New lease of business premises ordered by court and executed by parties in same form as before–The court, and both parties, understood this to be a lease which included a storeroom that had come to be used by the tenants–Plan in lease nevertheless drawn in old form so as to exclude storeroom–Parcels construed by reference to surrounding circumstances to include the store-room, plan treated as contradictory and ignored–Landlord’s ‘unmeritorious’ appeal dismissed on ground not taken by respondent in court below
This was an
appeal by Curdworth Investments Ltd from a decision of Judge Perrett in the
Birmingham County Court declaring in favour of the respondents, I S Mills
(Yardley) Ltd, that a storeroom at the rear of 4 Hurst Lane North, Castle
Bromwich, Warwickshire, was included in the premises demised by a lease of
October 15 1973 from the appellants to the respondents.
Mr C P F Rimer
(instructed by Kingsford, Dorman & Co, agents for S J Grey & Willcox,
of Birmingham) appeared for the appellants, and Mr H E Francis QC and Mr P G
Clough (instructed by Eyre & Co, of Birmingham) represented the
respondents.
Giving the
first judgment, LAWTON LJ said: This is an appeal by Curdworth Investments Ltd
(‘the landlords’) against an order made by His Honour Judge Perrett in the
Birmingham County Court whereby he declared that certain premises which were
described in an application before the court under the Landlord and Tenant Act
1954 as a storeroom at the rear of 4 Hurst Lane North, Castle Bromwich,
Warwickshire, were demised by, and part of the parcels included by, a lease of
those premises dated October 15 1973 and made between I S Mills (Yardley) Ltd (‘the
tenants’) and the landlords.
The problem
before the learned county court judge is one which arose out of a muddle. There
had been earlier proceedings in the Birmingham County Court before His Honour
Judge Nicklin. That learned judge had made an order, and difficulties arose
thereafter as to how it should be construed. It is necessary to go into the
facts in some detail. The story starts about the years 1958 and 1959, when the
landlords erected a block of property in Hurst Lane North, Castle Bromwich. The
block of property consisted on the ground floor of a number of lock-up shops.
On the first and second floors there was living accommodation, which had no
internal connection with the shops on the ground floor. At the back of this
block of property, and within the curtilage of it, were some garages. Each of
these garages had over it what has been described as a storeroom. Although
within the curtilage of this block of property, these garages were separated by
a yard from the lock-up shops. By a lease dated June 3 1959 the landlords let
one of these lock-up shops known as 4 Hurst Lane North to a Mr Jack Parkin for
a term of 14 years, to end on March 1 1973. The rent reserved by that lease was
£468 per annum, exclusive of all rates other than water rate. The parcels of
that lease were in these terms:
The lessors
hereby demise unto the lessees all that lock-up retail shop situate at and
known as No 4 Hurst Lane North Castle Bromwich in the County of Warwick all
which said premises are coloured red on the plan annexed hereto.
It is those
parcels which have had to be considered in this case. Shortly after the lease
was executed, it seems to have been agreed between Mr Parkin, the tenant, and
the landlords that Mr Parkin should have possession of a storeroom over one of
the garages. The exact terms of such oral agreement as there was were not
established in evidence. All that was known was that Mr Parkin as tenant paid a
sum of £28 per annum in respect of that room, and that he used it in connection
with the business of grocer and delicatessen seller which he carried on in the
lock-up shop referred to in the lease. When he paid his rent he gave one cheque
for both the rent reserved by the lease in respect of the shop and the rent
reserved by such oral agreement as he had made in respect of the storeroom.
This went on for many years without any question of any kind arising. Some time
about the year 1972 Mr Parkin assigned his leasehold interest to the tenants
involved in the present appeal, I S Mills (Yardley) Ltd. Such instrument of
assignment as there was was not put in evidence. There was some suggestion,
which no one sought to dispute, that whatever the instrument of assignment was,
it was a single instrument. There is no doubt on the facts that after that
assignment the tenants used both the lock-up shop and the storeroom over the
garage.
The lease was
due to expire on March 1 1973. As times had changed, the landlords were keen to
get an increased rent. The consequence of that was that they served notices
under the provisions of the Landlord and Tenant Act 1954, bringing the tenancy
to an end but at the same time stating that they would not oppose an
application to the court for a new tenancy. Shortly after serving that notice a
holding company, with which the landlords were in some way connected, and which
was clearly acting as the landlords’ agent, wrote a letter dated October 20
1972 to the tenants in these terms:
‘Dear Sirs, 4
Hurst Lane North. Further to your lease which expires in March 1973 we are
pleased to offer you, without prejudice, a new lease on the following terms: 14
years from the expiration of the existing lease at £992 per annum exclusive
with rent reviews in the fifth and tenth years. In all other respects the lease
will be unaltered. The proposed new rent is inclusive of one store.’
The rest of
the letter is immaterial. It is perhaps pertinent to point out that the
proposed rent of £992 per annum was double the combined rent of the lock-up
shop and the storeroom over the garage. The tenants were not prepared to pay
the proposed rent. They decided to take advantage of their statutory rights
under the Landlord and Tenant Act 1954,
by identifying the tenants as applicants and asking for the grant of a new
tenancy. Then the following particulars were given: ‘(Address of premises) 4
Hurst Lane North, Castle Bromwich. (Date of lease or agreement for a lease or
tenancy agreement) June 3 1959.’ Then
came the names of the parties to the original agreement. Then ‘(Term granted by
lease or agreement) 14 years from March 1 1959. (Rent reserved by lease or
agreement) £468 per annum. (Terms as to date and mode of termination of
tenancy) Determinable by effluxion of time on February 28 1973 or for
non-payment of rent or other breach of covenant. (Nature of business carried on
by the tenant in the premises) Grocery and delicatessen.’ Then, after a matter which was irrelevant,
‘(Rateable value of premises) £384’; and they proposed a new rent of £750 per
annum. On a quick reading of that document, it would appear to relate solely to
the lock-up shop leased under the lease dated June 3 1959, but as Mr Francis
pointed out in the course of his submissions, there are indications in that
application of some ambiguity, because the business of grocery and delicatessen
which was referred to was in fact carried on partly in the lock-up shop and
partly in the storeroom, because the storeroom was used in connection with the
business and clearly was an important facility of that business. Another
possible ambiguity in this document was the reference to the rateable value.
The rateable value of £384 was not the rateable value of the lock-up shop by
itself, but the rateable value of the lock-up shop plus the storeroom.
That notice
having been served, the landlords gave the appropriate answer in reply, saying
that they were not prepared to grant a new lease at the rent suggested, and in
due course a date for hearing was fixed before His Honour Judge Nicklin. The
proceedings were seemingly amicable. Both parties were represented and had
available expert witnesses. It was agreed between the parties that the evidence
of the expert witnesses in chief should be given by putting in their reports.
There may have been some cross-examination on the reports. What answers, if
any, were given this court does not know.
In the course
of the evidence put forward by a Mr Martin on behalf of the tenant, it was
clear that the rent which he was suggesting, namely £750, was a rent for both
the lock-up shop and the storeroom. The evidence given on behalf of the
landlords about the proposed rent of £992 was on the same basis. There can be
no doubt whatsoever about this. The inference I would draw would be this, that
the parties, through their legal advisers, were inviting the learned judge to
fix a rent for the premises occupied by the business; that is to say, the
lock-up shop and the storeroom. The learned judge made his order (which was
dated May 17 1973) in these terms:
‘That a new
tenancy of the premises known as 4 Hurst Lane North, Castle Bromwich,
Warwickshire, be granted to the applicant for a period of 14 years from March 1
1973 at a rent of £850 per annum, such rent to be reassessed at five and ten
years, and on terms otherwise identical to those contained in the current
lease.’
It was
accepted by Mr Rimer with engaging frankness that on the day of the hearing
both parties assumed that the judge was fixing the rent for both the lock-up
shop and the storeroom considered as one whole.
Once that
order had been made, it became the duty of the landlords under the provisions
of section 36 of the Landlord and Tenant Act 1954 to execute in favour of the
tenants a lease embodying the terms settled by the learned judge. For my part,
I have no doubt at all that the learned judge did think he was making an order
for a rent to cover the lock-up shop and the storeroom. That is what he had
been asked to do by the parties. It follows that it was the statutory duty of
the landlords to execute a lease in those terms, and in no other. By this date
in 1973 the parties clearly regarded 4 Hurst Lane North as those premises on
which the tenants carried on their business, and part of those premises was the
storeroom. The landlords purported to do their duty pursuant to the order made
by Judge Nicklin. What they did was to copy out the lease which had been
executed in 1959, altering the rent from £468 per annum to £850 per annum, that
being the rent fixed by the judge. Unfortunately–and I feel sure that this must
have been an oversight by somebody–they did not alter any other part of the
lease. The result was that the parcels in the new lease were the same as the
parcels in the 1959 lease. Those parcels included reference to a plan. The plan
was that coloured red, and whoever coloured the plan for the purposes of the
1973 lease put the red marking in exactly the same places as it had been put in
the 1959 lease. The lease having been prepared, it was then executed and dated
October 15 1973. Shortly after that lease had been executed, the landlords
became aware that the new lease could be construed as not referring to the
storeroom, as the storeroom had not been coloured red. They now say that they
want that storeroom for their own occupation. As a result of what they had
learned, on December 20 1973 they served a notice on their tenants under the
Landlord and Tenant Act 1954, purporting to terminate the tenancy of the
storeroom as from June 30 1974 and stating that they would oppose an
application to the court for the grant of a new lease of it.
The tenants in
due course served a counternotice, but when their legal advisers looked into
the matter, they appreciated at once that something had gone wrong. Their first
thought was that the order of His Honour Judge Nicklin had been wrongly drawn
up; so they sought to have that order amended under the slip rule. They gave
notice to this effect to the landlords. This application was considered by
another judge, Judge Sunderland, on February 1 1974. By this date Judge Nicklin
had retired. Judge Sunderland was faced with an awkward problem: he had not
tried the case; he had no idea what his predecessor had had in mind; and very
understandably, he refused to make any alteration to the order. The tenants, of
course, were gravely concerned about the threat to their possession of the
storeroom. They served the appropriate originating application under the
Landlord and Tenant Act 1954 for the grant of a new lease. They suggested a
rent under the new lease for the storeroom of £50 per annum. A date for hearing
was fixed in the county court. The tenants’ legal advisers appreciated before
the date of hearing that a difficult preliminary point would arise, because it
was their contention that Judge Nicklin had already dealt with the problem of
the storeroom when he made his order in 1973. They wrote to the landlords’
solicitors in these terms:
We are
advised by counsel that we should seek a declaration in the following terms:
(1) that by virtue of a new lease dated October 15 1973 and made between the
respondents and the applicants, and by virtue of section 62, subsections (1)
and (2) of the Law of Property Act 1925, the storeroom which is the subject of
this application then and theretofore in the occupation and use of the applicants
passed to and vested in the applicants as part and parcel of the premises
comprised in the said lease; (2) that the notice dated December 20 1973 whereby
the respondents purported to give the applicants notice under section 25 of the
Landlord and Tenant Act 1954 terminating the said tenancy on June 30 1974 is
null and void and of no effect whatsoever; and (3) that all further proceedings
be stayed or discontinued.
Sensibly the
landlords decided that they would agree to the matters raised by the tenants
being dealt with as a preliminary point by the learned judge when he came to
hear the tenants’ originating application under the Landlord and Tenant Act
1954. It was in those circumstances that Judge Perrett made the declaration
which is under appeal in this case. That declaration was in favour of the
tenants. The landlords have submitted that it ought not to have been; that as
landlords they are entitled to have possession of the
could not have been dealt with in the original application to Judge Nicklin;
and that it was outside the terms of the lease which was dated October 15 1973.
They have submitted that on the face of the originating application, all the
tenants were asking the judge to do was to grant them a new lease of the
lock-up shop at the rent suggested in that application. In those circumstances,
the judge’s order must be construed in relation to that originating application;
and as the originating application on its face referred only to the lock-up
shop, it necessarily follows that the lease executed pursuant to the order of
the judge could refer only to the lock-up shop.
To that Mr
Francis made a number of answers. The first was the one to which I have already
referred, namely, that there is some indication on the face of the originating
application of ambiguity. But more important than that, it is clear, and
accepted by the landlords, that at the hearing both sides were dealing with the
application on the basis that the judge was to fix the rent of both the lock-up
shop and the storeroom, and that that is what he intended to do. In those
circumstances, in my judgment, the order which he made on May 17 1973 should be
construed as referring to both the lock-up shop and the storeroom. All that
appeared in the order were the words ‘the premises known as 4 Hurst Lane North,
Castle Bromwich.’ 4 Hurst Lane North,
Castle Bromwich, was identified in the lease dated June 3 1959, but between the
parties 4 Hurst Lane North, Castle Bromwich, had come to mean the lock-up shop
and storeroom. That is clear from the letter of October 20 1972 which the
landlords’ agent wrote; it is clear from the proofs of evidence which the two
experts put in as their evidence in chief before Judge Nicklin; and it is clear
from the way in which the rent was fixed by the learned judge. It follows, in
my judgment, that when the landlords came to execute a new lease to give effect
to the judge’s order, they should have made it clear in the new lease that they
were granting a lease of the lock-up shop and the storeroom.
Unfortunately, because somebody copied out the earlier lease and used the
phrase ‘4 Hurst Lane North, Castle Bromwich’ there is doubt as to what those
words mean in the parcels of the October 1973 lease.
What was
submitted on behalf of the landlords was this, that whatever may have been the
intention of the parties, nevertheless when the lease came to be executed,
there was no doubt whatsoever what premises were known as 4 Hurst Lane North;
and even if there was doubt about that, those doubts were resolved by the words
in the October 1973 lease ‘all which said premises are coloured red on the plan
annexed hereto.’ Our attention was
called to the well-known decision of the House of Lords which is referred to so
frequently and which is so helpful in dealing with problems about the parcels
in conveyances, namely, Eastwood v Ashton [1915] AC 900. This
case can perhaps be described as a valuable drift mine for counsel, because if
one goes through the various speeches it is possible to find the odd sentence
here and there which will support most contentions. Nevertheless it seems to me
that when this case is considered as a whole it does nothing more than establish
the general proposition that the words in a conveyance, if they are clear, must
be given their ordinary and natural meaning, and that extrinsic evidence is not
to be admitted to give further meanings to words which are clear. All cases as
to the meaning of parcels in a conveyance turn upon the words used and
the circumstances in which the conveyance came to be executed. In this case it
is necessary to look at the circumstances in which this lease (being a
conveyance for the purposes of section 205 of the Law of Property Act 1925)
came to be executed. As Mr Francis pointed out in his submissions, they were
unusual because it was a lease which was intended to give effect to Judge
Nicklin’s order. Judge Nicklin’s order was intended to refer to both the lock-up
shop and the storeroom. It follows, therefore, that the question arises as to
what was meant by ‘4 Hurst Lane North’ in the October 1973 lease. That cannot
be decided without admitting extrinsic evidence.
Extrinsic
evidence, as has been long established and recognised, is admissible in certain
circumstances. The classical statement of the law on this subject comes in the
speech of Lord Davey in Bank of New Zealand v Simpson [1900] AC
182 at 187. Lord Davey said: ‘Extrinsic evidence is always admissible, not to
contradict or vary the contract, but to apply it to the facts which the parties
had in their minds and were negotiating about.’
What the parties had in their minds immediately before this October 1973
lease was executed was giving effect to Judge Nicklin’s order. It follows,
therefore, that extrinsic evidence is admissible to identify what Judge Nicklin
was referring to when he said there was to be a new lease of 4 Hurst Lane
North. I can find nothing in Eastwood v Ashton which says that
such evidence of identification cannot be admitted. I can, however, find
something in that case in the speech of Lord Parker which shows that it can be
admitted. In this case, once evidence is admitted to show what the parties had
in their minds and were negotiating about, the answer is clear, namely, the
lock-up shop and the storeroom. The difficulty, however, is that in addition to
the words in the parcels ‘known as 4 Hurst Lane North,’ come the words, ‘all
which said premises are coloured red on the plan annexed hereto.’ It was submitted by Mr Rimer on behalf of the
landlords that those final words are very similar to the words which were
construed in Eastwood v Ashton and have the effect of
particularising more general and more doubtful words in the earlier part of the
parcels. It seems to me, however, that once extrinsic evidence can be admitted
(as in my judgment it can be in this case) to identify the premises, then other
words in the parcels which contradict that identification can be and should be
disregarded. That is how I would construe the parcels in this case. It follows
that Judge Perrett was right when he took the view which he did, that the words
‘4 Hurst Lane North’ in the parcels of the October 1973 lease included the
storeroom as well as the lock-up shop.
That being my
opinion, it is unnecessary for me to go on to consider the second ground upon
which the tenants sought to support the declaration made in their favour by
Judge Perrett. That second ground was this: ‘Whatever the meaning of the parcels
may be, the storeroom was demised by the parcels because it was part of the
premises coming within the general words of section 62, subsections (1) and
(2), of the Law of Property Act 1925.’
This raises a difficult point of law of general application. I find it
unnecessary to decide it because, on the somewhat unusual facts of this case,
the appeal can be dealt with on the narrow point which I have discussed in
detail. I would dismiss the appeal.
MACKENNA J:
There can seldom have been a more unmeritorious appeal than the landlords’ in
the present case, or, I would add, one better argued by their counsel, and I am
happy that we are able to dismiss it. The grounds of my conclusion can be
stated shortly. Though the tenants’ application of October 1972 was ambiguous,
referring to the rent of £468 (which was only the rent of the shop) and also to
the rateable value of £384 (which was the value of the shop and the storeroom
combined), it is clear that the only question discussed before Judge Nicklin
and decided by him was that of the fair rent to be reserved in a new lease for
the two together. The tenants’ valuer in his proof had put forward a total
figure of £750–£675 for the shop and £75 for the storeroom. The landlords’
valuer had stated in his proof that ‘included in the proposed lease is a
first-floor lock-up store approached by an external staircase,’ which is an
accurate description of the storeroom. In the last paragraph of this proof it
was stated that other rents, in the witness’s
describe as ‘that which has been proposed for shop No 4.’ The two proofs were given to the judge as the
evidence in the case. They appear to have been the only evidence. In those
circumstances, the figure of £850 fixed by Judge Nicklin must have been
intended by him to be the fair rent of the shop and storeroom together. I turn
to the order for the new tenancy. It is in these terms: ‘It is ordered that a
new tenancy of the premises known as 4 Hurst Lane North, Castle Bromwich,
Warwickshire, be granted to the applicants for a period of 14 years from March
1 1973 at a rent of £850 per annum.’ The
words of the order ‘4 Hurst Lane North’ must have been intended, in the
circumstances I have described, to denote the storeroom as well as the shop.
Section 36 of
the Landlord and Tenant Act 1954 provides that in the absence of any agreement
not to act upon the order, the new lease must be in the terms determined by the
court. There was no agreement not to act upon the order. It follows that when
the parties executed the lease of October 15 1973, they must have intended the
description of the property demised, namely No 4 Hurst Lane North, to bear the
meaning given to it by the judge and to include the storeroom. It is true that
the descriptive words given that meaning contradict the plan annexed to the
lease. The premises coloured red on the plan, said in the body of the lease to
be the demised premises, did not include the store. Where there is a conflict between
two descriptions, that description must be preferred which is most likely to
accord with the real intention of the parties. Here there can be no doubt that
the words ‘No 4 Hurst Lane North,’ construed to mean the shop and the store,
give effect to the real intention of the parties, and that the plan does not. I
do not think that there is any rule of law which requires me to prefer the
inaccurate plan to the descriptive words. The plan must therefore be
disregarded. Judge Perrett’s decision in the tenants’ favour can, I think, be
upheld in this way without invoking section 62 of the Law of Property Act 1925,
on which the judged based his decision. I am happy to be able to uphold it
without having to consider whether the judgment of Fry J in Willis v Watney
(1881) 13 WR 424 is consistent with the views about section 62 expressed by
Russell LJ in H E Dibble Ltd v Moore [1970] 2 QB 181 at 190,
which is a question of conveyancing law that I am hardly competent to decide. I
would dismiss the appeal.
CAIRNS LJ: I
agree that the appeal should be dismissed for the reasons which my Lords have
given, and which I do not find it necessary to supplement. I add this footnote.
The decision of the learned judge was based wholly upon the application of
section 62 of the Law of Property Act 1925. The ground on which we have decided
the case was not, so far as appears from the judgment and from the judge’s note
of the argument, advanced before Judge Perrett. It therefore was necessary for
us to consider whether it was open to the respondents in this case to rely upon
that ground. There has been no respondents’ notice, but we gave leave at a late
stage for a respondents’ notice to be put in, and to that no objection was
raised by Mr Rimer on behalf of the appellants. It was then necessary for us to
consider whether the rule which debars an appellant on appeal from the county
court from relying on a point of law that was not raised in the county court
applies also to a respondent. I am satisfied from the authorities which were cited
to us–namely, Waller v Thomas [1921] 1 KB 541, Simpson v Crowle
[1921] 3 KB 243, both of which are cases in the King’s Bench Divisional Court,
and Thomas v Marconi’s Wireless Telegraph Co [1965] 1 WLR 850 in
the Court of Appeal–that it is open to a respondent, upon notice being given,
to rely upon a point of law not taken in the court below so long as it arises
upon the evidence which was given there. It will be apparent from the full
statement of the facts which Lawton LJ has given in the course of his judgment
that the evidence in the court below was amply sufficient to raise the point of
law upon which the appeal fails.
The appeal
was dismissed with costs. Leave to appeal to the House of Lords was refused.
