Deajan Properties Ltd v Campbell
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE ROTH |
| Judgment Date | 01 November 2011 |
| Neutral Citation | [2011] EWHC 3741 (Ch) |
| Docket Number | Case No: HC10C01982 |
| Court | Chancery Division |
| Date | 01 November 2011 |
[2011] EWHC 3741 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Roth
Case No: HC10C01982
MR COWEN appeared on behalf of the Claimant
MR MURCH appeared on behalf of the Defendant
Approved Judgment
This is a dispute concerning the true construction of the lease of a maisonette known as third and fourth floor maisonette, 2 Upper Wimpole Street, London W1G 6LD, and I shall refer to it as "the maisonette". The lessor, referred to as "the landlord" and the lessee ("the tenant"), have been ably represented by Mr Cowen and Mr Murch respectively.
The maisonette is part of a converted Georgian townhouse of six floors. The floors are not of uniform size. In particular, it is now agreed that by the time this lease was entered into, the basement and ground floor levels had been extended backwards beyond the rear elevation of the building such that there was additional roof space at the lower level.
The house is in mixed use. Some of the basement, most of the ground floor and the first floor are used as consulting rooms for medical professionals. The second floor is a self-contained flat used for residential purposes and the third and fourth floors comprise the maisonette that is the subject of the lease involved in this case.
The claimant is the landlord and the defendant is the tenant of the maisonette. The current lease of the maisonette is dated 8 July 1999 but that lease ("the 1999 lease") is expressly on the same terms as the previous lease and was obtained by the tenant by way of extension pursuant to the Leasehold Reform, Housing and Urban Development Act 1993. It made only certain changes which are immaterial to this dispute to the previous lease so it is to the terms of the previous lease which, for convenience, I will refer to simply as "the lease" that I shall turn.
The lease is dated 7 November 1958. It is for a term of 65 years as from 29 September 1958. At the outset, the maisonette is defined as "the premises" but the premises also include a staircase leading from the second floor landing up to the maisonette on the third and fourth floors. The lease also contains a definition of the flat immediately below on the second floor as "the flat". The lessee's covenants are in clause 2. Clause 2(8) provides that the lessee shall:
"At all times during the said term to pay and contribute a rateable or due proportion of the expense of making repairing maintaining painting supporting rebuilding and cleansing of all sewers drains pipes watercourses water pipes cisterns gutters party walls party structures easements and appurtenances belonging to or used or capable of being used by the Lessees in common with the Lessor or the tenants or occupiers of the flat and the rest of the house such proportion in the case of any difference to be settled by a single arbitrator …"
Clause 2(20) obliges the lessee:
"To pay to the Lessor every year on demand the sum equal to two fifths of every annual premium paid by the Lessor for a comprehensive insurance of the house to the full value thereof."
Clause 2(21) similarly imposes an obligation:
"To pay to the Lessor every year on demand a sum equal to eight-nineteenths of the annual cost of centrally heating the house and of providing hot water such cost to be made up of the cost of fuel and the cost of maintenance and repairs to the central heating system and the hot water system."
There is then the provision which is central to the present dispute in sub-clause 2(25):
"To pay to the Lessor on demand two-fifths of the expense at all times and from time to time incurred by the Lessor in performing the covenant contained in Clause 3(3) hereof."
Clause 3(3) is therefore one of the lessor's covenants. I shall read first clause 3(2):
"To keep the house insured against comprehensive risks to the full value thereof in some insurance office of repute and to pay all premiums when the same shall become due …"
Clause 3(3), which is the subject of the present dispute, states:
"To keep the roof and outside walls of the premises [and I emphasise the words 'the premises'] in good repair and condition and to paint the exterior of the premises [again, I emphasise 'the premises'] once in every seven years and except in cases of emergency, the Lessor shall before carrying out any work under this sub-clause obtain not less than two competitive estimates from substantial and reputable firms of contractors and shall submit them to the Lessees for approval and the Lessees shall be deemed to approve the cheaper or cheapest of the said estimates unless the Lessees shall within one calendar month of the receipt of the said estimates produce and forward to the Lessor an estimate from a substantial and reputable firm of contractors cheaper than the cheaper or cheapest estimate obtained by the Lessor and in such case the Lessor shall accept the estimate procured by the Lessees."
Accordingly, on its literal meaning, clause 3(3) relates only to the maisonette and the tenant's obligation in clause 2(25) is then to pay 40 per cent of the landlord's costs of keeping the roof and outside walls of the maisonette in good repair and repainting the exterior of the maisonette once every seven years.
For the landlord, Mr Cowen contends that this is a clear mistake and that clause 3(3) must be intended to refer to the house. He submits that it is such a demonstrable mistake that, as a matter of construction, the court can and should interpret it to mean "house" although manifestly that is a clear departure from the language of the covenant that refers expressly to "the premises". For the tenant, Mr Murch submits that this is not interpretation but a re-writing of the clause which is not, in his submission, an obvious or clear mistake. He emphasises that the landlord is not claiming rectification, for which the landlord would have had to adduce positive evidence of the intention of the parties.
The principles to be applied by the court in such a case are well settled and were very sensibly agreed between the parties. They received authoritative expression in the opinion of Lord Hoffmann in the House of Lords in the case of Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, an opinion with which the other members of the judicial committee agreed.
In that case, there was a dispute between a property developer and a house builder regarding the interpretation of a contract for the development and sale of a series of new build properties on a site that had been acquired for development. The issue was the correct interpretation of a pricing provision that determined how a balancing payment which became due for each residential unit was to be calculated.
The trial judge and the majority of the Court of Appeal upheld a literal meaning of the clause. The House of Lords reversed that decision. In his opinion, Lord Hoffmann considered the approach be adopted. He said at paragraph 14, omitting the authorities cited:
"There is no dispute that the principles on which a contract … should be interpreted are those summarised by the House of Lords in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896. They are well known and need not be repeated. It is agreed that the question is what a...
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