Pattrick & Anor v Marley Estates Management

The meaning of a lease term such as building depends on the context and the physical subject matter at the date of the lease. A permanent structure with a floor, roof, walls and colonnade may be a building for a repairing covenant even if it has limited practical uses. Commercial fairness and service-charge allocations do not justify rewriting clear lease language. Windows included in the demise may nevertheless fall within an obligation to decorate the exterior while remaining outside an obligation to repair the main structure. An equitable clean-hands principle cannot defeat reliance on a legal leasehold title. The court may also exclude litigation costs from service-charge recovery where necessary to achieve complete justice.

The lessees of Marley House appealed against findings by His Honour Judge Tyzack QC in the Torquay and Newton Abbot County Court. The dispute concerned responsibility under the lease for repairing the Chapel Cloisters, repairing and decorating the windows, and removing a gate said to interfere with a right of way. The judge found against the lessees on all three issues and ordered them to pay 85% of the Company’s costs. The lessees also sought an order under section 20C of the Landlord and Tenant Act 1985 preventing the Company’s litigation costs from being recovered through the service charge. The central issues were lease construction, estoppel by convention, interference with an easement and the costs jurisdiction.

Appeal allowed. The Court of Appeal set aside the material parts of the county court order and substituted declarations concerning the parties’ respective liabilities.

1. Chapel Cloisters. Whether the cloisters were a building for clause 6(d)(i) was a question of construction, assessed at the date of execution of the lease. Their earlier inclusion in Syon Abbey was irrelevant. As they then had a floor, roof, three walls and a man-made colonnade, they fell within the ordinary meaning of building. The Company was therefore liable to maintain, repair, decorate and renew their main structure.
2. Windows. Although the windows were comprised in the demised premises, they were also part of the exterior and fell within clause 6(f), requiring the Company to decorate the exterior, including woodwork. They were not part of the main structure for clause 6(d)(i). The lessees remained responsible for repairing the windows as a whole, including woodwork and glass, while the Company was responsible for decorating their exterior surfaces. As provisional guidance, making good ordinarily falls within redecoration, whereas work requiring a carpenter is repair; the boundary could not be determined in advance.
3. Estoppel and the gate. The county court’s factual finding rejected any settled convention concerning window repairs, and one payment did not justify appellate intervention. Without a convention there was no estoppel. The gate counterclaim also failed because no claimant was shown to possess a sufficient right of way over the relevant land. The clean-hands maxim was misplaced: the lessees relied on their legal leasehold title and were not seeking equitable relief.
4. Costs. Under section 20C of the Landlord and Tenant Act 1985, the court ordered that the Company’s costs of the action and appeal, including costs payable to the lessees, were not to be treated as relevant costs recoverable through the service-charge provisions. That order was necessary to achieve complete justice. Conduct remained a factor under the Civil Procedure Rules 1998, CPR rule 44.3(4)(a).

The undertakings given to the county court were discharged. Mummery LJ and Arden LJ agreed.

• Court of Appeal (Civil Division) [2007] EWCA Civ 1176: appeal allowed. The county court declarations and costs order were set aside, substituted declarations were made, and the undertakings were discharged.
• Torquay and Newton Abbot County Court, His Honour Judge Tyzack QC, 7 March 2007: the judge found against the lessees on the repair and decoration issues and the gate counterclaim, and ordered them to pay 85% of the Company’s costs.