West End Investments (Cowell Group) Ltd v Birchlea Ltd

For the purposes of Leasehold Reform Act 1967 Part 1, a structurally attached house is not excluded from enfranchisement merely because a boundary wall is divided vertically in ownership or extends above the house. Section 2(2) addresses a genuine mixed vertical and horizontal division involving a material overhang or underhang. A trivial or unimportant deviation does not engage the exclusion. Materiality is a question of fact and degree. Where the issue concerns a shared party wall or another immaterial boundary feature, the landlord’s interests may instead be protected by section 2(5).

The tenant sought a declaration that it was entitled to acquire the freehold of a two-storey mews house under Part 1 of the Leasehold Reform Act 1967. The house was not structurally detached and shared a single vertical wall with a taller adjoining building. The landlord appealed from a first-instance declaration in the tenant’s favour, arguing that section 2(2) excluded the house because part of it lay above or below a structure outside the demise. The issues were whether the wall created a relevant deviation from vertical division and, alternatively, whether the relevant part was material.

1. Appeal dismissed. The declaration that the tenant was entitled to enfranchise was upheld.
2. Section 2(2) concerns mixed cases in which the division between units is partly vertical and partly horizontal. It requires a genuine kink, dog-leg, overhang or underhang involving structural attachment and a material part of the house. A single vertical wall remains a vertical dividing feature even if part is a party wall and part is an external wall.
3. Even if the thickness of a single brick above or below roof level were treated as an overhang or underhang, it was de minimis and immaterial. Materiality is assessed as a matter of fact and degree, by reference to the overall significance of the relevant part to the house and the purpose of section 2(2).
4. The first-instance judge had erred in focusing on the structural support supplied by the wall rather than the significance of the alleged deviation. A vertical party wall did not comprise any floor area of the house and differed materially from a substantial part of a living room, bedroom, kitchen or bathroom.
5. Sections 2(1) and 2(2) define the house, while sections 2(4) and 2(5) concern boundary adjustment. Section 2(5) was apt to protect the landlord’s interest in a shared party wall. Its relevance did not depend on a notice already having been served.
6. The Party Walls etc. Act 1996 did not assist with the section 2(2) issue.

• High Court (Chancery Division): On 27 November 2015, Mr Justice Henry Carr dismissed the appeal from the order of His Honour Judge Dight dated 7 May 2015, which had declared that the tenant was entitled to acquire the freehold.
• Permission to appeal: Granted by Arnold J on 15 June 2015.