Fairstate Ltd. v First Secretary of State & Anor

On 18^th June 2003 the Westminster City Council issued an enforcement notice against Fairstate Ltd. (“Fairstate”) alleging that without planning permission there had been a change of use of Flat 3, 22-23 Marylebone High Street, London W1 from permanent residential accommodation to use for short-term lettings purposes, i.e. as temporary sleeping accommodation within the meaning of section 25 of the Greater London (General Powers) Act 1973 (“s. 25”), as amended. Fairstate appealed to an Inspector appointed by the First Secretary of State contending that no enforcement action could be taken because ten years had elapsed since the breach of planning control had occurred. On 22^nd March 2004 the Inspector dismissed the appeal and upheld the notice. Fairstate Ltd. appealed to the High Court and on 7^th July 2004 Sullivan J. dismissed its appeal. The company appeals to this court with permission of Waller L.J. granted because “the appeal raises an important point of principle”.

The flat in question is one of ten in a block of purpose-built apartments built sometime in the 1950s on the eastern side of Marylebone High Street. Two flats on each floor were built on five floors over shops on the ground floor with a separate basement area for storage. It was not disputed that each flat formed a single planning unit, and constituted “residential premises” as defined for the purposes of s 25 (see below). There was nothing to show that planning permission had ever been granted for any change of use nor had any Established Use Certificate or Certificate of Lawful Use been issued for any purpose.

Fairstate acquired a long lease of the premises in May 1979. One of the flats was retained as a residence for Mr Bahous, a director of Fairstate. The others were used for a mixture of tenancies. Mr Bahous said that 75% of his tenants came from overseas to receive medical treatment in the Harley Street area. They would occupy a flat under a short-term letting. This appeal is confined to Flat 3. The evidence established and the inspector found that in a ten year period starting at least as early as 3^rd January 1989 and ending on 2^nd January 1999 this flat was likely to have been used throughout as temporary sleeping accommodation as defined in s. 25. Then on 15^th February 1999 a Miss Kapoor took the first of six back-to-back short tenancies which continued until 19^th July 1999, a period of some 155 days. On 23^rd July 1999 Flat 3 was let to a Mr Setta this time for a short term and for use as temporary sleeping accommodation. Such short lets were continuing up to the time of the enforcement notice served in June 2003.

The interesting question which calls for decision in this appeal is what if any breach of planning control occurs where the use to which a London flat was put changed over three stages, 1) for more than ten years as temporary sleeping accommodation which made that use lawful, but 2) with a change for about five months to longer-term residential occupation, and finally 3) reverting back for the next four years to temporary sleeping accommodation.

Carrying out development without the required planning permission constitutes a breach of planning control: see s. 171A(1)(a) of the Town and Country Planning Act 1990 (“the 1990 Act”). Planning permission is required for the carrying out of any development of land: s. 57(1) of the 1990 Act. Development includes the making of any material change in the use of any buildings or other land: s. 55(1). When the buildings or land are within Greater London s. 25 assumes importance. It provides:-

Where it appears to the local planning authority that there may have been a breach of planning control they may serve an enforcement notice on the owner requiring the remedying of the breach: s. 172 and s.173 of the 1990 Act. However, no enforcement action may be taken after the end of the period of ten years beginning with the date of the breach of planning control alleged: s.171B(3). Thus the owner may appeal against an enforcement notice as Fairstate did in this case on the ground that at the date when the notice was issued, no enforcement action could be taken in respect of any breach of planning control which may be constituted by the matter stated in the notice: s. 174(2)(d) of the Act. For the purposes of the Act uses and operations are lawful at any time if no enforcement action may then be taken in respect of them (whether because they did not involve development or require planning permission or because the time for enforcement action has expired): s. 191(2).

His starting point set out in para. 6 was:-

He decided that Mr Jasim’s occupation did not break the pattern of short-term letting. As for Miss Kapoor he found:-

His conclusion was this:-

So he decided on the balance of probability that at the time the enforcement notice was issued, it was not too late to take enforcement action against the matters alleged in the notice and the appeal failed.

Fairstate submitted to him in effect that in the light of 1) his finding that the use of the premises for short term lettings had become lawful by virtue of ten years’ use in breach of planning control but 2) his failure to find that Miss Kapoor’s occupation constituted a material change of that lawful use, the Inspector could not rationally have concluded that those lawful use rights had been lost and s.25 could not bite because no change of use had occurred. The Secretary of State submitted that the effect of s. 25 was that the change of use from non-temporary residential use by Miss Kapoor to use as temporary sleeping accommodation by Mr Setta was deemed to constitute a material change of use which extinguished any previous lawful user rights. There was thus a development requiring planning permission and that had not been obtained.

Sullivan J.’s judgment is succinct and deserves to be set out in full. He said:-

On behalf of Fairstate Mr Meyric Lewis submits that the effect of the judge’s decision is to create a narrow class of short-term residential use which is subject to a stricter form of enforcement control than any other. The result of his decision is in conflict with the rationale of fairness which underlies the ten year time limit on enforcement, namely that after the passage of so many years, planning authorities will lose their right to object to a use which is carried on in breach of planning control: see Secretary of State for the Environment & Anor v Thurrock Borough Council [2002] J.P.L. 1278, para. 25. In accordance with “long established principles” (see Panton and anor v Secretary of State for the Environment, Transport and the Regions and anor [1999]P.L.R.92, 100),such an accrued planning-use right could only be lost by abandonment, of which there was no evidence or suggestion, or by a material change of use which the Inspector did not find.

Westminster City Council indicated to the court that it is content to rely on the reasons given by Sullivan J. and the Council is not represented at this hearing although its observers have attended. On behalf of the Secretary of State Mr Robert Palmer submits that s. 25 does not cease to apply where a lawful use as temporary sleeping accommodation has been established at any date, regardless of how often the use of the premises changes to or from that of temporary sleeping accommodation. He submits s. 25 is of broad application and should be seen as a deliberate artifice imposed on the planning landscape, designed as a legislative tool to limit the use of residential accommodation in Greater London for temporary accommodation to that specifically permitted by the local planning authority. Section 25 does give the local planning authority opportunity to enforce against use as short term residential accommodation and to that extent such uses may well be subject to a stricter form of enforcement control than other uses. That, however, is not to subvert the rationale of the statutory scheme; on the contrary, it is part of the statutory scheme itself. Miss Kapoor’s occupation which was not for temporary sleeping for less than 90 days resulted, as the inspector found, in a significant break in the period of short-term occupations, and so the resumption of the use for short-term occupations thereafter was sufficient to trigger the operation of s.25.

As I have already indicated there are three stages in the use of this flat which fall for consideration for present purposes. Stage one is the ten years or more of use as temporary sleeping accommodation. It is common ground that by virtue of s. 191(2) this became a lawful use. The rationale for this rule was accepted by this court in Thurrock in paras. 15(iii) and 25 to be that:-

It is common ground that the s. 191(2) lawful use can be lost by abandonment or by a material change of use. In this case the Inspector made no finding that Miss Kapoor’s use did amount to such a material change in use. Two consequences follow. First, her use was not to be treated as development within s.55 which required planning permission and in that sense it was “lawful” use. Secondly, however, but for s. 25, Mr Lewis would be correct to submit that the five month interruption of over fourteen years of use for temporary sleeping accommodation would ordinarily be insufficient to destroy that “hardy beast”, as Mr Lewis describes the accrued right. As Sullivan J. puts it in para. 19 of his judgment:-

If, therefore, s. 25 does have that destructive effect, it will operate as an exception to the general rule leading to Fairstate’s complaint that it will be unfair to permit enforcement in the face of over fourteen years’ lethargy.

How then does s. 25 fit into the statutory scheme? In R v Kensington and Chelsea Royal London Borough Council, ex parte Lawrie Plantation Services Ltd.[1999] 3 P.L.R. 138 the House of Lords was faced with the problem of construing the meaning of “consideration” in s. 25 where London flats were providing accommodation for employees of the owner most of whom came from the Indian sub-continent on holiday and used the flats for periods of up to two weeks without any monetary payment being required for the use of the accommodation. The material words of s. 25 were capable of bearing a narrow and a broad meaning and so, looking at the purpose of the provision, Lord Clyde said this at p. 142:-

For its part Westminster County Council have had longstanding policies to maintain a large and stable residential population in the City and protect permanent residential accommodation against loss to short-term lettings for temporary sleeping accommodation. There was evidence before the inspector that the council had been issuing enforcement notices against use of residential accommodation as temporary sleeping accommodation within the meaning of s. 25 since at least 1987, that is to say throughout the ten year period from January 1989 to January 1999 examined by the inspector in this case.

Section 25 is thus a powerful weapon in the local planning authority’s armoury to ensure the maintenance of a proper stock of permanent residential accommodation. It seems to me that four general points can be made about its operation.

Although enacted in a Local Government Act, s. 25 is clearly intended to operate within and as a part of general planning law. That is obvious from the opening words, “For the purposes of s. 55(1) of the Act of 1990”. Where s. 25 applies and where in consequence there has been a material change of use, then planning permission is required for that material change and failure to obtain it can lead to enforcement notices being served.

S.25 operates where residential premises, which, as defined, mean those which had been previously used, or designed or constructed for use, as permanent residences, become used as temporary sleeping accommodation i.e. occupied for a consideration for less than ninety consecutive nights. Implicit in the word “become” is the fact that there has been a change from something. That change is the trigger for the operation of s. 25.

Section 25 then takes effect as a deeming provision. The changed use of any residential premises to temporary sleeping accommodation in Greater London is treated as involving a material change of use of the premises. I can see the good sense of such a provision. Against a general background that residential accommodation is under threat from the floating population of this great metropolis, there are sound policy reasons for providing that the inevitable consequence of any change to short-term use must be treated as a material change of use for planning purposes.

There had been some difference of view in the High Court as to whether s. 25 applied every time there was use for temporary sleeping accommodation, as Mr Moriarty Q.C. held in The Lord Mayor and Citizens of the City of Westminster v The Secretary of State for the Environment and Dukegrade Ltd. [1990] J.P.L. 277, or whether there would be only one change of use if one temporary use was followed immediately by another as suggested by Mr Vandermeer Q.C. in Westminster City Council v Secretary of State for the Environment and Miller Developments Ltd.[1992] J.P.L. 24. That is not an issue before us, because there is no challenge to the Inspector’s finding that, after years of continuous short-term lettings, use for temporary sleeping accommodation had become lawful by January 1999.

The critical question seems to me to be whether the interruption of that sequence of short-term occupations, represented by Miss Kapoor’s occupation of the flat, brings s. 25 into play. Her occupation effected no material change of use and, as I have explained, it was to that extent lawful use of the accommodation. It endured for longer than ninety days and so it was not use as temporary sleeping accommodation. But it was, as the Inspector found, a significant break in the continuity of the pattern of use for temporary sleeping accommodation. It was the trigger which allowed the renewed operation of s. 25. Accordingly, in accordance with the clear words of the section, re-commencement of use for temporary sleeping accommodation was deemed to be a material change of use.

I have noted that in construing the consideration requirement in s. 25 the House of Lords adopted a wide construction in Lawrie Plantation. I would follow suit here. The purpose is to give the London Borough a greater and easier means of planning control in order to enhance permanent residential accommodation in Greater London and restrict the random spread of temporary sleeping accommodation. Westminster’s planning policy shows why this is necessary. Consequently I would conclude that s. 25 bites when an actual use as residential accommodation changes to actual use as temporary sleeping accommodation. Thus I agree with the inspector and with Sullivan J. that the issue was not whether Miss Kapoor’s use itself involved a material change from the previous lawful use as temporary sleeping accommodation. It was enough that the continuity of the sequence of short-term occupations was broken.

Taking a fair and common sense view of the facts in this case, I have regard to the fact that there was an actual change of circumstances in February 1999. Use for temporary sleeping accommodation ceased and the landlord allowed the flat to be used by Miss Kapoor for longer-term occupation. There is nothing unfair in the Greater London planning policies prevailing if the landlord reverts to lettings which planning controls were designed to prohibit.

The moment the longer-term occupation by Miss Kapoor ceased and the pattern of short-term occupations resumed with the letting to Mr Setta then it seems to me to be plain that there was, as a matter of fact, in the words of s. 25, “use as temporary sleeping accommodation of … residential premises in Greater London”. That is deemed to be a material change of use by s. 25. Because it is a material change of use without planning permission there is a breach of planning controls and the planning authority was entitled to issue its enforcement notice. For those reasons which are much more cogently given in paras 19-22 of Sullivan J’s judgment I would dismiss this appeal.

I agree.

I also agree.