Landlord and tenant — Construction of provisions in lease relating to tenants’ liability to contribute to landlords’ expenditure on repair, maintenance and renewal of demised premises — Dispute concerned tenants’ liability in respect of sand-blasting of external walls — The construction question was as to the correct way in which two provisions in the lease ought to be read — The first provision was that the tenant should pay by way of additional rent a proportion of the expenses incurred by the landlord in the repair, maintenance and insurance of the building and the provision of services therein as set out in the fourth schedule, such additional rent being called the service charge — The second provision was the list of heads of expenditure set out in the fourth schedule in respect of which the tenant was liable to pay a proportion by way of service charge, among which work on the external walls was not included — There was a proviso giving the landlord power at his discretion to add to or make any alteration in the rendering of the services so listed — It was submitted on behalf of the landlord that the tenant was liable under the first provision to contribute to the expenditure on the external walls; alternatively, that the landlord could vary the service charge arrangements so as to include works of repair to the external walls — Held that the two provisions must be read together — The service charge was a payment by way of additional rent for expenditure incurred when the landlord carried out the repairs or provided the services mentioned in the fourth schedule — The power given to the landlord to vary was a limited one within the range of the works mentioned in the schedule, not a right to impose liability on the tenant in respect of different kinds of works — Declarations accordingly
No cases are
referred to in this report.
This was an
originating summons for construction of provisions in a lease dated September
14 1976 of which the reversion was now vested in the present plaintiffs, Jacob
Isbicki & Co Ltd, and the term in the defendants, Goulding & Bird Ltd.
R W Slowe
(instructed by William Heath & Co) appeared on behalf of the plaintiffs;
Bernard A Perkoff (instructed by Hart Fortgang & Co) represented the
defendants.
Giving
judgment, MERVYN DAVIES J said: I have before me a construction summons arising
out of the lease dated September 14 1976 made between Mr S Propeeza, Mr David
Walsh and Mr Leon Sterling of the one part, and Apollo Quotok Ltd of the second
part, and Mr Martin Quotok of the third part. The present landlord is the
plaintiff now before me, Jacob Isbicki & Co Ltd, and the present tenant is
the defendant, Goulding & Bird Ltd.
In para (1)
the summons seeks a declaration that upon the true construction of clause 3(2)
of the lease the plaintiff being a person entitled to reversion immediately
expectant on determination of the term granted by the lease is entitled to
charge the defendant a proportionate part of the expenses and outgoings
reasonably and properly incurred by the plaintiff in the repair, maintenance and
renewal of the external walls of the building of which the demised premises
form part. There is then a second question in the originating summons which
reads:
(2) if the answer to (1) above is in the negative
whether on its true construction paragraph 8 of schedule 4 of the lease
entitles the plaintiff to extend, vary or make any alteration to the said
services provided for which the defendant is liable to pay a proportionate part
by way of the said service charge so as to include repair, maintenance, renewal
or cleaning the exterior walls of the building of which the demised premises
form part.
I will now
read parts of the lease that have been referred to in that summons. Clause 3(2)
of the lease reads:
Pay to the
landlord without any deduction by way of further and additional rent a
proportionate part of the expenses and outgoings reasonably and properly
incurred by the landlord in the repair, maintenance and renewal and insurance
of the building and the provision of services therein and the other heads of
expenditure as the same are set out in the fourth schedule hereto, such further
and additional rent hereinafter called the service charge being subject to the
following terms and conditions,
and then there
follow some terms and conditions which I need not read.
The fourth
schedule referred to is headed ‘landlord’s expenses and outgoings and other
heads of expenditure in respect of which the tenant is to pay a proportionate
part by way of service charge’. It proceeds:
1(A) the maintenance, repair, amendment, renewal,
cleansing, redecoration and other work to keep in good and tenantable condition
the entrances, staircases, passages, landings, toilet accommodation or other
parts of the building enjoyed or used by the tenant in common with others, all
of which are hereinafter called the said common parts, provided that the
landlord shall not be liable to the tenant for any defect or want of repair
hereinbefore mentioned unless the landlord has had notice thereof, nor in
respect of any obligation hereunder, that is to be constituted as falling
within the ambit of any of the tenant’s covenants hereinbefore contained;
(B) the maintenance in good working order and
repair of (a) all sewers, drains, channels, watercourses, gutters, rainwater
and soil pipes, sanitary apparatus, pipes, wires and cables and supply line in
or upon the building which will serve the same, excluding nevertheless any
which lie within the demised premises and exclusively serve the same; (b) all
apparatus, equipment, machinery, plant and machinery serving the heating
system, electric lighting appliances in the said common parts;
(C)(a) the cleaning and lighting of the common
parts; (b) the provision of hot water in the toilet; (c) the supply,
maintenance, repair and renewal as need be to such fire-fighting equipment in
the said common parts which the landlord may deem desirable or necessary, or as
may be required to be supplied and maintained by statute or by the fire
authority for the district; (d) the cleaning of all windows in the same common
parts . . .
And so the
fourth schedule goes on down to para 8, that being the paragraph referred to in
the second question to the originating summons. Para 8 reads:
provided
always the landlord may at his reasonable discretion hold, add to, extend, vary
or make any alteration in the rendering of the said services or any of them
from time to time if the landlord at his like discretion deems it desirable so
to do for more efficient conduct and management of the building.
Those are the
relevant parts of the lease. As I understand it, the question of construction
has arisen because there has been some external work done to the demised
premises in the way of sand-blasting the external walls, and it is said that
the tenant is obliged to contribute or pay towards the cost of this exterior
work. Mr Slowe appeared for the landlord and he said that the landlord was
entitled to recover as part of the service charge, or however it may be
described,
to regard it as falling within two limbs. In the first part he said, stopping
at the phrase ‘insurance of the building’, the landlord is entitled to be paid
by way of further and additional rent the proportionate part of the expenses
incurred by the landlord in the repair and maintenance of the building. He said
that the ‘building’ there means what it says, so that if there is some expense
incurred in repairing the external parts of the building, then the landlord can
recover therefor. He went on to say that the second part of clause 3(2) deals
with services in the more usual understanding of that phrase, by itemising in
the fourth schedule the matters for which the service charge properly so called
may be recovered.
Mr Perkoff,
for the tenant, did not read clause 3(2) in that way: he read it as a whole. As
I understand it, he says that clause 3(2) provides for the payment of one
single further and additional rent, and that further and additional rent is in
3(2) itself called the service charge, and the service charge is the
proportionate part of the expenses incurred by the landlord in the repair,
renewal and insurance of the building, provision of services and the other
heads of expenditure as the same are set out in the fourth schedule. So, says
Mr Perkoff, you run up the three items of repairing the building, provision of
services and the other heads of expenditure as the same are set out in the
fourth schedule, and you regard that as one entity for the purpose of
calculating the service charge.
I accept Mr
Perkoff’s construction of clause 3(2). As I read it, it is not permissible to
regard 3(2) as providing for the payment of two separate items by the landlord,
the one in respect of the repair of the building as a whole, and the other item
in respect of the provision of services as set out in the fourth schedule. I
think that Mr Perkoff is right in saying that the service charge provided for
by clause 3(2) is a payment by way of additional rent for that which the
landlord incurs when he repairs the house or provides the services that are
mentioned, or incurs the other heads of expenditure as the same are set out in
the fourth schedule. Accordingly, I answer question (1) in the summons in
favour of the tenant and say that the plaintiff is not entitled to recover a
proportionate part of the expenses incurred by the plaintiff in effecting this
work to the exterior walls that I have already referred to.
Turning now to
the question raised in the second question in the summons, I confess that I am
unable to see how para 8 can be operated in the way suggested by Mr Slowe when
in effect he said that para 8 may be used to enable the landlords so to alter
the obligations of the service charge as to include within its compass the
doing of works to the external parts of the house. Surely, para 8 is simply a
proviso saying that the landlord (and I use the words of para 8) ‘may add to,
extend, vary or make any alteration in the rendering of the said services . . .
if the landlord at his like discretion deems it desirable so to do’. That seems
to me to mean that, within the limits of the work for which the landlord can
recover, the landlord has his limited right to alter those works, but not, as I
see it, wholly to extend and make the tenant liable for a kind of work that was
never contemplated by clause 3(2). Accordingly, as to question (2) in the
summons I say that the landlord is not at liberty by the use of para 8 in the
fourth schedule to impose any liability on the tenant in respect of the works
done to the external walls of the demised premises. I think that answers both
questions.
