Sheppey Beach Villas Ltd v Courtney Taylor & Ors [2026] EWHC 647 (Ch)

[2026] EWHC 647 (Ch)

Case No CH-2024-000130

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

CHANCERY DIVISION

ON APPEAL FROM THE COUNTY COURT AT CANTERBURY – HHJ PARKER

Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NL

Date 19/03/2026

Before

SIR ANTHONY MANN SITTING AS A JUDGE OF THE HIGH COURT

Between

Sheppey Beach Villas LtdAppellant

Ms Courtney Taylor (substituted as the personal representative of Iris McCloughey)Respondents

Mr Matthew HeffernanRespondent

Mr David HeffernanRespondent

Joseph Meethan (instructed by DMB Law) for Appellant

Paul Tapsell (instructed by Ratcliffe Solicitors) for First Respondent

Mr Matthew Heffernan and Mr David Heffernan appeared in person for in person

Hearing Hearing date: 26 th March 2026

APPROVED JUDGMENT

Sir Anthony Mann:

[1]This is an appeal from an order of HHJ Parker sitting in the County Court at Canterbury and dated 29th May 2024, which followed from a judgment of his handed down on 23rd April 2024. In the order he declared that the then defendant, Iris McCloughey, was entitled to enfranchise a property called 7 Sheppey Beach Villas, Manor Way, Leysdown on Sea, Kent ME12 4QQ (“the property”) by acquiring the freehold under the Leasehold Reform Act 1967 (“the LRA” or “the 1967 Act”). The appellant, Sheppey Beach Villas Ltd (“Sheppey”) was the freeholder and the defendant in the action brought by Mrs McCloughey. He also dismissed a claim for forfeiture brought by Sheppey on the footing of provisions in that Act dealing with the interaction between enfranchisement proceedings and forfeiture proceedings and the unsatisfied requirement to obtain leave before commencing forfeiture proceedings after the service of an enfranchisement notice.

[2]This appeal raises the question of whether a property which had recently been largely destroyed by fire is a “house” within the meaning of the 1967 Act, and whether the structure is a “dwelling” for the purposes of section 168 of the Commonhold and Leasehold Reform Act 2002, which imposes restrictions on the service of section 146 notices (under the Law of Property Act 1925) in relation to some “dwellings”. If those restrictions apply to the property as a “dwelling” then the appellant accepts that the section 146 notices were bad for want of a prior determination of breach. It also raises the question of whether Mrs McCloughey served her enfranchisement “in good faith” for the purposes of the 1967 Act, though for reasons that appear later that point is not dealt with in this judgment and has been “parked” until after I have delivered it.

[3]On this appeal Mr Joseph Meethan appeared for the appellant Sheppey (as he did in the court below). Mr Paul Tapsell appeared for the substituted respondent Ms Courtney Taylor (the personal representative of Mrs McCloughey, who unfortunately died after the trial). Mr Matthew Heffernan and Mr David Heffernan appeared in person - their significance will appear hereafter. Mr David Heffernan (a solicitor, but without rights of audience) effectively spoke for both of them.

The factual background

[4]The facts essential to the parts of the appeal that I will be deciding can be taken largely from the judgment and they are as follows.

[5]The property was let on a 99 year lease on 25th May 1977, the term commencing on 1st March 1977. The premium paid was £1,500 and the annual rent £10. It was a single storey building of living accommodation described in the lease as “the holiday flat”, though it was not a flat in the conventional sense of being a horizontal or vertical part of a larger building. I can summarise, rather than set out verbatim, some of the relevant clauses of the lease and set out others fully; the judge had to consider more detailed wording in order to consider unappealed questions of breach, but I do not have to do that.

[6]The material terms are:(a) Clause 2(iii) contained a standard repairing covenant.

(b) Clause 2(v) contained a clause requiring the landlord to enter to inspect or carry out repairs.

(c) Clause 2(vi) contained a user covenant which I need to set out: “(vi) Not to use the holiday flat or cause or permit the same to be used or occupied otherwise than as a holiday residence for leisure purposes only and not to occupy or allow the holiday flat to be occupied for a period of four weeks in any period of eight consecutive weeks during the period 1st October to 31st March unless written permission be obtained from the Landlord or its agents.”

(d) Clause 2(viii) restricted subletting and parting with possession: “(viii) Not to underlet or part with possession of the holiday flat or any part thereof except (subject always to sub-clauses x and xi of this clause) by way of a furnished sub-letting to one or more individuals for a fixed period not exceeding four weeks in any one year.”

(e) Clause 3(xiii) contained a covenant to pay the expenses of serving a section 146 notice.

(f) Clause 2(xiv) contained an insurance covenant in these terms: “(xiv) To keep the holiday flat and its contents insured at all times throughout the said term from loss or damage by fire flood and other usual risks in some insurance office of repute in the sum equal to the full insurable value thereof from time to time throughout the said term and to make all payments necessary for the above purposes within 28 days after the same shall respectively become due and to produce to the Landlord or its agents on demand the policy or policies of such insurance and the receipt for each such payment and to cause all monies received by virtue of any such insurance to be forthwith laid out in rebuilding and reinstating the holiday flat or any part thereof with all convenient speed in respect of which such monies shall have become payable or have been received to the satisfaction in all respects of the surveyor for the time being of the Landlord and to make up any deficiency out of the tenant’s own monies.”

(g) Clause 4 contains the usual forfeiture clause.

[7]Sheppey and Mrs McCloughey acquired their respective interests under the lease by assignment. There was prior litigation between them about occupation which ended with a consent order on 2nd February 2009 which varied the occupation rights controlled by the lease. It is common ground that this “order” did not operate as an order of the court because it contained provisions inappropriate to an order, but it was accepted that it reflected and contained a contractually binding agreement. Its terms were relied on by the judge below in relation to one of the matters under appeal, so it is necessary to set out its actual terms:

“1. The Defendant [ie Mrs McCloughey] is permitted to sublet Flat 7 Sheppey Beach Villas for the duration of her ownership of the head lease of Flat 7. 2. The Defendant or her subtenants have permission to reside in Flat 7 throughout the year. 3. The Claimant [ie Sheppey] will not seek to enforce Clause 2(vi) or (viii) of the 1977 Lease for the duration of the Defendant’s ownership of the Lease. 4. The Defendant agrees to enter into a letting agency agreement with the Claimant administering any letting of Flat 7 and receiving 10% of the rental value together with VAT by way of commission payment. 5. The Claimant do pay the Defendant’s costs of £3,150. For the avoidance of doubt the Claimant waives payment of £517.50 outstanding from the order of 20.02.08. Payment to be made by 03.03.09.”

[8]The events leading up to the present litigation were as follows.

[9]As at March 2021 the property was occupied by Mrs McCloughey’s granddaughter. A fire broke out on 23 March 2021 causing very severe damage. The property has not been inhabited, and has not been habitable, since that date. The judge accepted a description of the property as “a burnt-out wreck”. Photographs show that some of the external walls are largely standing but the interior is basically gutted and the doors and windows have gone. All internal fittings have also gone. The evidence of the single expert at the trial was that it was unclear whether the external walls were salvageable or whether they would have to be demolished in order to rebuild the property. As I understand it it has not been rebuilt to this date, though some limited work was done (perhaps work of clearance) not long after the fire. Mrs McCloughey apparently accepted that she had received the insurance money in respect of the fire and “was ready to spend [it] on work to the Property” (judgment paragraph 44).

[10]There was a dispute about whether or not Mrs McCloughey complied with her obligations under the lease to allow the landlord to inspect; the judge considered that dispute and found that she had been in breach of covenant in that respect.

[11]In May 2021 Mrs McCloughey attempted to auction the lease. That process terminated after Sheppey objected.

[12]There then followed a series of notices under section 146 and under the 1967 Act:(a) On 3rd June 2021 Sheppey served a section 146 notice relying on a failure to produce an insurance policy, a failure to insure (if such be the case – it was not); a failure to claim for reinstatement under any such insurance policy; and a failure to cause all monies thereby received to be laid out forthwith in rebuilding and reinstating the property.

(b) On 27th July 2021 a second section 146 notice was served complaining that Mrs McCloughey had failed to pay the expenses of the preparation of the first notice.

(d) On 6th October 2021 a third section 146 notice was served alleging the following breaches: (i) failure to permit access for inspection; (ii) failure to pay the costs of the two previous s146 notices; (iii) failure to lay out monies received from Direct Line in reinstating the Property; (iv) failure to reinstate the Property to the satisfaction of the landlord’s surveyor; and (v) failure to make up any deficiency between the reinstatement monies paid out and the cost of reinstatement.

[13]Forfeiture proceedings were commenced in the County Court on 9th February 2022, and having formally defended that claim on 22nd June 2022 Mrs McCloughey issued a Part 8 claim seeking a declaration that she was entitled to purchase the freehold of the property. In neither set of proceedings did Mrs McCloughey claim relief from forfeiture. These were the two sets of proceedings which ended up before HHJ Parker.

[14]On 29th November 2023, when the proceedings were part heard, Mrs McCloughey served a second notice to enfranchise. It is not apparent that this notice had a material effect on the decision below.

[15]Those were the matters which formed the background to the decision of the judge below and on the basis of which he delivered his judgment. However, since then it has transpired that events had taken an odd turn. While this appeal was pending Sheppey, or its solicitor, did a search against the property and discovered that the registered proprietor had become Mr Matthew Heffernan (“Matthew”). Mr Matthew Heffernan is the son of Mr David Heffernan (“David”), a solicitor, who had, as he put it, “assisted” Mrs McCloughey at the trial. As I understand it he conducted the advocacy but he seemed to disclaim having been formally instructed in that respect. At the time of her Defence in the forfeiture proceedings Mrs McCloughey had instructed direct access counsel but she did not have counsel at the trial. She only had the assistance of David.

[16]When further documents became available it transpired that Mrs McCloughey had transferred the lease to Matthew by a transfer bearing the date 6th September 2021. The transfer included an entry in box 11 (“Additional provisions”) referring to “Assignment of Benefit of Notice of Claim”, and referring to the enfranchisement notice given by Mrs McCloughey but without containing words of actual assignment. Mr Meethan accepted that on its true construction this provision was capable of being an assignment of the benefit of the notice. The witness to Matthew’s signature was his father, David. The transfer was expressed to be for nil consideration.

[17]This transfer was not registered until some time after the judgment below in this case. Somewhat remarkably, the entire trial was conducted on the footing that Mrs McCloughey was the owner and was going to remain the owner for the purposes of enfranchisement. Sheppey, of course, knew no better, but David did, as did Mrs McCloughey (who gave evidence).

[18]This discovery led to an application to join the Heffernans as respondents to this appeal, and joinder was duly ordered by Cawson J on 4th November 2025. Although Matthew is now the registered proprietor, David was apparently joined because of some equivocation on the Heffernan side as to whether Matthew or both of them (“we” was the word sometimes used, apparently) were actual owners. On the same occasion Ms Courtney Taylor was joined in substitution for Mrs McCloughey, who had unfortunately died after the trial on or about 4th January 2025; Ms Taylor is her personal representative.

The judgment below

[19]In his very thorough judgment the judge below decided a number of issues, some of which are not the subject of any appeal or cross-appeal before me. Some of his findings can be simply summarised. Others will require more development below.(a) Mrs McCloughey had received insurance money which she had not applied in reinstatement and she was thereby in breach of the provisions of the lease. This is not appealed. There also seems to be an implicit finding that she was in breach in failing to make up any shortfall required in restoring the building, but that is not material.

(b) The first section 146 notice was arguably premature, but the third one was not.

(d) There is an implicit finding of breach in failing to pay the costs of the section 146 notices.

(e) The section 146 notices were valid (paragraph 67).

(f) The right to enfranchise arises in respect of property described as a “house” (as will appear). The judge found that notwithstanding the user restrictions in the lease, and notwithstanding the damage done to the property by the fire, the property was still a “house”. This is the first matter of appeal under Ground 1 of the Grounds of Appeal.

(g) The lease was not a discontinuous lease. There is no appeal from this.

(h) The form of enfranchisement notice served by Mrs McCloughey was a valid form notwithstanding the failure to complete a box about consideration. This finding is not the subject of this appeal, though this factor was one relied on in the “good faith” point which arose.

(i) By virtue of the provisions of Schedule 3 paragraph 4(1) of the 1967 Act leave was required to bring the forfeiture proceedings (this is not disputed) because leave is required once an enfranchisement notice has been served. The judge held that leave could be given retrospectively (this was not appealed). However, leave was refused because Sheppey had not established that Mrs McCloughey had given her notice “in bad faith” (a relevant requirement under the Act). This finding of good faith (or more accurately a failure to find bad faith) is the subject of Grounds 2 and 3.

(j) The second enfranchisement notice was not served in bad faith. The judge did not make a finding about unreasonable delay in making this claim.

(k) The Leasehold Property (Repairs) Act 1938 did not invalidate any of the notices, though it did apply to the complaints in the third section 146 notice insofar as it asserted failure to reinstate and failure to make up a deficiency of funds. There was no appeal or cross-appeal in relation to this.

(l) The property was and remained a “dwelling” for the purposes of section 168 of the 2002 Act with the effect that the section 146 notices were invalid since there was no prior finding of breach. In coming to this decision the judge considered it was supported by the terms of the consent order referred to above. These matters are the subject of Grounds 4 and 5.

The matters which I am to decide

[20]The non-disclosure of the transfer to Matthew presents particular problems in this appeal. Mr Meethan and Mr Tapsell presented various arguments turning on the effect of the transfer in law and in equity. Mr Tapsell’s first stance was that he did not accept the validity of the transfer, and he also suggested that insofar as it was technically valid in law then he reserved his client’s rights to challenge it on the basis of undue influence. His first point was partly, but only partly, reduced in its importance by an averment from David that the execution was actually the subject of a video recording which would prove it was actually executed, but he maintained his stance. Despite all that, Mr Tapsell made submissions about the effect of the transfer on the assumption, for the purposes of this appeal, that it was valid and unchallengeable.

[21]Mr Meethan also made submissions about the legal effect of the transfer, but he also indicated that the circumstances of its execution and non-disclosure went to the question of good faith for the purposes of those parts of the appeal which went to good faith/bad faith. It seems to me to be obvious that those circumstances are capable of going to those issues. However, that presented problems about how the matter was to be raised and how it was to be dealt with by the Heffernans, who are now interested in the result of this appeal. Technically it involved reliance on fresh evidence, and although it seemed to me that there would be no difficulty in satisfying the requirements for its introduction there remained the problem that there had been no formal application to introduce it, and therefore no formal opportunity for the Heffernans to respond to it. Furthermore, the parties had not prepared cases as to how to deal with it.

[22]At the end of a significant amount of debate on the point, and despite Mr Meethan’s understandable reluctance to embrace the prospect of a further hearing on the point (and particularly if it were to turn out that the matter needed to be remitted to the court below) I determined, and the parties accepted, that the sensible course was for me to direct Mr Meethan to make his formal application and for the Heffernans to put in their evidential response to it, and I gave a short timetable for that. In the meantime the good faith issue (Grounds 2 and 3) were parked pending a consideration of that material at a further hearing, so far as may be necessary. I say “so far as may be necessary” because the parties acknowledged that if I were with Mr Meethan on Ground 1 the first notice would be invalid anyway and it would be unnecessary to deal with the good faith point. Thereafter argument continued on Grounds 1, 4 and 5.

Ground 1 - whether the property was a house

[23]The judge below decided that, as at the date of the first notice (which it was accepted was the relevant date) the property was “a house reasonably so called” within the meaning of section 2 of the 1967 Act. Whether that finding was correct is the subject of this Ground.

[24]Section 1 of the 1967 Act provides generally for enfranchisement:

“This Part of this Act shall have effect to confer on a tenant of a leasehold house a right to acquire on fair terms the freehold or an extended lease of the house and premises where (a) his tenancy is a long tenancy …”

[25]Of the various requirements of the Act (long lease, low rent and other requirements) the only issue that arose was the question of whether the property was a “house”. Section 2 contains the definition of “house”, and the relevant words appear in subsection (1):

“2(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.”

[26]I have emphasised the words around which the debate before me (and, apparently, the debate below) turned. It seems to be accepted that the property was a building designed or adapted for living, so the question became whether the property, in its wrecked state, was a house “reasonably so called”. That was the question on which the judge below ruled. He does not seem to have been called on to rule on whether what was left was a “building”, and the point was not argued before me, so I proceed on the assumption that it was accepted by Sheppey that what was left was sufficient to make it a “building”. Nor does it appear to have been suggested below, and it was certainly not argued on this appeal, that the property could not be a “house” because at the time of the notice it was no longer “designed or adapted for living in” by virtue of the destruction that had occurred. That may well be because Boss Holdings Ltd v Grosvenor West End Properties Ltd

[2008] UKHL 5

seems to determine that it is sufficient that the building was originally designed for living in, which this building clearly was. See Lord Neuberger in Boss at paragraph 16:

“The fact that the property had become internally dilapidated and incapable of beneficial occupation (without the installation of floor boards, plastering, rewiring, replumbing and the like) does not detract from the fact that the property was designed for living in, when it was first built, and nothing that has happened subsequently has changed that.”

[27]I will therefore consider the judge’s reasoning on the point placed before both of us. He was apparently invited to reach his decision without the citation of authority, though he found for himself the case of Boss. He determined:(i) That it would not be enough for Mr Meethan to establish that the property might be called something else as well as being called a house.

(ii) That Boss determined that it was not essential for a building to be a house that it be fit for immediate occupation.

(iii) Having considered the state of the property (from photographs) his view was that while “wreck” would be an apt description, so would “house”.

(iv) The terms of the lease are rarely determinative (as was accepted by Mr Meethan).

(v) The fact that there were restrictions on the period during which the property could be occupied did not prevent its being called a house. A holiday home could still reasonably be called a house even if it was not occupied all year, a conclusion which he found to be consistent with an unreported County Court case called Mortimer v Eco Chic Ltd. The terms of the lease did not prevent the property from being called a “house”.

(vi) The actual use did not prevent its being a “house” either. From the time of the consent order until March 2021 the property was occupied without regular interruptions and not used only for holidays.

[28]Mr Meethan submitted that the judge’s conclusion was wrong. The judge was said to have focused on the first limb of the test (adaptability), as was demonstrated by the fact that Boss was about that first limb of the subsection and not the second (“house reasonably so called”), and he failed to give effect to the fact that both limbs have to be fulfilled. This was a case where the surveyor had said that the structure needed to be knocked down completely and mixed use cases such as Tandon v Trustees of Spurgeons Homes

[1982] AC 755

(referred to in Boss) did not assist. The state of the property at the date of the notice (which was the relevant date) was such that it could not reasonably be called a house - it was a burnt-out wreck, without doors, windows or roof and did not have all four external walls; it had not been occupied since the fire and was not used as a house; and the fact that it was once called a house does not mean that it always would be. He also submitted that if the words of limitation in section 2(1) (which they appear to be, on authority) did not exclude a building which was no longer usable and which required demolition then they were of such limited effect as to be useless.

[29]Although no reference was made to the point at the hearing before me, I have noted that the words of section 2(1) do not on their face seem to provide an exclusive definition. They provide that a house “includes …”, not that it “means”. Nonetheless no-one suggested that it was not a complete definition, and Lord Neuberger in Boss at paragraph 15 said that to be a house the two requirements of the subsection had to be fulfilled. That must be right - it would be hard to treat something as a house where neither of the two characteristics was present (particularly the second one).

[30]I consider that the judge came to the right view on this point for the following reasons, which are a further articulation of one or more his own.

[31]There is apparently no authority directly in point, and I was not shown any analogy. Hague on Leasehold Enfranchisement (7th Edition)does not have any reference to a situation such as that affecting the property. There are a lot of authorities on the statutory phrase, but many of them tend to focus on the situation where there is a mixed use. However, there are one or two indications in the authorities which point to the correct approach.

[32]In Boss Holdings Ltd v Grosvenor West End Properties Ltd

[2008] 1 WLR 289

the House of Lords considered the status of a terraced house in which the top three floors had been stripped out (including some floorboards, floor joists and some ceilings) so as to be uninhabitable. They had once been used as a residence. The lower three floors were not so stripped out and had been used for commercial use but had been vacant for some time. The question before their lordships was not the same as the question I have to consider. It was on the first limb of section 2(1), namely whether at the time of the notice the structure was “designed or adapted for living in”. Nonetheless Lord Neuberger (with whom the others of their lordships agreed) remarked that the first instance judge was “plainly correct” in finding that the structure could reaonably be called a house. That was despite the fact that the property would seem to have been in a largely uninhabitable state. That is not the same state as the subject property in this case, but it is some sort of pointer.

[33]It is also apparent from that case that policy can be taken into account in construing the statute. Their lordships took it into account in determining the question they had to decide - see the reference to “practicality and policy” in paragraph 17, and to policy considerations in paragraph 21. The same should apply to the present case. I do not understand what useful policy would be served by treating a property as a house the day before the fire, and the day after restoration is complete (and indeed probably at a stage before complete restoration when it would become obvious one could reasonably call it a house), but not as a house in the interim while it is in its “wrecked” state. This assumes, of course, a genuine intention to rebuild and not to abandon, and I have not overlooked the fact that the property has still not been rebuilt, but there is no suggestion of abandonment in this case.

[34]I also note that it is also implicit in Hosebay Ltd v Day

[2012] 1 WLR 2884

that policy is a factor in deciding the correct interpretation of the legislation - see paragraph 28. That was a case (actually two cases) involving questions of user (business as opposed to residential) and the decision does not throw much light on the proper approach to the present facts. However, it is significant that Lord Carnwath JSC (with whom the others of their Lordships agreed) considered that a literalist approach to the question of interpretation was not appropriate (paragraph 35).

[35]I therefore have to approach this question with little direct guidance from the authorities. I can start from the position that the structure was built and remained, at least until the fire, as something designed and adapted to be lived in, and as something that could reasonably be called a house. There was no express finding about that, but it was plainly the case. It was not suggested that it was never a house prior to the fire.

[36]There was then the fire. It was not a deliberate act of abandonment, or a deliberate act of destruction such that one could infer an intention to change its qualities. It had become, by virtue of some accident, a structure which could no longer be occupied. However, it still retained some identity - it was not razed to the ground. (I do not need to consider the question of what the position would have been had it been razed to the point of there being nothing left). There was no evidence of an intention to abandon it, and indeed the lease required its reinstatement - a significant point in my view. It was not going to be something that was just left. Its state as a wreck was going to be temporary.

[37]I do not consider the question should be left to a judgment based purely on its then physical appearance, but even if it were then I agree with the judge below that it could still reasonably be called a house. I consider that many people describing it would describe it as a ruined house, or a wrecked house, or a burnt-out house, but the word “house” would be used in all cases, and that would be a reasonable use.

[38]Of equal significance is the fact that its status as ruined, wrecked or burnt out is obviously temporary. Its status as property which could be occupied was temporarily disrupted. This was temporary in the sense that no-one thought the property would not be repaired, and the landlord actually required restoration according to its section 146 notices, but that does not mean that its status or identity as a house reasonably so called for the purposes of the statute was also temporarily disrupted. As I have already observed, it is not possible to ascertain a policy consideration for such a disruption. There was in effect a continuity of its status.

[39]I record that on this appeal Mr Meethan did not rely on the point he took below to the effect that the nature of the occupation as a holiday home, coupled with the restrictions on occupation contained in the lease, demonstrated that the property was not a “house”. I therefore do not need to consider that point. Had it been necessary to do so I would have agreed with HHJ Parker that it did not detract from the property being a “house”.

[40]Accordingly, I consider that at the time of the service of the enfranchisement notice the property was a “house” within the meaning of the statute. I would dismiss this Ground of Appeal.

Ground 4 - was the property a “dwelling”

[41]This Ground arises because of the provisions of the 2002 Act which, in the case of a long lease of a “dwelling”, provides that a section 146 notice may not be served before a determination of the existence of the breach on which it would seek to rely. Section 168 of that Act provides:

“(1) A landlord under a long lease of a dwelling may not serve a notice under section 146(1) of the Law of Property Act 1925 (c. 20) (restriction on forfeiture) in respect of a breach by a tenant of a covenant or condition in the lease unless subsection (2) is satisfied. [my emphasis] (2) This subsection is satisfied if— (a) it has been finally determined on an application under subsection (4) that the breach has occurred, (b) the tenant has admitted the breach, or (c) a court in any proceedings, or an arbitral tribunal in proceedings pursuant to a post-dispute arbitration agreement, has finally determined that the breach has occurred.”

[42]It is common ground (and obvious) that there was no prior determination of the existence of the breach within that Act, and Mr Meethan accepted that if it applied then the section 146 notices referred to above were bad. However, he disputed the application of the Act on the footing that the property was not a “dwelling”. By virtue of section 169(5) of the 2002 Act the word: “‘Dwelling’ has the same meaning as in the 1985 Act”,

[43]The “1985 Act” is defined as the Landlord & Tenant Act 1985. In that Act “dwellling” is defined in section 38 as follows:

“38 … “dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling, together with any yard, garden, outhouses and appurtenances belonging to it or usually enjoyed with it.”

[44]Whether or not the property was, at the date of the notices, a dwelling, was taken below. HHJ Parker identified that this point had become academic in the light of his decision in relation to the requirement to obtain leave for forfeiture proceedings once an enfranchisement notice had been served (under the 1967 Act). As appears above, he refused leave because Sheppey had not established that the first notice was served in bad faith. That made his decision on this section academic, but he nonetheless decided it. On this appeal the bad faith point is still live, so the question of the need for leave is still live - see above. On that footing the point may not be academic, and Sheppey have appealed it, so I should decide it.

[45]The decision of HHJ Parker was that the property fell within the protection of section 168 because it was a building (notwithstanding its condition) and that it was “occupied or intended to be occupied as a separate dwelling”. It was “intended to be occupied” because that was the intention or contemplation of the parties as reflected in the lease and perhaps a subsequent agreement (paragraph 198). He considered whether its use as a holiday home was use of the property as a dwelling, and decided tha t it was, following the decision in Phillips v Francis [2010] L&TR 28 (HHJ Griggs sitting as a judge of the High Court).

[46]He also had regard to the 2009 consent order which he said gave a clear indication of the parties’ intentions as to the use of the property while Mrs McCloughey remained the tenant. It contemplated occupation of the property on a full time basis (unlike the terms of the lease). He then rejected a submission that Mrs McCloughey had repudiated the 2009 agreement (a rejection which is not the subject of this appeal). The effect of his decision was therefore that the section 146 notices were invalid. That is the decision I still have to consider.

[47]Mr Meethan’s point in the appeal under this Ground is that the property was not a “dwelling” at the time of the proceedings. This is for two reasons - the property was a ruin, and it was let as a holiday house pursuant to the terms of the lease.

[48]I will consider the second of those points first. In my view the judge was right to reach the decision that he did.

[49]The point arose in Phillips v Francis in the context of litigation under the 1985 Act. The issue in that case was whether the service charge controls in that Act applied to a holiday property. The actual details of the terms of letting and lettability in that case do not appear clearly, but it appears that, as in the present case, there was an express restriction to the use for holiday lets, and only for certain times of the year - see paragraph 13. That is similar in concept to the terms of the lease in the present case. On a preliminary question as to whether the Act applied to holiday homes it was argued that because of those restrictions the properties were not “dwellings” for the purposes of the relevant part of the Act. It was argued by the landlord that the word “dwelling” connoted use as a home, which was inconsistent with holiday lettings. HHJ Griggs (sitting as a judge of the High Court) rejected that submission, having considered a particular authority in the Lands Tribunal which went the other way. He contrasted the definition in that Act with other legislation which had the added requirement of property being a main home and concluded that it would be right to give the word its “ordinary meaning without addition or subtraction unless that meaning produces injustice, absurdity, anomaly or contradiction” (paragraph 27, using words from Stock v Frank Jones (Tipton) Ltd

[1978] 1 WLR 231

[50]Mr Meethan did not seem to dispute directly that a direct transposition of that conclusion into the legislation and facts of this case without more would mean that the property is a dwelling for the purposes of the 2002 Act. However, he submitted, both here and below, that that was not an appropriate exercise, and it would be appropriate to give dwelling a different meaning in the 2002 Act because the policies of the 2002 and the 1985 Acts were different. The former is concerned with a form of security of tenure, whereas the latter is not - it is concerned with controls on service charges, which is (in policy terms) different. If one looks at the statutes conferring forms of security of tenure in a residential (as opposed to a business) context one sees that they tend to exclude holiday lettings. He cited relevant statutory instances which all excluded holiday lets either in terms or by conferring security only on houses that were the main residence of the tenant.

[51]In support of his submission he relied on the judgment of Parker LJ in Ruddy v Oakfern Properties Ltd

[2007] 3 WLR 524

at 540. In that case Parker LJ had to consider the correct interpretation of section 38 of the 1985 Act in the context of a service charge dispute. In doing so, and for his purposes, he contrasted the policies underlying the Rent Acts and the 1985 Act:

“78. I also reject the suggestion that there is any significant relationship between the service charge provisions and the Rent Acts. As the judgments in Horford make clear (see in particular the extract from Scarman LJ’s judgment, quoted in paragraph 34 above), the decision in that case was materially influenced by the underlying policy of the Rent Acts. The policy underlying the service charge provisions in the 1985 Act and earlier Acts is, however, a different policy in that its emphasis is not so much on protecting the tenant in his home as on providing him with a way of challenging unreasonable charges sought to be levied by his landlord. I can, for my part, see no reason why the policy considerations which led this court in Horford to decide that a tenancy of a block of flats is not within the protection of the Rent Acts should lead to the conclusion that a tenant of a flat in a block who happens also to be a tenant of another flat (or flats) in the same block, and/or of the common parts in the building, is not, for that reason, within the protection of the service charge provisions. Once again, Judge Cooke put the point better than I can in paragraph 31 of his judgment in Heron (quoted in paragraph 42 above).”

[52]In Phillips v Francis HHJ Griggs “had regard” to those words in interpreting section 38:

“27. In my judgment, the correct approach therefore is, as Mr Crozier submitted, to apply the normal rules of statutory construction, namely that the words in the statute are to be according to their natural and ordinary meaning without addition or subtraction unless that meaning produces injustice, absurdity, anomaly or contradiction. Although, as pointed out in argument, there will be some anomalies whichever decision is preferred, I agree with Mr Crozier that it is appropriate to have regard to what Jonathan Parker LJ said in [78] in Oakfern, at p540, namely that the policy underlying the service charge provisions in the 1985 Act and earlier acts is a different policy from the underlying policy of the Rent Acts, in that its emphasis is not so much on protecting the tenant in his home as on providing him with a way of challenging unreasonable charges sought by his landlord. The policy reasons that justify a restriction on freedom of contract, in my judgment, apply just as much to leaseholders of holiday chalets as they apply to tenants of large blocks of flats. The fact that parliament may not have intervened to restrict the freedom of contract in respect of the tenants of retail units in a shopping development does not, in my judgment, compel the court to align tenants of holiday chalets with tenants of commercial properties. In most instances, the bargaining power of the latter will be much closer to that of the landlord than will be the case in respect of the bargaining power of the tenant of a single holiday chalet. For that reason, if no other, an appropriate distinction can be drawn between them.”

[53]Mr Meethan drew attention to this reliance and submitted that since the present case was in the security of tenure camp (it concerned the protection of a tenant from the termination of her tenancy) the policy was different from that which protected the tenant from unreasonable service charges. Phillips v Francis was therefore distinguishable and “dwelling” should be construed differently and in line with the security of tenure cases so far as the 2002 Act was concerned. That would exclude holiday properties which could only be occupied on a series of short term arrangements, and which could not be occupied for part of the year.

[54]HHJ Parker rejected this argument below, holding first that the purpose of section 168 of the 2002 Act was not that different from sections 18 to 30 of the 1985 Act (the body of provisions which control service charges) and second that the incorporated statutory definition could not change from one statute to another.

[55]I consider that the short answer to this point is HHJ Parker’s second reason. Parliament chose to adopt the 1985 Act definition for the purposes of the 2002 Act. The wording of the cross-reference or incorporation is:

“‘Dwelling’ has the same meaning as in the 1985 Act”

[56]That is a straightforward sentence. It means what it says. The meaning of the word in the first Act is the same as in the second. A property which is a “dwelling” under the first Act must be a “dwelling” under the second, because the word means the same in each Act. There is no room for adjustment for policy reasons or otherwise. This approach is consistent with the approach in Bennion on Statutory Interpretation: “Where an Act unambiguously states that the meaning of a term is to be determined by reference to the definition in an earlier Act, the courts are likely to give short shrift to any argument that the term should be given a different meaning from that which it has in the earlier Act simply because of the context in which it is used in the later one.” (para 18.4 relying on Williams v Central Bank of Nigeria

[2014] UKSC 10

[2014] AC 1189

[57]Accordingly Mr Meethan’s attempt to introduce daylight between the decision in Phillips v Francis and the present case fails. Phillips v Francis has held that a holiday home is a “dwelling” within section 38; so it is a dwelling for the purposes of section 168.

[58]The other reason for saying that the property is not a dwelling is its state as a wreck. Mr Meethan did not really develop this argument. I assume he would advance similar arguments to those advanced in relation to the question of whether it is a “house reasonably so called”, above.

[59]HHJ Parker considered that the property’s ruinous state did not disqualify it as a dwelling. He focused on the wording of section 138 and held that the property could still be called a “building” even though it was largely gone. It would not be unnatural to call it a “fire-damaged building” or even a “ruined building”, and it was still a building of some sort (paragraph 197). So far as the occupation element was concerned, it was not possible to say that it was “occupied … as a separate dwelling” but it was “intended to be occupied as a separate dwelling”. He took into account the intention expressed in the lease and (“perhaps”) as demonstrated by subsequent conduct. He also held (paragraph 202) that the intention could relate to some future date and it did not require an immediate intention to occupy.

[60]I would agree with the judge on his finding of intention. The intention was that the property should be used as a dwelling, which is obvious from its nature and from the terms of the lease. While it was a wreck it could not be occupied, but the intention remained. Nothing in the surrounding circumstances demonstrated any change of intention arising out of the fire.

[61]I would also agree with the judge in his conclusion that there was enough of the property left to constitute a “building” for these purposes. That makes it unnecessary to decide whether, by way of analogy or parallel with my finding on “house”, the level of destruction would have still left the property qualifying because of the obligation and apparent shared intention to reinstate. Had it mattered I would have tended to the view that the same factors which applied to “house” meant that, unusually, the property still qualified because of the purely temporary change in its physical qualities, and because of the absence of any good policy reason why its temporary destruction should take it out of the protection of the Act. However, I do not need to decide that.

[62]I would therefore dismiss this Ground.

Ground 5

[63]This Ground complains that in considering whether the property was a dwelling the judge wrongly took into account the 2009 consent order which allowed permanent occupation during the time the tenancy was vested in Mrs McCloughey.

[64]The judge did indeed take the 2009 consent order into account in determining the intention of the parties for the purposes of the incorporated definition (hence, presumably, his reference to intentions demonstrated after the lease was entered into), but only as a supporting factor for a conclusion that he had already reached. In paragraph 201 he held that it was right to take it into account and it gave a “clear indication” of the parties’ intentions as to the use of the property while Mrs McCloughey remained the lessee:

“That, it seems to me, shows a joint intention that it may be occupied as a dwelling.”

He also held that it would not assist a successor in title, an interesting point which demonstrates how he was misled by the non-disclosure of the fact that she had, by then, ceased to be a leaseholder by virtue of the non-disclosed transfer.

[65]I do not think that this point matters much because of my determinations under Ground 5. Even without the consent order there was an intention to occupy. The original intention to occupy as a dwelling might be said to continue through the “wrecked” period on facts such as these. However, so far as it might remain relevant, I would agree with the judge below that the agreement reflected in the consent order was capable of going to the relevant intention at the time of the service of the section 146 notices (which it seems to have been accepted was the relevant time) and was capable of demonstrating an intention to occupy as a dwelling. I do not consider it to have been an irrelevant factor, but in any event it is merely supportive of a conclusion at which I would arrive anyway.

[66]I would dismiss this Ground.

Conclusion

[67]I would therefore dismiss the appeal on Grounds 1, 4 and 5. The decision on Ground 1 means that the “good faith” point remains live in relation to the notice to enfranchise. The parties have filed material in relation to what is, at the first stage, an application to adduce fresh evidence made by the appellant. I will decide the fate of that application, and any consequential matters, at a separate hearing on or after the handing down of this judgment.

Cited in 1 later judgment

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