Landlord and tenant — Right to deposit refuse — Whether lease or licence — Whether payment to be made for capping materials as well as dry waste
By clause 1 of
a deed dated May 15 1974 the appellants were granted by the respondents’ predecessor
in title an ‘exclusive licence and full liberty to use the [subject] Site for
depositing waste … for a period of 21 years’. The site was a large area of land
on parts of which quarrying was taking place. In the court below the judge
decided that the appellants held a licence and not a tenancy, and were
therefore not entitled to the protection of the Landlord and Tenant Act 1954.
He also decided that under the rent formula, which provided for a rate per
cubic yard of dry waste, rent was payable in respect of the deposit of capping
or covering materials. The appellants appealed contending that there were
clauses in the deed which were only consistent with the grant of exclusive
possession, and therefore of a tenancy.
intention on the part of the grantor to grant to the grantee exclusive
possession for 21 years. Clause 1 was the crucial clause; other clauses were at
best equivocal. The only exclusive quality of the grant was that the grantor
could not grant a competing right in the same site. One does not expect a
person given the right to tip rubbish in the excavated parts of a large plot of
land, on other parts of which quarrying was continuing, to have exclusive
possession. The rent payments were based on a simple formula by which used
airspace was to be calculated; this therefore included space filled with
engineering materials needed for lining, capping and covering tipping waste.
The following
cases are referred to in this report.
Addiscombe
Garden Estates Ltd v Crabbe [1958] 1 QB 513;
[1957] 3 WLR 980; [1957] 3 All ER 563, CA
Ashburn
Anstalt v Arnold (No 2) [1989] Ch 1; [1988]
2 WLR 706; [1988] 2 All ER 147; (1988) 55 P&CR 137; [1988] 1 EGLR 64;
[1988] 23 EG 128, CA
Clays
Lane Housing Co-operative Ltd v Patrick (1984) 49
P&CR 72; 17 HLR 188
Clore v Theatrical Properties Ltd [1936] 3 All ER 483
Shell-Mex
& BP Ltd v Manchester Garages Ltd [1971]
1 WLR 612; [1971] 1 All ER 841; [1971] EGD 303; (1971) 218 EG 285, CA
Street v Mountford [1985] AC 809; [1985] 2 WLR 877; [1985] 2 All ER
289; [1985] 1 EGLR 128; (1985) 274 EG 821, HL; reversing (1984) 49 P&CR
324; [1984] 2 EGLR 119; 271 EG 1153, CA
This was an
appeal by the defendants, Hunts Refuse Disposal Ltd, from a decision of Judge
Marr-Johnson, who on May 5 1995, dismissed a summons issued by the defendants
under Ords 14 and 14A of the RSC in their counterclaim in proceedings brought
by the plaintiffs, Norfolk Environmental Waste Services Ltd.
David Elvin
(instructed by Mills & Reeve) appeared for the appellants; Peter Crampin QC
(instructed by McKenna & Co) represented the respondents.
Giving
judgment, Hutchison LJ
said: This is an appeal by the defendants, Norfolk Environmental Waste Services
Ltd, from the judgment of Judge Marr-Johnson of May 5 1995. The appellant
company was set up by Norfolk County Council pursuant to section 32 of the
Environmental Protection Act 1990 and is, in effect, the waste disposal arm of
the council. The respondents to the appeal are not the owners of the land with
which it is concerned but are, vis à vis the appellants, in an
equivalent position. Putting the matter in this way avoids the need to describe
a number of antecedent dispositions which are not material to the issues to
which the appeal gives rise. These involve the proper construction of deeds of
May 15 1974 and August 11 1986, the terms of which are for practical purposes
identical, and which expired on the same date, May 15 1995. The issues before
the judge were: (1) whether these deeds conferred on the appellants a tenancy
or merely a licence of land at Priory Farm, Blackborough End, Kings Lynn in
Norfolk; and (2) what was the correct construction of the provision in the
deeds as to payment for deposit of dry waste. On the resolution of the first
issue depended the question whether the appellants were entitled to the
protection of Part II of the Landlord and Tenant Act 1954. The second question
involved whether the appellants were obliged to pay, at the stated rate per
cubic yard of solid waste, only in respect of actual waste materials or in
respect also of space occupied by materials used for covering and capping the
waste, lining the edge of the infill and finishing with topsoil. The judge
decided both questions in the respondents’ favour — that is to say he construed
the deeds as granting licences only and he held that payment had to be made in
respect of all space filled, whether by actual waste or such additional
materials.
The matter
came before the judge on a summons issued by the appellants for summary
judgment on their counterclaim, under Ord 14; or alternatively under Ord 14A.
It was agreed that there was no substantial issue of fact to be tried and that
the case turned on construction of the deeds. The judge’s decision effectively
terminated the proceedings in the respondents’ favour.
All the
references I am about to make are to the deed of May 15 1974, which was
incorporated in the later deed. I begin with the second of the recitals.
Whereas:–
(2) The
Licensee has applied to the Grantor for a Licence to deposit refuse and waste
matter (collectively referred to as ‘Waste’) at the Site upon the terms
hereinafter contained
Now this deed
witnesseth as follows:–
1. In
consideration of the payments hereinafter mentioned or made payable and the
covenants on the part of the Licensee hereinafter contained the Grantor hereby
grants unto the Licensee
(1) exclusive
licence and full liberty to use the Site for depositing waste without
restriction as to amount for the period of 21 years from the date hereof (‘the
Licence Period’)
(2) full
liberty for the Licensee from time to time and at all times during the
continuance of this Licence to enter upon the Site with or without vehicles for
the purpose of exercising the Licence and liberty hereby granted.
Clause 2
contains covenants by the licensee, which included the following:
(1) to be
responsible for all Site operations and restoration of the Site as required by
the Local Planning Authority and the Town and Country Planning Act 1971 … and
to keep the Grantor indemnified … in respect thereof …
(4) to
observe all planning requirements and statutory provisions regulations and
orders relating to the deposit of waste at the Site during the Licence period
(5) not to assign
or otherwise dispose of the benefit of this Licence or any part or interest
therein without the previous written consent of the Grantor (which consent
shall not be unreasonably withheld) …
(6) to keep a
proper account of all waste deposited at the Site and at all reasonable times
to allow such accounts to be inspected and copied by the Grantor or its duly
authorised agent and to permit the same to be audited from time to time as
reasonably required by the Grantor at its expense …
(8) to allow
the Grantor reasonable access for the purpose of extracting minerals from the
site subject to such extraction and access not impeding or interfering with the
Licensees normal operations of waste disposal at the site provided that
top-soil and overburden shall not be deemed to be minerals for the purposes of
this Licence.
Clause 3
contains provisions as to payment, distinguishing between liquid waste which is
to be paid for at stated rates for each 1,000 gallons deposited ‘as calculated
from the records and accounts referred to in Clause 2(6)’; and dry waste, in
respect of which the clause requires payment of:
a rent at the
rate of 10p per cubic yard of dry waste deposited at the site during each year
of the Licence Period the volume to be calculated at the end of each year in
accordance with the provisions of Clause 3 (2) hereof …
Clause 3(2),
which is of crucial importance in relation to the second issue, reads:
For the
purpose of calculating the amount of dry waste so deposited a survey of the
available air space shall be taken at the commencement of the Licence Period
and at each anniversary thereof by a firm of Chartered Surveyors to be
appointed jointly by the Grantor and the Licensee the Licensee to be
responsible for the Surveyors’ charges. In the event of any dispute between the
parties as to the amount of dry waste deposited in any year of the Licence
Period the decision of such Chartered Surveyors based on the difference between
the available air space at the beginning and end of each year shall be final and
binding upon the parties. In calculating the difference in such air space the
Surveyors shall have due regard to any additional air space created in
connection with the extraction of minerals during the relevant year
Clause 4 is a
provision entitling the grantor, if any part of ‘the rent hereby reserved’ is
unpaid for 30 days or there is a breach of licensee’s covenants, to serve
notice requiring payment or compliance, failing which the grantor is entitled
to determine the licence. It does not stipulate for a right of re-entry.
The judge, in
deciding the first issue in the respondents’ favour, in effect accepted the
arguments of Mr Peter Crampin QC on their behalf. Before the judge as before
this court, the argument on this issue concentrated on the question whether the
deed conferred exclusive possession on the appellants, and it is common ground
that that is the vital question: if it did, then the appellants have a tenancy:
if it did not they have only a licence. This is clear from a number of
authorities, in particular Street v Mountford [1985] AC 809*. At
p818 in the speech of Lord Templeman appears this passage:
*Editor’s
note: Also reported at [1988] 1 EGLR 64
There can be
no tenancy unless the occupier enjoys exclusive possession; but an occupier who
enjoys exclusive possession is not necessarily a tenant … To constitute a
tenancy the occupier must be granted exclusive possession for a fixed or
periodic term certain in consideration of a premium or periodical payments.
Later in his
speech Lord Templeman said at p826:
My Lords, the
only intention which is relevant is the intention demonstrated by the agreement
to grant exclusive possession for a term at a rent. Sometimes it may be
difficult to discover whether, on the true construction of an agreement,
exclusive possession is conferred. Sometimes it may appear from the surrounding
circumstances that there was no intention to create legal relationships.
Sometimes it may appear from the surrounding circumstances that the right to
exclusive possession is referable to a legal relationship other than a tenancy.
Legal relationships to which the grant of exclusive possession might be
referable and which would or might negative the grant of an estate or interest
in the land include occupancy under a contract for the sale of the land,
occupancy pursuant to a contract of employment or occupancy referable to the
holding of an office. But where as in the present case the only circumstances
are that residential accommodation is offered and accepted with exclusive
possession for a term at a rent, the result is a tenancy.
It is not
suggested in the present case that, if there was a grant of exclusive
possession, there exists some special reason for none the less regarding the
appellants as being only licensees.
The judge,
having rehearsed the arguments of counsel on each side, expressed his
conclusion that the deed was what it purported to be, a licence to enter upon
land. He said:
The essential
words of transfer in clause 1(1) are that the grantor grants the grantee
‘exclusive licence and full liberty to use the Site for depositing waste
without restriction as to amount’, and clause 1(2) permits the grantee at any
time ‘to enter upon the Site with or without vehicles for the purpose of
exercising the Licence’. I do not accept that the word ‘Licence’ in the
expression ‘exclusive licence and full liberty’ is a mere label which should be
ignored for construction purposes. It forms part of the operative words of
transfer and in the context in which it appears it must mean ‘permission’. Thus
by subclause (1) the grantee is given permission to use the site for
depositing waste and by subclause (2) he is given permission to enter
the site for the stated purpose.
By
implication it seems to me that the grantee is not to use the site or to enter
it for any other purpose. If the grantor were granting the grantee a tenancy,
and therefore ex hypothesi exclusive possession of the land, there would
be no necessity, in my judgment, to state that the grantee could deposit waste
without restriction as to amount, nor would there be any necessity to state
that he was entitled to enter the site with or without vehicles. The right to
do those things and more would be a necessary incident of the tenancy, although
of course one might find words of restriction limiting the grantee’s use of the
land at a later point in the tenancy agreement.
I conclude
therefore that clause 1 does not by its terms operate so as to confer exclusive
possession of the land on the grantee.
It is clear
from the following pages of the judge’s judgment that he had carefully
considered arguments addressed to him by Mr David Elvin, counsel for the
appellants, based on other provisions in the deed (which I too shall consider)
and he gave his reasons for holding that they did not invalidate his
conclusion.
Mr Elvin
submitted that construing the deed as a whole and considering what it permitted
the grantee to do led inescapably to the conclusion that it conferred a
tenancy, albeit one with a limited user provision. The judge gave too much
weight to the ‘labels’ used in clause 1. The significance the judge attached to
that clause was misplaced: see Addiscombe Garden Estates Ltd v Crabbe
[1958] 1 QB 513. There the equivalent clause was in these terms:
The grantors
hereby license and authorise the grantees to enter upon use and enjoy the
following: (a) the club house [etc] … (b) the tennis courts … (c) the use of
all articles of household use and ornament at present in and upon the said club
house and also the use of all nets machines tools and equipment in and about
the said premises …
This was, he
submitted, a clause arguably more apt to confer a licence than that in the
present case, and yet the Court of Appeal held that the agreement constituted a
tenancy.
Then Mr Elvin
pointed to various clauses in the deed which he submitted supported the view
that it conferred exclusive possession and were consistent only — or at least
consistent — with a tenancy. I shall summarise these submissions:
Clause 1(1),
granting exclusive licence and full liberty: it thus amounted to
the grant of exclusive possession with a limited user restriction.
Clause 1(2),
granting full liberty at all times: a right unfettered save for
the user restriction.
The
prohibition of assignment save with the grantor’s consent: clause 2(5). This,
he argued, was consistent with a tenancy — an interest in land — and quite
inconsistent with a mere personal right, which cannot be assigned. In this
connection he relied on Clore v Theatrical Properties Ltd [1936]
3 All ER 483 and Ashburn Anstalt v Arnold (No 2) [1989] Ch 1*.
*Editor’s
note: Also reported at [1988] 1 EGLR 64
Clause 2(8)
allowing the grantor reasonable access for the purpose of extracting minerals —
something the grantor did not need, it was argued, if he had not granted
exclusive possession.
Clause 4,
which Mr Elvin submitted was in substance a forfeiture provision entitling the
grantor to re-enter. He relied on Clays Lane Housing Co-operative Ltd v Patrick
(1984) 49 P&CR 72 where a question arose as to whether a provision
entitling the landlord of premises let under a weekly tenancy to give four
weeks’ notice to terminate the tenancy for various stated reasons including
arrears of rent, unauthorised alterations, etc, was a forfeiture provision.
Holding, contrary to the judge’s view, that it was not, Fox LJ, at p78 said:
We accept,
for present purposes, the submission … that a right to determine a lease by a
landlord is a right of forfeiture if (a) when exercised, it operates to bring
the lease to an end earlier than it would ‘naturally’ terminate; and (b) it is
exercisable in the event of some default by the tenant.
Clause 4, Mr
Elvin submits, fulfils this test: and he relies on the words of Buckley LJ in Shell-Mex
& BP Ltd v Manchester Garages Ltd [1971] 1 WLR 612, from which I
cite a rather more extensive passage than that on which he relied:
During the
course of his argument Mr Dillon has taken us through the detailed provisions
of the document with which we are here concerned and has pointed out that many
of the clauses in it are clauses which could appropriately find their place in
a tenancy agreement. That I think is perfectly true; but it is not to say that
they do not equally appropriately find their place in a licence. One must look
at the transaction as a whole and at any indications that one finds in the
terms of the contract between the two parties to find whether in fact it is
intended to create a relationship of landlord and tenant or that of licensor
and licensee. There are in this case none of those features present which in Addiscombe
Garden Estates Ltd v Crabbe [1958] 1 QB 513 led the court there to
conclude that the intention of the parties was to create a tenancy. They are
referred to succinctly by Parker LJ in his judgment, at p529. In that case
there was a clause expressly permitting the grantors to enter on the premises
to inspect the plant, which would have been unnecessary had they had a right to
enter on the premises apart from the agreement. There was a covenant for quiet
and uninterrupted enjoyment by the grantee — a covenant appropriate to a lease
but inappropriate, I think, to a licence where the licensor had a right of possession
in respect of the subject-matter; and, perhaps most cogent of all, there was a
term for re-entry upon breach of covenant, which is a term of a kind quite
inappropriate, in my judgment, to a licence.
The onerous
obligations imposed by clause 2(1) and, in particular, clause 2(4) are said to
show the considerable extent of the rights granted to the grantees and to be
entirely consistent with the grant of exclusive possession. Indeed, it is
argued, labels apart there is nothing in the deed which is inconsistent with
the grant of an interest in land; and it lacks altogether the sort of provision
one might expect to find where exclusive possession was not given, such as that
in the Shell Mex case ‘Not to impede in any way the officers servants or
agents of the company in the exercise by them of the company’s rights of
possession and control of the premises … ‘.
These
arguments have not persuaded me that, on this issue, the judge reached the
wrong conclusion, and I consider that Mr Crampin is right to submit that the
judge was correct essentially for the reasons he gave. At a stage in his
judgment when he was summarising the principles to be derived from Street
v Mountford and the other authorities to which he had been referred, and
had accepted (rightly) that ‘similar principles apply in the case of both
residential and business premises’ he went on to observe:
It is right
to say however that while general principle is immutable, its effect in
practice may be very different when one is considering an agreement relating to
the use of a 31-acre rubbish tip as opposed to the occupancy of a two-bedroomed
residential flat.
The judge was
here recognising, realistically and correctly, that the analysis to determine
whether an agreement constitutes a licence or a tenancy, while of course it
involves giving close attention to the terms of the agreement, is not to be
undertaken in a vacuum but rather with a proper regard to the context in which
the issue arises. Thus, while one would ordinarily expect that someone in occupation
of a small house for a fixed term at a rent had exclusive possession, one would
I suggest have no such preconceptions about a person given the right to tip
rubbish in the excavated parts of a large plot of land, on other parts of
which, it seems, quarrying was continuing.
Mr Crampin
poses the question: Does the deed evidence an intention on the part of the
grantor to grant to the grantee exclusive possession of the entirety of the
site for 21 years? It is plain from clause 1, he submits, that the answer must
be that it does not. It is not by accident that the words of the grant in
clause 1 are coupled with reference to user for the purpose of depositing waste
— an activity which involves the use of the site in stages. The appellants’
only rights are to be on the site for the purpose of tipping or carrying out
ancillary engineering or maintenance works. They have no right to go, for
example, on to a part of the site not yet excavated or where quarrying is in
progress. It is plain that the grantor was not (subject only to clause 2(8))
accepting exclusion from the entire site for the whole 21 years, whether or not
tipping was taking place. The provisions of the clauses relied on by the
appellants are incapable of bearing the weight which the appellants’ submissions
require them to bear. Of the majority of them, the most that can be said is
that they are as consistent with a tenancy as a licence. Thus — to take clause
4 — there is nothing inconsistent with a licence about a stipulation that upon
failure to pay the sums due or breach of the terms of the licence the grantor
may, if the grantee fails to comply with a notice requiring the money to be
paid or the breach remedied, determine the licence. Similarly, the obligations
in clause 2(1) and (4) are as consistent with a licence to tip refuse as with a
tenancy.
As to the
clause relating to assignment, Mr Crampin submits that there is nothing
inherent in a licence which prevents its being assigned, provided it contains
within it something indicating that it is intended to be assignable. If and to
the extent that clause 2(5) assumes wrongly that this licence was assignable,
that affords some support for the argument that this was a tenancy not a
licence — but is also explicable on the basis that the parties used inapt words
to restrict assignment of something they assumed to be assignable. On any view,
Mr Crampin submits, this provision is of little weight, when set against clause
1.
As to clause
2(8), which the judge accepted was the high point of the appellants’ case, Mr
Crampin makes what I regard as a telling point — namely that the clause does
not contain a reservation of the right to extract minerals but, proceeding on
the footing that the grantor has that right, is a covenant to allow him to
exercise it. Nevertheless, he concedes that the judge was right to regard it as
a high point of the appellants’ argument. Maybe, he accepts, the grantor did
not need to stipulate for such permission — but it is perfectly understandable
that the parties should wish sensibly to regulate matters between the two
competing users of the site. It certainly does not suffice to create a right to
exclusive possession of the site. If anything, the assumption underlying this
clause of there being a right in the grantor to extract minerals points the
other way.
I accept the
central thrust of Mr Crampin’s argument, that the crucial clause in this
agreement is clause 1, particularly subclause (1); and that there is nothing in
the other clauses relied upon of sufficient weight to displace the clear
indication in that clause that the grantee had only limited rights falling
short of exclusive possession. I accept his submission that all those other
clauses are equivocal, in that they are consistent with either a licence or a
tenancy. I accept the submission that it is not surprising to find the
draftsman of what was obviously intended to be a licence borrowing from the
language of landlord and tenant.
I reject Mr
Elvin’s suggested answer to the clause 1 point which, it will be remembered, is
that it cannot stand in the face of the decision in Addiscombe Gardens
Estates Ltd v Crabbe. It seems to me that that case, and the wording
of the comparable clause, were entirely different from the present. The clause
itself pointed much less strongly towards a licence than does the clause in the
present case — in particular it altogether lacked the ingredient of being
permitted to enter only for a limited purpose. Further, the other provisions of
the agreement were overwhelmingly inappropriate to a licence. As Parker LJ said
(p529):
… though the
agreement … is labelled a licence, almost all, if not all the clauses in it are
appropriate, and more appropriate, to a tenancy agreement. Not only that, but
three, in my view, are completely inconsistent with the document being a
licence …
If one stands
back and looks at the deed in the present case, construing it in its context,
everything, in my view, points to its being what it purports to be. This was
the judge’s view, and I agree with him. There is here no suggestion of a sham
devised to circumvent statutory provisions, or anything of that sort. On the
contrary, the grant of a licence to the grantee giving the exclusive right to
tip refuse is a perfectly natural and logical thing to do. That it should be a
licence rather than a tenancy causes one no surprise. In this respect also the
present case is quite unlike Addiscombe Gardens Estates v Crabbe.
I would
accordingly uphold the judge’s conclusion on the first issue.
I now turn to
the second issue which is one involving the construction of clause 3(2); though
of course regard must be had to other provisions of the agreement in order to
understand it in its proper context.
The importance
of the point appears from the pleadings and evidence before us, to which I make
brief reference. The defendants say that under current planning and waste
disposal requirements they have to line the base and sides of any part of the
quarry into which they are tipping with low permeability materials 1m thick
and, when it is filled to the permitted level, cap it with a 30cm
low-permeability layer, a 30cm drainage layer and a layer of topsoil of about
20cms. They say that the fill involved in these engineering works represents
rather more than one-third of the total volume for the year in question; and
they say that the cost of the engineering works, inclusive of materials, has
been £1.6m — a vastly greater sum than the plaintiffs claim by way of rent. It
is not difficult to understand why it is that the defendants feel aggrieved at
having to pay, as though it were filled by refuse, for the space occupied by
these engineering materials.
These
considerations are, it must be accepted, immaterial if, on its true construction,
the licence deed obliges the defendants to pay for all space that they use up
in carrying out their dry waste tipping operations. The licence agreement has
to be interpreted in the light of the surrounding circumstances as they were in
1974 when it was executed. Then, it is common ground, requirements as to what I
have for convenience called engineering works were significantly less
stringent. I am satisfied, however, that even then there existed statutory
controls the implementation of which must have given rise to the same problem,
though in a less acute form.
I begin my
consideration of the true extent of the defendants’ obligations in relation to
payments for dry waste by gathering together what seem to me to be the parts of
the licence deed which bear on the problem.
The second
recital records that the licensee seeks a licence ‘to deposit refuse and waste
matter (collectively referred to as ‘Waste’) at the Site …’. It is suggested
that this is a definition of waste, but I do not think it is properly to be
regarded as such: certainly it is not permissible to treat those words,
appearing where they do and directed to nomenclature rather than definition, as
having any more than marginal relevance to the question to which this second
issue gives rise. What can be said however is that, reading clause 1(1) of the
agreement in accordance with the recital, the defendants’ entitlement is to use
the site for depositing refuse and waste matter.
Clause 2(1)
imposes an obligation on the licensee to restore the site in accordance with
local authority and Town and Country Planning Act requirements; and clause 2(4)
a complementary obligation to observe all planning requirements and statutory
obligations relative to the deposit of waste. Undoubtedly, therefore, it was
appreciated by grantor and grantee at the date of the agreement that it was
obligatory for the licensees to undertake these matters, and at their own
expense.
Clause 3(1)(a)
to (c) lays down what consideration is to be paid for the exercise of the right
to deposit refuse and waste matter. In the case of liquid waste payment is to
be made on the basis of a unit price per thousand gallons to be calculated from
the accounts and records which under the agreement the licensees are obliged to
keep. It is perhaps worth observing that the requirement of clause 2(6) is ‘to
keep a proper account of all waste deposited at the site’ — that is to say
liquid and dry waste: whereas the provisions as to payment for dry waste do not
depend on these accounts which they presumably could have done — for example by
charging by weight or by volume for dry waste brought on to the site. Instead
dry waste is charged on a quite different basis.
Clause 3(i)(c)
— the clause which defines what has to be paid in respect of the deposit of dry
waste — is perfectly plain. It requires rent to be paid at the stated rate ‘per
cubic yard of dry waste deposited at the site during each year of the Licence
Period the volume to be calculated at the end of each year in accordance with
the provisions of Clause 3(2)’. In the course of the hearing it emerged that
(leaving aside the issue of engineering materials) the parties were at one in
treating this provision as obviating the need to take account of any question
such as the extent to which the dry waste had compressed or degraded or would
in the future do so: the measurement on which payment is based falls to be
calculated on the basis of a ‘snapshot’ of the tip at the end of the year in
question. I am satisfied that this common understanding, as well as having the
merit of simplicity, correctly reflects the provisions of clause 3(1)(c).
So we come to
the all-important question — what is the basis of the year-end calculation in
accordance with which the volume of dry waste deposited is to be determined?
Not (as with liquid waste) on the basis of volume coming into the site, but
rather on the basis of space occupied at a particular date by dry waste
deposited during the preceding year. However, clause 3(2) does not say that the
amount of dry waste deposited in the preceding year shall be deemed to be
the difference between the airspace available at the beginning of the year and
at the end. There is in my judgment a real difference between the words:
The amount of
dry waste deposited shall be deemed to be the difference between …
and the words:
For the
purpose of calculating the amount of dry waste deposited a calculation shall be
made of the difference between …
The former, a
deeming provision, is plainly laying down a formula which (if properly employed)
results in a conclusive figure for dry waste, notwithstanding that (for example
by reason of degradation) it may be very different from the volume of dry waste
deposited. The latter is at least open to the construction that it is simply
defining a first step to be taken towards arriving at a figure representing the
amount of dry waste deposited. However, depending on the context in which the
words have to be construed, they could fall to be interpreted as a
deeming provision.
Turning to the
other two sentences of clause 3(2), they, in my view, do have a significant
impact on the meaning of the first. Logically, I consider, the third sentence
ought to precede the second and for convenience I repeat the whole clause here,
with the second and third sentences transposed:
For the
purpose of calculating the amount of dry waste so deposited a survey of the
available airspace shall be taken at the commencement of the Licence Period and
at each anniversary thereof by a firm of Chartered Surveyors to be appointed
jointly by the Grantor and the Licensee …
In
calculating the difference in such airspace the surveyors shall have due regard
to additional airspace created in connection with the extraction of
minerals during the relevant year. In the event of any dispute between the
parties as to the amount of dry waste deposited in any year of the Licence
Period the decision of such Chartered Surveyors based on the difference between
the available airspace at the beginning and the end of each year shall be final
and binding upon the parties.
All the first
sentence requires the surveyors to do is by survey to ascertain the available
airspace at the beginning and at the end of the relevant year. The second
(previously third) sentence requires due regard to be had to the effect of
extraction of minerals; which, in the context, must involve adding the volume
of space produced by mineral workings in that year to the volume at the
beginning of the year (or subtracting it from the year-end figure). The third
(previously second) sentence envisages that when all that has been done there
may be a dispute ‘between the parties as to the amount of dry waste
deposited‘: not, be it noted, a dispute as to the difference between the
space available at the beginning and the end of the year after making allowance
for mineral extraction.
It might I
suppose be said that the contest on this issue resolves itself into the
question whether the rent for dry waste is payable in respect of the volume of
airspace within the tip that is used up or the volume of dry waste that is
deposited. There is, in my view, nothing to indicate that the former is the
correct measure. It would I suggest, require clear wording to impose on the
grantees an obligation to pay for something which is plainly not dry waste. I
find no such words in clause 3. To my mind, the wording points the other way.
Mr Crampin’s argument, (which is that the words ‘based on’ are sufficiently
accounted for by the potential for dispute about the measurement of unoccupied
airspace at the beginning and end of each year, the arithmetical calculation of
the difference and the adjustment in respect of mineral abstraction), in my
view, does not meet the point that the dispute referred to in clause 2(3) is
‘any dispute … as to the amount of dry waste deposited’, not ‘any dispute as to
the above measurements’.
In the
circumstances I cannot accept that the (adjusted) volume of airspace is to be
equated with the volume of dry waste deposited. I do not attach to the words
‘based on’ as much significance as in argument the appellants did — though
those words are of course material. I am more influenced by the consideration
that it is the very same surveyors who will have calculated the adjusted
difference whose decision on any dispute is required to be treated as final.
They will thus (if the plaintiffs’ construction be correct) in effect already
have determined the only thing about which there could be any dispute before
that dispute is referred to them. It is, in my view, no answer to say that
there could be room for argument as to the adjustment for mineral extraction:
that is something for the surveyors, not the parties, to have due regard to —
ie decide. There is in reality, on the matter of the adjusted airspace
difference, no scope for dispute between the parties or between a party and the
surveyors. The dispute which is envisaged is one between the parties as to
the amount of dry waste deposited: a dispute on which the surveyors have to
give a real decision ie not one which involves their merely saying: ‘We have
already given you the answer to that, and that is our decision which binds
you’.
It is
instructive to see how the judge reasoned in arriving at the opposite
conclusion. He took the first sentence of clause 3(2) to be ‘essentially
introductory’. Then he said that the words ‘In the event of any dispute …’ were
mere surplusage because, whether or not there was a dispute between the
parties, the calculation had to be made and was indeed the very mechanism
whereby the rent was to be ascertained. I do not consider that either of these
conclusions is correct; and the second, I think, begs the question to which
this issue gives rise — whether the calculated difference is to be deemed to be
the volume of dry refuse deposited, or is merely a step on the road to
ascertaining the latter volume.
The judge’s
construction then obliged him to hold that:
The parties
must be taken to have agreed therefore that any matter which entered the ground
along with the dry waste would itself become waste for the purpose of the
calculation of rent.
It seems to me
that what I have called engineering materials — for example specially imported
top soil — are plainly not (in the ordinary way) refuse or waste matter, and I
would not attribute to the parties such an implied agreement unless compelled
to do so.
It can of
course be said that in favour of the respondent’s and the judge’s construction
of clause 3(2) is simplicity and the elimination of much room for dispute — but
that is at best a marginal consideration on an issue of construction.
I would
accordingly hold that on its proper construction clause 3(2) involves that,
once the difference between adjusted airspace has been ascertained, as it must
be by the surveyors, it is for the parties to endeavour to agree the volume of
dry waste, using the surveyors’ figure as a base; and that if they cannot agree
the surveyors must finally determine the matter.
I would
therefore, while rejecting the appeal on the first question, allow it on the
second.
Agreeing, Morritt LJ said: The issues which
arise on this appeal and the circumstances in which they arise have been fully
described by Hutchison LJ. I gratefully adopt his account of them.
On the first
issue, namely whether the two deeds created leases or licences, I agree with
him in concluding that they created licences. Counsel for the appellants placed
considerable emphasis on the wording of clause 1 of the deeds and clause 1 of
the relevant document in Addiscombe Garden Estates Ltd v Crabbe
[1958] 1 QB 513, both of which have been quoted by Hutchison LJ. In my view,
that comparison does not assist the appellants.
This case
concerns a 31-acre site on which, at the time of the execution of the deeds,
quarrying or mineral extraction operations were taking place and likely to
continue. The deeds did not grant the exclusive licence and full liberty to use
the site at all times and for any purpose for which it might be suitable.
Rather it granted the exclusive licence and full liberty to use the site for
depositing waste. Thus it was exclusive only for that purpose. It prevented the
grantor from granting a competing right to any one else, but did not exclude
the grantors from continuing with their quarrying and mineral extraction operations
on the site or from using it or allowing others to use it for any purpose which
did not inhibit the exercise by the appellants or their predecessor of the
exclusive rights granted.
By contrast,
in Addiscombe Garden Estates Ltd v Crabbe any limitation on the
use to which the grantee might put the property was imposed by the nature of
the property and not the form of grant. The grant itself was for the
unrestricted use and enjoyment of specified property. Thus if the comparison of
this case with that is of assistance, which I doubt, it does not, in my
judgment, lead to the conclusion for which counsel for the appellants contends.
I agree with Hutchison LJ, for the reasons which he gives, that the deeds were
licences and not leases for they did not confer the right to exclusive
possession on the grantee.
I acknowledge
the force of the points on which Hutchison LJ relies for his conclusion on the
second point, however I am unable to agree with him. The provisions of the
licence relevant to this point have been quoted by him and I do not need to
repeat them.
At the time
the licences were executed it was known to the parties that the regulations
dealing with the deposit of waste required some engineering works as described
by Hutchison LJ. It was also then envisaged that the quarrying and mineral
extraction operations on the site would continue, thereby creating further
areas suitable for the deposit of waste. These were the circumstances in which
the formula for the measurement of the waste deposited for rental purposes had
to be agreed.
In my view,
the provisions of clause 3(1) show what the parties chose. Thus in the case of
liquid waste the volume deposited is to be calculated from the records and
accounts referred to in clause 2(6) but in the case of dry waste it is ‘to be
calculated at the end of each year in accordance with the provisions of clause
3(2)’. Thus the provisions of clause 3(2) are to be resorted to for the purpose
of the calculation of volume. The first and third sentences are in their terms
to be applied for the purpose of that calculation.
The two
surveys directed to be made for the purpose of such calculation equate the
amount of dry waste so deposited with the amount of the airspace filled at the
end of the year as compared with the amount filled at the beginning of the
year. This will necessarily include the material used in the engineering works
as described by Hutchison LJ. In my view, other provisions of the licences
indicate that this was the intention.
First, it is
hard to envisage how the accounts required to be kept by clause 2(6) could
assist in resolving any dispute as to the volume of dry waste deposited if, as
the parties rightly accept, the relevant measure is the volume on site as
compacted or degraded rather than the volume delivered. Second, it is
noteworthy that in connection with the creation of additional airspace in the
course of the year by the extraction of minerals the proviso to clause 2(8)
provides expressly that ‘the soil and overburden shall not be deemed to be minerals
for the purposes of this licence’. Had it been intended that the airspace
occupied by the materials required for the engineering works should not count
for rental purposes then it is surprising that the licence contains no
comparable exclusion. Third, to require the airspace occupied by such materials
to be ignored would sacrifice simplicity for a fertile source of disagreement.
I do not think that there is any context requiring such an intention to be
ascribed to the parties. Fourth, although the second sentence of clause 3(2)
envisages a difference between the parties as to the amount of the dry waste
deposited so as to require the intervention of the surveyors their decision has
to be based on the difference between the available airspace at the end of the
year compared with that available at the beginning of the year. It is true that
the decision of the surveyors is to be ‘based on’ such difference but there is
no suggestion that they would be entitled to treat airspace which was
unavailable because occupied by the material required for the engineering works
as being available for the occupation of dry waste in the future. In my view,
the use of the words ‘based on’ is sufficiently accounted for by the
recognition that the measurements might not be exact.
I agree with
Hutchison LJ that no reliance can be placed by either side on the wording of
the second recital and that the order of the sentences in clause 3(2) is
illogical. It is also true that the second sentence is not entirely consistent
with the first in that the decision of the surveyors is to be based on the
survey which they have already carried out. Nevertheless those considerations
are not, in my judgment, sufficient to displace the requirement to measure the
volume of dry waste deposited by reference to the airspace occupied in
consequence of that deposit, the failure to include any provision similar in
this respect to the proviso to clause 2(8) so as to exclude the non-waste
material used in the engineering operations and the good sense in providing for
the simplest possible formula.
For these
reasons I would dismiss the appeal on the second point as well as the first.
Also agreeing,
Neill LJ said: I have had
the advantage of reading in draft the judgments of Hutchison and Morritt LJJ.
On the first
issue I agree that for the reasons given in these judgments the deeds created
licences rather than leases. On this issue there is nothing that I can usefully
add.
On the second
issue, however, I am unable to agree with the conclusion reached by Hutchison
LJ.
By clause 2(6)
of the deed dated May 15 1974 the licensee was required to keep a proper
account of all waste deposited at the site. But, in contrast to the method of
calculation of the rent payable for the liquid waste which was expressed to be
at a specified rate per 1,000 gallons deposited to be calculated from the
records and accounts referred to in clause 2(6), a quite different method was
laid down for the dry waste.
Clause 3(1)(c)
of the deed provided for the payment of
A rent at the
rate of 10p per cubic yard of dry waste deposited at the site during each year
of the licence period the volume to be calculated at the end of each year in
accordance with the provisions of clause 3(2) hereof …
Clause 3(2)
provided:
For the
purpose of calculating the amount of dry waste so deposited a survey of the
available air space shall be taken at the commencement of the licence period
and at each anniversary thereof by a firm of chartered surveyors to be
appointed jointly by the grantor and the licensee the licensee to be
responsible for the surveyors’ charges. In the event of any dispute between the
parties as to the amount of dry waste deposited in any year of the licence
period the decision of such chartered surveyors based on the difference between
the available air space at the beginning and end of each year shall be final
and binding upon the parties. In calculating the difference in such air space
the surveyors shall have due regard to any additional air space created in
connection with the extraction of minerals during the relevant year.
I agree with
the criticisms which have been made of the arrangement of the sentences in
clause 3(2). Nevertheless, it seems to me that the provision in clause 3(2) for
the calculation of the difference between the available airspace at the
beginning and end of each year and the requirement that account is to be taken
of any additional airspace created by the extraction of minerals are clear
indications that the rent for the dry waste is to be calculated by reference to
the space occupied by it. The space will be reduced by compaction but will be
increased by any necessary protective layers of other materials. I am unable to
find in the words ‘based on’ in clause 3(2) any sufficient support for the
argument that the materials used in any engineering works or for the protective
layers are to be excluded.
In my view,
clause 3(2) was intended to provide a simple formula. It is to be remembered
that the formula was adopted at a time when less stringent rules were in force
for the protection of the environment from seepage and other contamination.
Moreover, in the absence of an express provision for finality one can imagine
that the measurement of the amount of airspace in an irregularly shaped quarry
could give rise to disputes.
For these
reasons and for the reasons more fully explained by Morritt LJ. I agree that
this issue too should be resolved in favour of the respondent company.
I would
therefore dismiss the appeal.
Appeal
dismissed with costs.
