Leasehold Reform Act 1967 — Whether building a ‘house’, so as to qualify for enfranchisement under the Act, or a shop — Court of Appeal divided — Majority, reversing decision of county court judge, held that the building in question was a shop with living accommodation above it — Ormrod LJ, dissenting, found difficulty in distinguishing the case of Lake v Bennett and considered that it was a house, in agreement with county court judge — The premises in question were in a small parade of shops with living accommodation above — About 75 per cent of the area of the premises was used as a shop, including a covered yard at the rear, and about 25 per cent consisted of modest living accommodation — Appeal allowed, but, in view of difference of opinion, leave given to appeal to House of Lords
This was an
appeal from a decision of Judge Coplestone-Boughey at Wandsworth County Court,
holding that the tenant, Ajeet Kumar Tandon, was entitled to acquire the
freehold in certain premises at Mitcham Lane, Streatham, from the landlords,
the Trustees of Spurgeon’s Homes, under the Leasehold Reform Act 1967. The
trustees appealed.
Patrick Ground
(instructed by Pothecary & Barratt) appeared on behalf of the appellants;
David Parry (instructed by Radia & Co) represented the respondent.
Giving the
first judgment at the invitation of Ormrod LJ, GRIFFITHS LJ said: This is an
appeal from a decision of His Honour Judge Coplestone-Boughey, in which he held
that a tenant was entitled to the enfranchisement of his lease pursuant to the
provisions of the Leasehold Reform Act 1967. There is no dispute in this case
that the tenant was entitled to enfranchisement provided that the building in
question of which he was tenant could be said to be a house ‘reasonably so
called’ within the meaning of section 2 of the Act.
I cannot
improve upon the description of the property contained in the learned county
court judge’s judgment and I now read the description from that judgment:
The property
is clearly shown by the agreed plan, description and photographs which are
before me.
I interpolate
to say that the members of this court have had the advantage of seeing that
plan and photographs.
The site is a
long narrow plot with a frontage of about 21 ft upon Mitcham Lane. The ground
floor is a shop fronting the main road and is one of four identical shops with
varying shop fronts. There is a first floor above containing three effective
rooms in the main part of the building and a back addition. Behind this
building there was originally a narrow open path running beside the back
addition and behind that an open space leading to a two-storey stable which in
turn gave access to a rear service road. At some uncertain time but certainly
before 1962 when Mr Kirkaldie inspected the premises a roof, treated for London
Building consent as temporary, was erected over the whole of the yard except an
outside water closet. This roof runs from and is attached to the rear of the
main building and extends right back to the stable. The doors are arranged so
that there is internal communication from the shop in front through the
original open space to the stable and service road at the back. The interior
layout is that at the rear of the main building there is an opening to the
right which forms the access to the upper part of the building and also to the
combined bathroom and water closet at ground level. The stairs rise by a right
angle to the right and open upon the first floor. At present the whole of the
ground floor including the covered yard and stable are used as a shop and the
first floor is residential. In 1962 the layout was the same but the first floor
was used as offices.
We have seen
the photographs of the premises and they consist of one of a small parade of
shops. Each shop has living accommodation above it; each consists essentially
of a flat above a shop. The premises now consist, as to their area, of about 75
per cent of the area being used as a shop, because the whole of the yard which
is covered in is now used as storage for the shop, and about 25 per cent for
the modest living accommodation, comprising living room and two bedrooms on the
first floor.
I turn now to
section 2, subsection (1) of the Act, which provides:
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.
These premises
were originally let by a lease in 1881 and were originally let not solely as a
house but (I quote from the lease) as a ‘messuage or dwellinghouse and shop’.
So these are premises which started as a shop with living accommodation.
The learned
judge was referred to the decision of this court in Lake v Bennett,
reported in [1970] 1 QB 663. He concluded that that decision applied to the
facts in this case and concluded it in favour of the tenant. The premises in Lake
v Bennett were, in my view, of a markedly different character to the
present premises and we have had the advantage of seeing photographs of them.
In Lake v Bennett the premises in question consisted of a house
in a parade of houses, which, from looking at the photographs, were quite
clearly built as a terrace of dwelling-houses. It was a house that consisted of
a basement, a ground floor and first and second floors. In the course of time
the ground floor was converted into a betting shop. The Court of Appeal held
that, notwithstanding that the ground floor was now a betting shop, the
building as a whole was ‘reasonably so called’ a house, and that conclusion
differed from that of the learned county court judge who tried the case at
first instance. The Court of Appeal held that they were free to differ from the
learned judge because, he having found the primary facts, this court was free
to say whether or not, on those primary facts, the house fulfilled the
condition in section 2(1), namely, that it was ‘reasonably so called’ a house.
The learned judge
having found the primary facts in this case, in my view this court is free to
apply its own views of whether these premises are reasonably called a house. In
approaching this decision, I bear in mind that the right to enfranchisement is
given only to householders. A person who lives in a flat has no right to
enfranchise the flat. Furthermore, I bear in mind that Parliament does provide
protection for those who carry on businesses and when their leases end they can
apply, under the relevant statutory provision, for a new lease, and if they
cannot agree with their landlords then there are provisions for the court to
fix a fair rent for the parties.
In Lake
v Bennett, although the court in that case, on those facts, was
satisfied that that building was reasonably to be called a house, Lord Denning
realised that in future other difficult questions might arise in regard to
other buildings. I, for my part, think that this is such a case. I am bound to
say that, looking at the photographs and taking into account that this was at
all times a purpose-built shop with living accommodation above it and part of a
parade of such shops, I do not think that it can reasonably be called a house.
I share
judge and who said it was not properly to be described as a house but as a shop
with living accommodation above it.
I appreciate
that, in the course of their judgments in Lake v Bennett, both
Salmon LJ and Cross LJ pointed out that there might be a case in which one
person would describe the building as a shop with living accommodation above it
but equally another person could reasonably describe it as a house with the
ground floor made into a shop. Of course, there will be such borderline cases,
but in my view this case is not a borderline case and for my part I do not
think that these premises could reasonably be described as a house. Although
the learned judge, I accept, applied the right test, and I take into account
that he said that he would have come to the conclusion, quite apart from Lake
v Bennett, that it could reasonably be called a house, I take the view
that, on the facts that he has found, he came to the wrong conclusion.
Accordingly, for my part, I would, for those reasons, allow this appeal.
I should
perhaps just add that we were also referred to Peck v Anicar
Properties Ltd, reported in [1971] 1 All ER 517, where, in respect of
premises which appear to me to be almost identical to those in Lake v Bennett,
it was assumed without argument that the premises were a house. I do not think
that case carries the matter any further than the authority of Lake v Bennett.
For those
reasons, I would allow this appeal.
WATKINS LJ
agreed.
ORMROD LJ
(dissenting) said: The definition in section 2(1) of the Leasehold Reform Act
1967 is not at all easy to construe. It begins by saying that ”house’ includes
any building designed or adapted for living in’. It goes on to say ‘and
reasonably so called’ and then proceeds with the words ‘notwithstanding that
the building is not structurally detached, or was or is not solely designed or
adapted for living in’. So Parliament plainly contemplated that a house within
the meaning of this Act might well be a house with a double user, partly for
living in, partly for some other purpose. So the fact that this house was
originally built in 1881 as a dwelling-house and shop does not take it outside,
in my judgment, the definition in section 2(1).
It seems to me
that one has to look at the building as a whole and answer the question,
allowing for the fact it is used for two quite different purposes, whether it
still can reasonably be called a house. That seems to me to introduce a degree
of flexibility into the application of the definition, which is highly unusual
in a statute but, of course, is designed to enable the court responsible for
making the decision to arrive at what one might call a broadly sensible
conclusion without being tied down by a technical definition.
Consequently,
I have some considerable difficulty in overruling the learned judge, who,
having seen the property and having considered the matter and applied, as I
think, the right tests, came to the independent conclusion, as he plainly did
because he says in terms, ‘Even if the matter were free from authority I should
conclude that the present building was reasonably called a house’, I find great
difficulty in differing from him on facts as narrow as these in the present
case.
To my mind the
approach which this court adopted in Lake v Bennett makes it
still more difficult to hold that these particular premises are not reasonably
described as a ‘house’. The approach which the court adopted in Lake v Bennett
seems to have been in accordance with the definition, because the court began
by saying that, looking at the premises in that case (Lake v Bennett),
for many statutory purposes the building would be called a ‘house’. One knows
that there is, in other statutes, a definition of a ‘house’ which is very wide
indeed. The court construed the words ‘and reasonably so called’ as, in a
sense, words of limitation, starting from the assumption that, without those
words, there could be no doubt that the property in Lake v Bennett
was a house. That being the approach that this court adopted in Lake v Bennett,
I feel considerable difficulty in adopting a different approach in this
particular case.
If that is the
right way of approaching it, then I find myself unable to disagree with the
learned judge’s view. I accept that it is open to anybody to adopt the
surveyor’s description of this property and I bear in mind that in the report
of Lake v Bennett, which includes an extract from the learned
county court judge’s judgment in that case, the learned judge said (reading
from [1970] 1 QB 663 at p 665): ‘I have formed the definite opinion that it
would not be called a ‘house’ in ordinary speech in the present century. A
person looking for a house to buy would be surprised to be directed to 61
Gayton Road. On seeing it he would say ‘I asked for a house and they have sent
me to a shop. I have been misled”. No doubt exactly the same point can be made
on the facts of the present case.
So I feel the
greatest diffidence in distinguishing this case from Lake v Bennett.
There are, of course, certain distinctions. First, there is the historical
distinction that in Lake v Bennett the property had started life
unquestionably as a house and had been subsequently converted to use as a shop
on the ground floor. It is fair comment that both Salmon LJ and Cross LJ used
language which indicated that the fact of the conversion was not irrelevant to
their minds. But the learned county court judge in this case dealt with that
point and dealt with it, I think, correctly. The only other distinction from Lake
v Bennett, it seems to me, is to say that in this case the area of the
property which was used as a shop was very much greater. But that seems to
introduce a quantitative consideration which could be extremely difficult. The
fact which influences my mind very much is that, looking at the photographs we
have been supplied with, looking at these present premises from the point of
view of somebody standing in the street and comparing the appearance of these
premises with the appearance of the premises which were the subject-matter of Lake
v Bennett, it seems a little bizarre to hold that the premises at 61
Gayton Road in Lake v Bennett and the premises at 41 Lee High
Road in another case were houses and yet that the present premises are not
reasonably called a house.
I think that
Parliament has left the decision on the fine distinctions in this type of case
to the trial judge and I am not prepared to differ from his conclusion in this
court, although I agree with my brethren that, starting afresh and without Lake
v Bennett as a guide, I think I should have come to the same conclusion
as they do. But I do not think that this case can properly be distinguished
from Lake v Bennett. Therefore, I would dismiss the appeal.
The appeal
was allowed with costs. Leave was given to appeal to the House of Lords.
