Posts Tagged ‘contractual interpretation’

Ownership of roof voids depends on proper construction of the relevant deeds

May 5, 2014

Hong Kong Mansion, Causeway Bay (IO) v Bothlink Ltd ([2014] 2 HKLRD 78, CA) concerned the ownership of roof voids. The incorporated owners argued that they were common parts and sought to recover them from the defendant (B) who argued that they had been assigned to his predecessor in title. The voids were in the roof space and were the lower portion of a space, the upper portion of which housed the maintenance platform for the lifts.

The Court of Appeal looked at the question as being one that turned on the construction of the first assignment in the building. This had included the right to ‘the remaining self-contained portions’, flat roofs and other roofs. It had not included property intended to be used for the common enjoyment of co-owners and co-occupiers. The question was as to whether the roof voids had been included in the first assignment or were property intended for common enjoyment. The Court of Appeal (like the Court of First Instance) held that the roof voids were intended for common enjoyment.

The question was as to the parties’ contractual intention at the time of the first assignment. The elements of the factual matrix all supported the incorporated owners’ contention that the voids were common parts: they were not included in the calculation of the gross floor area or building volume calculations in the approved building plans; the plans did not distinguish between the upper and the lower levels of the spaces in question (and it was agreed that the upper levels were common parts); the plans suggested that the relevant structures (in their entirety) were intended to house lift machinery; and at the time of the first assignment there was no means of access to the lower levels of the voids ([29] – [30]).

Michael Lower

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A lease for an uncertain term granted to an individual is a lease for life

November 15, 2011

A lease for an uncertain term (or a periodic tenancy where the right to serve notice to quit is subject to an indeterminate, invalid fetter) created a lease for life at common law. This was so whether or not the parties intended a lease for life. In England, a lease for life takes effect as a lease for 90 years (Law of Property Act 1925, s. 149(6)). Contractual effect (binding only on the parties) is to be given to a licence agreement that cannot take effect as a lease (because of uncertainty of term). This is so even if the parties thought that they were creating a lease. Similarly, contractual effect (binding only on the parties) can be given to an invalid, indeterminate fetter on the right to serve a notice to determine a periodic tenancy.

In Mexfield Housing Co-operative Ltd v Berrisford ([2011] UKSC 52) M entered into an occupancy agreement with B. B could determine it by serving a month’s notice. M could only terminate it in the event of B’s default or in the event of her ceasing to be a member of M. M purported to terminate it by serving one month’s notice. It argued that the agreement was an ineffective attempt to create a lease. It was ineffective, it was argued, because of the lack of certainty attached to the landlord’s right to determine the agreement. M argued that the result was that B occupied under a periodic tenancy that could be brought to an end by notice to quit.

The Supreme Court reluctantly accepted (and B conceded) that this was a lease for an uncertain term. When granted to an individual, however, common law deemed this to be a lease for life. This seems to have accorded with the parties’ intentions in this case but the result would be the same even if this were not the case. The Law of Property Act 1925, s.149(6) converted a lease for life into a lease for a term of ninety years subject to the parties’ rights to bring it to an end in certain events by notice to quit.

Even if this had not been the case, the agreement could have taken effect as a contractual licence even if the parties had intended to create a lease. Lord Neuberger left open the question as to whether it could have taken effect as a periodic tenancy (had this accorded with the parties’ intentions) with contractual effect being given (as between the contracting parties) to the restrictions on the right to serve a notice to quit found in the agreement between M and B ([69]).

The Supreme Court was highly critical of the certainty of term principle but did not overrule earlier authorities that laid it down as an essential element of a lease.

Michael Lower