Collins v Howard De Walden Estates Ltd.

For enfranchisement under the Leasehold Reform Act 1967, the court must determine whether the relevant building is a house reasonably so called and then apply the structural rules in section 2(1). Vertical division under section 2(1)(b) concerns division into units, not a division which merely separates parts of a unit. Whether adjoining properties form one house, and whether a party-wall opening prevents vertical division, are fact-sensitive questions. The court may consider physical layout, actual use, access, appearance, lease terms and the function of a garage or utility room. An appellate court should not interfere with an inspected first-instance judge’s conclusion absent misdirection or perversity.

The claimant held a lease of adjoining properties at 11 and 12 Devonshire Mews South. She sought a declaration that she was entitled to acquire the freehold under the Leasehold Reform Act 1967. The Central London County Court, in a judgment dated 16 May 2002, granted the declaration.

The freeholder appealed, arguing that the properties were two houses and that the combined building was excluded by section 2(1)(b) because it was vertically divided. The appeal required application of the House of Lords guidance in Malekshad to the physical layout and use of these adjoining properties.

The appeal was dismissed unanimously. The Court of Appeal applied the guidance given by the House of Lords in Malekshad [2002] HL 49, while distinguishing the materially different facts of that case.

1. The statutory inquiry under section 2(1) of the Leasehold Reform Act 1967 involves two questions: whether the relevant building is a house reasonably so called, and whether it is vertically divided from another unit. The structural rules in section 2(1)(a) and (b) are self-contained.
2. Whether numbers 11 and 12 formed a house reasonably so called was fact-sensitive. The judge was entitled to consider the physical layout, access, actual use, the lease covenant requiring occupation as a single private dwelling house, and the alterations made at the freeholder’s request. The separate appearance, two front doors and separate flat did not compel a different conclusion. Dyson LJ added that the appellant had shown neither misdirection nor perversity.
3. Vertical division under section 2(1)(b) is a question of fact and degree. The court must assess the significance and function of an opening, not merely its size. The provision contemplates division into units, not a division which separates parts of units. The door led to a utility room and integral garage forming part of the combined house; it did not create the separate units contemplated by the provision.
4. The fact that section 2(3) treats a garage as premises let with a house does not prevent a garage from being part of the house itself where it is integral to the building. The appellant’s construction would also create the flying-freehold difficulties which informed the different treatment of horizontal and vertical division.
5. The possible alternative claim concerning number 11 and parts of number 12, subject to section 2(5), did not arise. The appellant was ordered to pay the respondent’s agreed appeal costs of £12,133.04 by 7 May 2003.

1. Court of Appeal (Civil Division) — Appeal dismissed; the declaration made below upheld. [2003] EWCA Civ 545.
2. Central London County Court — His Honour Judge Hallgarten granted a declaration on 16 May 2002 that the claimant was entitled to acquire the freehold on fair terms.