House of Lords
Published February 4, 2008
Boss Holdings Ltd v Grosvenor West End Properties and Another
Before Lord Hoffmann, Lord Scott of Foscote, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe and Lord Neuberger of Abbotsbury
Speeches January 30, 2008

A property was a house, which a leaseholder was entitled to acquire, if it had been designed for living in when it was first built and the structure remained substantially the same, even if it had subsequently become internally dilapidated and incapable of beneficial occupation.

The House of Lords so held in allowing an appeal by the leaseholder, Boss Holdings Ltd, from the dismissal by the Court of Appeal (Lord Justice Tuckey, Lord Justice Laws and Lord Justice Carnwath) (The Times May 26, 2006; [2006] 1 WLR 2848), of its appeal from the dismissal by Judge Cowell in Central London County Court on May 16, 2005, of its claim that the freehold interest in 21 Upper Grosvenor Street, Westminster, be transferred to it by the landlords, Grosvenor West End Properties Ltd and Grosvenor (Mayfair) Estates.

Section 2 of the Leasehold Reform Act 1967 provides: “(1) ... ‘house’ includes any building designed or adapted for living in and reasonably so called, notwithstanding that the building is not structurally detached, or was or is not solely designed or adapted for living in, or is divided horizontally into flats or maisonettes...”

Mr Edwin Johnson, QC, for Boss; Mr Anthony Radevsky and Mr Mark Sefton for the landlords.

LORD NEUBERGER said that the landlords’ case was that the property was not, when the leaseholder’s notice seeking acquisition of the freehold was served, “designed or adapted for living in”, because it was not physically fit for immediate residential occupation. That was accepted by both courts below.

The judge had said that the words “designed or adapted for living in” carried with them a notion of premises with somewhere to sleep, to cook, to wash and simply to be when not out at work or out otherwise, and, depending on the size of the place, that was provided by a bedroom, kitchen, a bathroom and WC and maybe a living room of some kind.

The Court of Appeal described the three upper floors as: unoccupied, very dilapidated and incapable of being occupied as residences, and said that because of the grave dilapidation apparent from the photographs, the upper floors of the property were not at the relevant time designed or adapted for anything.

While his Lordship accepted that for present purposes one was largely concerned with the physical state of the property, he disagreed with those conclusions. As a matter of ordinary language, reinforced by considerations of practicality and policy, the property was, as at the relevant date, designed or adapted for living in within section 2(1).

The fact that the property had become internally dilapidated and incapable of beneficial occupation, without the installation of floor boards, plastering, wiring, plumbing and the like, did not detract from the fact that the property was designed for living in, when it was first built, and nothing that had happened subsequently had changed that.

While internal structural works would no doubt have been carried out to the property from time to time over the years, it seemed very likely from the floor plans that its layout, in terms of internal walls, partitions and staircases, had not changed much since the property was built. In any event, the upper three floors had always been laid out for residential use.

The words “designed or adapted for living in”, as a matter of ordinary English, required one first to consider the property as it was initially built: for what purpose was it originally designed? That was the natural meaning of the word “designed”, which was a past participle.

One then went on to consider whether work had subsequently been done to the property so that the original design had been changed: had it been adapted for another purpose, and if so what purpose?

When asking either question, one was ultimately concerned to decide whether the purpose for which the property had been designed or adapted, was for living in.

The notion that the word “designed” in section 2(1) was concerned with the past was reinforced by the later words in the same section “was or is solely designed or adapted”. The use of the past tense was striking in a section which contained a number of verbs only in the present tense.

The expression was to be construed distributively: thus, the word “was” governed “designed”, and the word “is” governed “adapted”. The present tense was appropriate for “adapted” because there could have been several successive adaptations, and it was only the most recent which was relevant.

Furthermore, the issue of whether a property was fit for immediate residential occupation, the test adopted by the courts below, could easily lead to arguments and uncertainty. As the first instance judgment disclosed, it might be a matter of debate whether a particular property was so fit if it had no bathroom or no kitchen, or if there was no sitting room. The resolution of such an issue would inevitably be subjective in many cases.

In the instant case, the property was designed for living in when it was first built in the 1730s, and, with the exception of the last ten years or so, all or at least half of the property, namely the upper three floors, had been used and laid out for residential purposes.

Indeed, the layout of all six floors of the property did not appear to have been substantially altered from its original construction as a house in single residential occupation. It was true that it had not been occupied for a number of years, that it had become very dilapidated, and that three residential floors had been stripped out to the basic structural shell, albeit that the internal walls, windows, staircases, and joists were in place.

However, none of that detracted from the point that at least the upper three floors were and remained designed to be lived in, and that the lower three floors appeared to be structurally laid out substantially as they had been when the property was in single residential occupation.

The property was “designed or adapted for living in” within the meaning of section 2(1) of the 1967 Act. Lord Hoffmann, Lord Scott, Lord Rodger and Lord Walker agreed.

Solicitors: Butcher Burns; Boodle Hatfield.

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