Landlord and tenant –– Service charges –– Construction –– Proportion of costs payable –– Flats in structure containing two originally separate buildings –– Meaning of “building” –– Whether “building” part or whole of present structure –– Disproportionate share of repair costs –– Whether disproportion factor relevant to construction of leases
The claimants held long leases of five of the nine flats (flats 1, 2, 3, 4 and 6) in a building held by the defendant under two leases. The claimants’ leases were subject to service charge provisions and had been granted between 1978 and 1980. The building had originally been two separate buildings, and it had frontages onto two separate streets. Access to flats 1 to 6 was from one street address, which was also capable of providing a physical access to flats 7 and 8. The principal access to flats 7 and 8, and the only access to flat 9, was from a different street address. Flats 8 and 9 had been amalgamated and were the residence of the sole director of the defendant company. The flats were on the first to fourth floors, above commercial premises.
Under the service charge provisions of the claimants’ leases, the proportion of the repair and other costs of “the building” for four of the leases was one-sixth, and one-quarter for the fifth; in total the claimants paid 91.67% of the repair and other costs. The county court judge held that “the building” meant only that part of the building containing flats 1 to 6, and did not include the part containing flats 7 to 9. The defendant appealed.
Held: The appeal was dismissed. At the date of the grant of the leases, the grantees would not have known that the tenants under the five leases would come to pay 91.67% of the total costs, but it would have been apparent to a prospective tenant of a lease, asked to pay one-sixth, that this was a proper proportion of the costs relating to that part of the building containing only flats 1 to 6. However, there would have been an obvious disproportion if the service charge provisions were to relate to the whole building. It was legitimate to bear in mind the proportions in each lease individually, as compared with the number of flats in the entire structure. Ultimately, the question depended upon the words of the leases and upon their proper construction. “The building” meant that part containing flats 1 to 6. That construction was supported by the disproportion factor, and much clearer wording would have been required if tenants under the claimants’ leases were to pay a proportion of the costs of the whole building.
The following case is referred to in this report.
Billson v Tristrem [2000] L&TR 220
This was the hearing of an appeal by the defendant, Bellshore Property Investments Ltd, from a decision of Judge Cowell, sitting in Central London County Court, in proceedings by the claimants, Ernst Stapel, Gordon Harris, Catherine Harris, Zal Holdings Ltd, Diane Loxton and Thomas Francis Hutchinson, seeking declarations as to the meaning of various leases.
Mark Loveday (instructed by Vizard Oldham) appeared for the appellant; Graeme Keen (instructed by Blake Lapthorn) represented the respondents.
Giving judgment, LLOYD J said:
1. This appeal, from an order of Judge Cowell in Central London County Court made on 7 September 2000, concerns the extent of the obligations of lessees of certain flats at premises in Marylebone to contribute by way of service charge to the cost of maintenance of those premises. The decision turns upon the words of the lease, and, in particular, upon the meaning of the phrase “the Building” used therein.
2. The claimants are lessees of five flats, whose postal addresses are flats 1, 2, 3, 4 and 6, 3 Marylebone Street, London Wl, which I will call the five flats. (There is also a flat 5, but this is not the subject of a lease with an equivalent service charge obligation.) They are on the first to fourth floors above commercial premises, whose postal address is 7 to 9 Marylebone High Street, London Wl. Access to the flats is gained from Marylebone Street, rather than from Marylebone High Street, to be precise from an entrance at no 3 Marylebone Street. This opens onto a hall and passage, which goes through premises that also contain flats numbered as 7, 8 and 9, 3 Marylebone Street, one on each of the first, second and third floors. Flats 8 and 9 have been amalgamated, and are now the residence of the sole director of the defendant, Ms Lombas, and her husband Mr Broomfield, the defendant’s agent.
3. Once upon a time, there were separate buildings on the two streets, 3 Marylebone Street and 7 to 9 Marylebone High Street. The freehold of both belongs to the Howard de Walden estate. The defendant holds a leasehold estate in the whole, and it, or a related company, has done so since early 1973, under two headleases from the Howard de Walden Estate, one of 9 Marylebone High Street and the other of the rest of the property. The ground floor and basement are the subject of an underlease dating from 12 March 1973, expiring in October 2031, by which the ground floor (apart from those parts required for access off Marylebone Street to the upper floors) and the basement, stretching from one frontage to the other, are let together, with access from Marylebone High Street. This underlease also includes flat 9 (then called flat 3, presumably at a time when the flats at the Marylebone High Street end were separately numbered and had a Marylebone High Street postal address), but that flat was then sublet in turn, as were the ground-floor commercial premises at each frontage, separately. The headleases suggest that the whole property at ground-floor and basement level (apart from areas required for access to upper floors) may have been in common occupation in the 1930s. In 1973 the two ends of the property were known by their original postal addresses. Access to flats 1 to 6 is gained from a door from the street that opens onto an entrance hall. At this entrance, there are letter boxes and entry phone appliances for flats 1 to 6. At the end of that is a staircase to the first floor, and also a lift. The lift is capable of providing access to the second floor, to flat 8, as well as to flat 7 at first-floor level.
4. Each of the five flats is subject to a lease, granted between December 1978 and October 1980 and expiring in 2031, in equivalent terms. That relating to flat 1 is in evidence. Clause 3(5) is a covenant by the tenant to pay a proportion of the aggregate of certain costs incurred by the landlord, including the cost of the repair, maintenance and renewal of “the Building”. The proportion is one-sixth in each case, except for flat 4, for which it is one-quarter. Each lease contains a definition of the demised premises as “Flat number [1] on the… floor of the Building known as Flats 1-6 at Marylebone Street”. The question for decision is whether “the Building” means just the Marylebone High Street block, or both blocks. Judge Cowell was in no doubt that it meant the former, and so held.
5. If it means the whole, then the lessees of the five flats have to pay between them 91.67% of the cost of repair, maintenance and renewal of the whole building, although it is accepted that this would be the net cost after deducting whatever is paid by the commercial tenants. It would, however, produce an uneven allocation of cost between the five flats, on the one hand, and the defendant, as owner of the rest, responsible for, and with the benefit of, the other four flats. It seems that some substantial liabilities have been incurred as regards the repair of the Marylebone Street frontage, which have led the claimants to take issue over their liability, hence these proceedings. The disproportion is emphasised by evidence from Mr Broomfield that the judge rightly held inadmissible on construction. He said that he had intended that the five flats should bear 100% of the repair and maintenance costs, so that he and Ms Lombas could occupy flats 8 and 9, and, through the company, rent out flats 5 and 7, free of any service charge cost. However, by inadvertence, flat 1 bears a sixth, instead of the intended quarter, of the overall cost, which is why the aggregate borne by the five flats is almost 92%, rather than 100%.
6. It is not in dispute that the decision turns upon the construction of the leases of the five flats in the light of the relevant surrounding circumstances, of which the main factor is the physical position on the ground at the time the leases were granted. I will refer first to the relevant terms of the lease of flat 1.
7. Clause 1 is a definition clause. It includes a conventional provision about singular and plural expressions, in (a)(ii), and definitions in (b) of the demised premises and the building, which I have referred to above, but should set out in full here:
“The Demised Premises” shall mean the premises described in the First Schedule hereto and each and every part thereof together with the appurtenances and all alterations and improvements thereto and shall also include all Landlord’s fixtures and fittings and plant machinery and equipment now or hereafter in or about the same…
“the Building” shall mean the building of which the Demised Premises form part (as defined in the First Schedule hereto) including all additions alterations and improvements thereto and all Landlord’s fixtures and fittings plant machinery and equipment now or hereafter in or about the same…
8. The lease is dated 7 October 1980 and grants a term from 5 December 1978 to 30 September 2031, at a rent of £50 pa until 2000, and £100 pa after that, with, in addition, an insurance rent and a service charge rent, expressed as follows:
by way of further rent a yearly sum equal to one sixth of the sum or sums paid by the Lessor in respect of insuring and keeping insured the Building against [a number of insurable risks including four years’ loss of rent of the Building]…
by way of further rent such sum as is from time to time payable by the Lessee under the covenant on the Lessee’s part hereinafter contained in clause 3(5) hereof [payable as thereafter provided]…
9. There are many references to the building in the remaining parts of the lease, but most of them are neutral on the question that I have to consider. For example, there are references to parts of the building not included in this demise, but most of these are likely only to apply to parts immediately adjacent to the demised premises. I will not refer to these. The next provision I do need to quote is clause 3(5) itself, as follows:
to pay to the Lessor without any deduction by way of further rent [subject to certain statutory provisions not presently relevant] one sixth of the aggregate of the costs expenses and outgoings incurred by the Lessor or to which the Lessor is liable to contribute in or towards the repair maintenance and renewal of the building and the provision of services thereto and the other heads of expenditure as the same are set out in the Fourth Schedule hereto (whether the Lessor be obliged hereunder to incur or contribute towards such expenditure or not)…
10. The clause goes on to deal with the quantification of the relevant amounts, in terms that do not assist on the question before me. The tenant’s covenants also include one provision, in clause 3(24), that is of minor relevance, as follows. (I quote only the relevant part of the clause):
to leave rubbish properly secured in plastic or other receptacles on the pavement outside of the Building only on the mornings concurring with those of the City Council refuse collection days.
11. It is clear that the pavement referred to must be that of Marylebone Street.
12. The landlord’s covenants include some of relevance. Clause 4(b) is the landlord’s covenant to insure, which obliges it to insure the building, and also, if the demised premises are destroyed or damaged by an insured risk, then obliges the landlord to apply the proceeds of the insurance in rebuilding, repairing and reinstating the demised premises. Upon the claimants’ reading of the lease, this does not oblige the landlord to insure the premises fronting onto 3 Marylebone Street, although the landlord might do so in practice. Parts of other covenants in clause 4 are of greater importance, which I will set out here, again omitting irrelevant passages:
(c) that subject to compliance by the Lessee with clause 3(5) hereof the Lessor will procure that the exterior… and main structure of the Building (including the roof and foundations thereof and including the pipes wires cables sewers and drains serving the Building but not included in this demise) is maintained repaired renewed cleansed and where appropriate decorated and otherwise kept in good repair and condition and the entrance hall staircases internal passageways and landings leading to the Demised Premises are decorated in a proper and workmanlike manner at such intervals as the Lessor may at its discretion direct…
(d)… the Lessor will
(i) maintain in good running order and if necessary renew or replace the passenger lift coloured blue on Plans 4 and 5 for use at all times in accordance with the rights in connection therewith granted by this Deed
(ii) procure such parts of the Building as are not included in this demise but over which the Lessee is by this Deed granted rights for the purpose of escape in case of fire are kept properly lighted and free from obstruction
(iii)…
(iv) procure the provision [from October to April of each year] of heating of night storage heaters in the entrance hall of the Building opening on to Marylebone Street…
(e) Not from the date hereof to grant any lease for a term exceeding twenty years of any other flat in the Building of which the Demised Premises form part unless such lease shall contain restrictions to be observed by the tenant thereof similar to those contained in the Fifth Schedule hereto and shall be substantially in the form of this Lease and shall contain covenants on the part of the tenant similar (mutatis mutandis) in all material respects to those contained herein…
(f) If so required by the Lessee to enforce against the tenant of any other flat in the said Building covenants and conditions contained or implied in any lease
13. Clause 5 includes a number of provisos, of which para (vi) provides for suspension of the rent reserved by the lease in the event that the building, or part, is destroyed or damaged by any insured risk so as to render the demised premises unfit for occupation or use.
14. I can then move on to the schedules, and start with the definition of the demised premises in the first schedule, of which the relevant part is as follows (nothing turns on the inadvertent omissions):
ALL THAT residential flat known as Flat No 1 on the Floor of the Building known as Flats 1 to 6 at 3 Marylebone Street in the City of Westminster ALL WHICH Flat is for the purpose of identification only shown edged on Plan Number 1…
15. The second schedule sets out rights and easements granted to the lessee, relevantly as follows:
The right for the Lessee and the Lessee’s servants agents and visitors in common with the Lessor any Superior Lessor those authorised by either of them and all others having the like right
(1) for the purpose of access to and egress from the Demised Premises
(i) to pass on foot only over and across the entrance halls staircases passageways and landings leading to the Demised Premises…
(ii) to use the passenger lift coloured blue on Plans 4 and 5
(2)…
(3) to use at all times for the purpose of public radio and television reception the communal radio and television aerial on the roof of the Building…
(4)…
(5) of support and protection from such parts of the Building as are not included in this demise and from other adjoining premises as now enjoyed by the Demised Premises…
(6) for the purposes of escape in case of fire or other emergency to go through and use the window indicated on Plan 1…
16. The fourth schedule sets out the heads of expenditure towards which the lessee is to contribute by way of the service charge:
1. All costs and expenses whatsoever incurred by the Lessor in and about the discharge of the obligations on the part of the Lessor set out in subclauses (c) (d) (e) and (f) of Clause 4 hereof…
2. The following costs expenses and outgoings payable by the Lessor or to which the Lessor may be liable to contribute whether under the provisions of this Deed or any Superior Lease or otherwise
(a) The cost of periodically inspecting examining maintaining decorating cleaning repairing overhauling and where necessary replacing any and every part of the Building (not being a part the repair of which is the liability of a person holding the same as a direct tenant of the Lessor) including but without prejudice to the generality of the foregoing the heating system serving the Building and the lift lift shaft plant machinery and engineering services therein and lighting system therein (including sums payable under insurance policies or maintenance contracts covering the same) and the cost of oil electricity and gas consumed therein
(b) All charges assessments impositions and other outgoings payable by the Lessor in respect of any parts of the Building not exclusively occupied or intended to be so occupied by a tenant or undertenant
(c)…
(d) The cost of employing staff in connection with the performance of the Lessor’s obligations under this Deed and the provision of services to the Building or any part or parts thereof and for the efficient management of the Building or any part or parts thereof and all other incidental expenditure in relation to such employment
(e)…
(f) The cost of carrying out works or services of any kind whatsoever which the Lessor may in its reasonable discretion deem desirable or necessary for the purpose of maintaining or improving the services in or for the Building or any part or parts thereof and the cost of any other services reasonably provided by the Lessor from time to time for the better enjoyment or use of the Building or any part or parts thereof by its occupiers
(g) The cost of effecting and maintaining an insurance policy or policies against such liability or liabilities of the Lessor its agents servants and workmen (including negligence) in connection with or arising out of the Building or the occupation maintenance or management thereof or any part or parts thereof or any plant equipment and machinery (including lifts) therein as the Lessor in its absolute discretion shall think fit
(h) The proper fees charges and expenses and commissions payable to any solicitor accountant surveyor valuer architect engineer and managing agent whom the Lessor may from time to time employ in connection with the management repair and maintenance of the Building or any part or parts thereof
(i) A sum equal to 10 per centum of the aggregate costs expenses and outgoings referred to in Clause 3(5) hereof (excluding this paragraph) such sum to be in respect of the general administration and supervision costs of the Lessor relating to or in connection with the management of the Building or any part or parts thereof…
17. The fifth schedule contains regulations, of which two provisions are relevant:
10. The outside door of the entrance hall opening on to Marylebone Street shall be kept locked shut at all times other than when in immediate use for entering or leaving the Building
11. All doors in the Building through which the Lessee is entitled to pass (other than the outside door referred to in the last preceding paragraph and the doors within the Demised Premises) shall be kept shut at all times other than when in immediate use…
18. The lease has attached to it plans that show the entire structure lying between Marylebone Street and Marylebone High Street at all levels, and, among other details, show clearly the lift and the entrance from Marylebone Street.
19. One of the points relied upon by Mr Graeme Keen, for the claimants, is the disproportion between the 91.67% of the overall liabilities that the lessees of the five flats have to bear between them and the degree of benefit that they get from the matters to which they would contribute, and also between their number and the number of other flats in the premises. I should say that Mr Keen advanced this point with some hesitation, and, although I encouraged his reliance, I have come to the conclusion that his doubts were justified. It is of course the case that I know the proportions due in respect of each of the five flats, and therefore the aggregate. This would not, however, have been known to each tenant when he or she took a lease in the first place. It seems to me that, as respects each lease, all I can consider is the amount due under that lease, with whatever inference can be drawn about other proportions.
20. This is a different case in this respect, on the facts, from Billson v Tristrem [2000] L&TR 220. That concerned the contribution due by way of service charge from the tenant of a basement flat in a house on five floors that had been converted and sold off on long leases, with one flat on each floor. The basement tenant only was before the court, and only her lease was in evidence. That required a contribution of 20% to certain maintenance costs. Not surprisingly, the court was able to infer that all the flats were the subject of leases in similar form, each with a 20% contribution.
21. In the present case, at the time of the grant of the leases of each of the five flats, the new tenant knew that he or she was being required to contribute either one-sixth or one-quarter of the overall costs in relation to the building, and knew that there were six flats on the Marylebone High Street frontage and three on the Marylebone Street frontage. (If, by that date, there did not appear to be three flats on the Marylebone Street frontage, because of the amalgamation of nos 8 and 9, it would at least have been apparent that there were flats on each of the first, second and third floors of that block, so that, in terms of area, it was as if there had been three.) Thus, it would have been apparent to the prospective lessee of flat 1, asked to pay one-sixth, that this was a proper proportion of the costs relating to the Marylebone High Street block, of which he would have to pay a directly proportionate share. As regards the tenant of flat 4, asked to pay a quarter, it would not necessarily be surprising, since that flat is on two floors and might be supposed to be larger than some of the others in that block. (So is flat 1, but nothing turns on that.) On the other hand, there would be an obvious disproportion if these prospective lessees were to be asked to pay these percentages of the costs of the whole structure, which contained, in effect, 9 flats, so that one might have supposed that the fraction would be of the order of one-ninth. That seems to me to be a matter legitimate to be borne in mind. Thus, even though I cannot take into account the
22. I must say something about surrounding facts relevant to construction. What stood upon the site in 1978 to 1980 is plainly relevant, as is the way it was organised and set out, which I have described. It seems to me (despite doubts that I expressed during argument) that the headleases are also relevant, since they would have formed part of the lessor’s title. On the other hand, I doubt whether the terms of the underlease of the commercial parts are relevant, because it is not obvious to me that they would have been available to the prospective tenants. In any event, the passages in it to which reference was made are altogether equivocal. I have set out, at para 3 above, the main elements in the matrix of facts to which I have regard.
23. Ultimately, however, the question depends upon the words used in the lease. The judge considered that the wording of the first schedule carried a clear and strong indication that the building meant the Marylebone High Street block. That is based upon the wording “the Building known as Flats 1-6 at 3 Marylebone Street”. If the entire structure had been intended, one would have expected it to read differently, for example as “the Building known as 3 Marylebone Street”. If any building is or was known as “Flats 1-6 at 3 Marylebone Street”, it must be the Marylebone High Street block. Of course, the operative definition of “the Building” for the purposes of the lease, in clause 1(b)(v), does not itself contain that phrase, but the express reference to the first schedule, which is not necessary for the purposes of the reference to the demised premises, seems to me to bring in that part of the first schedule that refers to a building as part of the definition of the building for the purposes of the lease. In my judgment, the natural and ordinary meaning of the definition, read in this way, is the Marylebone High Street block.
24. Mr Mark Loveday criticised the judge’s judgment for using words indicating that the defendant had to satisfy a heavy burden of proof if it were to show that the building meant both blocks. There is some force in the criticism. But it has to be borne in mind that the judge was delivering judgment late in the day after a full day’s hearing, and avowedly at some speed in order to avoid the inconvenience and expense of a second hearing day. In exchanges after judgment about permission to appeal (which he refused), he indicated that what he meant was that the landlord’s construction would be so disadvantageous to the claimants that it would need to be justified by very clear words. That, if justified on the facts, is a legitimate consideration.
25. Mr Loveday points to a number of references in the lease that, he says, show that the building means both blocks. These can be put into two categories. There are some that are clear and plain, because of the known location of items specifically referred to, and then there are others as regards which the result, if the claimants’ reading is correct, would be anomalous and, Mr Loveday says, cannot have been intended.
26. As regards the first category, he relies upon clause 3(24), with its reference to the pavement of Marylebone Street as being “outside of the Building”. This is perhaps a slight indication, but it does suggest that the pavement is immediately outside whatever is the building. More importantly, he relies upon clause 4(d)(iv), which refers to night-storage heaters in “the entrance hall of the Building opening on to Marylebone Street”. Then he refers to the fourth schedule, para 2(a), with its wording “the lift lift shaft plant machinery and engineering services therein”, ie in the building, and to para 2(g), which is in matching terms. This is to be contrasted with clause 4(d)(i), which refers to the lift without saying that it is “in the Building”, but does have the effect that the lessees of the five flats are, in any event, bound to contribute their percentages towards the repair and maintenance of the lift, even if it is not in the building. The judge said that the draftsman may have been confused as to precisely where the lift was, but since it is clearly marked on the lease plans, and referred to as such in the second schedule, para (1)(ii), it does not seem to me that this is a fair comment. Then Mr Loveday also refers to the fifth schedule, paras 10 and 11, which, taken together, refer to the front door opening onto Marylebone Street as being “in the Building”. Those passages refer to a physical feature as being within the building that is undoubtedly within the Marylebone Street block, and they are, therefore, not consistent with a reading of “the Building” as meaning only the Marylebone High Street block. There was also some reliance in the court below upon the second schedule, para (3), which refers to a communal television aerial on the roof of the building, but the judge found that, although there is currently such an aerial on the Marylebone Street block, there had been one on the Marylebone High Street block as well, so this reference is equivocal.
27. As regards parts of the lease that are more consistent with the landlord’s reading of the lease, but in less obvious ways, it seems to me that there is some force in the proposition that it would be odd for the landlord’s insurance obligation towards the lessees of the five flats to be limited to the Marylebone High Street block, and the same might also be said about the repairing and maintenance obligation. The lessees clearly have an interest in seeing that the Marylebone Street block is kept in a suitable condition for them to continue to exercise their rights of access and egress over the common parts. Clause 4(c) includes a landlord’s obligation to keep the access way decorated, which is not dependent upon the meaning of “the Building”, and there are also obligations in clause 4(c) to keep the lift in proper running order and to keep the fire-escape routes properly lighted and free from obstruction, neither of which depends upon the meaning of the building. However, if the claimants are right that the building means only the Marylebone High Street block, there is no general obligation to maintain and repair the entrance way and passages, or the structure of which they form part, even if only up to first-floor level, nor to insure them or to apply any insurance proceeds towards their repair and reinstatement after damage or destruction due to an insured risk.
28. The same point may be made as regards the provision in clause 5 for suspension of rent. This applies if the demised premises are rendered unfit for occupation by reason of the building or part being destroyed or damaged by an insured risk. One can imagine circumstances in which it would be impracticable to use the demised premises, so that they could be regarded as unfit for occupation, because access was impossible or because of damage to, or destruction of, the Marylebone Street block. On the claimants’ interpretation, they would not be able to use their flats, but they would not be entitled to a suspension of rent.
29. Thus, there is a tension between some provisions of the leases of each of the five flats and others. On the one hand, the way in which the building is defined, taking clause 1(b)(v) with the first schedule, does seem to me to identify clearly the Marylebone High Street block, rather than the whole. One could not say that the whole was “known as Flats 1-6 at 3 Marylebone Street”. It could have been known as “3 Marylebone Street” or as “Flats 1-9 at 3 Marylebone Street”, but not by reference only to flats 1 to 6. On the other hand, there are the references to the lift and the entrance door as being in the building, to the storage heaters being in the entrance hall of the building, and to the pavement of Marylebone Street as being outside the building. The last is a very minor point, but the others are clear and specific.
30. Then, on either side, there are less explicit points. It is said to be an extraordinary result that the lessee of each of the five flats should have to bear a significantly higher than pro rata proportion (as between all the flats in the two blocks) of the cost of repair, maintenance, insurance and so on of the entire property. As against that, it is said, first, that they do, in any event, have to bear their stipulated proportion of, for example, the potentially high costs of the lift, and, second, that it would be very odd if they were protected by the landlord’s covenant to repair, maintain and insure the Marylebone High Street block, but have only very limited protection as regards the Marylebone Street block, parts of which they have to use in any event and are therefore concerned to have properly kept up and protected against risks. It seems to me that the point that they have to pay the stipulated share of the lift costs is, in any event, rather equivocal in itself.
31. Considering the provisions of the lease as a whole, it seems to me that the arguments in favour of the building as meaning only the
32. The judge also referred in his judgment to a burden of proof upon the landlord, but only to express his view that the landlord’s construction would have an extraordinary result, and one that the court would need great persuasion to accept. It seems to me that the essential thinking behind the judge’s judgment was correct, even if he expressed it less clearly than he would have done if he had not been under severe time pressure. The starting point is the definition of the building in clause 1(b)(v), which takes one straight to the first schedule. The reader of the lease is entitled to regard those as the main determinative provisions in seeking a meaning for the building. I agree with the judge that those two provisions point clearly to the building being the Marylebone High Street block, rather than the whole property. It is true that this reading is inconsistent with the references to the storage heaters, to the lift, in the fourth schedule, although not in clause 4(d)(i), and to the entrance door. Although I do not disregard these upon the basis that the draftsman may not have known where they were, I do so upon the basis that the words that show that these were treated as within the building are not sufficiently strong indications to overcome the clear indication given by the provision that actually defines the building. One or other must yield and be disregarded or qualified. It seems to me right to disregard the incidental references, which do not affect the question of whether the lessees of the five flats have to contribute to the relevant costs as regards the heater or the lift, or whether they have to lock the front door, rather than to give the explicit definition a different reading from that which it naturally bears.
33. As regards the other factors, I find that the claimants’ reading is supported by the disproportion factor. It would be surprising if they had to contribute their respective shares, even taking them on their own, as I think is right, of the costs relating to the whole property. Such a reading therefore needs to be justified by clear provisions. The arguments from implication relied upon by the defendant are not sufficient for this purpose. The judge said that it would be extraordinary for the lessees of the five flats to have to pay a proportion of the costs relating to the Marylebone Street block. I do not altogether agree, because of the interest that they have in having it in a proper state, but I do consider it sufficiently extraordinary to require clearer words than there are in these leases for these lessees to have to pay more, or at any rate significantly more, than one-ninth of the overall costs, if they are to contribute to the costs for the whole structure. I regard one-sixth or one-quarter as seriously out of proportion in this context. I therefore agree with the judge’s attitude, even though not with all of his actual words.
34. Accordingly, I hold that the judge was right to decide that the building means what I have called the Marylebone High Street block. He did not deal expressly with a separate point raised, namely whether the building includes the ground-floor and basement levels of whatever is the relevant part of the property. It is common ground before me that it does. I do not know whether any point arises as to precisely how much of the ground floor and basement, horizontally, falls within the definition of the building, upon the basis that the building is only the Marylebone High Street block. If necessary, I will hear submissions as to that when this judgment is handed down, before deciding what order to make, but, on the main point, I will dismiss the appeal.
Appeal dismissed.
