Stuart Henley and Another v Emmanuel Cohen
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lady Justice Hallett,Lord Justice Leveson |
| Judgment Date | 02 May 2013 |
| Neutral Citation | [2013] EWCA Civ 480 |
| Docket Number | Case No: B2/2012/0572 |
| Court | Court of Appeal (Civil Division) |
| Date | 02 May 2013 |
[2013] EWCA Civ 480
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON CIVIL JUSTICE CENTRE
HHJ COWELL
Claim No. 0CL10314
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Mummery
Lady Justice Hallett
and
Lord Justice Leveson
Case No: B2/2012/0572
MR PHILIP RAINEY QC and MR STAN GALLAGHER (instructed by WGS Solicitors) for the Appellants
MR ADAM ROSENTHAL (instructed by Peter Brown & Co) for the Respondent
Hearing date: 26 th February 2013
Introductory summary
This dispute is about the right to enfranchise under the Leasehold Reform Act 1967 (the 1967 Act). The right is exercisable in specified circumstances where a "building" is subject to a long lease. So, as the very learned County Court Judge observed, "Diogenes in his barrel does not qualify." He delivered his ex tempore judgment on 28 September 2011.
The "building" also has to fit the statutory description of a "house." Can the mixed unit building here in Palmers Green (a ground floor shop with a first floor that has been adapted as a flat for living in) reasonably be called a house?
Section 2(1) of the 1967 Act provides that:-
"For the 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…"
That rather short, tolerably clear, inclusive description of a "house" in ordinary English has for 30 years generated enough legal analysis and judicial guidance to verify one of the satirical laws promulgated by C Northcote Parkinson in 1957. The latest weighty decision of our newest highest court was handed down (on 10 October 2012), : Hosebay Ltd v. Day [2012] UKSC 41; [2012] 1 WLR 2884 ( Hosebay). The unanimous decision in Hosebay explained the earlier 3–2 decision of the House of Lords upon which the trial judge in this case had had to rely: Tandon v. Trustees of Spurgeons Homes [1982] AC 755 ( Tandon).This court has received written and oral submissions from each side about the impact of Hosebay on Tandon. For obvious reasons the trial judge did not have the benefit of the latest learning in Hosebay.
This case falls into two parts. The first part is whether a two-storey, long lease building in Palmers Green, which has a greetings card shop on the ground floor with a recently converted flat above, is "a house reasonably so called" within the meaning of s.2(1). If it is not, that is the end of this affair. But if it is, the second part of the case is whether the unlawful conduct of the present lessees of the building (the claimants/appellants), who, with a view to enfranchisement, deliberately acted in breach of covenant by carrying out works to adapt the upper floor for living in, disqualifies them from acquiring the freehold that belongs to the present lessor/freeholder (the defendant /respondent), he having refused, when asked, to give his consent to the claimants' proposed conversion works.
The issue on this appeal is whether the order of HHJ Cowell dated 28 September 2011 was wrong in declaring that the claimants, Mr Henley and Mr Maunder Taylor, are not entitled to acquire the freehold of the premises at 252 Green Lanes, London N13, formerly called No 3 The Triangle (the Premises) pursuant to Part 1 of the 1967 Act. The judge also declared that alterations by the claimants to the first floor of the Premises were made in breach of clause 5 of the lease of the Premises dated 9 August 1935 (the Lease).
The original grounds of appeal advanced were that the agreed facts and those found by the judge ought to have led to the conclusion that the Premises were a house "reasonably so called" within the meaning of the 1967 Act; that the judge erred in law in holding that the respondent's consent was required for the works undertaken by the claimants to convert the first floor of the Premises into a flat; that the judge erred in holding that the respondent's consent was reasonably withheld; that the judge erred in concluding that the claimants were not entitled to rely on the conversion works, which were found to be unauthorised, in order to claim the right of enfranchisement; and that the judge erred in law in failing to give adequate reasons to explain and support the conclusions that the respondent unreasonably withheld his consent to the conversion works.
On 3 May 2012 Lewison LJ granted permission to appeal, save for ground 4 (consent to works not reasonably withheld by the respondent).
Background
The claimants began these proceedings claiming various declarations after they had given notice in writing to the respondent on 3 August 2009 of their intention to acquire the freehold of the Premises under the 1967 Act and the respondent had denied the entitlement asserted by them in a counter-notice dated 28 September 2009.
The Lease
The term was for 99 years from 24 June 1935. The claimants were registered as proprietors of the Lease on 13 February 2004. The Lease contains a number of references to the Premises as being a "messuage" and/or a "dwelling house", as, for example, in clause 5, which is a covenant against alterations to the Premises in the following terms:
"… the Lessee will not alter the plan or elevation or architectural design of the said messuage shop dwellinghouse and premises or of the boundary walls or fences or make any additions to the said premises without the previous consent in writing of the Lessor or the Lessor's Surveyor and that plans showing elevations and sections shall be submitted in duplicate to the Lessor or the Lessor's Surveyor when applying for any consent and the reasonable fees of such Surveyors shall be paid whether such consent be granted or not."
The judge noted that there were other references in the Lease to "dwellinghouse", as in clause 8.
The physical condition and use of the Premises
The Premises are located in a parade of two storey buildings dating from the 1920s. There are ground floor shops. In the Premises both floors are sub-let. The ground floor shop is called "Hallmark." It is occupied under a sub-lease granted by the claimants on 16 November 2004. The claimants have carried out works to adapt the first floor for living in as a flat. The judge visited the Premises in the company of counsel, but was unable to see the inside of either floor. He observed the area as a whole and described it in his judgment.
The access arrangements to the Premises are that the entrance to the ground floor is from the street at the front, but access to the first floor can only be gained via a service area and passageway at the rear. A metal staircase runs from the ground up to the flat roof of the shop and then along a route of about 50 feet across the flat roof of the shop to what was a fire door designed to open outwards to be an escape from the fire within. To the left of the fire exit is the first floor of No 252, which includes the fire exit.
As for the use of the first floor, ever since the grant of the Lease it had been used for non-residential purposes in conjunction with the occupation of No 250 next door. There was no internal access to the first floor except from No 250. In 2008 the opening between No 250 and the Premises was bricked up leaving the only access to the first floor via the door in the rear elevation. That was reached from the iron staircase at the rear and along the route across the flat roof of the back of the ground floor shop.
As appears from photographs in evidence and from the descriptions in the judgment the overall appearance of the Premises is that of a shop located in a parade of shops rather than of a house residing in a row of houses.
The claimants, one of whom is a surveyor, applied to the respondent on 9 October 2008 for consent to convert the first floor into a flat by carrying out works, which were described as follows:-
" …providing services to the first floor (there are none at present) and forming some non-load bearing partitions to provide for appropriate accommodation layout. There would be no change to the front elevation of the property and there would be only minor changes to the rear elevation."
The application included a copy of the plan prepared to show the proposed layout and noted that the Lease required the lessor's consent for a change in plan. The plan set out precisely where the living-room and the open-plan kitchen, the bathroom and the three bedrooms, one of them with an en-suite, would be placed.
The respondent refused consent. The refusal is in a series of letters dating from 7 November 2008. He relied on a number of grounds for his refusal. They included his wish to avoid the application of the Leasehold Reform, Housing and Urban Development Act 1993 giving a right to acquire an extended lease. The respondent wished to avoid the application of the 1993 Act and the 1967 Act. The judge held that the grounds for refusing consent were reasonable.
Despite the refusal the claimants proceeded with the proposed works to convert the first floor of the Premises from a storeroom, which was previously used in connection with the adjoining shop at No 250, into a self contained residential flat. The works were completed by the beginning of August 2009. On 1 August 2009 the claimants granted an assured shorthold tenancy of the flat so that, as at the date of the notice under the 1967 Act, the first floor of the...
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