Cloisters Business Centre Management Company Limited v Hamid Anvari & Anor

For statutory service-charge controls, a “dwelling” under section 38 of the Landlord and Tenant Act 1985 may comprise premises let for mixed residential and business use. Residential use need not be predominant, or constitute the tenant’s home, unless the relevant provision expressly imposes that restriction. Whether premises are a separate dwelling is principally a physical question. The occupied and intended-occupation limbs are alternatives. Intended occupation is assessed objectively, with the terms of the letting especially important in mixed-use cases. Ancillary residential use can suffice. Other statutory protections may remain unavailable where legislation expressly excludes tenancies governed by Part II of the Landlord and Tenant Act 1954.

The appellant management company appealed against decisions of the County Court at Central London that Unit 6, a self-contained top-floor unit in a business centre, was a “dwelling” for statutory service-charge purposes. The lease permitted use as offices with ancillary residential use but contained an apparently conflicting boiler-plate restriction on residential use and sleeping accommodation. The unit was currently used for storage and included a kitchen and shower room.

The appeal concerned the meaning of “dwelling” in section 38 of the Landlord and Tenant Act 1985, and whether mixed-use premises fell within sections 18 to 27A. It also concerned the construction of the lease’s use provisions.

1. Appeal dismissed. The decisions below that Unit 6 was a “dwelling” were upheld. The question of service-charge recoverability therefore remained for the First-tier Tribunal.
2. Section 38 of the Landlord and Tenant Act 1985 contains no requirement that premises be used wholly or mainly as a dwelling. Nor is it expressly inapplicable to business tenancies. Where Parliament intended to impose a predominant-residential restriction, it did so expressly elsewhere.
3. The policy of the service-charge provisions is to protect a tenant against unreasonable charges financially, rather than to protect the tenant’s home. The tenant need not personally occupy the dwelling, and the dwelling need not be the only property comprised in the tenancy. Mixed-use premises may qualify even where residential use is ancillary to business use. The court applied the approach in Epsom Grand Stand Association Ltd v Clarke (1919) 35 TLR 525 and Vickery v Martin [1944] KB 679.
4. “Separate” is principally a physical concept. A self-contained part of a building sharing no living accommodation with another part is separate. “Occupied” and “intended to be occupied” are alternative limbs. The intended-occupation question is objective and is determined mainly from the terms of the letting, while the physical configuration remains relevant.
5. The permitted-use clause, “Offices (and ancillary residential use)”, was the principal description of permitted use. The apparently inconsistent restriction was subsidiary and had to be construed consistently with the principal clause. It was sufficient that the lease permitted residential use, even if subordinate to office use. Current storage use did not satisfy the occupied limb, but the lease satisfied the intended-occupation limb.
6. Other statutory protections may expressly exclude business tenancies. The court noted the exclusions in section 81 of the Housing Act 1996 and section 167 of the Commonhold and Leasehold Reform Act 2002. Those provisions did not alter the construction of section 38.

• Court of Appeal (Civil Division): appeal dismissed. Lord Justice Lewison’s judgment was agreed by Lord Justice Baker and Lady Justice Elisabeth Laing.
• County Court at Central London: District Judge Gill and His Honour Judge Hellman decided that Unit 6 was a “dwelling”; the service-charge issue was transferred to the First-tier Tribunal. The county court citation is not stated in the judgment.
• Permission: Newey LJ granted permission for a second appeal.