Jewelcraft Ltd (Appellant/Claimant) v Paul Pressland and Another (Respondents/Defendants)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten |
| Judgment Date | 29 October 2015 |
| Neutral Citation | [2015] EWCA Civ 1111 |
| Date | 29 October 2015 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2014/1362 |
[2015] EWCA Civ 1111
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
HH JUDGE DIGHT
3CL10384
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Patten
Lord Justice Tomlinson
and
Lord Justice Vos
Case No: B2/2014/1362
Mr Stephen Jourdan QC and Mr Tom Jefferies (instructed by Maxwell Winward LLP) for the Appellant
Mr Anthony Radevsky (instructed by Bishop & Sewell LLP) for the Respondents
Hearing date : 8 October 2015
Approved Judgment
This is the judgment of the Court.
The issue on this appeal is whether some premises at 373 Upper Richmond Road, London SW15 ("the Premises") qualify as a "house" within the meaning of s.2(1) of the Leasehold Reform Act 1967 ("the 1967 Act"). That defines a "house" in these terms:
"(1) For purposes of this Part of this Act, "house" includes any building designed or adapted for living in and reasonably so called, notwithstanding that the building is not structurally detached, or was or is not solely designed or adapted for living in, or is divided horizontally into flats or maisonettes; and —
(a) where a building is divided horizontally, the flats or other units into which it is so divided are not separate "houses", though the building as a whole may be; and
(b) where a building is divided vertically the building as a whole is not a "house" though any of the units into which it is divided may be."
The Premises consist of a ground floor purpose-built shop with residential accommodation on the floor above. They form part of a parade of shops of similar external appearance and design constructed in the 1920's. As originally built, the ground floor shop was not self-contained and could be accessed via an internal staircase leading to the first floor or from a kitchen and scullery located at the rear of the ground floor which, in turn, provided access to a small yard at the rear of the Premises. The accommodation on the first floor comprised a sitting room, two bedrooms, a bathroom and W.C. with access to the ground floor kitchen and scullery via the internal staircase.
In about 1970 the internal layout of the Premises was changed. The kitchen and scullery on the ground floor were removed and the space incorporated into the shop. At the same time the internal staircase disappeared and access to what then became a self-contained first floor flat was provided by a new external staircase located in the back yard. The rear bedroom of the flat has been converted into a kitchen but otherwise the accommodation is largely arranged as before but with the absence of the internal staircase. The floor space occupied by the ground floor shop and the first floor flat is approximately equal.
The Premises were let on a 99 year lease granted on 12 January 1923 for a term commencing on 25 March 1921. The lease still subsists. It contains no covenants which restrict the user of the Premises and the evidence was that the Premises were used for the business of a tobacconist and post office at least until 1942. On 10 October 1978 a sub-lease of the whole of the Premises was granted to Martin Newsagents Limited on terms which restricted the use of the upstairs flat to that by an employee of the tenant. A new sub-lease has been granted in March 2011 on less restrictive terms but this post-dates the service of the notice to enfranchise in June 2010 which is the relevant date for determining the issue on this appeal.
On these facts HH Judge Dight held that the Premises did not constitute a house within the statutory definition contained in s.2(1) of the 1967 Act so that the claimant company was not entitled to enfranchise. The claimant now appeals with the permission of Gloster LJ on the ground that the judge's findings amount to an error of law and that he failed properly to apply the s.2(1) definition to the subject Premises as interpreted and explained by the decisions of the House of Lords in Tandon v Trustees of Spurgeon Homes [1982] AC 755 (" Tandon") and, more recently, by a unanimous Supreme Court in Hosebay Ltd v Day and Lexgorge v Howard de Walden Estate [2012] 1 WLR 2884 (" Hosebay").
The 1967 Act was passed in order to confer on the tenants of houses held on a long lease the right to acquire the freehold or an extended lease. As originally enacted, a condition of the right to enfranchise under s.1 of the 1967 Act was that the tenant should be occupying the house as his residence but s.1(2) qualified this requirement to the extent that occupation included occupation of only part of the house and, consistently with this, the statutory definition of a house in s.2(1) includes buildings which are or were not solely designed or adapted for living in. It is therefore common ground that the use of part of the building in question as a shop or for other commercial purposes is not a bar in itself to the property being a "house" within the meaning of s.2(1) nor to the satisfaction of the residence requirement under s.1(1).
The 1967 Act was amended by the Commonhold and Leasehold Reform Act 2002 so as to remove the residence requirement contained in s.1(1). This has had the consequence of extending the right to enfranchise to the lessees of buildings which qualify as houses even though not resided in by the tenant and therefore potentially at least to houses so defined used exclusively for commercial purposes. The conjoined appeals in Hosebay which we shall come to shortly both concerned premises of this kind.
The residence requirement in the 1967 Act was replaced with a new requirement in what is now s.1(1)(b)(i) that:
"at the relevant time (that is to say, at the time when he gives notice in accordance with this Act of his desire to have the freehold or to have an extended lease, as the case may be) he has-
(i) in the case of a right to acquire the freehold, been tenant of the house under a long tenancy for the last two years;"
There are also restrictions in s.1(1B) on claims to enfranchise by tenants of houses who are entitled to the protection of Part 2 of the Landlord and Tenant Act 1954. In such cases there is no right to enfranchise:
"….. unless, at the relevant time, the tenant has been occupying the house, or any part of it, as his only or main residence (whether or not he has been using it for other purposes) —
(a) for the last two years; or
(b) for periods amounting to two years in the last ten years."
There was some discussion during the course of the appeal as to whether the leasehold premises had to qualify as a house within the meaning of s.2(1) for the whole of the two year period specified in s.1(1)(b) and s.1(1B) or only at the date of the notice. This is a question of statutory construction which is not germane to the outcome of the appeal and, in the absence of full argument on the point, we do not propose to express a view which would be no more than obiter dicta in any event. What is, however, clear is that, consistently with s.1 of the 1967 Act in its original form, the changes now made to the conditions for enfranchisement have left untouched the statutory acceptance that occupation of part of the property and the use of the remaining part for business purposes does not ipso facto take the property outside the statutory definition of a house.
Against this background, we can turn to consider the authorities on what constitutes a house for the purposes of the 1967 Act. "House" is an ordinary English word meaning a building of one or more floors which, as s.2(1) says, is either designed or adapted for living in. In physical terms, the word can denote a property which is either detached, semi-detached or part of a terrace but, as a matter of common parlance, a house would not ordinarily include a property unless at least part of the building occupied the ground on which it was built. That understanding is reflected in s.2(2) which excludes from the definition of a house premises of which a material part lie above or below part of the structure not comprised in the house.
The most obvious contrast in terms of residential accommodation is between a house and a flat or maisonette and the 1967 Act has also recognised this distinction by making express provision for houses divided horizontally into flats. In such cases the building itself may still qualify as a "house" provided that it is a house "reasonably so called".
The first point, however, to be made about the s.2 definition of a "house" is that, although it represents in many ways what might be described as the common understanding of what is meant by a house in ordinary parlance, it operates and was clearly intended to operate as a purpose-made and therefore extended definition of that term designed to carry into effect the policy of the 1967 Act. It was therefore not Parliament's intention to exclude the right of enfranchisement in the case of buildings which were designed or adapted in part ("not solely") for non-residential use or which (if wholly residential in character) were internally sub-divided into flats.
The use of this extended definition has the potential to bring within the scope of the Act various types of premises which do not obviously conform to the every-day description and understanding of a house. A block of flats is a building designed for living in and divided horizontally into flats. But should it qualify for enfranchisement under s.2? The removal of the residence requirement brings into consideration properties such as those in Hosebay which were...
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