Spring House (Freehold) Ltd v Mount Cook Land Ltd

A lease must be construed objectively, in its commercial context and against the background reasonably available when it was made. The same word may bear different meanings in different parts of a lease.

A covenant concerning goods placed outside premises was not confined to merchandise. In context, goods included motor cars and placing goods was apt to include parking them. However, where the expression outside the said premises remained genuinely uncertain after examining the lease and its purposes, the restriction was construed, as a last resort, against the grantor. It meant outside the boundaries of the demise, rather than outside the building.

The respondent held a 999-year lease of a London property. Former open basement areas forming part of the demise had been covered by pavement lights. The respondent and its licensees had parked vehicles on those areas for many years.

The appellant lessor relied on clause II(9) of the 1924 lease and sought to prohibit the parking. The Central London County Court declared that the respondent was entitled to park on the demised premises. The lessor appealed the ruling that vehicles were not goods. The respondent cross-appealed the rulings that parking was placing goods outside the premises.

The central issue was the construction of clause II(9), particularly the words goods, placed, and outside the said premises.

Appeal dismissed. In their joint judgment, Ward and Rix LJJ held that the judge had erred as to the meanings of goods and placed, but had also erred as to the phrase outside the said premises. The respondent succeeded on its cross-appeal, so the declaration remained in force.

1. The court construed the lease objectively, by reference to the language, the lease as a whole, the commercial setting known to the parties in 1924, and business common sense. A proposed purpose could assist only if it was properly attributable to both parties.

2. Place was a colourless and general word. It was apt to describe the parking of a vehicle, but did not itself determine the meaning of goods.

3. Goods bore its ordinary wide meaning of property or possessions and included motor cars. The earlier reference to advertisements relating to goods dealt in by the occupier did not qualify the later prohibition. Had that limitation been intended, the covenant could have referred to “such goods”. The wider construction also avoided uncommercial distinctions between a tenant's stock and other objects affecting the exterior of the property. There was no ambiguity requiring recourse to contra proferentem.

4. The word premises was context-dependent. Although clause II(9) and the lease used the relevant expressions inconsistently, the predominant use of “the said premises” was to denote the whole demise. The court could not confidently identify a shared purpose that required the disputed phrase to mean outside the building. The resulting real ambiguity was resolved, as a last resort, against the grantor. “Outside the said premises” therefore meant outside the boundaries of the demised premises. Parking within those boundaries was not prohibited.

The appeal was dismissed with agreed costs of £6,000. Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division) — by a joint judgment of Ward and Rix LJJ, dismissed the lessor's appeal and accepted the respondent's cross-appeal on the construction of “outside the said premises”: [2001] EWCA Civ 1833.
• Central London County Court — on 17 November 2000, His Hon. Judge Rich QC declared that the lessee and its licensees were entitled to park vehicles on the demised premises.