Newman v Framewood Manor Management Co Ltd

An exoneration clause in a residential lease must be construed in its contractual and factual context and, where ambiguous, contra proferentem. A clause excluding liability for damage caused by servants, agents, contractors or workmen addresses vicarious liability; it does not ordinarily excuse the lessor’s direct breach of express repairing covenants. In that clause, damage means physical damage and does not extend to loss of amenity. Loss of amenity is independently recoverable for deprivation of promised communal facilities. Specific performance may be refused where reinstatement would be excessive and disproportionate to the amenity lost. The adequacy of a substitute is assessed objectively, by asking whether a reasonable person would regard it as equivalent in function and context. A different facility, such as a sauna replacing a jacuzzi, does not necessarily satisfy the covenant.

Mrs Newman, a long leaseholder, appealed against an order of the Slough County Court following claims concerning communal facilities and repairs at Framewood Manor. The county court found breaches relating to the swimming-pool doorway, jacuzzi, gym equipment and other matters, but construed an exoneration clause as excluding damages. It refused specific performance concerning the jacuzzi, treated the sauna as a sufficient replacement, rejected the tree-roots claim and made only limited awards on other claims.

The appeal concerned the proper construction of the exoneration clause, whether blocking the doorway was a temporary maintenance measure, the availability of damages for loss of amenity, the proportionality of specific performance, and the assessment of loss arising from the removal or defective maintenance of communal facilities.

The appeal was allowed unanimously. The Court of Appeal substituted awards of damages for loss of amenity and defective maintenance.

1. Exoneration clause. The clause had to be read in its factual matrix, including the Company’s effective ownership by the leaseholders. Properly construed, it addressed liability imposed on the Company on the basis of vicarious liability for defects or misconduct by servants, agents, contractors or workmen. It did not exempt the Company from its own direct liability for breach of express repairing covenants. That construction also gave effect to the lease’s separate provisions concerning notice of breaches and the carrying out of repairs. The clause was construed contra proferentem.
2. Meaning of damage. In the clause, damage meant physical damage and did not include loss of amenity. A claim for inconvenience, aggravation or deprivation of a promised facility was therefore not excluded.
3. Doorway. The Company had power to make a temporary alteration to facilities pending maintenance or repair, but the blockage was intended to be permanent when made. The later change of position during the trial did not alter its character. The appellant was awarded £1,000 for loss of amenity. The Company’s undertaking to reinstate the doorway made further specific performance unnecessary.
4. Jacuzzi. Specific performance was properly refused because reinstatement would cost about £20,000 and would be excessive and disproportionate to the loss of amenity, particularly after installation of the sauna. The approach was analogous to [1996] AC 344. Damages for loss of amenity were nevertheless recoverable. A sauna was not an adequate substitute for a jacuzzi: equivalence had to be assessed objectively by reference to function and the circumstances in which residential leasehold interests were acquired. The Court awarded £1,000 for past loss and £2,500 for continuing future loss.
5. Other claims. The judge was clearly wrong to treat the gym loss as trifling where there was cogent evidence of use and approximately one year’s inadequate maintenance. The Court awarded £500. The tree-roots claim failed because the drive remained fully usable and no specific performance was required. The existing awards of £250 for the steam-room light and £1,202.50 for the wardrobe were left undisturbed. The total award was £6,452.50.

Arden LJ’s view that the directors were officers, rather than employees or agents used by the Company, and that their decisions would fall outside the clause, was expressly unnecessary to the decision.

• Court of Appeal (Civil Division) — Allowed the appeal and substituted damages awards.
• Slough County Court — Mr Recorder Pulman QC found breaches concerning several communal facilities and repairs, but largely rejected damages claims, refused specific performance concerning the jacuzzi, and made limited awards on other heads of loss.