H Waites Ltd v Hambledon Court Ltd & Ors

Hambledon Court comprises a block of flats and two garage blocks. The buildings were erected in the early 1960s and the flats and garages have been let on 999 year leases. In 2007, the freeholder granted a lease of the airspace above the garages. The Claimant is a developer and is the current lessee under that lease. The Claimant now wishes to construct a flat on each of the garage blocks. This has given risen to issues between the Claimant and the lessees under the flat and garage leases (the Second to Eighteenth Defendants) and further issues between the Claimant and the present freeholder (the First Defendant) as to the Claimant’s ability to develop as it wishes. Some of the lessees under the flat and garage leases do not oppose the Claimant’s plans but the majority of such lessees do oppose those plans.

Hambledon Court is a residential development fronting onto The Grove, Ealing, London W5. The principal building is a block of 12 flats. The block of flats is set back from the road and between the block of flats and the road is a forecourt which permits vehicular access to the block. The block of flats was built in the early 1960s and is constructed on three floors. The block appears to be traditionally built in brickwork. The top floor is built within a mansard roof. At ground level, there is an opening in the centre of the block which gives vehicular access to the land behind the block. The first and second floors of the block are then built across this opening. The entrance to Flats 1 to 6 is on the left hand side of the opening and the entrance to Flats 7 to 12 is on the right hand side of the opening.

Behind the block of flats, as part of the original development, there are two blocks of garages. The left hand block comprises garages 1 to 6 and the right hand block comprises garages 7 to 12. I was provided with photographs which show the form of construction of the garages. Each block comprises 6 garages. The block has a brick wall on three sides. The walls are made of a single skin of bricks 100 mm thick with coping tiles set on top. The foundations of the walls go down to 800 mm below surface level. The foundations are 450 mm wide and 220 mm deep. The wall at the rear of the garage block rises above the level of the roof of the block. The roof is made of overlapping corrugated asbestos sheets fixed to timber supports. The roof is a single roof covering the six garages; the single roof is not separated into 6 separate roofs by, for example, upstands from the walls which separate the individual garages. The roof is a lightweight construction. Anyone working on the roof would need crawl boards to prevent damage to the roof. The roof slopes to the front of the block. The flank walls of the block rise to a constant height so that the gap between the roof and top of the flank wall increases as one travels to the front of the roof. At the rear of the roof, there is (or ought to be) flashing at the joint of the roof and the rear wall. At the front of the roof is a gutter. The gutter discharges into a downpipe. Each of the garages has its own set of double doors. There is a panel of brickwork between the doors. Internally, there is a brick wall separating each garage from the adjoining garage. The timbers supporting the roof run parallel to the front doors of the garages. The brick walls are not rendered. There is a light fitting attached to the roof timbers. The floors are made of concrete. The garage blocks are of a very basic form of construction. Garages like these are a very familiar sight.

On the left side of the left hand garage block there is a brick built electricity sub station. On the left side of the right hand garage block there is a brick built bin store with steps and a landing.

The developer wishes to construct a flat above each garage block. The structure of the garage block is inadequate to support the new flat. It is necessary to support the new flat on independent supports. The developer proposes to erect steel columns resting on their own foundations and the new flat will sit on horizontal steels supported by these columns.

If everyone were agreeable it would seem to be simpler and a better solution all round to demolish the existing garages and start again. The new development could give the developer his two new flats and the lessees of the garages could be given replacement garages. However, the parties are not prepared to adopt this approach. Hence these proceedings.

The first issue is as to the extent of the physical premises demised by the flat and garage lease and, in particular, whether the demised premises include the roof of the garage. This first issue is important in its own right but it is also highly relevant to the outcome of the second issue.

The second issue is whether the premises demised by the flat and garage lease include the airspace above the individual garage.

The third issue is whether the court should imply into the flat and garage leases a covenant by the lessor not to construct further flats on the Estate.

The fourth issue is whether the lessee under the 2007 lease is entitled to erect columns outside the garage blocks to support the flats which it wishes to build in the airspace above the blocks.

The fifth issue is whether the lessor under the 2007 lease unreasonably withheld consent to the request by the lessee under the 2007 lease for consent to the erection to staircases to gain access to the proposed flats above the garage blocks.

There are 12 leases of the flats and garages. The Second to Eighteenth Defendants are the current lessees under these leases. Each lease demises one flat and one garage. I was originally told that all 12 of the flat and garage leases were in the same terms. I was provided with the lease of flat 1 and garage 1 as a specimen of the leases. I doubted whether this lease was in all respects representative of the other leases as, in one respect at least, the typewritten form of lease had been amended in manuscript. I was then told that this particular manuscript amendment was particular to the lease of flat 1 and garage 1. I was then provided with lease of flat 12 and garage 12 and asked to treat that as setting out the terms of all of the leases, except of course for flat 1 and garage 1 where the lease had been amended in manuscript.

The recitals to the lease of flat 12 and garage 12 stated, as follows:

The Lessor is registered at H.M. Land Registry as proprietor with Absolute Title of the Freehold land known as 105/107 The Grove Ealing in the County of London W.5. more particularly shown on the plan annexed hereto

The Lessor is in course of developing the said land as a Residential Estate by the erection thereon or on some part or parts thereof of a block of flats with garages roads footpaths and sewers as shown on the said plan

The Lessor has recently offered to demise each of the said flats and garages subject to a general scheme applicable to the said development consisting of the stipulations contained herein to the intent that the Lessee for the time being of any of the said flats may be able to enforce in equity the observance of the said stipulations by the lessees for the time being of the other flats comprised in the said development”.

The lease demised flat 12 and garage 12 for a term of 999 years from 29 September 1961. In the case of seven of the leases, the term commenced on 24 June 1961; the other five commenced on 29 September 1961. The parcels clause in the lease was in these terms:

The First Schedule referred to the following:

The plan showed the block of flats and the part of the block which included flat 12 was shown coloured blue. The plan also showed the two blocks of garages and the part of the block which comprised garage 12 was shown coloured red.

The lease provided that the following rights were included in the demise:

In the lease of Flat 1, the right granted by clause 2(v) was qualified by the following words:

The lease provided that the demise was subject to the following matters:

The flat and garage lease requires the lessee to pay an insurance rent and a service charge rent. Each lessee is to pay 1/12 of the relevant costs of insurance and of the services.

By the lease, the lessee covenanted with the Lessor and so far as may be with the other lessees in and upon the Estate. The lessee’s covenants included the following provisions:

The lessor’s covenants included the following provision:

The lessor’s covenants also included covenants in relation to the upkeep of the drives, footpaths, car parking areas and other areas within the curtilage of the Estate and to light parts of the retained premises. The lessor also covenanted to maintain a maintenance fund in relation to sums received from lessees for repair, maintenance and management of the various matters for which the lessor was responsible. By clause 5(9), the lessor covenanted to hold the maintenance fund on trust for the purpose of discharging the costs of complying with the relevant obligations on it. By clause 5(10), it was agreed that in some circumstances, where the monies were not required for the relevant purposes, the lessor would be entitled to refund part of the maintenance fund to the lessees.

The Second Schedule was headed “General Stipulations” and contained a number of relatively usual restrictions on the use of the flat and dealt with matters such as noise and disturbance and pets. Paragraph 3 of the Second Schedule restricted the placing of notices on “any external parts” of the demised premises and referred to “the exterior of the said buildings”.

The first issue is as to the extent of the physical premises demised by the flat and garage lease and, in particular, whether the demised premises include the roof of the garage. The extent of the premises demised by a flat and garage lease is described in the parcels clause in each case which refers to the First Schedule to the lease. I have set out the relevant provisions above.

The Claimant contends, in effect, that that the following words in the First Schedule “but excluding the roof foundations and external and main structural parts of the said building” apply just as much to the garage as they do to the flat which is demised. The relevant Defendants disagree and contend that the roof of the garage in each case is demised as it is part of “the Garage”.

In the first instance, I will attempt to construe the flat and garage lease without regard to any specific authority. Having reached a provisional view on the first issue, I will then consider whether I am assisted by any specific authority to determine that issue.

The words of the First Schedule to the flat and garage lease are of central importance in determining the extent of the demise. Most of the language of the First Schedule is devoted to describing the extent of the demise of the flat. In that respect, the wording is relatively clear and it was not suggested that there was any difficulty in giving effect to that wording in the case of the flat. There are also some fairly obvious common sense considerations as to why the parties defined the extent of the demise of the flat in the way in which they did.

The Claimant submits that the wording of the First Schedule in relation to the definition of the demise of the flat should be taken to apply also to the demise of the garage. It is said that just as the lessor would have wanted to retain the main structure of the block of flats so too he would have wanted to retain the main structure of the block of garages. This submission seems to me to be wrong for two principal reasons. The first is that the wording which applies to the garage is quite different from the wording used in the case of the flat. The Claimant’s approach seems to me to involve a substantial rewriting of the wording so that parts of the language used to describe the flat are repeated in relation to the garage or the reference to the garage comes earlier in the wording so that, for example, the phrase “but excluding …” applies to the foregoing subject matter which has been redrawn to include the flat and the garage. The fact that the wording of the First Schedule which refers to the flat is quite different from the wording which refers to the garage is a powerful indicator that the parties intended the position to be different, rather than the same. The second reason is that the form of construction of a flat and the form of construction of a garage are quite different. The reasons which led the parties to define with precision how much of a flat is demised do not apply in the same way to a garage.

I consider that the relevant words from the First Schedule which define the extent of the demised garage are the following: “the Garage shown coloured red and Numbered [X] on the said plan”. The plan which is used in each case does not assist with the precise boundaries of the demise of a garage. Accordingly, the words which fall to be construed are “the Garage”.

I have earlier described the physical structure of the garages. On the face of it, the task is to identify which parts of the physical structure should properly be considered to be parts of “the Garage”. That appears to be a relatively easy question to answer. I would provisionally hold that the garage includes the floor, the doors, the roof timbers, the roof, and the walls which enclose the garage, save that in the case of a wall separating one garage from another, the demise extends to one half in depth of that wall. The last point is supported by clause 4(4) of the flat and garage lease.

Before reaching a final view, I ought to see if there are any other provisions of the flat and garage lease which suggest a different conclusion. It is obviously relevant to refer to the repairing obligations imposed by the lease. I also need to consider whether the form of construction of the roof of the garage blocks should prompt me to come to a different view from the provisional view expressed above.

By clause 4(3) of the lease, the lessee covenants to repair the demised premises. Taking that clause on its own, there is no difficulty in holding that the lessee must repair the structure of the garage demised to him. Clause 4(3) contains an exclusion for joists and beams to which ceilings are attached but that does not apply to these garages.

By clause 5(4) of the lease, the lessor covenants to repair “the retained parts the main structure of the said buildings and the roofs and all external parts”. Thus far, that wording could apply to the roofs of the garages and the walls and doors of the garages. The Claimant contends that these words do indeed apply to the main structure of the garages. The Claimant then contends that if the main structure of the garages is demised there is then a conflict between clause 4(3) (requiring the lessee to repair the demised premises) and clause 5(4) requiring the lessor to repair the main structure of the garages. The Claimant submits that the only way to resolve that conflict is to read the First Schedule to the lease so that the main structure of the garages is not demised.

There is another way of avoiding the conflict suggested by the Claimant. Clause 5(4) ends with the words “other than those repairable by the lessees under their respective leases”. If those words applied to an obligation on a lessee under clause 4(3) to repair the main structure of the garages (being part of the demised premises) then the suggested conflict is removed. The Claimant’s response is to submit that the words “other than those etc” do not govern all of clause 5(4) but only the immediately preceding words starting with “all sewers drains etc”. This last suggestion on the part of the Claimant is a possible one but I do not think that it is the only possible reading of the relevant words in clause 5(4).

Thus far, I consider that the better way of construing the lease to avoid the undesirable result that both the lessee and the lessor are obliged to repair the main structure of a garage is to construe the words “other than” as governing all of clause 5(4) rather than governing only the phrase which begins “all sewers etc” and then to have to read the words “the Garage” in the First Schedule to the lease as if they did not include the main structure of a garage. When I pressed counsel for the Claimant to identify how much of a garage was demised he submitted that the floor, the walls, the roof timbers and the roof were all excluded from the demise although at a later point he seemed to accept that the floor was demised. I consider that that conclusion as to the limited extent of the demise in relation to a garage is very far from the ordinary or any natural meaning of “the Garage” particularly when one reflects that the parties have expressly removed the main structure when defining the demise of a flat but, conversely, have not done so when defining the demise of a garage.

The consideration which has given me reason to pause before including the main structure of the garage, and in particular its roof, in the demised premises is the form of construction of the roof as a single roof covering six garages. Counsel for the Claimant did not originally rely on this feature of the roof of the garage blocks but I have considered whether the parties could have intended each garage lessee to be responsible for that part of the roof which is above the individual garage.

It seems to me that I do derive some assistance on this point about the single roof from the approach of the Court of Appeal in Tennant Radiant Heat Ltd V Warrington Development Corporation [1988] 1 EGLR 41. I drew attention to this authority in the course of the argument. In that case, there was a large building which was divided into units. The building was covered by a single roof. The relevant demised premises were Unit 6. Unit 6 represented 1/49 of the total area of the building. The lease of Unit 6 described the premises by referring to Unit 6 and the address of the building. The tenant covenanted to repair the demised premises. The trial judge held that the roof of Unit 6 was not demised. His decision was reversed by the Court of Appeal. That court did not seem to have any difficulty with that conclusion even though the roof of the entire building was a single continuous roof. That decision does not bind me to reach any particular conclusion in the present case. However, it does persuade me not to give undue importance to the fact in the present case that there is a single roof over each block of garages. The lease also contains provisions which would be relevant if a lessee of a garage wished to repair the roof above the garage and needed to have access to an adjoining garage in order to do see: see clauses 2(vi) and 3(v).

Accordingly, I conclude that the provisional view expressed in paragraph 31 above is indeed the correct one. The demise of the garage includes the floor, the doors, the roof timbers, the roof, and the walls which enclose the garage, save that in the case of a wall separating one garage from another, the demise extends to one half in depth of that wall.

The second issue is whether the demise of the garage includes the airspace above the individual garage.

Plainly, if the demise did not include the roof of the garage then the demise would not extend to the airspace above the roof. I have held that the demise does include the roof of the garage but that does not by itself determine this issue as to the airspace.

Again, I will consider the matter as one of construction of the lease, having regard to all of the terms of the lease and the relevant background. In the present case, the relevant background is confined to the nature and the form of construction of the garages.

I have already described the form of construction of the garages. The wording of the demise creates a vertical division between one garage and the adjoining garage. The wording does not describe any horizontal division in relation to the garages. The garages are of a very simple construction. It does not seem to me likely that the parties in the early 1960s would have foreseen that there would be any benefit to the lessor in retaining the airspace above the garages. On the other hand, it is far from obvious that the lessees would have foreseen much benefit in having a demise of the airspace. It can be said that as the lessees had an obligation to repair the roof of the garages, then it must have been envisaged that at some point they might need to go into the airspace above the roof to carry out the repairs. However, that point does not take the matter any further because clause 2(vi) would confer such a right on a lessee, even if the airspace were not demised. It may be relevant that the term of the lease was for 999 years and that the garages could not conceivably have been thought to have a life expectancy of anything like that period. If the parties had thought about it, they would surely have considered that it might be necessary to rebuild the garages at some time or other (and probably more than once) during the 999 year term. If the garages were to be rebuilt, it seems a little implausible that the lessees would have to build to the same profile as the existing garages or perhaps smaller garages within that profile (otherwise a larger garage would protrude into the airspace). It is also relevant that the lessor was protected in relation to the design of a future garage by the lessee’s covenant in clause 4(7) of the lease not to carry out structural alterations without the lessor’s consent. As against these considerations there is the further point that it is less likely that one lessee acting alone could rebuild a single garage to a new design.

Standing back from the particular circumstances of this case, I have also considered the problem more broadly. If the rights granted in the present case were not leasehold but freehold, then I would expect the parties to the transfer of a freehold of land on which a garage was built or even the transfer of a freehold of “a garage” to intend that the freehold included the airspace above the garage. The position is not necessarily the same with a leasehold grant. With a transfer of a freehold, one would hesitate before concluding that what was conveyed was a stratum only; one would not hesitate so long in the case of the grant of a lease. Leases of strata are commonplace. However, it remains a valid point that, in commercial terms, a grant for 999 years is much closer to a freehold than to a lease for a shorter term.

Balancing the above considerations at this point before referring to authority, I consider that the arguments point towards the conclusion that the parties are to be taken to have intended that the airspace above a garage was to be included in the demise.

Counsel for the relevant Defendants submitted that I should reach that conclusion on the authority of Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd [1957] 2 QB 334. In that case, the lessor demised a single storey shop for a term of 7 years. The parcels clause in the lease described the demised premises as: “All that shop with the rooms and cellars (if any) attached”. The lessee claimed that the demise included the airspace above the single storey shop so that he could assert that an advertising hoarding placed in that airspace was a trespass. The claim succeeded. Counsel for the lessor argued (see at page 337) that there was a difference between a demise which referred to a parcel of land with a building erected on it and a demise of a building. In the former case, it was said that the demise included the airspace above the land; in the latter case it was said that that demise did not include the airspace above the building. This distinction was rejected. The judge (McNair J) said at 339-340 that prima facie a lease of land included the airspace above the land and a lease of a single storey ground floor premises would also, prima facie, include the airspace about the building. The judge considered that that proposition was supported by Martyr v Lawrence (1864) 2 DE G J & Sm 261, although I consider that the present point was not really argued in that case. The judge then considered whether there were any indicators in the lease in that case to the contrary effect and he held that the indicators supported rather than contradicted the prima facie position. The case is well known for its reasoning as to the height to which the demise of airspace extends and in relation to the cause of action being in trespass, rather than nuisance.

The decision in Kelsen has not been doubted and, indeed, in relation to the separate questions as to the height to which the demise extends and as to the nature of the cause of action, it has been regularly referred to, most recently in the decision of the Supreme Court in Bocardo SA v Star Energy UK Offshore Ltd [2011] 1 AC 380 at [20].

I was referred to Straudley Investments Ltd v Barpress [1987] 1 EGLR 69 which was a case of a 99 year lease of a building in a terrace. It was held to be unarguable that the lease did not include the airspace. In Davies v Yadegar (1989) 22 HLR 232 and Haines v Florensa (1989) 22 HLR 238 it was held in each case that a lease of the top part of a building which included the roof also included the airspace above the roof. In the first of this pair of cases, the court referred to the reasons why it made sense for the lessee to be able to carry out alterations to a chimney, or a flue, or to erect an aerial above the pre-existing roof level. There is a dictum in favour of the application of a presumption as to airspace in Ravengate Estates Ltd v Horizon Housing Group Ltd [2007] EWCA Civ 1368 at [8]. In Lejonvarn v Cromwell Mansions Management Co Ltd [2012] L&TR 31, the Deputy Judge appeared to favour such a presumption but then made a number of points as to why it did not apply in that case: see at [30] – [34]. That case actually concerned sub-soil rather than airspace.

As against these decisions, there are statements in two cases that there is no presumption either way as to whether a lease of a part of a building carries with it any airspace above that part: see Delgable Ltd v Perinpanathan [2006] 2 P&CR 15 at [33] – [34] and Rosebery Ltd v Rockless Ltd [2011] L&TR 21 at [43]. The statements in these cases make good sense where one is dealing with a part of a building which has been horizontally divided, where there are often good reasons for the demise to be limited to a stratum and so as not to include airspace (or subsoil). Those reasons do not apply with the same force in the case of a building, whether single storey or not and whether in a terrace or freestanding, where all of the building is demised, i.e. there is no horizontal division.

Having considered these authorities, I conclude that there is nothing in them to prevent me giving effect to the provisional view I expressed in paragraph 45 above. Indeed, the authorities seem to me to provide support for that view. Whether one says that there is a presumption to be applied, I consider that where one is dealing with a demise of a building, where the wording of the demise is expressed by reference to a vertical division, and there is no wording expressing any horizontal division, it is natural to react to that wording by holding that there is no horizontal cut off which excludes the airspace above the building or, for that matter, the sub-soil below the building. My final view is that, in this case, the demise of a garage includes the airspace above the garage.

Although the matter was not expressly raised for decision, my provisional view is that the flat and garage lease also includes the foundations of the individual garage and some of the subsoil; it is not necessary in this case to be more definitive on the question of sub-soil.

The third issue is whether the court should imply into the flat and garage leases a covenant by the lessor not to construct further flats on the Estate.

The lessees contended that the flat and garage leases created a letting scheme in relation to the negative covenants by the lessees. It was then said that it was necessary to give effect to the letting scheme, and for other reasons, to imply the suggested covenant by the lessor. The lessees submitted that I should be guided by the decision in Devonshire Reid Properties Ltd v Trenaman [1997] 1 EGLR 45 to reach that conclusion.

The Claimant submitted that the flat and garage leases did not create a letting scheme and in any event it was not appropriate to imply the suggested covenant by the lessor. The Claimant submitted that I should be guided by the decision in Hannon v 169 Queen’s Gate Ltd [2000] 1 EGLR 40.

I consider that neither of the two cases relied on by the parties is determinative of the present case. However, it is useful to begin by considering those two cases to identify some of the points that need to be addressed.

Devonshire Reid concerned a building which comprised four flats which had been let on long leases. The lessor had retained the roof and roof space of the building and had obtained planning permission to develop the roof and roof space by the construction of a fifth flat. The question arose before the Lands Tribunal whether the lessor was entitled, having regard to the terms of the leases of the existing four flats, to carry out that development. The Tribunal held that the construction of a fifth flat would place the lessor in breach of its obligation to repair the roof. I am not concerned in the present case with the Tribunal’s reasoning in relation to that point. In addition, it was argued by the lessees that there should be implied into their leases a covenant that the lessor was not to create a fifth flat in the building. The Tribunal held that there was a letting scheme in relation to the negative lessee’s covenants in the four leases. Counsel for the lessor submitted that if there were a fifth flat and a fifth lease, the fifth lessee would not be bound by the letting scheme. The Tribunal appeared to accept this submission if the lessor were free to create a fifth flat. The Tribunal then held that it was necessary to restrict the number of flats to four as that was the number originally envisaged by the letting scheme. The Tribunal also referred to the fact that the four leases contemplated that the costs of maintenance would be shared between the four lessees and it was said that this carried with it the necessary implication that the parties did not contemplate any beneficial occupation of the remainder of the premises either by the lessor or by anybody claiming under it. The reasoning on these two points is relatively brief. The Tribunal’s conclusion was that it ought to imply a covenant by the lessor not to create a fifth flat.

Hannon concerned a purpose built block of 25 flats which had been let on long leases. The lessor had retained the roof and roof space of the building. The lessor wished to construct two further flats on the roof. A lessee contended that such work would involve a breach of the lessor’s obligation to repair the roof. This contention was rejected and Devonshire Reid was not followed on that point. The lessee also contended that the court should imply into the leases a covenant by the lessor not to construct any more residential flats in or upon the building at roof level. It was accepted that there was a letting scheme in relation to the lessee’s covenants. There was argument as to whether the geographical extent of the letting scheme would include the two new flats and the court held that it would. Thus, the lessees of the two new flats would be bound by the scheme. This distinguished the case from Devonshire Reid. Further, the service charge provisions provided for the lessees to pay a fair proportion of the relevant expenses and outgoings so that the presence of two further lessees, obliged to contribute to the service charge, would prima facie reduce rather than increase the burden on any one lessee. The court made a number of additional points: first, a reference in the leases to the fact that the building was divided into flats did not suggest that the lessor could not change the number of those flats, for example, by sub-dividing or aggregating the flats, whereas in Devonshire Reid, the leases referred to there being four flats; secondly, an express term of the lease contemplated that the lessor could alter and add to the building; thirdly, the lessees at the relevant time were the sole shareholders in the lessor company and it was not obvious that the lessees would have rejected a proposal for the lessor company to make a development profit from the addition of two further flats. It had also been submitted by the lessee that the addition of two flats to the letting scheme would be undesirable as it would expose each lessee to a liability to an additional two lessees. I do not see that the court specifically dealt with this point save that the court did not think that the overall burden on lessees would be increased by the addition of two flats.

I will now consider the circumstances of the present case. The Claimant submitted that there was no scheme of covenants in this case but it did not put forward any reasoning to support that submission. I do not accept it. I consider that the language of the leases clearly creates a scheme of covenants. There is no difficulty about the geographical extent of the scheme. The scheme applies to the Estate and that includes the airspace above the garage blocks. The scheme binds the lessor in relation to parts of the scheme which are not the subject of leases. As and when leases of those parts are later granted those lessees will be bound by the scheme: see Megarry & Wade, the Law of Real Property, 8^th ed., para. 32.076 and Brunner v Greenslade [1971] Ch 993. There is also little difficulty about the covenants which are the subject of the scheme. The relevant covenants are those set out in the Second Schedule to the flat and garage lease and, probably, the negative covenants in clause 4(7) and (8) of that lease. It is not suggested that there is an express covenant which binds the lessor from constructing additional flats. In particular it is not said that the covenant in clause 4(7) against structural alterations without the lessor’s consent can be turned around so that it requires the lessor to get the lessees’ consent.

As a result of the conclusions in the last paragraph, it is not necessary to imply a term restricting the number of flats in order to preserve the integrity of the letting scheme. Also, I am not impressed by the argument put forward in Hannon that a restriction on the number of flats should be implied in order to prevent any one lessee being liable to more than the original number of lessees.

It follows from the above that the fact that the flat and garage leases impose a scheme of covenants does not justify the court in implying a restriction on the number of flats which may be constructed.

I next need to consider whether the provisions of the flat and garage leases, dealing with the lessee’s contribution to the cost of insurance and services, justifies the suggested implication. There appear to me to be two aspects to this point. The first and more obvious is that the present leases require each lessee to pay 1/12 of the cost of insurance and services. The second point is that the cost of providing the insurance and services may be increased as a result of there being two more flats on the Estate.

As to the first of these points, there seem to me to be three possible positions that the court could adopt. The first might be to imply a term restricting the number of flats to 12, but (possibly) not so as to prevent sub-division of any of the 12 original flats. The second position might be to hold, in the event of the number of flats being in excess of 12 (apart from where there is a sub-division of an original flat), that a term should be implied to the effect that the proportion of insurance and service charges should be “a fair proportion” instead of 1/12. A third position would be to imply neither of these terms and allow the lessor to recover the full cost of insurance and services from the lessees of the 12 original flats and then to keep any contributions made by the two lessees of the two further flats or to let out the two further flats on terms whereby the tenants of them did not have to pay any specific sum towards the costs of insurance and of the services.

I am not attracted by the third position identified in the last paragraph. It is an unfair result. As I understand it, that result would not actually come about in the present case by reason of the provisions of Part IV of the Landlord and Tenant Act 1987 (see section 35(1)(f) and (4)) and the fact that the 2007 lease requires the lessee thereunder to contribute to the cost of insurance and some services. I did not receive any submissions on the operation of the 1987 Act and I do not therefore deal with the position if the lessor of the Estate were to retain the two new flats for the purpose of short term lettings and did not charge the tenants for insurance and services. In any case, the 1987 Act had not been enacted, and was not in anyone’s contemplation, when the flat and garage leases were entered into.

Does the law allow the court to imply a term to reverse the unfair result identified above and, if so, can the court imply either of the two terms I have identified above and, if so, which one? I have considered whether I am assisted by the decision of the Court of Appeal in Pole Properties Ltd v Fineberg (1982) 43 P&CR 121. That case is of interest because, on its facts, the lessor had carried out alterations which resulted in the original apportionment of the cost of services becoming unfair. The Court of Appeal reached a result under which the lessee was required to pay only a fair proportion of the cost. However, in the end, I do not think that I derive much assistance from the decision in that case because the reasoning was heavily dependent on the fact that neither party to the lease sought to operate the lease in accordance with its express terms and that allowed the court to select a different method of apportionment from that provided in the lease.

I consider that the clear assumption made by the parties to the flat and garage leases when initially entered into was that the Estate would not comprise more than 12 flats and 12 garages. On that basis, it was agreed that each lessee of a flat and garage would pay 1/12 of the relevant costs. If that assumption were later to be falsified (save where an original flat was sub-divided), I consider that it would be open to a court to imply that the consequential agreement as to a 1/12 apportionment would no longer be applicable. In such a case, I consider that it would be obvious that what should replace the reference to 1/12 should be a reference to “a fair proportion”.

If further flats were to be constructed on the Estate and the court were prepared to imply a term that the lessees of the original flats should be required to pay a fair proportion of the cost of insurance and services, then I also consider that the suggested difficulty that the costs of insurance and services might be increased as a result of the existence of two further flats would also be removed or sufficiently mitigated.

If, as I suggest, the court were prepared to imply that the lessees were liable to pay a fair proportion, rather than 1/12, of the relevant costs, then I do not see why it would be necessary or appropriate to imply the more radical term that the lessor should be disabled from constructing further flats anywhere on the Estate.

In the course of argument, I raised the question as to whether the addition of two flats to the Estate would cause additional difficulties which, if they were not dealt with by the express terms of the flat and garage leases, might support the lessees’ argument for an implied restriction on the number of flats which might be created. I had in mind issues such as parking on the Estate. In the event, there was no evidence before me which would allow me to assess any possible difficulty in this or other respects. Further, in relation to the lease of flat 1, which I was initially wrongly told was in the standard terms, it may be that the words qualifying clause 2(v) would be construed so as to limit the persons entitled to park on the Estate to the lessees, and their visitors, in relation to the original block of 12 flats (the relevant words are “the block hereinbefore mentioned”). However, those words were not added in the leases of the other 11 original flats where the position is otherwise, or at least is not so clear. Nonetheless, the right to park conferred by each flat and garage lease is probably subject to the limitation that the lessor may not grant to other persons rights to park on the Estate if that were to produce the result that the exercise of those rights by those others would substantially interfere with the original rights to park.

For these reasons, I am not prepared to imply the term contended for the lessees. I should add that the lessees also contended, in the course of argument, but without amending their pleadings to this effect, that I should imply a term that the lessor should not do anything at any time which increased the burden on the lessees in relation to payment for insurance and services. I am not prepared to imply such a term. The term is a very general one and would have wider implications beyond the particular difficulty at the present time. I am not persuaded that any such general term is justified. It will be remembered that, quite apart from the provisions of sections 18 to 30 of the Landlord and Tenant Act 1985 (which had not been enacted when the flat and garage leases were granted), the court will imply a term that the sums payable in relation to the cost of services are only recoverable to the extent that the same are fair and reasonable: see Finchbourne Ltd v Rodrigues [1976] 3 All ER 581. I recognise that that decision does not apply in the same way in relation to the cost of insurance: see Woodfall on Landlord and Tenant, Looseleaf Ed., para 7.166.

Before considering the remaining issues, I need to refer to the terms of the 2007 lease.

On 22^nd October 2007, the then freeholder owner of Hambledon Court, Talkfree Design Ltd, entered into a lease (“the 2007 lease”) in favour of Willaim Ltd. The 2007 lease gave the same addresses for both the lessor and the lessee. The 2007 lease indicated that no premium was paid for the grant of the lease.

Clause 1 of the 2007 lease contained the following definitions:

The plan annexed to the 2007 lease showed the two parts of the block of flats, coloured yellow, and the two blocks of garages coloured blue.

By clause 2 of the 2007 lease, the Demised Premises, as defined, were demised for a term of 125 years from 29 September 2007 at a ground rent payable from a date defined in a formula which referred to the completion of the Development or the occupation of a flat in the Development. The 2007 lease also provided for the lessee to pay the Lessee’s Proportion of the cost of insuring and providing certain services to the Estate, but excluding from the computation of the sum payable the outgoings or the costs of repairs and maintenance in relation to the Main Block.

The 2007 lease granted to the lessee the following rights:

By the 2007 lease, the lessee covenanted as follows:

By clause 4 of the 2007 lease, the lessee further covenanted in various respects as to the carrying out of the Development.

The lessor’s covenants in the 2007 lease included the following covenant:

The lessor’s covenants also included covenants in relation to the upkeep of the drives, footpaths, car parking areas and other areas within the curtilage of the Estate and to light parts of the Estate. The lessor also covenanted to maintain a maintenance fund in relation to sums received from lessees for repair, maintenance and management of the various matters for which the lessor was responsible. By clause 5.9, the lessor covenanted to hold the maintenance fund on trust for the purpose of discharging the costs of complying with the relevant obligations on it. By clause 5.10, it was agreed that in some circumstances, where the monies were not required for the relevant purposes, the lessor would be entitled to refund part of the maintenance fund to the lessees.

It may be relevant to note that the 2007 lease was granted by the then freeholder to its associated company on 22 October 2007, which was shortly after solicitors for some of the lessees had notified the then freeholder, on 12 September 2007, of their desire to acquire the freehold of the Estate under the Leasehold Reform, Housing and Urban Development Act 1993. On 23 December 2008, some of the lessees served the lessor with notice under section 13 of the 1993 Act. Thereafter, the freehold was transferred to the First Defendant company, the members of which are some of the lessees of the flats and garages. The current freeholder takes a very different attitude to a development above the garage blocks from that taken by the original lessor under the 2007 lease.

The term of the 2007 lease has been assigned on more than one occasion and is now vested in the Claimant.

Before considering the specific issues arising out of the 2007 lease, which I have been asked to decide, I will comment briefly on another matter which might be material if the Claimant were to proceed to build two flats above the garage blocks. The description of the premises demised by the 2007 lease refers to “the surface of the roofs of the Garage Blocks and the airspace above such roofs”. It is open to question whether this area includes the area above the external walls of the garage blocks and the airspace above those walls. However, I have not been asked to determine that question.

The fourth issue is whether the lessee under the 2007 lease is entitled to erect columns outside the garage blocks to hold up the flats which it wishes to build in the airspace above the blocks, one flat above each block. In view of my conclusion that the airspace above the garages is demised to the lessees of the garages and those lessees are not agreeable to the new flat development proceeding, this issue appears entirely academic, at least at present. Although the 2007 lease demises the airspace above the roofs of the garages, the 2007 lease takes effect in reversion on the demises of the airspace by the flat and garage leases.

The Claimant contends that there are two important background matters which assist in the interpretation of the relevant parts of the 2007 lease. The first of these is a planning application which was made in June 2006. The then proposed development was the construction of 8 flats built over the garage blocks. A plan attached to the application showed the development above the garage blocks but more than double the area of the garage blocks. The plan was annotated to show that the new development was to be supported by some 24 columns standing on the land near to, but not within, the garages. The documents suggest that this planning application was withdrawn in September 2006. The Defendants invited me to consider not only the 2006 planning application but the later applications which showed subsequent proposals which are nearer to the proposal which is now put forward by the Claimant. For example, in June 2007, there was a planning application for two flats built above the garage blocks. The application plan shows the new flats sitting on top of the garage blocks and there are no annotations on the plan to suggest that the new flats were supported by anything other than the garage blocks themselves. This application was refused in August 2007 because of the impact of one of the proposed flats on an adjoining property (not on the Estate). The scheme was then re-designed and re-submitted on 12 October 2007 when the new application plans again did not show that the new flats were supported by anything other than the garage blocks themselves. After the grant of the 2007 lease, the question of planning permission was pursued and eventually planning permission was given for the Claimant’s current proposal.

On this first point which is relied upon by the Claimant, I do not think that I get any real help from the fact that columns were shown on the plan which accompanied the 2006 planning application. That application was fairly promptly withdrawn. It was not current at the time of the 2007 lease. The planning application which was current at that time did not reveal any intention to use columns. If anything, the change from the 2006 proposal might be said to point to a belief that columns would not be needed, although for the reasons which later appear I doubt if that was the belief. This means that I do not need to consider the Defendants’ submission based on Cherry Tree Investments Ltd v Landmain Ltd [2013] Ch 305 that the plan attached to the 2006 application was not admissible as an aid to the interpretation of the 2007 lease.

The second background matter on which the Claimant relies is that it is said that the parties to the 2007 lease understood, or are to be taken to have understood, that it would not be structurally possible to erect new flats above the garage blocks without providing support independent of the existing structure of the garage blocks. As to that, it is an admitted fact in these proceedings that such structural support is indeed necessary. It is also pointed out that before the 2007 lease was granted, some of the lessees had been advised of this (in connection with advice given to them in relation to the 1993 Act) and some of the lessees had made that point to the planning officer dealing with the planning application. On 20 July 2007, the planning officer wrote to the architect who had made the planning application pointing out that the application did not indicate how the new development was to be supported structurally and stating that some lessees had drawn the local planning authority’s attention to the need for support, the garages being built of single skin brickwork. The planning officer also stated that the Building Control officer had advised of the need to make changes so that the new flats could be supported. She added that any future proposal which would increase the footprint of the building would require planning permission and could not be dealt with as a minor amendment. The planning officer’s report in relation to the application which was refused on 3 August 2007 referred in a number of places to the structural implications of the proposal. The report referred to letters of objection which had made the point that the garages were not structurally sound. The report also recorded the views of the local conservation area panel that the garages would not support the development. Based on this material, I find that the parties to the 2007 lease are to be taken to have understood that it would not be structurally possible to erect new flats above the garage blocks without providing support independent of the existing structure of the garage blocks.

The Claimant’s proposal is to provide support to the new flats independent of the existing structure of the garage blocks. In relation to the right hand garage block, what is proposed is the erection of 14 steel columns on concrete foundations. The columns will be placed some 15 mm away from the external walls of the block. The columns will rise above the height of the garage blocks and will be spanned by horizontal steel members. The new flat will rest on these horizontal steels. The position in relation to the left hand garage block is similar but because the new flat will be smaller and because of the presence of the electricity sub-station, there appear to be only 9 columns and the details of the foundations are different. In the case of both garage blocks, the columns are outside the envelope of the existing blocks.

Against this background, the fourth issue asks whether the Claimant is entitled under the rights conferred on it by the 2007 lease to construct columns in this way. The Claimant contends that it can do its proposed work pursuant to paragraph 7 of Part 1 of the Schedule to the 2007 lease and, in particular, the first indent of that paragraph. I have set out the relevant provision earlier in this judgment. The wording refers to “the right to carry out the Development” and then “the right to erect … structures … as are necessary for the carrying out of the Development”. The Claimant says that the columns are necessary for the carrying out of the Development; it relies on the fact that the Development cannot be supported by the existing structure of the garages. The Claimant also points to the fact that the 2007 lease did not warrant that the premises demised by the 2007 lease were structurally able to support the Development.

I have considered whether the references to “carry out” the Development should be confined to the period during which the Development is being carried out rather than the permanent state of affairs created by the Development being completed. While the words could be confined to the earlier period only, the same words are used in a number of places in Part 1 of the Schedule and convey the overall sense that they are not so confined.

“The Development” is a defined term which means the flats “on and in” the “Demised Premises”, which phrase is itself defined to be the surface of the roofs and the airspace above such roofs. Thus, if the Claimant is entitled to erect the proposed columns, this will involve the columns being placed outside the Demised Premises. Further, the columns will not be part of the Development which is to be on and in the Demised Premises. This is a somewhat unusual state of affairs with certain consequences. These include the fact that the lessee’s right to maintain the columns for 125 years is not pursuant to an express demise of the land on which they stand but is pursuant to the “right” conferred by paragraph 7 of Part 1 of the Schedule. Further, the lessee’s covenants in so far as they refer to the Demised Premises will not apply to the columns. This is particularly relevant in the case of the lessee’s repairing obligation.

There are other curiosities in the Claimant’s case. If the Claimant is right about the reference to “structures” in the relevant provision, then that provision gives the lessee the right to erect many other things such as walls, floors and roofs provided that they are necessary for carrying out the Development which, it will be remembered, must be on and in the Demised Premises. The converse of this point is to ask why it was thought to be appropriate to confer a right to erect walls and floors and roofs if the intention was to confine them to the Demised Premises; it could be argued that the lessee could do those things in any event pursuant to its demise of that property.

Another curiosity is the later wording in paragraph 7 of Part 1 of the Schedule which refers to the right to erect stairs in such location to which the landlord shall consent. It is quite clear that it is possible under this provision for the lessee to erect stairs which are outside the Demised Premises. The points made above about the columns being outside the Demised Premises and outside the Development will certainly apply to such stairs. Further, the words of the first indent of paragraph 7 also refer to stairs and pose the question: why are stairs referred to twice? One answer would be that the first stairs are internal within the Demised Premises and the second are not. If that is the right answer, it might be said that all the items in the first indent should equally be treated as within the Demised Premises.

As against all of that, the Claimant says that the most important matter is that the 2007 lease was granted for a specific purpose which was to allow the lessee to construct two flats above the garage blocks and that the parties are to be taken to be contracting on the basis that it is simply not possible for such a development, or any development, to be carried out unless it is supported by supports erected outside the garage blocks. I agree that that consideration is of great importance. I also consider that the words of the first indent of paragraph 7 can be read so as to permit the erection of such supports. The result contended for by the Claimant is a somewhat unusual one. Further, the 2007 lease does betray signs of not being properly considered, possibly as a result of rushed drafting.

My overall reaction to the strongly competing rival arguments is that the wording of paragraph 7 of Part 1 of the Schedule is just enough to confer on the Claimant the right to erect supports outside the garages in circumstances where the Claimant would not be able to carry out the intended development without such a right.

I have answered the specific question raised as to the placing of columns outside the garages. I have pointed out other problems, apart from that relating to the airspace, which the Claimants may encounter if they were to attempt to construct flats above the garages. One such problem is that prima facie, the new development may not protrude beyond the premises demised by the 2007 lease. I have also drawn attention to the doubt as to the extent of “the surface of the roofs” and the “airspace above such roofs”. So far as I can tell from the Claimant’s drawings, its current proposal does involve protrusion, even beyond the walls of the garage blocks. The other matter which was touched on in argument was the placing of the new foundations below the garages. I have provisionally held that the existing foundations and sub-soil, to some depth at any rate, are demised to the flat and garage lessees. Even if the freeholder is bound to allow the Claimant to place columns outside the garages, this does not affect the flat and garage lessees’ ability to complain of a trespass to their foundations and sub-soil.

The fifth issue is as to whether the First Defendant unreasonably withheld consent to the Claimant’s application for consent to the erection of two staircases for the purpose of gaining access to the proposed flats. The Claimant applied for such consent by letter dated 3 December 2012 and the First Defendant had not replied by the time that these proceedings were issued on 9 January 2013.

This issue received scant attention at the trial and was not really argued. In view of my earlier conclusion as to the airspace above the garage blocks, with the result that the proposed development cannot proceed, and in the absence of any other reason for the court to decide the question as to the withholding of consent, I intend to follow the lead shown by counsel for the parties and not deal further with this point.