Tenants objecting to paying service charges relating to whole of building – Extent of obligation to contribute by way of service charges to cost and maintenance of building – Construction of terms of lease – Judge concluding tenant liable to pay service charges relating to maintenance of part of building only – Appeal dismissed
The claimants were the lessees of five flats in Marylebone, London W1; there was also a sixth flat, which was occupied upon different terms to the other five and was not affected by the proceedings. The flats were on the first to fourth floors above commercial premises at 7 to 9 Marylebone High Street. Access to the flats was via an entrance on 3 Marylebone Street, which was also their postal address. The defendant landlord owned a leasehold interest in both 7 to 9 Marylebone High Street and 3 Marylebone Street.
Each of the five flats was subject to a lease granted between December 1978 and October 1980 and due to expire in 2031, and each was in equivalent terms. By clause 3(5), the tenant covenanted to pay a proportion (one-sixth for all but flat 4, for which the proportion was one-quarter) of the aggregate of certain costs incurred by the landlord, including the costs of the repair, maintenance and renewal of “the Building”. “The Building” was defined, in clause 1(b)(v), as “the building of which the Demised Premises form part (as defined in the First Schedule)”. The First Schedule defined the demised premises as “Flat number… on the… floor of the building known as Flats 1-6 at 3 Marylebone Street”.
A question arose as to the meaning of “the Building”. The claimants contended that it meant just the part on Marylebone High Street, and not the whole of the building, which included the parts on both Marylebone High Street and Marylebone Street. If the latter was meant, the claimants would have to pay between them 91% of the costs of repair, maintenance and renewal of the whole building, and they claimed that such a result would produce an uneven allocation of costs between the five flats, on the one hand, and the defendant as the owner of the rest. The situation was exacerbated by the fact that substantial liabilities had been incurred by repairs to the Marylebone Street frontage. The judge found in favour of the tenants, holding that the wording of the First Schedule carried a clear and strong indication that “the Building” meant only the Marylebone High Street part. The landlord appealed.
Held: The appeal was dismissed.
The matter turned upon the construction of the leases of the five flats in the light of the relevant surrounding circumstances, of which the main factor was the physical position of the building at the time the leases were granted. The judge’s reasoning had been correct, even though he had expressed it less clearly than he would have done had he not been under severe time pressure. The starting point was the definition of the building in clause 1(b)(v), which took one straight to the First Schedule. The reader of the lease was entitled to regard those as the main determinative provisions of the meaning of the word “the Building”. The First Schedule could not be said to describe the whole building, as it referred only to “Flats 1-6 at 3 Marylebone Street”, and not, for example, to “the Building known as 3 Marylebone Street”. Had the whole building been intended, one would have expected the schedule to read differently. Accordingly, it pointed clearly to the building being the Marylebone High Street part, rather than the whole of the property.
Graeme Keen (instructed by Blake Lapthorn) appeared for the claimants; Mark Loveday (instructed by Vizard Oldham) appeared for the defendant.
Thomas Elliott, barrister
