In the early 1990s the term "live/work" began appearing in planning permissions as a way for developers to avoid affordable-housing contributions. Landlords would seek substantial premiums from tenants to release those covenants, together with damages (which could be backdated) for the breach of user clause (i.e. someone not working in their unit).
A Landlord, AHGR Limited, brought a case against two of its tenants (one of whom happened to be a barrister) after the tenants had applied for a certificate of lawful use as a single dwellinghouse residential flat. The lease contained the user clause, seen in many leases, requiring the use to be 'in accordance with' a planning permission which granted permission for one 'live/work unit'. The landlord argued that the tenants were required to live and work at their property and so owed them damages of at least £60,000 for the past period in which they were not working.
The defendants succeeded initially in the County Court where the judge found that (1) on the specific facts of this case and terms of the particular permission the tenants could live and/or work in their flat; (2) the work they had to undertake in their home was sufficient and (3) there was no intention from the landlord to actually carry out forfeiture so they could not recover costs as incidental to preparation of an s.146 notice.
The landlord appealed each of those points, arguing that the tenants must both live and work in the premises, rather than being able to choose whether to live and/or work there and "work" required the continuous carrying out of a business. The appeal was dismissed on the basis that the County Court judge's interpretation was correct for the reasons given and even if it were wrong, there was no basis to narrow the interpretation of 'work' to 'business' and therefore there was no breach (so no s.146 would be valid).
The landlord took the case to the Court of Appeal who agreed with the first instance and High Court decisions, finding that the phrase live/work was ambiguous; there had been no subdivision in the plans submitted at planning stage to delineate an area for work, with the entire unit being described as live/work, leaving it for the leaseholder to allocate areas as they chose. This permissive approach gave the leaseholder the freedom to either live or work or to do both. Finally, given the risk of criminal sanctions in the event of a breach of planning, clear, unambiguous language could be expected if there were a requirement for both living and working in the unit for lawful use.
This case is a reminder that even if a flat is marketed as a flat and looks like a flat, leaseholders should carefully scrutinise the underlying planning permission, especially if it is referred to in the user clause. AHGR Limited v (1) Dr Luke Kane-Laverack and (2) Mr Peter Kane-Laverack.