[2024] UKUT 193 (LC)

Clause 5(5)(o) requires the landlord:

If the work does not amount to maintenance, said Mr Bates KC, it is nevertheless obviously being done for the safety of the buildings and falls within this clause. Again he referred to clause 5(5)(j) as an illustration of the range of skills the parties had in mind that the landlord might need. Mr Bates KC criticised the FTT for reading down this provision on the basis that it is a “sweeper” clause.

In fact at its paragraph 36 the FTT was careful to point out that “giving a clause such a label does not define its meaning or extent.” But this is a deliberately non-specific clause coming at the end of a list; I agree with Mr Bates KC that it is a form of future-proofing such as is commonly and sensibly provided for in a lease that is supposed to last for many decades. The idea is to pick up items that cannot be specifically foreseen on the date of the lease

Mr Bates relied again upon Assethold v Watts, where at paragraph 58 Deputy President said that language that is clearly intended to encompass a wide variety of situations should not be so restrictively construed as to deprive it of any real effect, and added:

Ms Gibbons argued that a purely literal construction of this clause is not appropriate. As Lord Hodge said in Wood v Capita Insurance Services Ltd [2017] UKSC 24, paragraph 10:

So the issue is: was clause 5(5)(o) intended to encompass anything so far-reaching as an obligation to remedy structural defects? The FTT said that such a clause was “not intended for works so extensive that the costs would vastly exceed those likely in any category expressly mentioned.”

Mr Bates KC argued that it is wrong to consider the cost of the work when construing the Clause. Cost is relevant to the reasonableness of service charges in accordance with section 19 of the Landlord and Tenant Act 1985, but not relevant to construing the lease.

I agree with that to the extent that if a particular type of work were clearly within an obligation, then the fact that a particular instance of that work was dreadfully expensive would not be relevant to the construction of the lease. But this clause is, necessarily, unclear; and so it is relevant to its construction that the remedying of structural defects generally tends to be very expensive, and that a commitment to bear the cost of such work is obviously a commitment to something “potentially ruinous”, as I put it in Dell v 89 Holland Park Management Company Limited [2022] UKUT 169 (LC). I appreciate that the sums involved here are lower, but for the leaseholders of flats in Tower Hamlets a liability of £60,000, £70,000 or £80,000 may well be impossibly expensive. That is part of the facts and circumstances known to the parties, which Arnold v Britton tells us to consider, and also a matter of commercial common sense. The Court of Appeal in Holland Park Management Company Limited v Dell [2023] EWCA Civ 1460 confirmed at paragraph 51 (Falk J) that that was the correct approach. The issue there was whether the landlord’s covenants included an obligation to object to planning applications and to engage in litigation about a neighbour’s building operations which (unlike those in Assethold Ltd v Watts) did not threaten the structure of the landlord’s building. Reliance was placed upon a similar “sweeper clause”; after a long list of obligations relating to repair, maintenance, insurance, cleaning, and the employment of staff and professional advisers the lease required the landlord:

In examining that clause the Court of Appeal considered that the fact that this was a “sweeper” clause was relevant; as Falk J explained at paragraph 48 the specific provisions that precede it are “the best indication” of what it might include. Such a clause might include the incurring of costs in a dispute over the repair of the building, but could not be extended to the extraordinary litigation costs the landlord had incurred, going far beyond the scope of its obligation to repair and maintain the building and so on in the clauses that precede the sweeper clause. Only an express provision could go that far.

I agree with Ms Gibbons that exactly the same can be said here. Clause 5(5)(o) in requiring the landlord to do everything it considers necessary or advisable “for the proper management maintenance safety amenity or administration of the Building” does not require it to remedy structural defects because that goes too far beyond the scope of anything that precedes it. Mr Bates KC argued that the words “Without prejudice to the foregoing” at the start of the clause mean that in construing it one cannot look at the items earlier in the list, but that is not correct. The effect of those words is to state that clause 5(5)(o) does not narrow down or contradict anything previously provided, but that does not mean those previous items have to be ignored. Far from it; they set the context for this clause and indicate its purpose and effect. Yes, it is intended to provide for items not yet thought of, but only express words will generate an obligation that is vastly different in kind and in likely scale from the obligations already specified.

In particular, in my judgment a tenant who signs up to pay for the landlord’s compliance with a covenant to “repair” and to “maintain” has to be taken to know that the courts have specifically held that neither of those terms includes an obligation to remedy a structural defect. Such a tenant would not intend that the obligation to do just that could be tucked in to the general words of a future-proofing clause like clause 5(5)(o).

In conclusion I agree with the FTT: clause 5(5)(o) does not encompass the work in issue here.