England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
NEWCASTLE UPON TYNE DISTRICT REGISTRY

		20 September 2005

1. Introduction

1. This is a "friendly" action to determine the true construction of the repairing covenants in leases of properties at Marlborough Park, Washington. Marlborough Park Services Limited ("the Management Company") is the landlord of 377 properties that form the complex known as Marlborough Park. Mr and Mrs Rowe ("the tenant") are the tenants of a 2 storey maisonette that is part of the complex known as 18 Neville Court.

2. In about 7 of the maisonettes, including 18 Neville Court cracks have appeared in the upper floor of the maisonette. It will be necessary to describe the cause of the cracking in a little detail later in the judgment but for present purposes it is sufficient to say that the joists of the ground floor ceiling/first floor floor are of insufficient strength to bear the superimposed load.

3. It has been estimated that the costs of repair to the joists are of the order of £5,000. In addition there will be further costs because the tenant will have to leave the flat for about 2 weeks whilst the repairs are carried out.

4. The principal question that arises for decision is whether the repair of the joists falls within the Management Company's or the tenant's obligation to repair on the true construction of the lease. As will appear below that question appears to turn on whether the defective joists form part of "the Main structure of the Property". If they are then they are excluded from the tenant's liability under its repairing covenant and included in the Management Company's repairing covenant.

5. If the Management Company are liable to repair they are entitled to recoup the costs of repair under a complicated mechanism in the lease by way of service rent from all of the occupiers of Marlborough Park. Thus the ultimate question is whether the costs of repair should be borne by the tenant or the occupiers of Marlborough Park as a whole.

6. I have described the action as "friendly" for 2 reasons. First there has been no dispute of facts between the parties. Second, pursuant to an order of D J Alderson dated 12^th October 2004 the Management Company have agreed to pay all of the costs of the tenant irrespective of the outcome of the proceedings.

7. In addition to the question of construction raised in relation to the repairing covenant that was fully debated before me Mr Caswell raised a number of other hypothetical questions which might arise between the Management Company and other tenants. Mr Vane did not feel able to argue these as they did not affect his clients. In those circumstances it seems to me that it would be wrong to express any views on the other matters. They should be left to situations when they arise and when, if necessary, persons with contrary interests to those of the Management Company can argue their case properly.

8. This judgment will thus only be concerned with the question of construction raised in paragraph 1(1) of the Claim form.

   2. Representation

9. The Management Company was represented by Mr Matthew Caswell, the tenant by Mr Christopher Vane. Counsel very helpfully provided me with detailed skeleton arguments and relevant authority. I am grateful to them.

   3. The Facts

10. As already noted the facts are not in dispute. Marlborough Park is a complex of 3 and 4 storey buildings containing flats and maisonettes. There are 377 individual properties arranged in 3 groups known as Collingwood Court, Kenilworth Court, and Neville Court each with its own central courtyard.

11. 18 Neville Court is a 2 storey maisonette. There is a flat above it in the complex.. During the course of the hearing Mrs Rowe showed me a video showing Neville Court and her maisonette. It showed in particular the cracking in the first floor rooms. A further impression can also be gained from the photographs attached to the Marlborough Park web page.

12. Marlborough Park was originally constructed as part of the development of Washington New Town. The development commenced in 1967 and originally comprised some 640 units of accommodation. In around 1987 the site was redeveloped by Regalian Properties to form 377 units. The properties were then sold off on long leases to individuals for owner occupation.

13. In about June 1998 cracks were reported in one maisonette. Similar cracks were found in a total of 7 maisonettes all being on the first and ground floor. There are in fact some 70 maisonettes in the development. There is accordingly a possibility that some of the 63 other maisonettes will in due course exhibit cracking.

14. There is a report dated 17^th June 1999 from a Structural Engineer – Anthony Davies. Mr Davies inspected 3 properties including 18 Neville Court. Mr Davies was in fact called by Mr Vane to amplify some of the matters in his report. He explained that the ground floor and the ceiling above the first floor were concrete. However the intermediate floor was of timber construction. The cracking was due to deflection of the timber floor. In his view it was increasing. Mr Davies proposed a solution which was contained in a drawing - 99207/1. At the trial he explained that the joists were laid between the partition walls separating 18 Neville Court from the adjoining flat/maisonette rather than the front of the development. He also explained that the timber floor would provide some lateral support to the partition walls.

15. If the deflection of the timber floor continues without repair there is a risk (though not an immediate risk) that there will be a partial collapse of the floor. This would have the effect of reducing the lateral support for the partition walls.

    4. The terms of the lease

16. During the course of the hearing I was referred to a number of the terms of the leases. It was agreed that there was no material difference between the leases of the various units and the parties referred me to the lease relating to 18 Neville Court.

17. The lease of 18 Neville Court is a lease of a maisonette on the ground and first floor. It is for a term of 125 years (less 3 days) from 1^st April 1986. The rent payable to the Management Company was £10 per annum plus a service rent in accordance with clause 4. Under clause 4 the tenant covenanted with the Management Company to pay an appropriate proportion of the costs incurred by the Management Company of complying with its obligations in the lease (including its obligations to repair under clause 5). It is not necessary to set out the terms in detail. The Fifth Schedule sets out financial details. Thus the consideration for the grant of the lease was £31,250. The estimated service charge was £285 per annum.

18. There are a number of clauses in the lease to which I was referred in the course of argument that are relevant to the question of construction.

19. The "demised premises" are defined in clause 1 of the lease, inter alia and so far as relevant, as the flat

    including the ceilings and floors thereof and the joists and beams on which the floors are laid .. . .all cisterns tanks sewers drains pipes wires ducts and conduits exclusively serving the Flat but no others and also including all windows window frames and glass thereon and all doors (including the front and rear door).

20. The Property is defined in the First Recital as being the freehold property comprised in Title No TY 193115

21. Clause 10 of the lease contains a number of declarations

    (ii) every internal wall separating the Flat from an adjoining flat shall be a party wall severed medially

    (iii) a ground floor flat includes the land on which it is built and the ceilings of the Flat (but not the floor of the flat above it) and the internal and external walls of the Flat up to the same level

    That a flat on the first second and third floor includes the floor and ceiling of the Flat (but not the floor of the flat above it) and the external walls of the Flat between the same levels

    That a fourth floor flat includes the floor of the Flat and the roof of the Property so far as it constitutes the roof of the Flat and the internal and external walls of the Flat between the same level

22. By clause 3(1)(m)(i) of the lease of 18 Neville Court the tenant covenanted with the Management Company:

    To keep the demised premises and all walls party wails sewers drain pipes cables wires and appurtenances thereto (other than the parts there comprised and referred to in clause 5 hereof) in good and tenantable repair and condition and in particular (but without prejudice to the generality of the foregoing) so as to support shelter and protect the parts of the Property other than the demised premises".

23. By clause 5(a) of the lease of 18 Neville Court the Management Company covenanted with the tenant:

    i) To maintain renew and redecorate (where applicable)

    a) the roofs and main structures of the Property

    b) the boundary walls fences gutters and rainwater pipes of or serving the Property

    c) the gas pipes water tanks and pipes drains and electrical and other cables and wires in under or upon or serving the Property other than those serving only one flat in the Property

    d) the entrance ways landings and staircases and any other common parts of the Property

24. Clause 10(iv) of the lease provides:

    "That the word "repair" includes the rectification or making good of any defect in the foundations roofs or structures of the Property notwithstanding that it is inherent or due to the original design thereof".

    5. Mr Caswell's submissions

25. It was common ground between Mr Caswell and Mr Vane that the definition of the demised premises included the timber floor of the first floor of the flat. It follows that it is for the tenant to repair the timber floor unless it is a part referred to in clause 5. Under clause 5 the Management Company must maintain … the main structures of the Property. Thus the question is whether the timber floor is part of the main structure of the Property.

26. Mr Caswell submitted that the timber floor was not part of the main structure. He made a number of points in support of this submission.

27. First he drew my attention to the definition of the Property as being the whole complex. The lease referred to the main structure of the Property rather than the main structure of the flat or the demised premises.

28. He drew my attention to the declarations in clause 10. He submitted that that made it clear that the Management Company did not retain any part of the maisonette except for those parts of the sewers etc which do not exclusively serve the flat.

29. The effect of the definitions is that each flat is contained within its own box and the only part of the property within the flat in the ownership of the Lessor are the conduits which are not exclusively serving the flat. He made a similar point in paragraph 8 of his skeleton argument.

30. He submitted that the question of ownership was relevant to the question of construction of clause 5 and therefore submitted that the main structure in clause 5 was not to be taken to refer to any structure within a flat or exclusively serving one flat. It refers to roofs and similar main structures that are in the ownership or under the control of the Management Company and serving more than one flat.

31. Thus he submitted that the words "main structures" in clause 5 refers to such structures (drains, sewer, conduits) as serve more than one flat.

32. He made the point that the timber floor was part of the demised premises and thus was not part of the main structure of the Property.

33. He referred me to the decision of Mr Justice Evans Lombe in Toff v McDowell^[1]. That was a case that had some similarities to the present case. Evans Lombe J was faced with a similar question of construction to the one in the instant case. The case involved the basement flat in a property converted into flats. As with this case the tenant covenanted to repair his flat save for the parts excluded under a later clause. The later clause imposed an obligation on the Lessor to repair "the main structure and in particular the roof chimney stacks gutters and rainwater pipes of the building".

34. Evans Lombe J accepted a submission on behalf of the Lessor that the floor/ceiling between the basement flat and the first floor flat did not form part of the main structure. The submissions that were made to the learned judge were summarised at page 541 of the report.

    Main structure is not a term of art but must be given a meaning special to the lease. The word "main" restricts the meaning.

    The lease should be construed to avoid shared liability.

    the lessee's particular obligations are phrased so as to show that he had responsibility for the foundations.

    the words "main structure" must be construed by reference to the words that follow them.

    that each tenant was responsible for the box consisting of the walls ceiling and floor of his flat

    a clause similar to clause 10(iv) in the instant lease underlines the correctness of the Lessor's submissions

35. Mr Caswell submitted that the similarities between that case and this are such that it is strong persuasive authority in favour of his submissions.

    6. Mr Vane's submissions

36. Mr Vane's submissions were also commendably concise. He started by referring to the well known principles of construction set out by Lord Hoffmann in ICS V West Bromwich Building Society^[2]:

    (1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

    (2) The background was famously referred to by Lord Wilberforce as the 'matrix of fact', but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

    (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

    (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax (see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, [1997] 2 WLR 945.

    (5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Cia Naviera SA v Salen Rederierna AB, The Antaios [1984] 3 All ER 229 at 233, [1985] AC 191 at 201:

    '… if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.'

37. He made the point that my task was to determine the meaning of the words "main structure" in the context of this lease. It was not to determine whether this timber floor was included in the demise. He submitted that that was the effect of Mr Caswell's submissions.

38. He made the point that the expression "main structure" is not a term of art with a precise meaning. It is fact dependent.

39. He drew to my attention two further authorities where the words "main structure" have been considered by the courts.

40. In Peterson v Pitt Place (Epsom)^[3] the Court of Appeal held that a landlord was not liable to repair the roof terraces as part of the main structure. This was because the terraces formed part of the demised premises which the tenant was liable to repair. If the landlord was liable to repair there would be overlapping obligations. That case is of limited assistance to me.

41. Ibrahim v Dovecorn Reversions Limited^[4] also concerned liability to repair a roof terrace. Rimer J upheld a decision that the roof terrace was within the main structure. The judgment includes a discussion of Evans Lombe J's decision in Toff v McDowell. In the view of Rimer J the primary reason for Evans Lombe J's decision depended on the wording of the covenant – which I have set out above – but he recognised that Evans Lombe J had also accepted the first submission put before him. The judgment also contains a discussion of Patten J's decision in Hallisey v Petmoor Developments^[5], a case which had also raised the question of whether a roof terrace was within a covenant to repair the main structure including the principal internal structures, the exterior walls foundations and roof. It was conceded by the landlord that part of the roof terrace (the concrete slab) was within the terms of the covenant but argued that other parts of the terrace were outside it. Patten J rejected the landlord's claim, One of the factors that influenced Patten J^[6] was the fact that the landlord had retained control of the fabric of the building with the benefit of a full indemnity under the service charge provisions. His construction retained that control to the landlord.

42. Rimer J regarded the analysis of Patten J as compelling. He made the point that Patten J was not deflected from his construction by the restrictive effect of the word "main" in relation to the structure.

43. Mr Vane made the point that the timber floor of 18 Neville Court provides lateral support for the partition walls separating 18 Neville Court from its adjoining property and thus contributes to the physical integrity of the building. Thus he submits they are part of the main structure of the building. That would enable the Management Company to maintain control of the main fabric of the building.

    7. Discussion and Conclusions

44. I cannot accept Mr Caswell's submission that the question can be determined simply by considering whether the timber floor is within the demised premises. In particular I do not think clause 5 is to be construed as imposing a liability on the Management Company only on those parts of the Property in the ownership and control of the Management Company and serving more than one flat. The fallacy of this construction can be seen by considering the roof. It is plain from the declaration that many of the roofs are within the properties demised to the top level flats. If Mr Caswell is correct the liability for those roofs falls on the individual tenant. Yet clause 5 provides a perfectly general liability on the Management Company to maintain the roofs of the Property.

45. I accordingly agree with Mr Vane that the question I have to answer is whether the timber floor is part of the main structure of the Property.

46. I do not for my part gain much assistance from the use of the words "the Property". 18 Neville Court is plainly part of the Property. Thus it does not seem to me to assist in the answering the question of whether the timber floor is part of the main structure.

47. I agree with Rimer J that the precise wording of the covenant was of considerable importance in Toff v McDowell. In my view there are significant differences between the wording of the covenant in that case and the covenant in this. In my view the cases are distinguishable.

48. I also agree that the considerations that influenced Patten J are of importance. In particular the scheme of the leases is that the Management Company retains control of the main structure and the roofs of Marlborough Park and is entitled to a full indemnity in respect of its costs under the service charge provisions.

49. In the end the question of construction is a narrow one. As pointed out by Mr Vane the timber floor is an integral structural part of 18 Neville Court. It constitutes the ceiling of the ground floor and floor of the first floor. It provides lateral support for the partition walls as explained by Mr Davies. In all the circumstances I have come to the conclusion it is part of the main structure of the Property.

50. It follows that I would accept Mr Vane's submissions.

    8. Conclusion

51. I would therefore declare that the liability to maintain repair and renew the intermediate floor separating the lower and upper floors of the maisonette known as 18 Neville Court falls to be discharged by the Management Company.

52. I would decline to answer the remaining questions in the originating application in that the questions are hypothetical and appropriate parties are not before the Court. It will be no doubt be borne in mind that as at present advised I do not think that the question of ownership and liability to repair are co-extensive.

53. I would direct that the costs of the tenant be paid by the Management Company on a standard basis if not agreed.

54. The questions that are raised in this application are by no means straightforward. In my view an appellate court might well take a different view. In those circumstances I would be minded – if asked – to give the Management Company permission to appeal.

    JOHN BEHRENS

    Tuesday 13 December 2005

Note 1   [1993] 69 P & C R 535    [Back]

Note 2   [1998] 1 AER 98 at 114    [Back]

Note 3   [2001] L & T R 46 at 49D    [Back]

Note 4   [2001] 2 EGLR 46    [Back]

Note 5   [2000] EGCS 124    [Back]

Note 6   See paragraph 24 of his judgment    [Back]