Property — Respondent converting house into two flats — Appellant taking long lease of first-floor flat — Whether flat including loft — Lease not expressly including loft — Whether appellant entitled to rectification of lease — Appeal allowed
The respondent was the freeholder of a two-storey property that he had converted into two flats. The appellant was the owner of a long lease of the first-floor flat, while the respondent lived in the ground-floor flat.
A dispute arose in respect of the loft at the top of the house, to which access could be gained only through an opening in the landing ceiling of the first-floor flat. The appellant had converted the loft to gain additional accommodation, and he had constructed a permanent staircase. The sales particulars, when he purchased the flat, had described the landing as providing “Access to large roof space with possibility of loft conversion to form extra accommodation”.
The respondent admitted that he had given verbal permission for the loft and the staircase, albeit after the event and allegedly under duress. However, he subsequently objected to the conversion, alleging that it had been done without his permission, and claimed damages and forfeiture of the lease. The county court concluded that: (i) the loft was not included in the lease; (ii) no case had been established to support the appellant’s counterclaim for rectification; and (iii) the respondent had not waived, and was not estopped from enforcing, his right to claim trespass and breach of covenant by the appellant. Accordingly, the recorder held that the respondent was entitled to substantial damages and to forfeiture of the lease. However, he granted relief against forfeiture on the payment by the appellant to the respondent of £9,000 damages. The appellant appealed.
Held: The appeal was allowed.
The appellant had clearly established his case for rectification with retrospective effect so that the lease would be read as though it had always included the loft.
The construction of the lease was not easy since common sense supported the appellant whereas the language of the lease supported the respondent. On balance, the recorder had been legally correct to hold that the lease did not include the loft but that it was probable that the omission was the result of a mistake or oversight in documenting the parties’ agreement.
The appellant had discharged the burden of proving an outward expression of accord to show that the lease did not reflect the parties’ mutual intention. The trend in recent cases has been to treat the “outward expression of accord” more as an evidential factor than a strict legal requirement in all cases of rectification. The sales particulars, which had been prepared by the respondent’s agents and relied upon by the appellant’s predecessors, were sufficient to satisfy any legal requirement of an “outward expression of accord” to include the loft in the lease of the first-floor flat: Gallaher v Gallaher Pensions Ltd [2005] EWHC 42 (Ch); Westland Savings Bank v Hancock [1987] 2 NZLR 21; JIS (1974) Ltd v MCP Investment Nominees I Ltd (construction of lease) [2003] EWCA Civ 721; Frederick E Rose (London) Ltd v William H Pim Junior & Co Ltd [1953] 2 QB 450; and Swainland Builders Ltd v Freeland Properties Ltd [2002] EWCA Civ 560; [2002] 2 EGLR 71; [2002] 23 EG 123 considered.
Even if the conclusion on rectification were wrong, it would be unconscionable for the respondent to rely upon his legal rights to the loft when he had acquiesced to the works and the appellant had suffered detriment in executing them in the belief that the loft was included in the lease.
Timothy Morshead (instructed by Gurney-Champion & Co, of Newport) appeared for the appellant; Jeremy Garrood (instructed by Robinson Jarvis Rolf, of Newport) appeared for the respondent.
Eileen O’Grady, barrister
