The claimant owned a large Georgian period property in central London. The property had been sub-divided into various standalone rental properties. One of which was a Maisonette first leased to the defendant in 1988. The lease had within it, at clause 3(iii), a repairing obligation, to:
‘keep the roof and outside walls of the premises in good repair and condition and to paint the exterior of the premises once every seven years’
This was conditional on the defendant complying with the rent obligations under the lease. In addition, the defendant was required, at clause 2(xxv), to contribute, when demanded by the claimant, two-fifths of the expenses incurred by the claimant in complying with the above repairing covenant.
The defendant was granted a new lease in 1999, and it was on substantially the same terms as the original lease. The repairing covenant and the related contributions remained unchanged.
The claimant undertook considerable work in repairing and maintaining the building, and then sought payment from the defendant. A dispute arose over the level of contributions required. The defendant was only willing to pay two-fifths of the cost of work done solely to its Maisonette, whilst the claimant was demanding payment of two-fifths of the cost of the repairs to the entire building. The defendant pointed out that its lease stated premises, and this related to its Maisonette within the property only. The claimant claimed that the two-fifths division clearly indicated, due to the structure of the house, that this was meant to refer to the entire house, and not just the defendant’s property.
Court of Appeal Decision
The Court of Appeal upheld the defendant’s appeal, and pointed out that:
- whilst the claimant may have intended the payment to relate to the whole property originally, the way that the lease read was a perfectly reasonable commercial term in and of its own right, and it would not therefore have been clear to the reasonable person that it was definitely a mistake;
- such division of repairing costs were far from unusual; and
- if the claimant had been mistaken originally, then they should have changed the terms of the lease when it was granted for a second time in 1999, it had 10 years in which to realise its mistake, so it would be reasonable for the defendant to assume that the written terms of the contract were those by which it should abide.
This is a demonstration of the importance of precise drafting, regardless of intentions. It demonstrates that the courts will not allow the doctrine of mistake to be applied simply where a landlord has drafted something poorly, and that a higher degree of appreciation by both parties of any alternative intention would be necessary. Only then would this allow the court to rule that a clause should be alternatively construed to that which is written in a contract.