The Court of Appeal has ruled that a mixed-use premises was a ‘dwelling’, as defined in Section 38 of the Landlord and Tenant Act 1985, and the tenants therefore benefited from the controls over the levying of service charges in the Act.
The tenants leased a unit which consisted of a suite of rooms including a kitchen and shower room. The lease obliged the tenants to use the premises for offices, with ancillary residential use allowed, and required them to pay a service charge. After a dispute arose over the service charge, the County Court found that the unit was a dwelling, with the result that the recoverability of service charges came under the jurisdiction of the First-tier Tribunal.
Appealing against that finding, the landlord argued that the unit was not a dwelling because the definition in Section 38 does not expressly permit mixed use, and where Parliament had intended to protect mixed use it had said so expressly. However, the Court of Appeal considered that this argument looked at the matter ‘from the wrong end of the telescope’ and ignored the substantial case law on the meaning of ‘dwelling’. In the Court’s view, the variety of definitions in the Act showed clearly that when Parliament had intended to give protection to residential tenants as opposed to business tenants, it had said so.
The Court observed that the meaning of the word ‘dwelling’ depends on context, and in particular the policy of the provision in which it appears. The policy behind the service charge provisions was to provide tenants with a way of challenging unreasonable service charges levied by their landlords. Considering a wealth of case law on the issue, the Court concluded that, in principle, mixed-use premises were capable of being a dwelling, even where the residential use is ancillary to the business use. To conclude otherwise would reinstate part of the definition of ‘flat’, in Section 30 of the Act as originally enacted, which Parliament had deliberately repealed.
After examining the terms of the lease, the Court found that the unit was a dwelling. The appeal was dismissed.
