3 May 2013

Court of Appeal rules that a shop with a flat above does not constitute a "house"

Stuart Henley & Anr v Emmanuel Cohen [2013]

The Court of Appeal has further reduced the scope of the Leasehold Reform Act 1967 by ruling that a shop with a residential flat above does not constitute a “house”.

The property in question this time was a two storey building in Palmers Green which comprised a ground floor card shop with a recently converted residential flat above.

There were two issues that had to be determined:

  • Whether the building was a “house reasonably so called” within the meaning of Section 2(1) of the 1967 Act and, if so,
  • Whether the unlawful conversion of the top floor of the building into a flat meant that the tenants should be disentitled from acquiring the freehold.

Although it is considered to be fairly settled law that a shop with a flat above is a “house reasonably so called” following the 1982 decision of Tandon v Trustees of Spurgeons Homes it appears that this is no longer the case. The Court of Appeal decided that Tandon could be distinguished because there was no access to the flat from the shop. They also felt that the first instance Judge was justified in looking at the way the property had been used in the past. As the flat had only recently been adapted for residential use, and there was no direct access between the shop and the flat, they agreed that the building as a whole was not a “house reasonably so called”. On the question of whether the tenant should be disentitled from enfranchising as a result of the fact that the conversion works were unlawful, the Court of Appeal ruled that the Judge had been correct on this point too. The tenants were not entitled to enforce a right acquired by committing a wrong.

This case does turn, to a certain extent, on its particular facts but will result in greater uncertainty when dealing with mixed use premises. Tenants will also have to consider carefully what steps they take before they make a claim to acquire the freehold of their building. It has always been thought that it is the date of the notice that is key in determining whether a building will qualify, but as a result of this decision it seems that its history may also have an impact.

 

 

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