Rent review — Determination by independent surveyor — Hypothetical lease on same terms as actual lease — Use of premises restricted to ‘research development testing manufacture repair and training in the use of engines motors and components and mechanical devices’ — Whether ‘mechanical devices’ should be given a special meaning — Landlord submitted that ‘mechanical devices’ should be given their ordinary meaning — Tenant submitted that the words ‘mechanical devices’ must be construed restrictively having regard to the earlier genus in the words ‘engines’ ‘motors’ and ‘components’ having reference and/or consisting or all or part of an apparatus for providing motive power — Whether ejusdem generis rule applied and contra proferentem rules applied
to the preceding words ‘engines motors and components’ — The ejusdem generis
rule does not apply to restrict the meaning of mechanical devices — The contra
proferentem rule does not mean that one has got to decide the case, if one
possibly can, against the landlord’s interest in every particular circumstance,
but that one construes the clause in its context against the interest of the
person who put it forward — The indication derived from the contra
proferentem rule is that a larger rather than a smaller construction is
appropriate to the tenant’s activities permitted by the lease — The meaning of
‘mechanical devices’ is not reduced by the meaning of, or any common feature
in, the other permitted uses — The justification for the ejusdem generis
construction, that one ought to restrict the wide words because otherwise the
earlier particular words are of no practical effect, was of singularly little
use in the present case for two reasons — If ‘mechanical devices’ were the
‘general words’ the clause would be highly eccentric — The surplusage argument
which justifies the ejusdem generis rule carried no weight in the
present case because of the great deal of overlap between the items listed —
The draftsman of the lease included the phrase ‘mechanical devices’ to include
the general run of engineering, consisting of mechanical devices with the
intention of its having an effect of extending the list of permitted activities
on the part of the tenant
The following
cases are referred to in this report.
Anderson v Anderson [1895] 1 QB 749
Chandris v Isbrandtsen-Moller Co Inc [1951] 1 KB 240; [1950] 2 All ER
618, CA
Gibbs v Lawrence (1860) 30 LJ Ch 170; 3 LT 367; 7 Jur NS 137; 9 WR
93
Tea Trade
Properties Ltd v CIN Properties Ltd [1990] 1
EGLR 155; [1990] 22 EG 67
Tillmanns v SS Knutsford Ltd [1908] 2 KB 385
This was an
application by way of an originating summons seeking a declaration as to the
true meaning and effect of a lease of premises at East Country Yard, Greenland
Dock, London SE16, by the plaintiff landlord, Skillion plc. The defendant,
Keltec Industrial Research Ltd, was the tenant of the premises.
Jonathan Brock
(instructed by Rowe & Maw) appeared for the plaintiff; Wayne Clark
(instructed by Titmuss Sainer & Webb) represented the defendant.
Giving
judgment, KNOX J said: By a lease dated June 20 1985, made between the
Borough of Southwark as landlord and Keltec Industrial Research Ltd (‘Keltec’)
as tenant, some premises
first, second and third floors of the building erected thereon situate at East
Country Yard, Greenland Dock, London SE16, were demised to Keltec, which is the
defendant, for a term of 22 years from January 1 1984 at a rent subject to rent
review provisions. By clause 2 the lease provided that it incorporated what are
described as ‘the special provisions below’ and ‘the general provisions
herein’.
The special
provisions contained a limited licence for the lessee to install a petrol tank
on certain conditions and, in particular, contained a provision for doing away
with it if the lessee assigned the benefit of the lease or the lease otherwise
expired.
The general
provisions contained quite usual tenant’s covenants, in particular a rather
limited repairing covenant to keep the premises in a wind and watertight
condition and a user covenant in the following terms:
Not to carry
on or permit or suffer to be carried on in or upon the premises or any part
thereof any trade or business whatsoever other than that described in the said
schedule of particulars.
The schedule
of particulars to which various matters such as the description of the
premises, the term, the rent and the review dates were consigned, contained the
following regarding the use:
As to that
part coloured red on the same plan for the research development testing
manufacture repair and training in the use of engines motors and components and
mechanical devices together with ancillary office accommodation and storage
and other parts
of the demised premises coloured blue on the plan were to be used for parking,
but nothing turns on that.
The rent
review provisions, in fairly common form, provide for a notice to be served by
the landlord providing for an increase in the rent payable under the lease and
a fairly normal provision for a lessee to serve a counternotice and at the end
of the day, failing agreement, there is a provision for the question whether
any, and if so what, increase ought to be paid in the rent payable under the
lease as from the review date to be referred to an independent surveyor. The
independent surveyor is required to make various assumptions in reaching his
conclusion acting, as the clause says, as an expert and one of those matters to
which he is required to have regard is contained in subclause (2) of the rent
review provision in clause 3(e) of the lease. It reads as follows:
Having regard
to market rental values current at the commencement of the relevant period for
a property let without a premium with vacant possession and subject to the
provisions of this lease other than the amount of rent hereby reserved but including
all the provisions for rent review for a term equal to the original term of
this lease by a willing landlord to a willing tenant.
The issue
which has arisen between the parties revolves round the requirement that the
surveyor should have regard to market rents subject to the provisions of the
lease and, in particular, subject (as is common ground between the parties) to
the provisions of the lease regarding the restrictions upon user which are
imposed by the combination of the covenant in the general provisions and the
incorporation in that covenant of the use that I read from the schedule of
particulars.
The
originating summons does not perhaps shed a great deal of light on what the
main issue between the parties has been. What it asks for, and it is issued by
the successor in title to the original lessor, that successor being Skillion
plc (which I will call the landlord), is a declaration as to the true meaning
and effect of clause 1(x) of the general provisions and the use as described in
the second schedule to the above-mentioned lease and, in particular, whether,
and if so to what extent, the word ‘mechanical devices’ in the said schedule
should be given a special, and if so what, meaning.
As can readily
be inferred from the perhaps slightly tendentious way in which that question is
drafted the plaintiff landlord is concerned to establish that the words
‘mechanical devices’ should be given what the landlord would describe as its
ordinary meaning, ie a meaning which is not cut down by the context. On the
other hand, the tenant has argued that two presumptions or rules of
construction or aids to construction (each has a Latin name) apply to restrict
the width of the words ‘mechanical devices’ to the earlier genus in the words
‘engines’, ‘motors’ and ‘components’, which is defined on the part of the
tenant as consisting of all or part of an apparatus for providing motive power.
Put perhaps
slightly more shortly, the question that has been argued before me is whether
‘mechanical devices’ are limited to devices concerned with or as part of
apparatus for the provision of motive power or whether they are unlimited
otherwise than by the normal meaning of the words. I have been referred to
dictionary definitions which, although they illuminate one’s ideas of such
common words as ‘engines, motors, components and mechanical devices’, do not,
in my view, advance the arguments of either side to any significant extent.
So far as the
law is concerned, I have been referred to three authorities. On behalf of the
tenant, reliance is placed on Tillmanns v SS Knutsford Ltd [1908]
2 KB 385. That was a case where a provision in a bill of lading read as
follows:
Should a port
be inaccessible on account of ice, blockade or interdict, or should entry and
discharge at a port be deemed by the master unsafe in consequence of war,
disturbance or any other cause, it shall be competent for the master to
discharge goods intended for such port on the ice or at some other safe port or
place, at the risk and expense of the shippers, consignees or owners of the
goods; and upon such discharge the ship’s responsibility shall cease.
There was such
a discharge but the Court of Appeal came to the conclusion that the reliance on
ice as the justification for it was factually not established. The headnote
reads:
Inaccessibility
was a question of fact, and that the port must be inaccessible not merely at
the moment of the ship’s arrival off the port but also for a reasonable time
after her arrival and first attempt to enter.
So that
argument failed. I am not concerned with that. Reliance was also placed on the
words ‘or any other cause’ in the passage that contains the phrase ‘be deemed
by the master unsafe in consequence of war, disturbance or any other cause’.
Reliance was placed because the master had formed that view, but, of course,
there is the obvious overlap between the specific reference to ice as causing
inaccessibility, as giving rise to the right to discharge goods, and to the
argument that was being advanced for ‘any other cause’ to be construed
literally as including, in particular, ice.
The decision
of the Court of Appeal to which I was referred was given by all three members,
but one of them went into the authorities on the ejusdem generis rule in
greater detail than the other two and, in particular, Vaughan Williams LJ went
at some length into the question whether there was a presumption of any sort
where one found particular words followed by general words. He said at p 398:
The real
contest comes in here. In Anderson v Anderson [1895] 1 QB 749
there can be no doubt as to what was laid down by the Court of Appeal and in
the absence of a conflicting decision of equal authority we are bound by that
case unless the facts are different. It was there undoubtedly held that the
general words must be treated, even when following the antecedent enumeration
of particular cases, as having a wide application and construction and not as
being narrowed by the antecedent words. But my difficulty arises thus. In Maxwell
on the Interpretation of Statutes, 4th edition, page 499 which I cite not
as an authority but as a convenient frame on which to hang a series of cases to
which I propose to refer, I find this: ‘But the general word which follows
particular and specific words of the same nature as itself takes its meaning
from them and is presumed to be restricted to the same genus as those words, or
in other words as comprehending only things of the same kind as those
designated by them unless, of course, there be something to show that a wider
sense was intended.’
That is the
end of that quotation from Maxwell. Vaughan Williams LJ goes on to
consider the authorities at some length and he says, having done that, at p
401:
The series of
cases to which I have referred are all cases which go to show that the true
rule is that the restricted meaning is the one which primarily applies.
He cites a
decision of Wood V-C, Gibbs v Lawrence (1860) 30 LJ Ch 170, where
that conclusion was reached in these words:
I think the
cases
— this is the
quotation from Wood V-C —
which are
very numerous on this subject have some common principle upon which they all
seem to have been decided and which is not difficult of application with regard
to gifts in general.
And of that,
Vaughan Williams LJ observes:
Of course it
is more difficult of application when you come to a contract and remember that Anderson
v Anderson was a case of a gift by a husband by a settlement on his
wife, the words following a specific enumeration being confined to things ejusdem
generis.
He goes on to
say that under these circumstances and in particular that decision of Gibbs
v Lawrence he, Vaughan Williams LJ, was not prepared to say that the
construction which Channell J at first instance had placed upon the words in
question was wrong.
In my
judgment, there is no doubt but that Vaughan Williams LJ did express a
preference for the view that was stated to be the true interpretation of the
authorities in the passage in Maxwell, then the
put the case on that footing. They put it on the footing that there was in this
case a genus to be found and that it would be right in all the circumstances to
apply the ejusdem generis rule in relation to that phrase ‘or any other
cause’.
There are at least
two points to be noted in relation to that. First, there is the point to which
I have already adverted, namely that there was a specific provision in relation
to inaccessibility owing to ice, inter alia, and it was on the face of
it rather surprising that the provision should deal with that potential
situation in more than one way. That was a very strong argument, as it seems to
me, in favour of a limited construction of the words ‘or any other cause’. The
other consideration is that one does have the classic case for the application
of the ejusdem generis principle in an enumeration of two things in this
case, which have a common feature — war and disturbance — followed by some
phrase, such as ‘or any other cause’ which is very close in sense to ‘etc’ or
some other quite general word which plainly embraces what has gone before. I
say ‘plainly embraces’ because the inclusion of the word ‘other’ makes it clear
that ‘war’ and ‘disturbance’ are two causes of that nature and it is, as it
seems to me, a matter of common sense and language that it is much easier to
apply the ejusdem generis rule when one has that type of collocation.
As against
that authority I was also referred to the decision of Devlin J in Chandris
v Isbrandtsen-Moller Co Inc [1951] 1 KB 240. The clause there in
question was one which was contained in a voyage charterparty which provided
that the cargo was to consist of lawful general merchandise ‘excluding acids,
explosives, arms, ammunition or other dangerous cargo’. What happened was that
there was loaded turpentine which became dangerous and the issue arose whether
that was within the phrase ‘or other dangerous cargo’. The learned judge,
having stated the question and the two alternative arguments, both of which
seemed to proceed on the assumption that the ejusdem generis rule was
applicable, started by expressing the view that the first question he had to
determine was whether the rule in one form or another applied at all. To do
that, he had to examine the nature and scope of the rule. He took as his point
of departure an earlier decision of the Court of Appeal, Anderson v Anderson
[1895] 1 QB 749. That, of course, was the decision that was referred to in the
passage that I have quoted from Vaughan Williams LJ’s decision in the Tillmanns
case. Devlin J said at p 244:
Anderson v Anderson is a decision of the Court of Appeal in relation
to a post-nuptial settlement in which all three Lords Justices clearly laid it
down that general words were prima facie to be considered as having
their natural and larger meaning and not to be restricted to things ejusdem
generis previously enumerated, unless there was something in the deed to
show an intention so to restrict them. In Tillmanns & Co v Steamship
Knutsford Ltd, Vaughan Williams LJ, without impeaching the authority of Anderson
v Anderson, set out other authorities to the opposite effect designed to
show that it is the restricted meaning which primarily attaches to the general
words. It is perhaps important for this case concerns a charterparty. In Thorman
v Dowgate Steamship Co Ltd Hamilton J, also dealing with a charterparty,
thought it unnecessary to embark on this discussion. Anderson v Anderson
is a decision which, unless distinguishable on the ground that I am concerned
with the commercial document rather than a settlement, is binding on me. Apart
from its authority, if I may respectfully say so, I entirely agree with it.
The learned
judge then continues to discuss the nature of the rule in question. He says:
A rule of
construction cannot be more than a guide to enable the court to arrive at the
true meaning of the parties. The ejusdem generis rule means that there
is implied into the language which the parties have used words of restriction
which are not there. It cannot be right to approach a document with the
presumption that there should be such an implication. To apply the rule
automatically in that way would be to make it the master and not the servant of
the purpose for which it was designed — namely, to ascertain the meaning of the
parties from the words they have used. The first approach will often plainly
show that the words are used far more widely than the parties could have
intended;
And he gives
examples of that; for example, ‘all other perils’ in a policy. He then
continues to deal with the question whether commercial documents should be
dealt with in a more stringent way than settlements. I need not, I think, deal
with that aspect of the matter. At p 245 he says this, which is significant:
Moreover, the
main argument of construction which justifies the application of the rule does
not apply in commercial documents. It is that if the general words have an
unrestricted meaning the enumerated items are surplusage. The presumption
against surplusage is of little value in ascertaining the intention of the
parties to commercial documents, as many great commercial judges have
recognised.
And he gives
various examples, which I need not cite, of that type of observation of a
commercial judge. I was, I mention in passing, referred to something that my
brother Hoffmann LJ said in Tea Trade Properties Ltd v CIN Properties
Ltd [1990] 1 EGLR 155 at p 158A of this argument against surplusage:
I see the
force of that argument, but I have never found the presumption against
superfluous language particularly useful in the construction of leases. The
draftsmen traditionally employ linguistic overkill and try to obliterate the
conceptual target by using a number of words or phrases expressing more or less
the same idea. I cannot, therefore, rely upon the language alone but must, as
it seems to me, construe the words also by reference to the commercial effect
which would be produced by one construction or the other.
Returning to
Devlin J’s decision, he continued at p 246:
I apply the
principle laid down in Anderson v Anderson and so inquire whether
there is anything in the text of this charterparty or in the circumstances in
which it was made which would lead me to suppose that the parties intended
‘other dangerous cargo’ to have some limited meaning. I can find no such
indication.
He therefore
rejected the argument that the ejusdem generis rule applied at all. He
did, however, go on to consider the other point which assumed that the ejusdem
generis rule — contrary to his decision — did apply, saying on this score:
But since it
was fully argued, and is a point much in dispute, I may permit myself to
express shortly my view of it. If the ejusdem generis principle is a
rule of automatic application, it becomes of the first importance to determine
exactly what the rule is. If it is merely, as I think, an aid to ascertaining
the intention of the parties, no point of controversy need arise at all. If
there is something to show that the literal meaning of the words is too wide,
then they will be given such other meaning as seems best to consort with the
intention of the parties. In some cases, it may be that they will seem to
indicate a genus; in others, that they perform the simpler office of expanding
the meaning of each enumerated item. If a genus cannot be found, doubtless that
is one factor indicating that the parties did not intend to restrict the
meaning of the words. But I do not take it to be universally true that whenever
a genus cannot be found the words must have been intended to have their literal
meaning, whatever other indications there may be to the contrary. I see no
reason why, if it accords with the apparent intention of the parties, the words
should not be treated as suggested by Lord McNaghten in Thames & Mersey
Marine Insurance Co Ltd v Hamilton, Fraser & Co as being
‘inserted in order to prevent disputes founded on nice distinctions’ and ‘to
cover in terms whatever may be within the spirit of the cases previously enumerated’.
I find myself
in a position which is not seriously dissimilar from that to which Farwell LJ
referred at the outset of his judgment in the Tillmanns case, when he
said of this point:
The second
point is the question of ejusdem generis, upon which question I felt
much embarrassed by the superfluity of authority.
There is, in
my view, some considerable difficulty in reconciling the general approach of
Vaughan Williams LJ, in particular in the Tillmanns case with what was
said in the Anderson v Anderson decision, particularly as
interpreted and applied by Devlin J in the Chandris case. If it were
necessary for me to choose between the two I would prefer and follow the
approach that Devlin J took. However, I doubt whether it is necessary for me so
to decide because, if one looks at the clause itself, in the context in which
one finds it, it seems to me that the answer is reasonably clear without resort
to any particular presumption of law.
I have an
affidavit before me which describes the condition of the premises at the date
when the lease was granted and that can be described compendiously as being, in
the words of the deponent of the affidavit, ‘scruffy’. Hence, no doubt, the
rather limited repair obligation imposed upon the tenant. I do not myself derive
any particular guidance from that state of affairs. Certainly I do not derive
any indication that the parties would have intended to limit closely the extent
to which the lessee should be entitled to trade, but the point is fairly
neutral.
The next point
does seem to me of somewhat more help. That is, that the clause in which one
finds the relevant phrase by incorporation by reference is a clause that
enumerates the permitted users in which the tenant can indulge in using the
premises by way of trade or business. It is an enumeration of permitted
activities. In that context I have no doubt but that the second of the two
rules mentioned in the argument before me with a Latin name, the contra
proferentem rule, operates in favour of a large, rather than a small,
construction; because there is common ground between the parties that the contra
proferentem rule, for what it is worth, does apply to leases and the person
who is doing the proffering is the landlord and therefore it is against the
landlord that one construes the relevant clause.
Now the
relevant clause, as I have said (I fear more than once), is an enumeration of
what the tenant may lawfully do on the demised premises and there can, in my
view, be no doubt at all but that, in approaching that question of
construction, the large construction is the one that permits the tenant to do
more rather than less. By a fairly typical irony in connection with rent review
clauses it is, of course, in the tenant’s interest in a rent review that the
scope of his activities should be restricted by the terms of the user covenant
because it is at least possible that a narrow user clause will persuade a
valuer who is in the position of the expert in this case that the open market
rent is lower than it would be if there were no such restriction. That is a
matter of very common experience. The contra proferentem rule does not
mean that one has got to decide the case, if one possibly can, against the
landlord’s interest in every particular circumstance. The contra proferentem
rule is that in approaching the construction of a clause, in this case in a
lease, one construes the clause in its context against the interest of the
person who put it forward and had it included in the lease. The particular
context is, of course, the extent to which the tenant’s activities are
permitted or forbidden by way of trade or business.
I start,
therefore, with some indication, derived from that rule, that a larger rather
than a smaller construction is appropriate.
The next
consideration is that we have got here an enumeration of the permitted
activities and that in such an enumeration one would expect the several forms
of activity that are defined to be cumulatively permitted — A + B + C — and one
would not expect a priori C to be reduced by the meaning of, or any
common feature in, A and B.
Third, the
justification for the ejusdem generis construction referred to as the
principal one intellectually by Devlin J, namely that surplusage indicates that
one ought to restrict the wide words because otherwise the earlier, particular,
words are of no practical effect, is of singularly little use in this case for
two separate reasons. First of all, if one just had what are described as the
‘general words’, ie mechanical devices, the clause would be, in my view, highly
eccentric. It would read: ‘for the research, development, testing, manufacture,
repair and training in the use of mechanical devices’, and one can well see
that a draftsman who was faced with a grant of a lease which included a
temporary permission to put in a petrol tank and, therefore, I think as a
matter of necessary implication it must have contemplated a fairly widespread
use of the internal combustion engine by the tenant, would have balked at not
making it a great deal clearer than that turn of phrase, ie a reference only to
mechanical devices, as a description of permitted user by a tenant who was
plainly going to be using engines and motors. So that I find a very natural
explanation for the specific mention of the particular words before one comes
to what is relied upon as the general. Second, the surplusage argument seems to
me of no use in this case, in that this is not — on the face of it — a
draftsman who avoided surplusage; he used ‘engines’ and ‘motors’ in immediately
close collocation, and it was very rightly expressly accepted before me by Mr
Clark, on behalf of the tenant, that there is a very great deal of overlap
between those two. The surplusage argument, therefore, does not seem to me to
carry any weight at all in this case.
Next, there is
the double use of the word ‘and’ which is slightly unusual but I think
explicable. It will be recalled that the phrase is ‘in the use of engines
motors and components and mechanical devices’. If one uses brackets, it seems
to me that one bracket should be put round ‘(in the use of engines motors and
components)’ and another round ‘(mechanical devices)’ because it does seem to
me that there may very easily be compelling reasons, and indeed were it
necessary to decide it I would decide, in favour of limiting components to what
has gone immediately before; in other words, that the components that are
referred to are components of engines and motors, and that, it seems to me,
justifies the insertion of the word ‘and’ in front of ‘components’ because
those three things are meant to go together. True, there is a very substantial
degree of repetition in ‘engines and motors’ but, disregarding that for a
moment, the components do seem to me to be intended to be the components of the
engines or the motors. But when one comes to ‘mechanical devices’ that argument
does not seem to me to apply with anything like the same strength, and also the
structure of the clause distinguishes it from the very large number of cases of
which I was, mercifully, referred to three only, where there is an enumeration
with, at the end of the enumeration, either ‘and’ and then a general word or
‘or’ and then a general word, depending frequently on whether it is a positive
or a negative phrase.
Here we do not
have that structure. This is not a long enumeration of which ‘mechanical
devices’ is at the end without more. It is a phrase which, it seems to me,
falls into two parts: one, ‘engines, motors and their components’ and I would
effectively include the word ‘their’ to make the meaning of components clear;
and, two, ‘mechanical devices’.
That leads me
to the final consideration. I ask myself, why did the draftsman include and why
did the parties agree to the inclusion of the expression ‘mechanical
devices’? If it had just been methods of
propulsion, or — as it is put in argument on behalf of the tenant — apparatus
for providing motive power, it seems to me that it would not have been very
difficult to find some much narrower phrase than ‘mechanical devices’. The
justification that I think I detect for the inclusion of ‘mechanical devices’
is that the draftsman (one assumes, on the instructions of the parties) was
concerned to allow the general run of engineering, consisting of mechanical
devices. It is an unusual phrase, in my experience, to find in a lease, but one
has to take the clause as one finds it and it does seem to me that it must have
been put in with the intention of its having an effect of extending the list of
permitted activities on the part of the tenant.
All those
reasons added together lead me to the conclusion that this is not a case in
which I should apply the ejusdem generis rule to restrict the meaning of
mechanical devices.
I will hear
counsel on the form of the order that I should make to give effect to that
decision. I am minded to declare that the words ‘mechanical devices’ contained
in the schedule of particulars in the lease are not to be limited by reference
to the preceding words ‘engines motors and components’, but there may be more
felicitous ways of expressing that conclusion.
