London Borough of Hackney v Roy Thompson
| Jurisdiction | England & Wales |
| Judgment Date | 11 October 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J1011-9 |
| Date | 11 October 2000 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | B2/1999/1092 |
[2000] EWCA Civ J1011-9
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SHOREDITCH COUNTY COURT
(His Honour Judge Graham QC)
Royal Courts of Justice
Strand
London WC2
:lord Justice Aldous
Lord Justice Sedley
B2/1999/1092
MR R LATHAM (Instructed by Messrs Akainyah & Co, London N4 2AG) appeared on behalf of the Appellant
MR R GREEN (Instructed by Hackney Legal Trading, London N16 0LH) appeared on behalf of the Respondent
LORD JUSTICE ALDOUS: Mr Roy Thompson appeals against the judgment and order of His Honour Judge Graham QC of 29th September 1999. By that order he allowed an appeal against the order of District Judge Wright which had dismissed the claim.
By deed of transfer dated 19th December 1988 the London Borough of Hackney ("the council") transferred to Mr Thompson the freehold of 6 Lowestoft Close, Jack Watts Estate, London E5. The transfer contained a covenant requiring Mr Thompson to pay certain management charges. Between 1989 and 1998 the council assessed those management charges and sought payment from Mr Thompson. He refused to pay upon the grounds that he owned the freehold and therefore was not liable to pay management charges, and also because he believed that he had not used the services for which the charges were sought to be levied. That resulted in the council taking proceedings for the arrears. Those proceedings were due to be heard on 1st December 1997. The council did not appear and the proceedings were struck out for non-attendance.
The council then started another set of proceedings on 7th December 1998 seeking payment of management charges assessed at just over £800. Those proceedings came before District Judge Wright on 11th June 1999. The District Judge dismissed the council's claim on the ground that the covenant requiring payment was void for uncertainty. The District Judge concluded that it was impossible to quantify with any certainty the charge to be paid by Mr Thompson. Against that decision the council appealed. Their appeal was allowed on 29th September 1999.
The sole issue that arises on this appeal is whether Clause 3(C) of the transfer is void for uncertainty. The relevant parts of that clause are as follows:
"3. THE TRANSFEREE for the Transferee and the successors in title of the Transferee hereby covenants with the Council …
(C) The Transferee hereby further covenants with the Council that the Transferee will at all times
(a) Pay to the Council such annual sums as may be notified to the Transferee by the Council from time to time as representing the due proportion of the reasonably estimated amount required to cover the cost and expenses incurred or to be incurred by the Council in carrying out such of the management functions contained in or referred to in the Third Schedule hereto and in addition a reasonable and fair proportion of the management and administration expenses in respect of the said management functions as the Council shall reasonably decide to carry out for each financial year running from the First day of April in each year to the Thirty first day of March in the following year and also of any costs and expenses incurred during a previous financial year (but not prior to the date hereof) but remaining unpaid which the Council may in its absolute discretion consider it reasonable to include (such costs and expenses being hereinafter together called 'the Management Charges') such sums to be payable monthly in advance of the First day of each month in each year the first payment being a proportionate part for the period from the date hereof to the present.
(b) If the amount by which the estimated Management Charges paid by the Transferee to the Council under sub-clause (a) of this clause is more than the due proportion payable by the Transferee of the total moneys properly and reasonably expended or retained by the Council as above the excess so paid shall be carried forward by the Transferee to be credited to the account of the Transferee."
The third schedule relates to maintenance of roadways, gardens, community halls, playgrounds, other community facilities and the like.
I shall have to come in detail to the submissions of the parties as to the meaning of Clause 3(C)(a). However, at this stage it is convenient to note that it is in two parts. Firstly, it is a covenant by the transferee to pay to the council such annual sum as may be notified as representing the due proportion of the reasonably estimated amount required to cover the costs incurred. The second part is a covenant to pay a reasonable and fair proportion of the management and administration expenses.
Before the judge and in this court it was the submission of counsel on behalf of Mr Thompson that the words "representing the due proportion of the reasonably estimated amount" were so uncertain as to make the whole clause void for uncertainty, as there was no indication of how the apportionment was to be carried out. That submission was dealt with by the judge and rejected. Referring to submissions made by counsel on behalf of Mr Thompson, he said:
"This is a clear and well formulated argument, but I do not accept it. If the phrase 'the due proportion of the reasonably estimated amount …' stood by itself then it would be capable of the variety of meanings which are set out. However, the phrase should be construed within the context of the whole agreement and, in particular, of the totality of clause 3C(a) and (b). On this basis 'due proportion' can logically be interpreted to mean '… a reasonable and fair proportion…'. This is because the transferee has not only to pay his share of the costs of the services set out in the Third Schedule but in addition 'a reasonable and fair proportion of the management and administration expenses …'. It would be irrational for the 'due proportion' in relation to the services set out in the Third Schedule to differ from a 'fair and reasonable proportion' of the management charges. 'The proportion' should mean the same in both expressions. Therefore 'due proportion' should be interpreted as 'a fair and reasonable proportion'.
However, this does not conclude the matter because a further question arises whether the phrase 'a fair and reasonable proportion' is itself not void for uncertainty. Is it not vitiated by the same diversity of meaning as the phrase 'due proportion' standing by itself. In my opinion not so. It is an intelligible concept capable of judicial application. It is an expression which the courts have frequently interpreted within the context of numerous contracts. In the present case if the Council were to apportion the costs pro rata according to the number of dwellings the court could determine in the event of a challenge whether such apportionment is 'fair and reasonable' and the same principle would apply in the event of an...
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