the basement car park. In March 2018 the Respondent was given permission to amend its claim form to rely on an amended notice. On 10 April 2018, in the light of disclosure received, the Respondent applied again to re-amend its claim form to rely upon a re-amended notice (the “Re-Amended Notice”).
At the hearing there was no oral evidence, but the Recorder did benefit from a site visit and from expert reports by structural engineers for both parties. The experts produced a joint report, described as a Joint Memoranda. Where relevant to my decision, and insofar as they are not apparent from the Recorder's decision or from the Joint Memoranda, I have relied on factual details contained in the report of the Appellant's expert.
The Notice and Re-Amended Notice
The Notice and Re-Amended Notice both used a pre-printed Oyez form. The disputed part of the Notice reads as follows:
...“ 1. The Specified Premises
The premises of which the freehold is proposed to be acquired by virtue of section 1(1) of the Act are shown edged in blue on the accompanying plan and known as the land on the west side of Rossmore Road, London (otherwise known as Palgrave Gardens, London NW1 9AX)
NB for the avoidance of doubt the accompanying plan shows the above ground footprint only of the Specified Premises. The red, green and mauve edging and numbering is to be ignored and not relevant for the purposes of this notice 1.
2. Additional freeholds
The property of which the freehold is proposed to be acquired by virtue of section 1(2)(a) of the Act are shown shaded in blue on the accompanying plan and known as
(i) all of the communal parts of the Specified Premises (if any) that may not be acquired by virtue of section 1(1) of the Act, including, but not limited to, all main entrances, passages, access ways, landings, staircases, lift shafts, means of refuse
disposal, water
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