Paddy Arnold v Rodney Britton and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Davis,Lord Justice Lloyd Jones,Lord Justice Richards |
| Judgment Date | 22 July 2013 |
| Neutral Citation | [2013] EWCA Civ 902 |
| Docket Number | Case No: A3/2012/3420 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 July 2013 |
[2013] EWCA Civ 902
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CARDIFF DISTRICT REGISTRY
MORGAN J
HC06C02169
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Richards
Lord Justice Davis
and
Lord Justice Lloyd Jones
Case No: A3/2012/3420
MR. MICHAEL DAICHES (instructed by Morgan la Roche Solicitors) for the Claimant/Respondent.
MR. TIMOTHY MORSHEAD QC and MR. RAWDON CROZIER (instructed by Fursdon Knapper Solicitors) for the Defendants/Appellants.
Hearing date: 26th June 2013
Approved Judgment
This case, which comes before the court on appeal from a decision of Morgan J dated 3 December 2012, raises points of interpretation of certain service charge clauses. The clauses are contained in long leases granted in respect of 25 properties, being holiday chalets at Oxwich Leisure Park, Oxwich, Gower, near Swansea. For reasons which remain unexplained, the clauses are not in precisely the same terms for each lease — there are five different versions extant.
The essential issue, in short, is whether — as the claimant lessor says — the clauses provide for annual compounded increases, at the rate of 10%, in the charges payable; or whether — as the defendant lessees say — the charges are subject to a cap. The judge (reversing the decision of the judge in the county court) found in favour of the lessor.
To make sense of the arguments it is appropriate to turn straightaway to the various versions of the leases.
Version 1
The first version of the lease is exemplified by that dated 9 August 1977. It relates to chalet 40. There are three other leases currently vested in some of the defendants on like terms, variously granted between 11 August 1977 and July 1980.
The lease was a building lease for which no premium was paid. In its recitals it is stated that: "It is intended to erect chalets on the Estate upon terms similar in all respects to the present demise".
By the lease, the chalet, a car parking space and some further land was demised for a term of 99 years from 25 December 1974. Among other things, rights of passage, rights to use sewers and pipes and the right to use an identified recreation area were granted to the lessee. The rent reserved was £10 per annum increasing thereafter by £5 for every subsequent 21 year period or part thereof, payable by equal half-yearly payments.
Clause 3 contains a number of covenants on the part of the lessee. The first is a covenant to pay the rent. The second — central to these proceedings — is in the following terms:
"(2) To pay to the Lessors without any deductions in addition to the said rent a proportionate part of the expenses and outgoings incurred by the Lessors in the repair maintenance renewal and the provision of services hereinafter set out the yearly sum of Ninety Pounds and value added tax (if any) for the first three years of the term hereby granted increasing thereafter by Ten Pounds per Hundred for every subsequent three year period or part thereof."
A number of other covenants on the part of the lessee are then set out. Amongst other things, the permitted use was as a holiday residence for a single family only during the months of March to October in each year.
There were also covenants on the part of the lessor contained in clause 4. These are in the following terms:
"4. The Lessors hereby jointly and severally covenant with the Lessee as follows:
(i) To construct and maintain in a reasonable state of repair the roads and footways coloured Brown on the said plans up to but not thereafter (if at all) the same becomes maintainable at the public expense.
(ii) To mow the lawn or grass and prune the trees (if any) on the parts coloured Green on the said plans but this is not to imply the replacing of the turf or reseeding of grass and fertilizing of soil or replanting of trees.
(iii) To keep the recreation ground coloured Yellow on the said lay-out plan in a reasonable state or repair and maintenance for the common benefit and enjoyment of the Lessors and all Lessees on the Estate.
(iv) To keep fences drains channels sewers pipes wires ducts and conduits other than those maintainable by the Lessees in good and tenantable repair.
(v) To issue regulations from time to time for the common benefit of all occupiers of chalets on the Estate concerning the use of the recreation ground the parking of vehicles the collection of refuse the control and keeping of domestic pets and animals the use of and payment for the use of the swimming pool (if any) and other additional facilities that may be provided on the Estate at present or at any future time.
(vi) To arrange for the collection of refuse from predetermined places twice a week the time and places to be indicated in accordance with sub-clause (v) above.
(vii) To patrol the Estate twice by day and once at night in order to discourage vandalism or theft or breaking in during the period the demised premises shall be unoccupied but this is not to imply any liability on the part of the Lessors or their employees or agents.
(viii) That the Leases granted by the Lessors of all other plots on or comprised in the estate shall contain covenants on the part of the Lessees thereof to observe the like obligations as are contained herein or obligations as similar thereto as the circumstances permit.
(ix) That the Lessee paying the rent and other payments hereby reserved and performing and observing the several covenants on his part and the conditions herein contained shall peaceably hold and enjoy the demised premises and the rights hereby granted during the said term without any lawful interruption from or by the Lessors or any person lawfully claiming under or in trust for them."
There was also a forfeiture clause in standard wide terms.
Version 2
The second version of the lease is exemplified by that dated 22 September 1980, relating to chalet 76 and parking space. On this occasion, a premium of £13,000 was payable. There are 13 other leases of this kind vested in various of the defendants, variously granted between August 1980 and February 1983. It is identical to version 1 save as to the service charge provisions in clause 3(2), which reads as follows:
"(2) To pay to the Lessors without any deductions in addition to the said rent as a proportionate part of the expenses and outgoings incurred by the Lessors in the repair maintenance and renewal of the facilities of the Estate and the provision of services hereinafter set out the yearly sum of Ninety Pounds and value added tax (if any) for the first year of the term hereby granted increasing thereafter by Ten Pounds per Hundred for every subsequent year or part thereof."
The essential difference is that, first, the word "as" appears before the words "a proportionate part"; and second, the identified sum of £90 is linked to the first year (not first three years) of the term and thereafter increasing by £10 for every subsequent year (not subsequent three years).
Version 3
The third version of the lease is exemplified in that dated 1 July 1985, relating to chalet 96 and car-parking space. The premium was £16,500. There are two other leases of this kind, granted between July 1985 and January 1988. In this form of lease, the recital now says: "It is intended to erect chalets on the Estate upon terms similar in respects to the present demise". The word "all" has thus been removed. Clause 3.2 is in these terms:
"(2) To pay to the Lessors without any deductions in addition to the said rent a proportionate part of the expenses and outgoings incurred by the Lessors in the repair maintenance renewal and the provision of services hereinafter set out the yearly sum of Ninety Pounds and value added tax (if any) for the first year of the term hereby granted increasing thereafter by Ten Pounds per Hundred for every subsequent year thereof."
Version 4
The fourth version of the lease is exemplified in that dated 22 March 1991, relating to chalet 29 and car-parking space. The named lessees were Mr and Mrs Short. The premium payable was £16,000. There are three other leases of this kind, granted between December 1988 and March 1991. The recital is the same as in version 3 and the provisions are, save as to clause 3(2), also otherwise the same. Clause 3(2) in this version of the lease reads as follows:
"(2) To pay to the Lessor without any deductions in addition to the said rent a proportionate part of the expenses and outgoings incurred by the Lessor in the repair maintenance renewal and the provision of services hereinafter set out for the yearly sum of Ninety Pounds and value added tax (if any) for the first year of the term hereby granted increasing thereafter by Ten Pounds per Hundred for every subsequent year thereof."
The difference here is that the word "for" has been added before the words "the yearly sum of Ninety pounds…" In addition, however, there is a proviso to this lease which reads as follows:
"Provided always and it is hereby expressly agreed that whilst the term hereby created is vested in the said William Richard Short and the said Janice Short or the survivor of them then maintenance shall be calculated as follows:-
To pay to the Lessor without any deduction in addition to the said rent a proportionate part of the expenses and outgoings incurred by the Lessor in the repair maintenance renewal and the provision of services hereinafter set out the yearly sum of Ninety Pounds and value added tax (if any) for the first three years of the term hereby granted increasing...
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