Charles Boyd & Ors v Burton Waters Moorings Limited [2024] EWHC 138 (Ch)

“1. To pay to the Lessor the yearly ground rent hereby reserved during the said term at the times and in manner aforesaid and without any deduction and to pay to the Management Company the Service Charge at the times and in the manner aforesaid and without any deduction 2. To pay all rates taxes assessments charges impositions and outgoings which may at any time during the said term be assessed charged or imposed upon the Premises or on the owner or occupier thereof and in the event of any such rates taxes assessments charges impositions and outgoings being assessed charged or imposed in respect of the Development to pay the proper proportion of such rates taxes assessments charges impositions and outgoings attributable to the Premises (except only (in either case) such as the Lessor may be liable to pay in respect of any dealing with any reversionary interest in the premises)… 4. To observe and perform all reasonable regulations which may from time to time be made by the Management Company for the proper management of the Development and of which written notice shall have been given to the Lessee and to take all reasonable steps to ensure that all occupants of and visitors to the Premises observe and perform the same 5.1. Not to assign transfer charge underlet or part with or share occupation of part only of the Premises 5.2 Not to underlet the Premises as a whole (except for a term not exceeding five (5) years) 5.3 Not to assign or transfer the Premises as a whole without effecting a simultaneous assignment or transfer of the Mooring Licence to the same assignee or transferee 6. Immediately upon any assignment or transfer of the Premises as a whole to procure that the assignee or transferee (as the case may be) executes a Deed in the form set out in the Sixth Schedule hereto and delivers the same duly stamped to the Management Company (or its solicitors) together with certified copies of the executed Deed of Assignment or Transfer (and the assignment or transfer of the Mooring Licence pursuant to Clause 5.3)… 16. Not to swim or permit or suffer any swimming from or to any part of the Premises in the marina basin forming part of the Development”

“1. The costs charges expenses and outgoings incurred by the Management Company in carrying out its obligations pursuant to Clause 4 of this Lease 2. All other sums incurred by the Management Company in and about the maintenance and proper convenient management and running of the Development including in particular but not limited to 2.1 Any interest paid on any money borrowed by the Management Company to defray any expenses incurred by it as specified in this Schedule 2.2 Any legal or other costs incurred by the Management Company and where there shall be a benefit of the same to the Lessee in taking or defending proceedings (including any arbitration) arising out of any Lease of any part of the Development or any claim by or against the Lessee or tenant thereof or by any third party against the Lessor the Management Company or occupiers of any part of the Development 2.3 Such reasonable sum as shall be estimated by the Management Company to provide a reserve fund to meet part or all of the costs charges expenses outgoings and matters for which the Management Company is responsible under this Lease provided that neither the Lessee nor any Other Lessee shall be entitled to be repaid any part of the reserve fund and upon any transfer of this Lease the amount standing to the credit of the Lessee at the date of the transfer shall enure for the benefit and credit of the transferee and provided further that such reserve fund shall be held at all times by the Management Company upon trust in a separate designated account”

“2.1 The Licensor authorises the Licensee to moor one (1) boat not exceeding the length from time to time approved and registered in accordance with clause 5.3.3 at the Mooring for a term commencing on the date of this Licence expiring on the 18th day of June 2060 PROVIDED THAT 2.1.1 The Licensor may terminate this Licence (without affecting any other of its rights against the Licensee) forthwith upon written notice to such effect if 2.1.1.1 Any sum payable under this Licence is unpaid for a period of twenty-one (21) days after becoming due 2.1.1.2 The Licensee remains in breach of any provision in this Licence at the end of a period of twenty-one (21) days commencing on the date on which written notice of such breach is delivered by the Licensor or the Management Company to the Licensee And upon such termination the Licensor shall be entitled to remove the boat at the cost of the Licensee 2.1.2 In the event of the Marina Basin being permanently closed dewatered or ceasing to be navigable (otherwise than temporarily) then either party may determine this Licence by giving to the other not less than six (6) months' previous notice in writing expiring at any time. 2.2 If the Licensor gives to the Licensee not less than three (3) months written notice of the Licensor's requirement to grant a further Licence for a period beginning immediately on the expiry of this Licence and in accordance with the terms of this Licence (except for this Clause) the Licensee shall enter into a further Licence for such period not exceeding sixty (60) years as may be agreed between the Licensor and the Licensee or in case of disagreement such period not exceeding sixty (60) years which accords with the Licensor's practice and policy regarding the renewal of long term mooring licences at the time of renewal having regard to the permanent nature of the Premises and the Mooring and the terms of the Licence available to the Licensor from the British Waterways Board (or similar competent Authority) 3. This Licence is subservient to the use of the Marina Basin by the Licensor and the Management Company for the purposes of their undertaking and shall be exercised at the Licensee's own risk and for the avoidance of doubt it is hereby agreed and declared that this Licence does not authorise:- 3.1 The discharge or running off into the Marina Basin from any boat moored at the Moorings of anything other than unpolluted surface water draining naturally and such engine cooling water and sink and shower waste as may be permitted from time to time by law and by the British Waterways Board (or similar competent Authority) 3.2 The taking of water from the Marina Basin 3.3 Fishing in the Marina Basin (except from the Premises or the Mooring) and it is hereby further agreed and declared that:- 3.4 This Licence is granted subject to any deficiency in the quantity and quality of the water in the Marina Basin howsoever occasioned and whether or not occasioned by the acts or default of the Licensor or the Management Company or their respective agents or licensees so that no compensation shall be payable to the Licensee for any deficiency in the quantity or quality of the water howsoever caused 3.5 The Licensor and the Management Company shall not be responsible for maintaining the level of the water in the Marina Basin and nothing herein contained shall prevent the Licensor or the Management Company from diverting diminishing interfering with or cutting off the supply of water to the Marina Basin or otherwise affect the right of the Licensor or the Management Company from time to time to alter vary or adjust the level of the water in the Marina Basin or to draw down the water from time to time as often as occasion may require for any purpose whatsoever provided that in the event the Licensor or the Management Company shall give to the Licensee as much notice as reasonably practicable (except in case of emergency) where the water level in the Marina Basin is to be materially altered”

“5.8 Not to do or cause suffer or permit anything which may interfere with the carrying on of the undertaking of the Licensor and the Management Company or which may devalue the Marina Basin or cause nuisance damage grievance or annoyance to the Licensor or the Management Company or to any other licensee or to the British Waterways Board… 5.11 At all times to comply with the rules and regulations of the Licensor and the Management Company in respect of the Mooring and the Marina Basin as notified in writing from time to time to the Licensee (including but not limited to the joint Yacht Harbour Association and British Marine Industries Federation General Conditions of Berthing Mooring and Storage Ashore attached hereto or any modification or replacement thereof insofar as the same do not conflict with any specific terms in this Licence or in such rules and regulations (and in case of any such conflict the terms of this Licence will prevail)”

“7.1 The benefit of this Licence shall not be capable of assignment by the Licensee except as a whole to an assignee or transferee of the Lease of the Premises simultaneously with such assignment or transfer or pursuant to Clause 7.2 7.2 If the Mooring is used by someone other than the current owner and occupier of the Premises such use shall be only by way of a licence for a period which does not exceed one year at a fee which is calculated at a rate per metre length for the boat not less than the rate per metre length charged in the commercial section of the Marina Basin for private pleasure craft moorings and the use by and licence to someone other than the current owner and occupier of the Premises shall only be arranged through the operator from time to time of the commercial section of the Marina Basin who shall be entitled to a commission of twenty per cent (20%) of the mooring fee”

“6. During 1985/86 I started to develop initial plans for a more ambitious development centred around a marina. I established a company called Eastman Securities Limited (“Eastman”) with four other business partners. I was the Company’s Managing Director. I was the architect and my firm at the time, Costall Alan Design (“CAD”), came up with the initial sketches and visuals. Around that time, we also met, for the first time, with the planning department of West Lindsey District Council (“WLDC”) and British Waterways (“BW”). Following extensive discussions and further meetings with both parties (where we ironed out key issues like “development in the open countryside”), and despite there being some political objection, we received a tentative indication of support from WLDC and BW. This gave us sufficient confidence to move forward with more detailed concept drawings and illustrations.” “20. When work commenced on site, Burton Waters Moorings Limited (“Moorings”) did not exist. To keep Eastman (a house builder) separate from the moorings operation, we had formed a partnership, comprising myself and my business partners at the time (the “Partnership”). The Partnership let the marina basin from Eastman pursuant to a 999-year lease dated 18 January 2001. Under this lease, Eastman also assigned the burden and the benefit of the CRT Licence to the Partnership. In 2010, the CRT Licence was varied to incorporate Ellison Quay; the variation was with Moorings directly. 21. The initial cost outlay of digging out the marina basin – something in the region of £1.5 million – was covered by Eastman. This was funded by our personal money and lending facilities through Svenska Handelsbanken. The flood gate alone cost circa £300,000, and had to be designed to specification agreed with BW and EA for flood control purposes. On top of this there were significant other costs, such as the construction of the floating pontoons and jetties.” 22. Following extensive negotiations, we sold the share capital in Eastman and the Partnership to Beals. At the same time, I incorporated Burton Waters Moorings Limited (“Moorings”) and purchased the Partnership (being, essentially, the benefit and burden of the CRT Licence) for £1.74 million from Beals. As part of the deal, I agreed to stay on with Beals as their Land Director. I initially agreed to stay for one year, but I ended up staying until December 2018. I was a director of the Management Company and ran this with managing agent, Banks Long & Co (“Banks Long”).”

“25. Wilkin Chapman were retained by Moorings (and Beals) to handle the sales of properties at Burton Waters and the execution or subsequent assignment of the Licence. When you buy a property at Burton Waters with a mooring, you take an assignment of the Licence. The assignment document is very simple [122-128]. Again, this structure is dictated by the CRT Licence. It is true that the Licence is already drafted when it is presented to the incoming purchaser – there is no other way to do it. However, we have never adopted a position of refusing to negotiate on the terms, subject only to those terms that we have to include by virtue of the CRT Licence. Indeed, Moorings has always taken a very pragmatic approach to how it operates the Licence terms. Every year, without fail, we have a handful of people that are late paying, or unable to pay – we saw a lot of them in 2020 who were struggling with job loss as a result of the pandemic. Where we can be, we are flexible, and often allow Licensees who might have financial difficulties to pay either on a payment plan or a deferred basis. 26. I note that, in the Defence, the Defendants aver that they had to sign the Licence as a condition of buying their properties. That is correct. That is because they bought homes with a mooring situate around a marina basin. Indeed, until recently, all but one of the Defendants have moored boats on their moorings, so presumably that was the point of buying a home with a mooring in the first place.”

“5. On the last morning of a flying visit from Northern Ireland (during March 2009), my wife and I visited Burton Waters, with the intention of renting an apartment for my son to take up residence in. 6. As the apartments shown to us, which were available for rent, were unsatisfactory, it was suggested by Beal Homes’ Sales Staff that I might like to look at a half-completed property for sale. 7. An hour later, we had signed an initial sales agreement to purchase our present home (Plot 28), later designated 15 Ellisons Quay during that initial meeting. 8. Though not directly facing the Ellisons Quay water basin, during that initial meeting I was informed by the Sales Staff that the house purchase would include a moorings licence for a specific moorings birth, some 45 metres away from the front boundary of the property. No other options were provided. 9. Never intending to own a boat, or a mooring, I asked if we had to take on such a licence. We were told that the sale of the property to us was dependent on us doing so. Though having fallen in love with the property and having begun the purchase process, I was not enthusiastic about paying for a mooring licence. As a result, I asked whether such mooring licence could be negotiated. We were informed that it was tied into the Lease of the property and as such could not be negotiated at all. Consequently, if my wife and I wished to continue with the purchase, we had no choice but to accept the mooring licence. 10. There was no direct negotiation with the Claimant, Burton Waters Moorings Ltd (“BWM”), the company who would release the moorings licence. I was led to believe that this was the same situation for everyone purchasing a property.11. Many years later I discovered that Beal Developments Ltd, the company which had constructed my property and sold it to me as a new build, had a Mr John Beal as director. At the time of my property purchase he was also, unknown to me on purchase, the main director of BWM. 12. None of the apartments to the immediate left of my property appear to be tied into a moorings licence contract unlike other apartments on Ellisons Quay, which face directly onto to the basin. It appears that it was potluck, or rather bad luck, if one ended up having to ‘own’ a mooring, in that Beal Homes initially offered options of mooring licences to new purchasers from 2003 to 2008. From 2009 onwards, possibly due to a lack of uptake, they began adding such vacant basin moorings as a condition of sale on new phases of build, hence mine being 45 meters away from my property, and some properties on the same row as mine, having no moorings.”

“59. As set out the defendants’ primary contention is that I should look at the leasehold contract and the mooring licence contract together. I reject that argument. Firstly, of course, the parties involved are not the same. The claimant here and one of the contracting parties to the mooring licence fee is Burton Waters Moorings Limited. The defendants entered into contracts with it. The defendants also entered into separate contracts with Beal Developments Ltd. Secondly, the subject matter of the contract with which I am concerned is the mooring licence. Not all the residential owners have a mooring licence. They have a separate contract in respect of the lease. The fact that one contract may be dependent on another, or the fact that the defendants had to enter into the mooring licence agreement as part of the agreement in respect of the property does not in my opinion automatically make the licence contract ancillary to the leasehold contract. That must be especially so where, as I say, there are different contracting parties. 60. The core terms of the mooring licence are the provision of the mooring and the payment of the fee. Clause 2.1.1 provides that the licensor may terminate the licence forthwith upon written notice of breach by the licensee, i.e. not paying any sum payable under the licence or any other breach. The claimant does not, as I understand it, argue that this is a core term. In any event, it does not seem to me that it would amount to such given as I have identified that the core terms are the provision of the mooring and the payment there for. 61. Similarly, clause 7.1, which provides that the “benefit of the licence shall not be capable of assignment except as a whole to an assignee or transferee of the lease of the premises" is not again argued by the claimant to be in core term nor would I find it to be so, in any event for the same reasons I have found in respect of clause 2.1.1. 62.The claimant does argue that clause 4, by which the licensee agrees to pay the licence fee, whether or not a boat is moored at the mooring is a core term since it relates to payment for the mooring itself. I find that this is a core term within regulation 6(2) “relating to the definition of the main subject matter of the contract, or to the adequacy of the price or remuneration, as against the goods or services supplied in exchange”

“81. The claimant emphasises the nature and description of the test of fairness in the Regulations so that a term, is regarded as unfair if contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer. In summary, the requirement of good faith is one of fair and open dealing. Openness requires that the term should be expressed fully, clearly and legibly containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously to the consumer.”

“86. I can deal with the argument about the service charge quite straightforwardly. Apart from the defendants’ suspicion of the claimant's motivation, there is nothing to suggest that the claimant is using the mooring licence fee as a method of circumventing the statutory protection afforded to leaseholders in respect of service charges. There is no evidence to support it and I reject the suggestion completely. 87. As an aside to the issue of whether or not the charging of the mooring licence fee is a device I note that one resident of the Estate, Mr Joshua Fernie, pursued what seems to have been a nine-day hearing (including a site visit) in the First-Tier Tribunal at huge expense, challenging many aspects of the management company’s service charge pursuant to the statute and recovering the sum of £10.44 in respect of unreasonable charges. 88. The three defendants who gave evidence themselves said that they would have paid the fee by way of service charge and that they were willing and able to do so. In those circumstances, it does not seem to me that there can be any relevant unfairness or imbalance. 89. I accept the evidence that the licence fee model used for the Burton Waters marina is entirely in line with the standard industry practice. 90. Any suggestion that this feeds into the court's consideration of unfairness for the purposes of the Regulations in a general sense is not made out on the facts here.” “98. The fifth point relates to the service charge point I have already covered. I have rejected any suggestion that this is a device to avoid statutory scrutiny. 99. The charging of a mooring licence fee represents the claimant's business model. Whether or not the mooring licence fee could also have been charged as part of the service charge is not, as I find relevant to my decision in these matters. I have found that this is not some sort of device to avoid any statutory review.”

“94. Importantly, as I find, on the basis of the advice they received at the time the defendants were fully aware of the fact that the property came with the mooring and the requirement to enter into the licence with the claimant and pay the fee. The defendants did so without complaint. Even those defendants who have never owned a boat, despite the length of time they have lived there, have made no complaint about the fact that they have to pay for mooring despite not having a boat. 95. In this respect, I reject the evidence of Mr Boyd that he specifically asked if he could negotiate the terms of the mooring licence and that he was not happy about paying the fee. I completely reject his evidence that he would not even have bought the property if he knew then what he says has been told now about the fairness of the licence. That is inconsistent with him saying that he would pay the fees through the service charge, and with him having paid the fees up until 2020. He was clearly attracted to the property itself. Similarly, I reject Mr Connell’s evidence that he and his wife felt they were in a difficult position due to the lack of negotiation of the mooring licence. I find that Mr Casey did indeed make no attempt to negotiate the terms of the mooring licence, but that does not mean that he could not have attempted to do so.”

“103. The claimant summarises the types of terms which might be unfair, as identified in paragraph 1 of Schedule 2 as those that in effect are trying to achieve the following: make a consumer pay an unfair penalty; mislead the consumer about his legal rights, or mislead about the contract; deny a consumer full redress; tie a consumer to a contract unfairly; allow a seller to not perform its obligations; not allow a consumer to recover his prepayments on cancellation; allow a seller to vary the terms after the contract has been agreed. 104. Against the background of those principles, I agree with the claimant’s emphasis on the need to look at the overall bargain contained in the agreement as a whole. At page 24 (d – l) of the skeleton argument, the claimant relies on: the age, character and locality of the Estate; the moorings requiring access through a private property; the security on the Estate; the express reference to the mooring licence; the existence of the commercial moorings; the CRT licence and the obligations thereunder; the fact that the defendants were legally advised and the character and likely financial position of the defendants; and the fact that the residential mooring rates are cheaper than the commercial moorings.”

“108. In consideration of the licence fee, the claimant provides significant services for the benefit of the residents with a mooring licence and in that respect, as identified by the claimant, I find that there is no significant imbalance in the parties’ relationship. There are considerable annual costs of maintenance which I accept. It is apparent that there are real benefits due to the fact of the existence of the marina itself. In fact, it is at the heart of the Estate. I have already found that the increase by reference to the RPI does not of itself create any unfairness. I accept the analogy provided by the claimant with the payment of a licence or service charge, for example, for a communal garden, which one does not use. Although if someone bought a property with the mooring, they were obliged to accept the licence for the mooring and pay the fee, they were not obliged to buy the property in the first place and there are properties without moorings. Again, insofar as the defendant's evidence suggested a lack of free choice in this regard, I reject it. I find that they wanted to buy a property on this Estate with its marina.”

“Article 3 1. A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer. 2. A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract. The fact that certain aspects of a term or one specific term have been individually negotiated shall not exclude the application of this Article to the rest of a contract if an overall assessment of the contract indicates that it is nevertheless a pre-formulated standard contract. Where any seller or supplier claims that a standard term has been individually negotiated, the burden of proof in this respect shall be incumbent on him. 3. The Annex shall contain an indicative and non-exhaustive list of the terms which may be regarded as unfair. Article 4 1 . Without prejudice to Article 7, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent. 2. Assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplies in exchange, on the other, in so far as these terms are in plain intelligible language.”

“5.— Unfair Terms (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer. (2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term. (3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract. (4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was. (5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair. 6.— Assessment of unfair terms (1)Without prejudice to regulation 12, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent. (2) In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate– (a) to the definition of the main subject matter of the contract, or (b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange.”

“(a) excluding or limiting the legal liability of a seller or supplier in the event of the death of a consumer or personal injury to the latter resulting from an act or omission of that seller or supplier; (b) inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations, including the option of offsetting a debt owed to the seller or supplier against any claim which the consumer may have against him; (c) making an agreement binding on the consumer whereas provision of services by the seller or supplier is subject to a condition whose realisation depends on his own will alone; (d) permitting the seller or supplier to retain sums paid by the consumer where the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract; (e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation; (f) authorising the seller or supplier to dissolve the contract on a discretionary basis where the same facility is not granted to the consumer, or permitting the seller or supplier to retain the sums paid for services not yet supplied by him where it is the seller or supplier himself who dissolves the contract; (g) enabling the seller or supplier to terminate a contract of indeterminate duration without reasonable notice except where there are serious grounds for doing so; (h) automatically extending a contract of fixed duration where the consumer does not indicate otherwise, when the deadline fixed for the consumer to express his desire not to extend the contract is unreasonably early; (i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract; (j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract; l) providing for the price of goods to be determined at the time of delivery or allowing a seller of goods or supplier of services to increase their price without in both cases giving the consumer the corresponding right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded; (m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract; (n) limiting the seller's or supplier's obligation to respect commitments undertaken by his agents or making his commitments subject to compliance with a particular formality; (o) obliging the consumer to fulfil all his obligations where the seller or supplier does not perform his; (p) giving the seller or supplier the possibility of transferring his rights and obligations under the contract, where this may serve to reduce the guarantees for the consumer, without the latter's agreement; (q) excluding or hindering the consumer's right to take legal action or exercise any other legal remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions, unduly restricting the evidence available to him or imposing on him a burden of proof which, according to the applicable law, should lie with another party to the contract.”

“In agreement with the judge and the Court of Appeal, I do not accept the bank's submission on this issue. The Regulations, as Professor Sir Guenter Treitel QC has aptly observed (Treitel The Law of Contract, 10th ed (1999), p. 248), "are not intended to operate as a mechanism of quality or price control" and regulation 3(2) is of "crucial importance in recognising the parties' freedom of contract with respect to the essential features of their bargain": p 249. But there is an important "distinction between the term or terms which express the substance of the bargain and 'incidental' if important) terms which surround them": Chitty on Contracts, 28th ed (1999), vol 1, ch 15 "Unfair Terms in Consumer Contracts", p 747, para 15-025. The object of the Regulations and the Directive is to protect consumers against the inclusion of unfair and prejudicial terms in standard-form contracts into which they enter, and that object would plainly be frustrated if regulation 32)(b) were so broadly interpreted as to cover any terms other than those falling squarely within it. In my opinion the term, as part of a provision prescribing the consequences of default, plainly does not fall within it. It does not concern the adequacy of the interest earned by the bank as its remuneration but is designed to ensure that the bank's entitlement to interest does not come to an end on the entry of judgment. I do not think the bank's argument on merger advances its case. It appears that some judges in the past have been readier than I would be to infer that a borrower's covenant to pay interest was not intended to extend beyond the entry of judgment. But even if a borrower's obligation were ordinarily understood to extend beyond judgment even in the absence of an independent covenant, it would not alter my view of the term as an ancillary provision and not one concerned with the adequacy of the bank's remuneration as against the services supplied. It is therefore necessary to address the second question.”

“In judging the fairness of the term it is necessary to consider the position of typical parties when the contract is made. The borrower wants E to borrow a sum of money, often quite a modest sum, often for purposes of improving his home. He discloses an income sufficient to finance repayment by instalments over the contract term. If he cannot do that, the bank will be unwilling to lend. The essential bargain is that the bank will make funds available to the borrower which the borrower will repay, over a period, with interest. Neither party could suppose that the bank would willingly forgo any part of its principal or interest. If the bank thought that outcome at all likely, it would not lend. If there were any room for doubt about the borrower's obligation to repay the principal in full with interest, that obligation is very clearly and unambiguously expressed in the conditions of contract. There is nothing unbalanced or detrimental to the consumer in that obligation; the absence of such a term would unbalance the contract to the detriment of the lender.”

“The above analysis suggests that the following considerations are relevant to this broad question, together no doubt with many others, depending upon the facts of the particular case. (i) The nature of the services provided as a whole and the manner and terms in which the standard term documentation is provided to consumers. (ii) The quantum of the particular payment, the goods or services to which it is said to relate and the other payments required under the contract. (iii) In order to be “price or remuneration” within the meaning of article 4(2) the payment provision must not be ancillary to the central bargain between the consumer and supplier. Along this sliding scale: (a) if the payment obligations are directly negotiated between the consumer and supplier they will not be subject to assessment for fairness under the Directive; (b) the more closely related the payment term is to the essential bargain between the parties, the more likely it is to fall within the exception in article 4(2); but (c) the more ancillary the payment term is and the less likely it is to come to the direct attention of the consumer at the time the contract is entered into, the less likely it is to be within the concept of “price or remuneration” within the meaning of the Directive.”

“39 I start with the language of article 4(2) and regulation 6(2) (I can see no significant difference between them, although for no obvious reason article 4(2) refers to assessing the unfair nature of a term whereas regulation 6(2) refers to assessment of fairness of a term). Paragraphs (a) (a) and (b) are, as I have said, concerned with the two sides of the quid pro quo inherent in any consumer contract. The main subject matter may be goods or services. If it is goods, it may be a single item (a car or a dishwasher) or a multiplicity of items. If for instance a consumer orders a variety of goods from a mail-order catalogue – say clothing, blinds, kitchen utensils and toys – there is no possible basis on which the court can decide that some items are more essential to the contract than others. The main subject matter is simply consumer goods ordered from a catalogue. I think that the Court of Appeal, ante p 720, para 55, was wrong to dismiss the difficulties raised by the banks on this point as something that the court could decide as a question of fact in the circumstances of the particular case. 40 Similarly, a supply of services may be simple (an entertainer booked to perform for an hour at a children’s party) or composite (a week’s stay at a five-star hotel offering a wide variety of services). Again, there is no principled basis on which the court could decide that some services are more essential to the contract than others and again the main subject matter must be described in general terms – hotel services. The services that banks offer to their current account customers are a comparable package of services. These include the collection and payment of cheques, other money transmission services, facilities for cash distribution (mainly by ATM machines either at manned branches or elsewhere) and the provision of statements in printed or electronic form. 41 When one turns to the other part of the quid pro quo of a consumer contract, the price or remuneration, the difficulty of deciding which prices are essential is just the same, and regulation 6(2)(b) contains no indication that only an “essential” price or remuneration is relevant. Any monetary price or remuneration payable under the contract would naturally fall within the language of paragraph (b) (I discount the absence of a reference to part of the price or remuneration for reasons already mentioned). 42 In the case of banking services supplied to a current account customer under the “free-if-in-credit” regime, the principal monetary consideration received by the bank consists of interest and charges on authorised and unauthorised overdrafts, and specific charges for particular non-routine services (such as expedited or foreign money transmission services). The most important element of the consideration, however, consists of the interest foregone by customers whose current accounts are in credit, since whether their credit balance is large or small they will be receiving a relatively low rate of interest on it (sometimes a very low rate or no interest at all). The scale of this benefit is indicated by the figure for 2006 already mentioned. Mr Sumption was wary about committing himself as to whether interest foregone constituted part of the bank’s price or remuneration for the purposes of regulation 6(2)(b). Whatever view is taken as to that, it is clear that just as banking services to current account customers can aptly be described as a package, so can the consideration that moves from the customer to the bank. Interest foregone is an important part of that package for customers whose accounts are in credit, and overdraft interest and charges are the most important element for those customers who are not in credit. Lawyers are very used to speaking of a package (or bundle) of rights and obligations, and in that sense every obligation which a consumer undertakes by a consumer contract could be seen as part of the price or remuneration received by the supplier. But non-monetary obligations undertaken by a consumer contract (for instance, to take proper care of goods on hire-purchase, or to treat material supplied for a distance-learning course as available only to the customer personally) are not part of the “price or remuneration” within the regulation. That is the point of Lord Steyn’s observation in the First National Bank case [2002] 1 AC 481, para 34, that “in a broad sense all terms of the contract are in some way related to the price or remuneration”. 43The House of Lords’ decision in the First National Bank case shows that not every term that is in some way linked to monetary consideration falls within regulation 6(2)(b). Paragraphs (d), (e), (f ) and (l) of the “grey List” in Schedule 2 to the 1999Regulations are an illustration of that. But the relevant term in the First National Bank case was a default provision. Traders ought not to be able to outflank consumers by “drafting themselves” into a position where they can take advantage of a default provision. But Bairstow Eves London Central Ltd v Smith [2004] 2 EGLR 25 shows that the court can and will be astute to prevent that. In the First National Bank case Lord Steyn, at para 34, indicated that what is now regulation 6(2) should be construed restrictively, and Lord Bingham said, at para 12, that it should be limited to terms “falling squarely within it”

“But the language used in expressing the test, so far as applicable in this case, is in my opinion clear and not reasonably capable of differing interpretations. A term falling within the scope of the Regulations is unfair if it causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer in a manner or to an extent which is contrary to the requirement of good faith. The requirement of significant imbalance is met if a term is so weighted in favour of the supplier as to tilt the parties' rights and obligations under the contract significantly in his favour. This may be by the granting to the supplier of a beneficial option or discretion or power, or by the imposing on the consumer of a disadvantageous burden or risk or duty. The illustrative terms set out in Schedule 3 to the Regulations provide very good examples of terms which may be regarded as unfair; whether a given term is or is not to be so regarded depends on whether it causes a significant imbalance in the parties' rights and obligations under the contract. This involves looking at the contract as a whole. But the imbalance must be to the detriment of the consumer; a significant imbalance to the detriment of the supplier, assumed to be the stronger party, is not a mischief which the Regulations seek to address. The requirement of good faith in this context is one of fair and open dealing. Openness requires that the terms should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously to the customer. Fair dealing requires that a supplier should not, whether deliberately or unconsciously, take advantage of the consumer's necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position or any other factor listed in or analogous to those listed in Schedule 2 to the Regulations. Good faith in this context is not an artificial or technical concept; nor, since Lord Mansfield was its champion, is it a concept wholly unfamiliar to British lawyers. It looks to good standards of commercial morality and practice. Regulation 4(1) lays down a composite test, covering both the making and the substance of the contract, and must be applied bearing clearly in mind the objective which the Regulations are designed to promote.”

“71. It seems to us that the argument in this case is directed to the judge's "evaluative" decision as to whether Dr Potamianos's conduct justified his exclusion from the management of the Company and so whether there had been "unfair prejudice" in the conduct of the company's affairs on the basis of the primary facts as he found them to be. While there were disputes below as to the primary facts, his findings on those disputes are not now challenged. We are concerned to assess the judge's "evaluation" of those primary facts leading to his decision that there had been "unfair prejudice" in this case.” 76. So, on a challenge to an evaluative decision of a first instance judge, the appeal court does not carry out a balancing task afresh but must ask whether the decision of the judge was wrong by reason of some identifiable flaw in the judge's treatment of the question to be decided, "such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermines the cogency of the conclusion".”

“17. The well-known general principles of contractual construction are to be found in a series of recent cases, including Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900; Arnold v Britton and others [2015] UKSC 36; [2015] AC 1619 and Wood v Capita Insurance Services Ltd [2017] UKSC 24; [2017] AC 1173. 18. A simple distillation, so far as material for present purposes, can be set out uncontroversially as follows: i) When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. It does so by focussing on the meaning of the relevant words in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the contract, (iii) the overall purpose of the clause and the contract, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions; ii) The reliance placed in some cases on commercial common sense and surrounding circumstances should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision; iii) When it comes to considering the centrally relevant words to be interpreted, the clearer the natural meaning, the more difficult it is to justify departing from it. The less clear they are, or, to put it another way, the worse their drafting, the more ready the court can properly be to depart from their natural meaning. However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a departure from the natural meaning; iv) Commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made; v) While commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party; vi) When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time the contract was made, and which were known or reasonably available to both parties. 19. Thus the court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. The court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. This is not a literalist exercise; the court must consider the contract as a whole and, depending on the nature, formality, and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning. The interpretative exercise is a unitary one involving an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences investigated.”

“Although Mr Hurndall did not refer to it specifically, it seems to me that a further important para is 4.004 relating to the property register and leasehold estates in land. There Ruoff & Roper states: “In the case of a registered leasehold estate, the property register will contain (as well as a description of the demised premises) sufficient particulars of the lease to enable it to be identified … The lease and these other documents remain essential parts of the title notwithstanding registration. So, for example, regard must be had to the lease itself, rather than what appears on the face of the register, in deciding questions relating to the covenants, provisions and conditions of the lease.”

“99. The question, then, is what does the registered charge mean? Whatever it means, it has always meant what it means. A contract cannot mean one thing when it is made and another thing following court proceedings. Nor, in my judgment, can it mean one thing to some people (eg the parties to it) and another thing to others who might be affected by it. As Arden LJ herself has said a contract has only one meaning: Static Control Components (Europe) Ltd v Egan [2004] 2 Lloyd's Rep 429 . Thus I do not consider that the question is as posed by Arden LJ at para 63. We are not, in my judgment, seeking to ascertain “what the parties intended to agree” but what the instrument means.” “130. In my judgment this is the key to the present case. The reasonable reader's background knowledge would, of course, include the knowledge that the charge would be registered in a publicly accessible register upon which third parties might be expected to rely. In other words a publicly registered document is addressed to anyone who wishes to inspect it. His knowledge would include the knowledge that in so far as documents or copy documents were retained by the registrar they were to be taken as containing all material terms, and that a person inspecting the register could not call for originals. The reasonable reader would also understand that the parties had a choice about what they put into the public domain and what they kept private. He would conclude that matters which the parties chose to keep private should not influence the parts of the bargain that they chose to make public. There is, in my judgment, a real difference between allowing the physical features of the land in question to influence the interpretation of a transfer or conveyance (which we do) and allowing the terms of collateral documents to do the same (which we should not). Land is (almost) invariably registered with general boundaries only, so the register is not conclusive about the precise boundaries of what is transferred. Moreover, physical features are, after all, capable of being seen by anyone contemplating dealing with the land and who takes the trouble to inspect. But a third party contemplating dealing with the land has no access to collateral documents.”

“18.— Meaning of “service charge” and “relevant costs” . (1) In the following provisions of this Act “service charge” means an amount payable by a tenant of a dwelling as part of or in addition to the rent— (a) which is payable, directly or indirectly, for services, repairs, maintenance, improvements or insurance or the landlord's costs of management, and (b) the whole or part of which varies or may vary according to the relevant costs. (2) The relevant costs are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with the matters for which the service charge is payable. (3) For this purpose— (a) “costs” includes overheads, and (b) costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period. 19.— Limitation of service charges: reasonableness. (1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period— (a) only to the extent that they are reasonably incurred, and (b) where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard; and the amount payable shall be limited accordingly. (2) Where a service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable, and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise. (5) If a person takes any proceedings in the High Court in pursuance of any of the provisions of this Act relating to service charges and he could have taken those proceedings in the county court, he shall not be entitled to recover any costs.”

“The second strand of Mr Bates argument was that, even if they were service charges, the rent and CCTV costs were fixed, rather than variable according to the costs incurred by or on behalf of the appellant in connection with the provision of the service. That seems to me to be an impossible argument. A service charge is an amount payable by a tenant which may vary according to the costs incurred by the landlord; it matters not that for the time being the costs incurred by the landlord are fixed. All that matters is that the cost to the tenant may vary in accordance with the cost to the landlord. Not only are the costs of providing the office accommodation and the gym subject to review under the terms of the gym and office leases, but those leases themselves are for only a relatively short period of the total term of the respondents' leases. If in 2017, when the gym lease expires, the appellant proposes to renew the lease, no doubt a new rent will be negotiated, and will be recoverable (subject to reasonableness) under the terms of the respondents' leases. The cost of providing the gym is a variable cost and the amount payable by the lessees varies in accordance with it. Nor is the fact that the charges for the provision of the CCTV equipment are fixed for the duration of the five year agreement sufficient to prevent them from forming a component of a variable service charge. The cost of providing the CCTV service plainly may vary from time to time during the term of the lease as the cost to the landlord of hiring or purchasing the equipment varies, so the fact that for any particular period the payments which the landlord is required to make for the equipment are fixed is nothing to the point.”

“42 Although Mr Baker criticised it as assuming that which needed to be proved, in my judgment Mr Fieldsend identified the correct starting point, namely that a construction of the Lease would produce a result which reasonable parties in the position of the Council and Ms Oliver could not sensibly have intended, if its service charge provisions permitted the Council to make double recovery. 43 The prospect of double recovery (if service charge proportions are determined without giving credit for third party funding) is by no means limited to payments under the CESP Scheme. The exterior of the Property or of the Block might be seriously damaged by an insured risk the repair of which would fall both within the Council’s repairing obligations (and therefore the confines of the service charge provisions) and within the cover provided by an insurance policy taken out pursuant to clause 4(4)(i) of the Lease, at the Lessees’ joint expense. 44 The Council might receive payment against the carrying out of works falling within its repairing covenant from an original builder of the Block under a guarantee, from the employers or insurers of the driver of a heavy goods vehicle which crashed into it, or by way of damages from someone committing malicious damage. All those sources would be third party contributions to the cost of carrying out the requisite works, and double recovery would occur if the Council did not have to give credit for the receipt of them when determining the service charge liabilities of the long lessees within the Block. 45 It is in my view no answer to say, as Mr Baker submitted, that the statutory prohibition of double recovery in relation to some forms of grant in section 20A of the Landlord and Tenant Act 1985 point to a mutual understanding, under the Lease, that double recovery is in principle permissible, save where specifically prohibited. The statutory provision may equally, and in my view more, sensibly be regarded as a form of belt and braces where a particular Lease made no sufficient provision for the avoidance of double recovery in relation to such grants.”

“A conveyance of land shall be deemed to include and shall by virtue of this Act operate to convey, with the land, all buildings, erections, fixtures, commons, hedges, ditches, fences, ways, waters, watercourses, liberties, privileges, easements, rights, and advantages whatsoever, appertaining or reputed to appertain to the land, or any part thereof, or, at the time of conveyance, demised, occupied, or enjoyed with, or reputed or known as part or parcel of or appurtenant to the land or any part thereof.”