Roadside Group Ltd v Zara Commercial Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Kitchin |
| Judgment Date | 30 July 2010 |
| Neutral Citation | [2010] EWHC 1950 (Ch) |
| Date | 30 July 2010 |
| Court | Chancery Division |
| Docket Number | Case No: CC/2009/APP/0477 |
[2010] EWHC 1950 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM THE NEWCASTLE UPON TYNE COUNTY COURT
(HHJ Langan QC)
Before: The Honourable Mr. Justice Kitchin
Case No: CC/2009/APP/0477
Lower Court Case No: NE03110
Mr. Jonathan Small QC (instructed by Pick worths) for the Claimant/Appellant.
Mr. Jonathan Gaunt QC (instructed by Sintons) for the Defendant/Respondent
Hearing dates: 9 July 2010
Mr. Justice Kitchin:
Introduction
This is an appeal from a decision and order of HH Judge Langan QC dated 2 July 2009 concerning the proper interpretation of a user covenant.
The appellant (“Roadside”) is the tenant of premises comprising a petrol station, car showroom (with two flats over it), service garage and hard standing on the west side of the Broadway on the Darras Hall Estate, Ponteland, Northumberland pursuant to an underlease dated 8 July 1963.
The respondent (“Zara”) is Roadside's landlord, holding under an intermediate lease and a headlease. The demised premises under the headlease include land adjacent to and to the south of Roadside's demised premises under the underlease.
Roadside has, in turn, granted a sub-lease of the car showroom and the service garage (but not the petrol station and hard standing) to a company called Triple Eight Motor Company Limited (“Triple Eight”) which for some time has parked cars for sale in certain areas around the perimeter of the site.
In this action Zara contended that, as a result of the activities of Triple Eight, Roadside was in breach of a covenant in the underlease not to use the demised premises “for the parking of motor vehicles for sale on any forecourt” (the “parking user covenant”) and that it was entitled to forfeiture of the underlease and possession of the demised premises. Roadside sought a declaration that there had been no breach, alternatively relief from forfeiture.
At trial, Zara was successful on the issue of the true construction of the underlease and so Roadside was held to be in breach. However, Zara failed in its bid to forfeit the underlease, the judge holding that the notice under section 146 of the Law of Property Act 1925 was invalid and, in any event, that this was a clear case for relief from forfeiture.
Triple Eight nevertheless wishes to continue to park cars for sale just as it has in the past. Accordingly, with the leave of the judge, Roadside appeals on two points:
i) whether on the true construction of the parking user covenant, Roadside is liable for the activities of its sub-tenant; and
ii) whether the judge was right to conclude that certain areas on which Triple Eight has been parking cars for sale are part of the forecourt within the meaning of the parking user covenant.
The terms of the underlease
The parking user covenant is contained in clause 2(xii)(b) of the underlease. This and certain other relevant covenants are set out below:
“2. The company HEREBY COVENANTS with the Lessors as follows:
….
(xi) Not to alter or permit to be altered any part of the buildings at any time on the demised premises or the fences or walls thereof without the plans and specifications thereof having been previously approved of by the Lessors and Superior Lessors
(xii) (a) Not without the written consent of the Lessors and the Superior Lessors to use the demised premises or any part thereof or the buildings thereon nor to permit the same to be used for the display of advertisements other than the name and type of business carried on and type of oil and petroleum products sold from the demised premises provided that the Lessors and Superior Lessors shall not unreasonably withhold their written consent to the display thereon of the advertisements of motor cars and motor accessories and service of motor vehicles of any kind
(b) Not to use the demised premises or any part thereof for the sale of motor vehicles by auction or for the parking of motor vehicles for sale on any forecourt or for the erection or maintenance thereon of temporary building huts caravans or moveable dwellinghouse or for the sale of ale beer wine spirits or other intoxicating liquors or for a club where intoxicating liquors are permitted to be consumed or distributed and further not to use the said piece of land otherwise than for a petrol and oil filling station service garage with showroom and residential accommodation therefor
(xiii) Not to erect or permit to be erected any outside lighting except by attachment to a building and further not without the written consent of the Lessors to erect or permit to be erected any form of neon or tubular display or advertising lighting on any part of the demised premises or any building for the time being erected thereon
(xiv) Not to do or permit to be done on the demised premises or any part thereof anything which may be or be likely to lead to be a nuisance damage grievance or annoyance to the owners or tenants of any of the adjoining property or to the neighbourhood”
The underlease was granted out of the intermediate lease dated 1 July 1963 which demised the same premises. The intermediate lease contains what is, in substance, the parking user covenant at clause 2(xii).
The intermediate lease was in turn granted out of the headlease dated 2 February 1960. As I have mentioned, this demised larger premises which wholly encompass the premises the subject of the intermediate lease. It again contains what is, in substance,the parking user covenant at clause 2(xv), which applies to the entirety of the demised premises.
The demised premises
A plan of the premises demised by the underlease is attached to the order of the judge and is reproduced in the appendix to this judgment. The premises occupy a quadrilateral site fronting and to the west of the Broadway, which runs in a generally north-south direction.
In the middle of the site is the petrol station with pumps, canopy and kiosk from which Roadside carries on business. To the south of the site is a cluster of buildings which are sub-let to Triple Eight and comprise, to the front, the showroom and, to the rear, the service garage.
For some time Triple Eight has, with the consent of Roadside, parked cars for sale in the shaded areas coloured red along the northern and western perimeters of the site and in the shaded area coloured blue along the southern perimeter of the site.
The judge concluded that the areas coloured red, but not the area coloured blue, formed part of the forecourt of the premises within the meaning of the parking user covenant, and it is this finding which forms the second aspect of the appeal.
Liability for the sub-tenant
Before the judge, Roadside relied upon the proposition stated in Woodfall's Law of Landlord and Tenant that a covenant not to do something is generally not broken if the prohibited thing is not done by the covenantor but by a third party, and also upon the contrast in language between the user covenant of clause 2(xii)(b) and the other covenants contained in clauses 2(xi), (xii)(a), (xiii) and (xiv), each of which is a covenant not to do various acts or permit them to be done.
Zara countered that Roadside's construction made a nonsense of the parking user covenant. It was clear the original landlord regarded as objectionable the parking of cars for sale on any forecourt and that the original lessee must have known this. Yet, upon Roadside's construction, the original lessee could, a day or two after the grant of the lease, have avoided the covenant by simply sub-letting the premises without imposing a corresponding negative covenant upon the sub-tenant.
The judge expressed his conclusion in concise terms in paragraph [27] of his judgment:
“[27] The choice between these two approaches is almost a matter of impression, and it is not one which I can pretend to make with great confidence. In my judgment, Ms Temple's submission is to be preferred. The proposition taken from Woodfall is, no doubt correct, but it is a general proposition only and it must yield to particular considerations in an individual case. The real question here is whether the contrast in language on which Mr Bruce relies is so stark as to drive me to the conclusion that clause 2(xii)(b) should be given therestricted and literal construction for which he contends. In my judgment, the linguistic argument is not so powerful that it overwhelms the commercial sense which is the basis of Ms Temple's submission. I have put the matter quite shortly, but it does not appear to call for further elaboration which would, in truth, be no more than repetition in other words of what I have said so far.”
On this appeal, Mr Small QC, who has appeared for Roadside, contends that the judge fell into error in failing to accept the submissions advanced on behalf of Roadside. Mr Gaunt QC, who has appeared for Zara, contends that judge was right for the reasons he gave and further, that his interpretation is confirmed and supported by section 79 of the Law of Property Act 1925 which reads, so far as relevant:
“(1) A covenant relating to any land of a covenantor …. shall, unless a contrary intention is expressed, be deemed to be made by the covenantor on behalf of himself, his successors in title...
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