Creditforce Ltd and another v Lay and others

Landlord and tenant – Lease of mixed-use building – Meaning of house – Claimant holding tenancy of building – Claimant subletting ground floor for business purposes – Whether building capable of being house “reasonably so-called” – Claim allowedThe claimant tenants leased a five-storey building from the defendant landlords. The ground floor was sublet as business premises and the upper floors comprised 10 flats. The flats could not be used for any other purpose than as private-dwelling houses without the written consent of the defendants. Less than 25% of the total area of the building was used for business. In September 2006, the claimants brought proceedings for a declaration that they were entitled to acquire the freehold of the building, described as “house and premises”, under the Leasehold Reform Act 1967. The defendants challenged their right to buy on the ground that the building did not come within the definition of “house” contained in section 2(1) of the Act.It was common ground that a house was not prevented from being a house within section 2(1) merely because part of it comprised business premises or because it was divided into flats. It was also accepted that the building was largely designed or adapted for living in. The question for the court was whether the building was a house “reasonably so-called” for the purposes of section 2(1). Held: The claim was allowed.The property could reasonably be called a house since it had been designed for living in and for occupation as residences. There were no exceptional circumstances to justify the building not reasonably being called a house for purposes of the 1967 Act, notwithstanding the fact that it was not structurally detached and that there were three separate doors on the ground floor. Neither the subletting of the ground floor nor its use for business purposes prevented the 1967 Act from applying to the property in the instant case. This was the first statute in which parliament had endeavoured to define “house”. Where statutes which had used the word “house” without defining it, the courts had given the term a wide interpretation. However, that interpretation was limited for the purposes of the 1967 Act by the use of the words “reasonably so-called”. As long as a building of mixed use could reasonably be called a house it came within the 1967 Act, even though it might reasonably be called something else; but whether it was reasonable to call a building a house was a question of law. Relevant considerations included: (i) the history of the premises; (ii) the terms of the lease; (iii) the proportion of the lease for residential and non-residential purposes; and (iv) the physical appearance of the premises, although none of those matters was conclusive: Lake v Bennett (1969) 213 EG 633; Tandon v Trustees of Spurgeon’s Homes [1982] 2 EGLR 73; (1982) 263 EG 349; Hareford Ltd v Barnet London Borough Council [2005] 2 EGLR 72; [2005] 28 EG 122; and Boss Holdings Ltd v Grosvenor West End Properties Ltd [20060 EWCA Civ 594; [2006] 2 EGLR 43; [2006] 26 EG 156 considered.In the instant case, after careful consideration and not without considerable hesitation, the court had concluded that the property in question was a house for purposes of the 1967 Act. Anthony Radevsky (instructed by Wallace LLP) appeared for the claimants; Mark Sefton (instructed by Pemberton Greenish) appeared for the defendants.Eileen O’Grady, barrister