J R & R WILSON TRUST v MRS W BLOUNT AND OTHERS (being the Leaseholders of various flats at Knighton Court) LRX/108/2005

UPPER TRIBUNAL

LANDS CHAMBER

LRX/108/2005

Case No LRX/108/2005

Between

J R & R WILSON TRUSTApplicant

MRS W BLOUNT AND OTHERS (being the Leaseholders of various flats at Knighton Court)Respondent

Before

His Honour Judge Huskinson

Venue Procession House, 110 New Bridge Street, London EC4V 6JL

Date 11 September 2006

Hearing 5 September 2006

Property: Block A and Block B, Knighton Court, Knighton Park Road, Leicester LE2 1ZB

[1]The Appellant appeals to the Lands Tribunal, with permission, from the decision of the Leasehold Valuation Tribunal for the Midland Rent Assessment Panel (“the LVT”) dated 7 July 2005 whereby the LVT decided, on a preliminary issue, that the replacement of the window frames in Blocks A and B Knighton Court by the Appellant and the inclusion of the cost of such works within the service charge provisions of the various leases was contrary to the terms of the leases and would not be recoverable from the Respondents.

[2]On 3 November 2004 the Appellant applied to the LVT under section 27A of the Landlord and Tenant Act 1985 for a determination regarding the liability to pay service charges for the years 2005, 2006 and 2007. The Appellant had prepared proposals for major works at Blocks A and B Knighton Court and sought a determination from the LVT as to whether, if incurred, the proposed costs were reasonable. The proposed works included the renewal of the windows in the Blocks. However a point emerged from contentions raised by the Respondents, or some of them, namely that it was questioned whether the Appellant enjoyed any right under the terms of relevant leases to replace the windows in the Blocks. Clearly if the Appellant enjoyed no such right to replace the windows then the Appellant would not be entitled either to do this work or to charge the work through the service charge. The LVT decided to consider this point as a preliminary issue. There was a hearing at which the Respondents were represented by counsel and solicitors. In the result the LVT reached the conclusion which is already set out above, ie a conclusion in favour of the Respondents. It is from this decision on the preliminary issue that the Appellant appeals.

[3]Certain points were raised in argument before the LVT which have not been reargued before the Lands Tribunal. Before the LVT the Appellant not only argued that, upon the proper construction of the lease, the Appellant was entitled to renew the windows and charge the cost through the service charge, but the Appellant also argued (insofar as the foregoing were wrong) that the Respondents were precluded by an estoppel (either arising from res judicata or arising by way of an estoppel by convention) from arguing that the Appellant was not entitled so to act. Further the Appellant argued that, if the construction of the lease as it stood did not give the Appellant the claimed right, then a term was properly to be implied into the lease giving the Appellant this claimed right. These points were decided against the Appellant by the LVT and no appeal has been brought against the LVT’s conclusions on these points.

[4]At the hearing before the Lands Tribunal the Respondents were neither present nor represented. I therefore heard argument from Mr Mold on behalf of the Appellant. The fact that the Respondents were neither present nor represented does not of course provide any reason for the Appellant’s appeal being allowed. I can only allow the Appellant’s appeal if satisfied by the Appellant that the LVT’s decision was wrong. 2 The Facts

[5]I understand that Blocks A and B Knighton Court were built in about 1930. The area in which they are situated is now part of a conservation area within the Town and Planning and Country Legislation. The Appellant is the freehold owner of the Blocks. The Respondents are the long lessees of the various separate flats which are comprised within the Blocks.

[6]The LVT proceeded on the basis that all of the leases of the various flats were in effectively the same terms, in that a standard form lease was used. I proceed on the same basis. There is before me a lease (apparently undated) in respect of Flat 24. The following provisions of the lease should be noted:

[1]The lease defines “the Building” as meaning “the land on which is comprised the buildings known as Blocks A and B, Knighton Court ....” This definition is slightly curious in that if read literally it might suggest that the Building meant a piece of land rather than meaning any buildings, but it is clear from other provisions in the lease that the Building does include the built structures known as Blocks A and B Knighton Court (being of course the built structures which include the various flats).

[2]The Flat which is demised by the lease is stated to include the components set out in the First Schedule, which provides that the Flat includes (for the purpose of obligation as well as grant) various matters including “(a) The internal plaster, the coverings and plaster work of the walls bounding the flats and the doors and the door frames and windows and window frames fitted in such walls”

[3]The Third Schedule paragraph 2 reserves to the Appellant a right of entry at reasonable hours and on reasonable notice (except in case of emergency) “.... to enter the Flat for the purpose of inspecting repairing maintaining decorating or renewing any part of the Building (whether hereby demised or not) ....”

[4]The Tenant’s covenants contained in clause 3 and the Fourth Schedule include a covenant in the following terms in paragraph 3: “At all times during the said term to maintain and keep the Flat clean and in good repair and condition and in particular as occasion requires thoroughly to clean all windows serving the Flat and to keep all conduits now laid or hereafter to be laid for the exclusive service of the Flat in good repair and condition and free from obstruction Provided that:-(a) the Tenant will not paint or otherwise interfere with the outside surfaces of the front door the window frames or any railings surrounding any balconies of the Flat and

(b) ....” 3

[5]Clause 6 and the Seventh Schedule in paragraph 8 contains a covenant by the Appellant that the Appellant will (subject to payment of certain matters by the tenant) throughout the term provide and carry out or procure the provision and carrying out of the purposes particulars of which are set out in the Sixth Schedule. The Sixth Schedule deals with the purposes for which the maintenance fund is to be applied. Paragraph 2 provides as follows:

“As often as may in the opinion of the Surveyor be necessary to wash and paint in appropriate colours and in a workmanlike manner or otherwise treat in an appropriate manner all the outside wood iron cement and stucco work of the Building usually painted or treated as the case may be AND ALSO at all times during the said term to keep the interior and exterior walls and ceilings and floors of the Building (but excluding such parts thereof as are included in the Flat by virtue of the definition contained in the First Schedule and also the corresponding parts of all other flats in the Building) and the whole of the structure roof balconies foundations and main drains of the Building in good repair and condition ....”

[6]Paragraph 19 of the Sixth Schedule is in the following terms:

“To carry out all repairs to any other part of the Building for which the Lessor may be liable and to provide and supply such other services for the benefit of the Tenant and the other tenants of flats in the Building and to carry out such other repairs and such improvements works and additions and to defray such other costs (including the modernisation or replacement of plant and machinery) as the Lessor shall consider necessary to maintain the Building as a block of first class residential flats or otherwise desirable in the general interests of the Tenants.”

[7]The appearance of the windows is shown in photographs which were before me at page 171 of the bundle. I was informed that the windows comprised a wooden surround which is attached into the brickwork and that into this wooden surround is set a metal frame and within this metal frame are the metal windows with metal glazing bars some of which open on hinges set into this metal frame.

[8]Mr Mold took me briefly through certain documents describing the history of the difficulties regarding the windows. However as I am only concerned with the appeal from the LVT’s decision on the preliminary issue, which turns on the proper construction of the lease, it is unnecessary to set out this history. The Issue

[9]The issue in this appeal is whether on the true construction of the lease the Appellant has under paragraph 19 of the Sixth Schedule the power (provided the Appellant satisfies the requirements of paragraph 19) to replace the windows in the Building and to charge the tenants with the costs of such works through the service charge provisions. I am not concerned to make any finding as to whether such works are needed nor as to whether the extent of the 4 proposed works are reasonable or whether the proposed costs would be reasonable or whether the costs would be reasonably incurred. Nor I am required to decide whether the replacement of the windows is something which the Appellant considers “necessary to maintain the Building as a block of first class residential flats or otherwise desirable in general interest of the Tenants”. I proceed on the assumption that the Appellant does indeed consider the replacement of the windows necessary for the foregoing reason or reasons. The question which arises is whether, on that assumption, paragraph 19 is sufficiently wide to entitle the Appellant to renew the windows in the Building and to pass on the cost to the Tenants through the service charge (subject of course to any question of reasonableness under section 19 of the 1985 Act). The LVT decided that the Appellant had no power under the lease to replace the windows and the issue is whether the LVT was correct in so finding. The Appellant’s argument

[10]On behalf of the Appellant Mr Mold advanced the following arguments. He began by accepting that the Appellant is obliged to paint the exterior of the windows, see the opening part of paragraph 2 of the Sixth Schedule. He also accepted that the Appellant is not obliged to repair the windows under this paragraph 2 or under any other covenant in the lease, leaving aside paragraph 19 of the Sixth Schedule.

[11]As regards paragraph 19 Mr Mold drew attention to the fact that one of the purposes for which the Maintenance Fund is to be applied is “....to carry out such other repairs and such improvements works and additions .... as the Lessor shall consider necessary to maintain the Building as a block of first class residential flats or otherwise desirable in the general interests of the Tenant.” (Emphasis added) Accordingly the Appellant is entitled to carry out repairs and improvements etc to “the Building”, which includes the whole of Blocks A and B including the various flats contained within them. Mr Mold pointed out that, when referring to the Building, the text in paragraph 19 did not exclude out of the Building any constituent parts of the Building such as the Flat or any other flats let to other tenants. Mr Mold pointed out that elsewhere in the lease (eg in paragraph 2 of Schedule 6 when dealing with the Appellant’s obligation to keep the interior and exterior walls and ceilings and the floors of the Building repaired) the draughtsman did exclude out of the Building such parts as are included in the Flat or in other flats. The absence of any such exclusion in paragraph 19 points therefore to the Appellant being entitled under paragraph 19 to carry out repairs and improvements etc to the whole of the Building, including such parts as may lie within a demised flat.

[12]As regards paragraph 2 of the Third Schedule Mr Mold did not argue that this of itself conferred any right on the Appellant to renew the windows. But he drew attention to this provision as one which gave to the Appellant the practical ability to do the works if (as he argued) the proper construction of paragraph 19 gave to the Appellant the legal right to do the 5 works. He argued therefore there was nothing inconsistent with the terms of the lease and nothing impracticable in reading paragraph 19 in the manner contended for by him.

[13]As regards the Tenant’s repairing covenant in paragraph 3 of the Fourth Schedule Mr Mold drew attention to the express provisions of proviso (a) which lays down that the Tenant “.... will not paint or otherwise interfere with the outside surfaces of the front door the window frames or any railings surrounding any balconies of the Flat....” Mr Mold accepted that it is not entirely clear whether the expression “the outside surfaces of” qualifies only “the front door” or whether it also qualifies the window frames and any railings surrounding any balconies. However even construing the provision as merely prohibiting painting or any other interference with the outside surfaces of the window frames, Mr Mold argued that this necessarily prevented the Tenant from carrying out any significant works to the windows. Any significant repair to the windows would involve an interference with the outside surfaces of the window frames. A fortiori a replacement of the windows would clearly involve an interference with the outside surfaces of the window frames because it would involve the complete removal from the flats of these window frames (including their outside surfaces). Accordingly the tenants are prohibited under the terms of the lease from themselves renewing the windows in the flat.

[14]If the foregoing is correct then, Mr Mold argued, it cannot be right to construe paragraph 19 as giving the Appellant no right to renew the windows because in that event neither the Appellant nor the Tenants have any right to renew the windows such that the windows could get worse and worse through the entire period of the lease without either party having any power under the lease to do anything about it. Mr Mold submitted that the factual matrix against which the lease was executed was one where it must have been intended by the parties that someone had the power to renew the windows if necessary.

[15]Mr Mold argued that even if his construction of paragraph 3 of the Fourth Schedule was wrong, such that the Tenants did enjoy thereunder a right to renew the windows if necessary, this did not require that paragraph 19 should be construed so as to prevent the Appellant also having the right to do such works if the closing words of paragraph 19 were satisfied (ie if the Appellant considered it necessary to renew the windows in order to maintain the Building as a block of first class residential flats or otherwise desirable in the general interest of the Tenants). He pointed out that difficulties could arise, especially where regulatory powers such as those pertaining in conservation areas existed, for Tenants carrying out the works in a piecemeal and one-off manner. There were also economies of scale available if all the windows were replaced together. Even if the Tenants had the power to do the works there was no inconsistency in the Appellant also having the power (if within the qualifying words at the end of paragraph 19).

[16]As regards the question of derogation from grant Mr Mold argued that if paragraph 3 of the Fourth Schedule is construed in the manner contended for by him then there is no derogation from grant at all if paragraph 19 is construed as granting the Appellant the power to renew the windows. This is because (contrary to the LVT’s finding in paragraph 18(d) of their 6 decision) the Tenants do not enjoy the ability to repair or replace the windows at their own decision. Even if the foregoing were wrong and if the tenants did enjoy the right to replace the windows if they so chose Mr Mold argued that construing paragraph 19 as entitling the Appellant to renew the windows in the circumstances contemplated in paragraph 19 did not amount to any derogation from grant. He referred to Molton Buildings Limited v City of Westminster

(1975) 30 P & CR 182

and also to Goldmile Properties Limited v Lechouritis

[2003] EWCA Civ 49

at paragraph 11 which indicated that a repairing covenant by the landlord was there for the tenant’s as well as for the landlord’s benefit. Conclusions

[17]With respect to the LVT I disagree with their conclusions on the preliminary issue. My reasons for so concluding are substantially those advanced by Mr Mold in argument and are as follows.

[18]An appropriate starting point is the Tenant’s repairing covenant in paragraph 3 of the Fourth Schedule. This expressly provides that the Tenant will not paint or otherwise interfere with (the outside surfaces of) the window frames. For present purposes I do not think it matters whether the words “the outside surfaces” qualify the window frames or not. The position is that the Tenant cannot do any significant repair works to the windows let alone replace the windows. If the Tenant replaced the windows the Tenant would necessarily be interfering with (the outside surfaces of) the window frames. It may be noted that the Tenant is not even allowed to paint (the outside surfaces of) the window frames. The expression “otherwise interfere with” cannot in my judgment be construed so as to allow the Tenant to do whatever he/she wishes in relation to the windows (including completely removing and replacing them) provided only that having done so there continues to be ensured “consistency of appearance”, see paragraph 18(e) of the LVT’s decision. If you are not allowed even to paint (the outside surfaces of) the window frames still less are you allowed to hack them out and remove them. It may be noted that the obligation in the earlier part of paragraph 3 requires the Tenant “thoroughly to clean all windows” – thus the glass is to be kept clean but the window frames are not to be painted or interfered with.

[19]Accordingly the Tenants are not entitled to do any significant works to the window frames and in particular are not entitled to remove and renew these window frames.

[20]So far as concerns the Appellant’s position regarding the window frames, leaving aside paragraph 19 of the Sixth Schedule there is no obligation (or power) for the Appellant to repair the windows – there is merely an obligation in paragraph 2 of the Sixth Schedule to paint the outside wood and iron work (ie including the outside wood and iron work of the windows) which is usually painted.

[21]I consider that for present purposes the important passages in paragraph 19 of the Sixth Schedule to be those as set forth in paragraph 11 above. I assume for the purpose of deciding this preliminary issue that the Appellant does indeed consider the replacement of the windows in the Building to be “necessary to maintain the Building as a block of first class residential 7 flats or otherwise desirable in the general interests of the Tenant”. On that assumption I conclude that the Appellant does have power to renew the windows in the Building. The wording of paragraph 19 allows the Appellant to do the relevant works to “the Building”, not to some lesser part of the Building. Paragraph 19 does not qualify the word “the Building” by excluding from it those parts of the Building which are demised to the Tenant under the lease or to any other tenant in the Building. The omission of any such exclusion, in contrast to the inclusion of such an exclusion in for instance paragraph 2 of the Sixth Schedule, confirms me in the conclusion that the power under paragraph 19 to do works to “the Building” is a power to do works to the whole of the Building whether or not the parts where the works are to be carried out constitute parts of some flat which is demised to a Tenant.

[22]I do not consider paragraph 19 to be ambiguous. I consider the proper construction to be as set out above. However, even if (contrary to my view) paragraph 19 were ambiguous, ie supposing it was unclear as to whether the power to carry out the repairs and improvements etc to “the Building” was to be construed as referring to the whole Building on the one hand or to the whole Building minus those parts of the Building as were comprised within any flat on the other hand, then I would construe paragraph 19 in the wider rather than the narrower sense. I would do so having regard to the factual matrix in which the leases were executed and the practical consequences of construing paragraph 19 in the narrower sense. The factual matrix was that the original lessor and lessee were entering into a 99 year lease in respect of a flat in one of two blocks where all the other flats were to be let upon similar terms. It was clearly desirable, indeed necessary for the proper functioning of the blocks, to make sensible provision in the leases to ensure that the blocks and the flats contained within the blocks would be and could be properly repaired and if necessary improved so as to maintain the blocks as blocks of first class residential flats. A construction of the lease which results in neither the lessor nor the lessee having the power to renew the windows (supposing that renewal were indeed necessary) is a construction which would seem to be contrary to what must have been the intention of the parties in the circumstances in which the lease was executed and is a construction that should not be adopted unless there is no reasonable alternative construction.

[23]I agree with Mr Mold that paragraph 2 of the Third Schedule (which gives the Appellant certain rights of entry to carry out works to the Flat) does not of itself confer on the Appellant the right to renew the windows. However the construction which I have adopted of paragraph 19 of the Sixth Schedule is a construction which is workable having regard to these rights of entry contained within the Third Schedule. The construction I adopt for paragraph 19 is consistent with the Third Schedule.

[24]So far as concerns derogation from grant this can be briefly dealt with. I do not agree with the LVT’s conclusion (see paragraph 18(d) of their decision) that the Tenant enjoys under the lease “.... a benefit, ie the ownership of the windows and the ability to either repair or replace at the decision of the tenant....” Having regard to the terms of the proviso to paragraph 3 of the Fourth Schedule, the Tenants enjoy no such right under the lease. Accordingly construing paragraph 19 in the way I have done does not involve the taking away with one hand from the Tenant something which the lessor has given with other hand. 8

[25]The Appellant did not make application for costs against the Respondents in respect of the hearing before the Lands Tribunal. My powers to award such costs are, of course, in any event limited by section 175(6) and (7) of the Commonhold and Leasehold Reform Act 2002 and I would not have awarded any costs against the Respondents.

[26]I am not aware of any application having yet been made to the Lands Tribunal under section 20C of the Landlord and Tenant Act 1985 for an order that all or any of the costs incurred or to be incurred by the Appellant in connection with proceedings before the Lands Tribunal are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the Respondents. I am however aware of concern on the part of the Respondents as to the costs of the proceedings. Also I do not know whether any application under section 20C has been made or is intended to be made to the LVT regarding the costs of proceedings before the LVT. Also I have no submissions on behalf of the Respondents in respect of section 20C regarding what order the Respondents submit would be just and equitable in the circumstances and why. I raised the question of section 20C with Mr Mold and he agreed that I should not at this stage give consideration to any section 20C application (and indeed none has yet been formally made) so far as concerns costs of the proceedings before the Lands Tribunal − if and when any such application is made by the Respondents it will fall to be decided on its merits. While it is a matter for the Respondents to decide what if any application to make, it may be that any actual decision by the Lands Tribunal on any section 20C application would best be ruled upon after the final decision by the LVT on the substantive application by the Appellant (the present proceedings are merely the appeal from the LVT’s decision on the preliminary issue) and once the LVT has itself decided what if any order under section 20C to make in respect of the proceedings before it.

[27]In the result I allow the Appellant’s appeal. Dated 11 September 2006 His Honour Judge Huskinson 9