Leasehold enfranchisement — Leasehold Reform Act 1967 — Meaning of “house” — Notice of desire to acquire freehold of property — Property one of parade of shops with residential accommodation above — Whether “house” for purposes of 1967 Act — Whether tenant entitled to exercise enfranchisement rights |page:73|
The claimant tenant served on the defendant landlords a notice of desire, under the Leasehold Reform Act 1967, to acquire the freehold of a property of which it held a long lease. The terraced property consisted of a shop on the ground floor, with above it, two floors of living accommodation arranged as a maisonette. The maisonette was let on an assured shorthold tenancy. The tenant contended that the property was a “house” within the meaning of section 2(1) of the 1967 Act, and that the decision in Tandon v Trustees of Spurgeons Homes [1982] 2 EGLR 73, which was indistinguishable, should be applied; as long as a building of mixed use could reasonably be called a house, it was a “house” within the meaning of the 1967 Act.
Held: The claim was allowed. The property was a “house”. It was sufficient that if a building was designed or adapted for living in, it must be a house reasonably so-called. The fact that an applicant does not live in the premises is irrelevant. The removal of the residency requirement by the Commonhold and Leasehold Reform Act 2002 showed that parliament intended that non-residents should enjoy the benefit of the 1967 Act. The test of whether a building was a “house” was an objective one; any manifestation of the reasonable man, having read the definition of a “house” in the 1967 Act and the relevant parts of the decision in Tandon, and having been made aware that the residency requirement had been removed by the 2002 Act, would say that the property was a “house” within the meaning of the 1967 Act.
The following cases are referred to in this report.
Lake v Bennett [1970] 1 QB 663; [1970] 2 WLR 355; [1970] 1 All ER 457; (1969) 213 EG 633, CA
Tandon v Trustees of Spurgeons Homes [1982] AC 755; [1982] 2 WLR 735; [1982] 1 All ER 1086; (1982) 44 P&CR 307; [1982] 2 EGLR 73; (1982) 263 EG 349, HL
This was a claim by the claimant, Hareford Ltd, for declaratory relief under the Leasehold Reform Act 1967 against the defendants, Barnet London Borough Council.
Anthony Radevsky (instructed by Wallace LLP) appeared for the claimant; Stanley Gallagher (instructed by the legal department of Barnet London Borough Council) represented the defendants.
Giving judgment, Mr Recorder Ross Martin said:
[1] The issue that I have to decide is whether 231 Deansbrook Road, Edgware, is a “house” within Part 1 of the Leasehold Reform Act 1967 (the 1967 Act), as amended.
[2] The claimant is the leaseholder of 231 Deansbrook Road under a lease for 99 years dated 16 December 1929 (the term of the lease began on 29 September 1928). The defendants are the freeholders, as successors to London County Council.
[3] Two hundred and thirty-one Deansbrook Road is one of a parade of buildings, with shops on the ground floor and residential accommodation above. The defendants are the freeholders of 10 of the similar buildings in the parade. I infer from the information that I have, although nothing turns on the point, that the parade was built in order to provide shops for a large estate built, or being built, by London County Council in the late 1920s. It faces houses in the estate, which are on the other side of Deansbrook Road.
[4] Further information concerning 231 Deansbrook Road is set out in the statement of agreed facts, to which I refer generally.
[5] Counsel for the defendants asked me to view 231 Deansbrook Road. Counsel for the claimant did not want me to do so because I had photographs and plans that, he submitted, would give me sufficient information. I could see the force of his submissions on this point, but decided to have a view none the less. I am glad that I did so because seeing the property did help me (rather to my surprise). However, the time taken left me insufficient time to give judgment immediately, in the light of the questions of law that arise in the case, and its possible relevance to other properties owned by the defendants.
[6] The claimant has served a notice under the 1967 Act, indicating its claim to acquire the freehold. The defendants have not served any notice in reply. They take their stand on their contention that 231 Deansbrook Road is not a “house” within the 1967 Act.
[7] Subsection 2(1) of the 1967 Act defines the word “house”. The subsection reads:
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; 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.
[8] The claimant relies upon the decision of the House of Lords in Tandon v Trustees of Spurgeons Homes [1982] AC 755*. In that case, the alleged “house” consisted, as in this case, of a terraced shop on the ground floor, with living accommodation above. The House of Lords held, by a majority, that the whole was a “house” within the 1967 Act. Counsel for the claimant submitted to me that Tandon is not distinguishable from the present case on its facts, and, as a matter of first impression, that is, to my mind, correct. However, a first impression cannot, of course, conclude the question.
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* Editor’s note: Also reported at [1982] 2 EGLR 73
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[9] Counsel for the claimant further referred me to the statement of Lord Roskill, at p766A, that:
the question must be resolved as at the time of the tenant’s notice under the statute. The character of the premises at that time will usually though not perhaps invariably reflect its history. Accordingly the history will be relevant though certainly not conclusive. The terms of the lease will also be relevant as will be the proportion of the premises respectively used for residential and non-residential purposes, and also the physical appearance of the premises.
[10] On area, counsel pointed out that 231 Deansbrook Road had a larger relative area of residential accommodation, two floors out of three, than the property in Tandon, where the residential accommodation amounted to either 25% or 50% of the total (depending upon whether a yard and stable were included).
[11] On the terms of the lease, counsel drew my attention to the description of the property demised as a “shop messuage and premises”. A “messuage” is an old legal word meaning a house: see Mozley & Whiteley’s Law Dictionary (9th ed). In addition, the lease contains a covenant by the lessee “in common with the lessees of other houses in Deansbrook Road” to pay a proportion of the cost of maintaining the accommodation road.
[12] With diffidence, because of the experience of counsel for the claimant in this area of the law (experience that I believe is shared by counsel for the defendants), I would say that the passage that I have quoted from the speech of Lord Roskill does seem to me to support the claimant’s case in two other interconnected ways that counsel did not mention.
[13] First, the history of 231 Deansbrook Road is that it was built as part of a parade of shops, with residential accommodation over, to serve a local authority residential estate. It was, and always has been, associated with that residential estate. Indeed, it and the other buildings in the parade would be part of the estate, were they not separated from it by Deansbrook Road. The estate continues, so to speak, at the back of the parade. If, as is undoubtedly the law, a building with mixed residential and retail use can be a “house”, the arguments for a building with the history and in the position of 231 Deansbrook Road being a “house” within the 1967 Act seem to me to be strong.
[14] Second, 231 Deansbrook Road did seem to me, when I saw it and its surroundings, to be more easily describable as a house than it appeared to be from the photographs and plans. This is, of course, a matter of impression, which is difficult, if not impossible, to particularise. I can only say that when I saw it I found it more like a house than I had expected to find.
[15] In Tandon, Lord Fraser of Tullybelton dissented on the facts, but one passage in his speech, at p762B, seems to me consistent with |page:74| the reasoning of Lord Roskill, and supportive of my reasoning in the previous two paragraphs:
In addition to the appearance of the particular building, another element contributing to its character is the setting in which it is placed. A building in a residential street is more likely to be reasonably called a house than the same building would be if it were in a busy street in the commercial area of a town.
[16] Before I turn to the submissions of counsel for the defendants, I will quote from some other parts of the speech of Lord Roskill in Tandon, at pp764G-765A:
looking only at the words of this subsection and regardless of any authority upon its construction, two points seem to me clearly to emerge. First, though the definition of “house” is expressed to be inclusive and not exhaustive, the words “any building… reasonably so called” are intended as words of limitation, for clearly premises are not to be treated as a “house” within the subsection merely because they are a building designed or adapted for living in unless they can also in ordinary parlance be reasonably called “a house.” Secondly, premises are not to be treated as without the definition merely because the building is not structurally detached or “was [not] or is not solely designed or adapted for living in.” Nothing in the present case turns upon “not structurally detached,” for these premises were not structurally detached. But the latter words which I have italicised suggest to my mind that Parliament was intending in certain circumstances to extend the benefits and privileges of the Act of 1967 to tenants of premises not exclusively designed or adapted for living in for residential purposes…
At p765C:
… The definition clearly contemplates some mixed user but leaves it to the courts to determine whether the particular premises fall within or without the definition, bearing in mind that it is the residential tenant of a “house” as defined for whom the benefit and privileges of the statute are intended. I would add that I think it important in resolving the problems to which the definition gives rise that the court should hold the balance fairly between the conflicting interests. The Act of 1967 operates to deprive a landlord of his rights as freeholder albeit in return for the payment of a sum of money, but the social purpose of the statute is to secure this result in favour of the tenant if, but only if, the tenant can satisfy the conditions precedent to acquiring for himself the landlord’s antecedent freehold interest.
At p766G-H:
The purpose of these words in the definition is clear. Tenants who live over the shop are not to be denied the right conferred by the Act, whether they themselves trade from the shop or not, merely because the building in which they work and live accommodates the two uses. Such a tenant occupies the house as his residence, even though it is also used for another purpose.
Small corner shops and terrace shops combined with living accommodation are to be found in almost every town and village in England and Wales. Parliament plainly intended that a tenant who occupied such premises as his residence should have the benefit of the Act if the building could reasonably be called a “house”…
At p767B-C:
For this reason, the Court of Appeal’s decision in Lake v Bennett [1970] 1 QB 663 was welcome as stating a principle and confirming the question of fact to a narrow area. I deduce from it the following propositions of law: (1) as long as a building of mixed use can reasonably be called a house, it is within the statutory meaning of “house,” even though it may also reasonably be called something else; (2) it is a question of law whether it is reasonable to call a building a “house”; (3) if the building is designed or adapted for living in, by which, as is plain from section 1(1) of the Act of 1967, is meant designed or adapted for occupation as a residence, only exceptional circumstances, which I find hard to envisage, would justify a judge in holding that it could not reasonably be called a house. They would have to be such that nobody could reasonably call the building a house.
The words to which Lord Roskill is referring in the second passage are those of section 2(1) of the 1967 Act. Lake v Bennett [1970] 1 QB 663* was a case where the ground floor of a house had been converted into a shop, and the Court of Appeal had held that the whole was a “house” for the purposes of Part 1 of the Act.
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* Editor’s note: Also reported at (1969) 213 EG 633
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[17] In his skeleton argument, counsel for the defendants set out certain facts appearing from the witness statement of the defendants’ surveyor, the photographs exhibited to it, the statement of agreed facts, and the agreed plan. They were not challenged, and are as follows:
(a) the property is a lock-up shop at ground-floor level with a self-contained and purpose-built maisonette arranged on the first and second floors above the shop;
(b) the maisonette is let on an assured shorthold tenancy;
(c) the shop is currently vacant, but was formerly let separately from the flat on a 10-year full repairing and insuring lease;
(d) the shop has exclusive access to a rear garden, this access is not currently in use;
(e) the maisonette has no access to the rear garden, but independent access to the street at the front of the property, with the original door appropriately 1250mm from the outer front door, forming a lobby area;
(f) at some point, a door has been installed connecting the “inner lobby” area with the shop. This door is lockable from either side so as to retain the property’s suitability for independent occupation. It is thought that this door contravenes current fire regulations;
(g) accordingly, the shop and the maisonette were constructed for independent occupation, although at times (but not presently) the shop might have been let with the maisonette; and
(h) the evidence from the council tax section shows that the maisonette has been registered as a dwelling in multiple occupation, and the ratings evidence indicates that, at times in the past, the maisonette was let as two separate flats.
[18] Counsel for the defendants said that it was important to note that when Tandon was decided the right to enfranchise was contingent upon the satisfaction of a residency test. Indeed, that test was part of the 1967 Act until it was removed (except in certain circumstances that do not exist in this case) by the Commonhold and Leasehold Reform Act 2002 (the 2002 Act). This appears from the passages in the speech of Lord Roskill, quoted above.
[19] Against this background, counsel for the defendants argued as follows.
(1) In Tandon, the court was approaching the question and applying the test from the standpoint of the applicant in that case: namely the long-lease tenant who was occupying the residential accommodation above the commercial premises as his home, rather than assessing the building objectively from the standpoint of an applicant such as the claimant in this case, that is, a non-resident leaseholder in occupation of neither the commercial nor the residential parts of the building. From the standpoint of the claimant in this case, the accommodation is not a home; it is a fixed residential and commercial property investment.
(2) Tandon held that, as long as a building of mixed use could reasonably be called a “house”, the building was within the meaning of “house” for the purposes of the 1967 Act, even though it might also reasonably be called something else: see p767E. However, counsel submitted, this conclusion is necessarily a function of the court having applied the test from the standpoint of the applicant leaseholder living above the shop and should be modified in cases, such as this, where the applicant does not live in the property, so that the whole character of the building is taken into account in considering whether it is a house reasonably so-called.
(3) Alternatively, where the applicant tenant is not living in the part of the premises that is designed or adapted for living (that is, as in this case where there is a non-resident tenant), that is an example of the exceptional circumstances contemplated by Lord Roskill, at p767D, that would justify a judge holding that the building could not reasonably be called a house.
(4) Moreover, it is clear that the words in section 2(1) of the 1967 Act – “[a house]”… reasonably so called” – are words of limitation, such that not every building designed or adapted for living will fall within the definition: see p764H. These words are the critical moderating element of the statutory definition. |page:75|
(5) The test is to be applied as at the date of the tenant’s notice. Accordingly, it is the character of the building at that date that is determinative.
(6) Therefore, counsel submitted, it was open to the court to find, and the court should find, as a fact, that the cumulative effect of:
(i) the independent nature of the residential accommodation to the commercial accommodation;
(j) the commercial setting of the property;
(k) the fact that the property is comprised of purpose-built retail and residential accommodation; and
(l) the fact that the tenant does not live at the property and lets both elements separately
is that nobody could reasonably call the building “a house”.
[20] I accept counsel’s fourth point. It must be correct. It is not sufficient that a building is designed or adapted for living. It must be a house, reasonably so-called.
[21] However, I reject counsel’s third point. The fact that the applicant is not living in the part of the premises that is designed or adapted for living cannot be an example of the exceptional circumstances contemplated by Lord Roskill. Any such interpretation nullifies the removal of the residency requirement by parliament in the 2002 Act. The removal of the requirement (except in certain circumstances) strongly suggests, at the lowest, that parliament intended to extend the benefits of the 1967 Act to non-resident tenants generally. Indeed, to my mind, it demonstrates that parliament intended exactly that.
[22] I am of the view that the removal of the residency requirement does not merely destroy counsel’s third point. It creates great difficulties for his entire case. Parliament deliberately removed the residency requirement, which had existed for some 35 years. Parades of shops with living accommodation above them are not rare. Parliament (and the ministers and civil servants who prepared and brought forward the 2002 Act) must have known that the removal of the residency requirement would allow the non-resident leaseholders of such buildings to enfranchise under the 1967 Act. If I may be permitted to adapt the words of Lord Roskill in Tandon, small corner shops and terrace shops combined with living accommodation are to be found in almost every town and village in England and Wales. Parliament plainly intended that a tenant, whether or not he occupied such premises as his residence, should have the benefit of the Act if the building could reasonably be called a “house.”
[23] Moreover, I think that there are other difficulties with counsel’s argument, more specifically with his first and second points. To my mind, Lord Roskill in Tandon was not approaching the question and applying the test from the standpoint of the applicant in that case, namely the tenant who was occupying the property. He was doing no more than deducing from the definition of “house” in section 2(1) that a building with mixed residential and commercial use could be a house. He spoke of tenants living above the shop because of the residential requirement that then existed. Neither the words of the 1967 Act nor the speech of Lord Roskill support an interpretation whereby the court has to apply the test from the point of view of the applicant. The court has to apply the test objectively. The point of view ought to be that of the judge, or that of the man on the Clapham omnibus, or that of the officious bystander, or that of any of the other manifestations of the reasonable man, looking at a question objectively. To my mind, any manifestation of the reasonable man, having read the definition of “house” in the 1967 Act and the speech of Lord Roskill in Tandon, and having been told that the 2002 Act had removed the residency requirement, would say that 231 Deansbrook Road was a house within the 1967 Act.
[24] Another difficulty with counsel’s argument is that neither the words of the 1967 Act nor the speech of Lord Roskill support an interpretation whereby the court has to look at the use of the building. In his skeleton argument, and in oral submissions, counsel contended that the court has to consider the “character of the building”. He treated this phrase as including its use: see for example item (i) under his sixth submission. However, the word “character” does not appear in the relevant parts of the 1967 Act. The question posed by the Act for the court is, “is this building a house reasonably so called?”.
[25] True, Lord Roskill referred to the “character of the premises” in the passage that I quoted in [9] above. However, the phrase “the character of the building” is not a term of art. It is commonly used in ordinary speech, but it is inherently imprecise. Depending upon its context, it might or might not refer to the use of the building in question. For example, suppose that a historic country mansion is used as an old people’s home, or as local authority offices, or as a school. If asked about the character of the building, a person might reply that it was a Georgian (or Victorian, or whatever) country house. Or he might reply that it was an old people’s home, local authority offices, or a school, as the case might be.
[26] In referring to the “character of the premises”, Lord Roskill was accepting a proposition advanced by counsel for the appellant in Tandon, from which counsel for the respondents did not dissent. The proposition was that “premises used for non-residential as well as for residential purposes could in law be a house within the definition and that it depended upon the character of the premises in question whether by reason of their mixed user they fell within or without the definition”. To my mind, it is clear from this that Lord Roskill was not saying that the use made of the premises by the appellant was a factor, still less the crucial factor, in determining whether the premises were a house reasonably so-called.
[27] My approach is supported, I think, by the oddities that would arise if the submissions made by counsel for the defendants were correct. Identical leases of properties, with identical uses, would be enfranchisable or not, depending upon whether the tenant was occupying the residential part of the property. Leases could change their status from enfranchisable to not enfranchisable, and back again, as tenants ceased to occupy and reoccupied the residential part. And, I ask rhetorically, what would happen in cases where the tenant ceased to occupy, but allowed members of his family to do so?
[28] I have come to the firm view that my first impression was the correct one: 231 Deansbrook Road is a house. I understand that the defendants put forward no reason as to why the claimant is not entitled to enfranchise, other than the one that I have rejected. I will therefore make the declaration asked by the claim form.
Claim allowed.
