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10/08/15

When is a House not a House - A Review of the Case Law

  1. So far as I have been able to ascertain, the first case under the Leasehold Reform Act 1967 that came before the higher courts was Harris v Swick Securities Ltd[1]. The 1967 Act had come into force on 1st January 1968 and the judgment of the Court of Appeal tells us that the judgment at first instance was given on 19th November 1968. I think we can assume reasonably therefore that the claimant Mrs Harris would have made her claim fairly soon after the Act came into force.
  1. The building in that case was one of a terrace that had been built in Victorian times. As was then common the building had originally been constructed for occupation by a single family but had subsequently been converted so as to provide accommodation for four families. The appeal itself is not very interesting concerned as it was with whether occupation of part of the building was sufficient to comply with the requirements of the Act.
  1. The only point of interest was that the county court had found that the converted building was a house within the meaning of section 2 although that issue did not form part of the appeal to the Court of Appeal.
  1. A year later the case of Lake v Bennett[2] came before the Court of Appeal. The building in that case comprised a basement, a ground floor and two upper floors. Until 1962 the claimant’s father had occupied the whole building, although he had used the ground floor for his business as a shoe repairer. After his death his daughter continued to occupy the two upper floors and also the basement for ordinary living purposes but she sub-let the ground floor as a licensed betting office.
  1. At first instance Judge Lesley had held that it was not a house “reasonably so called”. A part of what he said was this:

“There was no evidence to show that a building such as this is commonly called a house and… I have formed the definite opinion that it would not be called a “house” in ordinary speech in the present century. A person looking for a house to buy would be surprised to be directed to 61 Gayton Road. On seeing it he would say: “I asked for a house and they have sent me to a shop. I have been misled” … I cannot imagine any reputable estate agent describing number 61 in its present condition as a house nor do I think that any ordinary man in the street would so describe it.”

It is worth bearing in mind these observations when we come to look at what the Judge said at first instance in Magnohard.

  1. In his judgment Lord Denning M.R. said that in his view parliament had adopted the definition of “house” that he had formulated in Ashbridge Investments Ltd v Minister of Housing and Local Government[3]. In that case he said[4] that a “house”, for the purpose of the Housing Act, “means a building which is constructed or adapted for use as, or for the purposes of, a dwelling”. Those words are indeed very similar to the words that appear in section 2(1) of the 1967 Act but with the added limitation “reasonably so called”.
  1. So the issue in Lake was: what is the limitation conveyed by the words “reasonably so called”? However having asked the question, Lord Denning did not attempt to define the limitation but simply applied himself to the particular facts of that building. He came to the conclusion: if the tenant occupied the building entirely by himself using the ground floor for his shop premises (as was the position before the death of the claimant’s father) then in his view the building would plainly be a house reasonably so called. If the tenant instead of using the ground floor himself for business purposes chose to sub-let it to some third party, that does not (said Lord Denning) alter the character of the building. It remains a house reasonably so called.
  1. In his short judgment Cross LJ made the rather interesting observation that the conclusion to which the county court Judge had come (namely that it was not reasonable to call the building a house) was not a conclusion to which he could reasonably have come and was a conclusion that it was wrong in law. It is difficult to follow that reasoning
  1. The most significant judgment came from Salmon LJ: significant because it was a judgment that played a very large part when the House of Lords came to consider the subsequent case of Tandon. Indeed much of what Lord Roskill had to say in Tandon is derived directly from what Salmon LJ said here.
  1. Lord Salmon considered that a building “designed or adapted for living in” brought in a very wide range of buildings and would include for example the Ritz Hotel or large purpose-built block of flats. He took the view that the Act was not intended to apply to such buildings: hence the words “reasonably so called”. The only question was whether it was reasonable to call the building a house. It might equally be reasonable to call it something else but that did not matter; the only question was whether it was reasonable to call it a house.
  1. He also said[5] that it is partly a question of fact and partly a question of law as to the true construction of the meaning of the word “house”. Salmon LJ said that, in Lake, there was no evidence on which it could be possible to uphold the finding that this building could not reasonably be called a house with its ground floor converted into a shop. However, again, this observation does not sit very comfortably with the county court Judge’s observation that there was no evidence to show that a building such as this was commonly called a house. That does strike me as being a question of fact and not one of law.
  1. Finally Salmon LJ did also invoke what he considered to be a purposeful construction and made an observation[6] on what he thought was the policy of the Act. This again is interesting when we come to look at the judgment in Tandon and indeed subsequently in Hosebay. What Salmon LJ said was that in his view the appellant (living in a building of this kind in those circumstances) was obviously the sort of person to whom the legislature intended to give security of tenure.
  1. The next case to come before the Court of Appeal was Peck v Anicar Properties Ltd[7]. It is not a case of great interest and did not add much to the development of the law. There were two adjoining buildings and the two ground floor shops had been joined up and used as one shop with a hole being knocked in the wall between the two shops. There were no openings in the party wall at the upper levels. The claimant had a lease of one building which he sought to enfranchise. The Court of Appeal (with Lord Denning MR again giving the leading judgment) held that he could do so. There was not a great deal of reasoning beyond the rather bold statement that this type of building was covered by Lake[8] and the fact that an opening had been made into the next door shop at ground floor level did not take the building outside the meaning of “house”. Presumably it was being suggested that the existence of the door did not alter the fundamental character of the building.
  1. Lord Denning did go to suggest[9] that there were three things to be looked at when considering the question of what is a house: (1) the lease itself (2) the portion occupied as a residence and (3) the physical condition of the structure. He repeated this proposition in the next case to come before the Court of Appeal: Wolf v. Crutchley[10]. Here there were two adjoining buildings, each subject to a separate long lease. The tenant (who lived in one of them and thereby claimed the freehold of it) made an opening in the party wall at first floor level and ran the two buildings together as a guest house. The issue was whether the building which was the subject of the claim had lost its identity as a house in consequence of the opening and the use. Applying this proposition, the court decided that it had not and the claim succeeded. The case was largely decided on factual evidence.
  1. The case Parsons v. Trustees of Smith’s Charity[11] was the first case on section 2 to reach the House of Lords, although ultimately it dealt with a very narrow point: namely, what was meant by the words “structurally detached” in section 2(2). The building comprised two adjoining mews houses with garages, part of one mews house over-hanging the garage of the other. It was held (unsurprisingly) that the words mean “detached from any other structure”. It does not mean simply separated by walls, ceiling, floors etc.
  1. Which then brings us to the case of Tandon v. Trustees of Spurgeons Homes[12]. The case is interesting for any number of reasons although I suggest that there are two main ones. First the issue between the parties (what is meant by a house “reasonably so called”) was a very finely balanced argument. The tenant succeeded at first instance, lost in the Court of Appeal[13] on a majority (2-1) but then succeeded in the House of Lords on a majority (3-2). Secondly, the judgment of the House of Lords formed the basis of many subsequent cases (particularly relating to mixed use property) until it was first reigned-in by the Court of Appeal in Magnohard and then largely emasculated by the Supreme Court in Hosebay.
  1. The building consisted of a shop with living accommodation above; the living accommodation and the shop were not (certainly at the date of the claim) self-contained parts. The living accommodation was accessible only from the shop. However the shop and flat were purpose-built; unlike Lake, the building was not a conversion.
  1. The Judge at first instance had found that the tenant was entitled to acquire the freehold. On appeal the majority (Watkins and Griffiths LJJ) held that, since the premises were purpose-built with only modest living accommodation and were part of a parade of buildings of a like character, they could not be a house reasonably so called. In his dissenting judgment Ormrod LJ said that the case could not properly be distinguished from Lake and that parliament had left the decision on the fine distinction of this type of case to the trial judge (interestingly something that was not applied in the case of Lake itself). Ormrod LJ felt bound to follow Lake although he did conclude[14] by saying that, without that case “as a guide”, he thought that he would have agreed with the majority.
  1. In his judgment Lord Roskill (who gave the only speech for the majority in the House of Lords) made two preliminary points. They were both fairly obvious. First the words “reasonably so called” were intended to be words of limitation. It is not sufficient for a building simply to be “designed or adapted for living in”; it also needs to be a house “reasonably so called”. Secondly the building does not need to be solely designed or adapted for living in. Lord Roskill said that these words suggested to him that parliament was intending to extend the benefits and privileges of the Act to tenants of premises which were not exclusively designed or adapted for living in for residential purposes.
  1. The question that Lord Roskill then went on to consider was: what are the circumstances in which the tenant of a building which is not solely designed or adapted for living in can bring himself within the Act? Lord Roskill accepted that the definition did not mean that every mixed use building necessarily came within the Act. The problem was trying to define some test to decide whether or not a particular mixed use building was within or without the definition.
  1. Much of the subsequent difficulties that followed from Tandon arose from the fact that considerable emphasis was placed on what Lord Roskill referred to as his “propositions of law”. These come towards the end of his judgment and I consider them below. Certainly before the judgment in Hosebay not very much consideration seems to have been paid to what Lord Roskill said before he reached those propositions.
  1. Earlier in his judgment he had accepted[15] three propositions which had apparently been agreed between the parties. First, the question of whether a particular building was a house within the Act was a mixed question of fact and law. This was what Salmon LJ had also said in his judgment in Lake. Secondly, the fact that premises might be called something other than a house did not in itself prevent those premises from being a house reasonably so called. Thirdly, the question of whether mixed use buildings could as a matter of law be a house depended on the character of the premises in question. Again this very much follows from what Lord Denning had said in Lake when he considered whether a third party (as opposed to the tenant) occupying the shop changed the character of the building.
  1. Having set out those propositions (which were similar to but by no means the same as the “propositions of law” that came towards the end of his judgment), he then asked the question: how is the character of the premises to be determined? He started by making the point[16] that he thought that the question needed to be determined at the date of the notice of claim. The history of the building might therefore have a part to play in so far as the character of the building might be reflected in its history. However that would not be conclusive. He thought the terms of the lease might also be relevant, as would be proportion of the premises used for residential/non-residential purposes and also the physical appearance of the premises. Again these points simply reflect what Lord Denning said in Lake; in effect the judgment in Lake was approved.
  1. We then come to the part of Lord Roskill’s judgment[17] which, until the decision of the Supreme Court in Hosebay, had not received very much attention. It is worth setting it out:

“Tenants who live over the shop are not to be denied the right conferred by the Act ……. merely because the building in which they work and live accommodated the two uses.”

“Small corner shops and terrace shops combined with living accommodation are to be found in almost every town and village in England and Wales. Parliament plainly intended that a tenant who occupied such premises as his residence should have the benefit of the Act if the building could reasonably be called a “house”.”

As we shall come to see when we look at Hosebay, this part of the judgment has now assumed great significance.

  1. Lord Roskill concluded his judgment[18] by welcoming the decision in Lake “as stating a principle and confining[19] the question of fact to a narrow area”. He deduced from Lake[20] what he called the following propositions of law. First, as long as a building of mixed use can reasonably be called a house, it is within a statutory meaning of a house even though it may also reasonably be called something else. Secondly, it is a question of law whether it is reasonable to call a building a house. This is an odd proposition given that Salmon LJ had said in Lake that it was a mixed question of fact and law; the same point being made by Lord Roskill earlier in his judgment. Thirdly, if a building is designed or adapted for living in (which Lord Roskill said meant designed or adapted for occupation as a residence) only exceptional circumstances (which he found hard to envisage) would justify a judge in holding that it could not reasonably be called a house. It is, as we shall see, this third proposition of law which subsequently opened the gates to the enfranchisement, not only of substantial mixed-use buildings (which I would suggest that, in the real world, nobody would reasonably call a house) to buildings used wholly for commercial purposes. It was argued that the true construction of this so-called proposition was that, once a building was found to be “designed or adapted for living in” (either in whole or in part), then it would take exceptional circumstances for the building not to be a house reasonably so called. It was not until the judgment of the Court of Appeal in Magnohard and the subsequent decision of the Supreme Court in Hosebay that this proposition was substantially reinterpreted.
  1. What is interesting if you look at the judgments in Lake and Tandon is that it is very difficult to find much of a test at all. Looked at objectively, all the judges seem largely to have been doing is applying their own view of whether or not it is reasonable to call a building a house. For a long time I was of the view that Tandon had been wrongly decided but I am not sure if that is right. Tandon was clearly a border-line case which should have set the limit as to what could reasonably be called a house. However, the judgment was so misunderstood (and subsequently misapplied) that it actually became the starting point from which to push out the boundaries of eligibility to buildings which in reality could not possibly be reasonably called a house.
  1. I have to say that I find the dissenting judgment of Lord Wilberforce a great deal more convincing and, bearing in mind his reputation in the field of land law, that is not perhaps entirely surprising.
  1. There is much reference both in Lake and in Tandon to the “character” of the building, although no real consistency of guidance how you ascertain that character. In his judgment in Lake[21], Lord Denning was very much concerned with the character of the building but said nothing about the factors that might contribute to that character. Salmon LJ did not refer specifically to character but did agree with the judgment of Lord Denning. In giving judgment in the Court of Appeal in Tandon Griffiths LJ said[22] that in his view the premises in Lake were of “a markedly different character from the present premises”; he seemed to be basing his judgment on appearance “looking at photographs”; the structure (“a purpose-built shop with living accommodation above it”); and the setting (“part of a parade of such shops”). Watkins LJ agreed. In the House of Lords in Tandon Lord Wilberforce (in his dissenting judgment) also talked about the character of the building[23] and relied primarily on user (“it is the user at the date of the application to enfranchise that matters”), with some help from appearance/structure (“the nature of the building”) and “to some extent” its history. It is interesting that, by the time we get to Hosebay, it is user that becomes the determinant factor.
  1. Lord Fraser (also giving a dissenting judgment) said that the limitation of being a house “reasonably so called” directs attention to the character of the building. He took the view that the main element in the character was the building’s appearance although regard should also be had to the setting of the building and also the proportion of residential use to the non-residential use[24]. He left open that there might be other factors contributing to character in other cases. As we have seen above, Lord Roskill said that he thought character might be reflected in the history although the terms of the lease would be relevant as would be the proportion of residential/non-residential use and also the physical appearance of the property.
  1. There is one other little curiosity in Tandon. In the head note, it is said to have been decided per curiam:

“It is imperative if the law is be evenly and justly administered that there should be not only uniformity in principle in the approach of the courts to the question whether a building can reasonably be called a “house” but a broad consistency in the conclusions reached”.

That was certainly the view of the majority in Tandon but it is difficult to see how that could be said to be the view of Lord Wilberforce[25].

  1. In Sharpe v. Duke Street Securities[26] the Court of Appeal had to consider the position of a building which had been constructed as two maisonettes, one on the ground floor and the other on the first floor. Each maisonette had its own front door and those two doors were side-by-side in the front poach. Both maisonettes subsequently came into single ownership and the lessee put a door in the dividing wall of the downstairs hall of the upper flat and used the whole of the building as a residence for himself and his family.
  1. The Court of Appeal accepted that there had to be a determination of the character of the building at the date of the claim. As part of that exercise, Fox LJ had regard to the internal access arrangements and to the user (for the purpose of habitation with the continued user as a single dwelling over several years) to justify the court’s conclusion that the building could reasonably be called a house.
  1. In Malpas v St Ermin’s Property Company Ltd[27] the Court of Appeal had to consider a similar building. It was thought to have been constructed as part of a terrace in 1905 as a pair of adjoining maisonettes (the history was not entirely clear and it is possible that they were converted in the early 1920s from a single residence into a pair of maisonettes). Again there were two front doors and two back doors. However in contrast to the case of Sharpe the two maisonettes had retained their identities with the claimant living in one of them and an unconnected undertenant living in the other.
  1. In a relatively short judgment, Dillon LJ had regard to two factors in coming to the conclusion that it was reasonable to call the building a house. First it was to his mind quite plain looking at the photographs that the building could reasonably be called a house – notwithstanding that it had two front doors and two back doors. He also noted that the building was described in the lease as being a “messuage or dwellinghouse” and, if the draftsman of the lease could give the building that appellation, then it was not for Dillon LJ to disagree with it.
  1. I suggest that Malpas was wrongly decided, particularly in the light of the judgment in Hosebay. Although Dillon LJ was clearly very influenced by the judgment in Sharpe[28], it should be remembered that Sharpe was decided largely on the basis of user whereas Malpas was decided primarily on the basis of appearance.
  1. In Duke of Westminster v Birrane[29] the Court of Appeal had to consider the meaning of “material” in the context of section 2(2). In that case the house included a basement which ran under an adjoining building. Although it was acknowledged in Parsons that the meaning of “material” was open to discussion, Lord Wilberforce (who gave the only judgment) had not been tempted by that discussion since on the facts of Parsons both parties had agreed that the overhang was material whatever the test. He thought however that it was an issue which was “largely factual and one of common sense”[30].
  1. In the Court of Appeal in Parsons both Lord Denning and Stephenson LJ had had something to say about “material”. Lord Denning said he thought it meant an “important part” (without asking the questions: important to whom?; important to what?). Stephenson LJ said he thought it must mean “material to the tenant or to his enjoyment of the house”. He thought materiality would be looked at in the context of whether the premises became a flat rather than a house in consequence of the over/under-hang. It was a question of “fact and degree” which primarily should be decided by the judge.
  1. In Birrane Nourse LJ explored the questions that the Court of Appeal had rather side stepped in Parsons. He said that parliament must have intended that the part of the house, in order to be material, would need to be of sufficient substance or significance to have an effect of some kind. He asked himself the question: what might that effect be? He thought the primary purpose of section 2(2) was to exclude from the operation of the Act houses in respect of which the inability of one freehold owner to enforce a positive obligation against successors in title of the other would be likely to prejudice the enjoyment of the house or another party of the structure. That was the test that he had imposed, although, as we shall see it was not a test accepted by the House of Lords in the subsequent case of Malekshad.
  1. There were two principal issues that the court needed to determine in Malekshad v Howard de Walden[31]. The building in that case comprised a substantial house with the basement area lying beneath the adjoining mews property. The whole property had originally been built for occupation by a single household. Both the main house and the mews house were included under a single headlease. The claim was in respect of the whole of the property demised. The first question was therefore whether that whole property was a “house”. If not, there was a second question whether either the main house and/or the mews house was a “house” in its own right in the context of whether the under/over-hang between the two was “material”.
  1. The House of Lords held that the premises as a whole were not a “house” because there was a vertical division to bring the whole within section 2(1)(b). The court also held (with Lord Hobhouse dissenting) that the question of what constituted a “material part” was to be determined by comparison of that part with the entirety of the house sought to be enfranchised and not by reference to any special use made of the part by the tenant or its significance to the structurally attached property.
  1. All five law lords had something to say and some of them strayed beyond looking simply at section 2(1)(b) and section 2(2), to have regard to the wider issues under section 2(1).
  1. Lord Hope said that section 2(1) dealt with both use and structure. The first part of the sub-section (“designed or adapted for living in and reasonably so called”) in his view addresses the issue of user[32]. It does not deal with the issue of structure. Lord Hope said that that is covered by paragraphs (a) and (b) of section 2(1): the first dealing with buildings which were divided horizontally and the second dealing with buildings which were divided vertically. Lord Hobhouse agreed with Lord Hope’s analysis of section 2(1)[33]. Lord Millett decided that the requirement for a building to be “designed or adapted for living in” was “self-explanatory”[34]; a finding that must have come back to haunt him. He noted that the words “a house reasonably so called” are words of limitation which serve to exclude from the statutory definition of a house and premises, buildings which would otherwise fall within it but which could not reasonably be called a house. You cannot bring within the statutory definition premises which are outside it, even if it was reasonable to call those premises a house. The point he was making was that you do not ignore paragraphs (a) and (b) simply because it might be reasonable to call the building a house. It is necessary to first apply paragraphs (a) and (b) and then consider whether in the context of that application the building is a house “reasonably so called”. Lord Scott also considered section 2(1) as a whole although said nothing of great relevance.
  1. Their Lordships held that the building as a whole was not a house within the meaning of the Act because it fell within section 2(1)(b). Although the vertical line of separation in that case was not precisely vertical, that was not a requirement of the Act. It was not necessary for the line of separation to be unbroken to the extent that it was not necessary for it to lie in a single plane. It is not the geometric characteristics of the line of separation which matter; a building is divided vertically if it is divided from top to bottom[35]. The same analysis would apply to a horizontal division in section 2(1)(a).
  1. As regards the issue of materiality in section 2(2) Lord Hobhouse was the lone dissenting voice who preferred the reasoning and decision of Nourse LJ in Birrane. The other four law lords were unanimous in their view that the issue of materiality needed to be considered in the context of the house alone and not by reference either to the whole building or to the rest of the structure to which the house is attached. Lord Nicholls, Lord Hope and Lord Millett seemed to think that the test was concerned with structure and layout and had nothing to do with use. However Lord Scott had a rather wider set of factors including relative size; price enhancing quality; support and protection and perhaps some special use. He thought that in particular circumstances there might also be other factors.
  1. Collins v Howard de Walden Estates Ltd[36] concerned two adjoining mews houses which had been converted internally to provide accommodation as a single house, a use that was prescribed by the lease. The court adopted Lord Hope’s reasoning in Malekshad on the construction of section 2(1); since the building was adapted for use as a single residence and that was the prescribed use under the lease, it was clearly reasonable to call the building a house.
  1. The Commonhold and Leasehold Reform Act 2002 had a very significant impact on claims under the 1967 Act. Primarily this was because that Act removed the residency requirement for a claim which had previously existed. Before the 2002 Act came into force it was a precondition of any claim under the 1967 Act that the tenant had to have occupied the house as his only or main home for a prescribed period. That requirement was abolished. The consequence was that there was now much greater focus on what was meant by the words “designed or adapted for living in”. Before the 2002 Act this was not a difficult concept because it was a condition of any claim that the tenant had to be living in the building. But what did “designed or adapted for living in” mean if nobody was actually living in the building?
  1. This was the issue that came before the House of Lords in Boss Holdings Ltd v Grosvenor West End Properties Ltd[37]. The case concerned a six-storey building in a grand terrace of buildings in Mayfair. It had originally been built as a single house but had subsequently been altered so that the three upper floors were fitted out for residential use and the three lower floors for commercial use. By the time of the claim the property was vacant. The rooms on the three upper floors had been stripped back to the basic structure and were wholly incapable of being occupied. It was accepted (perhaps with the benefit of hindsight, with some regret) that the building was a “house reasonably so called” in the event that the Court decided that the building was “designed or adapted for living in”. The judge at first instance held that the building was not “designed or adapted for living in”. The Court of Appeal[38] dismissed the appeal.
  1. The Court of Appeal endorsed the judgment of the county court. What Judge Cowell QC had said was:

“It seems to me that some design or adaptation for living in must be demonstrated by the premises themselves. What precisely has to be shown is of course a matter of degree depending upon many factors such as the size of the property occupied, but ordinarily what is involved is somewhere to sleep, to cook, to wash and simply to be when not out at work or out otherwise…..

“…..the words “designed or adapted for living in” must refer to the physical state of the building and, secondly, the words relate to the then present state of the property at the time that the notice is given…..”

  1. In a short judgment of his own, Carnwath LJ expressed the view[39] (contrary to a submission made by Counsel for the Respondent) that in construing section 2(1) it was necessary to look at the Act as amended and not be concerned with what Parliament intended in 1967.

“Looking back on the earlier cases, it is clear that the former residence condition affected the balance of the arguments. That having disappeared, attention is focussed on the central part of the section 2 definitions and undoubtedly the character of the argument is affected by that. It seems to me that we must look at the Act as it now stands.”

  1. The House of Lords decided that this approach was wrong. Giving the sole judgment, Lord Neuberger said this[40]

“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 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”.

Whether or not a property was physically capable of being lived in at the date of the notice had nothing to do with it. The test was primarily concerned with the physical state of the property.

  1. Lord Neuberger went on to ponder[41] the question whether a property would still be a house within the meaning of the Act if it had been designed for living in but had subsequently been adapted to another use. He did not decide the point but suggested that: “As a matter of literal language, such a property would be a house, because “designed” and “adapted” appeared to be alternative qualifying requirements”. In effect what he was saying was: “once a house, always a house”
  1. Lord Neuberger also did not agree with the observation of Carnwath LJ set out in paragraph 49 above. He said that the construction of section 2(1) – which remains un-amended from 1967 – could not be affected by changes to other provisions of the same statute[42].
  1. At this point it is also worth mentioning the sister case to Boss – Mallett & Son (Antiques) Ltd v Grosvenor West End Properties Ltd[43]. The case was conjoined with Boss in the Court of Appeal. The building in that case had originally been constructed as a large private residence in central London but had subsequently been adapted for use as workshops, storage and showrooms for the business of dealing in antique furniture. There was a small caretaker’s flat on the top floor, comprising approximately 5% of the floor space. The whole property was used for business purposes and the judge found that as such the building was not at the date of the notice either designed or adapted for living in. The Court of Appeal agreed; the building in that case was “manifestly adapted for commercial use”. Although the tenant obtained permission to appeal to the House of Lords, the case settled and the appeal was not pursued. It should also be noted that at first instance, the judge had held that the building in Mallett was a house reasonably so called, in the event that it was decided that he was wrong that it was not “designed or adapted for living in”, feeling constrained to do so in light of the judgment of Lord Roskill in Tandon.
  1. This was the high water mark for tenants. Boss appeared to consider favourably the argument that a building which had originally be designed for living in but had subsequently been adapted to and remained in some other use (e.g. a commercial use) would be a house and, applying Lord Roskill’s third “proposition of law”, it would arguably be reasonable to call that building a house. Landlords became fearful of the future of their mixed use and commercial properties and there was much talk of cases being taken to Europe and lobbying for a change in the law.
  1. Prospect Estates Ltd v. Grosvenor Estate Belgravia[44] was the next case to reach the Court of Appeal. This building, in Belgravia, had originally been constructed as a house. At the date of the claim however 88.5% of the building was used for offices; the remaining 11.5% comprised a flat on the fourth floor. The building had retained most of its original architectural and structural features and externally still looked like a house. At first instance, the judge found that “… notwithstanding the office user of the majority of the building, its essential character is that of a house”. In consequence, the judge held that it was reasonable to call the building a house. Again, he was very much swayed by Lord Roskill’s third “proposition of law”.
  1. The Court of Appeal allowed the landlord’s appeal. In his judgment, Mummery LJ applied Lord Roskill’s propositions but said this[45]:

“In my judgment, the judge applied Lord Roskill’s propositions without taking full account of all the relevant circumstances. The propositions are not a statutory text and were never intended to be understood or applied as such. The judge paid insufficient attention to the peculiar, even exceptional, circumstances of prescribed and predominate office use in compliance with the lease. That circumstance is, in my view, the overwhelming and decisive feature of this case.

The original design and the unchanged external and internal appearance of the building featured too prominently in the judge’s reasons. If he had given due weight to the prescriptive terms of the lease, the actual uses of the building and the relative proportions of the mixed-use at the relevant date, he could only have come to one conclusion: that it was no longer reasonable to call the building a house within the 1967 Act”

  1. All these cases were concerned primarily with the question: what is a house reasonably so called where the building “was or is not solely designed for living in”; in effect mixed use buildings. The next case to come before the Court of Appeal was Hosebay but before looking at that, I would like to consider briefly a case concerned with a different element of section 2(1); what is a house reasonably so called, in circumstances where the building is divided horizontally into flats or maisonettes.
  1. The building in Magnohard Ltd v. Earl Cadogan[46] comprised a substantial corner block in Chelsea, over basement, ground and five upper floors. It had originally been constructed as a mixed block of flats (there were eight flats at the date of the claim) with three small shops on the ground floor. The judge at first instance said that her task was to arrive at a conclusion about the character of the building. She accepted that, if you could reasonably call the building a house, then it did not matter whether you could also reasonably call it something else. However, if the building could only be called a house by straining the concept or straining the use of language, then it would not be reasonable to call it a house. She said this:

“When I ask myself what this building is, my immediate reaction is: “it’s a block of flats.” …. It is not a house divided into flats. It is constructed and it is used as a block of flats. …. if I were to ask someone “what would you call this building” and they were to respond “a house”, my eyebrows would naturally rise and I would think this odd”

She concluded that it was not reasonable to call this building a house in any circumstances, let alone in ordinary parlance.

  1. The Court of Appeal dismissed the tenant’s appeal. As was said by Lord Neuberger MR[47]:

“A building constructed, laid out and used as a block of substantial self-contained flats throughout its 120 years of existence cannot reasonably be called a house – at least in the absence of very unusual factors.”

He also made an interesting observation as regards Lord Roskill’s third “proposition of law”. Lord Neuberger suggested that Lord Roskill’s “exceptional circumstances, which I find hard to envisage” were intended to apply only where the building was designed or adapted for living as a single residence, not in circumstances of multiple residences[48].

  1. The case of Day v Hosebay Ltd[49] concerned three buildings, originally designed as single houses, which had been used since at least 1981 so as to provide individual rooms with self-catering facilities—described by the judge at first instance as a “self-catering hotel”. In the case of Howard de Walden Estates Ltd v. Lexgorge Ltd[50], the building, which had also been originally designed as a single house, had been used wholly as offices since 1961. In both cases, the actual user did not accord with the user covenants in the leases. In Hosebay, the landlord contended that the buildings were neither “designed or adapted for living in” nor a house “reasonably so called”. In Lexgorge it was conceded (with the benefit of hindsight, probably unnecessarily) that the building was “designed or adapted for living in” but contested whether the building was a house “reasonably so called”.
  1. The county court judge in Hosebay decided both points in favour of the tenant. She did not feel obliged to follow Lord Neuberger’s musings at paragraph 51 above. However, she did decide that the buildings were “designed or adapted for living in” notwithstanding the fact that she thought “living in” meant occupation with a degree of permanence. She suggested that Judge Cowell had described the concept effectively in his first instance decision in Boss (see paragraph 48 above). She also found that the buildings were each houses reasonably so called, simply applying Lord Roskill’s third “proposition of law”. The county court judge in Lexgorge also found that the building in that case was a house reasonably so called although he applied more of a character test in reaching that conclusion.
  1. The appeals[51] were held jointly and in each case dismissed. Giving judgment, Lord Neuberger MR found that each of the buildings in Hosebay was “designed or adapted for living in”. He said that this was primarily a physical test. He did not think that either actual or past use would be of any significant relevance in determining this issue. He said that in order to determine whether premises are adapted for living in, it is necessary to look at the most recent works of adaptation and assess objectively whether they resulted in the property being adapted for living in.
  1. He did however reject his earlier thought on “once a house, always a house” – see paragraph 51 above – and accepted that, just as a building might be adapted to “living in”, it could equally be adapted away from “living in”[52]. It was also held that the properties were each a house reasonably so called. The question whether a building is a house reasonably so called is to be determined essentially by reference to its external and internal physical character and appearance. It was the same conclusion in Lexgorge. In reaching that conclusion, Lord Neuberger had regard to the building’s external character and appearance, its internal character and appearance, the description of the property in the lease as “messuage or residential or professional premises”, and the terms of the lease (restricting the use of the upper two floors to residential). Furthermore, Lord Roskill’s third “proposition of law” “appears to present the landlords with a high hurdle to cross.”[53] Lord Neuberger was also fairly scathing about the judgment in Prospect – see paragraph 56 above – and suggested that the ratio “should be treated as being limited to a case where residential use is either prohibited entirely, or restricted to a very small part of the building, and the actual use accords with that.”[54]
  1. The appeals in Hosebay and Lexgorge were heard together by the Supreme Court in July 2012. Lord Carnwath gave the judgment of the Court. He started his judgment by stating that on its face the 1967 Act is a statute about houses not commercial buildings[55]. He noted that Lord Neuberger in his judgment in the Court of Appeal had reached his conclusion (that buildings used wholly for commercial purposes could nevertheless be houses for the purpose of the Act) with regret but had felt bound to come to that conclusion in consequence of the strict wording of the Act. He had also suggested that there were no obvious policy considerations that would drive him to a different conclusion.
  1. Lord Carnwath took the opposing view. He said that there was no evidence to suggest that there was ever any intention to extend the scope of the Act beyond residential property and he could certainly find nothing to suggest that it was parliament’s intention to confer statutory rights on lessees of buildings used purely for non-residential purposes[56].
  2. In particular he said this[57]:
    “The two parts of the definition are in a sense “belt and braces”: complimentary and overlapping but both needing to be satisfied. The first … (“designed or adapted for living in”) ….looks to the identity or function of the building based on its physical characteristics. The second…. (“house… reasonably so called”) ….ties the definition to the primary meaning of “house” as a single residence, as opposed to say a hostel or block of flats; but that in turn is qualified by the specific provision relating to houses divided horizontally. Both parts need to be read in the context of a statute which is about houses as places to live in, not about houses as pieces of architecture, or features in street scene, or names in an address book.”

    1. Having set that scene, Lord Carnwath then considered the authorities. He accepted that the first part of the definition had indeed been drawn from Lord Denning’s judgment in Lord Denning was expressing the present identity or function of a building (not currently in use), defined by reference to the purpose of its construction or subsequent adaptation. It follows that “designed or adapted for living in” looks to the identity or function of the building as a house by reference to its current physical character, whether that is derived from its original design or from subsequent adaptation. Where a building is in active and settled use for a particular purpose, then it is likely that it has undergone at least some physical adaptation to make it suitable for that purpose. In most cases that can be taken as the use for which it is currently adapted and that use will define its identity or function. If the building is empty and/or dilapidated (as in the case of Boss) then it will not lose its identity as a building “designed or adapted for living in” merely in consequence of that use ceasing, unless it is has subsequently lost that identity by, for example, being put to another use.
    1. Lord Carnwath came to no final conclusion as to whether the buildings in Hosebay were “designed or adapted for living in”. He did not need to because (as we shall see) he decided that they were not houses reasonably so called. However, he did accept that “living in” means something more settled than “staying in”[58] and said that in the case of Hosebay use as a “self-catering hotel” did not qualify as such. However there was evidence to suggest that the last adaptation had not been solely for such use, to the exclusion of longer term occupation. Such issues however would be factual, to be decided on the evidence.
    1. The Supreme Court allowed both appeals on the ground that a property wholly in commercial use could not be a house reasonably so called. “The fact that the buildings might look like houses and might be referred to as houses for some purposes is not in my view sufficient to displace the fact that their use was entirely commercial”[59]. A similar point was made in respect of Lexgorge: “The fact that it was designed as a house and is still described as a house for many purposes including in architectural histories is beside the point”.[60]
    1. The Supreme Court also reviewed the judgments in Lake, Tandon, Boss and Of course all these cases dealt with mixed use properties, which was not the issue in either Hosebay or Lexgorge. In both those cases, the buildings were used wholly for commercial purposes.
    1. Lord Carnwath said that the reasoning of the single majority speech of Lord Roskill in Tandon was not without difficulty[61]. In particular, he had considerable difficulty with the so-called “propositions of law”[62]. As regards the first proposition, it would certainly not be enough to say that, simply because somebody might describe the building as a “house”, it would thereby be a house “reasonably so called”. It would have to be reasonable to call it a house in the context of what people ordinarily think of as being a house; i.e. a building in single residence. He did not think that anything very helpful could be derived from the second proposition – the extent to which the issue was one of fact and/or law.
    1. As regards the third proposition, Lord Carnwath thought that this was no more than an expression of Lord Roskill’s own view as to the correct policy approach to a mixed use building which was adapted at least in part for occupation as a residence. Indeed Lord Carnwath developed this theme that both Lake and Tandon were largely decided on the grounds of policy; a belief that parliament had intended that the tenant living above the shop in buildings comprising small shops combined with living accommodation was the sort of person to whom the legislature intended to give rights[63].
    1. Lord Carnwath decided that the determinative points in Tandon were: first, the proportion of residential use and secondly, the fact that the tenant occupied the building as his residence in a way that he considered to be within the scope of the protection offered by parliament. The principle established in Lake was that a tenant living above a shop was the sort of person to whom parliament intended to give rights and the building in Tandon came within that policy[64].
    1. Turning to Boss, Lord Carnwath agreed that Lord Neuberger had been right to have second thoughts about his “once a house; always a house” proposition[65]. It follows that a building originally designed for living in but subsequently adapted for some other purpose will not be “designed or adapted for living in” unless it was subsequently re-adapted for that purpose. Lord Carnwath had difficulty with Lord Neuberger’s “literalist” approach to the definition. As we have seen above he was more drawn to Ashbridge[66]. Incidentally, Lord Carnwath did not give any special weight to the word “adapted”: he suggested that it meant “made suitable”. The word is applied to the building (rather than its contents) but there is no implication of any particular degree of structural change required to the building. It appears therefore that a relatively minor degree of adaptation to a non-residential use can mean that a building will no longer be “designed or adapted for living in”.
    1. As regards Prospect, Lord Carnwath rejected the criticisms levelled at it by Lord Neuberger in his judgment in the Court of Appeal in Hosebay[67]. He took the view that Prospect was rightly decided and that the ratio should not be limited in the way that Lord Neuberger had proposed. In so far as Mummery LJ had treated the use of the building (rather than its physical appearance) as determinative, Lord Carnwath considered that that was entirely consistent with the reasoning of the majority in Tandon.
    1. Since Hosebay, there has been one further case to come before the Court of Appeal. In Henley v Cohen[68] the court was concerned with a two-storey building (in a parade) with a card shop on the ground floor and a recently converted flat above. The shop and the flat were physically separate and each was separately sub-let. The flat had only recently been converted for that purpose (in breach of the covenants in the lease), having previously been used for storage.
    1. It was common ground that, if the conversion of the upper floor was taken into account, then the building would be “adapted for living in”. However the Court decided that the tenant could not claim a right under the 1967 Act which arose solely in consequence of his wrong. As the Court of Appeal put it “as a matter of statutory construction it cannot have been intended by parliament to give the lessee the right to enfranchise by making in breach of covenant the very adaptation of the building for living in that is necessary for him to exercise the right”[69].
    1. In any event the court also decided that, even if the building was “designed or adapted for living in”, it was not a house reasonably so called. Primarily the basis of the judgment was to distinguish the building from that in Tandon, where the living accommodation above the shop was physically connected with the shop unit below[70]. The court endorsed the finding of the judge at first instance that it was not reasonable to call a building a house, primarily because of the complete isolation of the first floor from the ground floor.
    1. There have been to my knowledge two subsequent county court decisions relating to mixed use properties. The first of these is Brightbest Ltd v Meyrick[71]. This case was concerned with two separate claims affecting two derelict buildings. The main building had originally been constructed as a house and subsequently converted to a hostel comprising 23 units; it was derelict and unoccupied at the date of the claim. It was held that such a building was not a house reasonably so called. The building was found to a hostel and the judge decided that the terms hostel and house were mutually exclusive[72]. The second claim related to a cottage which had originally been constructed as a coach house and was subsequently converted into two self-contained flats with no shared common parts and no internal connection. The judge also held that this cottage was not a house reasonably so called; it had never had the character of a house. Since its conversion from a coach house, it had the character of a small block of two flats[73].
    1. The second case is Jewelcroft Ltd v Pressland[74]. This case was concerned with a shop in a parade with a separate flat above. The property had originally been built with an internal connection but 40 years previously this had been removed and access to the first floor was via a rear external staircase only. The judge decided that no one could reasonably call it a house.
    1. So what can we derive from all this rather confusing case law.
    1. The words in the definition in section 2(1) that cause all the trouble are first “notwithstanding that the building… was or is not solely designed or adapted for living in” and secondly “notwithstanding that the building… is divided horizontally into flats or maisonettes”. The first set of words mean that mixed use buildings can come within the Act. The second means that buildings in more than one occupation can also come within the Act.
    1. Whether a building is designed or adapted for living in is to be determined at the date of the claim. In order to make that determination it is necessary to look at the identity or function of the building based on its physical characteristics. That present identity or function can in most cases be ascertained from the active and settled use of the building at the date of the claim. That active and settled use will, unless there is evidence to the contrary, determine the purpose of the design or later adaptation. Design or adaptation is clearly an issue of structure but the purpose of that design or adaptation will be an issue of use. The word “adapt” does not require any particular degree of structural change but it must be something more than simply changing furniture or contents. “Living in” means something more than just “staying in” – it connotes “a residence” of some kind. I suggest that the definition given by Judge Cowell in Boss, effectively adopted by HH Judge Williamson QC at first instance in Hosebay and then effectively approved by the Supreme Court is Hosebay – see paragraph 48 above – “… ordinarily what is involved is 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 is commonly provided by a bedroom, a kitchen, a bathroom and WC and maybe a living room of some kind.” 
    1. The question of what constitutes a house reasonably so called is undoubtedly more difficult. However I would emphasise again what the Supreme Court said in Hosebay; these words “… tie the definition to the primary meaning of “house” as a single residence”. That must be the starting point. If you delete the words “notwithstanding…” onwards so that a house is simply defined as “any building designed or adapted for living in and reasonably so called” then I suggest that there would be no issue as to whether a mixed use building or a building divided into flats or maisonettes would come within the definition. It would not. The words following “notwithstanding…” were added to demonstrate that there are some particular types of building that would not normally be called a house but could nevertheless be brought within the definition (as a matter of explicit policy) by extension. So a mixed use building could come within the definition if it was still reasonable to call it a house (i.e. it retained the characteristics and identity of a house) – the same would apply to a house divided into flats or maisonettes.
    1. Let us look again at these significant cases on the basis of that analysis. In Lake the building had not lost its identity as a house (a building in single occupation) merely because the ground floor had been converted to a commercial use. By far the overwhelming part of the building continued to be used as a house and the building retained its overall identity of a house. In any event, Salmon LJ made clear in his judgment that the policy of the Act was to assist a tenant “living in a house of this kind in these circumstances”. Tandon is very much the same. Lord Roskill famously noted that small shops combined with living accommodation were a familiar feature of towns and villages across the country – in his view it was the policy of the Act to give rights to tenants of such buildings. In addition a significant proportion of the building was in residential use. The building in Tandon was a single unit in single occupation albeit with mixed use.
    1. A building in single residential occupation will obviously be a house reasonably so called. I suggest that such a building with perhaps a granny flat or staff accommodation would also continue to be a “house reasonably so called”. However can it really be said that a building originally constructed as a house but subsequently gutted and converted into say four, five or six flats remains a house reasonably so called? How does such a building retain its identity as a house in the context of the primary meaning of the word as a single residence?
    1. In my view, it is arguable that a building originally constructed as flats can never (save perhaps in exceptional circumstances) be a house reasonably so called. It will never have had the identity of a house as a single residence.
    1. As was made clear by the House of Lords in Boss, parliament would not have intended that the meaning of section 2(1) should change (there have never been any changes to that section) as a result of amendments to other provisions of the same statute. Accordingly it becomes necessary to construe section 2(1) in the context of its original enactment. When doing that is should also be remembered that the situation that existed in 1967 was very different from the situation that exists today. The great expansion of flats in Central London had not yet started and flats let on long leases were still a relative rarity. London in particular remained dominated by large houses and although in a changing world lessees and others were finding it increasingly difficult to maintain such large houses, it was not really until 1970s that the large scale conversion of houses into flats started. I raise this because if we are to look at Hansard (which I propose to do) then the debates need to be considered in this context. I will leave it to others to decide whether or not such material would be permitted to be put before the court under the rule in Pepper v Hart[75] but of course in the context of this lecture I suffer no such inhibitions.
    1. Section 2(1) in its present form was introduced by amendment on 20th June 1967. Arthur Skeffington MP (Parliamentary Secretary to the Minister of Housing and Local Government) who proposed the amendment said this by way of explanation[76]:

    “When the Committee agreed to the removal of the words in relation to a house being so divided as to be unsuitable for one occupation, it became clear that, although we had been doing the correct thing, as the government thought, in bringing in a leaseholder who had made a proper conversion, we were at the same time by the wording of the Clause, running some risk that the other type of leaseholder would fail to qualify. Hence the present redraft of Clause 2 which, while not dealing exhaustively with “house”, gives it a wide meaning to include, first converted property. This could be a converted mews or in the country a barn or oast house or perhaps a purpose built dwelling and shop combined.

    It has always been the government’s intention that mixed premises of this type should be covered by the Bill. This also includes, not purpose-built flats which are excluded, but old property which has been the subject of a lease and which has been converted into flats. These are now within the definition of the new sub-section (1). Paragraph (a) enables a leaseholder to count as a house, a house which has been converted into flats or maisonettes. An individual flat will not count as a house so a leaseholder can compulsorily enfranchise the whole building as long as he has the long lease of it and can live in one flat himself.

    1. There are a couple of points to be made here. First we can perhaps see from this where Lord Roskill derived the view that a “purpose built dwelling and shop combined” is within the policy of the Act. Secondly, it was clearly not the intended policy to include purpose built flats.
    2. When the Bill reached the House of Lords, Wing Commander Lord Shackleton (Minister without Portfolio) said pretty much the same thing. Referring to clause 2 of the Bill he said this in the context of what was meant by the word “house”:
      “It gives a wide meaning to the word to include converted property – for example a converted mews, a converted barn or oast house – purpose built dwelling and shop combined and a house which since it was built has been divided into flats.”

      1. So if I look at the authorities in the context of these statements, I suggest that they give rise to the following propositions:
      1. A long and settled use will generally be determinative of whether or not a building is designed or adapted (“made suitable”) for living in.
      1. “Living in” means something more than just “staying in”
      1. A building originally designed or subsequently adapted for living in (as opposed to staying in) as a single residence will (other than in exceptional circumstances) be a house reasonably so called.
      1. A building originally designed or subsequently adapted for a wholly commercial use will never be a house reasonably so called.
      1. It is not whether it is possible to call a building a house but whether it is reasonable to do so, notwithstanding that it may also be reasonable to call it something else.
      1. A building originally designed or subsequently adapted for a mixed use will be a house reasonably so called if it has the character or identity of a house. That character or identity will be derived primarily from the use to which the building has been put, considered in the context of a “house” as a single residence and as a place to live
      1. If a building is originally designed as a house (i.e. as a single residence) but is subsequently converted to flats then there is a presumption that such a building would be a house divided into flats and as such (and subject to any compelling evidence to the contrary) would be a house reasonably so called.
      1. If a building is originally designed as flats (i.e. is purpose built as such) then there is a presumption that such a building would be a block of flats and as such (and subject to any compelling evidence to the contrary) would not be house reasonably so called.

      Damian Greenish

      30th June 2014

      [1] [1969] 1 WLR 1604

      [2] [1970] 1 QB 663

      [3] [1965] 1 WLR 1320

      [4] At 1324G

      [5] At 672F

      [6] At 672G

      [7] (1971) 1 All ER 517

      [8] In Peck, although there were separate entrances to the shop and the residential accommodation, there was apparently a connecting staircase between them and the tenant lived over the shop

      [9] At 519b

      [10] [1971] 1 WLR 99

      [11] [1974] 1 WLR 435

      [12] [1982] AC 755

      [13] [1982] QB 41

      [14] At 47C

      [15] At 765E

      [16] At 765H

      [17] At 766F/G

      [18] At 767B

      [19] In the reported judgment, the word is “confirming” but this is clearly a typing error

      [20] At 767B/C

      [21] e.g. at 671A

      [22] At 44D

      [23] At 760A

      [24] In Hosebay, it was said that this was one of the two determinative factors in Tandon (the other being “policy”); it is interesting to note that that Lord Roskill and Lord Fraser came to different conclusions on this factor, demonstrating just how finally balanced the decision was.

      [25] See 760B

      [26] [1987] 2 EGLR 106

      [27] [1992] 1 ELGR 109

      [28] As he said at 110A: “But the crucial factor in that case, which is not present in the present case, is that both maisonettes were occupied by one family as their residence……..”

      [29] [1995] 1 EGLR 89

      [30] At 440C

      [31] [2003] 1 AC 1013

      [32] Para 21

      [33] Para 34

      [34] Para 49

      [35] Para 57

      [36] [2003] 3 EGLR 35

      [37] [2008] 1 WLR 289

      [38] [2006] 1 WLR 2848

      [39] Para 25

      [40] Para 18

      [41] Para 26

      [42] Para 23

      [43] [2006] 1 WLR 2848

      [44] [2009] 1 WLR 1313

      [45] Paras 19 & 20

      [46] [2013] 1 WLR 24

      [47] Para 15

      [48] Para 18

      [49] [2012] 1 WLR 2884

      [50] [2012] 1 WLR 2884

      [51] [2010] 1 WLR 2317

      [52] Para 31

      [53] Para 39

      [54] Para 49

      [55] Para 1

      [56] Para 3

      [57] Para 9

      [58] Para 44

      [59] Para 43

      [60] Para 45

      [61] Para 23

      [62] Para 25

      [63] Para 27

      [64] Para 29

      [65] Para 34

      [66] Para 35

      [67] Para 41

      [68] [2013] EWCA Civ 480

      [69] Para 61

      [70] Para 55

      [71] Unreported [2014] Winchester County Court HH Judge Hughes QC

      [72] Para 99

      [73] Para 155

      [74] Unreported [2014] Central London County Court HH Judge Dight

      [75] [1993] AC 593

      [76] Col 1540