Court of Appeal interprets “live/work” user clause in a lease: AHGR Limited v Kane-Laverack and another [2023]

The Court of Appeal (CoA) recently considered the construction of the phrase “live/work” within a long lease of a flat in London in the case of AHGR Limited v Kane-Laverack & another [2023] EWCA Civ 428.

The user clause in the lease permitted the flat to only be used as “a live/work unit in accordance with … the planning permission” and, in describing the permitted development, the planning permission also used the phrase “live/work”.

The flat formed part of a mixed-use development comprising residential and commercial units, but the flat in question was the only “live/work” unit within the scheme. This “live/work” unit was deliberately incorporated into the planning application to avoid the scheme reaching the threshold which would have required the developer to deliver 25% of the scheme as affordable housing.

The claim was first brought to the County Court by the freehold owner of the development) alleging that the tenants were in breach of covenant by using the flat exclusively for residential purposes. The County Court dismissed the claim and the High Court also dismissed the freeholder’s subsequent appeal.

The freeholder further appealed to the CoA arguing that “considerable reliance” should be placed on planning guidance issued by the London Borough of Southwark when interpreting the clause, and in so doing, it would be obvious that “live/work” meant “live and work”.

The CoA agreed with the County Court’s and the High Court’s interpretations that “live/work” meant “live and/or work”, meaning exclusive residential use of the flat was not a breach of the user clause.

In reaching this decision, the CoA had regard to the fact that the phrase “live/work” was ambiguous and that the approved planning drawing referred to in the planning permission did not show any sub-division of the unit into “live” or “work” areas This suggested a permissive approach whereby the leaseholders might decide to only live or to only work at the flat, or to do both in different parts.

The CoA further stated that the possibility of being served with enforcement notices and becoming the subject of criminal proceedings for breach of planning permission is relevant stating that, if the intention was to use the unit to both “live and work” only, then the clause should have spelled this out more clearly.

It is worth highlighting that the CoA expressly disagreed with the freeholder’s suggested approach to rely on the local authority’s planning guidance. It held that a “reasonable reader” would not have had regard to extrinsic materials which are not specifically referred to or incorporated in the planning permission – although the CoA did confirm that the planning guidance actually endorsed the “live and/or work” interpretation.

Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.

For further information, please contact Rubilee Stockley