Case No. UKUT-26-(LC)-UTLC-Case-Numbers:-LC-2022-346

30.I did not hear a great deal of argument on this issue. Mr Bates addressed me only briefly. Mr Gallagher, quite reasonably, did not feel able to concede that the FTT Decision should be set aside, but sensibly decided to concentrate his submissions on the Self-Contained Part Question.31.Mr Gallagher’s decision was a sensible one because, with due respect to the FTT, it seems to me that the FTT Decision does fall to be set aside. I do not think that the reasoning of the FTT can stand.32.My reasons for this conclusion are essentially the same as those articulated by the Deputy President in his decision granting permission for the appeal and cross appeal. My reasons are as follows.33.The essential reasoning of the FTT, by which they reached their decision on the RTM Application, is to be found in paragraphs 7-13 of the FTT Decision, the content of which I have already summarised. In paragraphs 7 and 8 the FTT stated what I take to be conclusions; namely that the Property constituted a single building for the purposes of the 2002 Act and that the RTM had complied with the statutory requirements for making an RTM claim. It therefore becomes necessary to look at the following paragraphs of the FTT Decision in order to identify the reasons for that conclusion.34.At paragraph 9 the FTT set out Section 72, which identifies what premises, subject to the exceptions in Schedule 6, constitute Qualifying Premises.35.In paragraphs 10 and 11 the FTT made reference to the Property having a single address, since its conversion to the four flats. The FTT also made reference to what was said to have been Assethold’s consistent treatment of the Property as a single building for the purposes of insurance and services. In paragraph 12 the FTT made findings (i) that Assethold had consistently treated the Property as a single building with a single address, and (ii) that the Property differed significantly in character from blocks of flats on an estate and characterised as separate buildings for the purposes of the 2002 Act. In paragraph 13 the FTT then stated, or restated their conclusion that the RTM Company had satisfied the FTT that it was entitled to acquire the right to manage.36.The tests which are set out in Section 72 for the two categories of Qualifying Premises, namely self-contained buildings and self-contained parts of buildings, are physical tests. They depend upon the structure of the relevant premises and, in the case of self-contained parts of buildings, upon the ability to carry out independent redevelopment of that part and upon the nature of the services provided to that part.37.As can be seen the FTT did not apply these physical tests. Instead, the FTT made reference to the address of the Property and to what was said to have been Assethold’s treatment of the Property. It seems to me that none of the matters considered by the FTT in paragraphs 10, 11 and 12 had any relevance to the matters which the FTT were required to consider, for the purposes of the test in Section 72. Put more simply, it seems to me that the FTT failed to apply to the Property the test in Section 72. 38.Beyond this, and so far as this is relevant, it is not clear what evidence there was to justify the finding that Assethold had consistently treated the Property as a single building. Assethold only acquired the Property in 2018, and was registered as proprietor of the freehold titles to the Property in 2019. There was no witness evidence, lay or expert, before the FTT. In terms of the documents which were before the FTT, I have seen some documents, which I understand to have been the same documents as were before the FTT, which relate to the management of the Property. It seems to me that these documents did not provide any proper basis for a finding that Assethold had consistently treated the Property as a single building. It is true that the Property has and has had a single address. Although I have not seen all the leases of the Flats, it is my understanding that the service charge structure of the Flats is that the service charge costs incurred in relation to the Property are shared between the tenants of the Flats, with each tenant paying 25% of those service charge costs. It seems to me however that these matters were not a reliable basis for the finding, in paragraph 12, that Assethold had “consistently treated the subject premises as a single building”. It seems to me that the only finding which the FTT was in a position to make in this respect was that the Property had had a single address, since its extension and conversion into four flats pursuant to the planning permission granted in September 2014. Indeed, in this respect the FTT seem to me to have been wrong in stating, in paragraph 10, that the Property had originally comprised two terraced houses with two different addresses. My own finding is that the Property originally comprised only the Western Part, known as 36 Eveline Road, which was then extended to create what is now the Property.39.What I have said in my previous paragraph is of course subject to the prior, and more important point that the finding made by the FTT in paragraph 12, whether right or wrong, seems to me to have been irrelevant to the test, in Section 72, which the FTT were required to apply.40.The FTT also stated in paragraph 12 that the Property differed significantly in character from blocks of flats on an estate, which were characterised as separate buildings for the purposes of the 2002 Act. I do not understand this point. Plainly, the Property is not of the same character as a block of flats, whether on an estate comprising several blocks of flats or standing on its own. I do not however see how this statement was relevant to the application to the Property of the test in Section 72.41.In summary, and bearing in mind that at this stage of this decision I am engaged in a review of the FTT Decision and not a rehearing, I do not think that the reasoning of the FTT can be upheld. In my judgment, and with due respect to the FTT, their reasoning was seriously flawed and cannot be upheld.42.I therefore conclude that the FTT Decision falls to be set aside. This therefore clears the way for the rehearing of the RTM Application in this Tribunal. As I have explained, the remaining issue in the RTM Application and the issue on which the RTM Application now turns is the Self-Contained Part Question.43.There is one other point which is conveniently made in this section of this decision, before I come to my discussion of the Self-Contained Part Question. The point is relevant to my discussion of the Self-Contained Part Question. It seems to me that one of the matters which may have contributed to the flawed reasoning of the FTT in the FTT Decision was their failure to draw an important distinction in the context of Section 72. 44.As I have already noted, Section 72 applies to two categories of Qualifying Premises, namely self-contained buildings and self-contained parts of buildings.45.So far as the Property is concerned, it is not structurally detached from Number 38. On its western side the Property shares a party wall with Number 38. As such, the Property is not structurally detached from the remainder of the Terrace.46.Turning to the Terrace, I have not had the opportunity to inspect the Terrace, so I do not know this for certain, but the plans and photographs which I have seen suggest two features of the Terrace, both of which one would expect to find in a terrace of properties of this kind. The first feature is that none of the other properties in the Terrace are structurally detached from each other. In the usual way, the properties within the Terrace form a line of properties, structurally attached to each other. The second feature is that the Terrace itself is structurally detached from the buildings nearest to the Terrace. By way of example, the photographs and plans I have seen show a gap between the eastern end of the Terrace and the neighbouring building. In theory, there might be a feature such as an underground car park which runs under a part of the Terrace and an adjacent property, thereby comprising a structural link between the Terrace and the adjacent property. There is however no evidence of this, and it would be surprising to find such a feature in relation to a terrace of properties of this kind. In any event it is clear on the evidence that there is no such structural feature which affects the Property or the eastern end of the Terrace. 47.Returning to the Property it is now agreed that the Division Criteria are satisfied in respect of the Property, in terms of its relationship with Number 38, and thus the remainder of the Terrace. The eastern side of the Property comprises the eastern flank wall of the Terrace, with no structural attachment to the neighbouring building, with the consequence that the Division Criteria are not relevant in relation to the eastern side of the Property.48.In relation to the Parts it is also now agreed that the Division Criteria are satisfied in relation to each Part, in terms of their relationship with each other and, in the case of the Western Part, in terms of its relationship with Number 38 and thus the remainder of the Terrace.49.The above analysis has the following consequences:(1)For the purposes of Section 72 neither the Property nor the Parts can qualify as a self-contained building, within the meaning of Section 72. Neither the Property nor the Parts are structurally detached. If there is a self-contained building in the present case, for the purposes of Section 72, it can only be the Terrace. It is convenient to assume, for the purposes of my discussion of the Self-Contained Part Question, that the Terrace is a self-contained building for the purposes of Section 72. It seems highly unlikely that it has any structural attachment to any neighbouring property which would disqualify it from constituting a self-contained building for the purposes of Section 72. (2)If therefore the Property falls within the terms of Section 72, it can only be as a self-contained part of a building, namely the Terrace.(3)The same applies to the Parts. If they each fall within the terms of Section 72, it can only be as self-contained parts of a building, namely the Terrace.50.I have taken some time to spell out the above distinction between a self-contained building and a self-contained part of a building because a failure to maintain this distinction can lead to confusion and, as it seems to me, did operate to confuse the reasoning of the FTT in the FTT Decision.