Leasehold enfranchisement – Leasehold Reform Act 1967 – Enfranchisement of house – Shop with self-contained flat above – Appellant seeking to acquire freehold under 1967 Act – Definition of “house” in section 2(1) of 1967 Act – Whether building a house “reasonably so called – Appeal allowed
The appellant was the long lessee of a building comprising a shop with living accommodation above in Putney, London SW15. In 2010, it brought an enfranchisement claim against the respondent landlords, under the Leasehold Reform Act 1967, seeking to acquire the freehold of the building.
The appellant’s property formed part of a parade of shops which dated from the 1920s and were set back slightly from the highway, with parking spaces in front. The ground floor shop had a plate glass window onto the street and was used as a Martins newsagents, sweet shop and tobacconist. The residential accommodation above comprised a self-contained flat with kitchen, bathroom, bedroom and sitting room, with its own separate entrance reached by an external open staircase in the yard to the rear of the property. Although there had originally been an internal staircase from the shop below, it had been removed in the 1970s when the self-contained flat was created. The whole of the building was sublet to Martins on terms that restricted occupation of the flat to an employee of the business.
An issue arose as to whether the building was a “house” within the definition in section 2(1) of the 1967 Act. It was common ground that it was “designed or adopted for living in” but the respondent disputed whether it was a house “reasonably so called”.
Dismissing the enfranchisement claim, the county court judge held that the building could not reasonably be called a house, since it had been built not as a house but as a shop with living accommodation above, and the character of the parade and the appellant’s building was overwhelmingly one of commercial premises: see [2014] PLSCS 212. The appellant appealed.
Held: The appeal was allowed.
The use of part of a building as a shop or for other commercial purposes was not in itself a bar in itself to the property being a “house” within the meaning of section 2(1) of the 1967 Act. The amendment to the 1967 Act effected by the Commonhold and Leasehold Reform Act 2002, so far as it removed the residence requirement previously applying to applicants for enfranchisement, potentially had the consequence of extending the right to enfranchise to the lessees of buildings which were used exclusively for commercial purposes, provided they qualified as houses as defined.
Although the statutory definition of “house” in many ways represented the common understanding of what was meant by a house in ordinary parlance, it operated as a purpose-made, and therefore extended, definition of that term designed to carry into effect the policy of the 1967 Act. The use of that extended definition had the potential to bring within the scope of the Act various types of premises which did not obviously conform to the everyday description and understanding of a house. In the more difficult cases, such as where the building was divided into flats or used wholly for commercial purposes, the entitlement to enfranchise would depend on the words “reasonably so called”. Whether a building was a house “reasonably so called” would therefore often be the critical limiting factor in determining whether the 1967 Act applied to the property in question.
The limits of the statutory right to enfranchise, although dictated by policy, fell to be established through a mechanism which required some kind of objective evaluation by the court. Whether a particular property was a house within the meaning of section 2 was a question of law, on which there could be only one correct answer, and not a purely factual issue for the judge. Moreover, assuming that parliament had intended to include certain recognisable types of property within the right to enfranchise, it would be surprising if the grant of a right to enfranchise to the lessees of a property within such categories should depend on particular physical characteristics, such as whether the various parts of the premises were linked internally or externally. One would expect the policy of the 1967 Act to be fashioned by broader questions of entitlement. Further, if the correct interpretation of section 2(1) to particular types of property was driven by policy considerations, then it ought to be possible, and was desirable, that the application of the policy of the Act should promote consistency of treatment.
Taking those matters into consideration, and having regard to the relevant authorities, shops with accommodation above were, as a matter of law, reasonably to be described as houses for the purpose of section 2(1) provided that a material part of the building was designed or adapted for, and used for, residential purposes on the relevant date. The test turned on use, such that claims to enfranchise buildings comprising shops with accommodation above should not be dismissed either because the building was, as a matter of ordinary speech, best described as a shop or because the accommodation was not linked internally to the remainder of the building. The external and internal physical character and appearance of the building and the descriptions of it in the lease were not determining factors in deciding whether the building was a house reasonably so called. County court judges would doubtless be adept at dismissing cases where the conversion of part of a building to residential user was not genuine or substantial or where the premises were not of the type which, as a matter of policy, parliament intended to fall within the 1967 Act. Those cases apart, there was no warrant for distinguishing between similar types of building solely on the basis of their external appearance or their internal layout. In the instant case, the removal of the internal staircase and the construction of an external means of access to the flat in the appellant’s building did not have the effect of taking the building outside the scope of what could reasonably be called a house for the purposes of section 2(1). The flat remained accessible by means of a staircase situated within the demise: Tandon v Trustees of Spurgeons Homes [1982] AC 755; [1982] 2 EGLR 73; (1982) 263 EG 349 and Hosebay Ltd v Day [2012] UKSC 41; [2012] 1 WLR 2884; [2012] 3 EGLR 31; [2012] 43 EG 116 applied; Henley v Cohen [2013] EWCA Civ 480; [2013] L&TR 28; [2013] PLSCS 91 distinguished.
Stephen Jourdan QC and Thomas Jefferies (instructed by Maxwell Winward LLP) appeared for the appellant; Anthony Radevsky (instructed by Bishop & Sewell LLP) appeared for the respondents.
Sally Dobson, barrister
Read a transcript of Jewelcraft Ltd v Pressland and another here
