Cadogan & Anor v Panagopoulos & Anor

For collective enfranchisement under Leasehold Reform Housing and Urban Development Act 1993, “common parts” includes facilities that provide a shared benefit to tenants. A facility may comprise both a physical part of the building and the service provided from it. Tenants need not have physical access to that part.

A caretaker’s flat may therefore be a common facility where it is designated for a resident caretaker and at least some tenants have a right to the caretaker’s services. Once such a flat is a common part, its acquisition is reasonably necessary for its proper management if the nominee purchaser otherwise could not use it to accommodate a caretaker. The freeholder’s willingness to negotiate, or the possibility of providing the service elsewhere, does not restrict the statutory acquisition right.

Three qualifying tenants of a building containing five flats served a collective-enfranchisement notice. After its registration, the Estate granted a 999-year lease of the basement caretaker’s flat to its nominee.

The purchasers contended that the grant was void because the caretaker’s flat was liable to acquisition as common parts. HH Judge Marshall so held in County Court proceedings. Roth J upheld that decision in the Chancery Division.

The Estate appealed. The central question was whether a caretaker’s flat, to which tenants had no physical access but which enabled the provision of resident caretaking services required by certain leases, was within the common parts for the purposes of the statutory acquisition provisions.

Appeal dismissed. Carnwath LJ gave the leading judgment. Hughes LJ and the Chancellor agreed.

1. The inclusive definition of common parts in section 101(1) of the Leasehold Reform Housing and Urban Development Act 1993 carries its ordinary meaning. “Common” denotes shared rather than individual use or benefit. A common facility can include physical equipment or a defined part of a building together with the service provided through it. Physical access by each tenant is not essential.

2. The caretaker’s flat was a distinct part of the building, designated for a resident caretaker. The services of such a caretaker were contractually available to some tenants, including a participating tenant. The flat and those services together were therefore a common facility and hence common parts. Hughes LJ confined his agreement to parts which at least some tenants have a right to enjoy in common; the wider question whether actual dedication alone would suffice did not arise.

3. Under section 2(1)(b), acquisition of the leasehold interest in the flat was reasonably necessary for proper management or maintenance of those common parts. Without acquiring the flat, the nominee purchaser could not use it to accommodate the caretaker. The Estate’s willingness to negotiate alternative arrangements, and the possibility of providing caretaking elsewhere, did not affect the statutory right.

4. The court rejected the contrary construction in McGuckian v 29 Eaton Place Management Co Ltd [2008] EWLands LRA_85_2006. Section 2(4) does not make flats and common parts mutually exclusive: its relevant distinction is between common parts and flats held by qualifying tenants. Section 4, which concerns the business-to-residential floor-area calculation, did not support a different result. Oakwood Court (Holland Park) Ltd v Daejan Properties Ltd [2007] 1 EGLR 121 concerned a different statutory use requirement and did not govern the definition of common parts.

• Court of Appeal (Civil Division) — dismissed the Estate’s appeal and affirmed the conclusion that the grant of the caretaker’s-flat lease was void: [2010] EWCA Civ 1259.
• High Court, Chancery Division (Roth J) — upheld HH Judge Marshall’s decision. The citation is not stated in the judgment.
• County Court (HH Judge Marshall) — held, in proceedings arising from the proposed registration of the lease, that the lease was void. The citation is not stated in the judgment.