|Judgments - Malekshad (Respondent) v. Howard De Walden Estates Limited (Appellants)
95. The last paragraph of this passage was cited and applied by Robert Walker LJ in the Court of Appeal in the present case (see para 27).
96. My Lords, I find myself unable to agree that Nourse LJ was right in adopting a test of what was a "material part" that depended upon the relationship between the part in question and the premises that lay above or below the part. In the context of section 2(2) the reference to "material part" is to a material part of the house to be enfranchised" .of which a material part ." etc. It is not a reference to a material part of the building of which the house forms part, nor to a material part of the structure to which the house or the part of the house is attached. And since the reference is to a material part of the house to be enfranchised, the materiality must depend, in my opinion, on the relationship between the part in question and the house as a whole. The relative size of the part may be a factor; the price-enhancing quality of the part may be a factor; the extent to which the part derives or provides support or protection from or for other parts of the house may be a factor. No doubt other factors might come into play in a particular case. And, as Lord Wilberforce made clear, the issue will be a largely factual one, an issue, as Stephenson LJ said, "of fact and degree". But the relevant factors will all, in my opinion, relate to the relationship between the part of the house in question and the house as a whole. A part of a "house" does not, in my opinion, become a "material part" for section 2(2) purposes on account of its importance or significance or materiality to premises which do not form part of the "house". Nor, in my opinion, in disagreement in this respect with what Stephenson LJ said in Parsons (p 854), would a part of a house become a "material" part on account of some special use to which a particular occupant might put, or propose to put, the part.
97. If, judged on this approach, the overhanging or underlying part of a "house" is a material part, the tenant cannot enfranchise. If it is not, he can enfranchise. An approach which judges the materiality of the overhanging or underlying part by reference to its relationship with the parts of the building or structure not comprised in the house, is not only inconsistent with the language of the subsection but would have the result that, for example, a trivial store cupboard or 18 ins of basement space of no conceivable importance or significance or value to the house to be enfranchised might result in disqualifying the "house" from enfranchisement. In disagreement with Nourse LJ I cannot believe that Parliament intended such a result. The problems about positive covenants to which Nourse LJ referred do not seem to me to be substantial. If the premises that lie above or beneath the part of the house in question do not belong to the landlord, the problems of severance, of flying freeholds, will have already arisen and the enfranchisement of the house, including the part, will make no difference. If the premises, on the other hand, belong to the landlord, the severance difficulties can be addressed under subsection (5). The landlord can serve a subsection (5) notice objecting to the severance. In a case where the "house" is not structurally detached and the tenant is contending that the overhanging or underlying part is not a material part of the house, the tenant's opposition to the landlord's objection to severance on grounds of "hardship or inconvenience to the tenant" could hardly be expected to succeed. (see ss. 5(b)).
98. In my opinion, for the reasons I have given, the approach to subsection (2) for which Duke of Westminster v Birrane is authority ought not to be followed.
99. The approach to subsection (2) that I have suggested would have the consequence that where the division of a building has been mainly on horizontal lines, none of the several units could qualify as a house. It would be inevitable that the overhanging or underlying part of each unit would be a material part of the unit. But where the building has been divided mainly on vertical lines, with only a minor degree of horizontal division, the approach would make it possible for the vertical units, or at least some of them, to qualify.
100. Moreover, this approach dovetails, it seems to me with Chapter II of the Leasehold Reform, Housing and Urban Development Act 1993. The purpose of Chapter II was to enable a qualifying tenant of a flat, who would necessarily be unable to enfranchise under the 1967 Act, to obtain a new long lease on payment of a discounted premium (see Sch 13). 'Flat' is defined in section 101(1) as:
101. It was clearly the intention of Parliament to bring about a state of affairs in which a dwelling which formed part of a building would either be a "house" under section 2(1) and (2) of the 1967 Act or, if it was not, would be a "flat" as defined in section 101(1) of the 1993 Act. Into which category would 76 Harley Street fall? It seems to me natural to regard it as a "house" rather than a "flat". A natural reading of paragraph (c) of the section 101(1) definition would require the "material part" to be a part material to the flat. If it is not material to the flat, then the dwelling cannot be a "flat" as defined.
102. It is, of course, not permissible to construe section 2(1) of the 1967 Act by reference to a later enactment. But the terms of section 101(1) of the later Act can at least serve to confirm the Parliamentary intention in enacting section 2(2) of the 1967 Act.
103. I must now turn to the two issues in the case.
Are 76 Harley Street and 27 Weymouth Mews a "house" for 1967 Act purposes?
104. The judge, Judge Ryland, held that they were not. He asked himself whether "the two structures form a house or two houses?" (para 18). In the Court of Appeal Robert Walker LJ commented that this question was based on "the unspoken assumption that the building or buildings could not simultaneously be one house and two houses". This assumption, the Lord Justice thought, failed to take account of the guidance given by this House in Tandon v Trustees of Spurgeons Homes (supra). Tandon's case was a mixed use case. The issue was whether a property, part of which was used as a residence and part of which was used as a shop, could reasonably be called a "house". This House held that mixed use was not necessarily a sufficient reason why a property could not reasonably be called a "house". The present case does not, however, involve mixed use. The purposes for which 76 Harley Street and 27 Weymouth Mews were being used when Mr Malekshad's notices were served was, bar the use of a small part of 76 Harley Street as a doctor's consulting rooms, wholly residential. The issue is whether premises which appear to be two separate houses can, for section 2 purposes, be a "house". This issue, unlike the issue in Lake v Bennett  1 QB 663 and in Tandon, is not an issue of appellation.
105. Judge Ryland took the view that the Act was envisaging one house, not two, as being the "house . reasonably so called". He said that each of 76 Harley Street and 27 Weymouth Mews could reasonably be called a house, but that the two together could not (para 23). Robert Walker LJ thought that the judge had misdirected himself in concluding that two houses, each reasonably so called, could not together be a "house . reasonably so called" for section 2 purposes. For my part I would prefer to leave the point open. I find it difficult to envisage how two apparently separate houses could together constitute a "house . reasonably so called" but would not wish to exclude completely the possibility. I prefer to concentrate on whether these two houses, 27 Weymouth Mews and 76 Harley Street could together reasonably be called a "house". The judge plainly thought they could not and I do not think his supposed misdirection, if that is what it was, drove him to a conclusion he would not otherwise have reached. But Robert Walker LJ came to a different conclusion. He said:
He then referred to the various conversion works that had taken place and continued:
106. The first of these two passages contains, in my respectful opinion, a false premise which invalidates the conclusion. I do not think it would ever have been reasonable or natural to call the whole of the 76 Harley Street/27 Weymouth Mews structure a "house". 76 Harley Street was the house. The Mews building, comprising a coachhouse and stables, later garages, with accommodation above, was not part of the house. If anyone had asked the coachman or groom, or chauffeur, who occupied the residential first floor of the Mews building, whether he lived in his employer's house, he would answer that he did not and that he lived above the stables/garages. The housemaids and domestics who lived in the upper floors, or perhaps basement, of 76 Harley Street lived in the house. The occupants of the Mews building did not.
107. The Mews building would, in the days when it was still used for the domestic purposes of the owner of 76 Harley Street, have passed, whether or not expressly mentioned and unless expressly excluded, on a conveyance of 76 Harley Street (s. 62(1) of the Law of Property Act 1925). Subsection (3) of section 2 of the 1967 Act underlines the point. The enfranchisement right conferred by section 1 is a right to acquire " . the house and premises", and subsection (3) says that:
So the "premises" of 76 Harley Street would have included the coachhouse, stables, garages, and the residential accommodation, all of which were occupied and used for the purposes of the house.
108. In my opinion, it would never have been reasonable or natural to call the whole of the 76 Harley Street/27 Weymouth Mews structure a "house". The Mews buildings, 27 Weymouth Mews, was at one time part of the "premises" that would have been subject to enfranchisement with 76 Harley Street, the "house". Once 27 Weymouth Mews had become occupied separately from and otherwise than for the purposes of 76 Harley Street it would, of course, no longer have been part of the "premises" of 76 Harley Street.
109. In my opinion, in agreement with the judge and disagreement with the Court of Appeal, 76 Harley Street and 27 Weymouth Mews were not together a "house . reasonably so called".
110. There is another reason why, in my opinion, the combined property cannot be a "house". If the building comprising both 76 Harley Street and 27 Weymouth Mews is considered as a whole, the division of the building into 76 Harley Street on the one hand and 27 Weymouth Mews on the other hand is a vertical division. As originally built, there was a horizontal division at basement level. But once a part of the basement had been incorporated into 27 Weymouth Mews, there was a vertical division of the building at basement level, as well as a reduced horizontal division. At ground floor level there was originally open space between 76 Harley Street and 27 Weymouth Mews but once the southern ground floor extension of 76 Harley Street had been built, there was a further vertical division of the composite building at the point where the extension met the Mews building. Accordingly, in my opinion, subsection (1)(b) prevents the composite building from being a "house" for 1967 Act purposes.
111. For these reasons I would allow the appeal against the Court of Appeal's decision that Mr Malekshad was entitled to enfranchise the whole of the premises comprised in the 1949 lease.
Is enfranchisement of 76 Harley Street alone barred by section 2(2)?
112. There is no doubt that 76 Harley Street is a "house . reasonably so called". The issue is whether it is disqualified from enfranchisement by section 2(2) on the ground that "a material part lies above or below a part of the structure not comprised in the house". The part in question is the part of the basement that lies beneath 27 Weymouth Mews. It comprises an area of about 27.3 square metres. Both Judge Ryland and Robert Walker LJ applied, as they were bound to do, the test of materiality prescribed by Nourse LJ in the Birrane case. They held that because part of the ground floor and first floor of 27 Weymouth Mews lie above and are supported by the 27.3 square metres of basement the freeholder's enjoyment of 27 Weymouth Mews would be prejudiced by the severance of the freehold of 76 Harley Street from that of 27 Weymouth Mews. In my opinion, however, for the reasons I have explained, Nourse LJ prescribed the wrong test. Judged by its relationship to 76 Harley Street as a whole the 27.3 square metres is of no materiality whatever. It is not a "material part" of 76 Harley Street, the house to be enfranchised. If it is important for the freeholder of 27 Weymouth Mews to retain ownership and control of the 27.3 square metres, and it may well be, the freeholder's remedy is to serve a subsection (5) notice in order to bring about the exclusion of the 27.3 metres from the premises to be enfranchised. Your Lordships have been given to understand that Mr Malekshad would agree to that exclusion. Even if he did not I can see no possible ground on which a court could fail to be satisfied that any hardship or inconvenience likely to be caused to the tenant by the exclusion would be out-weighed by the difficulties likely to result from severance of the 27.3 square metres from the premises lying above them.
113. Both the two 1967 Act notices served by Mr Malekshad seek the enfranchisement of 76 Harley Street and 27 Weymouth Mews together. There is, at present, no notice that seeks enfranchisement of 76 Harley Street alone. If one or other of the notices is proposed to be amended so as to exclude reference to 27 Weymouth Mews, the amendment should not, in my opinion, be permitted otherwise than on terms that allow the freeholders a reasonable period, not exceeding two months, within which to serve a subsection (5) notice relating to the 27.3 square metres.Conclusion
114. For the reasons expressed I would allow the freeholder's appeal against the Court of Appeal's decision that 76 Harley Street and 27 Weymouth Mews together constituted a "house" for the purposes of the 1967 Act. I would set aside the declaration by the Court of Appeal to that effect.