Courtyard RTM Co Ltd v Rockwell (FC103) Limited & Anr: When is a building truly ‘separate’?

In Courtyard RTM Co Ltd v Rockwell (FC103) Ltd & Another, the Court of Appeal heard two similar cases relating to residential structures with overlapping features. The case provides important guidance for tenants, landlords, developers and managing agents who are involved in buildings with overlapping structures. Although the case concerned the right to manage regime under the Commonhold and Leasehold Reform Act 2002 (the 2002 Act), the decision will likely have some relevance for those dealing with Building Safety Act 2022 (the BSA) matters.

To qualify for the right to manage, leaseholders must show that the premises consist of a self-contained building or a self-contained part of a building. Under section 72(3) of the 2002 Act, a part of a building will only qualify if it constitutes ‘a vertical division of the building’ and can be redeveloped independently of the remainder. The first appeal concerned three separate residential blocks structurally connected to a shared podium with a car park underneath. The second matter joined to the case concerned a terraced property which, when redeveloped, had foundations extending beneath neighboring properties.

The court confirmed that the vertical division test is a physical one, in that the question for the court is not whether a ‘notional’ line can be drawn on a plan to separate the buildings, but whether the buildings themselves can be divided by physical features.

For the first case with the shared podium and basement car park development, the court held that the shared basement prevented the blocks from constituting separate self-contained buildings, as the buildings could not be physically separated across a single line.

In the second case the court confirmed that there was nothing in the meaning of vertical division which required a single straight line boundary, meaning that kinks or dog legs in the vertical division were okay.

As to its relevance to the BSA, the definition of relevant building is a self-contained building or self-contained part of a building containing at least 2 residential units and being at least 5 storeys or 11 metres tall.  The meaning of self-contained in section 117(5) of the BSA mirrors the wording of the 2002 Act considered by the Court of Appeal

Although this case was not strictly a Building Safety Act case, the judgment will prove helpful to those looking to identify the footprint (and the limit of the footprint) of a relevant building for the purposes of BSA compliance.   Developments frequently contain shared and interconnected infrastructure, so it is worth developers bearing in mind the potential ramifications of this case not only` from a management perspective, but also through a BSA lens. The court’s focus on the physical reality of the building compared to theoretical plans mirrors many of the questions arising under ‘self-contained’ elements of the Building Safety Act regime.

Key takeaways

For property developers and owners, the key takeaway is that shared basements and podiums may prevent different blocks being truly ‘separate’, meaning the footprint of a relevant building (for BSA purposes) may be larger and the consequent leaseholder protections that apply of broader effect.  By contrast, when considering the question of vertical divisions, the division does not have to be a straight line and physical features that present kinks or dog legs in the vertical dividing line do not in and of themselves prevent connected structures from each being considered self-contained.