[2024] UKUT 383 (LC)

We have to construe paragraph 1 of Schedule 6 to the 2002 Act so as to decide whether the roof voids, being non-residential parts of the building, are part of the “internal floor area of the premises (taken as a whole)”. The respondent did not suggest that the roof voids are a residential area on the basis that they are or were intended as storage spaces for the top floor flat and therefore intended to be occupied for residential purposes (paragraph 1(3)); the parties agreed that the building had been converted to flats some time after its construction so that that could not be taken to have been the purpose of the roof voids. So if they are included they are non-residential parts of the building.

Furthermore, neither party argued that paragraph 1 of Schedule 6 should be read as if it incorporated the criteria set out in the RICS’ Property Measurement (2^nd edition) for Gross Internal Area or Net Internal Area. Previous decisions have not done so, and in Indiana Investments the judge suggested that those criteria should be “applied with circumspection” and indeed did not follow them.

We turn to the words of the paragraph itself. We do not agree that the use of the definite article before “internal floor area” in paragraph 1(1) means that it is assumed that all parts of the building have a floor. Rather, it is for the parties and the FTT to ascertain what that area is in order to do the calculation required by paragraph 1. We agree with the appellant that “floor area” is not defined, and that paragraph 1(4), which we repeat for ease of reference, is a deliberately wide provision:

“(4)

For the purpose of determining the internal floor area of a building or of any part of a building, the floor or floors of the building or part shall be taken to extend (without interruption) throughout the whole of the interior of the building or part, except that the area of any common parts of the building or part shall be disregarded.”

There is no express stipulation there that the space concerned must be in use or potentially useful, and we agree with the appellant that such a stipulation should not be implied or inferred; had Parliament wanted to make that a requirement it would have said so. Therefore, although we agree with the appellant that it could potentially use at least the right-hand void for storage if access were constructed via the landing or the next-door roof, we also agree that that is not relevant to the decision whether that void is now part of the internal floor area of the premises.

Digressing for a moment, it might perhaps be thought odd that usefulness, or potential usefulness, is not mentioned in paragraph 1 of Schedule 6. Its purpose is to protect the landlord’s right to manage the non-residential areas when they are substantial, and therefore parts of the building that are not usable are irrelevant. But Parliament chose not to achieve its purpose that way, perhaps because usefulness, or being useable, is an imprecise concept and could generate considerable argument.

A floor, by contrast, is physical and obvious. It is a continuous surface, whether that is the earth floor of a cellar or boards laid over joists. Its presence or absence is obvious, without importing any technical language or specification, or any requirement about the extent of the load that a floor will bear. There are of course bad floors and good ones. But the minimum requirement to be part of the internal floor area of a building is the presence of a floor.

We agree that paragraph 1(4) is a deeming provision. But it is aimed at interruptions such as non-structural partitioning (hence the “ashlar” in Indiana Investments, which closed off space under the eaves of a room in order to support a radiator). It may be aimed at temporary interruptions, so that an area that is normally floored but has had its floor taken up for repair would be included. That is what we think is meant by “the floor or floors of the building or part shall be taken to extend (without interruption) throughout the whole of the interior of the building”, and we do not understand that wording to encompass areas that do not actually have a floor. A space that might have a floor one day, or even a space that is going to have a floor because planning permission has been granted for development, is not – at the point in time when paragraph 1 of Schedule 6 is relevant – part of the internal floor area of the premises.

That alone eliminates the most absurd of possible results. The shallow roof void postulated by Mr Gallagher is most unlikely to have a floor and therefore will not be within the calculation. It accords with the purpose of the statutory provision which is to protect the landlord’s right to manage the non-residential parts of the building when they are substantial, because an area without a floor is most unlikely to have a use and therefore does not need to be managed.

We do not regard that construction as causing any difficulty in the context of section 103(4) of the 2002 Act (see paragraph 26(e) above); the idea that “internal floor area” refers to areas that have, or normally have (excluding temporary interruptions), a floor is likely to be as appropriate in the context of service charges as it is in the context of the assessment of the non-residential parts of the building for the purpose of the right to manage.

That eliminates the right-hand roof void in the present appeal, and therefore the appeal fails because it is agreed that if either roof void is taken out of the calculation the respondent is entitled to acquire the right to manage. In any event it also eliminates the left-hand roof space, to which no access at all is possible at present and whose internal condition cannot be known; it is most unlikely to have a floor, and the appellant cannot show that it has a floor.

The FTT’s decision therefore stands, albeit on the basis of different reasoning.

The FTT regarded accessibility, and potential usefulness, as crucial. As we have said above, potential usefulness is not a criterion that can be extracted from paragraph 1 of Schedule 6. As to accessibility, we do not agree that the absence of legal access for the landlord to the right-hand roof is relevant; to import such a requirement would contradict the deliberately wide wording of paragraph 1(4). Whether physical accessibility is relevant is another matter; arguably an area to which there is no present access and to which access could not be gained without making physical changes to the building is not within the natural meaning of “internal floor area”. That would also accord with the purpose of the statutory provision which is to protect the landlord’s right to manage substantial non-residential parts of the building, to which inaccessible spaces are even more obviously irrelevant than unfloored spaces. But we do not have to decide that in the present appeal.

Accordingly although we disagree with the FTT’s reasoning, and in particular with what the FTT said, the appeal fails because we have reached the same result as the FTT, albeit by different reasoning which does not add to the words of the statute.