City of Westminster v Fountain & Colonnade Management Ltd [2005] EWCA Civ 1607

Case No A1/2005/0546[2005] EWCA Civ 1607
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
His Honour Judge Richard Seymour QC
HT04147
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Tuesday, 20 th December 2005
Before
THE PRESIDENTLORD JUSTICE KEENELORD JUSTICE WALL
Between
The Lord Mayor and Citizens of the City of WestminsterAppellantFountain and Colonnade Management LimitedRespondent
(Transcript of the Handed Down Judgment ofSmith Bernal WordWave Limited190 Fleet Street, London EC4A 2AGTel No: 020 7421 4040 Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Thomas Graham (instructed by Westminster Legal Services Department) for AppellantMiss Dominic Rawley (instructed by McFarlanes Solicitors) for Respondent
JudgmentSir Mark Potter, P:Introduction:
[1]This is an appeal against a judgment of His Honour Judge Richard Seymour QC dated 28 February 2005 in respect of a claim brought by Fountain and Colonnade Management Limited (“F&C”) against the Defendant, the Lord Mayor and Citizens of the City of Westminster (“the Corporation”).[2]By his judgment, the judge found that, under the terms of an Agreement, dated 27 November 1991 and made pursuant to s. 38 of the Highways Act 1980 between the British Railways Board (“BRB”), Greycoat Victoria PLC (“Greycoat”), and the Corporation (“the s.38 agreement”), the Corporation who were liable to pay to F&C (as successors in title to Greycoat) the sum of £126,653.11 (including interest) as a fair proportion of the costs incurred by F&C in carrying out works of repair and maintenance to a highway. F&C were leaseholders of two properties at 123 and 151 Buckingham Palace Road, London SW1 (“the properties”). The properties were constructed by Greycoat on a huge raft above the platform and tracks at Victoria Station as part of a development between the streets of Ecclestone Bridge and Elizabeth Bridge. A service road called Bulleid Way (“the highway”) was constructed by Greycoat on the same raft as part of the development.[3]The s. 38 agreement was part of the legal arrangements subject to which the development was carried out. It made provision, inter alia, in respect of the repair and maintenance of the highway and the structure beneath it and for the contributions of Greycoat and the Corporation in respect thereof. The issues before the judge with which this appeal is concerned were whether the Corporation has any obligation under the s.38 agreement to make a contribution to F&C (as Greycoat’s successors) in respect of certain works of repair and maintenance carried out by F&C to the highway and the structure beneath in 2002-2003, and, if so, what is the “fair proportion” of the reasonable costs of such works which the corporation is required to contribute under the s. 38 agreement.

The s.38 agreement

[4]The relevant provisions of the s.38 agreement were as follows.[5]Recital (2) provided that BRB and Greycoat:
“Have agreed to give up and dedicate the New Link Road to the public as a highway subject to [the Corporation] agreeing to undertake the maintenance of the New Link Road [i.e. the highway] under sub-sections (3) & (6) of section 38 of the Highways Act 1980…”
[6]Recital 2(b)(iv) provided that the highway did not include inter alia: “The structure below the New Link Road which structure includes the red asphalt carpet and everything there under including the movement joints in the Land (referred to jointly as “the Structure” also including (for the avoidance of doubt) the air space and land beneath the Structure”.[7]Clause 3 provided that the Corporation: “Shall undertake the maintenance of the New Link Road the lighting system referred to in clause 14 of this Agreement (excluding that part of the New Link Road [crosshatched] on the Drawing) and other lighting and associated electrical wiring any surface water drainage to the point where it passes from the New Link Road to the Structure and ventilation plant and any other services and items enjoyed exclusively in connection with the highway”.[8]Clause 9 provided: “Greycoat hereby covenants to maintain the Structure and also service media passing through the Structure and the Corporation hereby covenants to pay a fair proportion of the reasonable costs of repairing and maintaining all such items enjoyed in connection with the Highway whether or not used in common within 28 days of demand by the party incurring such costs”.[9]Clause 10 provided:
“Without prejudice to the generality of the foregoing provisions of this Agreement the Corporation hereby covenants to pay the costs of any electricity used in connection with the Highway (whether for extraction fan units lighting or otherwise) any such electricity to be separately metered”
. The Relevant Facts.[10]The concrete raft structure, which supported the buildings, incorporated 4 movement joints running east west across the entire raft. Joints 1 and 4 were necessary to isolate the raft’s structure from the two Victorian bridges spanning the railway line immediately to the north and south of the raft (Ecclestone Bridge and Elizabeth Bridge respectively). Joints 2 & 3 were incorporated to accommodate differential movement between the two 6-story office/retail buildings and the central atrium structure, which together, comprised the buildings and occupied nearly 90% of the site. At the place where the movement joints crossed the highway, they sat on a number of concrete plinths (the plinths) in the form of upstands rising through the surrounding surface material from the concrete of the raft below. The joints were “Waboflex” electrometric movement joints, installed in the highway at the time of its construction in 1990. The road was opened in about July 1991. According to the manufacturers’ literature, the joints should have lasted some 20 years. In fact they failed in less than 8 years from the opening of the road as revealed in an inspection in August 1999.[11]The sequence of events was described in the Agreed Statement of Facts as follows. 15. The adopted Highway, now called Bulleid Way was in use from the end of 1991. Buses/coaches used Bulleid Way as a number of coach operators stop at Victoria Coach Station. There are a number of coach parking bays on Bulleid Way for this purpose. Bulleid Way is also a useful “cut through” linking Elizabeth and Ecclestone Bridges and [the Corporation] noted that this was a great planning advantage and would relieve congestion. 16. 7 years after adoption, in early 1999, Arup [the well known engineers Ove Arup & Partners Limited] were asked by [F&C] to conduct a detailed survey/inspection report for the whole of the Development, including Bulleid Way. During the course of that survey it was identified that the movement joints were in a relatively poor state and were likely to be allowing rainwater to leak into Victoria Station below. 17. Once the damage to the movement joints had been identified, [F&C] decided, on the advice of an engineering consultant, Ove Arup, that the most economical option was to replace the movement joints. Once plans had been prepared for the replacement works, agents of [F&C] contacted [the Corporation] with a view to making arrangements for the repair/replacement of the movement joints and to seek a contribution towards the costs of the replacement works pursuant to clause 9 of the Section 8 Agreement …21. The repair works commenced on 2 September 2002 and [the Corporation] were kept informed via its external consultant, Babtie. The Defendant was invited to the site on 26 September 2002 in order to see the Works and to review a problem that had been discovered upon uncovering the movement joints. The Defendant did not acknowledge the letter.22. The repairs included the replacement of the original “Waboflex” joints with “Britflex BEJ 5” joints.23. It was discovered at this stage that the structural plinth was made from concrete (rather than reinforced concrete) and was damaged.24. As a result of this problem the repair works became more expensive than had originally been anticipated, because the concrete itself had to be replaced.25. [F&C] wrote to [the Corporation] on completion of the Works, to inform it of the total costs of the repair works.26. [The Corporation] did not agree that it had any liability for a contribution towards the replacement works.27. [The Corporation] has, by contrast, accepted its liability as to the costs of replacement asphalt and paid that sum in full (£8,063.55).28. [F&C] chose to carry out the replacement works and sought the costs from [the Corporation] afterwards.29. In April 2003, [F&C] informed [the Corporation] of the costs of the replacement works [£119,262.52) and requested that [the Corporation] pay a fair proportion of these costs on the basis that the traffic (particularly buses) on the public road had caused the damage to the movement joints.”[12]In relation to the Waboflex joints used in the construction of the Highway the experts in the case issued a joint statement which stated:
“2.1. Type of Joint Used Based on current experience of the product used, the original selection of Waboflex Joint was not the most suitable compared to other potential choices. The Joint consists of discrete sections that need to be carefully installed to ensure that they are watertight. Given that the need for water-tightness was important at this location to stop leakage into the station areas below, another more reliable type of joint might have been considered. However the Joint was used for highway bridges at the time of the building’s construction as it was believed to be economical and was on the Department of Transport’s approved list of products. In the mid 1980’s when the design took place the potential problems associated with leaking joints was only just being recognised in the industry as being a major issue for highways and bridges. On independent highway bridges, leakage of water through joints could be handled by a secondary system such as drainage gutters, and therefore a fully watertight joint might be considered as less critical. In this situation no secondary system was possible due to the presence of the station below. 2.2 Layout of Joints Given the layout of the office development and the position of the road, it was agreed that the chosen layout of the 4 joints in the road itself was economical. If the main structural raft had been divided up differently, fewer transverse joints might have been used but a longitudinal joint [would] have then been necessary, with the cumulative length of joint being even greater. 2.3 Type of Joint used for Repair It was agreed that the use of Britflex BEJ 5 Joints was an appropriate solution for the joint repair in this situation. Other types of joints such as Bode Asphalted Plug would not have been appropriate on the basis of performance and Maurer cast-in joints would have been too complicated to install in this location without major work to the structure. No other types of joints were identified as possible solutions.”
Based on current experience of the product used, the original selection of Waboflex Joint was not the most suitable compared to other potential choices. The Joint consists of discrete sections that need to be carefully installed to ensure that they are watertight. Given that the need for water-tightness was important at this location to stop leakage into the station areas below, another more reliable type of joint might have been considered. However the Joint was used for highway bridges at the time of the building’s construction as it was believed to be economical and was on the Department of Transport’s approved list of products. In the mid 1980’s when the design took place the potential problems associated with leaking joints was only just being recognised in the industry as being a major issue for highways and bridges. On independent highway bridges, leakage of water through joints could be handled by a secondary system such as drainage gutters, and therefore a fully watertight joint might be considered as less critical. In this situation no secondary system was possible due to the presence of the station below. Given the layout of the office development and the position of the road, it was agreed that the chosen layout of the 4 joints in the road itself was economical. If the main structural raft had been divided up differently, fewer transverse joints might have been used but a longitudinal joint [would] have then been necessary, with the cumulative length of joint being even greater. It was agreed that the use of Britflex BEJ 5 Joints was an appropriate solution for the joint repair in this situation. Other types of joints such as Bode Asphalted Plug would not have been appropriate on the basis of performance and Maurer cast-in joints would have been too complicated to install in this location without major work to the structure. No other types of joints were identified as possible solutions.”[13]The judge found that, in the light of the poor reputation of the Waboflex joints the length of time over which the original movement joints remained in service supported the conclusion that they were installed to an acceptable standard. It also indicated that the impact of the deficiency in the design or construction of the plinths was limited.

The Judgment below

[14]The judge held that, on the proper construction of clause 9 of the s.38 Agreement F&C (as successors to Greycoat) had to maintain “the Structure and also service media passing through the Structure”, while the Corporation had to pay a fair proportion of the reasonable costs of repairs and maintenance incurred by F&C in pursuance of that obligation. He rejected the submission advanced by the Corporation that the words “all such items enjoyed in connection with Highway whether or not used in common” (in respect of which the Corporation had to contribute) referred back only to “all servicemedia passing through the Structure”. He held that they plainly referred to both “the Structure and all service media passing through the Structure”.[15]At paragraph 16 of the judgment he held:
“What Mr Graham’s submission [for the Corporation] actually involved was separating a phrase which was in fact “The Structure and all service media”, that is to say, an expression with a conjunctive, so as to detach the first part from the remainder, and then treat only the remainder as incorporated in the reference “all such items”
. It does not seem to me that there is any warrant for such a construction. In my judgment both as a matter of language and as a matter of common sense the expression “all such items” comprehended “the Structure and all service media”. I deal separately, because Mr Graham did, with his submission as to whether the Movement Joints were “enjoyed in connection with the Highway”. However, in the context of the submission now under consideration, it is material to consider the structure of Clause 9 of the Section 38 Agreement. It is in two parts. By the first part the predecessor in title of F&C covenanted “to maintain the Structure and all service media passing through the Structure”. By the second part the Corporation in effect covenanted to pay a fair proportion of the reasonable costs to the predecessor in title of F&C, and then F&C, of complying with the covenant in the first part, subject only to the costs being incurred in respect of items “enjoyed in connection with the Highway whether or not used in common”. Anticipating my finding in relation to the issue, which I consider next in this judgment, nothing seems more obvious to me than that the support, which the Highway depends for existence, the Structure, was and is “enjoyed in connection with the Highway”. Consequently not only is there no warrant linguistically for the construction for which Mr Graham contended, but the commercial justification for such a construction seems illusionary.”[16]As to the question whether the movement joints were “enjoyed in connection with the Highway” the judge found that the issue raised was a factual one. The argument on behalf of the Corporation was that the sole reason the movement joints were provided in the first place was because they were needed for the purposes of the buildings and not the highway. It was accepted that, had there been no buildings it would have been necessary to provide what were called “carriageway joints”, but such joints would have been of different type and fewer than 4 in number. The Corporation asserted that, if the raft had been constructed simply as a bridge upon which the highway was carried between Elizabeth Bridge and Ecclestone Bridge, all that would have been necessary was a movement joint at each of the two points at which it joined the other bridges.[17]At paragraph 19 of his judgment,

the judge held as follows:

“In my judgment the point that, had there been no Buildings on the Raft, fewer movement joints than were in fact provided would have been needed, and they would have been of a different type, are misplaced. The material issue is whether Movement Joints have in fact been, and are “enjoyed in connection with the Highway”, not whether, had the Raft been designed differently, one might have needed fewer joints or joints of a different kind. On the evidence put before me the Movement Joints are in fact part of the Raft and they make up part of the Highway. They have to extend through the surface of the Highway in order to perform their intended function, which is to protect the Highway and the Buildings from the damage caused by expansion and contraction as a result of temperature variation. I have no hesitation in finding that the Movement Joints have in fact been, and are, “enjoyed in connection with the Highway” so that the point taken on behalf of the Corporation fails.”
[18]In paragraph 20 of the judgment, the judge went on to make the point that, had there been no Building there would have been no Raft and thus no Highway. He stated that in the light of what was agreed at paragraph 2.2 of the experts’ Joint Statement (See paragraph 12 above), the technical foundation for the points made on behalf of the Corporation concerning the number and type of movement joints had there been no Buildings was lacking.[19]The judge also rejected the argument of the Corporation that the works undertaken were improvements rather than repairs. This argument was based on the assertion that the Britflex BEJ 5 Joints installed in the course of repair were better joints than the original Waboflex Joints and that the remedial works improved the quality of the defective plinths originally installed, the absence of reinforced concrete being the main cause of the loosening of the joints.[20]At paragraph 35 of the judgment, the judge held that so far as the replacement joints were concerned “...It is not an improvement to replace a joint which it is accepted needed to be replaced with the only type of joint which is considered acceptable at the date of replacement. The whole purpose of a movement joint is that it should function satisfactorily as a joint accommodating movement over a reasonable life span. A joint that merely does that cannot, it seems to me, said to be an improvement over, as opposed to a replacement of, a joint, which has failed, regardless of the reason for the failure of the original joint. As I have pointed out, if the replacement joint has a longer service life than the replaced joint, that is actually a benefit to the Corporation as well as to F&C.”[21]As to the replacement of the plinths, the judge stated that it was “a logically separate question” whether the provision of an appropriate support for the new joints, in place of a support, which was inadequate, amounted to an improvement rather than a repair. He also accepted that, in a landlord and tenant context at least, the authorities established that, whether a remedial work amounted to a repair falling within the terms of a particular repairing covenant or an improvement outside the terms of the covenant, is a question of degree: see Ravenseft Properties Limited – v- Dabstone (Holdings) [1980] 1 QB12.[22]He went on to say:
“I am not altogether persuaded that much assistance is to be derived from the present case from the landlord and tenant authorities to which I was referred. The real question in my judgment is what, in the circumstances with which I am concerned, is “a fair proportion” for the Corporation to pay towards the costs actually incurred by F&C, which it was not suggested was not in itself reasonable, of repairing and maintaining the Structure. However, to the extent that it may be relevant, I find that the provision of a satisfactory support for new expansion joints cannot sensibly be looked at in isolation. Rather the installation of the new joints and the provision of appropriate support for them need to be considered as a package. After all, without a proper support the new joints could not have been installed at all. Thus, if it were appropriate to categorise the totality of the remedial Works as either repair or improvement, I should unhesitatingly find that they were works of repair. The third of the grounds upon which the Corporation resisted the claim of F&C therefore fails.”
[23]In considering what was the “fair proportion” of the costs of repairs for the Corporation to pay, the judge accepted the submission of F&C that the appropriate figure was 90%, based on agreed traffic surveys to the effect that at least 90% of the vehicles using the highway was public traffic. It was the weight of traffic use which was responsible for the need to replace the movement joints; without it the joints would not have required replacement. Accordingly, the costs of repairing or maintaining items enjoyed in connection with the highway should be apportioned according to the parties’ respective traffic use. It was the submission of the Corporation that a more sophisticated and wider-ranging approach was appropriate, taking into account the extensive benefits which the existence of the road afforded to F&C in terms of vehicular and pedestrian access to F&C’s premises and passing trade from members of the public using the highway to the advantage of F&C’s retail leases. Reliance was also placed on the assertion that the Highway only required two joints at the junctions of the two road bridges at either end, the additional two intermediate joints being installed simply because of the design needs of F&Cs buildings. It was also contended that the costs of the works had been increased by the need to remedy the inherent defect in the Structure constituted by the lack of reinforcement in the concrete plinths; thus such sum should be excluded from the calculation of a fair proportion within the meaning of Clause 9. Similarly, it was contended that the cost of the work was increased or incurred by virtue of the need to address the inadequacies in the original joints at a point less than halfway through their expected life span; thus the sum otherwise payable should be reduced by not less than 50%.[24]At paragraph 41 of the judgment, the judge stated that the whole purpose of the s.38 Agreement was to provide for the dedication of the Highway as a public highway and that, given that purpose; “…The fact that occupiers of the Buildings would have the benefit of the Highway to obtain access to the Buildings for themselves and also for persons making deliveries or collections or providing services, it seems to me to be plain that the contribution which would be a “fair proportion” of the costs and repairs of maintenance of the Corporation to pay falls to be assessed on the basis of the contribution made by the nature and degree of user of the Highway by the public to the need for the item of repair or maintenance in question as compared to the contribution made by those using the Highway to obtain access to the Buildings.”[25]In relation to the wider benefits said to be enjoyed by F&C, the judge stated that there was almost no evidence before him in support of any of the matters upon which the Corporation sought to rely.[26]As to the increase in the costs of works to remedy the lack of reinforcement in the concrete plinths supporting the joints,

the judge stated (at paragraph 47 of the judgment):

“That feature of the original construction was an inherent weakness which carried within it the seeds of a less lengthy service life than might otherwise have been the case. However, it is a feature which would have been largely immaterial if no traffic ever used the Highway, so that no loads other than static loads and those imposed by movement in the Buildings were ever imposed on the Movement Joints. Moreover, the actual service life of the original Movement Joints, as compared with what Mr Holland considered typical, does not suggest that the inherent weakness in the original construction was particularly significant as a factor prompting a need for replacement. In the result I accept the analysis of Mr Cooke in Section 9 of his report and find that the need to replace the Movement Joints rose overwhelmingly as a result of the effects upon the joints of the traffic in fact using the Highway.” “While the need to replace the Movement Joints, in the light of my finding, was overwhelmingly caused by the effects upon the joints of the traffic in fact using the Highway, the work of replacing them in the event included the remedying of the deficiencies in the Plinths.”
[27]He went on to state (at paragraph 49 of the judgment):
“…On a proper construction of the clause in my judgment the Corporation must contribute a fair proportion of the reasonable costs of repairing and maintaining the Structure and any service media enjoyed in connection of the Highway, whatever the occasion of the need for repair or maintenance works. Thus there is no reason to exclude from the costs to which the Corporation must contribute the costs of repairs arising from some particular cause, such as inherent defects. The issue is not to what costs, or to the costs of what repairs, it would be fair for the Corporation to contribute. The issue is, the Corporation having to contribute a fair proportion of the relevant costs, whatever they are, what proportion would be fair.”
[28]I now turn to the issues arising on this appeal. Does the expression “all such items” comprehend the Structure as well as the service media passing through it?[29]In my view, the judge was correct in his conclusion on this issue. So far as the internal language of clause 9 is concerned, I do not seek to improve upon the reasoning set out in paragraph 16 of the judgment (see paragraph 15 above). The judge was right furthermore to conclude that there was no commercial justification for a departure from such language, either by reference to s. 52 of the Town and Country Planning Act 1971 or the agreement of 22 August 1984 (“the s. 52 Agreement”) between BRB, Greycoat, the Corporation and the Greater London Council, pursuant to clause 3.3 of which the s.38 agreement was made.[30]By clause 3 of the s.52 agreement, the development included the construction of the highway “to a design and specification approved by the Corporation” as shown on an attached drawing (3.1); “the costs of works … to be borne entirely by the developer” (3.2); the surface of the new road to “become a highway maintainable at public expense not later that 42 days after the practicable completion of the … development” (3.3).[31]Clause 3.4 of the s. 52 agreement laid down the provisions for maintenance of the highway in terms very close to those subsequently set out in clause 9 of the s.38 agreement, the “Structure” supporting the new road in the latter being termed the “sub-structure” in the former. Clause 3.4 provided:
“Maintenance of Road (a) [the Corporation] to maintain (and where applicable operate) surface of road, lighting and associated electrical wiring, draining to point where passes through the structure, ventilation plant and any other services and items enjoyed exclusively and in connection with the road as [Greycoat] may require (other items to be dealt with under paragraph (b) below) (b) BRB/ Greycoat to maintain sub-structure and services passing through the sub-structure; [the Corporation] to pay a fair proportion of the costs of repairing and maintaining such items (including also all services enjoyed in connection with the road, whether or not in common) (c) Without prejudice to the generality of the foregoing [the Corporation] to pay the cost of any electricity used in connection with the road (whether for extraction fan units, lighting or otherwise) any such electricity to be separately metered.”
[32]Thus the intention of the parties as set out in the s.52 agreement was clear. 3.4(a) dealt with those items subsequently referred to as the “service media” in the s.38 agreement. It provided that the corporation was to be liable to maintain them to the point where they passed through the structure (i.e. the highway itself). 3.4(b) dealt with “the sub-structure and services passing through the sub-structure” which BRB/ Greycoat were obliged to maintain, but in respect of which the Corporation was liable to contribute. 3.4(c) made provision for the cost of the electricity.[33]These provisions were reflected in the s. 38 agreement in slightly expanded form: the earlier clause 3.4(a) became clause 3, clause 3(4)(b) became clause 9 (save that BRB was no longer a party), and clause 3(4)(c) became clause 10. In relation to clause 3.4 (e) and clause 9, the changes were immaterial save that provision was made for the reasonable costs of repair and maintenance. Although, the wording was slightly expanded, none of the alterations was in my view material and, in so far as it is argued for the Corporation that the words “all such items” are not apt or intended to apply to the Structure and the service media in clause 9 of the s. 38 agreement, any force in that argument is removed by reference to the terms of the s.52 agreement.

Were the movement joints “enjoyed in connection with the highway?

[34]Again, I have no doubt that the judge was correct in his treatment of this issue.[35]He made a broad finding of fact based upon the evidence before him that the four movement joints, as part of the raft and making up the surface of the highway, were “enjoyed in connection of the highway”. There was evidence that whilst the outer joints (1 and 4) isolated the road from the bridges at either end and allowed differential movement between the two, the central joints (joints 2 and 3) provided a benefit to the highway in that they protected against any differential settlement from thermal movement as between the office blocks, the atrium between them, and the perimeter highway. The fact that, had joints 2 and 3 not been present, there would have been a need for a longitudinal joint along the length of the buildings at the side of the highway, demonstrated that the highway derived benefit from movement joints 2 and 3 and thus “enjoyed” them “in connection with the highway”.[36]Despite that, it isargued on behalf of the Corporation that the judge was wrong to construe the s.38 agreement so as to include joints incorporated into the design for the benefit of Greycoat/ F&C’s buildings, even though, as built, they inevitably provided an incidental benefit to the highway. It is submitted that such joints could not fairly or properly be said to be “enjoyed in connection with the highway”. I see no warrant whatever for such a construction. Like the judge, it seems to me that the question is whether in fact the movement joints were so enjoyed. They plainly were. Furthermore, form TA1, dated November 1989, demonstrates that the choice of a four-joint solution was approved in principle by the Corporation. Clause 3, headed “BRIEF DESCRIPTION OF STRUCTURE (include reasons for choice)”, refers to:
“Articulation arrangements Movement joints in bay 12, 13 and at each end abutting existing bridges.”
No reasons for the choice were stated. In construing the meaning of the s.38 agreement, it does not seem to me appropriate to investigate the engineering reasons for such choice, given that the design of the structure was unequivocally specified and agreed between the parties.

Did the Works carried out constitute Improvements rather than Maintenance and Repair?

[37]The answer to this question may conveniently be considered under two heads. The submissions of the Corporation have been directed separately to(a) the replacement of the original Waboflex joints with Britflex joints, the latter having a longer service life than the former, and(b) the replacement of the supporting plinths. In relation to both, the Corporation have sought to support the submission that the works constituted improvements by reference to the distinction classically drawn between works of improvement and works of maintenance and repair in the authorities concerning repairing covenant in leases: See Woodfall Vol 1 Paras 13.031- 13.035 and 13.037- 13.037.10; Ravenseft Properties v Davestone Holdings (supra) in which the previous authorities were comprehensively reviewed; Post Office v Aquarius Properties [1985] 2 EGLR 105; and Eyre v McCracken [2000] 80 P&CR 220.[38]The judge considered these authorities of limited assistance. To the extent that any analogy is sought to be drawn between this case and the facts with which those cases were concerned, I agree. It is also right to say that the considerations governing the distinction drawn between Repairs and Improvements in relation to leasehold premises are by no means readily applicable to repairs carried out, or liabilities arising, under a s.38 highway agreement. As stated by Nicholls LJ in Holding and Management Limited (The Property Holding and Investment Trust PLC) [1990] 1 ALL E R 938 at 945d-f:
“… The exercise involves considering the context in which the word “repair” appears in a particular lease and also the effect of remedial works proposed. Accordingly, the circumstances to be taken into account in a particular case under one or other of these heads will include some or all of the following: the nature of the building; the terms of the lease; the state of the building at the date of the lease; the nature and extent of the defects sought to be remedied; the nature, extent and cost of the proposed remedial works, at whose expense the proposed remedial works are to be done; the value of the building and its expected lifespan; the effect of the works on such value and life span; current building practice; the likelihood of a recurrence if one remedy rather than another is adopted; and the comparative costs of alternative remedial works and their impact on their use and enjoyment of the building by the occupants. The weight to be attached to these circumstances will vary from case to case.”

The Movement Joints

[39]So far as this s.38 agreement is concerned, there is no doubt that prima facie the works carried out were works of repair and maintenance, given that they involved the rectification of defects in works brought about by traffic wear and tear and essential to the proper functioning of the road as a highway for the use of the public. The question is whether the works are to be regarded as improvements beyond the scope of the Corporation’s obligation to contribute, rather than works of repair and maintenance, because the joints were replaced with new and “better” joints and the plinths were not simply restored with the same materials as before but reconstructed using reinforced concrete. The judge did not think so and nor do I. The points raised by the Corporation are these.[40]It is said that the judge wrongly failed to have adequate regard to the authorities. However, Mr Graham for the Corporation has been unable to point to any authority which persuades me that, even on application of the tests to be derived from the landlord and tenant authorities, the judge should have reached a different result. It does not seem to me that the judge’s approach was any different from what it would have been had he expressly applied the reasoning of Forbes J in the Ravenseft Properties case, in which it was held to be a question of degree whether the remedying of an inherent defect was work or repair rather than improvement. In that case, the works carried out were held not to have been improvements because no competent professional engineer would have permitted the re-erecting of cladding without the inclusion of expansion joints which had been omitted from the original design. By analogy in this case, it is clear that the experts were agreed that the appropriate method of repair was by installation of Britflex joints which were considered to be the only type of joint acceptable at the date of replacement.[41]Similarly, in Stent v Monmouth District Council [1987] 54 P&CR 193, the front door of a council property had proved inadequate for preventing water penetration, which ultimately led to the rotting of the door and damage to the furnishings in the house. The Court of Appeal found in respect of the landlord’s obligation to “repair and maintain the structure and exterior of the dwelling house”, that, once the door was damaged, the work required was that which not only affected a repair but also achieved the object of rendering future repair of the door unnecessary. Thus, replacing the door with an altogether different and improved design capable of keeping out the water did not constitute an improvement for the purposes of the covenant. In the instant case, the judge found that both types of joint performed the same job, and that the Britflex joint used to replace the Waboflex joint was the only appropriate solution once damage had occurred and replacement became necessary. In these circumstances, it is quite clear to me that the replacement of the joints constituted a repair and not an improvement.

The Plinths

[42]Mr Graham for the Corporation has criticised the judge for his remark that the provision of a satisfactory support for the new expansion joints could not sensibly be looked at in isolation and that the installation of the new joints and the provision of appropriate support for them needed to be considered as a package (see paragraph 36 of the judgment quoted at Para 21 above). He submits that the judge should have given separate consideration to the two issues which were logically distinct, as the judge elsewhere in his judgment recognised. Mr Graham submits that categorisation of the joints as works of repair and maintenance did not logically lead to similar categorisation in respect of the plinths.[43]This is indeed correct as a matter of logic, divorced from the circumstances of the case. However, as a practical engineering matter, the point has no force whatsoever. The Judge was plainly right to regard the provision of satisfactory support for the new expansion joints as part of the “package” of repair agreed by the experts to be necessary. As he observed, “after all without proper supports new joints would not have been installed at all” c.f. the Ravenseft Case.

Was the Corporation’s contribution of 90% a “Fair Proportion”?

[44]The judge’s finding was based on a rough calculation of the relative use of the highway made by “through” traffic, on the one hand, and traffic using the highway in connection with access to and from F&C’s buildings on the other. Traffic survey evidence was presented at trial which supported the figures of 90% and 10% respectively.[45]It was and is submitted on behalf of the Corporation that the judge was wrong to equate a fair proportion with a fair proportion according to traffic use. It was and is submitted that what is a fair proportion should depend upon the following factors:(1) The costs incurred were increased by virtue of the need to remedy the lack of reinforcement in the plinths which was “an inherent defect” in the developers’ structure, for which the Corporation were not responsible. Hence the extra costs attributable to the need to replace the concrete in the plinths (quantified by the judge at £40,000) should be deducted from the total.(2) F&C benefits extensively from the existence of the road in relation to vehicular and pedestrian access to the premises, as well as passing trade from persons using the highway, such as coach customers and pedestrian accessing the southern entrance to Victoria Station.(3) The cost of the works was incurred by virtue of the need to address the inadequacies in the original joints and their early failure. Since the joints lasted less than half of their expected lifespan, the sum otherwise payable should be reduced by 50%.(4) Since only joints 1 and 4 were required for the benefit of the highway and the two intermediate joints were installed exclusively because of the design needs of the developers’ buildings, the sum otherwise payable should be reduced by a further 50%.[46]Mr Graham criticises the judge for rejecting the relevance of points (1) to (4) above and simply apportioning the costs of repair according to the nature and degree of user of the highway by the public on the one hand and those seeking access to the buildings of F&C on the other.[47]In my view the judge was entitled to find as he did. It is true that use of the phrase a “fair proportion” at first sight leaves the matter very much at large. However, as the judge stated at paragraph 41 of his judgment:
“Given the purpose of the s.38 Agreement and the fact that the occupiers of the Buildings would have the benefit of the Highway to obtain access to the Buildings for themselves and also for persons making deliveries or collections or providing services, it seems to me to be plain that the contribution which would be a “fair proportion” of the costs of repair and maintenance for the Corporation to pay falls to be assessed on the basis of the contribution made by the nature and degree of user of the Highway by the public to the need for the item of repair or maintenance in question as compared to the contribution by those using the Highway to obtain access to the buildings.”
[48]The judge accepted the analysis of Mr Cooke, the expert for F&C, who held that the primary cause of the damage to the joints was one or more of the following: frequent use of the joints by heavy vehicles particularly buses and coaches; the horizontal breaking and accelerating forces imparted by vehicles stopping and starting; the horizontal lateral forces caused by large vehicles turning on entry and exit to the highway acting along the joint; continued use by other vehicles such as cars, taxis and delivery vehicles enhancing any damage. Contributing features were use of block work paving in the lay-by-zones; poor drainage on the roadway; and poor structural support below the joint. Having fully considered the evidence, the judge found that the need to replace the movement joints arose “overwhelmingly” as a result of the effects upon the joints of the traffic in fact using the Highway.[49]I now turn to the numbered points raised by the Corporation as set out in paragraph 43 above.[50]As to (1) the judge held that, on a proper construction of the clause, the Corporation had to contribute a fair proportion of the reasonable cost of repairing and maintaining the structure and service media, whatever the occasion of the need for repair or maintenance works. As he put it :
“The issue is not to what costs, or to the costs of what repairs, it would be fair for the Corporation to contribute. The issue is, the Corporation having to contribute a fair proportion of the relevant costs, whatever they are, what proportion would be fair?”
In assessing how much of the damage which caused the movement joints to need replacement was caused by public traffic in the highway and how much by traffic seeking access to the building, he relied on the report of Mr Cooke and held that a majority of the damage could be attributed to the use of the road by heavy vehicles, particularly buses and coaches, nearly all of which would have been stopping and starting as they travelled through. In terms of proportion, over 90% of the damage could be attributed to the buses and coaches using the road due to their heavier wheel-loading compared with cars or taxis. Those heavier vehicles had damaged the road surface and caused localised ruts to appear which in turn had led to higher loads being imparted to the joints themselves.[51]In my view the judge cannot be criticised for the approach which he took and he was right not to find that F&C should pay a proportion attributable to the fact that the plinths represented an inherent defect in the F&C’s structure. The road was built to a design and specification approved by the Corporation, including the movement joint layouts. There is no evidence that the Corporation required no specific provision for reinforced concrete, and it appears that reinforcement may well have been left out because of difficulties with the level of the road surface had this not been done. In any event, the Corporation, with every opportunity for preliminary comment and subsequent inspection, expressed themselves satisfied that the road had been built to the agreed specification. In those circumstances, I do not consider that the judge was obliged to make any allowance as submitted by the Corporation.[52]As to (2) the judge did not, as the Corporation has suggested, ignore its case that other benefits should be taken into account. He considered and rejected them as collateral commercial considerations unrelated to the task of assessing a fair proportion of the repairs by reference simply to the vehicular use of the highway which had rendered this necessary. In my view he was correct to do so.[53]As to (3), it does not seem to me that any reduction is called for by reason of the fact that the joints lasted less than half of their expected lifespan. As already indicated, the use of the joints in the design and construction of the highway was agreed and approved by the Corporation. Though the joints were said not to be “satisfactory”, they were acceptable by the standards of the time by which they were installed. When eventually they failed, their replacement was simply an item of repair and maintenance subject to the obligations of the parties under the clause 9 of the s.38 agreement.[54]As to (4), again as already stated, whether or not the two intermediate joints were installed because of the design needs of F&C’s buildings, the necessity for their replacement was simply a matter of repair and maintenance of the highway as built which fell within clause 9 of the s.38 agreement.

Conclusion

[55]The judge was right in the conclusions to which he came, essentially for the reasons which he gave. I would dismiss this appeal. Lord Justice Keene:[56]I agree

Lord Justice Wall:

[57]I also agree.