Landlord and tenant–Lease of part of a building to a firm of surveyors, valuers and estate agents–Provision in lease for payment by lessees of a contribution towards the costs of various services and works of maintenance and repair carried out by lessors–Contribution to be a ‘due proportion’ of the costs, based on the ratio of the rateable value of the demised premises to the total rateable value of the building–Question raised as to whether ‘rateable value’ in this context meant the rateable values at the date of the lease, so that the proportion would then be fixed once and for all, or the rateable value from time to time of the premises demised and the total rateable value from time to time of all parts of the building–Held that the latter was the correct construction and that the exact point of time for calculation was the time or times when each item of expense was paid
This was a
construction summons to determine the true construction of a clause in a lease
dated May 11 1971 relating to part of St James’ House, 13 Kensington Square,
London W8. The plaintiffs were the present lessors, Moorcroft Estates Ltd, and
the defendants were R Doxford and A Colvin, who carried on business as Robert
Bruce & Partners at St James’ House.
Miss H E
Williamson (instructed by Lawrance Messer & Co) appeared on behalf of the
plaintiffs; P J Talbot (instructed by Stones, Porter & Co) represented the
defendants.
Giving
judgment DILLON J said: This originating summons raises a short question of
construction of a lease which is dated May 11 1971 whereby certain rooms and
offices on the ground and lower-ground floors of St James’ House, 13 Kensington
Square, London W8, were demised to the present defendants, Mr Doxford and Mr
Colvin, who carry on business there as surveyors and estate agents under the
name of Robert Bruce & Partners. The plaintiffs, Moorcroft Estates Ltd, are
currently the lessors entitled to the reversion in the demised premises.
The lease was
for a term of 14 years from March 25 1971. By it, after the reservation of the
main rent, there was a reservation by way of further or additional rent of such
sum as may from time to time be determined by the surveyor for the time being
of the lessors as a due proportion of the annual premium or premiums paid by
the lessors for the insurance of the building against certain risks and also
there was reserved by way of further or additional rent during each year of the
said term a due proportion of the cost to the lessors of providing the services
mentioned or referred to in the second schedule. These were a range of services
covering recurrent matters such as costs of maintenance and repair of the
structure of the building, cost of lighting the common parts and keeping them
clean and tidy, window cleaning of the common parts and such like. Then in
clause 4 (vi) of the lease the lessees covenanted to contribute and pay on
demand a due proportion of the costs and expenses of repairing and cleansing
sewers, drains, pipes, water courses, wires and other easements used or to be
used in common. The phrase ‘due proportion’ used in the passages to which I
have referred is defined in clause 1 of the lease as follows:
The
expression a due proportion wherever used and employed in this lease shall mean
a proportion of the total expenses and/or expenditure in question payable, paid
or incurred by the lessors in respect of the building hereinafter mentioned and
defined as is in the ratio which the rateable value of the premises hereinafter
demised bears to the total rateable value or values of all parts of the
building inclusive of common parts and areas.
The rateable
values of the constituent parts of the building were increased in consequence
of a rating revaluation which took effect from April 1 1973 and they were not
increased in the same proportion, one part to another, because parts of the
building, including the parts demised by this lease, are business premises but
other parts are residential. The question I have to consider is whether the
reference to rateable value of the premises in the definition of due proportion
means the rateable values as at the date of the lease, so that the proportion
was then fixed once and for all, or means the rateable value from time to time
of the premises demised and the total rateable value from time to time of all
parts of the building so as to fluctuate with any fluctuations in the relative
rateable values.
In my view the
commonsense of the clause requires the expression ‘rateable value’ to be
construed as meaning the rateable value from time to time so that the
proportions reflect any changes that there may be in rateable values. The due
proportion is to be paid in respect of the current expenditure. They have
chosen rateable value as a means for calculating the proportion, and it seems
to me to be sensible that they should be referring to rateable value from time
to time. If they had intended to refer to a proportion fixed once and for all
at the date of the lease, it would have been sensible to set out what that
proportion was, namely, as it has been calculated and agreed, 38.82 per cent,
without using a formula at all. Furthermore, there is the possibility that
there might be additions, or subdivisions in the building, such as the building
of a penthouse flat, and if that were to happen and the proportions had been
fixed once and for all at the date of the lease, the result would be either
that the landlords would make a profit or that no part of the burden would be
attributable to the assumed penthouse flat. Mr Talbot, for the lessees, has
pointed out that in various other parts of the lease the parties have been
careful to use the words ‘from time to time’ or ‘for the time being’ when they
meant those words. He has given me quite a number of examples. For instance, on
p 5 of the lease, there is reference to additional insurance premiums paid by
the lessors ‘by reason of or consequent upon the occupation and user from time
to time carried on upon the demised premises.’
On p 4 in the reservation of the insurance rent the reference is to
‘such sum as may from time to time be determined by the surveyor.’ And on p 6 where there is a rent review
clause the question of the revised rent in default of agreement between the
surveyors and the parties is to be referred for determination to a third
independent surveyor to be appointed by the president for the time being of the
Royal Institution of Chartered Surveyors. There are other instances. Now, it is
natural enough for the words ‘from time to time’ or ‘for the time being’ to be
used in those other clauses, but I do not think the fact that they have been
used in such clauses is sufficient to override what I regard as the natural
meaning of the expression ‘a due proportion.’
Mr Talbot has
also invited me to look at the circumstances surrounding the execution of the
lease and he has referred me to evidence that prior to the execution of the
lease the demised premises were in very poor order. The evidence is that it was
a condition of the defendants entering into the lease that substantial
refurbishment to the basement would be carried out by the landlords, but that
the defendants would be responsible for the refurbishment of the ground floor.
Looking at
that information, however, as part of the matrix of facts does not afford me
any assistance in concluding one way or the other whether the rateable values
referred to in the definition of ‘a due proportion’ are the rateable values at
the date of the lease or the rateable values ‘from time to time.’ Mr Talbot has also urged as one of the
surrounding circumstances that the defendants knew the comparative rateable
values of the constituent parts of the premises at the date of the lease and
were inferentially content to bear that proportionate burden of the service
charge and insurance rent, but to my mind if one is to draw any inferences from
the assumption that the parties knew the comparative rateable values, the
inference I would have drawn would be that if they intended the proportion to
be fixed once and for all, then they would have referred to the fixed
proportion and not used a formula.
Mr Talbot has
also invoked the contra proferentem rule of construction saying that
this is a lease put forward by the landlords, but he has frankly said that that
is a last-ditch argument and I do not regard this as a case to be determined
only in the last ditch. I take the view that the due proportion means the due
proportion of the rateable value from time to time of the premises relative to
the total rateable value or values from time to time of all parts of the
building.
The originating
summons raises a second question which is as to the date at which the due
proportion of any expense is to be calculated. Miss Williamson has argued that
it is to be calculated at the date on which demand for payment is made, but
that must be a wholly arbitrary date, and I prefer Mr Talbot’s argument on this
point, that as what is to be calculated is a due proportion of various expenses
paid or incurred by the lessors, the rateable values for calculating the due
proportion are to be taken at the times when each item was paid or incurred.
His Lordship
made declarations accordingly. It was agreed by counsel that the calculation of
the due proportion should be made at the dates when the relevant expenses were
paid, not incurred. The defendants (lessees) were ordered to pay the costs of
the summons.
