Landlord issuing proceedings for recovery of rent – Tenant counterclaiming for damages for breach of repairing covenant – Construction of landlord’s repairing covenant – Judge finding for tenant – appeal dismissed
In May 1990 the defendant tenant took a 25-year lease of a property at 17 Longbridge Road, Barking, Essex (the Barking lease). By clause 3.4 of the lease, the tenant covenanted “To keep the property (including any additions after the date of the lease) in good internal repair.” By clause 4.3, the claimant landlord covenanted “To keep the foundations and roof in good and tenantable repair and condition and to keep the structure and the exterior of the Building (other than those parts comprised in the property) in good and tenantable repair and condition”. The expression “the Building” was not to be found anywhere else in the lease, and it was common ground that it was synonymous with “the property” ie with the whole of the property comprised in the lease.
The Barking lease was granted as part of a transaction under which the landlord transferred to the tenant its insurance services business, which was operated from seven different properties. As part of the transfer, the landlord granted the leases of the seven properties to the tenant. One of those leases was the Barking lease, which, along with one other lease (the Ilford lease), related to an entire building. The Ilford lease was in a similar form to the Barking lease. Clause 3.4 of the Ilford lease was identical to clause 3.4 of the Barking lease. Clause 4.4 of the Ilford lease was effectively identical to clause 4.3 of the Barking lease, save that the bracketed words in clause 4.3 of the Barking lease were omitted. The other five remaining leases related to parts of buildings. Typical of the five leases was the lease of the ground floor offices at 267 Ongar Road, Brentwood (the Brentwood lease). Clause 3.3 of the Brentwood lease was a tenant’s internal repairing covenant, in identical terms to that in the other two leases, and clause 4.3 of the Brentwood lease was identical to clause 4.3 of the Barking lease.
The tenant had failed to pay the rent due under the Barking lease, and, in February 1998, the landlord issued proceedings for recovery of the rent. The tenant counterclaimed for damages for breach of the landlord’s repairing covenant and sought an injunction requiring the landlord to comply with the covenant. A dispute arose as to the extent of the landlord’s repairing covenant, in the Barking lease.
The landlord claimed that the wording of clause 4.3 obliged it to keep the foundations and the roof of the property in good and tenantable repair and condition, but that it was not obliged to carry out any other work because of the exclusion from “the Building” of “those parts [of the Building] comprised in the property” (the first interpretation). The tenants submitted alternative interpretations, namely that: (i) the bracketed words in clause 4.3 should be deleted in their entirety as they were plainly wrong and had been inserted in error (the second interpretation); and (ii) the bracketed words in clause 4.3 should be deemed as referring to those parts of the property that the tenant had covenanted to repair, and the landlord’s obligation therefore extended to those parts that did not fall within the tenant’s repairing covenant in clause 3.4 (the third interpretation). The judge held that the third interpretation was correct. The landlord appealed. The tenant cross-appealed, arguing that the second interpretation was correct.
Held: The appeal was dismissed and the cross-appeal was allowed.
There had clearly been a clerical error in clause 4.3 of the Barking lease, namely the inclusion of the words in brackets, which made it unclear and nonsensical. It was obvious that the parties had intended clause 4.3 of the Barking lease to be in the same form as clause 4.4 of the Ilford lease, but had, in error, adopted the clause that was appropriate to the five leases relating to parts of buildings. Accordingly, the second interpretation was to be preferred. That conclusion could be reached by reconstructing the common intentions of the parties. This could be achieved by considering, inter alia, the factual matrix of the case, the natural ordinary meaning of the words to be interpreted, and the objectives of both parties.
John Cherryman QC and Rajinder Sahonte (instructed by Palmers, of Basildon) appeared for for the appellant; Derek Wood QC and Philip Glen (instructed by Beachcroft Wansbroughs, of Bristol) appeared for the respondent.
Thomas Elliott, barrister
