Malekshad v Howard de Walden Estates Ltd

For leasehold enfranchisement, the question under the Leasehold Reform Act 1967 is whether the entirety of the premises demised can reasonably be called a house. That is a question of law. The fact that the premises may also reasonably be described as two houses, or as separate residential units, does not prevent the whole from being a house. Separate occupation and lack of internal communication are not decisive. A structural overhang is excluded only if a material part is involved. “Material” means an overlap sufficiently substantial or significant to make likely a prejudice to enjoyment after severance, including difficulty enforcing positive obligations. The Convention rights did not require a different construction.

The tenant held a headlease of an integrated property comprising 76 Harley Street and 27 Weymouth Mews. He served notices seeking enfranchisement under Part I of the Leasehold Reform Act 1967. The Central London County Court held that the premises comprised two houses, not one, and that the material overlap meant neither qualified under the Act. It dismissed the application with costs. The Court of Appeal considered whether the whole property could reasonably be called a house and, alternatively, whether the statutory exclusion for a material overlap was engaged and required a Convention-compatible construction.

Disposition and principal reasoning

Lord Justice Robert Walker delivered the leading judgment. Lord Justice Sedley agreed that the appeal should succeed and added observations on the human rights issue. Mr Justice Lightman agreed with both judgments. The appeal was therefore allowed unanimously.

1. Meaning of “house”. The statutory question under sections 2(1) and 2(2) of the Leasehold Reform Act 1967 was whether the entirety of the premises demised by the headlease could reasonably be called a house. Following Tandon v Trustees of Spurgeons Homes [1982] AC 755, the issue was one of law, not an unrestricted question of fact. The court was not required to choose between a description as one house and a description as two houses.
2. Application to the premises. The history, physical unity and continuing residential character of the property meant that the whole site remained capable of being reasonably described as a single house in 1997. The fact that the two principal parts had been separately occupied, or that internal access had ceased to be used, did not alter that conclusion. The county court judge had therefore approached the issue incorrectly by asking “one house or two?” as if the alternatives were mutually exclusive.
3. Material overlap. The court considered, in the alternative, that the judge had been right to regard the overhang as material if the two structures had otherwise been separate houses. The test derived from Parsons v Trustees of Henry Smith’s Charity [1974] 1 WLR 435 and Duke of Westminster v Birrane [1995] QB 262: the overlap must be sufficiently substantial or significant to make likely prejudice to enjoyment after severance. Floor-area comparisons were not the governing test. The inability to enforce positive repair obligations was relevant, notwithstanding the preservation of support rights under section 10(2).
4. Convention argument. The alternative reasoning was also supported by Articles 8 and 14 of the Convention. Applying section 3 of the Human Rights Act 1998, the word “material” did not require a different construction because the criterion was objectively justifiable and proportionate. Sedley LJ cautioned that the reference in Birrane to more than a trivial or insignificant part was not a separate legal test. The wider question whether Article 14 governs every right created by domestic legislation was left open.

The order below was set aside, a declaration was made giving effect to the appellate decision, and the appellant received all costs in the Court of Appeal and below. Permission to appeal to the House of Lords was refused.

1. Court of Appeal (Civil Division) — [2001] EWCA Civ 761; appeal allowed, order below set aside, declaration made, and costs awarded to the appellant.
2. Central London County Court — HH Judge Ryland decided the preliminary issues against the tenant and dismissed the enfranchisement application with costs.