Rutland Lodge (Petersham) Management Company Limited v Oliver Julian Benjamin & Anor

Contractual construction is a unitary exercise directed to ascertaining the objective meaning of the parties’ words. The court considers the agreement as a whole, the relevant factual background, commercial consequences and the quality of the drafting. Antecedent negotiations cannot be used to establish what the contract means, although they may illuminate its commercial or business object.

Where a compromise requires works which may be subject to planning or building control regimes, the obligation is construed, where appropriate, as requiring performance to the maximum lawful extent. A contractual requirement to create a barrier requires an uninterrupted line serving to prevent access. A restriction on use of an area may prohibit retaining plants there, and watering them is not necessarily maintenance.

The claimant sought declarations concerning the construction and implementation of provisions in a Tomlin Order compromising earlier proceedings about alterations to the defendants’ property. The disputed provisions concerned louvres across an upper window, planters required to form a barrier, and trees situated in an area which the defendants had agreed not to use except for maintenance or emergencies.

The defendants also sought rectification based on unilateral mistake, relying on the negotiations and Heads of Terms preceding the Tomlin Order. The central issues were the objective meaning of the compromise terms, the relevance of planning and building control requirements, and whether the written terms should be rectified.

1. Louvres. Paragraph 2(b) required louvres across the entirety of the upper northern window. The obligation was subject to compliance with planning and building control regimes. If full installation was lawful, it was required; otherwise the defendants had to install louvres to the maximum extent lawfully possible. The express provision permitting an extension of time accommodated the need for lawful implementation. The court did not determine whether full installation was possible or whether either party had breached the agreement.
2. Planters. Paragraph 2(e) required planters extending across the entirety of each specified line and maintained as a barrier. Containers capable of growing plants could qualify as planters, but gaps meant that the defendants’ existing arrangement did not comply. The court did not prescribe the precise form of the barrier. A very small de minimis gap might arguably be permissible, but that issue did not require determination.
3. Plants. The prohibited roof area was not to be used except for maintenance or emergencies. Retaining plants constituted use of the area, and watering them was not maintenance within the meaning of the agreement, which naturally referred to maintenance of the building itself.
4. Rectification. A unilateral mistake requires unconscionable taking of advantage by the other party. The defendants knew of, and did not object to, the inclusion of the word “barrier”. Their subjective misunderstanding did not show that the written agreement failed to record the parties’ agreement. No unconscionable conduct was established. There were likewise no grounds to rectify the restriction on plants.
5. The court accepted the defendants’ construction on the louvres and the claimant’s construction on the planters and plants. Further declarations were to be considered after the parties had addressed their appropriate form.