Opportunity missed? The critical question of when mixed use premises can be called a house remains unanswered
The vexed problem of when mixed use premises can be considered a house for the purposes of the Leasehold Reform Act 1967 has been in the highest Court in the land multiple times in the 50 years since the Act came into force and in the Court of Appeal no less than five times. In spite of this, earlier this year the Supreme Court declined the opportunity to consider a point of law that several generations of the most capable property lawyers have spent their careers grappling with. Permission to appeal was refused in the case of Jewelcraft v Pressland with the Supreme Court stating simply “… the application does not raise an arguable point of law …”
The decision of the court of appeal
The facts of the case will be well known to most and return to the scenario considered in the very first “house” case to be decided under the Act, namely that of a shop with a flat above. If you were to ask most reasonable people whether a shop with a flat above could be described as a house the answer would probably be no. However, the Act specifically states that a house can include premises which are not solely designed or adapted for living in. This opens the door to some creative arguments and a number of judgments which aren’t easy to reconcile.
The Court of Appeal appeared keen to try and dispel any notion of difficulty in such cases and whole-heartedly endorsed the 30-year old test set out in the leading House of Lords authority Tandon. This was surprising, particularly in light of the apparent criticism of that test by the Supreme Court in the more recent case of Hosebay. In short, the Court of Appeal in Jewelcraft considered that where there was a substantial residential element, a shop with a flat above could constitute a house for the purposes of the Act. This applied even though the property in question was not originally designed as a house, it formed part of a wider purpose-built parade of shops and at the time of the claim, there was no internal connection between the shop on the ground floor and the flat above.
Henley v Cohen - spot the difference?
In reaching their conclusion, the Court of Appeal considered another recent decision, Henley v Cohen. At face value the facts were very similar, but the Court of Appeal in Henley had reached the opposite conclusion. That case involved premises which had originally been entirely commercial but shortly before the date on which the claim was made the upper floor had been adapted for living in. The alterations to form the living accommodation had been carried out without the landlord’s consent and with the apparent intention of enabling a claim for the freehold. The Court of Appeal decided that the premises did not constitute a house for the purposes of the Act. Much of the focus of the decision was on the fact that there was no internal link between the newly formed living accommodation on the first floor and the shop on the ground floor. Interestingly, the Court of Appeal in Jewelcraft doubted whether Henley had been correctly decided.
Where does this leave us?
In the face of such obviously conflicting Court of Appeal authorities within a short space of time, it is surprising that the Supreme Court refused permission to appeal. The current uncertainty is exacerbated by the Supreme Court’s comments in Hosebay, calling into question the reasoning of the House of Lords in Tandon, which the Court of Appeal then unreservedly endorsed in Jewelcraft. This appeal seemed to be the ideal opportunity to resolve all of these issues but unfortunately the chance has been missed. The question remains as to precisely why?
The need for consistency?
There were several references in the Court of Appeal’s decision in Jewelcraft to the need for consistency. Perhaps this is why the Supreme Court left the decision untouched? The unfortunate result is that many important questions raised about mixed use premises remain unanswered. This is by no means the last word, indeed, the Court of Appeal has recently granted permission to appeal in another house case, which will provide an opportunity to re-examine some of these issues. Regardless of the outcome it is clear the question will continue to trouble the courts for many years to come and it must only be a matter of time before the Supreme Court is tempted to have another look at it.
This article was written by James Souter and Lauren Fraser. For more information please contact James on +44 (0)20 74276452 or at email@example.com or Lauren on +44 (0)20 74276418 or at lauren.fraser.@crsblaw.com
News & Insights
Sustainable Repurposing and Planning
The opportunities for investors and developers to meet new demands in a changing market are there.
Public Company Update - November 2020
The November 2020 edition of our biannual Public Company Update.