Leasehold Reform Act 1967 — Whether enfranchisement provisions applied to a building occupied for both residential purposes and as a shop — Shop on ground floor with dwelling accommodation on the upper floor, and with a combined bathroom and water closet on the ground floor which formed part of the residential accommodation above — Definition of ‘house’ in section 2(1) of the 1967 Act — Common ground that tenant satisfied all requirements of 1967 Act for enfranchisement except for the disputed question as to whether the premises constituted a ‘house’ — Landlords contended that the premises were not a ‘house’, county court judge held that they were, Court of Appeal by a majority (Watkins and Griffiths LJJ, Ormrod LJ dissenting) decided that they were not, and tenant now appealed to House of Lords — Decision in Lake v Bennett discussed — Held by a majority (Lords Roskill, Scarman and Bridge of Harwich, Lords Wilberforce and Fraser of Tullybelton dissenting) that the tenant’s appeal from the decision of the Court of Appeal should be allowed — County court judge’s decision restored — Premises could reasonably be called a ‘house’ — As long as a building with a 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; it is a question of law as to whether it is reasonable to call a building a ‘house’; and, if the building is designed or adapted for occupation as a residence, only exceptional circumstances would justify a judge in holding that it could not reasonably be called a house — Difficulty of problem illustrated by fact that, including the county court judge, five judges were in favour of the tenant and four against
This was an
appeal by the tenant, Ajeet Kumar Tandon, from a decision of the Court of
Appeal reversing a decision of Judge Coplestone-Boughey at Wandsworth County
Court in favour of the tenant’s right to acquire the freehold of mixed
premises, consisting of a shop with living accommodation, at 116 Mitcham Lane,
Streatham, London SW16, under the Leasehold Reform Act 1967. The Court of
Appeal’s decision was reported at (1981) 258 EG 553, [1981] 1 EGLR 66.
John Stuart
Colyer QC and David Parry (instructed by Radia & Co, of Kilburn) appeared
on behalf of the appellant; Patrick Ground QC and Richard Rundell (instructed
by Pothecary & Barratt) represented the respondents.
In his
dissenting speech in favour of dismissing the appeal, LORD WILBERFORCE said:
The appellant is seeking compulsorily to acquire from his landlord the freehold
of 116 Mitcham Lane, London, in accordance with the Leasehold Reform Act 1967.
He holds a tenancy of those premises under a long lease and it is not disputed
that all the conditions prerequisite to enfranchisement are satisfied except
one — and that the vital one — which is in contention. The Act applies only to
living accommodation, ie not to shops or other business premises, and not to
every kind of living accommodation. It does not apply to flats. To satisfy the
statute the premises must be a ‘house’. Section 2(1) provides an inclusive
definition of ‘house’ as follows:
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 . . .
The essential
facts are quite simple and there is no need for any elaborate law to appraise
them. The premises, of which we had a photograph in colour, are one of a row of
similar premises forming a shopping parade. In each case there is a shop on the
ground floor and a dwelling on the first floor. In the appellant’s case there
are two special features: first there is behind the shop a fairly large space
leading to a two-storey stable. This space is now covered over with a temporary
roof and is used in connection with the shop as is the stable. Secondly,
between the shop and the covered yard there is a small bathroom and wc from
which stairs go up to the living accommodation. The judge found that if the
yard is counted as part of the shop, 75% of the total area is occupied for that
purpose and only 25% as a dwelling. If the yard is disregarded, the proportions
are 50-50%. If one takes a criterion of rental value, by far the greater part
(85%) is attributable to the shop.
There is no
doubt that the premises were constructed as a mixed unit — shop and dwelling.
The lease of 1881, under which they are still held, described them as ‘all that
messuage or dwelling house and shop now erecting and building on the
said piece or parcel of ground.’
The question
is whether these premises, taken as a whole, are a ‘house reasonably so
called’.
There must be
many thousands of mixed units in the country, varying greatly in character.
Many of them may have started life as an ordinary house on several floors, and
later the basement and/or ground floor has been made into a shop. Some may be
at a corner, though for myself I do not appreciate the relevance of this
category; others may form one part of a terrace. Others may have originated as
a shop, and later some portion may have been made into living accommodation.
Others, again, may have been built as mixed units, of which part has been
designed and constructed for use as a shop, part as living accommodation. It is
the user at the date of the application to enfranchise that matters, but the
nature of the building, and to some extent its history, must be relevant to a
determination of its character.
I do not think
that it is contended that all mixed units are houses reasonably so
called: if it were I should reject the contention: there is no warrant for it
in the Act. Nor can I agree that there is any presumption that mixed premises
are to be regarded as a house. The Act extends to dwellings: it does not extend
to shops: there is no warrant for forcing one category into the other. Nor do I
think it our task to prescribe a simple formula which will solve the judges’
problem for them. Certainty can always be purchased for the price of injustice,
and I know of no rule which prevents different cases from being differently
decided. To suppose that judges, if left without firm guide lines, will give
anomalous decisions seems to me to underrate their common sense. The judge has
to decide each case using his knowledge and applying the Act, and unless he
applies a wrong test the decision is decisive.
In the present
case, the judge held that he was bound to hold the premises to be a house by
the previous case of Lake v Bennett [1970] 1 QB 663. That was a
decision upon a particular building, one of a row
building now in issue. To hold that a decision upon one set of facts is a
binding authority as regards another set of facts is a plain error of law. No
doubt, in the interest of uniformity, cases that are truly similar should be
similarly decided, but the authority of a decided case is authority only as to
the law it states.
What law,
then, did Lake v Bennett (ubi supra) lay down? It decided that if a building can equally
reasonably be described as a house, then it is a house for the purposes of the
Act, notwithstanding that it could reasonably be described as something else.
In saying this, the lords justices, particularly Salmon and Cross LJJ, were
saying little more than is inherent in the definition. When that says that a
house is something reasonably so called, it necessarily implies that a
reasonable man might take another view — and that this view might be less, or
more, reasonable than the first.
The judge
then, in my opinion, instead of holding that he was bound by Lake v Bennett’s
view of the facts, ought to have considered whether this building is a house
reasonably so called. If he had done so, he could only have come to one
conclusion — whether one accepts the proportion of 75-25% or that of 50-50% —
namely, that it is a mixed unit consisting in part of a shop and in part of a
dwelling. That is not a house within the Act; it is not the policy of the Act
that the tenant should be able compulsorily to acquire it.
I do not
overlook that the judgment contains a sentence that, apart from authority, the
judge could conclude that the building was reasonably called a house, but I do
not consider that, on the facts which he had found, and on the uncontradicted
evidence, this finding was open to him.
I agree,
therefore, with the majority of the Court of Appeal that the judge’s finding
cannot stand, and I would only add that I do not consider that the convincing
judgment of Griffiths LJ is weakened or invalidated by a reference it contains
to the Landlord and Tenant Act 1954. It seems to me quite appropriate, when
striking a balance between landlord and tenant, in relation to an Act which
greatly favours the tenant, to have in mind that the consequence of deciding
against him would not be damaging to his business. To use this as an argument for
undermining his judgment appears to me somewhat fragile.
I would
dismiss the appeal.
Also speaking
in favour of dismissing the appeal, LORD FRASER OF TULLYBELTON said: The facts
of this appeal are fully stated in the speech of my noble and learned friend
Lord Roskill, and I do not propose to repeat them. The only issue is whether
the building at 116 Mitcham Lane, London, is a ‘house . . . reasonably so
called’ in the sense of section 2(1) of the Leasehold Reform Act 1967. If it
is, there is no dispute that the appellant, who is the tenant of the premises
at that address, is entitled to acquire the freehold under the Act. If it is
not, he is not entitled to acquire the freehold. The learned county court judge
decided in favour of the appellant. The Court of Appeal (Ormrod, Watkins and
Griffiths LJJ) by a majority, with Ormrod LJ dissenting, decided in favour of
the respondents, who are the owners of the freehold.
The building
consists of a shop on the ground floor, and dwelling accommodation above it on
the first floor, being the only upper floor. It is described in the lease dated
July 23 1981 as ‘All that messuage or dwellinghouse and shop’. The primary
facts were fully found in the admirably clear judgment of the learned judge.
The material passage from the judgment is quoted in Lord Roskill’s speech where
a minor inaccuracy in the findings is mentioned. We have also been shown
photographs of the building and a plan of the premises. The primary facts
having been found by the judge, it is in my opinion a question of law whether
the building falls within the meaning of a ‘house’ as used in the Act. The
decision of the Court of Appeal in Lake v Bennett [1970] 1 QB 663
is authority for that proposition and I agree with it. Lake v Bennett
is also authority for the proposition that a building which could reasonably be
called a shop with living accommodation above, but could ‘equally reasonably’
be described as a house with its ground floor made into a shop, is a ‘house’
for the purposes of section 2(1) of the 1967 Act — see Salmon LJ at 672 E to F
and Cross LJ at 673 B. That proposition was enough for the decision of Lake
v Bennett and I accept the proposition as correct, although I doubt
whether it is necessary for the two descriptions to be ‘equally reasonably’. On
the assumption that reasonableness can be a matter of degree, I think it is
possible that a building might reasonably be called a house so as to qualify
under section 2(1), even though some other description would be more natural
and therefore, perhaps, more reasonable. I think Mr Colyer was right in saying
that it might still be not unreasonable, and therefore ‘reasonable’, to call
the building by the less natural description, but nothing turns on that point
in the present case.
Section 2(1)
evidently recognises that not every building which is partly designed or
adapted for living in is a house; if every such building were a house, then a
large factory or office building with living accommodation in a caretaker’s
flat might qualify. That result is avoided by the provision which limits the
meaning of house by adding the qualification that the building must be
reasonably so called. The limitation directs attention to the character of the
building and the main element in the character of a building is its appearance.
The fact that a building, originally designed solely as a house, has been partly
adapted or converted into a shop is, in my view, not relevant per se.
Partial conversion is relevant only in so far as it affects the present
appearance of the building, as it usually does. In Lake v Bennett
both Salmon LJ and Cross LJ referred to the building having had its ground
floor ‘converted into’ or ‘made into’ a shop, but I think they were only
explaining the reason for the appearance of the building at the relevant date.
If they meant to imply that the fact of conversion was relevant in itself, I
would respectfully disagree. Some buildings which were designed and originally
used solely as houses, but have had their ground floors converted into shops,
retain most of their original character as houses. Others do not. The character
of each building has to be considered separately, as a question of fact. Lake
v Bennett did not, in my opinion, decide as a matter of law that all
buildings with shops on the ground floor and living accommodation above are
‘houses’ in the sense of the Act. If Parliament had intended that to be the law
it could easily have said so, but it did not.
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. Another
relevant factor is, as the learned judge rightly said, the proportion of the
residential use to the non-residential use. But no proportion is laid down in
the 1967 Act as a test, and no definite rule is possible. The proportion of use
refers to the proportion of the floor area, but the proportion of the value of
the complete building attributable to the residential part may also be
relevant. No doubt the value of the shop will very often, perhaps usually, be
greater than the value of the residential part, and that fact by itself would
not be enough to prevent the building from being reasonably called a house. But
if the value of the residential part is very much less than that of the shop,
that will be some indication against the reasonableness of describing the
building as a house.
I have not
sought to give an exhaustive list of all the factors that might be relied upon
in determining the character of the building, but only to draw attention to
those that might have a bearing upon the present case. The building in question
here was built and has all along been let and used as a shop on the ground
floor and as living accommodation on the first floor. The fact that the
bathroom and wc for the living accommodation are on the ground floor means that
the shop and the living accommodation can only be conveniently occupied by the
same family — the family of the shopkeeper who lives above the shop. Such a
building is not likely to be reasonably called a house, and the photograph of
it that we have seen shows a shop in a row of shops. The contrast with the
converted house that was under consideration in Lake v Bennett is
obvious from the photograph and I would say with all respect to those who think
otherwise that the building here cannot reasonably be called a house. The floor
area of the residential accommodation and of the shop are roughly equal, if one
takes the view most favourable to the appellant of treating the backyard with
its temporary roof over it not as part of the building but as part of the
premises. In that respect also the
where the floor area of the residential portion consisting of the basement and
the two floors above the ground floor was much greater than the floor area of
the shop which occupied the ground floor alone. Finally, in the present
building, 85% of the rental value is attributable to the shop area and only 15%
to the residential area.
On the whole
matter I consider that there is no evidence to show that this building is
reasonably called a house and I would dismiss the appeal.
Giving the
speech for the majority in favour of allowing the appeal, LORD ROSKILL said:
This appeal is brought by the tenant with the leave of the Court of Appeal from
a decision of that court dated February 20 1981 (Griffiths and Watkins LJJ,
Ormrod LJ dissenting) which reversed a decision of His Honour Judge
Coplestone-Boughey given at Wandsworth County Court on June 11 1980. It raises
a difficult question under Part I of the Leasehold Reform Act 1967 (‘the 1967
Act’) in relation to the application of the leasehold enfranchisement
provisions of that Act to premises which are occupied and used for more
purposes than one by the tenant — in the present case both for residential
purposes and as a shop. The difficulty is demonstrated by the fact that the
Court of Appeal was not unanimous, Ormrod LJ agreeing with the learned county
court judge, while the majority were of the opposite view, and I understand
that your Lordships are not unanimous as to the correct answer.
My Lords, the
appellant is the tenant of premises at 116 Mitcham Lane, London SW16. His title
originated in a building lease for 99 years from March 25 1881 under which
these premises, described as ‘All that messuage or dwellinghouse and shop’ were
upon completion to be demised to the then lessee for the period just stated.
The primary
facts regarding these premises were clearly stated by the learned county court
judge and subject to the correction of one small error were accepted by both
parties as having been properly found. For brevity I shall repeat the same
passage of the learned county court judge’s judgment as Griffiths LJ cited in
his judgment in the Court of Appeal, first mentioning that your Lordships have
seen the same agreed plan, description and photographs as did the Court of
Appeal.
The property
is clearly shown by the agreed plan, description and photographs which are
before me. 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
between 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.
It was in the
penultimate sentence that the learned county court judge made a slight error.
The combined bathroom and water closet at ground level to which he referred did
not form part of the shop but formed part of the residential accommodation
which was otherwise entirely on the first floor.
On those
primary facts was the appellant as tenant entitled to acquire the freehold
interest in the premises from his landlords, the respondents? The learned county court judge and Ormrod LJ
thought he was. Griffiths and Watkins LJJ thought not. It was throughout common
ground that the appellant could satisfy all the requirements of the 1967 Act
save one. But the respondents contended that these premises were not a ‘house’
within the definition of that word in section 2(1) while the appellant
contended that they were. This is the issue for decision by your Lordships.
The relevant
part of the definition in section 2(1) reads thus:
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 . . .
My Lords,
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 1967 Act to tenants of premises not exclusively designed or adapted for
living in for residential purposes. If that approach be correct, the next
question is — what are the circumstances in which the tenant of such premises
can successfully assert a claim to those benefits and privileges?
My Lords,
learned counsel for the respondents did not seek to argue that the mere fact
that part of the premises was used as a shop constituted a complete bar to the
successful assertion of such a claim. Learned counsel for the appellant did not
seek to argue that such a claim could be successfully asserted in every case of
mixed user, that part of the user which was non-residential being wholly
ignored. Each learned counsel therefore avoided the extreme argument possibly
open to him and in my view one has only to look at the definition in section
2(1) to see that each was right so to do. 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 benefits 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 1967 Act 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.
My Lords,
learned counsel for the appellant advanced three propositions from which
learned counsel for the respondents did not dissent. First, the question
whether the particular premises were a ‘house’ within the definition was a
mixed question of fact and law, so that if there were no evidence upon which a
particular conclusion one way or the other was reached that conclusion could be
reviewed on appeal. Secondly, if the premises might also be called something
other than a ‘house’ within the definition, that fact alone did not prevent
those premises from being ‘a house . . . reasonably so called’. Thirdly, it was
implicit from such previous decisions as there have been upon this question
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.
My Lords, in
agreement with both learned counsel I accept these propositions as correct, but
they restate the question rather than resolve it. How is the ‘character’ of the
premises to be determined? It is
tempting to look at the history of the premises and having regard to the
language of the original demise which I have already quoted, learned counsel
for the respondents naturally urged your Lordships so to do. As already stated,
these premises were built in 1881 as a ‘dwellinghouse and shop’. I think it
clear, having regard to 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.
My Lords, in
the instant case the learned county court judge did not find it necessary to
decide precisely the proportions devoted to the respective users for the
reasons he gave. On the view most favourable to the respondents, the figures
were 75% shop, 25% residential, but if the yard and stable be excluded as part
of the premises the two figures would be approximately equal. On any view both
users were substantial.
My Lords, the
learned county court judge largely founded his conclusion upon the decision of
the Court of Appeal in Lake v Bennett [1970] 1 QB 663. Ormrod LJ
thought that decision indistinguishable, though he added that apart from it he
might have agreed with the views of the majority. But the majority, though
accepting that the learned county court judge applied the right test, held that
he reached the wrong conclusion on the facts that he had found. This conclusion
must, I think, involve that the learned lords justices in the majority thought
that on those facts there was no evidence on which the learned county court
judge could hold that these premises were ‘a house’ within the definition, the
obverse of the conclusion in Lake v Bennett, where the Court of
Appeal held, reversing the learned trial judge there concerned, that there was
no evidence that the premises there in question were not such ‘a house’.
My Lords,
though the respondents in their printed case advanced the alternative
contention that Lake v Bennett was wrongly decided, their learned
counsel expressly refrained from so arguing and I think he was right, for in my
view on the facts of that case it was correctly decided by the Court of Appeal.
The weight of his able argument in support of the view taken by the majority of
the Court of Appeal was that the learned county court judge had given wholly
insufficient weight to what was described as the shop element. It was argued
that if one looked at these premises in their state as it existed at the date
of the appellant’s notice and as shown in the photographs and other documents,
any description which did not give prime emphasis to the shop element (the
first floor accommodation being only ancillary to the shop beneath) was
unreasonable and misleading.
The purpose of
these words in the definition is clear. Tenants who live over a 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’. It is
imperative, if the law is to be evenly and justly administered, that there
should be not only uniformity of principle in the approach of the courts to the
question but a broad consistency in the conclusions reached. The question must
not, save within narrow limits, be treated by the courts as a question of fact:
for the variations of judicial response could well be such as to give rise to
unacceptable, indeed unjust, differences between one case and another. This
could lead to the statute being applied to two practically identical buildings,
one way by one judge and another by another — an echo of equity and the length
of the Chancellor’s foot. For this reason, the Court of Appeal’s decision in Lake
v Bennett was welcome as stating a principle and confining 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, 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.
My Lords,
reading the careful judgment of Griffiths LJ, I cannot but think that the
majority of the Court of Appeal allowed themselves to be influenced by the
consideration that the appellant would or might be entitled to protection under
Part II of the Landlord and Tenant Act 1954. With respect, I think this is an
irrelevant consideration. Schedule 3 to the 1967 Act shows that there is an
overlap between the two statutes and the fact that there may be different
protection available to the appellant as a tenant is no reason why he should
not be able to exercise his other rights also as a tenant under the 1967 Act if
the premises in question possess the relevant qualifications.
My Lords, as I
have already stated, the majority in the Court of Appeal accepted that the
learned county court judge applied the right test. With all respect to those
who take a different view, I think he came to the right conclusion. I would
therefore allow the appeal, restore the decision of the learned county court
judge and grant the appellant the declaration which he sought.
LORD SCARMAN
and LORD BRIDGE OF HARWICH agreed with the speech delivered by Lord Roskill and
would allow the appeal for the reasons given by him.
The appeal was allowed and the decision of the county
court judge restored.
