This was the question which HHJ Cowell had to answer last week at Central London County Court in respect of a claim for Collective Enfranchisement made under the Leasehold Reform and Housing Development Act 1993 in the matter of Farndale Court Freehold Limited v. G & O Rents Limited.

The claim concerned a building which can best be described as akin to a student halls of residence. The building consisted of a terrace of 4 blocks. In one block was a management office which belonged to the freeholder and also a room used as a laundry. On either side of the stairwell on each floor was a Unit which typically consisted of 6 en suite bed sitting rooms, a corridor and a communal Kitchen/diner. There were 30 of these units and a Qualifying majority of tenants had given a Notice to Enfranchise under the 1993 Act. The Defendant freeholder had served a Notice alleging that the Units were not flats within the definition of the 1993 Act Section 101(1).

Further the Defendants also alleged that the Units were used as business premises. This was not raised in the Counter Notice.

As a result the Freeholder alleged that the Claimant nominee purchaser was not entitled to enfranchise.

The Claimant bought proceedings for a declaration under Section 22 of the Act that the participating tenants were entitled to enfranchise.

The Judge in deciding if the leases were of a flat took the view that each lease was for a separate set of premises and that each formed part of the building as a whole and had been constructed and adapted for use as a dwelling. The Judge did not feel that the cases relating to “houses” and enfranchisement under the Leasehold Reform Act 1967 assisted him but he did refer to Malekshad v. Howard de Walden Estates and the view of Scott LJ at paragraph 101 that a dwelling was either a house or a flat.

The Judge in this case found that the Units had been constructed for people to live in. Further he determined that whilst most units had 6 rooms, each room could not be said to be a separate dwelling since each was used with the kitchen. He went on to say that if each room could be said to be a flat that was in his view unrealistic and the alternative that there were no flats was equally unrealistic.

He held that each of the Units were a flat within the definition of Section 101(1).

The next point was whether the Defendant was entitled to rely upon the business user despite having failed to mention this in the Counter Notice.

The Judge relied upon a decision of HHJ Cooke at Central London County Court in the case of Bishopsgate Foundation v. Curtis [2004] and found that the argument over business user had not been thought about or hinted at in the counter notice and the Defendant could not rely upon this since there was no reference in the Counter Notice.

He did however go on to consider the business user point. The Judge did state that he could see that a layman looking at the letting arrangements and the units may well conclude that this was a business user but he was satisfied that this was not the correct test. The correct test was to have regard to Section 23 of the Landlord and Tenant Act 1954. The Judge was referred to Graysim Holdings v. P & O [1996] but determined that the current case was on all fours with this authority.

The Judge found that there was not a Business user (save for a short period in respect of two units only as a hotel).

As a result the Claimants were successful in their application although the Defendant may appeal.

It is believed that this is the first case on the point of what is a flat under the 1993 Act. It seems that if you have a dwelling then if it is not a house it will be a flat! Plainly the factual situation is going to be important and we still await the House of Lords decision in Hosebay which may or may not provide further assistance.

Further the Judge did make clear that in his opinion a Freeholder must set all arguments in the Counter Notice although he does not need to go into in detail. This is perhaps surprising but the Judge was clear that in effect the Counter Notice is akin to a pleading.

Perhaps not of huge interest save for those who practice in this field but an interesting decision none the less.

PainSmith were instructed on behalf of the Defendant Company and are happy to advise with regards to all residential long leasehold matters.