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Home is where… the structure is annexed to the ground

Spielplatz Limited v John & Maureen Pearson [2015] EWCA Civ 804

This was one of those rare cases where the facts just do not fit comfortably with the law.

Spielplatz is a naturist resort founded in c.1929. It lets plots of land to its members. Members had originally pitched a tent or sited a caravan on their plot as a means of enjoying the lifestyle and recreational facilities provided by the resort. Over the years, some members had constructed wooden chalets on their plots.

As was the custom on the site, in 1992 the Pearsons had purchased the wooden chalet on their plot from the outgoing tenant and then entered into a tenancy agreement with Spielplatz. Unlike on park home sites, the landlord was not involved in the sale of chalets and did not take a commission.

The tenancy agreement demised the “plot or clearing in the grounds” and covered sunbathing, photography, visitors, dress code and other matters relevant to the members’ mutual enjoyment of the resort.

The arrangement between the parties was not consistent with an assured tenancy. The Pearsons believed that they owned the chalet. They had subsequently spent c.£100k extending and upgrading the chalet (including replacement of the wooden walls with block cladding).

However, when Spielplatz served a notice to quit and sought possession of the plot, the Pearsons defended on the basis that they had security of tenure under the Housing Act 1988. Of course, such conclusion would mean that the Pearsons did not own their home.

The Court of Appeal recently upheld the first instance decision that, if the chalet was annexed to the ground, it was part of the land and, by virtue of the operation of the law, it was automatically demised to the Pearsons: applying Elitestone Ltd v Morris and Another [1997] 1 WLR 687.

Spielplatz submitted that Elitestone was distinguishable on two grounds: firstly, there had been a concession in Elitestone that if the chalet was annexed the result would be a Rent Act protected tenancy; and secondly, the purpose of the letting on the resort was for naturist pursuits not housing, whereas in Elitestone the agreement stated the purpose of the letting as being for residential occupation.

A demise of land does not automatically create a particular type of tenancy only by virtue of the use to which the buildings can be put. In deciding that the parties had unwittingly created an assured tenancy the Court disregarded the intentions of the parties. It is well established that the purpose of the letting must be considered: Wolfe v Hogan 1949] 2KB 194, as approved in R v Newham London BC [2014] USKC 62.

Take the following example: I have a 1-acre plot on which I am slowly converting a barn into my dream retirement home. I have run out of money for the time being and works are on hold, so we agree that I will let the plot to you for the grazing of your ponies. The plot includes the barn, which is annexed to the ground. According to the logic of the Court of Appeal, if the intentions of the parties as to the purpose of the letting are irrelevant, potentially I have just granted you a residential tenancy. (A similar example was raised in submissions but is not referred to in the judgment).

In Spielplatz the Appellant argued that the legal position which most closely reflected the true arrangement between the parties was of it being a tenancy of the plot with a separate licence to use the chalet.

Sir Colin Rimer @44 held: "There is no evidential basis for attributing to the parties an intention to create such a bizarre scheme."

However, there is no evidential basis for attributing to the parties an intention to create an assured tenancy either. At first instance the judge found that initially the Pearsons occupied the chalet at the weekends, then later moved in permanently.

In considering whether the tenancy would be a holiday letting under paragraph 9 of Schedule 1 of the 1988 Act, in the appeal (though the point was not covered in the judgment) LJ Laws put forward the example of his second house in Cornwall being let for a year for a person’s occasional use. As the tenant could visit more than once, it was not let "for a holiday" so as to fall within the statutory exception. But it is not let for them to use as my permanent home either. However, as I understand the decision, if the tenant goes into occupation of LJ Law's house and lives in it as their home, then an assured tenancy has been simply because it is a dwelling-house.

At paragraph 46 of its judgment the CoA held: "There was no evidence upon which she (the judge at first instance) could find that the purpose of the letting was to give the Pearsons the right to occupy the chalet for a holiday."

The operation of the site itself is that evidence. It is a private member's club for recreational purposes. The landlord did not provide housing accommodation with all the inherent repairing obligations.

The practical outcome in Spielplatz appears to be that while the Pearsons cannot be evicted so long as they comply with the express and statutorily implied terms of their tenancy agreement, they and other members no longer own their chalets.

Clearly, the case is not of wide application, but it is a useful reminder of the importance of annexation in determining the extent of a demise and provides an interesting insight into how the Court copes with difficult cases where the facts do not sit easily with the law.

Andy was led in the Court of Appeal by John de Waal QC.