Munt v Beasley

Rectification is available where a written lease fails by mistake to record the parties’ continuing common intention. An outward expression of accord is ordinarily evidential, rather than an inflexible legal requirement, particularly where the party resisting rectification admits the same mistaken belief.

Proprietary estoppel may also prevent a landlord from denying a tenant’s entitlement where the landlord acquiesced in costly works undertaken on the shared belief that the area formed part of the lease. The landlord need not have known of his strict legal rights. Relief must be proportionate to the detriment and may require the area to be treated as part of the demised premises.

Rectification operates retrospectively. It therefore defeats claims for trespass, breach of covenant and forfeiture founded on the omitted area.

The tenant of a first-floor flat converted the loft above it into living accommodation. The lease did not expressly mention the loft, although the only access was through the flat and the original purchasers, the tenant and the landlord had believed that it formed part of the demise.

The Newport (Isle of Wight) County Court held that the loft was excluded, rejected claims for rectification and proprietary estoppel, awarded damages for trespass and noise, and ordered forfeiture subject to relief. The tenant appealed.

The central issues were whether the lease should be construed or rectified to include the loft, whether the landlord was estopped from denying that entitlement, and the resulting liability for trespass, covenant breaches, forfeiture and damages.

1. Appeal allowed unanimously. Mummery LJ, with whom Scott Baker LJ and Sir Charles Mantell agreed, held that the lease was correctly construed as excluding the loft. The extent of the demise depended on the lease wording read in the context of the property. Although sole access through the flat strongly supported the tenant’s case as a matter of common sense, the demise of the first-floor flat did not include the unmentioned space above its ceiling.

2. The court nevertheless ordered rectification. The sales particulars, prepared by the landlord’s agents, expressly referred to access to loft space. The original lessees and the landlord shared the belief that the loft formed part of the lease. Those facts established a continuing common intention which the lease failed by mistake to record.

   An outward expression of accord was not an invariable and strict requirement for rectification. It was an evidential factor. The court applied the approach reflected in Gallaher, Westland Savings Bank and JIS (1974), rather than the recorder’s stricter approach. Rectification had retrospective effect.

3. The court also held that proprietary estoppel was established. The landlord had acquiesced in the conversion works while the tenant acted, to his detriment, on the belief that the loft formed part of the flat. It was unconscionable for the landlord later to rely on his legal rights. The landlord’s lack of knowledge that he owned the loft was immaterial. If rectification had not been available, proportionate relief would have required the loft to be treated as part of the demised premises for the tenant and his successors.

4. Consequently, the claims for trespass, breach of covenant, forfeiture and damages in lieu of an injunction could not stand. Works to the roof after March 2003 were also outside the covenant confined to works to the flat. The order for £7,500 trespass damages and forfeiture was set aside.

5. Scott Baker LJ upheld liability for intermittent noise nuisance and breach of the lease covenants, but corrected the recorder’s arithmetic. Damages were reduced from £1,500 to £1,250. The dismissal of the tenant’s exterior-repairs counterclaim was not disturbed.

• Court of Appeal (Civil Division) — [2006] EWCA Civ 370: allowed the tenant’s appeal. It ordered retrospective rectification of the lease, set aside the trespass-damages and forfeiture orders, and reduced noise damages to £1,250.
• Newport (Isle of Wight) County Court (Mr Recorder Murphy) — by order dated 7 September 2005, held the tenant liable for trespass and breach of covenant, awarded £7,500 for trespass and £1,500 for noise, dismissed rectification and proprietary-estoppel claims, and granted relief from forfeiture conditional on payment.