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Neutral Citation Number: [2015] EWCA Civ 804 Case No: B5/2014/ IN THE COURT OF APPEAL (CIVIL DIVISION) ON APPEAL FROM LUTON COUNTY COURT Her Honour Judge Lindsay Davies Case No: 3S Royal Courts of Justice Strand, London, WC2A 2LL Date: 28/07/ Before : LORD JUSTICE LAWS LORD JUSTICE BURNETT and SIR COLIN RIMER
**Between :
SPIELPLATZ LIMITED Appellant** - and - (1) JOHN PEARSON (2) MAUREEN PEARSON Respondents
Mr John de Waal QC and Mrs Andy Creer (instructed by Gateley LLP ) for the Appellant Mr Gary Blaker QC (instructed by Photiades Solicitors ) for the Respondents Hearing date: 2 July 2015
Judgment
Sir Colin Rimer : Introduction
- The claimant/appellant is Spielplatz Limited, the freehold owner of a woodland naturist resort at Spielplatz, Lye Lane, Brickett Wood, St Albans (‘the resort’). The defendants/respondents are John Pearson and his wife Maureen, who have occupied the resort’s Plot 44A since 1992 as Spielplatz’s tenants under a tenancy agreement dated 14 August 1992.
- By proceedings issued on 2 July 2013 in St Albans County Court, Spielplatz claimed possession of Plot 44a from the Pearsons, asserting that they had no more than an unprotected common law tenancy of the plot which it had determined by a notice to quit. The Pearsons’ defence was that their tenancy was an assured tenancy under the Housing Act 1988, which Spielplatz had not determined in accordance with that Act, nor had it shown any ground entitling it to possession.
- The claim was tried before Her Honour Judge Lindsay Davies at Luton County Court over two days in April 2014. By her reserved judgment, of which we have an agreed draft, and an oral addendum to it of which we have an agreed note, the judge explained her reasons for finding that the Pearsons had an assured tenancy of Plot 44 A which Spielplatz had not determined. Her order of 7 May 2014 dismissed both Spielplatz’s claim and the Pearsons’ counterclaim. She refused Spielplatz permission to appeal but Sir Timothy Lloyd granted permission on 1 July 2014. We are not concerned with the dismissed counterclaim. The appeal turns primarily on whether the judge was right to find that the tenancy was one under which a dwelling-house was let as a separate dwelling for the purposes of section 1 of the Housing Act 1988 and so gave the Pearsons an assured tenancy.
- Mr de Waal QC (who did not appear below) and Mrs Creer (who did) represented Spielplatz. Mr Blaker QC (who also appeared below) represented the Pearsons. The background facts
- I take these from the judge’s judgment, supplemented in minor part by agreed matters derived from the documents. The naturist resort was established in about 1930 and was developed over subsequent years. Spielplatz acquired the freehold in about 1946 and its title was registered at HM Land Registry in 1997. The resort comprises about 12 acres of green belt land and includes 64 plots. Spielplatz lets the plots only to its members (i.e. its shareholders). Originally the expectation was that the tenant would put a caravan or pitch a tent on his plot, which he would own. As time went by, the tenants developed a taste for more substantial accommodation and many constructed cabins or chalets on the plots.
- Some of the 64 plots are designated by Spielplatz as for holiday or seasonal use only, and Spielplatz owns two chalets which it lets for holiday use: the resort has a clubhouse, swimming pool, tennis courts and other games facilities. Other plots are designated as for all year round occupation. Of the latter, some are occupied permanently; others are used mainly as weekend homes. Spielplatz is not, and never has been, involved in the installation or construction of the accommodation that tenants put on their plots, nor is it or has it been involved in their sale to, or purchase
photography and rubbish. Clause 17 required the tenant to ‘discharge all general rates payable in respect of the said Plot and any rateable building thereon’ and to produce the current receipt to Spielplatz on request.
- The Pearsons remained in occupation of Plot 44A as yearly tenants. Their rent increased over the years and by April 2006 it was £1,863 per year. At first they used Plot 44A only at weekends but later began to use it all the year round as they were entitled to do following the 1988 transfer of residential status to the plot. The judge’s summary of the material evidence
- The evidence was materially devoted to the question whether the chalet was a chattel (and so not part of the land demised by the tenancy agreement) or was part and parcel of Plot 44A (and so was demised by the tenancy agreement: quicquid plantatur solo, solo cedit ). The resolution of that issue was crucial to the decision as to whether the Pearsons had an assured tenancy of the plot.
- The judge said the Pearsons’ evidence was that in 2008 they put breeze blocks around the outside of the chalet and rendered it. In 2011, they put on a new roof. In 2012, they refurbished or ‘virtually rebuilt’ much of the building following a leak into the bathroom. They estimated they spent about £100,000 on the works. Spielplatz was aware of the works and wrote to the District Council on 2 April 2012 expressing its concern that the Pearsons ‘could be changing an essentially wooden dwelling into a larger and more permanent brick/block structure.’ The outcome of some unfriendly correspondence between Spielplatz and the Pearsons was that on 25 September 2012 Spielplatz sent the Pearsons a six-month notice to quit.
- The judge summarised the evidence of Fred Nicholls, who is in the business of moving static caravans and mobile homes. He said it was impossible to move a building of the size of that on Plot 44A in either one or two pieces. It could only be moved ‘by being taken back to its constituent parts’. The building measured 37 x 40 feet and fell outside the dimensions of a mobile home.
- The judge also referred to the report dated 9 April 2014 of a jointly instructed expert chartered building surveyor, David Turner, and said of his evidence: ‘19. … He considered the original plans for the building that was erected in 1975. He noted that much of the original construction was concealed so it was difficult to provide an opinion of how all the various elements of the original part was constructed. The original walls were timber framed which could have been manufactured off site or on site. The roof trusses were prefabricated and would have been brought to the site already formed. The roof covering would have been fitted on site. The asbestos cement boards finishing the external walls would have been fitted on site. The foundation of the floor would have been created on site. It was his opinion that the original construction would have been intended to be permanent and was not mobile or movable at any point in its life.
- The current building, following its major refurbishment in 2012 he describes as resembling a bungalow. He noted that the external walls were thickened in 2011 with a render finished block wall outside the original property.
- From the information he saw he believed the floor and foundation comprise one element and are formed as a raft foundation. They have not been constructed separately.’
- Whilst the judge did not say so expressly, I understand her to have accepted the evidence as to the nature of the original building given by Mr Turner, as to the Pearsons’ refurbishment of it and as to the problems explained Mr Nicholls with regard to moving it. The issue before the judge and her decision
- Spielplatz’s case was that all it owned, and had ever owned, as regards Plot 44A was the land upon which the chalet stood; that the chalet belonged to the Pearsons and that it had no interest in it; and that all it had let to the Pearsons by the 1992 tenancy agreement was the land. The Pearsons’ tenancy was not, therefore, a ‘tenancy under which a dwelling-house is let as a separate dwelling’ and so was not an assured tenancy within the meaning of the Housing Act 1988. The Pearsons had likewise believed, and were adamant in their evidence, that they owned the chalet. The judge observed that whilst, therefore, both parties were denying that Spielplatz had any interest in the chalet, it might be that they were both wrong. Despite their claimed belief, the Pearsons’ case, however, was that the chalet in fact formed part of Plot 44A and that the 1992 tenancy agreement had given them an assured tenancy of the plot and chalet. Their case was that, whilst the parties did not realise it, the 1992 letting was a ‘tenancy under which a dwelling-house [was] let as a separate dwelling’.
- The critical question for the judge was therefore whether, at the date of the 1992 tenancy agreement, the chalet was part and parcel of Plot 44A. She derived guidance as to when a structure becomes part of the land upon which it stands from the decision of the House of Lords in Elitestone Ltd v. Morris and Another [1997] 1 WLR 687, a case with features similar to those of this case. Substantive speeches were delivered by Lord Lloyd of Berwick and Lord Clyde, with both of whose speeches Lord Browne-Wilkinson, Lord Nolan and Lord Nicholls of Birkenhead simply agreed. The judge said that the decision showed that the answer to the question depended on the degree and the object of the annexation to the land; and that, assessed objectively, a house built in such a way that it could not be removed except by destruction could not have been intended to remain a chattel and must have been intended to form part of the realty. After referring to Lord Lloyd’s speech, she said: ‘31. Looking at these two factors in relation to the evidence in the present case, the degree of annexation is that this building was erected on the plot to be used as a place in which to reside. It was designed as a residence for initially part time occupation and latterly full time occupation. It was annexed to mains water and electricity. It could not be removed except by being taken apart into its component parts – timber by timber or roof truss by roof truss. Thus the building would have been destroyed just as much as a brick built house which could be taken down brick by brick and re-erected elsewhere ….
- Applying then the analogy as Lord Lloyd did, I have no doubt that when the building was built and as each original timber frame was placed in position it became part of the structure which was itself part and parcel of the land. The object of bringing the individual timbers and roof trusses onto the land is so clear
rejected that argument, saying it was clear that there had been permission to occupy the chalet as a residential dwelling all year round and so the ‘holiday letting’ exception did not apply. The decision in Elitestone
- Of the five grounds of appeal, two challenge the judge’s conclusion that the chalet on Plot 44A was, at the date of the 1992 tenancy agreement, part and parcel of the plot and so was let with the land as a separate dwelling. Before coming to the arguments, I shall summarise the decision of the House of Lords in Elitestone, the authority most directly relevant to that challenge.
- Elitestone owned the freehold of Holt’s Field, a site divided into 27 lots of which Mr Morris had occupied lot 6 upon which a chalet or bungalow had stood since at least
- Elitestone wanted to develop the site and made claims for possession against all the occupiers. The claim against Mr Morris was one of them. It failed in the county court on the grounds that he was a yearly tenant of lot 6 , occupied the bungalow as his residence and so was protected by the Rent Act 1977. The recorder had identified the key question as being whether the bungalow formed part of the realty and had held that it was. The Court of Appeal reversed that decision, Aldous LJ being impressed by the fact that the bungalow simply rested by its own weight on concrete pillars to which it was not attached. He inferred that the common intention of the parties was that, whilst the ownership of the sites of the lots remained in the freeholders, the occupiers should own the bungalows, which had not been sufficiently annexed to the soil to become part of the land.
- The House of Lords reversed that decision. Lord Lloyd said that photographs the House had seen, but the Court of Appeal had not, showed that the bungalow was not like a Portakabin or mobile home. It could not be taken down and re-erected elsewhere but could only be removed by a process of demolition. That was a factor of great importance. He said ([1997] 1 WLR 687, at 690B): ‘If a structure can only be enjoyed in situ, and is such that it cannot be removed in whole or in sections to another site, there is at least a strong inference that the purpose of placing the structure on the original site was that it should form part of the realty at that site, and therefore cease to be a chattel.’
- Lord Lloyd referred to the then recent decision of the House of Lords in Melluish v. B.M.I. (No. 3) Ltd [1996] AC 454, which established that the terms expressly or impliedly agreed between the fixer of a chattel and the owner of the land cannot affect the determination as to whether, in law, the chattel has become part of the land. The only question was whether the bungalow had become part of the land or had remained a chattel since its construction. Lord Lloyd noted that the component parts of the bungalow were chattels when they were brought onto the site. Whether they ceased to be chattels when they were built into the composite structure depended, as Blackburn J had said in Holland v. Hodgson (1872) LR 7 CP 326, on the circumstances of the case ‘but mainly on two factors, the degree of annexation to the land, and the object of the annexation’ ([1997] 1 WLR 687, at 692A).
- Dealing first with the degree of annexation, Lord Lloyd said its importance will vary from object to object, although ‘in the case of a large object, such as a house, the
question does not often arise. Annexation goes without saying.’ He said that because of this there was little recent authority on the point but he did refer to the decision of the High Court of Australia in Reid v. Smith (1905) 3 CLR 656, which raised the question of whether a dwelling-house erected upon an allotment, but not fastened to the soil, remained a chattel or became part of the freehold. The High Court, reversing the Supreme Court of Queensland, held that it became part of the freehold, treating the answer almost as a matter of common sense. The High Court held that the absence of any attachment did not prevent the house forming part of the realty. Lord Lloyd also cited from an American authority, Goff v. O’Connor (1855) 16 I11 421, at 423, where the court said: ‘Houses, in common intendment of the law, are not fixtures to, but part of, the land. … This does not depend, in the case of houses, so much upon the particular mode of attaching, or fixing or connecting them with the land upon which they stand or rest, as it does upon the uses and purposes for which they were erected and designed.’
- Lord Lloyd turned to consider the purpose of annexation in any case. He said that tests suggested in relation to objects such as a tapestry which had been fixed to a house were less useful when considering the house itself. He said ([1997] 1 WLR 687, at 692H): ‘A house which is constructed in such a way so as to be removable, whether as a unit, or in sections, may well remain a chattel, even though it is connected temporarily to mains services such as water and electricity. But a house which is constructed in such a way that it cannot be removed at all, save by destruction, cannot have been intended to remain as a chattel. It must have been intended to form part of the realty. I know of no better analogy than the example given by Blackburn J in Holland v. Hodgson, LR 7 CP 328, 335: “Thus blocks of stone placed on the top of another without any mortar or cement for the purpose of forming a dry stone wall would become part of the land, though the same stones, if deposited in a builder’s yard and for convenience sake stacked on top of each other in the form of a wall, would remain chattels.” Applying that analogy to the present case, I do not doubt that when Mr Morris’s bungalow was built, and as each of the timber frame walls were placed in position, they all became part of the structure, which was itself part and parcel of the land. The object of bringing the individual bits of wood onto the site seems to be so clear that the absence of any attachment to the soil (save by gravity) becomes an irrelevance.’
- The final aspect of Lord Lloyd’s speech to which I should refer is his return to the question of ‘intention’ in relation to whether a chattel has or has not become part of the land. He explained that the House of Lords in Melluish had put beyond question that ([1997] 1 WLR 687, at 693F): ‘… the intention of the parties is only relevant to the extent that it can be derived from the degree and object of the annexation. The subjective intention of the parties cannot affect the question whether the chattel has, in law, become part of
terminated, which was also a factor on which the Court of Appeal relied, cannot affect the operation of the law.’ The grounds of appeal
- Of the five grounds of appeal, grounds 1 and 2 were implicitly premised on the basis that the judge was correct to find that the chalet was part of the land, as also was the new ground 5 for which we gave permission at the hearing. Grounds 3 and 4 challenged the correctness of the judge’s finding that the chalet was part of the land. Although those grounds were developed in the skeleton argument, Mr de Waal devoted most of his oral submissions to the new fifth ground and barely developed grounds 3 and 4. This approach perhaps tacitly reflected Spielplatz’s recognition of the difficulty it faces in challenging the judge’s conclusion that the chalet was part of the land. Since, however, that is logically the first question in the appeal, I shall take grounds 3 and 4 first.
- They are to the effect that the judge wrongly failed to consider and attach proper weight to the purpose for which the chalet was annexed to the land and the relevant intention of the parties. It is said that, had she done so, she would have held that it was not part of the land. The relevant intentions are those in place when the tenancy agreement was entered into in August 1992. It is said, however, that the judge apparently also had regard to, and was influenced by, events that happened later, including the ‘virtual rebuilding’ of the chalet in 2012 and its dimensions as rebuilt. It is said that these influenced her conclusions on the ‘purpose of annexation’ element of the test. She is also criticised for drawing on what Lord Clyde said was the purpose of the bungalow in Elitestone, namely to enable the amenity of Holt’s Field to be enjoyed through the establishment of a residence, and finding that the like consideration applied in the present case.
- In development of this submission in the skeleton argument, Mr de Waal identified various features of the present case which he said pointed away from the legitimacy of the judge’s finding. First, in Elitestone Mr Morris had what was called a licence which permitted him to keep a bungalow on his plot and reside in it. New licences had been granted over the years which increased the annual fees and the court was considering the nature of the bungalow in 1985 when the last licence was granted. There was no evidence in Elitestone as to the circumstances surrounding the bungalow’s construction. It was appropriate, therefore, for the court to emphasise its physical qualities and its degree of annexation to the land.
- By contrast, the circumstances of the present case were different. The Pearsons’ tenancy was merely of ‘the plot or clearing in the grounds’. The renewed planning permission granted in 1980 limited its user to being ‘occupied on an occasional basis and at no time as a permanent dwelling.’ Mr de Waal invited the drawing of an inference from this that the chalet had not been built with the intention of being used as a full-time residence. In addition, plot tenancies were only granted to Spielplatz’s members: the object of the Spielplatz scheme was not to provide low cost housing but to promote naturism, which was the object of the resort.
- Whilst Mr de Waal accepted that Elitestone made clear that reliance could not be placed on the subjective intentions of the parties as a guide to the purpose of the annexation, he nevertheless submitted that their subjective intentions were evidence
from which the objective intention as to the purpose of annexation may properly be inferred. In this connection, he relied on the evidence that the practice was for the members to arrange their own accommodation on the plot and the common understanding that such accommodation was theirs to sell to successor occupiers of their plot. He said in his skeleton argument that on any objective analysis of these facts, the Plot 44A chalet cannot have been constructed with a view to effecting a permanent improvement of the plot. Rather, it was constructed as something that could be enjoyed in itself and traded and thus could properly be regarded as a chattel. In his oral argument, however, Mr de Waal departed somewhat from that submission, saying instead that the purpose behind the construction of the chalet was the better enjoyment of the facilities of the naturist club. That is, of course, close to what the judge had found in paragraph 35 of her judgment.
- I do not accept that any of these points, whether taken severally or collectively, undermine the judge’s finding that the chalet on Plot 44A became part of the land. I regard that finding as plainly open to her on the evidence. Indeed, given the evidence relating to the construction of the chalet, I consider it was probably the only finding she could properly have made.
- It is correct that the judge referred to the evidence of the Pearsons’ refurbishment works carried out between 2008 and 2012 and to Mr Nicholls’s evidence as to the impracticability of moving a building of its current size in one or two pieces, i.e. that it could only be moved by dismantling it to its constituent parts. I do not, however, accept that she placed any reliance on that evidence in making her finding as to the annexation of the chalet to the land. When she made her findings as to that, she was clearly referring to the nature of the chalet as it was in 1992, when the tenancy was granted. As to that, she had the report of Mr Turner who had explained as best he could the original construction of the chalet and who had given his view that the original building, when constructed, would not then have been movable at any point in its subsequent life.
- It is worth referring to the central part of Mr Turner’s expert report. He had been instructed to give his opinion as to whether the building was permanent or mobile at various different dates, including 19 75 (when the chalet was constructed), 1980 (when it was extended), and 1992 (when the Pearsons commenced their occupation of it under the tenancy agreement). Following his explanation of the construction of the original building, he expressed his opinion as follows: ‘9.7.1 It is my opinion that the original building was intended to be permanent. 9.7.2 The construction is typical for permanent houses built at that time. 9.7.3 It is my opinion that the property was constructed to be permanent and was not intended to be mobile or moveable at any point in its life. The construction of the property at the various stages of its life is, in my opinion, consistent with a permanent building, albeit of lower quality.’
- The heart of the judge’s reasoning is in her paragraphs 31 to 35, in which she found that the original building could not be removed except by being taken apart into its component parts. It was designed for residential occupation. A point is taken in
however, in the business of making contracts for the litigants before it. If, as I consider she was, the judge was right to hold that the chalet was part of the land forming Plot 44A, it followed that it was automatically demised to the Pearsons under the tenancy of that plot which Spielplatz granted in 1992 and there is no basis for a conclusion that it was not. Moreover, as the letting was of a separate dwelling the tenancy was, subject to grounds 1 and 2, an assured tenancy. I would reject ground 5.
- I come finally to grounds 1 and 2 (although I have already referred to the particular point raised in ground 1: see paragraph 40 above). They are together devoted to the assertion that the judge was wrong in declining to find that the tenancy was excluded from being an assured tenancy by being ‘a tenancy the purpose of which is to confer on the tenant the right to occupy the dwelling-house for a holiday’, an exclusion provided by section 1(2) of, and paragraph 9 of Part 1 of Schedule 1 to, the Housing Act 1988. I have explained why the judge rejected that argument in the addendum to her judgment.
- I regard the judge’s short reasoning for rejecting that case as unanswerable and could derive nothing from Mr de Waal’s submissions that came close to answering it. There was no evidence upon which she could find that the purpose of the letting was to give the Pearsons the right to occupy the chalet for a holiday. When they took on the tenancy, they were entitled to occupy it all the year round, clause 9 described Plot 44A as being for ‘the habitual use’ by the Pearsons and the letting was a tenancy from year to year. I do not understand on what basis it is said that the court could or should find that the letting was for the purposes of a holiday. It was not. Disposition
- I would dismiss Spielplatz’s appeal. Lord Justice Burnett :
- I agree. Lord Justice Laws :
- I also agree.
