Landlord and tenant –– Repairs –– Roof terrace –– Repairing liability –– Whether terrace part of “main structure” –– Whether all components of terrace demised to tenants –– Whether surface only demised to tenants –– Discretion under section 20C of Landlord and Tenant Act 1985 –– Costs
The claimant tenant was the lessee of flat 8, a second floor flat in a block owned by the first defendant landlord. Immediately above flat 8 were two flats, nos 9 and 10, owned respectively by the second and third defendants. Part of the interior of flat 8 lay underneath a section of a roof terrace to which flats 9 and 10 had access. Access was through french doors in each flat. For some years water percolated from the terrace down into flat 8. In proceedings brought by the claimant against the landlord, the landlord contended that the water penetration was due to defects in the terrace serving flats 9 and 10, and denied liability. The claimant then joined the second and third defendants. At the hearing of a preliminary issue, the county court judge decided that the whole of the roof terrace was part of the “main structure” of the building and that therefore the respective repairing obligation fell upon the landlord. He ordered that the landlord should pay the costs of the claimant and of the second and third defendants and that, for the purposes of section 20C of the Landlord and Tenant Act 1985, the landlord should not be entitled to include the costs so payable as items of expenditure for service charge purposes. The landlord appealed.
Held: Subject to a small qualification, the appeal was dismissed. The relevant clauses of the respective standard-form leases showed that the demised premises did not include “the main walls and structure”. The plans to the leases of flats 9 and 10 showed that the terrace was included in the demise, but that neither the verbal description in the leases, nor the annexed plans, indicated how much of the component parts of the terrace were included, although at the least the surface was demised as without the surface the tenants could not have used the terrace. All relevant sections of the terrace formed part of the main structure of the building, and therefore fell within the repairing liability of the landlord, save only for the surface area of the tiles; that part only was demised with the flats. The county court judge was entitled to exercise his discretion in making the order under section 20C, but he should have included an order that the claimant should pay the costs of the second and third defendants.
The following cases are referred to in this report.
Hallisey v Petmoor Developments Ltd [2000] EGCS 124
Irvine v Moran (1992) 24 HLR 1; [1991] 1 EGLR 261
Petersson v Pitt Place (Epsom) Ltd [2001] EWCA Civ 86; [2001] L&TR 21
Toff v McDowell (1993) 25 HLR 650; (1995) 69 P&CR 535
This was the hearing of two appeals: the first by the first defendant, Dovecorn Reversions Ltd; and the second by the second and third defendants, Maxine Platzman and Mark Houghton-Berry, from a decision of Judge Levy QC, sitting in the Central London County Court, on a preliminary issue in proceedings by the claimant, Dr AT Ibrahim, against the defendants, for damages and other relief.
Jonathan Brock QC (instructed by Gisby Harrison, of Cheshunt) appeared for the first defendant; William Geldart (instructed by Dowse & Co) appeared for the claimant; Martin Rodger (instructed by Dewar Hogan) appeared for the second and third defendants.
Giving judgment, RIMER J said:
Introduction
1.This judgment is on appeals against orders made by Judge Levy QC in the Central London County Court on 19 January 2000. The main appeal is against the judge’s declaration as to the incidence of certain repair obligations as between landlord and tenant. Two other appeals relate to costs orders that the judge made.
2. 36-39 Queens Gardens, London W2 is a building comprising several flats. The claimant, Dr Ibrahim, is the lessee of flat 8, on the second floor. The first defendant, Dovecorn Reversions Ltd, is the freeholder and landlord (“the landlord”).The second defendant, Maxine Platzman, is the lessee of flat 9, on the third floor. The third defendant, Mark Houghton-Berry, is the lessee of flat 10, which is also on the third floor and adjoins flat 9.
3. The leases of the flats are in a standard form. The question raised by the main appeal is one as to their true construction. The answer to it is not easy. I regard it as probable that those responsible for drafting the leases did not foresee the type of problem that has arisen. That observation is not intended as a criticism of anyone. Wisdom after the event is a virtue everyone can enjoy.
Background facts
4. At the rear of the internal parts of flats 9 and 10 is a roof terrace, which also runs along the remainder of the building at the rear of other flats. Each flat enjoys the exclusive use of the section of terrace abutting
5. The construction of the roof terrace is as follows. Its main foundation is a structure comprised of timber joists. The joists are covered with a layer of plywood above which is a thick layer of cement screed. Above that is a layer of asphalt and on top there is a layer of tiles. There is a gap between the tiles and a parapet wall at the rear of the terrace, along which an indentation in the asphalt surface serves as a gully, whose function is to carry rainwater off the terrace via a single outflow, or hopper, on the outside of the main rear wall of the building and into a downpipe. The hopper is at the point at which the boundary between flats 9 and 10 meets the rear wall. The sections of the terrace serving flats 9 and 10 are separated by a metal fence. Flat 10’s terrace is slightly lower than flat 9’s. The terrace is accessed by french doors in each flat.
6. For some years, water has been percolating down into flat 8 from the roof terrace serving flats 9 and 10. There is some evidence as to the cause, or likely cause, of this, but I need not go into it. Suffice it to say that in July 1998 the claimant, Dr Ibrahim, issued proceedings against the landlord by which he sought to compel it to perform what he claimed were its repairing obligations. He also claimed damages. By its defence, the landlord claimed that the water penetration was caused by defects in the roof terraces serving flats 9 and/or 10 and denied that the claimant’s lease cast any obligation upon the landlord to repair them. The trial was due to take place in July 1999. Shortly before then the claimant obtained leave to amend his claim to join the lessees of flats 9 and 10 as second and third defendants in order to make alternative claims against them, and the trial was adjourned to enable that to happen. By their defence, those defendants also denied that they were in any way responsible for the water penetration, and asserted that, contrary to the landlord’s contentions, the obligations to keep the roof terraces in repair were exclusively the landlord’s.
7. Against that background, on 15 November 1999 Judge Cooke directed the trial of certain preliminary issues. They were aimed at determining to what extent, if at all, the sections of the roof terrace serving flats 9 and 10 respectively were comprised within the leases of those flats. To the extent that they were, it is clear from the leases that the lessees were responsible for the repairing obligations and that the landlord was not.
8. The hearing of these issues took place in January 2000 before Judge Levy. Mr William Geldart appeared for the claimant and opened the issues to the judge. Mr Martin Rodger appeared for the lessees of flats 9 and 10 and advanced an argument whose essence was that no part of the roof terrace was comprised within the leases of flats 9 and 10, but that the whole of it was part of the “main structure” of the building and so fell within the landlord’s repairing obligations. Miss Michelle Stevens-Hoare appeared for the landlord. She accepted that the joists providing the foundation of the roof terrace were part of the “main structure” and fell within the landlord’s responsibility, but otherwise she argued that the various layers of the terrace above the timber joists were comprised within the leases of flats 9 and 10 respectively and so fell within their respective lessees’ repairing obligations.
9. The judge accepted Mr Rodger’s arguments. He declared that no parts of the roof terrace, serving flats 9 and 10 respectively, (including the upstands and flashings on the perimeter of the terrace) were comprised within the leases of those flats. It was common ground between the parties that the parapet wall was not comprised within the leases, and the judge also declared that this was so. The result of his decision was that it followed that the leases imposed the repairing obligations with regard to the roof terrace on to the landlord.
10. With the permission of the judge, the landlord appeals against that decision. It claims that on the true construction of the leases of flats 9 and 10, all layers of the relevant sections of the roof terrace (save for the timber joists) form part of the respective demises of those flats and that (save only with regard to the joists, for which the landlord admits responsibility for repairs) the repairing obligations fall upon their respective lessees. Mr Jonathan Brock QC appeared for the landlord. Mr Rodger again appeared for the lessees of flats 9 and 10. Mr Geldart again appeared for the claimant, but took no part in this part of the argument. He was concerned only to deal with a separate appeal, on a question of costs, to which I shall come later.
Arguments on the main appeal
11. After that long prelude, I must introduce the leases. As I have said, they are in standard form. I have been referred to that of flat 9. It is dated 16 May 1984 and is for a term of 125 years from 25 December 1983. Its parties were: (i) predecessors of the landlord; (ii) a management company and; (iii) predecessors of Miss Platzman, the first defendant. It was granted for a premium and at an annual ground rent. The management company was dissolved at some stage, but the landlord thereupon assumed responsibility for all its obligations under the leases and nothing turns on that. The provisions of the lease of particular relevance to the arguments are the following (in setting them out, and having regard to the assumption by the landlord of the management company’s obligations, I will refer to the latter’s obligations as being those of the landlord).
12. The description of the flat being demised is of central importance, and is as follows:
2. … ALL THAT self contained apartment delineated (for the purposes of identification only) on the plan annexed hereto and thereon edged in red and more particularly specified in paragraph 5 of the particulars occupying part of the floor specified in the Particulars of the Building
2.01 including (but without prejudice to the generality of the foregoing)
(a) all pipes or drains watercourses wires cables and other media forming part of the Building but serving the Demised Premises alone
(b) the ceilings of the flat below the level of the bottom of the beams or joists immediately above
(c) the floors above the level of the tops of the beams or joists immediately below
(d) the interior faces including the plaster covering of all exterior walls of the Building enclosing the Demised Premises and the glass and windows therein
(e) the interior faces of all other walls to include the plaster coverings of the Building enclosing the Demised Premises and the entrance and other doors and doorways therein and leading thereto
(f) all interior partition walls and
(g) any balcony outside of and forming part of the Demised Premises and for its sole and exclusive use (but expressly excepting and excluding the main walls and structure of the Building).
13. Pausing there, the particulars referred to identify the flat as no 9 on the third floor, but otherwise shed no light relevant for present purposes. The annexed plan referred to is important, and its red edging clearly incorporates the section of roof terrace at the rear of the flat. The plan is only “for the purposes of identification”, so that it cannot be regarded as providing a definitive guide as to, for example, the precise line of the boundary between flats 9 and 10, but questions such as that do not arise.
14. Clause 4 sets out the lessee’s repairing and like obligations. Clause 4.01 imposes an obligation on the lessee “well and substantially [to] cleanse repair support uphold maintain and generally keep in good and substantial condition the whole of the Demised Premises… but so that the Lessee’s obligations under this covenant shall not extend to any repairs hereinafter covenanted to be effected by the [Landlord]…”. Clause 4.03 obliges the lessee to permit the landlord and its agents to enter the demised premises and do any repairs or work for which the landlord is liable under the landlord’s covenants. Clause 5 imposes obligations upon the lessee to pay a specified contribution to the landlord of the latter’s reasonable costs and expenses in complying with its own obligations (so that if the repairing obligations now in question fall on the landlord, it will be entitled to recover the cost from all the lessees under the service charge). Clauses 6 and 7 set out the landlord’s covenants. Clause 6 obliges it to insure the building. Clause 7 imposes the following repairing obligations upon the landlord:
7.01 To maintain and keep in good and substantial repair and condition:
(a) the main structure of the Building including the principal internal timbers and the exterior walls and any other structural walls and the foundations and the roof thereof with its main water tanks main drains gutters and rain water pipes (other than those included in this demise or in the demise of any other flat in the Building)
(b) all such gas and water mains and pipes drains waste water and sewage ducts and electric cables and wires as may by virtue of the terms of this Lease be enjoyed or used by the Lessee in common with the owners or tenants of the other flats in the Building
(c) the Common Parts
(d) the boundary walls and fences of the Building
(e) the flat or flats or accommodation whether in the Building or not occupied or used by any caretakers porters maintenance staff or other persons employed by the [Landlord] in accordance with the provisions of sub-clause 7.05 of this Clause
(f) all other parts of the Building not included in the foregoing sub-paragraphs (a) to (e) and not included in this demise or the demise of any other flat or part of the Building.
15. Taking stock of that collection of provisions, I arrive at the following preliminary set of conclusions. First, the combined effect of clauses 2 and 4.01 is that the lessee is only responsible for the repair of the demised premises, namely the flat as defined and described in clause 2. Second, the important words in parentheses at the end of clause 2 show that the premises so demised do not include “the main walls and structure of the Building”. Third, taking that phrase in isolation, it is ambiguous as to whether the word “main” qualifies not only “walls” but also “structure”. However, clause 7.01 imposes repairing obligations upon the landlord in respect of the “main structure” of the building and, construing the lease as a whole, I consider it follows that in clause 2 the word “main” is intended also to qualify the word “structure”. Fourth, in my view the verbal description in clause 2 does not, by itself, indicate whether and, if so, to what extent, the roof terrace at the rear of flat 9 is comprised within the demise. The only arguable indication in that direction is clause 2.01(g) showing that “any balcony outside of and forming part of the demised premises and for its sole and exclusive use” is part of the demised flat. I have so far referred to the terrace in question as a terrace, although I accept that it might also be referred to in conversation as a “balcony”. In my view, however, a “balcony” more usually means an overhanging balustraded platform, projecting from the wall of a building. There are such balconies in this building and I consider that it is to structures of this type that clause 2.01 is more naturally referring, not to the type of roof terrace with which this case is concerned. On 19 January 2001, seven days after I had reserved judgment, the Court of Appeal delivered its judgment in Petersson v Pitt Place (Epsom) Ltd [2001] EWCA Civ 86. That case raised a problem that in certain respects was similar to this one, and I had the benefit of written submissions on it from counsel. It also concerned a roof terrace, substantially similar to that with which I am now concerned, the terrace forming part of a building that also had some balconies of the traditional type. It was also concerned with who was responsible for the repair of the terrace. The landlord’s repairing convenant obliged it to repair “the main structure of the buildings… including the external walls foundations balconies and the roof thereof…”. Laws LJ gave the main judgment, with which Penry-Davey J agreed, and expressed the view in para 19 that the lease did not intend “to include these roof terraces within the term ‘balcony’”. The lease in that case was, in material respects, different from that of flat 9, although I do not regard the differences as relevant to the court’s decision on this point, which I regard as providing assistance in this case too. I would, however, have reached a like conclusion even without the support of that decision. I should perhaps say that Mr Brock, whose excellent submissions were to the effect that the roof terrace at the rear of flat 9 does form part of the flat, did not overplay his argument based upon clause 2.01(g), fairly recognizing that the roof terrace may not strictly be regarded as a “balcony”. Fifth, therefore, I conclude from all this that if the proposing lessee of flat 9 were to inspect it with merely the benefit of the verbal description contained in clause 2, he would not be able to work out whether or not the roof terrace was comprised within the lease.
16. Having said this, I nevertheless regard it as clear that the roof terrace –– at least down to some uncertain depth –– is comprised within the lease and does form part of the demised flat. This is made clear by the annexed plan. The plan does not of course disclose whether the demise was intended to include only the surface of the terrace, or also one or more of its various component layers. But it must have been the parties’ intention at least to include the surface of the terrace, since otherwise the lessee would have no right to set either foot or plants upon it. He would at most only have a lease of the airspace above it, which is a notion too ridiculous to spend more time over. Whatever may therefore be embraced within the “main structure” of the building –– such structure being expressly excluded from the flat 9 demise by the words in parentheses at the end of clause 2.01 –– it cannot sensibly be interpreted as including the entirety of the section of roof terrace identified in the plan. If it were, it would mean that the lease and annexed plan are internally contradictory in a fundamental way. In my view it is plain that every sensible effort should be made to avoid arriving at such a result.
17. Having arrived at this point in the reasoning process, I conclude also that the judge’s decision cannot have been wholly correct. His conclusion was that the whole of the roof terrace –– including the entirety of its surface –– formed part of the main structure of the building and so was not included within the demise of the flat and therefore fell within the landlord’s repairing obligations. For reasons given, I consider, with respect, that the judge was in error in this. In my view, the correct interpretation of the lease is that at least the surface of the terrace must have been comprised with the demise, even if all the layers below it are correctly to be regarded as part of the main structure of the building, and so within the landlord’s repairing obligation. The real question is whether any, and if so which, of such layers also form part of the demise of the flat and so fall within the lessee’s repairing obligation, or, whether they form part of the “main structure” of the building and so fall within the landlord’s repairing obligation.
18. Mr Brock concedes that the timber joists forming the foundation of the terrace are properly to be regarded as part of the “main structure” of the building and so fall within the landlord’s repairing obligation. No doubt his concession was, in part, influenced by the terms of clause 7.01(a), which refers expressly to the “main internal timbers” of the building as being within the landlord’s obligation. He also submitted that this was consistent with the express recognition in clause 2.01(c) that the joists below the floors within the internal parts of the flat were not part of the demise. As regards those layers of the terrace above the joists –– the plywood, cement screed, asphalt and tiles –– Mr Brock submitted that they all form part of the demise, a submission which he said was consistent with the scheme of clause 2.01 –– that everything above the joists in the interior of the flat is part of the demise. Mr Rodger’s submission was to the effect that all such layers are part of the “main structure” and so are not part of the demise. The answer to that question depends ultimately on the interpretation of the lease, but I was also referred to the following authorities, which provide assistance in the interpretation exercise.
19. In Irvine v Moran [1991] 1 EGLR 261, Mr Recorder Thayne Forbes QC, sitting as a deputy judge of the Queen’s Bench Division, had to consider the nature of the repairing obligation imposed upon lessors by section 32(1)(a) of the Housing Act 1961, one requiring them “to keep in repair the structure and exterior of the dwelling-house (including drains, gutters and external pipes)…”. In so far as he expressed views on the meaning of “structure”, they were of course views on “structure” within the context of that sub-section as a whole. The judge said at p262F:
I also agree with Mr Brock that by using the words “the structure of the dwelling-house” and “the exterior of the dwelling-house” the legislature in both cases was referring to something less than the dwelling-house as a whole. The structure of the dwelling-house is something less than the overall dwelling-house itself… Of course the difficulty that is posed is deciding to what more limited aspects of the overall dwelling-house the word “structure” is addressed. I have come to the view that the structure of the dwelling-house consists of those elements of the overall dwelling-house which give it its
I am not persuaded by Mr Brock that one should limit the expression “the structure of the dwelling-house” to those aspects of the dwelling-house which are load-bearing in the sense that that sort of expression is used by professional consulting engineers and the like; but what I do feel is, as regards the words “structure of the dwelling-house”, that in order to be part of the structure of the dwelling-house a particular element must be a material or significant element in the overall construction. To some extent, in every case there will be a degree of fact to be gone into to decide whether something is or is not part of the structure of the dwelling-house. It is not easy to think of an overall explanation of the meaning of those words which will be applicable in every case and I deliberately decline to attempt such a definition. I am content for the purposes of this case to say that I accept Mr Brock’s submission that “structure of the dwelling-house” has a more limited meaning than the overall building itself and that it is addressed to those essential elements of the dwelling-house which are material to its overall construction
20. I regard those observations as tending to support Mr Rodger’s submission rather than Mr Brock’s. I consider that the terrace in this case can fairly be viewed as an element of the building that makes a material contribution to its “essential appearance, stability and shape” and also that it is “a material or significant element in the overall construction” of the building. It does, after all, serve not just as pleasant area available for the enjoyment of the flat 9 lessee: it also serves the vital function of providing part of the roof of flat 8 and of providing protection to that flat from the elements. In my view, this points towards a conclusion that all the relevant sections of the terrace form part of the structure.
21. Mr Brock pointed out, however, that whereas the Irvine case was concerned with the word “structure”, the relevant phrase for present purposes is “main structure”, and he submitted that the adjective must operate to require a more restrictive interpretation of the noun than might otherwise be appropriate. As a matter of language, I regard that submission as essentially sound, and Mr Brock submitted that it also finds some support in Evan-Lombe J’s decision in Toff v McDowell (1995) 69 P&CR 535. In that case the premises demised to the tenant were a basement flat. They were defined as including one half in depth of the structure between the ceiling of the flat and the floor of the ground floor flat above. The tenant was responsible for the repair of his flat, apart from any parts of it comprised in the “main structure” of the building, for which the landlord was responsible and in respect of which the tenant had to make a service-charge contribution. The tenant claimed that the area between the ceiling of his flat and the floor surface of the flat above was part of the “main structure” of the building and so within the landlord’s repairing covenant. The landlord argued that it was not part of such a structure. The judge set out the landlord’s submission at p541:
Main structure, it is said, is not a term of art but must be given a meaning special to this lease. That meaning must be more restrictive than the word “structure” simpliciter where that term is used without being qualified by the word “main” in the lease. It is further submitted that the lease should be construed so as to avoid shared liability, in particular for repairs, unless such a construction is forced on the court by the express words used in the lease… Thirdly, it is submitted that the word “main structure” contained in the landlord’s covenant to repair in clause 6(d) and in paragraph 1(a) of Part 1 of the Fourth Schedule is specifically defined by the words “in particular the roof chimney stacks gutters and rainwater pipes of the property”, so that the words “in particular” can be construed as restricting the meaning of “main structure” to the roof, chimney stacks, gutters and rainwater pipes of the property.
22. Evans-Lombe J accepted those (and other) submissions from the landlord, and concluded that the “main structure” of the building did not include that part of the building which was in issue. I interpret his primary reason for that conclusion to be his acceptance of the third submission put to him, which depended on the particular wording of para 1(a), but it is fair to note that his acceptance of all the submissions apparently included the first, rather more general, point put to him and which Mr Brock also put to me.
23. Hallisey v Petmoor Developments Ltd unreported 1 November 2000*, is a decision of Patten J. It raised a problem similar to that in this case. It concerned a building on the eighth floor of which there was a roof terrace comprised within flat 69, which also served in part as the roof of flat 66 immediately below. The terrace was made up of a concrete slab above which was a layer of polystyrene block insulation over a polythene membrane. On top of this was a thick sand and cement screed above which there was a layer of asphalt. Above that there was a further thin sand and cement screed on top of which were laid the ceramic tiles that formed the floor surface of the roof terrace. It was clear that the flat 66 demise did not include anything higher than its ceiling plaster on the underside of the concrete slab. The tenants were responsible for the repair of their flats. The landlord was responsible for the repair of “the main structure of the Building including the principal internal structures and the exterior walls and the foundations and the roof to the Building with its main water tanks main drains gutters and rainwater pipes together with lifts and other electrical and mechanical services (other than those included in this demise or in the demise of any other flat in the Building).” The issue was whether, as the tenant of flat 66 claimed, the landlord was responsible for the repair of the whole of the roof terrace. The tenant claimed that it was only the surface of it that was comprised within the lease of flat 69. The landlord conceded that the concrete slab forming part of the terrace was part of the “main structure” so as to be within its responsibility, but otherwise denies the tenant’s claim. Patten J did not accept the landlord’s argument. He said in paras 23 to 25:
23. In my judgment this search for uniformity must not be taken too far. It is clear that the demise of each flat does not extend beyond but certainly includes the internal plasterwork. Similarly in the case of the car parking space the surface screed is included but nothing else. But when considering how the eighth floor terrace fits into the scheme of the lease it needs to be remembered that it fulfils two different functions. Unlike the lower floors of the building the eighth floor terrace has no roof cover. It is open to the elements and provides protection from them for the flats beneath. Therefore it cannot be and is not of the same construction as the other floors of the building. Unlike the lower floors which are plastered on their lower side to form the ceilings of the flats below and are presumably carpeted or tiled on their upper side as part of the furnishing and decorating of the flat above, the eighth floor roof terrace was constructed with the layers of asphalt and external tiles in order to provide the necessary weather proof for the porous concrete slab beneath. It seems to me that the “main structure” of the building ought properly to be construed so as to include not only the bare concrete shell but also whatever additional surfaces were created by the lessor in order to make that shell a complete and effective structure for the purpose of maintaining the physical integrity of the flats within the development. To construe the “main structure” as including both the concrete slab and the asphalt and tiles above it is entirely consistent with the inclusion (by clause 5.4.1.1.) in that structure of the exterior walls, foundations and roofs all of which serve the same purpose.
24. Conversely, if the asphalt and tiles are not part of the “main structure” then one has to assume that the landlord deliberately ceded control and responsibility for the repair and maintenance of part of the exterior fabric of the building to one of the tenants rather than retain the right to maintain the fabric of the building (and the value of its reversion) with the benefit of a full indemnity under the service charge provisions. In so doing there could be no guarantee that the tenant would carry out these obligations and their enforcement might ultimately require legal action by the landlord.
25. This seems to me to be an unlikely scenario and is not required by the language of the lease. Clause 5.4.1.1. preserves to the landlord control of the fabric of the main parts of the building and in my judgment the entirety of the roof terrace is included amongst them.
* Editor’s note: Reported at [2000] EGCS 124
24. I regard Patten J’s reasoning as compelling. The point with which I am concerned is essentially similar to the one with which he was faced. I regard his decision as providing a clear pointer towards the conclusion that, in this case too, I ought to regard the “main structure” of the building as including the entirety of the roof terrace, save only for the surface area of the tiles, the latter of which I consider has to be
25. Finally, I should refer again to the recent decision of Petersson (supra). It also concerned a block of flats, in which the flat leases included a roof terrace. Laws LJ said it was plain that the tenant’s repairing covenant required it to repair his flat, which included the roof terrace. The problem was, however, that on one view the obligation to repair the terrace also fell within the landlord’s covenant, which obliged the landlord to repair “the main structure of the buildings upon the Estate including the external walls foundations balconies and the roof thereof with its gutters and rain water pipes.” The judge had held that both landlord and tenant were liable for the repair of the roof terrace. Laws LJ pointed out that this was a deeply impractical result, since it meant that each would have a remedy against the other for failure to do the work, and that the practical result would be to stultify both obligations. Laws LJ referred to counsel for the tenant’s forceful argument that there was much to be said for the view that the terrace formed part of the “main structure” of the building. The opposing argument was that “main structure” is to be differentiated from “structure” and that it was possible to give a sense and content to the use of the term “main structure” in the landlord’s covenant so that it did not include the subject matter of the tenant’s covenant. The particular point that was argued was that the reference in the landlord’s covenant to “the roof thereof” was to the roof of the main structure, and did not need to include the terraces as being the roofs of the flat below. Laws LJ concluded his judgment as follows, at para 34:
I have found this a difficult problem. It is plain and obvious that there is a very great deal of force in Mr Pickering’s submission, accepted by the judge, that as a matter of common sense these terraces fall within the main structure of the building. It seems to me however that the consequences of a conclusion which allows for shared or overlapping repairing obligations are so impractical that such a conclusion must be avoided unless it simply cannot be done on the language. I do not consider that the language here brings us to such a pass as that. It is clear that the lease could and should have been drafted a great deal more clearly than it was. I suspect that the judge is right when he indicated (and I have referred to the passage) that the draftsman did not think about the position relating to these terraces. But in performing the duty of construing this lease, the imperative of avoiding if possible overlapping obligations has driven me to the conclusion that Mr Holland’s submissions ought to be accepted. They may be accepted as a matter of language. I do not say that it is the plainest or more obvious sense to be given to clause 4(c); but insofar as it is possible to construe “main structure” as not including these roof terraces I, for the reasons I have given, would do so and accordingly I would allow the appellants’ appeal upon this part of the case.
26. Mr Rodger submitted that that decision supported his argument. He relied upon the court’s manifest preference for the view that the roof terraces were part of the “main structure” of the building, and the fact that it felt driven to decide otherwise only because of the presumption against overlapping obligations. He says there is no like problem in the present case, since there is no question here of there being any overlapping obligations. Mr Brock submitted that the decision provided assistance to his argument. For my own part, I do not derive a great deal of help from the Petersson case. In particular, the court did not address itself to the physical structure of the terrace in question, and did not consider whether anything less than its entirety was demised to the tenant. As it seems to me, an alternative conclusion to which the court might perhaps have come was that only the surface of the terrace was so demised, and that the remainder of it was part of the “main structure” and so exclusively within the landlord’s obligation. It does not appear from the judgment whether or not the point was argued.
27. I return to the present case. In my view, the more natural interpretation of the leases is that the reference to “main structure”, at the end of clause 2.01 and in the landlord’s covenant in clause 7.01(a), is that it includes the whole of the roof terrace (save only its surface area, which I hold is demised to the lessee). In particular, I do not regard the words “including the principal internal timbers thereof etc” in clause 7.01(a) as being exhaustively definitive of the extent of the “main structure”; they are merely indicative of certain elements of the building forming part of such structure. Thus, while I accept that the reference in those words to “the roof thereof with its main water tanks etc” is a reference only to the main roof of the building, I do not regard that as meaning that the roof terrace is not part of the “main structure”.
28. The judge’s reasons for his decision were expressed at the end of his judgment as follows:
This is a modern lease, and it seems to me for the reasons in his written submissions on which Mr Rodger expanded in his oral submission that it would be extraordinary if something which was clearly a roof to the claimant was to be made the responsibility of his fellow tenants to make sure that it was kept windproof, waterproof and watertight etc. In considering the lease as a whole, in my judgment the words at the foot of clause 2.01 –– “(but expressly excepting and excluding the main walls and structure of the Building)” –– are of assistance to me in considering the questions which I have to answer. It was apparent from the lease itself and made more apparent from the view that the main walls and structure of the building were part of the matters to be excluded and therefore no part of the demise to the second and third defendants.
29. In my judgment, save only that I consider that the surface of the roof terrace must be regarded as forming part of the demise of leases 9 and 10, the judge came to the correct decision. His decision pre-dated Hallisey, which I regard as providing solid support for his conclusion. Subject to any necessary modification of the judge’s decision, so as to record the qualification I have just mentioned, I dismiss the appeal against this part of his decision.
Section 20C appeal
30. Having decided the matter against the landlord, the judge ordered the landlord to pay the claimant’s costs of the preliminary issue and also the costs of the second and third defendants (whose role in the action was brought to an end by the decision on the preliminary issue). The judge also acceded to an application by Mr Rodger, supported by Mr Geldart, that he should make a further order in relation to costs pursuant to section 20C of the Landlord and Tenant Act 1985 (a section substituted by section 83(4) of the Housing Act 1996). Section 20C provides, so far as material:
(1) A tenant may make an application for an order that all or any of the costs incurred, or to be incurred, by the landlord in connection with proceedings are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the tenant or any other person or persons specified in the application. …
…
(3) The court… to which the application is made may make such order on the application as it considers just and equitable in the circumstances.
31. The order made was a declaration that no part of the landlord’s costs “in connection with the preliminary issue are to be regarded as relevant costs for to be taken into account in determining the amount of any service charge payable by the Claimant and the Second and Third Defendant or any other lessee of [the building]”. The effect of that was that even though, but for such order, the landlord’s costs would have been recoverable under the service charge (subject to arguments as to their reasonableness), the judge precluded the landlord from including such costs in the service charge at all.
32. There is in my view no doubt that the judge had a jurisdiction to make such an order, although whether to exercise that jurisdiction in the way he did was a matter of discretion. That is plain from section 20C. Mr Brock submits that the judge was in error in exercising his discretion in the way he did, and that his order had, and has, the potential to produce great unfairness for the landlord. He relies, in particular, upon a witness statement of Alan Millinder made on 16 May 2000. Mr Millinder is a director and the sole shareholder of the landlord and a senior partner of its managing agents. He there gives some imprecise evidence about the building, and refers (irrelevantly, as it seems to me), to other adjoining or neighbouring buildings which are apparently let on similar leases, by different landlords. He asserts that the landlord
33. I do not regard that as a very persuasive submission. First, two of the three parties to the alleged convention are the second and third defendants, whose stance in this litigation is that the relevant repair obligations are the landlord’s. Second, Mr Millinder’s witness statement, for what it may be worth, was not before the judge at the time when he dealt with the application under section 20C, and nor was any request made to him on behalf of the landlord for an adjournment in order to adduce evidence that might be relevant to the exercise of the judge’s discretion.
34. The judge did not give a formal judgment for his decision on this application, but it is apparent from the post-judgment exchange with counsel that what played a major influence upon his decision to make the declaration he did, was the fact that the landlord had embarked upon the defence of the claimant’s claim –– and upon the assertion that the relevant repair obligations were exclusively those of the lessees –– without any prior consultation with the lessees generally. I interpret the judge as, in substance, concluding that the landlord had made an essentially unilateral decision to take the line it did, and so to cause the incurring of the costs the preliminary issue. Having concluded (as he also did) that the landlord must pay the other parties’ costs of that issue, he decided that it would be unfair to enable it to recover any part of those costs from the same parties via the service charge, and also that it would be unjust to allow the landlord to recover any part of such costs via the service charge from other lessees not before the court.
35. The contrary argument is that the question raised by the preliminary issue was and is an important one of principle that the landlord had to have decided one way or another. Having had it decided, even though the decision was adverse to the landlord’s argument, justice demanded that the landlord should not be out of pocket in respect of its costs liabilities of the litigation.
36. I do not regard this particular appeal as raising a general question of principle. Section 20C gave the judge a wide discretion to make such order upon Mr Rodger’s application as was just and equitable in the circumstances. I can well understand how the judge considered it unjust and inequitable that any of the parties before the court should have to bear any part of the landlord’s costs via the service charge. I regard his decision that none of the other lessees should have to do so either as slightly more questionable, but, in making it, he was plainly influenced by the lack of pre-litigation consultation with them which I consider a proper factor for him to take into account, although I do not go so far as to suggest that it was one that was inevitably fatal to the landlord’s position on the section 20C application. In my judgment, however, the decision the judge made was one pre-eminently within this discretion. It is possible that other judges might have made a different decision, but I feel unable to conclude that the judge misdirected himself, in any material respect, in arriving at the order he did. I dismiss this appeal too.
Other costs appeal
37. The second and third defendants, by succeeding on the preliminary issue, demonstrated that they had been wrongly joined in the action. They had been so joined by the claimant. The case was, therefore, a simple one in which the claimant had sued the second and third defendants and had wholly failed. In those circumstances, it is not surprising that Mr Rodger’s first application for costs to the judge was for an order that the claimant should pay his clients’ costs. He also asked for a like order against the first defendant. Mr Geldart, for the claimant, submitted that his client should not be liable to pay any costs to the second and third defendants, but that the landlord should pay all parties’ costs. The judge acceded to that argument. He ordered the landlord to pay the claimant’s costs of the preliminary issue and also the second and third defendants’ costs –– which I understand to mean their costs of the action.
38. With the permission of Laddie J, the second and third defendants appeal against that order. Mr Rodger submits that, in refusing to order the claimant to pay his clients’ costs, the judge made an irrational decision. It may be that the claimant joined the second and third defendants as parties because the landlord had asserted that they were responsible for the relevant repairs. But the decision to join them was that of the claimant, and the outcome was that the claimant wholly failed in its claim against them. As between the claimant on the one hand, and the second and third defendants on the other, the latter were the successful parties and there was no basis at all for the judge’s decision to absolve the claimant of any liability for those defendants’ costs. It was plain that the judge was satisfied that the second and third defendants should recover costs from someone, but the only party he considered ought to be liable for costs was the landlord. The effect of that was to place the whole risk of any inability, on the part of the landlord, to pay those costs on to the second and third defendants.
39. I regard it as a reasonable exercise of discretion to have ordered the landlord to pay the second and third defendants’ costs, because the landlord was largely instrumental in those defendants having been brought into the action, even though the decision to do so was the claimant’s; and the contest on the hearing of the preliminary issue was one primarily between the landlord and the second and third defendants. Where, however, I consider that the judge fell into error, was in exonerating the claimants from liability for those costs and in thereby subjecting the second and third defendants to the risk I have mentioned. The judge does not appear to have taken account of that. Nor did he identify any sound reason for departing from the general rule that the unsuccessful party should pay the costs of the successful party.
40. In my judgment, the judge misdirected himself with regard to this aspect of the case. I consider that in those circumstances I can, and should, exercise my own discretion in the matter. I agree with the judge’s order that the landlord should pay the costs of the second and third defendants, but I consider that he should also have made a costs order against the claimant. I will allow the appeal against this part of the judge’s order and vary his order so as to include an order that the claimant pays the costs of the second and third defendants.
Appeal dismissed.
