FSV Freeholders Limited v SGL1 Limited

On a first hearing of a Part 8 claim, the court may dispose of the claim summarily where the supporting evidence appears sufficient and the defendant raises no matter requiring further investigation. Generalised evidence of compliance with complex statutory requirements may suffice initially. If a potentially significant issue is raised, the court should give directions for its investigation rather than summarily grant declaratory relief.

For notices under the Landlord and Tenant Act 1987, a proposed transaction involving more than one building must be severed for notice purposes. If the tenants do not accept the offers, the landlord may nevertheless complete the originally proposed unsevered transaction. The notices need contain the severed terms required by the Act, including any apportioned consideration.

FSV appealed against a District Judge’s order declaring that administrators of Fox Street Village Limited had complied with section 5 of the Landlord and Tenant Act 1987 when selling freehold interests in blocks A to E, 30 Fox Street, Liverpool, to SGL1 Limited.

The District Judge treated the first hearing of the Part 8 claim as a disposal hearing and rejected FSV’s challenges summarily. On appeal, FSV argued that there was insufficient evidence to determine the validity of the notices, that the wrong test had been applied to the administrators’ proposal to sell, and that the transaction had been incorrectly severed for notice purposes. The central issue was whether the claim could properly be disposed of without directions for a trial.

1. Appeal allowed in part. The District Judge’s order was set aside. The issue whether blocks A, B, C and E constituted one or more buildings for the purposes of section 5 was directed to trial.
2. On a first hearing of a Part 8 claim, the court may decide whether the claim can be disposed of immediately under the overriding objective. The claimant must prove the claim, but generalised evidence of compliance may be sufficient initially where the statutory scheme is complex. The question is whether the defendant has raised a substantive triable issue. If so, further directions may be required.
3. The question under section 5 is whether the landlord proposes to make the relevant disposal, rather than whether it has finally decided or formed an intention to sell to the particular purchaser. The evidence showed that the administrators had at least proposed to sell on the terms summarised in the notices. The challenge that the notices were served too soon was unarguable.
4. Section 5(3) requires a transaction involving more than one building to be severed for the purpose of serving notices. Section 5A(2) requires the principal terms of the severed proposed disposals to be stated, including apportioned consideration where appropriate. Failure by the tenants to accept the offers does not require the landlord to complete a severed sale; the original unsevered transaction may proceed.
5. The evidence raised an arguable issue whether blocks B, C and E were separate buildings. Relevant considerations could include physical connections, shared services and facilities, structural support, appurtenant rights, construction dates, management, service charges and visual appearance. The District Judge therefore erred in foreclosing that issue without further investigation.
6. The description of FSV’s defence as “totally without merit” could not stand. That expression should generally be confined to cases where it has technical significance under Practice Direction 3C.

• High Court (Chancery Division): appeal from the order of District Judge Lampkin made on 11 January 2022. The order was set aside and directions were given for trial of whether the section 5 notices were correctly served on the basis that the blocks constituted two separate buildings.