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England and Wales Court of Appeal (Civil Division) Decisions
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Plymouth Community Homes Ltd v Crisplane Ltd [2025] EWCA Civ 346 (26 February 2025)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2025/346.html
Cite as:
[2025] WLR(D) 172,
[2025] EWCA Civ 346
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[2025] WLR(D) 172]
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Neutral Citation Number: [2025] EWCA Civ 346 |
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Case No: CA-2024-000535 |
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (LANDS CHAMBER)
Martin Rodger KC, Deputy Chamber President
[2024] UKUT 15 (LC)
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The Royal Courts of Justice Strand, London, WC2A 2LL |
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26 February 2025 |
B e f o r e :
LORD JUSTICE HOLROYDE
LORD JUSTICE STUART-SMITH
LORD JUSTICE NUGEE
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Between:
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PLYMOUTH COMMUNITY HOMES LIMITED
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Applicant/ Appellant
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- and –
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CRISPLANE LIMITED
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Respondent
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Transcript of Epiq Europe Ltd, Lower Ground, 46 Chancery Lane, London WC2A 1JE
Tel No: 020 7404 1400 Email: civil@epiqglobal.co.uk (Official Shorthand Writers to the Court)
____________________
Jonathan Ward (instructed by Tozers LLP) for the Appellant
Rawdon Crozier (instructed by Curtis Whiteford Crocker) for the Respondent
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HTML VERSION OF APPROVED JUDGMENT
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Crown Copyright ©
WARNING: reporting restrictions may apply to the contents transcribed in this document, particularly if the case concerned a sexual offence or involved a child. Reporting restrictions prohibit the publication of the applicable information to the public or any section of the public, in writing, in a broadcast or by means of the internet, including social media. Anyone who receives a copy of this transcript is responsible in law for making sure that applicable restrictions are not breached. A person who breaches a reporting restriction is liable to a fine and/or imprisonment. For guidance on whether reporting restrictions apply, and to what information, ask at the court office or take legal advice.
Lord Justice Nugee:
- This appeal from the Upper Tribunal (Lands Chamber) concerns the question whether a lessee has to contribute by way of service charge to the costs incurred by its lessor on repairing the roofs of two properties in Plymouth. The appeal concerns two flats in Rothesay Gardens, Numbers 96 and 146. They are in separate buildings. In each case, the freehold is now owned by the Appellant, a registered social landlord called Plymouth Community Homes Limited, whom I will refer to as "the Lessor". Each flat is let on a long lease originally granted in 1990 by Plymouth City Council to individuals pursuant to the right to buy legislation in the Housing Act 1985. Each lease is now held by the Respondent, Crisplane Limited, whom I will call "the Lessee".
- In 2018, the Lessor inspected the roofs of the two buildings and found them to be at or close to the end of their useful life. The roofs were repaired. There is now no dispute that the costs incurred were reasonable. The question is whether the Lessee has to contribute to them under the terms of each lease. Although the question is the same with each flat, the arguments are not and they have to be looked at separately.
- Proceedings were started in the County Court but the question of liability for the service charge was transferred to the First-Tier Tribunal. The First-Tier Tribunal (Judge Tildesley, Judge A Cresswell and Mr R Brown) decided in a decision handed down on 12 April 2023 that the Lessee was liable to contribute to the cost of repairs, its liability being quantified at £7,965.60 in respect of each flat. The Lessee appealed to the Upper Tribunal. The appeal was heard by the Deputy Chamber President, Martin Rodger KC. In a decision dated 16 January 2024, publicly available at [2024] UKUT 15 (LC), he allowed the Lessee's appeal. The Lessor now appeals to this Court with the permission of Snowden LJ, on two grounds. Ground 1 only applies to 96 Rothesay Gardens, and Ground 2 only applies to 146 Rothesay Gardens.
- We have this morning heard interesting and well-argued submissions from Mr Jonathan Ward on behalf of the appellant Lessor and from Mr Rawdon Crozier on behalf of the respondent Lessee. I prefer those of Mr Crozier and would dismiss the appeal. In short, I completely agree with the analysis so lucidly and cogently set out by the Deputy President in his decision which seems to me entirely correct in all respects. Indeed I could, I believe, stop this judgment here as I do not really need to say any more than that. But in deference to Mr Ward's argument, I will say a little more to explain why I take that view.
- I will start with Ground 1 which concerns Number 96. The lease now held by the Lessee was granted on 26 February 1990 by Plymouth City Council to a Mr and Mrs Whitehead for a term of 125 years expiring on 25 February 2115. It is common ground that it was granted under the right to buy legislation and this is reflected in clause 2 which refers to the Lessor acting pursuant to the provisions of section 122 of the Housing Act 1985. Number 96 is described in the lease as "the upper flat" and I can take a description of it from the decision of the Deputy President as follows. At paragraph 13 he said:
"Each of the flats is in a separate building. Each of the buildings is a two storey 'Cornish Unit' containing four flats, two on the ground floor and two on the upper floor, each with its own separate entrance. The buildings were constructed in the immediate post-war period, either in the late 1940s or early 1950s."
At paragraph 19, he says:
" 'The property' is defined as 'the building' shown on a plan annexed to the lease; notwithstanding that description, it can be seen from the plan that the property is only half of the building, divided vertically and comprising No. 94 on the ground floor and No. 96 on the upper floor. The property does not include the other half of the building comprising Nos. 98 and 100."
At paragraph 20:
"The 'demised premises' means No. 96, consisting of the upper storey of the property including the floor, half of the depth of the joist supporting the floor, the roof and the rain water gutters of the property as well as front and rear gardens."
- Clause 3 of the lease contains a covenant by the Lessee as follows:
"THE LESSEE HEREBY COVENANTS with the Lessor that the Lessee will observe and perform the obligations on the part of the Lessee set out in the Third Schedule hereto".
I will come back below to the relevant part of Schedule 3.
- Clause 4 contains a corresponding covenant by the Lessor in the following terms:
"THE LESSOR HEREBY COVENANTS with the Lessee that subject to and upon the condition expressed in clause 12 of the Third Schedule hereto, it will observe and perform the obligations on its part set out in the Fourth Schedule hereto".
- If one goes to Schedule 4, one sees a number of covenants by the Lessor. For present purposes, the relevant ones are paragraphs 4 and 5 which read respectively as follows:
"4. The Lessor shall keep the reserved premises and all fixtures, fittings and apparatus therein and additions thereto in a good and tenantable state of repair decoration and condition."
And that has to be read with the definition of "the reserved premises", which in effect means the ground floor flat, that is the lower flat known as 94 Rothesay Gardens.
- Paragraph 5 of Schedule 4 reads:
"5. The Lessor shall keep and maintain the exterior of the property (excluding the roof thereof) in good and tenantable repair decoration and condition…"
and then there is a proviso which I need not read.
- Reverting to the Lessee's covenants in Schedule 3, the only relevant one is that in paragraph 12 which reads as follows:
"The Lessee shall contribute and shall keep the Lessor indemnified from and against one half of all costs and expenses incurred by the Lessor in carrying out its obligations under and giving effect to the provisions of the Fourth Schedule hereto including Clauses 8 and 9 of that Schedule but excluding clause 4 of the said schedule and enabling the Lessee to enjoy the rights contained in the First Schedule hereto".
- As a matter of construction of the lease, this seems to me entirely clear. The Lessor covenants to repair the exterior of the property but not the roof. The Lessee covenants to pay one half of the costs incurred by the Lessor in carrying out these obligations. It is evident that as a matter of construction the Lessee is not obliged to contribute to the cost of the repairs to the roof. As the Deputy President put it in his decision at paragraph 51:
"At No. 96, the Fourth Schedule imposes no obligation on the Lessor to carry out any work to the roof at all. The roof is not part of the reserved premises and therefore does not fall within paragraph 4. The obligation in paragraph 5 to keep the exterior of the property in repair is subject to the express exclusion of the roof. On the face of it, therefore, the Fourth Schedule imposes no obligation to repair the roof and it follows that paragraph 12 of the Third Schedule does not require the Lessee to contribute towards the costs of any work which the Lessor carries out to the roof."
- At this point, however, one must refer to the provisions of the Housing Act 1985 under which the lease was granted. Section 139(1) of the Act, headed "Terms and effect of conveyance or grant and mortgage", reads as follows:
"(1) A conveyance of the freehold executed in pursuance of the right to buy shall conform with Parts I and II of Schedule 6; a grant of a lease so executed shall conform with Parts I and III of that Schedule; and Part IV of that Schedule has effect in relation to certain charges."
- When one goes to Schedule 6 to the Act, it contains a number of provisions, those in Part I, headed "Common Provisions", dealing with both grants of the freehold and grants of leases and those in Part III dealing with leases. For present purposes, the relevant paragraph is paragraph 14 in Part III, headed "Covenants by the landlord." It reads as follows:
"14(1) This paragraph applies where the dwelling house is a flat.
(2) There are implied covenants by the landlord -
(a) to keep in repair the structure and exterior of the dwelling-house and of the building in which it is situated (including drains, gutters and external pipes) and to make good any defect affecting that structure."
I need not read (2)(b) or (c) or (3) and (3A) but (4) reads:
"(4) The county court may, by order made with the consent of the parties, authorise the inclusion in the lease or in an agreement collateral to it of provisions excluding or modifying the obligations of the landlord under the covenants implied by this paragraph, if it appears to the court that it is reasonable to do so."
- It is not disputed that in the present case no County Court order was made under paragraph 14(4) and that that means that the Lessor is under an implied covenant to repair the structure and exterior of the dwelling house and/or the building in which it is situated. It is also not disputed that the roof is part of that structure and exterior. Hence, it is common ground that the Lessor was obliged to repair the roof over Number 96. The question is whether the Lessee was obliged to contribute to the cost of it.
- Paragraph 16A of Schedule 6 provides as follows:
"(1) The lease may require the tenant to bear a reasonable part of the costs incurred by the landlord–
(a) in discharging or insuring against the obligations imposed by the covenants implied by virtue of paragraph 14(2) (repairs, making good structural defects, provision of services, etc.) or …"
And then I need not read the rest of that paragraph but I should refer to paragraph 16A(4) which reads:
"(4) Where in any case the obligations imposed by the covenants implied by virtue of paragraph 14(2) or (3) are modified in accordance with paragraph 14(4) (power of the county court to authorise modification), the references in this paragraph are to the obligations as so modified."
- The provisions of paragraph 16A are, as Mr Ward accepted, permissive provisions. The statute does not itself impose any obligation on tenants to pay service charges and does not require a lease granted under the Act to include any service charge provision at all. In a decision of this Court called The Mayor and Commonalty and Citizens of the City of London v Various Leaseholders of Great Arthur House [2021] EWCA Civ 431 ("Great Arthur House"), Lewison LJ said at [38]:
"That may well mean that the cost of some works that are within the landlord's obligation to 'make good structural defects' cannot be passed on to the lessees but that is a consequence of the way in which the definition is drafted; and there is no presumption that the cost of all works that the landlord is obliged to carry out can be passed on to the lessees: Campbell v Daejan Properties Limited [2012] EWCA Civ 1503, [2013] 1 P & CR 14 at [56]."
- On the face of it therefore, the position is very simple. Again, I agree with the way in which the Deputy President put it in his decision. At paragraph 53 he said this:
"53. The FTT was clearly correct that the effect of paragraph 14(2) was to subject the Lessor to the implied covenant to keep the whole of the structure and exterior of the flat and the building in which it was situated in repair … At No. 96, the implied covenant is the only obligation on the Lessor to repair the roof.
54. But the covenant implied into the Lease by the statute says nothing about any corresponding obligation on the Lessee to contribute towards the costs incurred by the Lessor in complying with it. Moreover, paragraph 16A(1) of Schedule 6 leaves the parties free to agree whatever terms they choose about contributions by the tenant towards costs incurred by the landlord in discharging the implied obligations (provided those contributions do not exceed a reasonable part of those costs). In neither of these leases did they expressly agree anything about those costs nor can any obligation to contribute be applied … At No. 96, the Lease works perfectly well with the only relevant obligation being the Lessor's implied covenant to keep the structure of the building in repair without the need to imply any corresponding payment obligation on the Lessee's part. It cannot be said that the absence of a service charge covering the implied obligation causes the Lease to lack business efficacy..."
And then he refers to the passage I have already referred to from the judgment of Lewison LJ in Great Arthur House.
- I entirely agree. Or if I can put it in my own words, here the Lessee expressly agreed to pay 50% of certain costs. Those were the costs specified in Schedule 3, namely complying with the Lessor's obligations in Schedule 4. That did not include any repairs to the roof, so the Lessee never expressly agreed to contribute to the cost of roof repairs. Nor the does the statute impose any obligation on the Lessee to do so. It does impose a repairing obligation on the Lessor but not a corresponding payment obligation on the Lessee. It is up to the parties to decide if such a payment obligation should be imposed. That depends upon the terms of the lease. Under the terms of this lease, they did not do so.
- What then is Mr Ward's argument to the contrary? He fastens on paragraph 14(4) of Schedule 6 to the Act. He says that that provides that the parties can modify the implied covenants but that requires an order of the County Court. Here, he says, the words in paragraph 5 of Schedule 4, "excluding the roof thereof," are an attempt by the parties to modify the implied covenant. But no County Court order was obtained, so those words are ineffective. Paragraph 5 should therefore be read as if they were not there. Read like that, the Lessor's obligations under paragraph 5 of Schedule 4 include an unqualified obligation to repair the exterior of the property. Hence the obligation of the Lessee to contribute is to contribute half of the costs of complying with that unmodified obligation.
- This is an ingenious argument that Mr Ward advanced tenaciously, but I do not accept it. I prefer the view that the only express obligation of the Lessor to repair is that set out expressly in paragraph 5 of Schedule 4. This is admittedly less extensive than the covenant implied by statute – in fact in two respects, because not only does it expressly exclude the roof but it also only expressly extends to the exterior of the property and not the structure of the property which may be different. But I do not see why it should not mean what it says. The effect of limiting the Lessor's express covenant in this way is to limit the Lessee's payment obligation correspondingly, the payment obligation being tied to the Lessor's express obligations under Schedule 4. So although the wording in paragraph 5 may be ineffective to exclude the Lessor's implied repairing obligations under the covenants implied by paragraph 14 of Schedule 6 to the Act, I see no reason why those words are not effective to confine the Lessee's payment obligation to what he has expressly agreed to contribute towards. That does not include – indeed expressly excludes – the roof.
- Again, I can refer to the way in which it was put by the Deputy President. In his decision at paragraph 56, he says this:
"I do accept that the parties were not free to contract out of the statutory implied covenant. But that does not require any rewriting of paragraph 5. Paragraph 14(4) of Schedule 6 restricts the extent to which the parties may exclude or modify the obligations of the landlord under the covenants implied by paragraph 14. It has no effect on express covenants, whether or not they are inconsistent with paragraph 14; the implied covenant to repair the structure and exterior of the dwelling and of the building is an additional obligation, the meaning of which is clear and which applies unamended. So far as it goes, the express obligation in paragraph 5 of the Fourth Schedule duplicates but is not inconsistent with the implied obligation. In both leases, the Lessor is obliged by the statutory implied covenant to repair the roof, notwithstanding the exclusion of the roof from the separate covenant at paragraph 5 of the Fourth Schedule.
57. But for the reasons I have already given in paragraphs 54 and 56 above, I do not accept that the implied covenant requires that the leases be read as if the words '(excluding the roof thereof)' did not appear in paragraph 5 of the Fourth Schedule.
58. It follows that when the respondent replaced the roof of No. 96, it was not carrying out any obligation under the Fourth Schedule. It was complying with the implied covenant."
- Again, I entirely agree. For those reasons, I think the Deputy President came to the right conclusion in relation to Number 96 in the Upper Tribunal and I would dismiss Ground 1 of the appeal.
- Ground 2 of the appeal concerns Number 146. Here, the lease was granted on 25 June 1990, again, for a term of 125 years, in this case expiring on 24 June 2115. It was granted by the City Council to a Mr Midgley, again pursuant to the provisions of section 122 of the Housing Act 1985, that is, under the right to buy legislation.
- The demised premises are defined as meaning the lower flat, known as 146 Rothesay Gardens. The reserved premises means the upper flat, known as 148 Rothesay Gardens, and expressly includes the roof of the property.
- The other provisions of the lease are very similar to those in the lease of Number 96. Thus, so far as the Lessor's covenants are concerned, clause 4 contains a covenant by the Lessor to observe and perform the obligations set out in Schedule 4. Schedule 4 in paragraph 4 contains an obligation to keep the reserved premises et cetera in repair.
- Paragraph 5 of Schedule 4 contains an obligation to keep the exterior of the property, excluding the roof thereof, in repair.
- As far as the Lessee's covenants are concerned, clause 3 again contains a covenant by the Lessee to observe and perform the obligations in Schedule 3.
- Paragraph 12 of Schedule 3 contains an obligation to contribute half of the costs:
"… in carrying out its [that is the Lessor's] obligations under and giving effect to the provisions of the Fourth Schedule hereto including Clauses 8 and 9 of that Schedule but excluding clause four of the said schedule and in enabling the Lessee to enjoy the rights contained in the First Schedule hereto".
- I will come back to the final words on which this ground is based but before getting to that, the express exclusion of clause 4 of Schedule 4 from the Lessee's service charge obligation at paragraph 12 of Schedule 3 means that it was expressly agreed that the Lessee was not liable to contribute to the costs of keeping Number 148, the upper flat, in repair, those being the reserved premises, and since the reserved premises include the roof, there was an express agreement in paragraph 12 of the Third Schedule that the Lessee was not liable to contribute to the costs of repairing the roof. That is what the Deputy President said in the Upper Tribunal at paragraph 48 as follows:
"It follows that having regard only to the express terms of the Lease of No. 146, the Lessee has no obligation to contribute towards the costs incurred by the Lessor in carrying out repairs to the roof because the roof is specifically excluded from the parts of the property covered by paragraph 5 of the Fourth Schedule and the Lessee's obligation in paragraph 12 of the Third Schedule does not include contributing to costs incurred in complying with paragraph 4 of the Fourth Schedule, which does extend to the roof."
- That seems to me to be clearly right and it has not been appealed. But as I read, paragraph 12 also includes at the end the costs incurred by the Lessor "in enabling the Lessee to enjoy the rights contained in the First Schedule hereto."
- Schedule 1 contains a grant of various rights to the Lessee together with the demise. They include, for example, rights of way and rights of passage of services (gas, electricity and the like) in the familiar way. Paragraph 3 of Schedule 1 reads:
"3. All rights of way support and other easements and quasi-easements rights and benefits of a similar nature now enjoyed or intended to be enjoyed by the demised premises over any part of the premises and the Estate".
I should also note paragraph 5:
"5. Repairing, maintaining, renewing, altering or rebuilding the demised premises or any part of the property giving subjacent or lateral support shelter or protection to the demised premises [etc]".
- The argument put forward by Mr Ward is that the wording at the end of paragraph 12 of Schedule 3 is wide enough to catch the Lessor's expenditure on the roof because one of the rights in paragraph 3 of Schedule 1 is a right of shelter for Number 146, the lower flat, from the upper flat including the roof. In the Upper Tribunal, the Deputy President assumed that that might be so. He said at paragraph 61:
"As for No. 146, I will assume that paragraph 3 of the First Schedule entitles the ground floor flat to receive shelter from the first floor flat and the roof over it."
- I will make the same assumption; I think that it is well arguable that a right of shelter comes within the words "other easements and all quasi-easements, rights and benefits of a similar nature" – that is, similar to the right of support which is expressly mentioned. But it is helpful to remind oneself of the nature of such rights. Gale on Easements (22nd edn, 2025) says this about rights of support at paragraph 10-30:
"The nature of the right of support for buildings by buildings has been summarised as follows by Sir Wilfred Greene MR in Bond v Nottingham Corporation [1940] Ch 429 at 438:
'The owner of the servient tenement is under no obligation to repair that part of his building which provides support for his neighbour. He can let it fall into decay. If it does so and support is removed, the owner of the dominant tenement has no cause for complaint. On the other hand, the owner of the dominant tenement is not bound to sit by and watch the gradual deterioration of the support constituted by his neighbour's building. He is entitled to enter and take the necessary steps to ensure that the support continues by effecting repairs and so forth to the part of the building which gives the support. But what the owner of the servient tenement is not entitled to do is by an act of his own to remove the support without providing an equivalent. There is the qualification upon his ownership of his own building that he is bound to deal with it and can only deal with it subject to the rights in it which are vested in his neighbour.' "
- If there is a right of shelter granted by paragraph 3 of Schedule 1, I think it must be of the same character as Sir Wilfred Greene explains the right of support to be, namely that it imposes purely negative obligations on the owner of the part of the building which provides the shelter. Translated to the present case, it means that Plymouth Community Homes Ltd as Lessor could not actively remove the roof and leave the property exposed to the elements, but on the other hand, the Lessee had no right under this part of the lease to require the Lessor to spend any money on doing repairs although it could, if it chose, do repairs itself.
- In those circumstances, I again agree with the Deputy President in the Upper Tribunal. This is for two reasons. The first is that where the roof is specifically and expressly excluded from the service charge obligations by the earlier part of paragraph 12 of Schedule 3, it would be contrary to usual principles of construction to hold that an obligation to contribute was nevertheless brought in by the much more general words at the end. The way in which the Deputy President put it in his decision at 61, after referring to the assumption that paragraph 3 of Schedule 1 did confer a right of shelter, was this:
"On that assumption, I nevertheless find it impossible to accept that the parties intended the cost of maintaining the roof and the structure of the upper flat thereby to become part of the Lessee's liability under paragraph 12 of the Third Schedule. They had crafted paragraph 12 to create a liability to contribute towards the cost of repairing the whole of the exterior of the property except the roof. It seems probable that the purpose of distinguishing between the reserved premises and the remainder of the exterior of the building was specifically to exempt the Lessee from a liability to pay for the repairs to the roof. But whether that was their intention or not, the parties specifically excluded the roof from the Lessee's service charge liability in the Third and Fourth Schedules. It is impossible to believe that at the same time they intended, by their obscure reference to the costs of 'enabling the Lessee to enjoy the rights contained in the First Schedule', thereby to make the Lessee liable for half the cost of repairs to the roof. Had that been their intention, it could have been achieved by simply omitting the words '(excluding the roof thereof)' in paragraph 4 of the Fourth Schedule."
- I agree and that is sufficient to dismiss this ground of appeal. But I think it very doubtful in any event that money spent by the Lessor on repairing the roof could properly be described as costs incurred in enabling the Lessee to enjoy the right of shelter. That is not why the Lessor spent the money. It did so because it was obliged to repair the roof by the implied repairing covenants in paragraph 14(2) of Schedule 6 to the Act, not because the Lessor desired to enable the Lessee to enjoy the right of shelter which, as I have pointed out, did not by itself oblige the Lessor to spend any money at all, even though, of course, by repairing the roof, it may have had the effect of enabling the Lessee to continue to obtain shelter from the roof. Again, I agree with the way in which the Deputy President put it in his decision in this case at paragraph 62:
"The rights included in the First Schedule also included, at paragraph 5, an express right for the Lessee to repair, renew or rebuild the demised premises or any part of the property giving shelter or protection to the demised premises, presumably at his own expense. In view of that entitlement, and the express exclusion of the cost of repairs to the roof from the liability otherwise described in paragraph 12 of the Third Schedule, I do not read the reference in paragraph 12 to the costs of 'enabling' the Lessee to enjoy the rights contained in the First Schedule as covering the cost of repairs to building components for which liability had already been assigned or excluded."
- I would therefore dismiss Ground 2 of the appeal and with it, the appeal.
Lord Justice Stuart-Smith:
- I agree.
Lord Justice Holroyde:
- I also agree. The appeal accordingly fails and is dismissed.
Order: Appeal dismissed