Leasehold enfranchisement – Leasehold Reform Act 1967 – Enfranchisement of house – Townhouse previously used as offices on lower floors and residential accommodation on upper floors and in mews annexe – Property entirely unoccupied for several years – Respondent leaseholder seeking to acquire freehold from appellants under 1967 Act – Whether property a house “reasonably so called within definition in section 2(1) of 1967 Act – Appeal dismissed
The appellants were the freeholders of a substantial property in London W1. The respondent, as the leaseholder of that property, sought to acquire the freehold pursuant to the leasehold enfranchisement provisions of the Leasehold Reform Act 1967. An issue arose as to whether the property was a “house” as defined in section 2(1) of the 1967 Act so as to qualify for enfranchisement under those provisions. It was not disputed that the property was “designed or adopted for living in”; the sole issue was whether it was a house “reasonably so called”.
The property comprised a large townhouse with an annexed mews building. At some time in the 1940s it had ceased to be used solely for residential purposes and had instead been used partly as offices, with residential accommodation on the top two floors and in the mews. The property had been refurbished in the early 1980s to create several flats in the residential parts.
A lease dating from 1996 contained a covenant by the tenant to use the basement, ground, first and second floors of the townhouse only as business or professional offices. Initially, the terms of that lease restricted occupation of the flats on the third and fourth floors and in the mews to directors or senior employees of the companies occupying the offices, but that restriction was later removed. A 1987 underlease similarly divided the permitted user of the property between office use on the lower floors and residential on the upper floors. A 1999 deed of variation of the lease had the effect of allowing office use of the third floor also. However, for 13 years before the enfranchisement claim, the property had been left totally unused.
The county court judge found that the property was a house “reasonably so called”. He took the view that, while there were superficial traces of past office use, the property retained its residential character and identity as a townhouse and was, in that regard, very similar to the property considered in Boss Holdings Ltd v Grosvenor West End Properties Ltd [2008] UKHL 5; [2008] 1 WLR 289; [2008] 1 EGLR 51. The appellants appealed.
Held: The appeal was dismissed.
The property was not of the kind that clearly fell outside the statutory definition of a “house”, such as hotels, hostels or premises with an active and settled use for entirely commercial purposes. The property was not in use at all at the relevant date and had a history of mixed use in the past. While the active and settled use of a property might determine its character as a house or otherwise in most cases, other considerations came into play where, as here, there was no such use.
The last user, or last adaptation for use, was not determinative of the character and identity of the property. The statute required the matter to be assessed at the relevant date. To turn the clock back to the last user was to negate rather than to apply the statute. The court had to decide the building’s present identity or function by reference to its physical character, whether derived from its original design or from its subsequent adaptation, at the relevant date. While past adaptation might have changed that identity or function, the last user could not be the only relevant consideration.
Nor was it appropriate to look solely at the state of the property just after the last occupant had moved out. A property could still be considered a “house” for the purposes of the Act even if it still bore traces of the past officer user. Many London townhouses might have been used wholly or in part for commercial purposes but, when those commercial purposes had ceased, there was no reason why such properties should not, in appropriate cases, still be seen as houses “reasonably so called”.
The law, in statute and decided cases, had not prescribed and could not possibly prescribe a legal solution for every type of property. However much one tried to squeeze particular types of property into watertight legal compartments, the fact remained that buildings were infinitely variable in character and function, affected in part by historic user. Where the trial court was faced with a property of a type not exactly similar to one previously characterised by the higher courts, it had to do its best to apply the law to the facts as found and decide whether the property in question was or was not a house, with the benefit of its own evaluation. Various types of building had to be amenable to varying characterisation by trial judges, doing their best to apply the principles emerging from decided cases. Any other solution would simply be a recipe for an endless chain of appeals to the higher courts in an attempt to achieve a formal legal characterisation of individual properties, to no advantage at all to the litigants involved.
That being so, there were no grounds for disturbing the judge’s conclusion that the property had essentially the same identity and function as the building considered in Boss Holdings and that it should be characterised as a house, with traces of past office user, rather than a disused office building. The judge was in the best position to make that assessment and he had done so after an exhaustive factual analysis and a full and accurate noting of the applicable legal principles: Tandon v Trustees of Spurgeons Homes [1982] AC 755; [1982] 2 EGLR 73, Boss Holdings, Prospect Estates Ltd v Grosvenor Estates Ltd [2008] EWCA Civ 1281; [2009] 1 WLR 1313; [2009] 1 EGLR 47, Day v Hosebay Ltd [2012] 1 WLR 2884; [2012] 3 EGLR 33; [2012] 43 EG 116 and Jewelcraft Ltd v Pressland [2015] EWCA Civ 1111; [2016] L&TR 73; [2016] EGLR 10 considered.
Jonathan Gaunt QC and Anthony Radevsky (instructed by Boodle Hatfield LLP) appeared for the appellants; Edwin Johnson QC (instructed by VMA Solicitors) appeared for the respondent.
Sally Dobson, barrister
