England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
District Judge Langley
HC09C04701

		Royal Courts of Justice Strand, London, WC2A 2LL
		11/04/2014

Lord Justice Jackson:

1. This judgment is in seven parts, namely:

Part 1. Introduction	(Paragraphs 2 to 8)
Part 2. The facts	(Paragraphs 9 to 22)
Part 3. The present proceedings	(Paragraphs 23 to 30)
Part 4. The appeal to the Court of Appeal	(Paragraphs 31 to 34)
Part 5. What are the parties' rights and liabilities under the two leases?	(Paragraphs 35 to 50)
Part 6. Decision	(Paragraphs 51 to 65)
Part 7. Executive summary and conclusion	(Paragraphs 66 to 68)

Part 1. Introduction

2. This appeal concerns a four-storey property at 50 Warwick Gardens, London W14. That property is divided into four flats, each one being above the other. All references in this judgment to "flats" are to the flats in that building.
3. The occupant of Flat 3 has carried out building works which caused damage to Flat 4 and nuisance to its occupants.
4. The principal issues in this appeal are (a) whether the occupant of Flat 3 has a right of access to Flat 4 to facilitate his proposed move of a gas pipe and gas meter, (b) whether the trial judge erred in assessing damages.
5. The claimants in this action and respondents in the Court of Appeal are Darius Potel and Marie Christine Summers, the lessees of Flat 4. The defendant in this action and appellant in the Court of Appeal is Dr Simon Yeung, the lessee of Flat 3.
6. In describing 50 Warwick Gardens and the work which has been carried out in that building, I shall draw upon the main report of Clifford Watkins, the expert witness whose evidence the trial judge accepted.
7. In summarising the facts, I shall adopt all findings of fact made by the judge, except for those which are the subject of a ground of appeal for which the defendant has permission.
8. After these introductory remarks, I must now turn to the facts.
Part 2. The facts

9. 50 Warwick Gardens is a four-storey building which was constructed in the mid-19^th century. In the 1960s the then owners, Norman Property Company (London) Ltd ("Norman"), divided the house into four self-contained flats. The lower ground floor became Flat 1. The upper ground floor became Flat 2. The first floor became Flat 3. The second floor became Flat 4.
10. There needed to be an effective division between the ceiling of each flat and the floor of the flat above, in order to muffle noise and inhibit the spread of fire. In Flat 3 there was a ceiling attached to joists. Above that there was a gap and then a separate set of joists, which supported the floor of Flat 4. On the underside of the floor joists there was, or there had been, a lath and plaster ceiling. Evidence of the old lath and plaster ceiling can be seen on photographs in the form of light markings on the underside of the floor joists.
11. On 28 July 1964, Norman granted to Margaret Patricia Martin a 99 year lease of Flat 3. Clause 1 of the lease defined the property demised as follows:

"ALL THAT flat shown for identification on the plan annexed hereto and therein edged red situate at and forming part of the Building known as 50 Warwick Gardens W.14, in the County of London being the flat numbered 3 and being on the first Floor of the said Building (including the ceilings and floor of and in the flat the joists or beams on which the said floors are laid but not the joists or beams to which the said ceilings are attached and the internal walls of the flat up to the same level and also including all cisterns tanks sewers drains pipes wires ducts and conduits used solely for the purpose of the flat) AND TOGETHER with the easements rights and privileges mentioned in the First Schedule hereto subject as hereinafter mentioned EXCEPT AND RESERVED unto the Lessor as mentioned in the Second Schedule hereto."

12. Schedule 1 to the lease defined the easements and privileges included in the lease. These included:

"4. The free and uninterrupted passage and running of water and soil gas and electricity from and to the Flat through the sewers drains and watercourses cables pipes and wires which now are or may at any time hereafter be in under or passing through the Building or any part thereof.

5. The right for the Lessee with servants workmen and others at all reasonable times on notice (except in case of emergency) to enter upon other parts of the Building for the purpose of repairing cleansing maintaining or renewing any such sewers drains and watercourses cables pipes and wires as aforesaid and of laying down any new sewers drains and watercourses cables pipes and wires causing as little disturbance as possible and making good any damage caused."

13. Schedule 2 to the lease defined the exceptions and reservations. These included:

"2. The free and uninterrupted passage and running of water and soil gas and electricity in through and under the Flat through the sewers drains and watercourses cables pipes and wires which now are or may at any time hereafter be in under or passing through the Flat or any part thereof.

3. The right for the Lessor and the owners and lessees of the other flats comprised in the Building with servants workmen and others at all reasonable times on notice (except in case of emergency) to enter upon the Flat for the purpose of repairing cleansing maintaining or renewing any such sewers drains and watercourses cables pipes and wires causing as little disturbance as possible and making good any damage caused."

14. On 23 March 1967 Norman granted a 99 year lease of Flat 4 to Prudence Owen. The Flat 4 lease contained the same provisions as the Flat 3 lease. When in this judgment I refer compendiously to "the two leases", this is a reference to the leases of Flats 3 and 4.
15. Subsequently the ownership of 50 Warwick Gardens passed to 50 Warwick Gardens Ltd, a company owned and controlled by the lessees of the four flats.
16. On 22 March 1985 the lessees of the flats and 50 Warwick Gardens Ltd entered into deeds of variation. Under these deeds the terms of the leases were extended to 999 years.
17. On 4 August 1993 the lessor and lessee of Flat 3 entered into a supplemental lease. The effect of this supplemental lease was to bring a storeroom on the mezzanine floor within the property demised under the lease for Flat 3.
18. Over the years the leasehold interests in the four flats changed a number of times. In recent years the defendant has been the lessee of Flat 3 and the claimants have been the lessees of Flat 4.
19. In November 2008 the defendant commenced major building works in his flat. He did not give notice to the claimants of what he was proposing to do. Nor did he serve any Party Wall Act notice on the claimants. The defendant's works included removal of internal walls, insertion of a steel beam, removal of the existing ceiling and attaching a metal frame to the underside of the floor joists of Flat 4. The defendant intended and intends to attach a new ceiling to that metal frame. It will be higher than the former ceiling of Flat 3.
20. The purpose of the defendant's building works was to improve Flat 3, so that he could let it out at a higher rent. The defendant was, of course, fully entitled to do this. He was not, however, entitled to cause damage to adjoining properties. Nor was he entitled to trespass on those properties or to cause a nuisance.
21. Unfortunately the defendant's building works caused much damage to Flat 4 and considerable disturbance to the claimants, particularly the second claimant who is the principal occupant of that property.
22. Accordingly the claimants commenced the present proceedings.
Part 3. The present proceedings

23. On 10 December 2009 the claimants applied to the Chancery Division of the High Court for an interim injunction requiring the defendant to cease work for seven days and to allow the claimants' expert engineer access to Flat 3. On the same day Sales J granted an injunction to that effect. Mr Russell, the claimants' expert at the time, duly entered Flat 3 and carried out an inspection.
24. By a claim form issued in the Chancery Division on 11 December 2009 the claimants claimed damages for nuisance and negligence as well as injunctive relief. The interim injunction lapsed on 17 December 2009. The action was transferred to Central London County Court and continued as a claim for damages.
25. The defendant served a defence denying liability and a counterclaim seeking damages under various heads. By his counterclaim the defendant also sought an injunction requiring the claimants to allow him (i) to gain access to Flat 4 and (ii) to turn off the gas supply in Flat 4 for a short period. The reason why the defendant sought this injunction was because he wished to re-route the gas pipe and move the gas meter in Flat 3. Having raised the ceiling in Flat 3, the defendant wished to raise the gas pipe and gas meter as well, so that they would not be unsightly. He could not carry out this operation unless the gas supply in Flat 4 was turned off for a short period.
26. In December 2011 the claimants amended their particulars of claim so as to claim an order that the defendant should reinstate the ceiling of Flat 3 to its original position.
27. The action came on for trial before District Judge Langley in the Central London County Court on Monday 9 July 2012. The trial lasted four days. The judge heard extensive factual and expert evidence. She handed down her 31 page reserved judgment on 20 August 2012. That judgment is clear, well-structured and well-reasoned.
28. I would summarise the judge's conclusions as follows:

i) The property demised to the defendant comprised Flat 3 up to and including the existing ceiling, but not the joists to which that ceiling was fixed.

ii) By removing that ceiling and installing a new ceiling at a higher level the defendant trespassed on the claimants' property.

iii) The defendant's works caused extensive damage to the walls and floors of Flat 4. The works also caused nuisance in the form of noise and dust.

iv) Damages are assessed at £87,627.05. This figure includes £4,000 general damages and £12,850 VAT, which will be due on the remedial costs.

v) The defendant's various counterclaims for damages are dismissed.

vi) The defendant is not entitled to move the gas meter and gas pipe to their proposed new positions. The terms of the defendant's lease do not entitle him to gain access to the claimants' flat in order to turn off the gas supply for that purpose.

vii) Accordingly, the defendant's counterclaim for an injunction is dismissed.

29. The judge dealt with costs at a separate hearing. She ordered the defendant to pay 90% of the claimants' costs of the claim and counterclaim.
30. The defendant was aggrieved by the judge's decisions. Accordingly, he appealed to the Court of Appeal.
Part 4. The appeal to the Court of Appeal

31. By an appellant's notice issued on 18 March 2013, the defendant applied for permission to appeal against District Judge Langley's judgment of 20 August 2012 on a number of grounds. Gloster LJ considered this application on the papers. On 10 October 2013 she granted the necessary extension of time and gave the defendant permission to appeal on certain grounds only. These grounds were as follows (adopting the paragraph numbers of the appellant's notice):

i) 13 – 18: On the true construction of his lease and the claimants' lease the defendant had the right to lay a gas pipe up to and between the joists on which the floor of Flat 4 rested. Therefore the defendant had a right pursuant to schedules 1 and 2 of the two leases to enter Flat 4 and turn off the gas supply for that purpose.

ii) 25 – 27: Moving the gas pipe to the proposed location is not unreasonable. In any event the leases do not include a requirement of reasonableness.

iii) 28: Alternatively, the gap between Flat 4's floor joists and Flat 3's original ceiling forms part of the demise of Flat 3. Therefore the defendant should be permitted to run the gas pipe there, even if he is not allowed to run the gas pipe between the floor joists of Flat 4.

iv) 41 – 42: The judge made certain errors in assessing the costs of remedial works. Damages should be reduced accordingly.

32. When he was long out of time the defendant applied to renew the grounds of appeal for which permission had been refused. The defendant also applied for permission to amend his notice of appeal to raise new grounds. To some extent the defendant's application was superfluous, because it overlapped with matters already pleaded and for which he had leave. In so far as the defendant sought to raise new matters (including a line of defence not raised at trial) the application came far too late and was unacceptable.
33. At the hearing on 18 March we heard brief argument on the defendant's applications. We dismissed those applications and then proceeded to hear counsel's submissions on the grounds for which Gloster LJ had given permission to appeal. The documentation for this appeal is in a lamentable state. We are grateful for the assistance of counsel as they, like us, struggled with the bundles and the photographs.
34. Before tackling the issues in this appeal, I must first ascertain what are the parties' rights and liabilities under the two leases.
Part 5. What are the parties' rights and liabilities under the two leases?

35. Ms Amanda Eilledge, on behalf of the defendant, concentrated most of her argument on the question whether the defendant was entitled to re-route the gas pipe in Flat 3. She drew our attention to correspondence from National Grid PLC. That company is willing to do the work, but will need temporarily to shut off the gas supply in Flat 4 for that purpose.
36. Ms Eilledge submits that when read together schedules 1 and 2 to the two leases give the defendant a right of access to Flat 4 in order to facilitate the operation of laying a new gas pipe in a different position within Flat 3. In support of this argument Ms Eilledge cites two authorities, namely Taylor v British Legal Life Assurance Co (1925) 94 LJ Ch 284 and Trailfinders v Razuki [1998] 2 EGLR 46.
37. In Taylor lessees demised to the defendants part of a building in Knightsbridge known as Imperial Court. The lease contained the following reservation:

"excepting and reserving unto the lessors and the person or persons for the time being occupying the other parts of the said building the passage of gas water and other pipes and electric wires through the demised premises and the free running of water and soil in and through the pipes connected with the demised premises."

38. The Court of Appeal held that this reservation applied to the existing pipes and wires, but not to any future pipes or wires. The landlord's right to enter and do repairs was limited to the pipes and wires currently in place.
39. In Trailfinders the plaintiff owned a number of properties in Earl's Court Road, one of which it leased to the defendant. The lease contained the following reservations clause:

"Except and reserving unto the landlord, the free and uninterrupted running and passage of water, soil, gas and electric current from other buildings and lands of the landlord's, and other properties adjoining or near to the hereby demised premises, through the channels, sewers, drains, water courses, pipes, wires and other conduits which are now, or may hereafter during the term hereby granted, be in, under or over the said demised premises."

Clause 2.9 of the lease gave the lessor the right:

"to enter upon the demised premises for the purpose of executing repairs, alterations or improvements of or upon such adjoining premises making good to the tenant all damage occasioned thereby, and also for any other necessary or reasonable purpose."

40. Judge Finlay QC noted the words "which are now, or may hereafter during the term granted, be in, under or over the said premises". The judge held that these words distinguished the lease from that in Taylor. The reservation was not limited to existing drains, pipes and wires. It applied to any replacement drains, pipes and wires which may in the future be in the demised premises.
41. Ms Eilledge rightly points out that the two leases in our case contain a similar phrase to that used in Trailfinders. See the last part of paragraph 4 of schedule 1: "which are now or may at any time hereafter be in, under or passing through the building or any part thereof".
42. In Trailfinders the lessor wanted to lay special computer cables across the demised premises. The judge held that that was not within the reservations clause. The computer cables were different from and additional to the electric wires which were already in the property. They would not be replacing those electric wires.
43. Although the decision in Trailfinders is not binding on this court, I agree with the reasoning and conclusions of the judge in that case. I must therefore consider whether and how Taylor and Trailfinders assist in relation to the present case.
44. The problem in the present case is that there is a mismatch between paragraph 5 of schedule 1 to the two leases and paragraph 3 of schedule 2. Paragraph 5 of schedule 1 includes the phrase "for the purpose of…laying down any new sewers drains and watercourses cables pipes and wires". Paragraph 3 of schedule 2 (the reservations clause) does not include that phrase. That paragraph only extends to "renewing" sewers, drains, watercourses, cables, pipes and wires.
45. The question therefore arises whether there should be implied into the reservations clause the additional words "or laying new". Ms Eilledge submits that these words should be implied. They would overcome the mismatch between the existing provisions. Also this would achieve what the parties must have intended. Ms Eilledge points out that the original parties entered into their leases in the 1960s; the parties entered into deeds of variation on 22 March 1985 extending the terms to 999 years. They must have anticipated that over the next millennium there would be times when the various conduits and pipes in the building would need to be repaired or renewed. They must also have anticipated that it may be desirable to reposition old pipes or to lay new pipes in different positions.
46. Mr Carl Fain, for the claimants, resists this argument. He points out that there a heavy burden on a party alleging an implied reservation. Mr Fain relies upon the rule in Wheeldon v Burrows (1878) 12 Ch D 31, to which there are only very limited exceptions: see Aldridge v Wright [1929] 2 KB 117 and Colquhoun v Harris (19^th March 2010, Lawtel transcript). These cases show that if a vendor or lessor wishes to reserve any rights over property of which he is disposing, he must do so expressly. Save in exceptional situations, such as necessity, reservations will not be implied.
47. On this issue I see force in the submissions of Mr Fain. If the original lessor had wished to extend the reservations clause to cover laying new and additional pipes and wires, it would and should have said so expressly in paragraph 3 of schedule 2. A second opportunity arose in March 1985, when 50 Warwick Gardens Ltd was the freeholder. If the parties considered that the reservations clause was insufficiently wide, they could and should have amended it by means of the deed of variation.
48. Having regard to the reasoning in the authorities mentioned above, I conclude that the effect of the reservations clause in this case, namely paragraph 3 of schedule 2, is as follows. Either (a) the lessor or (b) the lessees of other flats may enter Flat 3 or Flat 4 for one of two purposes:

i) Repairing, cleaning or maintaining sewers, drains, watercourses, cables, pipes and wires.

ii) Renewing sewers, drains, watercourses, cables, pipes and wires.

In this context "renewing" pipes or wires means substituting new pipes or wires as replacements for the pre-existing ones: see Lurcott v Wakeley and Wheeler [1911] 1 KB 905 at 923 – 924. It does not, however, extend to laying new and additional pipes or wires of a different character from the pre-existing ones: see Trailfinders.

49. The additional words which Ms Eilledge proposes cannot be implied into the reservations clause. I readily accept that such an addition would be sensible, indeed desirable. But the case for adding in the proposed phrase falls far short of necessity. Whilst the additional words would seem to me an improvement, the leases function perfectly well without them. The mismatch between paragraph 5 of schedule 1 and paragraph 3 of schedule 2 is certainly an oddity. It is not, however, the function of the court to rewrite carefully drawn leases and deeds of variation merely to eliminate oddities of this nature.
50. Having dealt with the construction of the two leases, I must now reach a decision on the issues under appeal.
Part 6. Decision

51. I shall deal first with the defendant's counterclaim for an injunction, since that has been the principal focus of counsel's submissions on both sides.
52. What the defendant wishes to do in the present case is to turn off the gas supply in Flat 4, so that the gas pipe and meter in Flat 3 can be moved up to a higher level. Ideally he would like to place the pipe between the floor joists of Flat 4. If that is not allowed, he would like to place the pipe immediately beneath those floor joists. That is within what used to be the void between Flat 4's floor joists and Flat 3's previous ceiling.
53. There would be no objection to the defendant re-routing the gas pipe within his own demise. The problem in the present case is that the defendant has, in effect, carried out a "land grab" by raising the ceiling of his flat. The judge has held that by removing the original ceiling of Flat 3 and constructing a new ceiling at a higher level the defendant was trespassing on the claimants' property: see paragraph 36 of her judgment.
54. The defendant challenges the conclusion that he is trespassing on the claimants' property: see paragraph 28 of his grounds of appeal. In my view, however, the judge's conclusion was correct. Under clause 1 of the lease of Flat 3 the demise to the defendant was "all that flat…(including the ceilings…but not the joists or beams to which the said ceilings are attached…". In other words the demise to the defendant extended up to the ceiling which existed in his flat from 1964 until 2008. The joists to which the ceiling was attached and the area above that ceiling were demised to the lessees of Flat 4. The gap between the defendant's original ceiling and the claimants' floorboards served a useful purpose, in that it was a barrier which would reduce noise and disturbance passing from one flat to the other. An alternative possible construction of the lease is that the gap between Flat 3's ceiling joists and Flat 4's floor joists was retained by the freeholder. Even if that be correct, the defendant had no right under his lease to occupy that space.
55. Since the defendant's intention is to move the gas pipe and meter into an area outside the bounds of Flat 3, the judge has held that the defendant had no right to enter Flat 4 and turn off the gas supply in order to achieve that objective.
56. The present state of play is a curious one. The judge has held that the defendant is trespassing by maintaining his new ceiling at an elevated level. On the other hand the judge has not ordered reinstatement of the original ceiling. That is understandable because the costs of reinstatement would be substantial. Nor has the judge made an award of damages in lieu of an injunction. The position simply is that the defendant is de facto in occupation of an area which he is not entitled to occupy.
57. Re-routing a gas pipe so that it lies within an area outside the property demised is not an activity which falls within paragraph 5 of schedule 1 to the lease of Flat 3. Nor does that activity fall within the purposes encompassed by the reservations clause in the lease of Flat 4, namely paragraph 3 of schedule 2. Accordingly the judge was right to dismiss the counterclaim for an injunction. I would dismiss this part of the defendant's appeal.
58. For the avoidance of doubt, the defendant would be entitled to enter Flat 4 if his purpose was:

a) to effect repairs to his gas pipe or gas meter, or

b) to renew his gas pipe or gas meter.

If the defendant wishes to renew his gas pipe or gas meter, there is no objection to him putting the replacement pipe and meter in a new position, provided that they are within the area demised to him under clause 1 of his lease.

59. The defendant also counterclaims damages on the basis that the claimants have wrongly prevented him from re-routing his gas pipe. For the reasons set out above the judge rightly dismissed this element of the counterclaim.
60. The final live issue in this appeal concerns the assessment of damages in respect of the claimants' claim. The defendant asserts that the judge made certain errors in quantifying the remedial costs.
61. The first alleged error concerns the judge's award of £7,250 for skip hire, rubbish removal and parking. Ms Eilledge contends that (a) the total cost of these items was £6,000 and (b) part of this cost is referable to remedial works for which the defendant is not liable.
62. Ms Eilledge's argument is based upon an understandable misreading of the second block of figures in the builder's estimate at page 398 of the bundle. Owing to a typographical error all the figures on the right-hand side of this block are one line lower than the items on the left-hand side to which they relate. The consequence is that the bottom line figure (£3,000) appears to be charged for nothing whatsoever. Once this error in layout is corrected, it can be seen that the total figure for skip hire, rubbish removal and parking is £14,500. In allocating £7,250 of that sum to the defendant, the judge has made an appropriate discount in respect of remedial works for which the defendant is not responsible.
63. Ms Eilledge also contends that there is a mismatch between the list of remedial works required set out on pages 11 – 12 of Mr Watkins' report and the items included in the schedule of loss. The mismatch relates to the replacement of the bathroom in Flat 3. This alleged discrepancy was not put to Mr Watkins in cross-examination at trial. We simply do not know what Mr Watkins would have said if he had been asked. The point may be a good one or it may be a bad one. It is not possible for points of this nature to be raised for the first time in the Court of Appeal. The necessary evidence is not available. The trial judge was not required to and did not make any findings on this issue.
64. So far as I can see, the judge dealt very carefully with the factual and expert evidence concerning quantum. She cut down the claimants' claims in a number of respects. The judge made no errors of principle. The Court of Appeal will not re-open and unpick the judge's decisions on detailed matters of quantum.
65. In the result therefore, if my Ladies agree, the defendant's appeal will be dismissed and the judgment of District Judge Langley will stand.
Part 7. Executive summary and conclusion

66. In the 1960s 50 Warwick Gardens was divided into four flats, each above the other. The lessees of Flat 4 on the top floor claim damages for nuisance because of building works carried out by the lessee of Flat 3 beneath them. The judge has held that those works constituted both a trespass and a nuisance. She awarded damages accordingly. The judge dismissed the defendant's counterclaim for damages and for an injunction permitting the defendant access to Flat 4 so that he could move a gas pipe and meter.
67. The defendant appeals against the judge's decision on the basis that he is entitled to move the gas pipe and meter under the terms of his lease. He also challenges certain elements in the judge's award of damages.
68. This court dismisses the defendant's appeal. He is not entitled to enter Flat 4 and turn off the gas in order to facilitate movement of the gas pipe and meter into an area outside the property demised under the Flat 3 lease. The judge's assessment of damages was based upon a careful assessment of the factual and expert evidence, with which the Court of Appeal will not interfere.

Lady Justice Sharp:

69. I agree.

Lady Justice Arden:

70. I also agree.