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 and the result that the meaning of the live/work concept therefore has 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 (27 September 2021, CCCL, HHJ Johns QC) was such a case. The facts were these: Planning permission had been granted in 2002 for a mixed-use redevelopment of a large building in Bermondsey, with a number of business units, residential units, and one “live/work” unit. Unusually, the permission contained no express conditions regulating the nature or extent of the use and the underlying plans did not delineate any specific part of the premises for use as ‘live’ or ‘work’. The live/work unit had been built out as a flat, without apparent regard to the requirements set out in building regulations for commercial premises at the time. The user clause required use “as a live/work unit in accordance with the terms and conditions of the planning permission”. The Defendants (a barrister and doctor) had resided in the live/work unit primarily as their home, albeit that they had undertaken various work-related activities in their open-plan living space and spare room, such as writing books, publishing papers, and undertaking triaging and consultation of patients by phone. There was no designated work space in the unit and despite inspections over the years, no objections had been raised by the landlord’s agents to such use.
The Claimant took the Defendants to court alleging breach of the lease, and sought declarations that the user clause mandated both live and work and that ‘work’ meant either business use which required something more than home-working. It sought back-dated negotiating damages in the sum of £60,000 and contractual costs pursuant to a clause relating to s. 146 notices. The Defendants counterclaimed for an alternative declaration that the user clause was permissive; that it allowed “live and/or work”, that insofar as ‘work’ was necessary, that term extended to the activities they had undertaken; that any mandatory requirement had been waived or lost by estoppel; that any damages would be minimal; that costs were not recoverable because no intention to forfeit had been shown.
After a 4 day trial, HHJ Johns QC dismissed the claim. He concluded the planning permission meant “live and/or work”. The construction of the planning permission was central to the construction of the leasehold covenant and particular regard was had to:
(i) the planning policy background to the permission, (ii) the absence of conditions, (iii) the fact that the plans marked the whole area as live/work, (iv) the fact that other plans referred to in the permission used a “/” to indicate “and/or”, (v) the planning framework (including the fact that a breach of planning control can have criminal sanctions) (vi) the fact that a “live and/or work” construction still serves a purpose of allowing a business to be run from the premises; and (vii) how the planning permission had been implemented. A 1999 Supplementary Planning Guidance document, which was relied on by the Claimant, did not alter that interpretation.
The Judge also held that if the clause had mandated work, the planning permission did not require running a business from the unit and the activities undertaken by the Defendants were sufficient. Further, even if there had been a breach, the damages entitlement would have been no more than £5,000 and there was no entitlement to contractual costs. The waiver and estoppel claims did not succeed on the facts in the absence of any clear representation.
Whilst the construction of such user clauses will be fact sensitive, this dispute serves to confirm the importance of close analysis of the factual matrix, including the underlying planning and the manner in which it had been implemented in practice.