Riverlate Properties Ltd v Paul

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Russell,LORD JUSTICE RUSSELL
Judgment Date08 Apr 1974
Neutral Citation[1974] EWCA Civ J0408-4
Judgment citation (vLex)[1974] EWCA Civ J0408-6

[1974] EWCA Civ J0408-4

In The Supreme Court of Judicature

Court of Appeal

Civil Division

On appeal from Order of Mr Justice Templeman.

Before:

Lord Justice Russell,

Lord Justice Stamp (Not Present) and

Lord Justice Lawton

Between:
Riverlate Properties Limited
and
Laura Caroline Paul

Mr H. E. FRANCIS, Q.C. and Mr ROBERT WAKEFIELD (instructed by Messrs Charles Caplin & Co.) appeared on behalf of the Appellant (Plaintiff).

Mr MICHAEL EASTHAM, Q.C. and Mr PETER SLOT (instructed by Messrs Dibsdall & Mills) appeared on behalf of the Respondent (Defendant).

Lord Justice Russell
1

The Judgment I am about to deliver is the judgment of the Court.

2

No. 22 Blenheim Road, St. John's Wood, is at the end of a terrace. In 1969 the ground and basement floors were subject to a lease for use as a shop. The first and second floors were a self contained maisonette with a separate outside front door and staircase from ground level. The plaintiff company a £100 property dealing company part of a group wished to dispose of the maisonette on a 99 year lease at a price of £6,500 with a ground rent exclusive of rates of £25 per annum and put it in the hands of agents. The defendant Mrs Paul, a recent widow not in very good health, was attracted by it. She saw the property and the estate agents and went to solicitors, in which the relevant partner was a Mr Mills, to act for her in making an offer and carrying through the acquisition of the property. Solicitors for the plaintiff submitted a draft contract to which was annexed a draft of the proposed 99 year lease. Ultimately the contracts were exchanged and the lease and counterpart executed. A friend of the defendant's son was a surveyor: he looked at the property and found defects that he thought should be remedied before completion by the lesser, and the contract provided for this. The accepted price or premium was £6,250.

3

The lease as executed provides that the lesser shall be responsible for exterior and structural repairs of the building No. 22 and contains no provision for any part of the cost falling upon the lessee. This action seeks rectification of the lease so as to make the lessee obliged to reimburse to the lesser one half of the cost of such repairs. The alleged error in the form of the lease, which was executed in July 1969,was first asserted by the plaintiff in 1971. The plaintiff claims that the lease was executed in a form which does not throw upon the defendant any obligation to bear part of the cost of exterior and structural repairs by a mistake common to both parties: alternatively upon the ground that the plaintiff made the mistake and the defendant knew that the plaintiff was making it, which equally it is said entitles the plaintiff to rectification. In the further alternative the plaintiff contends that the case is one in which, albeit there was only unilateral mistake not known to or contributed to by the defendant, the defendant should be put to her election whether to submit to rescission of the lease or to rectification such as to cure the plaintiff's mistake.

4

First we turn to the contents of the lease as executed, which in particular are relied upon by the plaintiff as showing that at least something has gone wrong.

5

Clause 3 contained lessee's covenants to pay rent, rates and taxes charged on the maisonette and to pay the proper proportion of such outgoings as were attributable to the maisonette so far as they were charged on the building as a whole. The building was the whole of No. 22. Clause 3 also required the lessee to deal with interior maintenance and decoration of the interior of the maisonette, and other usual tenant's covenants. Clause 4 provided that it was for the lesser to decide the appropriate proportion of rates and taxes etc. attributable to the maisonette subject, if dispute, to decision of an independent surveyor: this is relevant to a later reference to water rate. We come then to clause 5(3) whereby the lessee covenants to contribute and pay one half of the reasonable costs, expenses, outgoings and matters for whichthe lesser is responsible by virtue of the provisions of clause 6, paragraphs (b), (c) and (d), thereof. Herein is the nub of the dispute. Clause 6 imposes obligations on the lesser. Clause 6(a) relates to exterior and structural repairs. Clause 6(b) was a covenant by the lesser to insure the building the building being, of course, the whole of No. 22. Clause 6(c) required the lesser to decorate the exterior of the building. Clause 6(d) required the lesser to pay the water rates on the building.

6

It would obviously make good sense if you combine clause 5(3) with clause 6 (a), (b) and (c). If you combine clause 5(3), as required by it, with clause 6 (b), (c) and (d), it throws on the lesser the entire financial liability for exterior and structural repairs, without putting upon the lessee an obligation to contribute a suitable proportion of such expenditure by the lesser. Moreover, by putting upon the lessee one half of the water rate on the whole building, it would appear to conflict with the obligation under clause 4 for the lessee to bear an appropriate proportion of, inter alia, water rate, whether it be half or not.

7

There is this further to be considered. Clause 6(f) and (g) require the lesser to keep accounts of his expenditure under clause 6 (a), (b) and (c) and from time to time (half yearly) that an audit should certify the total expenditure under these three heads. Here it is said is a system which must be designed to produce a sum of expenditure by the lesser to which can be applied the obligation of the lessee under clause 5(3) to contribute half.

8

In short, it is said, every provision works well and intelligibly if you substitute in clause 5(3) the reference toclause 6 (a), (b) and (c) for clause 6 (b), (c) and (d): and that if you do not do this, you find a situation, at the very least unusual, in which (i) at this ground rent of £25 the lesser is for 99 years wholly liable for exterior and structural repairs relevant to the maisonette, (ii) while at the same time the lessee is liable to contribute an appropriate proportion to the cost of external decoration such as painting of ironwork and outer parts of window sills, (iii) there is an apparent conflict as to water rate between liability on the lessee of a proper proportion of the water rate on the whole of the building and a liability for half that whole under clause 6(d) regardless of relative consumption of water or relative rateable values, and (iv) the accounts to be kept and the total expenditure to be certified are to include an element (clause 6(a) exterior and structural repairs) which ere no concern of the lessee, for whose benefit it is to be assumed that the auditor's certificate is to be prepared.

9

Under all these heads there is good ground for thinking that something has gone wrong. But these heads are not sufficient by themselves to justify construction of the lease in the sense suggested by the lesser which indeed is not suggested as possible.

10

The defendant herself gave evidence which was accepted by the Judge and is not challenged. Her memory of 1969 was, not surprisingly, vague, but she was clear that it was always her understanding that the lesser was to be responsible for exterior and structural repairs of the building and that she was not to be liable for any part of that expense. For the appellant it was accepted that if her state of mind was the only relevant one for the purpose of founding a claim torectification upon either common mistake or upon unilateral mistake by one party known to the other party, the latter lying low and saying nothing (like a combination of Brer Fox and the Tar Baby in Uncle Remus), it did not suffice. What was contended was that the proper conclusion from events and from the evidence of Mr Mills was that he, the agent of the defendant, either intended the lease to put upon the defendant an obligation to pay half the lesser's expenses from time to time on exterior and structural repairs, or that he appreciated that the form of lease prepared by the plaintiff failed by a mistake of the plaintiff or its advisers to achieve that result because clause 5(3) referred to clause 6 (b), (c) and (d) instead of 6 (a), (b) and (c). He could not, it was said, have failed to appreciate this. There is one point to be particularly mentioned in this connection. An amendment was introduced into clause 4 of the draft of the lease by Mr Mills (and accepted by the plaintiff's solicitor) by way of a reference subjecting it to clause 6(d). It is plain from this that Mr Mills recognised that, so far as water rate might be charged on the whole building, clause 6(d) in conjunction with clause 5(3) put liability for half on the lessee, while clause 4 put on her liability for a "proper proportion": hence the amendment to make 6(d) and 5(3) govern the situation. But this certainly shows that Mr Mills did not think that clause 5(3) erred in referring to 6(d). Another point is this. It is, we think, reasonably plain that the draft lease prepared by Mr Butcher, the plaintiff's solicitor, was based upon an earlier lease of the maisonette at No. 20, next door, to one Webb, for which Mr Butcher was also responsible. That was also for 99 years at a £25 ground rentfor a premium payment of an amount unknown, and equally referred to clause 6 (b), (c) and (d), and not (a), (b) and (c). The point here is that in that case also the solicitor for the lessee seems not to have assumed a mistake on the lesser's side: unless, of course, he was somewhat dishonestly emulating the Uncle Remus combination.

11

The summary of Mr Mills' evidence is this: and it must be remembered that he was trying to reconstruct his thoughts in the face of a minute examination of the implications of various parts of the lease when the question had boon first raised two years after the...

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