The Leasehold Reform Act 1967 gives qualifying long leaseholders of houses the right, inter alia, to acquire the freehold. The definition of “house” is quite technical, but, in essence, it turns on whether it could reasonably be called a house (even if it could reasonably be called something else). There is a quite eye-watering amount of law on this issue, most recently Day v Hosebay Ltd; Howard de Walden v Lexgorge [2012] UKSC 41 (our note here).
In general terms, many of these cases are worth quite a lot of money. Which means that they get appealed (and appealed, and appealed). In Henley and another v Cohen [2013] EWCA Civ 480, the Court of Appeal has had a go at trying to stop further appeals. But probably hasn’t managed it. And, in the process may well have generated another route for further appeals. Ho hum.
The building in question had commercial use on the ground floor, with a first floor which had been converted into a flat. Those conversion works were relatively recent and were in breach of covenant. The leaseholders sought to enfranchise and the landlord resisted.
The trial judge went on a site visit to view the property. He noted that the flat was entirely separate from the commercial unit; that it had been adapted in breach of covenant and that, in his view, the property was not a “house reasonably so called.”
The leaseholders unsuccessfully appealed to the Court of Appeal. In quite a terse judgment, the court held that the trial judge had not erred in law and the factual basis of his decision was largely a matter for him. There was always scope for disagreement over whether or not a property could reasonably be called a house. But that is what trials were for. Appeals against such a fact-sensitive conclusion would be difficult to sustain.
Now, the case strikes me as the CA trying to put down a bit of a marker to stop appeals in these sorts of cases. Fair enough I suppose. But what interested me is that the Court then went on to deal with the unlawful conversion works. Given that those works were what founded the basis of a claim to enfranchise, the Court was reminded of the old adage that a person should not benefit from his or her own wrong. Of course, this is all obiter, but it does seem to me to open up another line of argument that both parties will need to be aware of in future cases. And, of course, it will generate its own appeals as well.
The reasoning of the Court of Appeal regarding the alterations in breach of covenant seems irresistible to me – the landlord had expressly refused consent to the works because they would give the property the potential to enfranchise but the tenant then did the works anyway without notifying the landlord or applying to court to challenge the landlord’s refusal.
I suppose that landlords may get into greyer areas where the alterations carried out in breach of covenant were only a single piece of the jigsaw that makes up the adapting for residential occupation of the “house”.
I suppose the case is also authority for the proposition that a landlord can reasonably withhold consent to alterations purely on the basis that the alterations once completed would provide the tenant with an opportunity to enfranchise an otherwise unenfranchisable building.