Myriam Stacey QC and Nick Grant analyse a recent High Court ruling on a 'live / work' user clause.
The term “live/work” started appearing in planning permissions in London in the early 1990s. As developers sought to avoid policy-imposed affordable-housing contributions, it became common to see, therefore resulting in the concept of live/work to have significant practical importance for residents of such units. The significance has been enhanced by the increasing trend in recent years for landlords to seek substantial premiums from their tenants to release such covenants, together with damages – often backdated – for breach of the user clause on the basis that a live/work unit is said to be required to be used to live and work.
AHGR Ltd v Kane-Laverack was such a case. The claim was brought by the landlord, AHGR Ltd, against two of its tenants, Peter and Luke Kane-Laverack (a barrister and doctor). The lease contained a user clause requiring use “in accordance with” a planning permission which granted permission for 1 “live/work unit”. AHGR argued, among other things, that the tenants were required to live and work at their property, that what the tenants did at home did not constitute “work” for this purpose, and that the tenants owed them damages of at least £60,000 for the past period in which they were not “working”.
Last September, the Defendants succeeded in the County Court before HHJ Johns QC (our note here). The judge had found that (1) on the specific facts of this case and terms particular permission, the tenants could live and/or work in their flat, (2) even if they had to work, the work undertaken by them in their home (such as writing books, publishing papers, and undertaking triaging and consultation of patients by phone) was sufficient and (3) there was no intention to forfeit so AHGR could not recover its costs as incidental to the preparation of an s.146 notice.
AHGR appealed to the High Court, arguing among other things:
- That, again, live/work requires tenants to both live and work in the premises, rather than being able to choose whether to live and/or work there; and that
- That “work” required the tenants to continually carry on a business (i.e., undertake work with a view to making profit);
- The judge had been wrong to find no intention to forfeit.
Earlier this month Meade J dismissed AHGR’s appeal ( 7 WLUK 77). He held that HHJ Johns QC’s interpretation was right for the reasons he gave and, even if that were wrong, there would be no basis to narrow down “work” to business. Moreover, there was no breach (so could be no s. 146 notice), and in any case, the judge had had more than enough to find as a fact there was no intention to forfeit.
The dispute serves as a salutary reminder that even if a live/work unit looks like a flat and is marketed as a flat, leaseholders should scrutinise the detail of the underlying planning permission.
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