Landlord and tenant — Construction of user covenant in underlease — Plaintiff was the lessee under a 99-year headlease of the whole premises consisting of a garage and filling station — He occupied the forecourt and carried on there a petrol filling station — He also ran a shop from which he sold motor accessories and such things as sweets and confectionery; he lived in a flat above the shop — His lease was subject to a 21-year underlease of part of the premises vested in the defendants; this part consisted of the car showroom and workshops — Plaintiff’s lease precluded him from carrying on any business on the demised premises without the landlord’s consent save for ‘that of a garage with car sales and service station with office accommodation annexed thereto’ — Defendants’ underlease prohibited the carrying on of any business ‘except that of a garage with car sales and vehicle repairs’
predecessors had a counter within the showroom from which they sold motor
accessories such as fan belts, oil filters, air cleaners, batteries, wiper
blades, spark plugs, hose clips, oil and lubricants — Defendants, however,
expanded the sales activity of their predecessors, widening the range of goods
sold and improving the display in an extended front window looking on to the
forecourt — Plaintiff, who had not questioned the fairly low-key activities of
the predecessors, objected to the greater enterprise of the defendants and
issued a writ seeking relief by way of interlocutory injunction — As the
question of the true construction of the defendants’ user covenant was the
principal issue, it was arranged that this question should be determined as a
preliminary issue — The judge, Millett J, held that the business authorised by
the defendants’ underlease was that part of the business of a garage which
consisted of the sale of cars and the repair of vehicles and any other
business, including retail trade, which was incidental thereto — By ‘retail
trade which is incidental thereto’ the judge meant (1) the sale of parts of
vehicles, accessories, oils or lubricants in the course of the repair of
vehicles, (2) the sale of parts of cars or accessories in the course of sales
of cars, and (3) the sale of such parts or accessories as are, or would be,
stocked for the purpose of carrying on the business of the sale of cars and the
repair of vehicles — In his order the judge made it clear that this third head
did not include, by way of illustration, removable roof racks, child seats,
car-cleaning equipment or warning signs such as the triangle required for
driving on the continent of Europe and did not include oils and lubricants —
The defendants appealed against the judge’s decision and the plaintiff
cross-appealed
put forward various arguments for the purpose of extending the authorised sales
activities permitted, including the suggestion that ‘with’ meant ‘and in
addition’ — Plaintiff rejected this interpretation and showed that it would
produce anomalies — The court also rejected it as it would mean that the
defendants could carry on the business of a petrol filling station, which could
not have been intended; when the underlease was granted, the lessor had
retained the petrol pumps used for a petrol filling station business — In the
end the Court of Appeal agreed with Millett J’s construction subject to a minor
amendment to the judge’s list of items not included under the third head; the
court would allow removable roof racks and child seats to be included in the
articles which could be sold — Subject thereto, appeal dismissed
No cases are
referred to in this report.
This was an
appeal by the defendants, Courts Garages (a firm), and a cross-appeal by the
plaintiff, Malkiat Singh Atwal, from the decision of Millett J on a preliminary
point of construction of words in an underlease of a part of the premises at 42
Wallingford Road, Goring on Thames.
J H Tecks
(instructed by Matthew Arnold & Baldwin, of Watford) appeared on behalf of
the appellants (defendants in the action); H M Harrod (instructed by
Hetherington & Co, of Slough) represented the respondent (plaintiff in the
action).
Giving
judgment, NICHOLLS LJ said: This appeal raises a question of construction of a
few words in a user covenant in a lease. The lessor and the lessee are the
occupants of different parts of premises at 42 Wallingford Road, Goring on
Thames, which consist of a garage and filling station. The plaintiff occupies
the forecourt and he carries on there the business of a petrol filling station.
He also runs a shop from which he sells motor accessories and sweets,
confectionery and so forth in a manner which is quite common today. He lives in
the flat above the shop. The defendants occupy the car showroom and the
workshops.
The plaintiff
is the lessee under a 99-year headlease, which was granted in 1979, of the
whole of the property which I have mentioned. Under that headlease the lessee
is precluded from carrying on any business on the demised property without the
landlord’s consent, save for ‘that of a garage with car sales and service
station with office accommodation annexed thereto’. The headlease is subject to
a 21-year lease, dated July 8 1985, of the showroom and workshops. The
defendants are now the lessees under that lease.
One of the
lessees’ covenants provides for user to be restricted. Clause 2(i) prohibits
the carrying on of any business ‘except that of a garage with car sales and
vehicle repairs’.
The defendants
acquired the 1985 lease early in 1987. Before then, the original lessees, who
were the defendants’ predecessors in title, had a counter within the showroom
from which they sold motor
blades, spark plugs, hose clips, oil and lubricants. Whether or not parts or
accessories were being sold from a counter within the showroom before the 1985
lease was granted is not a matter made clear either way by the evidence.
However, after the lease was granted there were sales, as I have indicated,
from such a counter, albeit this seems to have been a fairly low-key activity.
The plaintiff
acquired the headlease of the whole property early in 1986. He made no
objection to this user of the property demised by the 1985 lease. But soon
after the defendants acquired the lease (as I have said, early in 1987) they
improved and expanded and generally made more prominent the sales activity
within the showroom. They displayed goods in an extended front window looking
on to the forecourt and they widened the range of goods being sold. The
plaintiff objected, claiming that this was a breach of the user covenant in
clause 2(i) of the lease. The plaintiff issued a writ on June 17 1987 and
sought interlocutory injunctive relief.
The matter
came before Millett J. He noted that the principal issue in the action turned
on the true interpretation of the user covenant in the lease and encouraged the
plaintiff to apply to have the question of construction determined as a
preliminary issue. In this way the question could be determined definitively at
an early stage in the action. Very sensibly, that course was adopted, so the
judge heard argument on the question of construction and he decided that
question. That was on July 15 1987. He held that the business authorised by
clause 2(i) of the 1985 lease was that part of the business of a garage which
consists of the sale of cars and the repair of vehicles and any other business,
including retail trade, which is incidental thereto. By the phrase ‘retail
trade which is incidental thereto’ the judge meant, first, the sale of parts of
vehicles, accessories, oils or lubricants in the course of the repair of
vehicles; second, the sale of parts of cars or accessories in the course of
sales of cars; and, third, the sale of such parts or accessories as are, or
would be, stocked for the purpose of carrying on the business of the sale of
cars and the repair of vehicles.
In the order
which was drawn up the judge clarified the position regarding certain specific
items. The order provided that this third head did not include, by way of
illustration, removable roof racks, child seats, car-cleaning equipment or
warning signs such as the triangles required for driving on the continent of
Europe; nor did the third head include oils and lubricants.
From that
decision the defendants appealed, the plaintiff has cross-appealed, and that
appeal and cross-appeal are now before us.
In short, the
defendants submit that in the crucial phrase ‘with’ is a word of extension. It
means ‘and in addition’. On this construction the sales activities of the
defendants would be proper, as they would fall within the very wide scope of
the activities today of a garage. Alternatively, the defendants submit that the
phrase means the type of garage business which deals in the sale of cars and
repair of vehicles. What is permitted is not merely the use of the property for
the business of car sales and vehicle repairs: the user clause is expressed to
embrace the business of a garage with car sales and vehicle repairs, and
some meaning is to be given to the word ‘garage’ as comprising something other
than what follows. On this construction, it is submitted, the sales activities
complained of would be within the range of permitted use, as they would be
commercial activities of a garage secondary or incidental to the car sales and
vehicle repairs. It was said that the sale of oils and lubricants, for example,
would be permitted on this construction because they are essential to a garage
business.
The defendants
submitted, third, that, even if the sale of parts and accessories is confined,
as the judge held, to parts and accessories that would be stocked for the
purpose of carrying on the business of the sale of cars and the repair of
vehicles, it is illogical and inconsistent to exclude specific items such as
oils and lubricants and child seats.
The plaintiff,
on the other hand, submits that the word ‘with’ does not necessarily extend the
meaning of the word which it qualifies. Here it is said it does not. It was
submitted that if the phrase ‘with car sales and vehicle repairs’ extends the
meaning of ‘business . . . of a garage’, then the unextended meaning cannot
include retail sales of parts and accessories of cars; the word ‘garage’ must
be given some limited meaning, such as a building used for storage of vehicles,
and that no such limited meaning of ‘garage’ would exclude the sale of cars but
include the sale of parts and accessories. If, as the plaintiff contends, the
phrase ‘with car sales and vehicle repairs’ limits the meaning of ‘business . .
. of a garage’ by describing the parts of that business which are authorised,
then the other parts of that business, that is, the garage business, such as
retail sales of accessories or parts, are necessarily excluded from the
authorised use.
The plaintiff
submits that the words used limit authorised sales to those specifically
mentioned, that is, the sale of cars, and those necessarily included in the
other activities expressly authorised, that is, sales in the course of car
sales and vehicle repairs.
I have no
hesitation in rejecting the defendants’ primary contention. If right, it would
mean that, for instance, the defendants were permitted to carry on the business
of a petrol filling station, for that is part of the activities embraced by a garage.
But that cannot have been intended. When the 1985 lease was granted, the lessor
retained the petrol pumps which were being used for a petrol filling station
business. The lease was of the showroom and of the workshops. What was intended
was that the part of the garage business appropriate to that part of the garage
property which was demised, that is, the showroom and workshops, was to be
within the province of the lessee. Other garage activities carried on on the
parts of the garage property which were retained by the lessor — the petrol
pumps and so on — were to remain with the lessor. ‘With’, in my view, is used
here in a descriptive sense, as in the phrase mentioned in the course of
argument, ‘a tree with broad leaves’. There what is being identified is a
particular type of tree — likewise here, a particular type of garage business.
The phrase is intended to identify the type of garage business comprising car
sales and vehicle repairs.
It may be
questionable whether, in construing the user covenant in the 1985 lease, it is
permissible to have regard to the user covenant in the headlease. If it were
proper to look at the headlease, this would fortify me in the view I have just
expressed, for this reason. The user covenant in the headlease is drawn in
different terms, which on their face are wider. Thus the apparent object of the
user covenant in the 1985 lease was not merely to confine the lessee to the
activities permitted by the headlease: the user covenant in the 1985 lease was
intended to do that, but it was also intended to protect the lessor by
excepting from the lessee’s permitted activities some of the activities
permitted by the headlease which were being carried on by the lessee on the
property which was not being demised by the 1985 lease, eg the petrol filling
station activity. But on the defendants’ primary contention the difference in
language between the two user covenants, apparently deliberately made, would
have no difference in legal effect because, despite the difference in the language,
all garage activities would be open to the lessee under the 1985 lease. As I
have said, that consideration would fortify me in the view I have reached, but
it is not a matter which I have taken into account in reaching that conclusion.
That leads me
to consider next what activities are included within a garage business of the
permitted type, namely one which consists of car sales and vehicle repairs. Are
the only permissible sales those of cars and of parts or accessories
necessarily included in car sales and vehicle repairs, as the plaintiff
contends? For example, when the oil in a
car engine is changed when a car is serviced, or when new spark plugs or oil
filters are supplied, the servicing will necessarily include the supply and
sale of fresh oil and the new plugs and filters as an integral part of the the
servicing. Similarly, when wing mirrors are added or fixed to a new car at the
customer’s request and sold to him with the new car. Or can the lessee sell
independently of the sale of a new car or the repair of a vehicle any parts or
accessories whatever, or, at the least, parts and accessories which the lessee
stocks primarily for the purpose of supplying on the sale of a car or the
repair of a vehicle?
I do not think
that it can be right to construe this user covenant as narrowly as the
plaintiff contends. In the ordinary way, carrying on the business of vehicle
repairs from premises such as these would include the sale of parts stocked
primarily for the purpose of being used in repairs. If a do-it-yourself
motorist turns up and asks for a fan belt, I do not think that a sale to him
from the stock held for repair purposes would be regarded as the carrying on of
a different business, and I am unable to discern, in the circumstances of this
lease, a context sufficently clear to displace this construction. Had no sales
of any parts or accessories been intended, nothing would have been simpler than
for the lease to have so provided. I cannot, however, accept that the lessee is
free to sell all motor parts and accessories. Many of these (first aid kits,
torches, car-cleaning aids spring to mind) are so far removed from the business
of selling cars or
even though the word ‘garage’ is present. The sale of such items would be the
carrying on of a different business.
I turn, then,
to consider what goods can be sold. In my view, they must be such that they
would have been stocked even if no sales of parts or accessories separate from
the sale of cars or the repair of vehicles had been permissible. That, as I
understand it, is substantially what is provided for in para (B)(iii) of the
judge’s order*. What those goods would comprise in this case is a question of
fact, but there are two matters I should mention: first, oils and lubricants.
These would normally be stocked, of course, as part of a vehicle repair
business, but it seems to me that they really stand in a special category of
their own. I do not think that oils and lubricants would normally be expected
to be sold as part of a vehicle repair business or as part of the business of
selling cars, any more than one would expect petrol to be sold independently as
part of the business of the sale of cars or the repair of vehicles. Oils and
lubricants would not be expected to be sold at the parts counter as an adjunct
to a vehicle repair business, at any rate where there is a forecourt shop.
Where there is a forecourt shop one would expect to see the oil and lubricants
on sale there. So I agree with the judge on para (C)(i) of his order.
*Editor’s
note: The relevant parts of the order read as follows:
‘(A) that the business authorised by Clause 2(i)
of the Underlease . . . is that part of the business of a garage which consists
of the sale of cars and the repair of vehicles and any other business including
retail trade which is incidental thereto
(B) that the retail trade herein before mentioned
consists of (i) the sale of parts of vehicles accessories oils or lubricants in
the course of the repair of vehicles (ii) the sale of parts of cars or
accessories in the course of sale of cars and (iii) the sale otherwise than in
the course of the sale of a car of such parts or accessories as are or would be
stocked for the purpose of carrying on the business of the sale of cars and the
repair of vehicles (which by way of illustration will not include removable
roof racks child seats car cleaning equipment or warning signs such as the
triangles required for driving on the Continent of Europe)
(C) that the business authorised by the said
Clause 2 (i) does not include (i) the separate trade of dealing in oil and
lubricants or (ii) the separate trade of dealing in parts of cars or
accessories other than such parts or accessories as are or would be stocked for
the said purposes.’
The second
matter concerns the other items specifically listed in the order at the end of
para (B)(iii). With respect to the judge, two of those items are difficult to
justify. Child seats often require to be anchored to the structure of a car by
bolts which a motorist would expect to be fitted by a garage. Again, a
removable roof rack might be stocked for the purpose of selling with a new car.
Mr Harrod for the plaintiff did not resist the deletion of those two items, and
I would amend the judge’s order in that very small respect.
Subject to
that minor point, in my view the judge reached the right conclusion on the
question of construction and I would dismiss this appeal.
TAYLOR LJ
agreed and did not add anything.
The appeal
was dismissed with costs; the order below was amended to the extent outlined in
the judgment.
