UKSC 41
On appeal from:  EWCA Civ 748
Day and another (Appellants) v Hosebay Limited (Respondent)
Howard de Walden Estates Limited (Appellant) v Lexgorge Limited (Respondent)
JUDGMENT GIVEN ON
10 October 2012
Heard on 16, 17 and 18 July 2012
Edwin Johnson QC
(Instructed by Pemberton Greenish LLP)
Stephen Jourdan QC
(Instructed by Bircham Dyson Bell)
Jonathan Gaunt QC
Katharine Holland QC
(Instructed by Speechly Bircham LLP)
(Instructed by Wallace LLP)
LORD CARNWATH (with whom Lord Phillips, Lord Walker, Lord Mance, Lord Clarke, Lord Wilson and Lord Sumption agree)
"This would bring the residence test for houses in line with the proposals for flats. It would allow long leaseholders of second homes to benefit and would also enable leaseholders who lease houses through a company to enfranchise. Furthermore, as in the case of flats, it would restrict the scope for short-term speculative gains (p 189)."
There is no evidence then or thereafter of any ministerial or parliamentary intention to extend the scope of the Act more generally, or in particular to confer statutory rights on lessees of buildings used for purely non-residential purposes.
"It would, in my opinion, be wrong to disregard the fact that, while the Act may to some extent be regarded as expropriatory of the landlord's interest, nevertheless it was passed for the benefit of tenants. It is the duty of the court to construe the 1993 Act fairly and with a view, if possible, to making it effective to confer on tenants those advantages which Parliament must have intended them to enjoy." (Cadogan v McGirk  4 All ER 643, 648)
By the same token, the court should avoid as far as possible an interpretation which has the effect of conferring rights going beyond those which Parliament intended.
"… '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; and-
(a) where a building is divided horizontally, the flats or other units into which it is so divided are not separate 'houses', though the building as a whole may be; and
(b) where a building is divided vertically the building as a whole is not a 'house' though any of the units into which it is divided may be."
"33... My primary reason for that conclusion is that, in order to determine whether premises are adapted for living in, one looks at the most recent works of adaptation, and assesses objectively, whether they resulted in the property being adapted for living in…
36. In this case, I consider that the effect of the most recent works of conversion to the three properties, if they were works of adaptation, adapted those properties for living in. Ignoring one or two rooms, each room in the three properties is a self-contained unit of accommodation, with its own basic small shower room/WC, and its own even smaller and more basic cooking facilities. As Moore-Bick LJ pointed out in argument, the rooms are entirely appropriate for letting to students on three year degree courses, and, as Mr Johnson rightly accepted, if they had been, all the rooms, and therefore the three buildings, would have been used for living in. Even if, as Mr Johnson argued and I am prepared to assume without deciding, the current use of the three properties is not for living in, that certainly does not mean that, viewed objectively, the three properties were not adapted for living in."
"externally, each of the three properties has the appearance of being a relatively large town house; internally, each of the three properties has been converted so that almost every room can be used as a self-contained unit for one or more individuals, with cooking and toilet facilities. ... I find it hard to see how the judge could be faulted for concluding that, even if each of the three properties might be called something else as well, they could each reasonably be called a house." (para 38)
"53. If the upper two floors of the property had been empty, I have little doubt but that the property could reasonably have been called a house, bearing in mind its external character and appearance (a classic town house in London's West End), its internal character and appearance at least on the upper two floors (which were, as I understand it, substantially as constructed), the description of the property in the lease as 'messuage or residential or professional premises', and, to the extent that it is relevant, the terms of the lease (restricting the use of the upper two floors to residential). I find it hard to see why the fact that the upper two floors had been used (even for many years) as offices (in contravention of the terms of the lease) should wreak such a change that the property could no longer reasonably be called a house."
"… (1) as long as a building of mixed use can reasonably be called a house, it is within the statutory meaning of 'house', even though it may also reasonably be called something else; (2) it is a question of law whether it is reasonable to call a building a 'house'; (3) if the building is designed or adapted for living in, by which, as is plain from section 1(1) of the Act of 1967, is meant designed or adapted for occupation as a residence, only exceptional circumstances, which I find it hard to envisage, would justify a judge in holding that it could not reasonably be called a house. They would have to be such that nobody could reasonably call the building a house." (p 767)
"18. In my judgment, the words 'designed or adapted for living in', as a matter of ordinary English, require one first to consider the property as it was initially built: for what purpose was it originally designed? That is the natural meaning of the word 'designed', which is a past participle. One then goes on to consider whether work has subsequently been done to the property so that the original 'design' has been changed: has it been adapted for another purpose, and if so what purpose? When asking either question, one is ultimately concerned to decide whether the purpose for which the property has been designed or adapted, was 'for living in'.
19. The notion that the word 'designed' in section 2(1) is concerned with the past is reinforced by the later words in the same section 'was or is [not] solely designed or adapted'. The use of the past tense is striking in a section which contains a number of verbs only in the present tense. In my judgment, the expression is to be construed distributively: thus, the word 'was' governs 'designed', and the word 'is' governs 'adapted'. The present tense is appropriate for 'adapted' because, as Lord Scott of Foscote pointed out in argument, there could have been several successive adaptations, and it is only the most recent which is relevant. The word 'was' is in any event difficult to reconcile with Grosvenor's case (as accepted by the judge and the Court of Appeal), as it would be irrelevant whether the property could have been fit for residential occupation at any time in the past."
"There can be no doubt that the external and internal appearance of the properties are highly relevant factors on this issue, and it is clear from the Prospect Estates case  1 WLR 1313 that, in so far as user is significant, the permitted use under the lease is a relevant factor. In those circumstances, even assuming that actual use is also relevant, I find it hard to see how it can be sensibly said that each of the three properties cannot 'reasonably [be] called' a 'house'. To hold otherwise would involve concluding that the actual user, even where it involved people occupying virtually all the rooms in the building for relaxing, sleeping, cooking and washing, albeit on a short term basis, trumped all the other factors to the extent of disabling the building from being able to be a 'house ... reasonably so called'."
The present cases