First-tier Tribunal Determines Interests in Collective Enfranchisement Dispute

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference :  LON/OOAG/OCE/2021/012

Property :  9 [APPELLANT] [POSTCODE] Applicant: [redacted] :  Ms [COUNSEL]

Respondent :  [redacted] (2) [COUNSEL] :  Mr [COUNSEL] of Application :  Collective enfranchisement dispute Tribunal Members :

Judge Shepherd Neil Martindale FRICS

Date of Determination :  4th August 2022

Determination

1. In this case the Applicants are seeking to acquire the [NAME] of [ADDRESS] NW3 4Y the (“the premises”) pursuant to the Leasehold Reform, Housing and Urban development Act 1993 (“The Act”). The Applicants are 9 [COMPANY] (“The Applicants”). The Respondents are the [NAME] of the premises, [NAME] and [NAME] (“The Respondents”).

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2. The issues for the Tribunal to decide are broadly :

a) the interest falling to be acquired; and

b) the valuation of the additional [NAME] falling to be acquired.

3. The parties agree that the actual premises and the garden demised with the lower ground floor flat fall to be acquired. The parties disagree as to whether any other additional [NAME] property falls to be acquired. The Respondents say that some of the other additional [NAME] property either does not fall to be acquired at all as it as it is neither demised nor an area over which there are rights in common (in particular the car parking spaces at the front of the premises) or that the claim to acquire the property which falls within section 1 (3) (b) of the Act (in other words areas over which tenants have rights in common) is defeated by the offer of rights in lieu under section 1 (4) of the Act.

4. The Tribunal were lucky to have been assisted by two counsel who are very experienced in this area, [COUNSEL] for the Applicants and [NAME[NAME] for the Respondents. Mr [NAME] was very clear in his submissions that the Respondents are prepared to grant whatever rights may be required, however extensive, in order fully to satisfy the equivalence test in section 1 (4) of the Act (see below).

5. For ease of reference the notice and counter notice which are relevant to this case are attached as Annexes to this judgement.

5 6. A notice of claim was served on 26 November 2020 seeking to acquire the [NAME] of the premises and the leasehold interest in the plantation area, car parking space and rear garden. The leasehold interest is registered in the name of the First Respondent under title number NGL 988091 (“The [NAME]”).

7. A counter notice was served by the Respondents on 29 January 2021 the counter notices admitted the right to acquire the specified premises but did not accept the proposal to acquire the additional [NAME] property edged and hatched green on the plan attached to the initial notice. At paragraph 3.2 the counter notice did not accept the proposal to acquire the [NAME]. In relation to to the additional [NAME] property edged and hatched green on the plan attached to the initial notice the counter notice made counterproposals as follows:

a) in relation to the close rear garden (which was hatched green on the plan accompanying the counter notice) it was accepted that the [NAME] fell within section 1 (2) (a) of the Act, the counter notice agreed to the acquisition of the [NAME] of that part.

b) in relation to the areas hatched blue on the plan accompanying the counter notice it was accepted that the [NAME] fell within section 1 (2) (a) of the Act and the counter notice offered to grant over that property, on the acquisition of the specified premises, such permanent rights as would ensure that thereafter the occupiers of the flats that enjoy rights over the blue land would have as nearly as may be the same rights as those enjoyed in relation to the blue land by the [NAME] of those flats under their leases. The blue land corresponded to the entrance steps part of the forecourt and the pavement part of [APPELLANT].

6 c) in relation to the area shaded pink on the plan accompanying the counter notice it was not accepted that the [NAME] fell within section 1 (2) (a) of the Act and the Respondents counter proposed that the [NAME] should neither acquire such land nor have any rights over it. The pink land included the lower rear garden, parts of the forecourt [APPELLANT] gardens and the Plantation area. The counter notice also provided that if all or part of this land did fall within section 1 (2) (a) of the Act then the counter notice offered to grant over the parts found to fall within that section, on the acquisition of the specified premises, such permanent rights as would ensure that thereafter the occupiers of the flats that enjoy rights over the pink land would have as nearly as may be the same rights as those enjoyed in relation to the pink land by the [NAME] of those flats under their leases.

8. On 16 July 2021 the Applicants applied to the Tribunal for a determination of the price to be paid for the acquisition of the various interests of the property claimed and for a determination of whether the Applicants were entitled to acquire the [NAME] and leasehold interests in the rear garden, car parking spaces and plantation area. The parties agreed that the price payable for the [NAME] of the building on the premises excluding any valuable value attributable to the other interests was £24,450.

9. The premises consist of a five-storey semi detached house containing three flats, gardens and parking areas. The [NAME] of the premises is registered under title number LN219474 in the names of the Respondents. The [NAME] title includes-

a) the building known as 9 [APPELLANT];

b) a paved forecourt in front of the building;

7 c) that part of the private road known as [ADDRESS] which is immediately in front of the building and the adjacent pavement;

d) an area on the far side of the road which has a tar macadam surface and is known as the plantation area;

e) an area of garden adjoining the building which is demised under the lease of the lower ground floor flat;

f) the lower rear garden which is double width and straddles 9 and 10 [APPELLANT];

g) a side path leading to the lower rear garden.

10. This is subject to 4 leases-

a) a lower ground floor flat which was originally owned by the [NAME]. The [NAME] granted the First Respondent a lease on 25 April 2019 and the lease was sold on 4 October 2019. This flat is not participating in the claim.

b) a ground and first floor flat which is let on a lease made between the Respondents and [NAME] and [NAME] dated 12 April 2016 which is an extension of a lease dated 7 February 1991

c) a second and third floor flat which is let on a lease granted by [NAME] to [NAME] dated 5 October 1995

8 d) The [NAME] granted by the Respondents to the First Respondent on 16 April 2019. This lease was granted for a term of 999 years from 7 June 2019. The demised premises are described as “the flat” but the definition of flat is missing there is a description of the demised premises at schedule one which refers to lease plans. These plans show that the lower rear garden and most of the plantation area are within this demised premises. The lease reserves rights to the grantor in relation to all existing easements and quasi easements over the demised premises and specifically in relation to the garden rights granted to the upper ground floor flat.

11. The ground floor lease states that the building where the context so admits includes the grounds thereof the extent of which is for identification only outlined in red on plan number one which building is divided into two flats and two bed sitting rooms.

12. Plan number one shows the whole of the [NAME] title including the rear garden, the car parking spaces and the plantation area outlined in red thereby comprising the building. Ground Floor Lease 13. The demise of the ground floor includes the rights in the second part of the first schedule-a right of way in common with the landlord and all others entitled to a like right over and along and through such entrance ways and passageways leading to and from the flat within the building and a right of way along the path coloured brown on plan to the garden as referred to in clause 6 of the second part of the schedule together with a right-of-way in common with others entitled to the like right to pass and re-pass over [APPELLANT] and over the path or way leading to the building providing access to and egress from it.

9 14. The right to keep a proper refuse enclosed container in that part of the front area designated by the land and a right of access at all times is also granted to the ground floor flat.

15. The right to use that part of the garden shown coloured green on plan one in common with the other lessees for the purposes only of quiet enjoyment and not for playing a ball or any other games nor the exercising of animals and the case of children only with adult supervision is also given to the Ground Floor Flat.

16. The right to park one private motor vehicle on the parking area at the front of the property (so far as the landlord is able) as may be designated by the landlord from time to time in common with the lessees of the other flat is also given to the Ground Floor Flat.

17. The area shaded green on plan one is the rear garden and the path coloured brown is the pathway leading down the left-hand side of the building from [APPELLANT] gardens to the rear garden

18. The lessee of the ground floor flat is required to pay a service charge representing 2/5 of the amount spent by the landlord in performing its obligations as to external repair, decoration of the common parts, maintenance and insurance. Those obligations include to keep in good order the grounds of the building not included in this demise or in a demise of any part of the building including and without prejudice to the foregoing the maintenance cultivation and cutting of the lawns and communal garden areas.

19. The common parts are defined in clause 9 (IV) as including any part of the building not demised to the tenant of this flat or to the tenant of any other flat in the building including the gardens and fences.

10 Second and Third Floor Lease

20. The second and third floor the lease is required to pay a service charge representing 2/5 of the landlord's expenditure in carrying out its obligations and those obligations include-

4 (3): to keep in good order the grounds of the building not included in this demise or in a demise of any part of the building including and without prejudice to the foregoing the maintenance cultivation and cutting of lawns and communal garden areas. The common parts include the communal garden (if any) and fences Lower Ground floor flat

21. The lower ground floor flat has its own garden. The block is defined as the whole of the [NAME] title including the rear garden car parking spaces and plantation area and the common parts of such parts of the block as for the time being not comprised or intended to be comprised in any lease or tenancy granted or to be granted by the landlord. The service charge proportion is a fair proportion of the charges for services provided by the landlord pursuant to the covenants in clause 7 and 8 at a starting rate of 10% the external nonstructural parts of the block. The landlord's obligation in clause 7.4 include keeping the common parts those interior and exterior in good repair and decorative condition.

22. The rights granted to the lower ground floor flat include the right-

to use such facilities (if any) within the block that may from time to time be designated by the landlord for use (with or without others) by the tenants of the block in general…

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to access a refuge bin on such part the common parts of the designated by the landlord from time to time for such purposes together with a right-of- way over the common parts on foot only to access the bin store area; and

to park one private motor vehicle at the front of the block (so far as the landlord is able) as may be designated by the landlord from time to time in common with the landlord and other tenants or occupiers of the block.

The rear garden

23. The ground floor flat has rights to use the rear garden as does the tenant under the [NAME] and the second and third floor flat are required to pay service charges in respect of the rear garden. Car Parking space

24. In terms of car parking spaces there are three car parking spaces at the premises on the forecourt of the building and one over the lane on the plantation area.

The law

25. The relevant statutory provisions are attached as annexes to this judgement.

26. Chapter 1 of part 1 of the Act confers on the [NAME] of flats in premises to which the provisions apply, the right to have the [NAME] of those premises acquired on their behalf by a [NAME] at a price determined under that chapter. Where the right to collective enfranchisement is exercised,

12 pursuant to section 1 (2) (a) the [NAME] are also entitled to have acquired on their behalf the [NAME] of any property which is not comprised in the relevant premises but to which the paragraph applies by virtue of subsection (3). Section 1 (3) states:

Subsection (2) (a) applies to a property if at the relevant date either-(a) it is a pertinent property which is demised by the lease held by a [NAME] of a flat contained in the relevant premises; or (b) it is property which any such tenant is entitled under the terms of the lease of his flat to use in common with the occupiers of other premises (whether those premises are contained in the relevant premises or not).

27. The right to acquire the [NAME] of property described in section 1 (3) (b) may be satisfied by the fulfilment of one of the alternatives in section 1 (4). This provides-

The right of acquisition in respect of the [NAME] of any such property as is mentioned in subsection 3 (b) shall, however be taken to be satisfied with respect to that property if, on the acquisition of the relevant premises in pursuance of this chapter, either-(a) there are granted by the person who owns the [NAME] of that property-(I) over that property, or (II) over any other property, such permanent rights as will ensure that thereafter the occupier of the flat referred to in that provision has as nearly as may be the same rights as those enjoyed in relation to that property on the relevant date by the [NAME] under the terms of his lease; or (b) their is acquired from the person who owns the [NAME] of that property the [NAME] of any other property over which any such permanent rights may be granted.

28. In addition to the [NAME] the [NAME] are also entitled to acquire certain leasehold interests. These are described in section 2 (3) as-

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The interests of the tenant under any lease… Under which the demised premises consist of or include-(a) any common parts of the relevant premises (b) any property falling within section 1 (2) (a) which is to be acquired by virtue of that provision where the acquisition of that interest is reasonably necessary for the proper management or maintenance of those common parts… On behalf of the tenants by whom the right to collective enfranchisement is exercised.

29. Where a lease includes parts falling to be acquired and other parts which do not fall to be acquired section 2 (4) provides that the lease is severed and only the [NAME] parts are required. Section 2 (4) states-

Where the demised premises under any lease falling within subsection (2) or (3) include any present premises other than-

(a) a flat contained in the relevant premises which is held by a [NAME],

(b) any common parts of those premises, or

(c) any such property as is mentioned in subsection (3) (d) the obligation or as the case may be right under subsection (1) above to acquire the interests of the tenant under the lease shall not exceed to his interests under the lease in any such at the premises.

30. Unsurprisingly there has been case law in relation to section 1 (4) of the Act. The case of [COMPANY] v [COMPANY] [2003] 3 E.G.L.R. 147 at [63]) found that provided the rights

14 offered by the landlord satisfy the test in section 1 (4) the FTT has no power or discretion to order the transfer of the [NAME] of the land.

31. The exact scope of the rights to be granted under section 1 (4) may be modified by the reversion up after service of the counter notice and even at the hearing; [NAME] v [NAME] [COMPANY] [2014] UKUT 215 (LC) at [42].

32. Whether the [NAME] has offered rights which are sufficient to engage section 1 (4) is a matter for the Tribunal ([COMPANY] v Huntsmore House ([COMPANY] [2015] UKUT 338 (LC) at [77]) but any objection to the exact scope of the permanent rights to be granted would be decided at the contract stage [COMPANY] v [COMPANY] [2003] 3 E.G.L.R. 147 at [64].

33. The transfer may require the grantee of the right to contribute to the upkeep of the land over which rights are granted-[NAME] v [COMPANY] [2011] UKUT 285 (LC) at [41(11)].

34. In relation to whether land is used in common with the occupiers of other premises for the purposes of section 1 (3) where there are several car parking spaces within the [NAME] title, but each space is allocated to a particular tenant each allocated space is not used in common with the occupier of other premises-[NAME] v [NAME] above. Car parking 35. The individual leases of the flats in the present case grant various rights over the parking areas. The upper ground floor flat has a right to part one private motor vehicle on the parking area at the front of the property (so far as the landlord is able) as may be designated by the landlord from time to time in common with the landlord and other lessees of the flat. The lease of the

15 second and third floor flat grants a right in identical terms save for the fact that the last word correctly refers to flats. The lease of the lower ground floor and garden flat grants rights in similar terms to park one private motor vehicle at the front of the block (so far as the landlord is able) as may be designated by the landlord from time to time in common with the landlord and other tenants or occupiers of the block.

36. The Respondents’ case is that there are five designated parking spaces. As well as the leases already described the lease of the first floor flat at 10 [APPELLANT] grants a right to park in similar terms to the flat leases as a result of a deed of variation. Garden rights 37. In terms of garden rights the close rear garden is demised with the lease of the lower ground floor flat. This is uncontentious. Only the lease of the upper ground floor flat grants a right to use the lower rear garden – see above.

38. The tribunal were assisted considerably by Counsel who prepared an agreed list of questions for the tribunal to address. It is now intended to deal with each question in turn.

Question one 39. This can be summarized as – are the parking spaces allocated to individual flats?

40. The Respondents say the Applicants are not entitled to acquire the parking spaces because each space is not used in common with the occupiers of other premises as required by section 1 (3) (b). The parking area is made up of three areas the forecourt, part of the pavement and the plantation land on the other side of the lane. In schedule 2, para 1 of the leases there are rights of access over the forecourt and the pavement area. The forecourt does not have a

16 specific path leading to the front of the property, the lower ground floor flat or the side entrance to the rear garden. Access is required over the whole of the forecourt if the requirements of section 1 (4) is to be met the Applicants argue that because the transfer will grant rights on foot over the whole of the forecourt and pavement they are entitled to acquire the whole of the forecourt pavement and the issue of whether there is communal use or allocated spaces of the area other than the plantation land is academic.

41. The car parking rights which each lease grants are described above. At the hearing Mr [APPELLANT] the joint tenant of the upper ground floor flat gave oral evidence that he always parked in the same spot which was on the road known as [APPELLANT]. He knew that he had a right to park there because that was what he was told when he brought the flat. Each of the other tenants parked in their spaces. The tenant of the second and third floor flat parked a mini in the plantation area. Previously both he and Mrs [NAME] mother had parked in that area and it made it difficult for the refuse collection lorry to pass. The tenants of the basement flat parked on the forecourt in the space closest to 10 [APPELLANT] and had installed a charging station for their electric Peugeot 208. He had in the past on at least one occasion parked on the other space and had been told off doing so by Mrs [NAME]. None of the tenants would park in the space used by another tenant. The Respondents say this evidence was consistent with Mrs [APPELLANT] evidence that each tenant parked in a space which had been designated or allocated by the [NAME]. They also say that each lease clearly contemplated a single space being designated for each lessee. The Respondents rely on the case of [NAME] v [NAME] (see above). where the rights granted was in the following terms-

The right to Park one private motor vehicle in such space forming part of the development as the landlord shall allocate from time to time.

42. In [NAME] the Judge rejected the contention that the car park spaces fell within section 1 (3) (b) stating-

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I find that the car parking spaces do not fall within the provisions of section 1 (3) (b) of the 1993 act. In my judgement the car parking spaces do not form a common pool and each allocated space is not used in common with the occupiers of the premises. Each space is allocated to each tenant and each tenant has a right to park in a specifically marked space allocated by the reversion.

43. The Respondents also rely on [COMPANY] v [APPELLANT] [ 2014] L and TR 28. They say that each tenant has the right to use a designated space and there are no areas over which the tenants have common use therefore the claim to acquire the [NAME] of the car parking spaces fails alternatively they say if the Tribunal finds against them on this point then the claim to acquire the car parking spaces is defeated by the grant of permanent rights in lieu and the transfer should include the grant of such rights.

44. Miss [NAME] for the Applicants highlighted the fact that in [NAME] the Tribunal found as a fact that the parking spaces were numbered 1 to 12 on the car parking plan and on the relevant date 10 spaces were specifically allocated to participating tenants. The Tribunal found that each allocated space was not used in common with the occupiers of the premises because each space was allocated to each tenant. [APPELLANT] says that in [NAME] the lessee was entitled to have a space allocated; there were numbered spaces marked out on the ground; once allocated the space could only be used by the specific tenant and there was no common pool. She says that none of these factors apply in this case and the wording of the parking easement in the leases is very different. She says that the lease allows a lessee to park one motor vehicle on the parking area at the front of the property and allows the landlord to designate where the parking area at the front of the property should be- So far as the landlord is able. She says that the latter phrase must have been included to recognised at the time the leases were granted there were pre-existing rights- of-way and restrictive covenants over the roadway, pavement and the curved

18 part of the plantation land contained in the 1962 conveyance. The lease provides that the landlord may designate from time to time where the parking area may be and would appear to have done so. The landlords designated that the area will include that part of the forecourt which is not used for bins, the plantation land and the pavement in order to fit in three cars they have granted rights to. She says they could have abided by the restrictive covenants and not include the plantation land in the parking area; they could have only designated the forecourt. It may have been that while there were two flats the forecourt would have been a sufficient parking area at the front of the property to accommodate both cars if the front wall is removed and a dropped curb installed to allow access over the area currently occupied by one of the cars. However, by the time a third flat was granted a larger parking area at the front of the property was required.

45. Miss [NAME] says that the evidence on allocation of spaces was thin. There was no evidence from the original grantor of the leases and Mrs [NAME] had no personal knowledge of what her parents agreed. There was no evidence from any grantees that they had been specifically allocated a space. There was no evidence from the successors in title of the original grantees or from the [NAME] that the [NAME] had spoken to the successors following their purchase and designated a particular parking space to them. If the parties intended their flat would be allocated to a specific space it would have been a simple matter to put that in the lease but the lease grants are right over a communal area. Since the Respondents acquired the [NAME] of number 9 they have granted two new leases within number 9 neither of them purports to allocate a space. She says there are no markings on the ground and no obvious locus of the space it is not surrounded by walls for example. She says the evidence was that the leaseholders do not park full square within particular spaces. The lower ground floor flat lessee parks as and where on the forecourt, the second and third floor flat lessee parks as and where on the plantation land and the photographs show different cars at different angles. She says just because leaseholders within a building have sensibly reached an accommodation with each other to ensure that they are likely to be depart

19 without blocking each other does not mean they are not entitled to use the rest of the parking area. Inevitably if a new leaseholder moves in he will park wherever his predecessor tended to park in order to promote harmony this does not alter the nature of rights.

Accordingly, she says that the applicant is entitled to acquire the whole of front parking area which the landlord designated as including the plantation land.

Determination

46. The Tribunal finds that the parking areas which comprise the forecourt, part of the pavement and the plantation land are property which any such tenant is entitled under the terms of his lease of his flat to use in common with occupiers of other premises. This case can be distinguished from [NAME] where there was a clear allocation of parking spaces. The spaces were numbered and it was intended that particular lessees used particular spaces. The Tribunal finds that the evidence from the Respondents and the lessees goes no further than supporting the fact that there was an expectation that particular lessees would use particular spaces. There was no clear express allocation of spaces to particular lessees. The fact that the lessees in a small building had agreed parking spaces in order to promote harmony and allow the occupiers to avoid conflict (in the tribunal's experience car parking is very often the source of conflict in neighbour disputes) does not mean that there were allocated spaces. If there had been allocated spaces one would have expected these to be numbered and allocated in the lease or at least some form of written express designation giving exclusive rights to use particular spaces. The situation was fluid. The [NAME] retained the right to designate where lessees could park generally but there was no allocation of particular spaces.

Accordingly, the answer to question one is yes.

Question two

20 47. This question read as follows: Is the plantation land or part of it (and if part only, which part)-property which any such tenant is entitled under the terms of the lease of his flat to use in common with the occupiers of other premises (whether those premises are contained in the relevant premises or not- section 1 (2) (a) and 1 (3) ( b).

48. The plantation land is shown on a photograph on page 449 of the bundle. It is a small area on which a car is shown to be parked and where there is a tree.

Determination

49. We have already decided that the parking on the plantation area is part of the shared parking at the front of the building. On its face the parts of the plantation land which are not part of the parking area are not to be acquired. This seems rather impractical and somewhat artificial. In practical terms those parts of the existing [NAME] of the plantation area which are not the parking space are in any event in common use – they can be seen or walked over by all of the lessees. However, if the Respondents want to retain them they can.

Question three

50. This question does not come into play as far as the Tribunal can see because the forecourt, pavement and plantation land (part of it) fall to be acquired under section 1 (2) (a) for reasons related to car parking.

Question Four

21 51. This question related to acquisition of the leasehold interest in the [NAME].

52. The land intended to be demised in the [NAME] is the rear garden and the car parking space and plantation area at the front of the block. The area demised for car parking is only big enough for a single car. The [NAME] is subject to the rights enjoyed over the garden by the ground floor flat and is not subject to any rights in favour of any occupiers of number [ADDRESS] it is also subject to the parking rights granted to each of the lessees under the three leases in the block.

53. Under section 2 of the Act the Applicant is entitled to acquire the leasehold interests in:

(a) any common parts of the relevant present premises, or

(b) any property falling within section 1 (2) (a) which is to be acquired by virtue of that provision,

Where the acquisition of that interest is reasonably necessary for the proper management or maintenance of those common parts, or (as the case may be) that property, on behalf of the tenants by whom the right to collective enfranchisement is exercised.

54. The Respondents accepted the property falls within section 1 (2) (a) but say that as it is not land which is to be acquired by virtue of that provision because rights in lieu have been offered there is no right to acquire the [NAME]. The Tribunal was offered no authority on this point and therefore it is to some extent a novel area.

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55. Section 1 (4) applies to all land falling to be acquired under section 1 (3) (b) in other words property which any [NAME] is entitled under the terms of the lease of his flat to use in common with the occupiers of other premises. In the case of a [NAME] acquisition the Act requires the [NAME] to grant equivalent permanent rights to the [NAME]. The [NAME] will still be in a direct relationship with the [NAME] and the [NAME] or its successor in title can enforce those [NAME] rights against the [NAME] or its successor in title. When the current leases expire the [NAME] can include the rights in a new extended term because it enjoys permanent rights from the [NAME].

56. Miss [NAME] said that in the case of a leasehold interest there is no equivalent to section 1 (4) in the act so in a case like this one where a 999 year lease has been granted the permanent rights granted by the [NAME] to the [NAME] would be worthless because neither the [NAME] nor the [NAME] could enforce them. She says that the suggestion that the [NAME] could sue the [NAME] pursuant to the transfer covenants and the [NAME] could then enforce against the intermediate lessee would be cumbersome and make management of the common areas more or less impossible and even if the Act required such convoluted means of enforcement there is no guarantee that the [NAME] will have like rights against the immediate intermediate lessee.

57. Miss [NAME] said there are factors in the drafting of the Act which make it clear that the right to acquire the intermediate lease is not determined by whether or not the [NAME] offers permanent rights in lieu under section 1(4). The first is the wording of that section itself. Section 1 (4) provides the right of acquisition in respect of the [NAME] of any such property as is mentioned in subsection 3 shall however be taken to be satisfied with respect to that property if permanent rights are granted.

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58. The right of acquisition referred to is the right contained in section 1 (2) where subsection (a) refers to the [NAME] aspect and subsection (b) deals with the acquisition of leasehold interest. Section 1 (4) is only directed to interests to be acquired under subsection (a) and there is no reference to section 1 (4) dealing with interests in subsection (b). She says that if section 1 (4) related to interest to be acquired under section 1 (2) (b) and section 1 (3) (b) it would have said so.

59. Miss [NAME] says the wording of section 1 (4) is very specific. It says that the right of acquisition is taken to be satisfied if permanent rights are granted it does not say the [NAME] can elect to grant permanent rights instead of transferring the [NAME]; it says the right to have the [NAME] transfer is deemed satisfied if such rights are granted.

60. Miss [RESPONDENT] says that the Respondent's case is illogical because if the [NAME] was acquiring the [NAME] and would be in a position to perform the landlord covenants itself and enforce the terms of of the intermediate lease it can also acquire the lease but if it was not acquiring the [NAME] and had to rely on the enforcement of covenants in a transfer against the [NAME] who would not be able to acquire the lease of common areas and could not enforce directly.

61. Miss [NAME] says that the Applicants cannot comply with their obligations in relation to the upkeep of the areas demised by the plantation unless they acquire that lease and suing the [NAME] is not practical but in any event the obligations in the plantation leads do not mirror those in the leases. She says had the Act intended section 1(4) to apply to leasehold interests as well as [NAME] interest it would have said so.

24 62. Further Miss [NAME] states that the acquisition of the lease is necessary for the proper management or maintenance of those common parts. She says that under clauses 4 (1) and 4 (3) of the ground floor and second and third floor leases the landlord is obliged to keep the appurtenances of the building in good and substantial repair. If the Respondents retain the [NAME] of the appurtenant land the Applicant will be unable to enforce any covenants in the [NAME] as it will not be the [NAME] of that. If the [NAME] was not acquired the Applicants have no way of managing or maintaining the appurtenant land.

63. Mr [NAME] who was very patient in taking the tribunal through a complex and technical argument sought to argue that the lease of the plantation was not to be acquired. He reminded the Tribunal that the [NAME] demises the lower rear garden and part of the plantation area. The plantation area comprises a raised area which has plants and shrubs and a tar macadam area. The tar macadam area forms a crescent and the tree stands towards the middle of the crescent. Only one third of the tree and roughly half the crescent is within the [NAME] of 9 [APPELLANT].

64. In his closing he pointed out that the Applicants had originally nailed their colours to the mast in arguing for acquisition under section 2 (3) (a) namely that the premises demised under the [NAME] fell to be acquired as common parts. The applicants since accepted that this was not really a runnable argument because the plantation area and the lower rear garden do not constitute common parts. Instead, the applicants rely on section 2 (3) (b).

65. Section 2 (3) (b) applies to property falling within section 1 (2) (a) which is to be acquired by virtue of that provision. Property falling within section 1 (2) (a) is additional [NAME] property. Mr [NAME] states that therefore the right to acquire leasehold property under section 2 (3) (b) is only exerciseable in relation to leasehold property the [NAME] of which is to be acquired. So if the

25 [NAME] of land is not to be acquired on section 1 then no lease of that same land can be acquired under section 2(3) (b).

66. Mr [NAME] argued that in relation to the plantation area neither of the conditions in section 2(3)(b) are fulfilled because it's not property falling within section 1 (2) (a) because it is neither demised nor an area in respect of which the tenants have rights in common. In the case of the lower rear garden he says that the first condition is fulfilled because the ground floor flat has the right to use the lower rear garden in common with others but the second requirement is not fulfilled because it is not property which is to be acquired by virtue of section 1 (2) (a) because the respondents have offered rights in lieu under section 1 (4).

67. Mr [NAME] central arguments rests on the words to be acquired.

Determination

68. This is a difficult area of law which is apparently untested. One needs to look at section 1 (4) which states the right of acquisition in respect of the [NAME] of any such property as is mentioned in subsection (3) (b) shall however be taken to be satisfied with respect to that property if, on the acquisition of the relevant premises in accordance in pursuance of this chapter et cetera. The Tribunal read this as a deeming provision so that if permanent rights are granted this will be treated as an acquisition of the relevant premises. Mr [NAME] argument rests on a restricted reading of section 2 (3) (b) to the effect that it refers to any property falling within section 1 (2) (a) which is to be acquired by virtue of that provision. He says where the landlord offers rights under section 1 (4) there is no acquisition. The tribunal rejects this argument. Section 1 (4) itself deals with acquisition albeit by a deeming provision. In other words there is an acquisition even if it is met by means of offering permanent rights. [NAME] is putting the cart before the horse.

26 The Applicants want to acquire the [NAME] of the additional land. They consider that they are entitled in this regard. It may be that the landlord can offer additional permanent rights instead but if he does this can’t and should not affect legal rights of acquisition with regard to the [NAME] otherwise the cart would be driving the horse!

69. In light of this finding the tribunal therefore finds that section 2(3) (b) is prima facie applicable to the present case. Further it is clear that the acquisition of the leasehold interest in the present case is reasonably necessary for the proper management or maintenance of the common parts or other property. As pointed out by Mr [NAME] in his skeleton argument it is the lessee of the [NAME] that has responsibility for maintaining the lower rear garden. If the lease remained in the name of the First Respondent the Applicants would have no real control over whether she complied with her responsibilities in the event that they don’t acquire the [NAME] and even if they did it would obviously improve management if they were in control of the lease.

70. Its difficult to see why the Respondents want to retain the [NAME] of the lower rear garden without any benefit and with only the burden of enforcing the [NAME]. The leaseholders do benefit from the Applicants becoming the [NAME] in terms of simplicity of management. At present because the Respondents have imposed a lease of the plantation land between themselves and the leaseholders the latter would have to rely on the [NAME] to enforce the covenants in the [NAME]. The fact that the [NAME] and the Plantation Lessee are the same person (at least in once case) makes this an easier task. If however the [NAME] was still the Respondents and the Plantation Lessee the Applicants enforcement would undoubtedly be more difficult. There is no reason to expect the Respondents to warm to the task of such enforcement. It may be said that its unlikely that the Applicants would fail to maintain the garden but its not certain, leaseholders move on or fall out and the personnel involved with the Applicants may change. It is difficult to see what permanent rights could be

27 given to the leaseholders to ensure that the [NAME] (if still the Respondents) comply with their obligations in relation to maintaining the common areas by taking action against the plantation lessee. As the Tribunal sees it s.1(4) is not open to the Respondents at least in relation to the lower rear garden for the reasons we have given.

71. In answer to the various questions in this section: does the plantation area or part of it fall within section 1 (2) (a) the answer is yes. The answer to 4.2 is yes. The area for the purposes of section 2 (3) (b) would ordinarily be acquired even where the right of acquisition in respect of the [NAME] of that part is to be taken to be satisfied by the grant of permanent rights under section 1 (4). This is the Tribunal's interpretation of section 1 (4). It is appreciated that this is a novel and complex area however the tribunal considers that the most practical reading is the one that the Tribunal has adopted.

72. In relation to question 4.3 the answer is in principle yes but the Tribunal does not consider that equivalent rights of enforcement can be granted. In response to the question 5.1 it is considered that the acquisition of the leasehold interest is reasonably necessary for the proper management or maintenance of those common parts or as the case may be that property on behalf of the tenants by whom the right to collective enfranchisement is exercised as indicated above.

73. The tribunal have considered the cases and statutory provisions referred to in the questions. It does not appear that either was mentioned during submissions at the hearing. It is not clear why the Tribunal should be considering these cases and authorities. It is not for the tribunal to speculate as to arguments that either party is seeking to make. These arguments should in any event have been made at the hearing It's assumed that the Respondents are concerned about the situation in which their client retains the [NAME] but the leasehold is owed by the Applicants but this is not clear. Valuation

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74. Matters of valuation can be dealt with in shorter order. The parties have agreed that the value attributable to the lower rear garden is £25,000. The Tribunal considers that there is no value attributable to the parking space demised by the [NAME] or the parking easement or indeed any of the spaces. The spaces have value but only as reflected in their rights to park given in the lease not as separate rights ( questions 8-10).

75. The Tribunal believes that the loss of value to the First Floor Flat , 10 [APPELLANT] is speculative and the [NAME] precludes a claim for compensation for the reasons given . The fact that the First Respondent is a joint tenant of the First Floor Flat, 10 [APPELLANT] does not change this position. In any event the loss would be nominal and Mr [NAME] assessment at £500 is correct (questions 11-15).

76. In relation to question 16 no evidence was provided to the Tribunal in relation to these issues by the Respondents save that Mr [NAME] said it was “significant”. Mr [NAME] assessed the value at £25000 which the Tribunal accepts.

77. Question 17 is not applicable because no evidence was provided.

Terms of transfer

78. The Tribunal will be willing to look at any remaining issues of transfer terms once the parties have considered this determination. Judge Shepherd 4th August 2022

ANNEX 1- RIGHTS OF APPEAL Appealing against the tribunal’s decisions

29 1. A written application for permission must be made to the First-tier Tribunal at the Regional tribunal office which has been dealing with the case.

2. The application for permission to appeal must arrive at the Regional tribunal office within 28 days after the date this decision is sent to the parties.

3. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28- day time limit; the Tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed despite not being within the time limit.

4. The application for permission to appeal must state the grounds of appeal, and state the result the party making the application is seeking. All applications for permission to appeal will be considered on the papers 5. Any application to stay the effect of the decision must be made at the same time as the application for permission to appeal.

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Annex 2 - Notice of claim and counter notice

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Annex 3 – Statutory Provisions

Leasehold Reform, Housing and Urban Development Act 1993 c. 28 s. 1 The right to collective enfranchisement. 1.— The right to collective enfranchisement. (1) This Chapter has effect for the purpose of conferring on [NAME] of flats contained in premises to which this Chapter applies on the relevant date the right, exercisable subject to and in accordance with this Chapter, to have the [NAME] of those premises acquired on their behalf— (a) by a person or persons appointed by them for the purpose, and (b) at a price determined in accordance with this Chapter; and that right is referred to in this Chapter as “the right to collective enfranchisement” . (2) Where the right to collective enfranchisement is exercised in relation to any such premises (“the relevant premises”)— (a) the [NAME] by whom the right is exercised shall be entitled, subject to and in accordance with this Chapter, to have acquired, in like manner, the [NAME] of any property which is not comprised in the relevant premises but to which this paragraph applies by virtue of subsection (3); and (b) section 2 has effect with respect to the acquisition of leasehold interests to which paragraph (a) or (b) of subsection (1) of that section applies. (3) Subsection (2)(a) applies to any property if [...]1 at the relevant date either— (a) it is appurtenant property which is demised by the lease held by a [NAME] of a flat contained in the relevant premises; or (b) it is property which any such tenant is entitled under the terms of the lease of his flat to use in common with the occupiers of other premises (whether those premises are contained in the relevant premises or not). (4) The right of acquisition in respect of the [NAME] of any such property as is mentioned in subsection (3)(b) shall, however, be taken to be satisfied with respect to that property if, on the acquisition of the relevant premises in pursuance of this Chapter, either— (a) there are granted by the [person who owns the [NAME] of that property]2 — (i) over that property, or (ii) over any other property, such permanent rights as will ensure that thereafter the occupier of the flat referred to in that provision has as nearly as may be the same rights as those enjoyed in relation to that property on the relevant date by the [NAME] under the terms of his lease; or (b) there is acquired from the [person who owns the [NAME] of that property]3 the [NAME] of any other property over which any such permanent rights may be granted. (5) A claim by [NAME] to exercise the right to collective enfranchisement may be made in relation to any premises to which this Chapter applies despite the fact that those premises are less extensive than the entirety of the premises in relation to which those tenants are entitled to exercise that right. (6) Any right or obligation under this Chapter to acquire any interest in property shall not extend to underlying minerals in which that interest subsists if— (a) the owner of the interest requires the minerals to be excepted, and

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(b) proper provision is made for the support of the property as it is enjoyed on the relevant date. (7) In this section— “appurtenant property” , in relation to a flat, means any garage, outhouse, garden, yard or appurtenances belonging to, or usually enjoyed with, the flat; [...]4 “the relevant premises” means any such premises as are referred to in subsection (2). (8) In this Chapter “the relevant date” , in relation to any claim to exercise the right to collective enfranchisement, means the date on which notice of the claim is given under section 13.

2.— Acquisition of leasehold interests. (1) Where the right to collective enfranchisement is exercised in relation to any premises to which this Chapter applies (“the relevant premises”), then, subject to and in accordance with this Chapter— (a) there shall be acquired on behalf of the [NAME] by whom the right is exercised every interest to which this paragraph applies by virtue of subsection (2); and (b) those tenants shall be entitled to have acquired on their behalf any interest to which this paragraph applies by virtue of subsection (3); and any interest so acquired on behalf of those tenants shall be acquired in the manner mentioned in paragraphs (a) and (b) of section 1(1). (2) Paragraph (a) of subsection (1) above applies to the interest of the tenant under any lease which is superior to the lease held by a [NAME] of a flat contained in the relevant premises. (3) Paragraph (b) of subsection (1) above applies to the interest of the tenant under any lease (not falling within subsection (2) above) under which the demised premises consist of or include— (a) any common parts of the relevant premises, or (b) any property falling within section 1(2)(a) which is to be acquired by virtue of that provision, where the acquisition of that interest is reasonably necessary for the proper management or maintenance of those common parts, or (as the case may be) that property, on behalf of the tenants by whom the right to collective enfranchisement is exercised. (4) Where the demised premises under any lease falling within subsection (2) or (3) include any premises other than— (a) a flat contained in the relevant premises which is held by a [NAME], (b) any common parts of those premises, or (c) any such property as is mentioned in subsection (3)(b),

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the obligation or (as the case may be) right under subsection (1) above to acquire the interest of the tenant under the lease shall not extend to his interest under the lease in any such other premises. (5) Where the [NAME] of a flat is a [NAME] and the flat is let under a secure tenancy [ or an introductory tenancy]1 , then if— (a) the condition specified in subsection (6) is satisfied, and (b) the lease of the [NAME] is directly derived out of a lease under which the tenant is a [NAME], the interest of that [NAME] as tenant under that lease shall not be liable to be acquired by virtue of subsection (1) to the extent that it is an interest in the flat or in any appurtenant property; and the interest of a [NAME] as tenant under any lease out of which the [NAME]'s lease is indirectly derived shall, to the like extent, not be liable to be so acquired (so long as the tenant under every lease intermediate between that lease and the [NAME]'s lease is a [NAME]). (6) The condition referred to in subsection (5)(a) is that either— (a) the [NAME] is the immediate landlord under the secure tenancy [or, as the case may be, the introductory tenancy]2 , or (b) he is the landlord under a lease which is superior to the secure tenancy [or, as the case may be, the introductory tenancy]3 and the tenant under that lease, and the tenant under every lease (if any) intermediate between it and the secure tenancy [or the introductory tenancy]3 , is also a [NAME]; and in subsection (5) “appurtenant property” has the same meaning as in section 1. (7) In this section “the relevant premises” means any such premises as are referred to in subsection (1).