The contra proferentem rule provides that where ambiguity exists in the meaning of a contractual clause the words used should be construed against the interests of the party who is assumed to have been responsible for drafting or proposing the same. In Two Rivers Housing v Sanders [2022] UKUT 79 (LC) the Upper Tribunal (Lands Chamber) has emphasised that a premature resort to the use of the rule as an aid in contractual interpretation is not appropriate. It should be used as a tool of last resort.
The respondent tenant was the long leaseholder of a former local authority one-bedroom flat situated in Broadwell, Coleford, Gloucestershire. The appellant was the respondent’s landlord and the freehold owner of the block in which the flat was situated.
As commonly found in right-to-buy leases, the service charge provision in the lease required the landlord to keep the structure and exterior of the building in repair (clause 9(i)). The lease did not contain a variable service charge provision enabling the landlord to recover from the leaseholder a contribution towards its performance of that obligation.
Unusually for a right-to-buy lease, the leaseholder was also obliged to contribute a variable amount towards the cost of repairing various rights of way granted by the second schedule of the lease as identified in part by plans annexed to the lease. In particular, under paragraph 11 the leaseholder was granted a right of way over the stairway and landing to the building. Consequently, he was required to pay one half of the cost of maintaining and keeping the whole or any parts of the stairway and landing in repair.
A routine inspection of the block in 2018 revealed that water was penetrating through part of the roof above the communal stairwell. Works to the roof were rendered urgent by the presence of asbestos. Works commenced in January 2019 without the landlord following the statutory consultation requirements. The works cost £6,264. The landlord sought to recover half of this sum from the leaseholder under paragraph 11 of the second schedule of the lease. The respondent argued that he was not entitled to contribute to the costs of the same under the terms of his lease.
The landlord applied to the First-tier Tribunal for a determination as to payability of the costs of the roof works from the leaseholder and a dispensation from the consultation requirements. The FTT determined that the cost of the roof works was not recoverable under paragraph 11 of the second schedule to the lease, but in construing the terms of the lease the FTT applied the contra proferentem rule.
The UT was critical of the FTT’s approach to construing the terms of the lease. It observed that the ordinary modern legal principles of contractual interpretation should have been applied. Regard was to be had to the meaning of the relevant terms of the lease in their documentary, factual and commercial context. Any ambiguity should be resolved by reaching a view as to which rival meaning was more consistent with business common sense.
Applying the above legal principles, the UT held that the FTT was nevertheless correct to find that paragraph 11 of the second schedule to the lease did not oblige the leaseholder to contribute towards the costs of repairs over the stairwell. The right of way granted over the stairway did not extend to the structures enclosing the stairwell or the roof covering it. Additionally, the landlord’s comprehensive repairing obligations under clause 9(i) were not contingent on the leaseholder contributing to the cost of the same.
Elizabeth Dwomoh is a barrister at Lamb Chambers
