Wellcome Trust Ltd v Hamad (Church Comrs for England v Baines, Ebied v Hopkins)

A residential sub-tenant may obtain the protection of section 137(3) of the Rent Act 1977 when a superior tenancy of mixed business and residential premises ends. The fact that the superior tenancy fell within Part II of the Landlord and Tenant Act 1954, and was therefore not a regulated tenancy, does not prevent the statutory protection of a sub-tenancy of part of those premises.

For this purpose, the superior premises are assessed by their character. The question is whether, in a broad sense, they are a dwelling-house partly or substantially used for business, rather than business premises used partly for residence. The statutory reference to tenancies for the like purposes operates distributively between the dwelling-house and the remainder.

Three conjoined appeals concerned residential occupants of upper parts of premises held under superior tenancies to which Part II of the Landlord and Tenant Act 1954 applied. The superior premises combined commercial and residential use. The appellants respectively occupied residential rooms or flats under protected or statutory tenancies.

When the relevant superior tenancies ended or were surrendered, the County Court judges held that the appellants could not rely on section 137(3) of the Rent Act 1977. They considered themselves bound by Pittalis v Grant [1989] QB 605. Possession orders were made against Hopkins and Hamad, and a declaration that Baines held an assured tenancy was made.

The common issue was whether section 137(3) protected the residential sub-tenancies despite the superior tenancies being business tenancies under the 1954 Act.

1. The Court allowed all three appeals and set aside the County Court orders. Lord Justice Leggatt gave the judgment of the Court.

2. Section 24(3) of the Rent Act 1977 prevents a Part II business tenancy from being a regulated tenancy. It does not mean that the premises cannot be, or be treated as, a dwelling-house. Its express saving preserves the application of other provisions of the Act to a sub-tenancy of part of the premises. Section 137(3) can therefore apply to a protected or statutory residential sub-tenancy notwithstanding that the superior tenancy falls within Part II of the Landlord and Tenant Act 1954.

3. The Court held that Pittalis v Grant [1989] QB 605 had been decided per incuriam. Its conclusion that a Part II tenancy could not comprise “premises” within section 137(3) overlooked both the qualifying words in section 24(3) and the established authorities on mixed residential and business premises. It should not be followed.

4. Following the approach identified in Maunsell v Olins [1975] AC 373, the statutory word “premises” includes premises which, applying accepted principles, would factually be held to be a dwelling-house. The applicable broad-sense inquiry, drawn from Whiteley v Wilson [1953] 1 QB 77, asks whether the building is a dwelling-house partly or substantially used as a shop, or a shop partly used for residential purposes.

5. Each superior letting satisfied that inquiry. The residential character of the upper parts was not displaced by the commercial use of other parts, separate entrances, or the Part II status of the superior tenancy. Further, the phrase “for the like purposes” in section 137(3) is construed distributively between the dwelling-house and the remainder of the premises.

• Court of Appeal: Allowed the three appeals and set aside the County Court orders.
• Central London County Court: On 27 February 1997, Judge White ordered possession against Hopkins.
• West London County Court: On 23 April 1997, Judge Wakefield ordered possession against Hamad.
• West London County Court: On 25 November 1996, Judge Cowell declared that Baines held an assured tenancy.