Caerphilly Concrete Products Ltd v Owen
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL,LORD JUSTICE SACHS,LORD JUSTICE STAMP |
| Judgment Date | 05 November 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J1105-1 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 November 1971 |
[1971] EWCA Civ J1105-1
In The Supreme Court of Judicature
Court of Appeal
On Appeal from MR. Justice Foster
Lord Justice Russell
Lord Justice Sachs
Lord Justice Stamp
In the Matter of A LEASE dated 6th May, 1963, and made between John Kenneth Hopkins and Frederick William Owen
and
In the Matter of the Law of Property Act, 1922.
MR. BRUCE GRIFFITHS, Q. C., and MR. T. HYWELL MOSELEY, instructed by Messrs. Theodore Goddard & Co., Agents for Messrs. Hugh-Jones (Cardiff), appeared for the Appellants (Plaintiffs).
MR. R. H. WALTON, Q. C., and MR. H. W. J, ap ROBERT, instructed by Messrs. Granville-West, Chivers & Morgan (Newbridge, Mon.), appeared for the Respondent (Defendant).
This appeal from Mr. Justice Foster raises the question whether the terms of a lease are such as to create a perpetually renewable lease, and consequently by force of the Law of Property Act, 1922, confers upon the tenant a 2,000 year term.
The lease in question is dated 6th May, 1963. One Hopkins was the lessor and the defendant Owen the lessee. It was for a term of five years from 1st January, 1963, at a rent of £10 yearly payable in advance in one sum of £50. The premises were an area of 4,800 square feet in an industrial area in Caerphilly. Owen had been previously lessee of the property from Hopkins under a succession of leases in similar terms, and in 1957 had sublet the premises to the plaintiff at a weekly rental of 30s. In 1966 the plaintiff bought the freehold of the premises; and the plaintiff contends that on the expiration of the five year term it is no longer since January,1968, liable to nay the 30s weekly rental to the defendant. The defendant admittedly had at least an option for another five years from January, 1968, but had failed to give due notice exercising that option: but the defendant contends that the lease of 1963 was perpetually renewable, in which case notice was not necessary because of the 2,000 year term.
I add that there is a secondary point that arises if there was no perpetually renewable lease and therefore no 2,000 year term, because of a payment of £50 by way of rent for a period after January, 1968, apparently accepted as such by the plaintiff. This may prevent the plaintiff in any event from contending that it ceased to be the lessee of the defendant at 30s. weekly in January 1968: but that point is in any event not now for decision.
The 1963 lease contained a number of covenants, provisos and conditions which do not I think call for special notice. I am not sure at what stage in the history of the Hopkins to Owen leases a shed was erected on the premises by Owen, but presumably it was before 1957, thus justifying a weekly rent of 30s. charged in the subletting by Owen to the plaintiff.
The crucial clause is 4(3) which was in the following terms: "The landlord hereby covenants with the tenant as follows: (3) That the landlord will on the written request of the tenant made six months before the expiration of the term hereby created and if there shall not at the time of such request be any existing breach or non-observance of any of the covenants on the part of the tenant hereinbefore contained at the expense of the tenant grant to him a lease of the said demised land for the further term hereby granted at the same rent and containing the like covenants and provisos as are heroin contained (including an option to renew such lease for the further term of five years at the expiration thereof) the tenant on the execution of such renewed lease to execute a counterpart thereof",
Here then is the short point, when the time comes for the grant of the second five year term, is that grant to include clause 4(3) including the parenthesis? In that case we have a perpetually renewable lease. Or is it to include clause 4(3) without the parenthesis or an option in some other terms, in which case there is provision in the 1963 lease for three periods of five years and no more.
The approach to the question whether a lease is perpetually renewable is not in doubt. The language usedmust plainly lead to that result: though the fact that an argument is capable of being sustained at some length against that result does not of course suffice.
As a matter of history, when a covenant by a lessor conferred a right to renewal of the lease, the new grant to contain the same or the like covenants and provisos as were contained in the lease, the courts refused to give literal effect to that language, which if taken literally would mean that the second lease would contain the same covenant (or option) to renew, totidem verbis, and so on perpetually. The reference to the same covenants was construed as not including the option covenant itself. This limited the tenant's right to one renewal. In order therefore to make it plain that the covenants to be contained in the second lease (to be granted under the exercise of the option to renew) were to include also the covenant to renew, draftsmen were accustomed to insert phrases such as "including this covenant", so as to achieve a perpetually renewable lease. As I have indicated, if they did not dothis, the second lease would not contain any option clause.
The operation of the words of inclusion was not limited to requiring the second lease to contain a covenant to renew once more only, which would have been the outcome if the words of inclusion had been omitted in the second lease. This was because the words of inclusion could not properly be onstrued as requiring the second lease to contain the same covenants other than the covenant to renew but additionally to include an option to renew once more only - a total of three terms. The words of inclusion defined or explained what was meant by "the same covenants", that is to say, as including the covenant to renew. Consequently in thesecond lease, in order to comply with the words of definition or explanation, the covenants referred to therein to be contained in the second lease must contain the same wording including the inclusion.
Now in the present case the brackets make it abundantly plain that the parties are explaining that "the same or like covenants and provisos" is a phrase intended to embrace an option. That is to say that the covenants and provisos contained in the first lease which the first lease requires the second lease to contain are not to be construed as a reference to those covenants and provisos other than an option to renew, but as a reference to all those covenants including an option to renew. But what covenant in the first lease (to be repeated in the second) can be regarded as such except clause 4(3)? The second lease must contain the clause...
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...is whether cl 3(c) of the said lease gave the plaintiff a perpetual right of renewal. In Caerphilly Concrete Products Ltd v Owen [1972] 1 WLR 372; [1972] 1 All ER 248 by a lease dated 6 May 1963 the predecessor in title to the plaintiff landlords demised the premises to the tenant Owen for ......
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...rise to a right of perpetual renewal. The option would be spent once it is exercised once, see Caerphilly Concrete Products Ltd v Owen [1972] 1 WLR 372 at 374G to 375A. I do not think the Covenant is clear enough to confer upon Ching Hing a right to a second renewal. I do not regard the wor......
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...rise to a right of perpetual renewal. The option would be spent once it is exercised once, see Caerphilly Concrete Products Ltd v Owen [1972] 1 WLR 372 at 374G to 375A. I do not think the Covenant is clear enough to confer upon Ching Hing a right to a second renewal. I do not regard the wor......