The Where’s Wally? books are surprisingly good fun. You spend hours pouring over a page (or pages) trying to find Wally as he hides in ever more obscure places. Reading Day v Hosebay Ltd; Howard de Walden v Lexgorge [2012] UKSC 41 did rather feel like a Wally experience. I felt – as more than one other NL writer has also remarked – that the Supreme Court had deliberately hidden their reasoning and you really had to search hard to try and find it. Frankly, without the accompanying press-release, I’m not sure I’d have known where to look.
The cases concern the Leasehold Reform Act 1967. The Act entitles leaseholders of a house to enfranchise their building. As originally enacted, there was a residence requirement but the Commonhold and Leasehold Reform Act 2002 did away with this, replacing it with a requirement that the lease has been owned by the tenant for at least two years.
In order to qualify for enfranchisement, the house has to come within the definition in s.2, 1967 Act and includes “any building designed or adapted for living in” that can “reasonably” be called a house. In Tanden v Trustees of Spurgeon Homes [1982] AC 755, it had been said that this was not an exacting test; unless no reasonable person could call the property a house, then it probably was.
In Hosebay, the property had been built as a house and then converted into self-contained flatlets (suitable for short term visitors, etc). In Lexgorge, the property had again originally been built as a house but was now mostly used for commercial purposes as offices. The county court and Court of Appeal had held that these were houses “reasonably so called” (see our note here).
The Supreme Court unanimously allowed the appeals. It was noted (at [3]) that, when Parliament abolished the residence requirement with the 2002 Act, it did not appear that Parliament intended to do anything other than improve the situation of, e.g. those leaseholders who sub-let or used the property as a second home. At [9], the Court held that the context of the 1967 Act was important and, in that regard, it was about the enfranchisement of a house as a home and not about the architecture or appearance of the property.
And, as far as I can tell, that is the reasoning. In order to be a house “reasonably so called” , one must look to the current use of the property. In both of these cases, the property was used for commerical purposes and, hence, was not a house within the meaning of the Act.
Now, I have some problems with this. How does this sit withTandon, where the “house reasonably so called” consisted of accomodation above a shop in a parade of similar buildings? Why is this not re-introducing (or partially re-introducing) a residence test? And how does one judge the use of the property? Suppose, for example, that the leasehold interest in the house is owned by “NL Holdings Ltd”. Clearly, the company can’t use the property as a home. If it sub-lets, then surely it is running a business. It might be said that the sub-tenant is using the property as a home, but that, surely, is going to be a question of fact and degree. Suppose the sub-tenant has only been there for a short time? Can you aggregate all the sub-tenancies together? What happens where the house has been subdivided into separate units and some are used for commercial purposes and some for residential?
I just can’t see how Hosebay / Lexgorge helps us in the long term. And I envisage many lawyers and Judges having to pour over the decision, searching (possibly in vain) for some reasoning. And, if that’s what I wanted to do, I’d spend more time with my Wally books.