Construction of lease — Extent to which under terms of lease county council could deposit refuse on lessee’s farm — Lord Denning’s views on principles of construction not accepted by other judges — Court unanimous, however, in favour of county council’s construction — Appeal allowed
This was an
appeal by West Sussex County Council from a decision of Thesiger J in the
Queen’s Bench Division on July 9 1976, on a preliminary issue, that West Sussex
County Council was not entitled under the terms of a lease of Baythorne Farm,
Itchingfield, Horsham, granted by them to Mrs Yvonne Gilmartin (there having
been a sale and lease-back), to tip or deposit or cause or allow to be tipped
or deposited, refuse of any kind into or over or on the whole of three areas of
the 70-acre farm shown on a plan annexed to the lease.
Anthony
Scrivener QC and Christopher Cochran (instructed by Sharpe, Pritchard & Co)
represented the appellants; Derrick Turriff (instructed by Gregory, Rowcliffe
& Co, agents for Cotching & Son, of Horsham) appeared for the
respondent.
Giving
judgment, LORD DENNING MR said that the case concerned an interesting point on
the modern industry of the dispersal of rubbish arising on the interpretation
of a document. Nowadays the Department of the Environment had plans for the
industry. Areas with ditches, holes and cuttings were found and filled up with
rubbish from the district. Later, top soil was put over them to make the area
suitable for agriculture. It was an excellent and comparatively modern way of
dealing with refuse.
In 1964
Horsham Rural District Council made an arrangement with Mrs Gilmartin, who had
a pedigree herd of Guernsey cows on some 70 acres of farmland. Under it she
sold the farm to the council for some £9,000 and the council immediately leased
back the land to her under a 21-year lease at a rent. The recital to the lease
said that the council had purchased the land ‘for the purpose of carrying out
thereon a controlled refuse tipping scheme.’
Special clauses gave the council the right to resume possession
separately of three particular areas, each about 8 acres and shown on an
attached plan as ‘edged purple, edged blue and edged green for the purpose of
the scheme.’
The council
was also given the right to enter on any part of the farm to carry out works
specified in a schedule to the lease. The details of the works indicated an
overall plan for the area to be better drained into the River Arun. There was
also a provision that at the end, when the council had made the land fit for
agricultural purposes, they would give Mrs Gilmartin notice that she could have
the land back.
The schedule
provided for three phases. For some time everything went according to plan.
Possession of the land edged purple was resumed in 1964, the land edged blue in
1970, and the works were carried out. From time to time Mrs Gilmartin
complained of nuisance–the lease had a special covenant that the works should
not be a nuisance–and the council apologised. The time came when her advisers
looked at the lease and advised her that the tipping area was limited by the
line of a ditch shown on the plan which cut across the areas which had been
repossessed. She brought an action claiming damages for nuisance and an
injunction, and also claiming that there was no right to tip on parts of the
land which had not been repossessed by the council. She also applied for an
interlocutory injunction. Cusack J felt that the true interpretation of the
lease in relation to the tipping area should be tried as a preliminary issue.
Thesiger J held that Mrs Gilmartin was right.
The council,
now West Sussex County Council, appealed. He (his Lordship) thought that it was
unfortunate to have a trial of a preliminary issue like this, limited to the
wording of the lease, without the surrounding facts and background being known.
But as the parties and the judge had agreed to deal with the preliminary point
the court had to determine it on that basis. The words which Mrs Gilmartin
relied on, and which the judge felt were decisive, were in para 7 of the
schedule: ‘The tipping area as shown edged in purple . . . will be limited on
the north and west sides by the new open cut ditch. Strip all topsoil from the
tipping area and stockpile adjoining the access road where indicated on the
plan.’ These words, it was said, defined
the tipping area in the first phase. There were similar specific words for the
second and third phases. If the words were taken by themselves without being qualified
by the rest of the document he (his Lordship) would agree with the judge that
it did appear that the tipping area was limited to the area of which possession
had been resumed. But the sentences must be read not only in the context of the
agreement as a whole but also against the background in which it was made–to
use Lord Wilberforce’s phrase in Reardon Smith Line Ltd v Hansen-Tangen
[1976] 1 WLR 989 at 997, ‘in the same factual matrix as that in which the
parties were.’ One did not look only at
the words but at the correspondence, the background, and everything which
formed the matrix in which the parties negotiated. One important factor in this
case was the actual line on the land itself. If Mrs Gilmartin were right it
would produce a hopeless state of affairs for the proper carrying out of ‘a
controlled refuse tipping scheme,’ because at the end there would not be a good
level field but a tipping area going down into an old ditch quite steeply and
up the other side of a crevasse, half of which would be a tipping area with
refuse on it and the other half not. And it might be difficult to drain, so
that the last stage would be worse than the first.
In his (Lord
Denning’s) view, the key operative provision of the agreement was clause I
(ii), which gave the council
edged purple . . . blue . . . and green for the purpose of the scheme.’ That meant that the council was regaining
possession of its own property. Clause I (iii) gave the council the right to
carry out works specified in the schedule ‘with such variations as the council
may consider necessary.’ That was a
right to carry out works with a provision for variation; and it showed that
there was nothing binding in law, so that when the schedule said that the tipping
area should be limited as defined, even that could be varied. It was only a
provisional plan and, in law and having regard to all the background
circumstances, the schedule was a schedule of proposed works which could be
varied in almost every respect. The governing provision was the right of the
council to resume possession as it might desire. Looking at the whole
background he interpreted the document differently from the judge and would
allow the appeal.
Agreeing,
SCARMAN LJ said that on the preliminary point the facts were not investigated
at all. It was clear that there was a great area of dispute which, if Mrs
Gilmartin pursued her claim for damages, would inevitably have to be
investigated. He would deal with the case as it came before the court, in the
framework of a construction summons as to the terms of a written agreement.
After examining the lease and the agreement for sale in detail, he considered
that the contractual documents did not impose on the council the inflexible
duty of carrying out a particular controlled refuse tipping scheme, but left it
to the council’s good judgment and discretion to devise whatever scheme it
thought appropriate. He had reached his conclusion for reasons deriving from
analysis of the documents. One did not have to examine the matrix of the facts,
which were largely uninvestigated and undetermined.
BRIDGE LJ,
also agreeing, said that before the case reached the Court of Appeal it
probably had not occurred to anyone that it was either necessary or helpful to
look beyond the confines of the contractual documents in order to determine the
disputed issue of what they meant. Of course, there were cases in which it was
vital to apply the principle expressed by Lord Wilberforce in Reardon Smith;
but he (Bridge LJ) could not see what factual matrix in 1964 could assist in
the construction of the elaborate formal documents before the court. He would
respectfully but vigorously express his dissent from the view that it was
proper for the court to consider the pattern of land–a fortiori to look
at photographs of what the land looked like at the present stage of the
ditching operation–in order to ask itself what, from the public health,
agricultural or landscape point of view, would have been the most sensible
agreement for the parties to have made. On the interpretation of lamentably
drafted documents, he had felt greater difficulty in reaching a conclusion than
had his brethren, but he was not prepared to carry his doubts to the point of
formal disagreement.
The appeal
was allowed with costs.
