Magnohard Ltd v RH Charles Gerald & Ors

Under section 2(1) of the Leasehold Reform Act 1967, “reasonably so called” limits the statutory meaning of house. The question is whether it is reasonable to call the building a house, not whether that description is merely possible or whether another description is also available. For a predominantly residential building, primary weight ordinarily falls on its external and internal physical character and appearance. A purpose-built block of substantial self-contained flats will generally not qualify, absent very unusual factors, even if it can be converted into one dwelling. The assessment is made at the relevant date, and historic lease terminology is weak evidence of modern appellation.

Magnohard appealed from a decision of HH Judge Marshall QC in the Central London Civil Justice Centre. The judge held that premises at 1 Sloane Gardens and 2, 4, 6 and 6B Holbein Place were not a “house” for section 2(1) of the Leasehold Reform Act 1967, although they had been designed or adapted for living in, and granted permission to appeal.

The building was constructed in 1888 as a substantial block containing residential suites, a housekeeper’s flat and three shops. By September 2010 it contained eight flats and the shops, with communal access, and could be adapted into one dwelling at considerable expense. The central issue was whether it could reasonably be called a house, having regard to its physical character, use, historical construction and lease description.

Appeal dismissed unanimously. Lewison LJ gave the principal judgment. The Master of the Rolls agreed with his reasoning, and Longmore LJ agreed with both judgments.

1. Statutory construction. The words “reasonably so called” in section 2(1) of the Leasehold Reform Act 1967 are words of limitation. The issue is one of appellation: whether it is reasonable to call the building a house. It is insufficient that the building might also be called something else, but the court must avoid treating mere possibility as reasonableness.
2. Judicial consensus. The authorities establish a consistent view that a purpose-built block of flats cannot reasonably be called a house. Although the examples given in the authorities were not binding ratios, their strength and consistency meant that the Court of Appeal should not depart from the underlying consensus. The authorities included Lake v Bennett [1970] 1 QB 663, Tandon v Trustees of Spurgeon Homes [1982] AC 755, Malekshad v Howard de Walden Estates Ltd [2002] UKHL 49 and Prospect Estates Ltd v Grosvenor Estate Belgravia [2008] EWCA Civ 1281.
3. Relevant characteristics. For a predominantly residential building, the assessment depends primarily on its external and internal physical character and appearance. Here, the structure and use had remained substantially unchanged since construction. It was built and used as a block of substantial self-contained flats, with three shops, rather than as a house divided into flats. Its ability to be converted into one dwelling did not alter that conclusion.
4. Historical material. The relevant date was September 2010, when the notice to acquire the freehold was served. The 1888 lease’s description of the premises as a “messuage” was not a helpful guide to whether, in contemporary ordinary language, they could reasonably be called a house. The reference in Tandon to occupation as “a residence” was understood as referring to a single residence and did not assist a building occupied as multiple residences. The reasoning in Hosebay Ltd v Day [2010] EWCA Civ 748 was not inconsistent, because the premises in that case had originally been constructed as houses for single occupation.
5. Order. The first-instance judge had made no error of law and was amply justified in concluding that the building was not a house. Permission to appeal to the Supreme Court was refused, although the Court suggested that any renewed application should be considered promptly in light of the pending Hosebay appeals.

1. Court of Appeal (Civil Division): In [2012] EWCA Civ 594, the appeal was dismissed and permission to appeal to the Supreme Court was refused.
2. Central London Civil Justice Centre: HH Judge Marshall QC held that the premises were not a house for the purposes of section 2(1) of the Leasehold Reform Act 1967 and granted permission to appeal.