Housing — Lease granted pursuant to the right to buy provisions in Housing Act 1985 — Whether covenant to pay service charge void and unenforceable by reason of para 18 (alternatively para 11) of Schedule 6 to Housing Act 1985
By a lease dated
July 4 1988, granted pursuant to the right to buy provisions of the Housing Act
1985, the respondent council granted the appellants a lease for the term of 125
years of a flat for a premium and subject to a ground rent of £10 pa. By clause
5(2) of the lease the appellants covenanted to pay a service charge at a rate
of £208 a year subject to an increase to take account of any escalation in
building costs established by the RICS Index. The council made a claim in
accordance with clause 5(2) for the year from October 1 1988 in the sum of
£244. In the court below the judge held that clause 5(2) of the lease was valid
and enforceable. The lessees appealed contending that clause 5(2) was void and
unenforceable as it fell within para 18(a) of Schedule 6 to the 1985
Act, alternatively, the sum claimed would fall to be treated as part of the
rent and would be irrecoverable by reason of para 11 of the same Schedule.
entitles a local authority landlord to include in a lease a provision that the
tenant should bear a reasonable part of the costs incurred by the landlord in
discharging the obligations imposed by the covenants for repair implied by
virtue of para 14(2). The sum claimed is not ‘a reasonable part of the costs
incurred by the landlord’ within the meaning of para 16A, but a fixed charge
payable without any reference to the actual costs incurred or to be incurred in
the future. Schedule 6 and the protection which it confers on a tenant have to
be looked at in the context of the statutory control relating to variable
charges. The reasonableness of a fixed charge can be examined at the time when
the long lease is being negotiated. Assuming the fixed charge is reasonable the
tenant is protected over the whole period of the lease from fluctuating and
unpredictable costs. His only exposure to risk is in the risk attendant on a
clause which depends on inflation. Clause 5(2) therefore fell outside para 16A
and accordingly outside the scope of para 18 of Schedule 6. Further, it did not
infringe para 11 of Schedule 6 because the word ‘rent’ in that paragraph cannot
embrace all sums payable from time to time as consideration under the lease.
No cases were
referred to in this report.
This was an
appeal by Michael David Cole and Patricia Eleanor Cole from an order of Judge
Harrison-Hall QC of June 2 1992 setting aside an arbitration award of Deputy
District Judge Sharpe of November 15 1991 in proceedings brought against the
appellants by the respondents, Coventry City Council.
Lance Ashworth
(instructed by Field Overell, of Coventry) appeared for the appellants; Michael
Briggs (instructed by the solicitor to Coventry City Council) represented the
respondents; the third respondents did not appear and were not represented.
Giving
judgment, NEILL LJ said: This is an appeal by Mr Michael David Cole and
Mrs Patricia Eleanor Cole (whom I shall call ‘the lessees’), from the order of
Judge Harrison-Hall QC dated June 2 1992 setting aside an arbitration award of
Deputy District Judge Sharpe dated November 15 1991 in proceedings brought
against the lessees by Coventry City Council (the council). The appeal is
brought by leave of the judge.
The appeal
raises an important question relating to the right to buy provisions contained
in the Housing Act 1985 (as amended).
For the
purpose of reaching our decision on this appeal it will be necessary to
consider not only the right to buy provisions themselves but also the history
of the statutory control of service charges. The control of service charges was
first introduced in 1972 in relation to leases on property granted to tenants
by private landlords. First, however, I propose to set out the relevant facts.
In 1988 the
lessees were the tenants of a first-floor flat at 2 Deal House, Dunhill Avenue,
Coventry. The landlords were the council from whom the lessees held the flat as
secure tenants. The lessees decided to exercise their right to take a long
lease of the flat in accordance with the provisions of the Housing Act 1985. By
a lease dated July 4 1988 the council demised the flat to the lessees for the
term of 125 years in consideration of the sum of £5,175. The lease was at a
fixed rent payable throughout the term at the rate of £10 pa, payable annually
in advance on October 1.
By clause 4 of
the lease the lessees covenanted, inter alia, to put keep and maintain
all parts of the interior of the flat in good and tenantable repair order and
condition, and to permit the council and the other specified covenantees and
their agents to enter the flat for the purposes of repairing any other part of
the building of which the flat formed part, and for other specified purposes.
In addition by clause 4(4) the lessees covenanted as follows:
Structural
defects
[To] bear a
reasonable part of the cost of (a) carrying out repairs not amounting to the
making good of any structural defects, (b) the cost of making good any
structural defects of which the council have notified the lessee before the
date of this lease or of which the council do not become aware of earlier than
ten years after the date of this lease and (c) insuring against risks involving
such repairs or the making good of such defects.
By clause 5 of
the lease the lessees entered into a number of specific covenants with the
council. The relevant part of clause 5 was in these terms:
5. The lessee
hereby covenants with the council as follows:
(1) . . .
To pay
service charge
(2) To pay sum (hereinafter called ‘the Service
Charge’) as is specified in the fifth schedule hereto subject to and in
accordance with the provisions therein mentioned in arrears on the 1st day of
October in every year.
The fifth
Schedule to the lease contained provisions relating to the service charge. It
is sufficient to refer to only part of the fifth Schedule as follows:
The Service
Charge to be paid by the lessee to the council in accordance with clause 5(2)
thereof shall be:–
(a) The sum of £208 per annum and
(b) By way of additional charge a sum bearing the
same proportion to the said sum as shall be borne by any increase in the
Building Cost Information Service Tender Price Index published by the Royal
Institution of Chartered Surveyors to the figure shown therein for May . . .
and . . .
It is not necessary
to set out the terms of the proviso. It will be seen that the service charge
was to be at the rate of £208 a year, but was subject to an increase to take
account of any escalation in building costs as established by the RICS index.
Clause 6 of
the lease contained a covenant by the council in these terms:
The council
hereby covenants with the lessee in addition to the covenants implied by virtue
of Part III of the sixth schedule to the Housing Act 1985 or any statutory
amendment or re-enactment thereof (subject to the lessee paying the rents
hereby reserved and performing and observing the several covenants conditions
and agreements herein contained and on the lessee’s part to be performed and
observed) but not so as to be personally liable after it shall have transferred
all its estate and interest in the said property that the lessee shall and may
peaceably and quietly hold and enjoy the said property during the said term
without any lawful interruption or disturbance from or by the council or any person
or persons rightfully claiming under or in trust for the council.
In due course
the council made a claim against the lessees for the service charge expressed
to be payable in accordance with clause 5(2) of the lease for the period from
October 1 1988 to September 30 1989. The sum claimed was £244 calculated, it
seems, in accordance with the fifth Schedule to the lease. The lessees failed
to pay the sum claimed or any part of it and on April 1990 the council issued a
summons in Coventry County Court. The case came before Deputy District Judge
Sharpe in November 1991 under the small claims procedure. By a judgment dated
November 15 1991 Deputy District Judge Sharpe dismissed the claim on the basis
that the council were not authorised to recover the sum claimed by reason of
the provisions of the Housing Act 1985 relating to service charges. The council
then appealed.
On June 2 1992
Judge Harrison-Hall QC allowed the council’s appeal and set aside the order of
the deputy district judge. He granted leave to appeal to this court. Judge
Harrison-Hall held that clause 5(2) of the lease was valid and enforceable.
Statutory
right to buy
The right to
buy houses and flats was first conferred on council tenants by the Housing Act
1980. The right could be exercised either by taking a conveyance of the
freehold or by obtaining the grant of a long lease of not less than 125 years.
By section 17 of the 1980 Act, it was provided that a grant of a lease should
conform with Parts I and III of Schedule 2 to the Act.
The 1980 Act
was amended by the Housing and Building Control Act 1984, which introduced new
paragraphs into Part III of Schedule 2 and a requirement that the landlord
should provide estimates of costs of making good structural defects.
The lease with
which this appeal is concerned was granted pursuant to the right to buy
provisions contained in Part V of the Housing Act 1985 (the 1985 Act), which
replaced the 1980 Act. It is therefore necessary to consider in some detail the
provisions of the 1985 Act and to take account of the amendments to the 1985
Act introduced by the Housing and Planning Act 1986. By section 139(1) of the
1985 Act (replacing section 17 of the 1980 Act) it was provided that the grant
of a lease should conform with Parts I and III of Schedule 6.
Before I come
to Schedule 6, however, I should refer first to the definition of ‘service
charge’ contained in section 621A of the 1985 Act and to the provisions
relating to estimates and information about service charges contained in
section 125A.
Section 621A
of the 1985 Act was inserted by section 24(2) of the Housing and Planning Act
1986. So far as is material it is in these terms:
(1) In this Act ‘service charge’, means an amount
payable by a purchaser or lessee of premises —
(a) which is payable, directly or indirectly, for
services, repairs, maintenance or insurance or the vendor’s or lessor’s costs
of management, and
(b) the whole or part of which varies or may vary
according to the relevant costs.
(2) The relevant costs are the costs or estimated
costs incurred or to be incurred by or on behalf of the payee, or (in the case
of a lease) a superior landlord, in connection with the matters for which the
service charge is payable.
(3) For this purpose —
(a) ‘costs’ includes overheads, and
(b) costs are relevant costs in relation to a
service charge whether they are incurred, or to be incurred, in the period for
which the service charge is payable or in an earlier or later period.
It is provided
in section 621A(4) that the ‘payee’ means the person entitled to enforce
payment of the charge.
Section 125 of
the 1985 Act provides that where a secure tenant has claimed to exercise the
right to buy the landlord should serve on the tenant a notice containing the
information prescribed in the section. Section 125 was amended by the Housing
and Planning Act 1986 and it is now provided by section 125(4) that where the
notice contains provisions which would enable the landlord to recover service
charges from the tenant the notice should also contain the estimates and other
information required by section 125A. Though it is not necessary to set out the
terms of section 125A at length, it is to be noted that the broad effect of
this section (which was inserted by the Housing and Planning Act 1986) is to
require a landlord to set out in the notice under section 125 estimates of the
likely cost of, and of the tenant’s likely contribution in respect of, each
item of work which the landlord considers may have to be carried out by way of
repair in the first five years after the grant of the lease. Where works are so
itemised the notice has to contain an estimate of the average annual amount
which the landlord considers is likely to be payable by the tenant.
I come now to
Schedule 6. As to Part I of Schedule 6 it is sufficient to refer only to para
5. It is in these terms:
Subject to
paragraph 6 [which has no relevance in this case], and to Parts II and III of
this Schedule, the . . . grant may include such covenants and conditions as are
reasonable in the circumstances.
Part III of
Schedule 6, however, requires fuller treatment. It is provided by paras 11 and
12 of Part III that where the landlord holds the freehold interest the lease
should be for a term of not less than 125 years and at a rent not exceeding £10
pa.
Para 14
contains statutory implied covenants by the landlord where the dwelling-house
is a flat. Para 14(2) is in these terms:
There are
implied covenants by the landlord —
(a) to keep in repair the structure and exterior
of the dwelling house and of the building in which it is situated (including
drains, gutters and external pipes) and to make good any defect affecting that
structure;
(b) to keep in repair any other property over or
in respect of which the tenant has rights by virtue of this schedule;
(c) to ensure, so far as practicable, that
services which are to be provided by the landlord and to which the tenant is
entitled (whether by himself or in common with others) are maintained at a
reasonable level and to keep in repair any installation connected with the
provision of those services;
Para 14(3)
contains an additional implied covenant by the landlord that he should ‘rebuild
or reinstate the dwelling-house and the building in which it is situated in the
case of destruction or damage by fire, tempest, flood or any other cause
against the risk of which it is normal practice to insure’.
It is further
provided by para 14, however, as follows:
(4) The county court may, by order made with the
consent of the parties, authorise the inclusion in the lease or in an agreement
collateral to it of provisions excluding or modifying the obligations of the
landlord under the covenants implied by this paragraph, if it appears to the
court that it is reasonable to do so.
Para 16 of
Schedule 6 sets out the covenants to be implied on the part of the tenant. It
is in these terms:
Unless
otherwise agreed between the landlord and the tenant, there is implied a
covenant by the tenant —
(a) where the dwelling-house is a house, to keep
the dwelling-house in good repair (including decorative repair);
(b) where the dwelling-house is a flat, to keep
the interior of the dwelling-house in such repair.
I come now to
paras 16A to 19 of Schedule 6. Paras 16A to 16D and para 18 were introduced by
the Housing and Planning Act 1986. It is necessary to set some of these
paragraphs out in extenso. It is not necessary, however, to refer to
paras 16C or 17.
Service
charges and other contributions payable by the tenant.
16A.–(1) The lease may require the
tenant to bear a reasonable part of the costs incurred by the landlord —
(a) in discharging or insuring against the
obligations imposed by the covenants implied by virtue of paragraph 14(2)
(repairs, making good structural defects, provision of services, etc.), or
(b) in insuring against the obligations imposed
by the covenant implied by virtue of paragraph 14(3) (rebuilding or
reinstatement, etc.),
and to the
extent that by virtue of paragraph 15(3) (effect of provision of superior lease)
such obligations are not imposed on the landlord, to bear a reasonable part of
the costs incurred by the landlord in contributing to costs incurred by a
superior landlord or other person in discharging or, as the case may be,
insuring against obligations to the like effect.
(2) Where the lease requires the tenant to
contribute to the costs of insurance, it shall provide that the tenant is
entitled to inspect the relevant policy at such reasonable times as may be
specified in the lease.
(3) Where the landlord does not insure against
the obligations imposed by the covenant implied by virtue of paragraph 14(3),
or, as the case may be, the superior landlord or other person does not insure
against his obligations to the like effect, the lease may require the tenant to
pay a reasonable sum in place of the contribution he could be required to make
if there were insurance.
(4) Where in any case the obligations imposed by
the covenants implied by virtue of paragraph 14(2) or (3) are modified in
accordance with paragraph 14(4) (power of county court to authorise
modification), the references in this paragraph are the obligations as so
modified.
(5) This paragraph has effect subject to
paragraph 16B restrictions in certain cases as regards costs incurred in the initial
period of lease.
16B.–(1) Where a lease of a flat
requires the tenant to pay service charges in respect of repairs (including
works for the making good of structural defects), his liability in respect of
costs incurred in the initial period of the lease is restricted as follows.
(2) He is not required to pay in respect of works
itemised in the estimates contained in the landlord’s notice under section 125
any more than the amount shown as his estimated contribution in respect of that
item, together with an inflation allowance.
(3) He is not required to pay in respect of works
not so itemised at a rate exceeding —
(a) as regards parts of the initial period
falling within the reference period for the purposes of the estimates contained
in the landlord’s notice under section 125, the estimated annual average amount
shown in the estimates;
(b) as regards parts of the initial period not
falling within that reference period, the average rate produced by averaging
over the reference period all works for which estimates are contained in the
notice;
together, in
each case, with an inflation allowance.
(4) The initial period of the lease for the
purposes of this paragraph begins with the grant of the lease and ends five
years after the grant, except that —
(a) if the lease includes provision for service
charges to be payable in respect of costs incurred in a period before the grant
of the lease, the initial period begins with the beginning of that period;
(b)
if the lease provides for service charges to be calculated by reference to a
specified annual period, the initial period continues until the end of the
fifth such period beginning after the grant of the lease; and
(c) if the tenant served notice under section
142 deferring completion, the initial period ends on the date on which it would
have ended if the lease had been granted on the date on which the notice was
served . . .
16D.–(1) The Secretary of State
may by order prescribe —
(a) the method by which inflation allowances for
the purposes of paragraph 16B or 16C are to be calculated by reference to
published statistics; and
(b)
the information to be given to a tenant when he is asked to pay a service
charge or improvement contribution to which the provisions of paragraph 16B or
16C are or may be relevant.
(2) An order —
(a) may make different provision for different
cases or descriptions of case, including different provisions for different
areas;
(b) may contain such incidental, supplementary or
transitional provisions as the Secretary of State thinks appropriate; and
(c) shall be made by statutory instrument which
shall be subject to annulment in pursuance of a resolution of either House of
Parliament . . .
18. Where the
dwelling-house is a flat, a provision of the lease or of an agreement
collateral to it is void in so far as it purports —
(a) to authorise the recovery of such a charge as
is mentioned in paragraph 16A (contributions in respect of repairs, etc.)
otherwise than in accordance with that paragraph and paragraph 16B
(restrictions in initial period of lease); or
(b) to authorise the recovery of any charge in
respect of costs incurred by the landlord —
(i) in discharging the obligations imposed by
the covenant implied by paragraph 14(3) (rebuilding or reinstatement, etc.), or
those obligations as modified in accordance with paragraph 14(4), or
(ii) in contributing to costs incurred by a
superior landlord or other person in discharging obligations to the like
effect; or
(c) to authorise the recovery of an improvement
contribution otherwise than in accordance with paragraph 16C (restrictions in
initial period of lease).
19. A
provision of the lease, or of an agreement collateral to it, is void in so far
as it purports to authorise a forfeiture, or to impose on the tenant a penalty
or disability, in the event of his enforcing or relying on the preceding
provisions of this Schedule.
Statutory
control of service charges
Since 1972 Parliament
has recognised the need to protect tenants from excessive demands made in
respect of service charges. The control was introduced by section 90 of the
Housing Finance Act 1972, which provided as follows:
(1) Where the service charges which are payable
by the tenant of a flat in any calendar year, or which are demanded from the
tenant as being so payable, exceed [£80] . . ., the tenant shall, in accordance
with this section, be entitled to obtain a summary in writing of the relevant
costs in the accounting year ending in or with that year, certified by a
qualified accountant as being in his opinion —
(a) a fair summary of those costs, set out in a
way which shows how they are or will be reflected in demands for service
charges, and
(b) sufficiently supported by accounts, receipts
and other documents which have been produced to the accountant,
and the
certificate shall identify the accounting year to which the summary relates.
It was made
plain, however, by the definition of ‘service charge’, in section 90(12) that
the statutory control was restricted to any charge for ‘service, repairs,
maintenance or insurance’ which varied or might vary according to any costs
(including charges for overheads) incurred from time to time by or on behalf of
the landlord. It was further provided that the amount of £80 could be varied
from time to time by the Secretary of State. Local authorities and certain
other bodies were excluded from the statutory control by section 91.
By section 124
of the Housing Act 1974 a right to challenge service charges was given to
tenants by the insertion of a new section 91A into the Housing Finance Act
1972. In 1980 sections 90 to 91A of the Housing Finance Act 1972 were replaced
by the provisions contained in Schedule 19 to the Housing Act 1980. A service
charge was defined in para 1 of Schedule 19 as meaning:
an amount
payable by the tenant of a flat as part of or in addition to the rent
(a) which is payable, directly or indirectly, for
services, repairs, maintenance or insurance or the landlord’s costs of
management; and
(b) the whole or part of which varies or may vary
according to the relevant costs.
The relevant
costs were defined as the costs or estimated costs incurred or to be incurred
in any period by or on behalf of the landlord.
By para 14 of
Schedule 19 an exception from the statutory control was made in relation to
service charges payable by a tenant of the local authority and certain other
bodies.
It is to be
noted that the definitions of ‘service charge’ contained in section 46(1) of
the 1985 Act (before it was amended), in section 18(1) of the Landlord and
Tenant Act 1985 and in section 621A of the
1985 Act (as
amended by the Housing and Planning Act 1986) include as part of the definition
the words ‘the whole or part of which varies or may vary according to the
relevant costs’.
Case for
the lessees
Counsel for
the lessees drew attention to the right to buy legislation and to the
provisions relating to long leases of flats imposed first by Schedule 2 to the
1980 Act and later by Schedule 6 to the 1985 Act (as amended in 1986). He
pointed out that clause 4(4) of the lease, though apparently included in the
lease by an oversight, would have been apt as a tenant’s covenant at the time
when paras 16 and 17 of Schedule 2 to the Housing Act 1980 were in force in
their original form. He submitted, however, that the charge mentioned in clause
5(2) of the lease (whether properly described as a service charge or by some
other name) was void and unenforceable as it fell within para 18(a) of
Schedule 6 to the 1985 Act. Alternatively, the sum mentioned in clause 5(2)
would fall to be treated as part of the rent and would then be irrecoverable
because of the provision in para 11 of Schedule 6 that the rent could not
exceed £10 pa.
Case for
the council
It was
submitted on behalf of the council that clause 5(2) of the lease was unaffected
by para 18(a) of Schedule 6. That paragraph, in common with the
statutory control relating to private landlords, was concerned with service
charges as defined in the various Acts since 1972, or at any rate was concerned
with variable charges. Neither para 18(a) nor paras 16A and 16B were
concerned with fixed charges of the kind specified in clause 5(2). Furthermore,
it was clear from the context that the word ‘rent’ in para 11 was not used in
the wide sense as meaning any periodic consideration payable under a lease, but
meant a ground rent. It was to be noted that the words ‘the ground rent’ were
used in section 127(3)(c) with reference to the assumptions to be made
for calculating the value of a dwelling-house or the purposes of the statutory
notice to be provided by the landlord in accordance with section 125. It was
argued that the statutory control of service charges which were variable was
fully justified but the need for such control had no relevance to a fixed
charge. A variable charge was beneficial to the landlord under long leases
because he was thereby insured against financial risks. On the other hand, if
the service charge was not controlled, the tenant was exposed to the
unpredictability of charges for repairs which could be undertaken at times
decided by the landlord. In addition, the right to recover costs incurred
provided the landlord with no incentive to make sure that any repairs and maintenance
were carried out as economically as possible. In the case of a fixed charge it
was the landlord who was at risk of having to incur substantial expenditure at
short notice. A fixed charge (subject only to an indexed escalation clause)
enabled a tenant to budget for the future. Furthermore, a tenant exercising his
right to buy had the added security of being able to refer the terms of his
long lease to the county court before any contract was concluded.
Validity of
clause 5(2) of the lease
It was accepted
on behalf of the council that if clause 5(2) was held to be valid they could
not rely in addition on clause 4(4). Counsel stated that the council are
willing to give an undertaking on the matter which can be recorded in any order
of the court.
The central
question for decision is whether clause 5(2) is avoided by the following words
in para 18 of Schedule 6:
Where the
dwelling-house is a flat, a provision of the lease or of an agreement
collateral to it is void in so far as it purports —
(a) to authorise the recovery of such a charge as
is mentioned in paragraph 16A (contributions in respect of repairs, etc.)
otherwise than in accordance with that paragraph and paragraph 16B
(restrictions in initial period of lease);
Certain
matters appear to be clear:
(a) Although the sum referred to in clause 5(2)
is described as ‘the service charge’, both in clause 5(2) and in the fifth
Schedule to the lease, the description is of no particular significance in this
case. The reference to the price index published by the RICS makes it clear,
however, that the sum is payable as a contribution towards the cost of repairs
and maintenance.
(b) The ‘service charge’ in clause 5(2) is not a
‘service charge’ within the meaning of the 1985 Act or of any of the relevant
provisions of the 1985 Act such as sections 125A and para 16B of Schedule 6.
(c) Para 16B of Schedule 6 has no application
because the restrictions on liability imposed by that paragraph during the
initial period of a lease apply only ‘where a lease of a flat requires the
tenant to pay service charges in respect of repairs’. The sum payable under
clause 5(2) is not a ‘service charge’ within the meaning of the 1985 Act.
One therefore
turns to consider the words ‘such a charge as is mentioned in para 16A (contributions
in respect of repairs etc) . . .’ in para 18.
The implied
covenant contained in para 14(2) of Schedule 6 obliges the landlord, inter
alia, to keep in repair the structure and exterior of the dwelling-house
and of the building in which it is situated and to ensure, so far as
practicable, that services which are to be provided by the landlord are
maintained at a reasonable level. Para 16A entitles the landlord to include in
the lease a provision that the tenant should bear a reasonable part of the costs
incurred by the landlord in discharging the obligations imposed by the
covenants implied by virtue of para 14(2).
In the present
case the council are bound by the implied covenants in para 14(2): see clause 6
of the lease. They do not seek, however, to recover any contribution from the
lessees by way of a charge authorised by para 16A. The sum claimed is not ‘a
reasonable part of the costs incurred by the landlord’ within the meaning of
para 16A, but a fixed charge payable without any reference to the actual costs
incurred or to be incurred in the future. Clause 5(2), it is said, is a term
which is permissible under para 5 of Schedule 6, which authorises the inclusion
in the grant of a lease of ‘such covenants and conditions as are reasonable in
the circumstances’.
After some
hesitation I have come to the conclusion that the submissions advanced on
behalf of the council are correct. Schedule 6 and the protection which it
confers on a tenant have to be looked at in the context of the statutory
control relating to variable charges. The reasonableness of a fixed charge can
be examined at the time when the long lease is being negotiated. Assuming that
the fixed charge is reasonable, the tenant is protected over the whole period
of the lease from fluctuating and unpredictable costs. His only exposure to
risk is in the risk attendant on a clause which depends on inflation. I
consider that the judge was right to uphold the clause and to treat clause 5(2)
as falling outside para 16A and therefore outside the scope of para 18 of
Schedule 6.
I am also
satisfied that clause 5(2) does not infringe para 11 of Schedule 6. The rent
‘not exceeding £10’ stipulated in that paragraph clearly means ‘the ground
rent’. The provisions set out in paras 16A and 16B make it clear that the word
‘rent’ in para 11 cannot embrace all sums payable from time to time as
consideration under the lease.
Subject to the
inclusion in the order of the court of a term that will record the undertaking
given by the council that they will not hereafter seek to enforce or rely upon
clause 4(4) of the lease, I would dismiss the appeal.
STEYN and ROSE LJJ agreed and did not add anything.
Appeal
dismissed.
