Andy Creer looks at the decision in Jewelcraft Ltd v Pressland  EWCA Civ 1111.
There must be few provisions which have taxed the senior judiciary quite as much as s.2(1) of the Leasehold Reform Act 1967. The seemingly simple question of “what is a house” for the purposes of the right to enfranchise under the Act, has been considered by the House of Lords/Supreme Court three times since 19821 and by the Court of Appeal (COA) three times in as many years2.
Section 2(1) provides:
“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.”
As such, premises used for both residential and non-residential purposes may be a house within s.2(1). Whether they are depends on an assessment of the premises at the time of the service of the notice of claim. It is that assessment which has again caused difficulties.
In the recent case of Jewelcraft the COA allowed an appeal from HHJ Dight, who had rejected a claim to enfranchisement on the ground that the premises did not constitute a house reasonably so called within the meaning of s.2(1).
The premises in question were a ground-floor purpose built shop with residential accommodation above in a small parade in Putney dating from the 1920s. When originally constructed, the premises formed one unit with the ground floor kitchen and scullery being used by both the shop and the rooms above.
In about 1970 the premises had been converted into two self-contained units: downstairs the kitchen, scullery and internal staircase were removed and the shop’s floor space was extended; upstairs a bedroom was converted into a kitchen and a new external staircase built at the rear to access the flat. By the time of the service of the notice to enfranchise in June 2010, the premises were let as a newsagents with a service user restriction on the flat.
At first instance the judge took into account the history of the property, its physical appearance, the terms of the lease and the user. He concluded that the premises had been built as a shop not as a house and that, by virtue of the alterations, it was not a mixed use unit but two separate units. Was this the correct approach?
The Approach to the Assessment
In Tandon, in determining the character of the premises and whether it could reasonably be so called a house, Lord Roskill @766A had endorsed the following approach: -
“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.”
However, in Hosebay Lord Carnwath explained the decision in Tandon as being a matter of policy rather than principle. In effect, one should look at whether the premises were of a type that Parliament had intended residential tenants should have the opportunity of acquiring the freehold. (Albeit most judges had hypothesized that answer by defining premises to which the Act was not intended to apply, for example, an office block with a penthouse or a factory with a caretaker’s flat).
Further, instead of adopting Lord Roskill’s approach, an unanimous seven-strong bench in Hosebay advanced an assessment which gave weight to the use of the premises rather than their physical character and appearance.
Accordingly, in Jewelcraft Patten, Tomlinson and Vos LLJ held that there had been an error of law at first instance. The judge had been wrong to distinguish Tandon, (which also concerned a mixed-use property within a parade of shops and where the premises were held to be a house) on the basis of the internal configuration. The fact that the premises could best be described as a shop did not mean they could not be reasonably so called a house.
Interestingly, their Lordships also doubted that Henley v Cohen had been rightly decided. This too had been a case concerning a purpose-built shop that had been held to be outside of the 1967 Act. The key difference was that for some 70 years the floor above the shop had been used as storage by an adjoining property. At the time of the notice the premises had, in breach of the lease, only recently been adapted for residential use. In any event, they thought it would be distinguishable on the basis of user over the term of the lease.
Reminder of law:
- Not every building with living accommodation is “a house”
- “Reasonably so-called” is intended to limit the right to enfranchisement
- Judges should have regard for the purpose of the 1967 Act
- Use of the building at the date of service of the notice is a determinative factor
- Shops with accommodation above are reasonably to be described as houses provided that a material part of the building is designed or adapted for and used for residential purposes.