Boss Holdings Limited v Grosvenor West End Properties and others

The sole legal issue was the meaning of "house" in section 2(1) of the Leasehold Reform Act 1967, specifically whether a building must be physically fit for immediate occupation to be "designed or adapted for living in". The court held that the phrase is to be read distributively: "designed" is concerned with the original design (past) and "adapted" with any subsequent adaptation (present). The House rejected the lower courts' approach that required fitness for immediate residence, concluding that a building originally designed for habitation remains "designed for living in" despite internal dilapidation. The decision relied on the statutory text, the original residence requirement in section 1(1) as enacted, and considerations of practicability and policy.

Background and parties: The appellant, Boss Holdings Limited (assignee of a tenant's lease), sought to acquire the freehold of 21 Upper Grosvenor Street under the Leasehold Reform Act 1967. The respondents were Grosvenor West End Properties and related Grosvenor companies (landlords/head lessors).

Facts: The property, built in the eighteenth century as a single private residence, had been used residentially for many years but by 2003 the upper three floors were stripped to the structural shell and the lower three floors had earlier been used for dressmaking and more recently were vacant. The lease dated from 1948. A tenant's notice to enfranchise was served on 14 October 2003 and assigned to Boss. The landlord served a counter-notice contending the property was not a "house" within section 2(1).

Procedural history: The trial judge (Central London Civil Justice Trial Centre, 16 May 2005) held the property was not "designed or adapted for living in" and dismissed the claim. The Court of Appeal ([2006] 1 WLR 2848; [2006] EWCA Civ 594) upheld that decision. The appeal to the House of Lords followed.

Nature of the claim/application: An application under the Leasehold Reform Act 1967 to acquire the freehold (enfranchisement) of the premises.

Issues framed by the court:

• Whether, as at the date the tenant's notice was served (14 October 2003), the property was "designed or adapted for living in" within section 2(1) of the 1967 Act.
• Whether the correct test was fitness for immediate residential occupation or whether the court should have regard to original design and subsequent adaptations.

Reasoning and decision: The House concluded that "designed" (past participle) naturally refers to original design and that "adapted" (present) refers to more recent modifications; the words are to be construed distributively. The court emphasised that section 2(1) had not been amended and that the original residence requirement in section 1(1) supported giving effect to the ordinary meaning of "designed". The House rejected the lower courts' focus on temporary physical unfitness for immediate occupation as an inappropriate and impractical gloss. Applying this construction to the facts, the property, though internally dilapidated, had been originally designed as a house and the upper floors remained laid out for residential use; therefore it fell within section 2(1). The appeal was allowed.

Appeal allowed. The House held that in section 2(1) of the Leasehold Reform Act 1967 the words "designed or adapted for living in" should be read distributively so that "designed" refers to the original design (past) and "adapted" to subsequent adaptations (present). A property originally designed for habitation remains a "house" under section 2(1) notwithstanding internal dilapidation that prevents immediate occupation; the lower courts were wrong to apply a test of immediate fitness for residence.

Trial: Central London Civil Justice Trial Centre (His Honour Judge Cowell) - application dismissed (16 May 2005). Court of Appeal: appeal dismissed; judgment reported at [2006] 1 WLR 2848; [2006] EWCA Civ 594. House of Lords: appeal allowed, [2008] UKHL 5.