What is a house? – Jewelcraft Ltd v Pressland [2015] EWCA Civ

The Leasehold Reform Act 1967 gives owners of long leases of houses the right to compulsorily acquire the freehold. But what exactly is a ‘house for the purposes of the Act? This was the question litigated in this case, despite it having previously been considered by the House of Lords in Tandon v Trustees of Spurgeon Homes [1982] AC 755 and by the Supreme Court in Hosebay Ltd v Day [2012] UKSC 41.

Section 2(1) of the Act defines a “house” as including:

“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;”

The Premises in question consisted of a ground floor shop with residential accommodation on the floor above. They formed part of a parade of similar shops constructed in the 1920s. They were let on a 99 year lease commencing on 25th March 1921. As originally built, the residential accommodation was accessed via an internal staircase leading to the first floor.

In about 1970, the internal layout of the Premises was changed. The internal staircase was removed and access to what then became a self-contained first floor flat was provided by a new external staircase located in the back yard.

On these facts, HH Judge Dight held that the Premises did not constitute a house within s.2(1) of the 1967 Act so that the claimant was not entitled to acquire the freehold. The claimant appealed to the Court of Appeal.

A similar situation had been considered by the House of Lords in the Tandon case – but the difference here was that the shop and flat in Tandon were linked by an internal staircase. In the present case there was no internal link between the two parts of the building. Did that make any difference?

The Court of Appeal unanimously allowed the appeal. Patten LJ delivered the judgement of the Court.

38. Our view is that this distinction is precluded as a matter of authority. We do not accept that the removal of the internal staircase and the construction of an external means of access to the first floor flat had the effect of taking the building outside the scope of what can reasonably be called a house for the purposes of s.2(1). There is no doubt that until the alterations to the building in 1970 the Premises, although obviously not identical in appearance to those considered in Tandon, were in substance the same in terms of layout and use. In our view, that did not change merely because the shop space was increased and the means of access to the upstairs flat was changed. If a purpose-built shop with ancillary accommodation falls within the definition of a house for the policy reasons identified in Tandon, we do not see how that position can be materially changed by the works to the staircase.

He also included some advice for future disputes:

40 In our view … claims to enfranchise buildings comprising shops with accommodation above should not be dismissed for non-compliance with the reasonably so called condition in s.2(1) either because the building is, as a matter of ordinary speech, best described as a shop or because the accommodation is not linked internally to the remainder of the building. Tandon establishes that shops with accommodation above are, as a matter of law, reasonably to be described as houses for the purpose of s.2(1) provided that a material part of the building is designed or adapted for and used for residential purposes on the relevant date. County Court judges will doubtless be adept at dismissing cases where the conversion of part to residential user is not genuine or substantial …. A block of offices with a caretaker’s flat would be such a case. But, these cases apart, there ought to be no warrant from now on for distinguishing between similar types of building solely on the basis of their external appearance or their internal layout.

So there we are – a shop can be a house.

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