England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
HIS HONOUR JUDGE HALLGARTEN

		Royal Courts of Justice Strand, London, WC2A 2LL
		16th April 2003

Lord Justice Aldous:

1. Mrs Roberta Collins is the owner of a lease dated 9th February 1977 of 11 and 12 Devonshire Mews South, London W1. Howard de Walden Estates Limited (HDW) are the freeholders. On 10th July 2001, Mrs Collins started these proceedings seeking a declaration that she was entitled, pursuant to the Leasehold Reform Act 1967, to acquire the freehold of numbers 11 and 12 on fair terms. That was resisted by HDW. The dispute came before His Honour Judge Hallgarten who, in his judgment of 16th May 2002, upheld the submissions of Mrs Collins and granted the declaration sought.
2. The judge obtained guidance from the judgments of this Court in Malekshad v Howard de Walden Estates Limited [2001] 3 WLR 824. He realised that that case was due to be considered by the House of Lords and therefore gave permission to appeal upon the basis that this Court would have the advantage of the speeches in the House of Lords. They were available to us ([2002] HL 49; [2002] 3 WLR 1881).
3. The dispute between the parties turns upon the application of s. 2, in particular s. 2(1)(b) of the 1967 Act. The relevant parts of s. 2 read as follows:

"s 2 Meaning of "house" and "house and premises", and adjustment of boundary.(1) For purposes of this Part of this Act, "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.

(2) References in this Part of this Act to a house do not apply to a house which is not structurally detached and of which a material part lies above or below a part of the structure not comprised in the house.

…

(5) In relation to the exercise by a tenant of any right conferred by this Part of this Act there shall be treated as not included in the house and premises any part of them which lies above or below other premises (not consisting only of underlying mines or minerals), if –

(a) the landlord at the relevant time has an interest in the other premises and, not later than two months after the relevant time, gives to the tenant written notice objecting to the further severance from them of that part of the house and premises; and

(b) either the tenant agrees to the exclusion of that part of the house and premises or the court is satisfied that any hardship or inconvenience likely to result to the tenant from the exclusion, when account is taken of anything that can be done to mitigate its effects and of any undertaking of the landlord to take steps to mitigate them, is outweighed by the difficulties involved in the further severance from the other premises and any hardship or inconvenience likely to result from that severance to persons interested in those premises.

…"

4. Section 1 of the 1967 Act enables a tenant who is occupying a house as his residence to acquire the freehold on fair terms. In this case Mrs Collins contends that she is such a tenant. HDW dispute her claim upon the basis that numbers 11 and 12 do not together constitute a dwelling house within section 1 as Mrs Collins contends. They do so on two grounds. First that numbers 11 and 12 are not a house and premises, but two houses. Second that the property is divided vertically and is therefore excluded by subsection (1)(b) of section 2.
5. The issue between the parties is a question of mixed fact and law to be decided as of 2001. The judge saw the property and there is no dispute as to the facts, albeit there is a dispute as to the conclusion to be drawn from them. Using the judgment I can take the background shortly.
6. By agreement made on 15th November 1976 it was agreed that Mr Laurence Rose would surrender to HDW the two head leases that he owned in respect of numbers 11 and 12 and that Mrs Anita Rose, his wife, would surrender her underlease of number 11. In return HDW agreed to grant Mrs Rose a new head lease for a term of 99 years of numbers 11 and 12. It was a term of the agreement "that Mrs Rose will within 12 months … at her own expense carry out the alterations in order to combine numbers 11 and 12 Devonshire Mews South into a single private residence in accordance with the drawing … attached hereto such works to be completed to the entire satisfaction of the landlord". The new head lease was duly granted on 9th February 1977. It contained the usual covenants. Under clause 2(15) the tenant covenanted:

"(a) To use and occupy the demised premises as a single private dwelling house provided that this shall not prevent the flat on the first floor of the part of the premises known as number 12 Devonshire Mews South from being used as a separate self-contained private residential flat in the occupation of one household or family.

(b) As to the part of the ground floor of number 12 Devonshire Mews aforesaid comprising garage accommodation to be used as the garaging of private motorcars ancillary to the use only of that part of the demised premises known as number 11 Devonshire Mews South."

7. Clause 24 (c) required the tenant:

"Not at any time during the said term to underlet any part of the demised premises, (here meaning a portion only and not the whole thereof), but this shall not prevent the subletting of the flat on the first floor of the part of the demised premises known as number 12 Devonshire Mews South, subject always to the provision of sub-clause (23) of this clause and paragraphs (e) and (f) of this sub-clause (24)."

8. By an underlease of 19th May 1983 Mrs Rose let to Susan Green the flat on the first floor of number 12 until 2075. Mrs Collins together with her husband acquired the head-lease from Mrs Rose on 1st April 1985. Mr Collins by deed of gift dated 17th January 1992 transferred his interest to his wife.
9. Prior to the agreement of 1976 numbers 11 and 12 were separate with number 11 consisting of a garage and living accommodation on the ground floor and living accommodation on the first floor. Number 12 had garages on the ground floor with a flat above. A communicating door was made in 1977 through the party wall between number 11 and number 12. It gave access from the patio of number 11 to a utility room situated at the back of the ground floor in number 12 and from there to the garages in number 12. It seems that that was considered by HDW to comply with the 1976 agreement and to convert numbers 11 and 12 into "a single private residence". Certainly HDW never complained that the obligation in the 1976 agreement requiring that the two properties should be combined into a single residence was not complied with.
10. In 1985 work was carried out on number 12. An entrance lobby was made and the first floor flat was completely remodelled. Photographs taken in 2001 show the front of number 11 as having on the ground floor a front door and two main windows with window boxes and three windows on the first floor. Number 12 has, adjacent to number 11, two garages then a front door on the ground floor and four windows on the first floor.
11. The plan set out below fairly illustrates the layout of numbers 11 and 12, but the door from the utility room to the garage area in number 12 is not shown.

[Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture]

12. Before the judge, the submissions of the parties concentrated on whether numbers 11 and 12 were a house or were two houses. The judge said they were one house. He said:

"34. Such being the relevant principles, can numbers 11 and 12 be reasonably be called a house? In my view they can, and I summarise my reasons as follows:

1. I think that the description of the two properties in the head lease as representing one dwellinghouse is and remains an important, albeit not determinative factor (See Malpas at 110 E to F).

2. I do not attach weight to the circumstance that access to the storeroom or as I have more appropriately considered it, the utility room, and garage on the ground floor of number 12 comprised an important part of the overall facilities enjoyed by those living at number 11. I do not attach weight to the circumstances of access from number 11 to number 12 was and is only to be gained via the patio and storeroom. The distance is small and the storeroom has a strong feel of being part and parcel of number 11 rather than some separate property.

3. The existence of a separate, self-contained flat on the upper floor of number 12 does not in my view derogate from the position. The authorities make it clear that the mere fact that part of the building is in separate occupation does not prevent that building from being called a house.

4. Had the two properties had their facades altered or been painted in the same way as to give the impression of continuity, the position described in the previous sub-paragraph would have been clear, really, beyond all doubt. For my part, while I accept that appearance is a factor which it is appropriate to take into account, it is not one which in the end I feel it is necessary to attach substantial, let alone decisive, weight.

5. While I quite accept that because the two properties retain their separate appearance and numbers, it is possible to refer to them as two houses (cf. Dugan Chapman v Grosvenor Estates [1997] 1 EGLR 96), directing myself, as I must, in the light of the judgment in Malekshad, and looking at the entirety of the properties demised with the knowledge of their actual use, I have come to the conclusion that such property – viz. numbers 11 and 12 – can reasonably be called a house. I have to say, however, that I reach this conclusion with a degree of unease. I am conscious that the approach which I have adopted gives a very wide meaning to the word "house" as compared with "house and premises" in section 1.

35. The above matter was the only issue before me, but prior to the conclusion of the case Mr Radevsky for the claimant, sought leave to amend his application so as, if necessary, to claim that insofar as the claimant was wrong, she might in the alternative seek enfranchisement of number 11 alone, together with the garage and storeroom of number 12, on the basis of those being premises within the meaning of Sections 1(1) and 2(3) of the Act.

36. This question does not, of course, now arise but, had it arisen, I would have allowed leave to amend, subject to further consideration of the issue being adjourned until after the defendant had had the opportunity to raise issues bearing on hardship or inconvenience under Section 2(v) of the Act."

13. Miss Jackson, who appeared with Mr Harry for HDW, submitted that the judge had come to the wrong conclusion. She also submitted that numbers 11 and 12 were excluded from the definition of a house by section 2(1)(b). To support those submissions she referred us to the speeches of the House of Lords in the Malekshad case and to the facts which she submitted were similar to those in this case. That being so, she submitted that the Court should arrive at the same result as in Malekshad.
14. In Malekshad, Mr Malekshad applied for enfranchisement of 76 Harley Street and 27 Weymouth Mews South. 76 Harley Street is a substantial house which originally was attached to 27 Weymouth Mews. That Mews was intended to be enjoyed in conjunction with 76 Harley Street consisting as it did of a coach house and stables. It subsequently became a separate residential unit consisting of two basement storage rooms, two garages at ground floor level and first floor accommodation. At some time between 1935 and 1944 the connecting door between the two properties was blocked up and there was then no means of access between the two properties. On 3rd March 1960 the then leaseholder granted an underlease of 27 Weymouth Mews to a Dr Mackenzie who was then an occupant of a maisonette in 76 Harley Street. It contained a term which gave Dr Mackenzie permission to construct a doorway in the boundary wall, which he did, in order that he could obtain access to the mews garages. Dr Mackenzie covenanted that upon giving up occupation he would close the doorway. Dr Mackenzie gave up occupation in about 1970 but did not close the doorway or reinstate the boundary wall. In November 1974 a Dr Gomez acquired the underlease of 27 Weymouth Mews as recorded by Lord Scott in paragraph 83 of his speech.

"83. … In November 1974 a Dr Gomez acquired the underlease of 27 Weymouth Mews and remained in occupation until shortly before the underlease expired. Her evidence at trial was that during her occupation of 27 Weymouth Mews the doorway that Dr McKenzie had constructed remained locked and was never opened. On the Mews side, she said, the door had no door handle."

15. Miss Jackson drew to our attention paragraph 16 of Robert Walker LJ's judgment in Malekshad [2002] QB 364 at 372. In that paragraph Robert Walker LJ recounted the evidence of the applicant that on or just after 28th March 1997 he had changed the old lock on the communicating door. Even so, the judge found that he had not occupied the mews. Lord Scott was of the view that the door remained locked and was never opened.
16. There is in my view a real difference between the unused door between 76 Harley Street and 27 Weymouth Mews and the door in the common wall between numbers 11 and 12 Devonshire Mews. In any case, there is a real difference between property consisting of a house in one street and the other in another street as in Malekshad and property where the two buildings are attached and in the same street as in the present case. The differences are such that it is not appropriate to extrapolate from Malekshad to this case using the facts. This case depends upon a proper application of the Act to the facts of this case using the guidance of the speeches in Malekshad.
17. Although the members of the Committee who decided Malekshad were unanimous in the conclusion that section 2(1)(b) of the Act precluded 76 Harley Street and 27 Weymouth Mews from being a house, they did not speak with one voice as to how to decide whether they were a house reasonably so called. It is therefore necessary to consider more than one speech to seek guidance as to the principles applicable to the facts of this case.
18. Lord Hope, when considering the meaning of section 2(1), pointed out in paragraph 19 that the draftsman had had to provide a definition of the word "house" for the purpose of section 1. That required attention to two issues, the first being an issue as to structure and the second user. For example, a storehouse could be structurally a house, but would probably not be "designed or adapted for living in", and therefore would not be a house within the opening words of section 2(1).
19. As Lord Hope said:

"20. The issue which I have described as the issue of structure was capable of being solved more precisely than the issue of user. All that was needed to resolve the issue of structure was a definition which identified the way in which buildings were to be divided up. The definition had to identify the individual units within a building which were to be available for enfranchisement. It was necessary to address two features which are common to almost every building which comprises more than one residence. These are the features by which a building may be divided up into separate units both vertically and horizontally. All that was needed was to set out the rules by which the individual units within buildings with divisions of that kind could be identified. But the issue of user was not capable of the same precise treatment. The best that could be done was identify a test by which a building which was appropriate for enfranchisement as a house occupied by the tenant as his residence could reasonably be distinguished from one which was not.

21. Section 2 of the 1967 Act is not easy to analyse, as it deals with the issues of structure and use in the same subsection. Subsection (1) deals with both use and structure, so it is necessary to pay careful attention to the words used. They must be construed and then applied to the facts precisely in the order in which they are set out. The first part of the subsection addresses the issue of user. It does so by saying that "house" includes any building "designed or adapted for living in and reasonably so called." This instruction is then qualified by the words "notwithstanding that the building is not structurally detached, or was or is not wholly designed or adapted for living in, or is divided horizontally into flats or maisonettes." This is a list of things which are to be disregarded when the issue of user is being addressed. It does not deal with the issue of structure. That issue is dealt with in the second part of the subsection. This part is divided into two separate paragraphs. Paragraph (a) deals with cases where the building is divided horizontally. Paragraph (b) deals with cases where the building is divided vertically. Different rules are set out in each of these two paragraphs. But they have this point in common, that they are both self-contained. There is no instruction that the result of giving effect to these rules must be subjected to a further test which asks whether the building is nevertheless a house "reasonably so called.""

20. Lord Hope concluded that the houses at 76 Harley Street and 27 Weymouth Mews were designed, adapted and used for living in, and they were used by their respective occupiers as a residence. Upon that basis he held that the user test was satisfied. He then concluded that the two residences could be divided vertically and therefore they were excluded from being a "house" by section 2(1)(b) of the Act.
21. Adopting that approach, numbers 11 and 12 Devonshire Mews would be considered by Lord Hope to satisfy the user test and the result of this appeal would depend on whether section 2(1)(b) applied. Thus the judge came to the right conclusion on the first issue, perhaps for the wrong reasons.
22. Lord Hope made it clear that the issue of structure was dealt with in paragraphs (a) and (b) of s. 2(1). Paragraph (a) dealt with buildings divided horizontally and (b) with buildings divided vertically. Both paragraphs were self-contained. As he said:

"There is no instruction that the result of giving effect to those rules must be subjected to a further test which asks whether the building is nevertheless a house "reasonably so called"."

23. He went on to criticise the approach of the Court of Appeal for considering whether the building was one house or two. He said:

"24. I think therefore, with great respect, that Robert Walker LJ was wrong to criticise the judge for asking himself the question "is this one house or two?" He said that the judge set off on the right track, but that he then strayed off it: [2001] EWCA Civ 761; [2001] 3 WLR 824, 838C, para 37. In my opinion the Court of Appeal strayed on to the wrong track when they asked themselves whether the building, which on the judge's findings was divided vertically into two units at the point where the extended ground floor and basement of 76 Harley Street adjoin the back wall of 27 Weymouth Mews, could nevertheless be called a "house". This is because section 2(1)(b) states that 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."

24. Adopting that approach Miss Jackson submitted that the building, consisting of numbers 11 and 12, is and always was divided vertically. I will consider the validity of that submission later in this judgment.
25. Lord Scott held that 76 Harley Street together with 27 Weymouth Mews could not together be a house … reasonably so called. He said:

"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"."

26. He went on to hold that the property was not a house having regard to section 2(1)(b). He said:

"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."

27. As the facts in Malekshad are very different to those in this case, Lord Scott's conclusion that 76 Harley Street and 27 Weymouth Mews were not together a house reasonably so called does not decide that issue in this case. Further there is nothing in his speech which suggests that the judge's conclusion that numbers 11 and 12 Devonshire Mews could be a house reasonably so called was wrong.
28. Lord Millett also considered the meaning of the word "house" in section 2. He said:

"46. "House" is defined in section 2 of the Act. The definition has several elements. Taking them in the order in which they appear in the section, a "house" is (strictly speaking includes) 

(i) any building which (ii) is designed or adapted for living in and (iii) which may reasonably be called a house (iv) 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 (subsection (1); but so that (v) (a) where the building is divided horizontally, the flats or other units into which it is divided are not separate houses, though the building as a whole may be; and (vi) (b) where it is divided vertically the building as a whole is not a house though any of the units into which it is divided may be; but so that (vii) it does not include a house which is not structurally detached and of which a material part lies above or below a part of the structure not comprised in the house (subsection (2)). 

With the exception of (ii) and (iii), all these elements are concerned with the structure of the building. I will take them in turn.

47. "Any building" is merely a built structure. For the purposes of section 2 of the Act, it need not be structurally detached and may be subdivided into self-contained units. So it may form part of a larger whole, and at the same time may itself be a composite whole formed by separate units. The word is, therefore, not used with any degree of precision. The necessary precision is obtained by other elements of the definition of "house". For the purposes of section 2, the same structure may be regarded as a single building or as several buildings. Thus a terrace of houses may constitute a single building even though each house in the terrace also constitutes a building in itself.

48. Given the degree of imprecision in the concept of a "building", I think that the primary purpose of the requirement that the house should form the whole or part of a building is to exclude other forms of residential accommodation such as caravans or houseboats. No doubt it goes further than this, for I do not see how two separate detached buildings can constitute a single building. But subject to this, I do not think that the question calls for the kind of historical, sociological and architectural investigation which was conducted by the Courts below in the present case. In my opinion No. 76 Harley Street is a building; and so are No. 76 Harley Street and No. 27 Weymouth Mews taken together.

….

50. "Which may reasonably be called a house." An authoritative explanation of these words was given by Lord Roskill in Tandon v Trustees of Spurgeons Homes [1982] AC 755 at p. 767. He made two particular points of general application which greatly influenced the Court of Appeal in the present case: (1) as long as a building of mixed use can reasonably be called a house, it is within the statutory definition of "house", even though it may also reasonably be called something else; and (2) it is a question of law whether it is reasonable to call a building a house.

51. Earlier in his speech, however, at p.764, Lord Roskill made an equally important point of which the Court of Appeal seem to me to have taken rather less notice. This is that the words "which may reasonably be called a house" are words of limitation. They serve to exclude from the statutory definition of a "house" premises which would otherwise fall within it but which could not reasonably be called a house. They do not operate so as to bring within the statutory definition premises which are outside it merely because they are capable of reasonably being called a house.

52. The point is important because the statutory definition of "house" does not end with this requirement. It continues, not only to bring in premises which might otherwise have been excluded ("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") but also to exclude other premises which might otherwise have been included (the individual flats or other units into which a building is divided horizontally and an entire building which is divided vertically). Where these further provisions extend the definition of a "house", the premises must also satisfy the requirement that they should be capable of being reasonably called a house. Where they limit it, however, the premises are not a "house" within the meaning of the Act, and they do not become one even if they could reasonably be so called."

Nothing in that part of Lord Millett's speech suggests that the judge was not entitled to conclude that numbers 11 and 12 were a house reasonably so called.

29. Lord Millett also considered the meaning and effect of section 2(1)(b). He said:

"54. Where the building is divided vertically. In such a case the building as a whole is not a "house", though any of the units into which it is divided may be. Even if, as I think, the whole Harley Street terrace of which No. 76 forms part is a building, it is not a "house" because it is divided vertically into separate units. On the other hand, any of the units may be a "house". "May be" not "is", because a particular unit may fall outside the definition of "house" for any number of reasons. It may, for example, be a doctor's surgery with no living accommodation, and so not designed or adapted for living in. Or a material part of it may lie above or below another part of the structure. But a building which is divided vertically is not a "house", even though it may reasonably be called a house."

30. When coming to apply that reasoning to the facts. He said:

"61. I am bound to say that I find this conclusion a startling one. Whether a building can reasonably be called a house or can only reasonably be called something else is a question of appellation. The present question is not one of appellation but of number. I do not see how the same building can at one and the same time reasonably be called one house and two houses.

62. But there is no need to decide this. In my opinion the Judge asked himself the right question. The "secondary question" whether the two properties were reasonably capable of being called a house did not arise for decision if they were not a "house" at all; and because they comprised a building divided vertically they were not. The Judge was, of course, right to ask himself the "secondary question" in case he was wrong on the first. In my respectful opinion, however, the Court of Appeal fell into error by treating their answer to the secondary question as determinative of the issue in favour of Mr. Malekshad in circumstances when it was conclusively determined against him by the nature of the structural division of the building."

31. On the point in issue in this case Lord Hobhouse agreed with the analysis and reasoning of Lord Hope. Lord Nicholls said that he was only inclined to differ from the reasoning of Lord Hope and Lord Scott on the issue concerning what was a "material part". That does not arise in this case. It would therefore appear appropriate to concentrate upon the speeches of Lord Hope and Lord Scott.
32. As I have said Miss Jackson submitted that numbers 11 and 12 were two houses. Mrs Collins might be entitled, subject to the provisions of section 2(5), to enfranchisement of number 11 with its "premises" consisting of the garage and utility room in number 12. But number 11 and 12 were not a house and therefore the judge should not have made the declaration sought.
33. If the reasoning of Lord Hope is adopted, it is apparent that numbers 11 and 12 satisfy the user requirement in section 2(1) just as 76 Harley Street and 27 Weymouth Mews did. Lord Scott concluded that 76 Harley Street and 27 Weymouth Mews were not together a house reasonably called. In the present case the judge concluded, albeit with a "degree of unease" that numbers 11 and 12 could reasonably be called a house.
34. Miss Jackson submitted that we were in just as good a position to consider this issue as the judge and should come to a different conclusion. She submitted that the door in the party wall was not sufficient to convert the two houses into one. She drew to our attention the difference of appearance between numbers 11 and 12, the fact that they had two front doors and that the flat in number 12 was not called 11A.
35. It is surprising that HDW should be contending that numbers 11 and 12 were not combined into a single private residence when that was a requirement of the 1976 agreement and at no time have they indicated that that was not achieved by the construction of the door. It is also a surprising contention in view of the terms of the lease which contained a covenant that Mrs Collins would use and occupy numbers 11 and 12 "as a single private dwelling house", albeit with provisions that the covenant would not prevent the flat being sublet.
36. In argument various alterations in the property, such as moving the door and converting the garage in number 12 to another room, were considered to ascertain the width of the parties' submissions. Also we were referred to a number of cases e.g. Gaidowski v Gonville and Caius College Cambridge [1975] 1 WLR 1066, Malpas v St Ermin's Property Ltd [1992] 1 EGLR 109, Wolf v Crutchley [1971] 1 WLR 99 and Duke of Westminster v Birrane [1995] QB 26. Those cases have to be treated with caution having regard to the speeches in Malekshad. Further they are fact dependant. Each case is likely to differ and any difference could be sufficient to lead to a different result.
37. I have considered the photographs of numbers 11 and 12, the plan, the user agreement and conclude that the judge was entitled to find as he did, namely that they were a house reasonably called. I therefore turn to what was, I believe, the primary submission of Miss Jackson that numbers 11 and 12 were not a house having regard to the exclusion provided by section 2(1)(b).
38. Miss Jackson submitted that there was a vertical division of the building down the party wall of numbers 11 and 12. I disagree. The building which can reasonably be called a house consists of numbers 11 and 12. The division advocated by Miss Jackson splits off the garage and utility room of number 11 from the rest of number 12. The division contemplated in section 2(1)(b) produces units, not parts of units. That was the basis of the reasoning in Malekshad. Lord Scott saw 27 Weymouth Mews and 76 Harley Street as vertically divided into two residential units. The division in this case does not produce the same result.
39. Lord Millett in paragraph 56 of his speech drew attention to a reason for section 2(1)(a). As he said:

"56. I have already expressed the view that No. 76 Harley Street and No. 27 Weymouth Mews taken together can be regarded as a single building. But Mr. Malekshad's claim to enfranchise both properties depends critically on its not being a building which is "divided vertically", in contradistinction to one which is "divided horizontally". The thinking behind the different treatment of the two cases is tolerably clear. The enfranchisement of part of a building has the effect of separating the freehold titles to different parts of a single structure. This is productive of considerable legal and other difficulties where the properties in different ownership lie one above the other; but not where they lie side by side. So-called "flying freeholds" are a relatively modern innovation and bring with them many problems which need to be resolved. These include but are not confined to problems of support. Who is to bear responsibility for the repair of the roof is another example. Terraces of freehold houses, by contrast, date back at least to the 18th century."

40. If Miss Jackson's submission is correct, the division would result in number 11 being a house with its premises consisting of the garage and utility room in number 12. That would produce just an effect that section 2(1)(a) was designed to avoid, namely the flat in number 12 as a flying freehold. That difficulty is avoided if the real position is accepted, namely that the utility room and garage of number 12 were part of number 11 both in practice and by design of both parties.
41. In my view the buildings are not divided vertically in the manner contemplated by section 2(1)(b). I therefore reject HDW's submission upon this issue.
42. I would dismiss the appeal.

Lord Justice Dyson:

43. I agree that this appeal should be dismissed. I add a few words of my own. In the light of the guidance given by the House of Lords in Malekshad, it is clear that there are two questions, viz: (a) whether Nos 11 and 12 Devonshire Mews South are a building that is a house "reasonably so called", and if so, (b) whether they are vertically divided from each other. Both questions are ones of fact. This is important, because unless the appellant can show that the judge misdirected himself, or reached a decision which was perverse, this appeal must fail.
44. As regards the first question, I agree with what Aldous LJ says at paras 35-37 of his judgment. Miss Jackson has not exposed any misdirection on the part of the judge, nor has she satisfied me that his decision was perverse. Indeed, far from it. One of the remarkable features of Miss Jackson's submissions on this issue is that the appellant required alterations to be made to Nos 11 and 12 to convert them into a single dwelling house, and these were carried out. And yet, it is said by Miss Jackson that it was not open to the judge to find that Nos 11 and 12 are a building which it is reasonable to call a house. It seems to me that, far from being plainly wrong on this issue, the judge clearly reached the right conclusion, despite his expressed unease in so doing.
45. As for the second question, it was conceded by Miss Jackson that it is a question of fact and degree whether a gap in a party wall is sufficient to prevent the wall being a vertical division between what lies on either side of it. It seems to me that it is not merely a question of assessing the size of the gap. Its significance is also relevant. In the present case, the gap is a door which leads to the utility room and integral garage to No 11. Miss Jackson submits that the garage should be left out of account in an assessment of the significance of the door in the wall. She refers to section 2(3) which provides that the reference to "premises" in Part I of the Act "is to be taken as referring to any garage, outhouse, garden, yard and appurtenances which at the relevant time are let to [the tenant] with the house and are occupied with and used for the purposes of the house…" In my view, the fact that "premises" includes a garage let with a house, does not mean that there are no circumstances in which a garage may not be part of a house. It seems to me that section 2(3) is directed at the situation where a garage, not being an integral part of the house reasonably so called, is let with the house. But where the garage is an integral part of the building which is a house reasonably so called, I see no reason to exclude it from consideration when addressing the question whether the house is vertically divided.
46. The judge did not ask himself the question in so many words: "are Nos 11 and 12 vertically divided?". He did not have the guidance of the House of Lords decision in Malekshad. But the finding at para 34.2 of his judgment is important. The judge viewed the property. Of the fact that access from No 11 to No 12 was via the patio and storeroom, he said: "the distance is small and the storeroom has a strong feel of being part and parcel of number 11 rather than some separate property". The distance to which he was referring was the distance from the patio door to No 11 to the door to the storeroom. The judge was clearly indicating that the storeroom at least was part of No 11. This alone meant that the case was very different from Malekshad on its facts. There is a real sense in which the party wall did not vertically divide No11 from No12. If one adds the integral garage to the storeroom, the case becomes even clearer.
47. For these reasons as well as those given by Aldous LJ, I too would dismiss this appeal.
Order: Appellant's appeal dismissed with an agreed order that the appellant should pay the respondent's costs of the appeal to the Court of Appeal agreed at £12, 133.04, such costs to be paid on or before 7^th May 2003. (Order does not form part of the approved judgment)