Grosvenor (Mayfair) Estate v Merix International Ventures Ltd & Anor

Whether a building is a “house” under section 2(1) of the Leasehold Reform Act 1967 depends on its identity and function at the relevant date, assessed by its physical character and the statutory language. The last actual use is not determinative, particularly where the building is vacant. Past adaptations remain relevant, but the court must make an overall assessment.

Where precedent does not precisely classify the property, the trial judge must apply the governing principles to the facts. A mixed-use or formerly commercial building may still be a house reasonably so called if its residential identity remains sufficiently evident. Appellate intervention is inappropriate merely because another characterisation is possible.

Merix held the lease of a large London townhouse at 41 Upper Grosvenor Street, with an annexed mews building. The property had formerly been used for both offices and residential accommodation, but had been wholly unoccupied for 13 years when Merix served a notice under Part 1 of the Leasehold Reform Act 1967.

The County Court at Central London declared that the property comprised a house and premises within section 2 and that Merix was entitled to acquire the freehold and reversionary interests. Grosvenor appealed, arguing that the property was a disused office building with ancillary residential accommodation and that its last use was determinative. The central issue was whether the property was “a house” reasonably so called at the relevant date.

1. Appeal dismissed. The property was a “house” within section 2(1) of the Leasehold Reform Act 1967. The statutory definition requires consideration of whether the building is designed or adapted for living in and whether it is a house reasonably so called.
2. The court rejected the submission that the last use, or the last adaptation for use, was determinative. The assessment must be made at the relevant date by reference to the building’s present identity or function and physical character, whether derived from its original design or subsequent adaptation. The absence of active use may require the court to look beyond the approach applicable to buildings in active and settled use.
3. The authorities did not prescribe a rigid legal formula for every kind of property. Tandon established relevant principles for mixed-use premises, but its propositions had to be read in their factual context. Boss was the closest comparison: a building could retain its identity as a house despite disuse, dilapidation and mixed use. Prospect was distinguishable because it concerned continuing, predominant office use. Hosebay was likewise principally concerned with buildings in active and settled commercial use, including a self-catering hotel and wholly office-used premises.
4. The judge had made a careful factual assessment. The property retained an evident residential character, identity and functionality, while the office features were superficial and principally evidence of past use. The Court of Appeal found no sufficient basis to interfere with the conclusion that it was a house reasonably so called.
5. Lord Justice Flaux and Lord Justice McFarlane agreed with Lord Justice McCombe’s judgment.

• Court of Appeal (Civil Division): appeal from the County Court at Central London dismissed; the declaration that the property was a house and premises within section 2 of the Leasehold Reform Act 1967 was upheld.
• County Court at Central London: HH Judge Gerald declared that the property comprised a house and premises within section 2 and that Merix was entitled to acquire the freehold and reversionary interests pursuant to its notice.