B e f o r e :
Mr. N. Strauss Q.C. sitting as a deputy judge.
|| Rosebery Limited
||Rocklee Limited (1) Eaglestone Investments Corporation (2)
||Eaglestone Investments Corporation
||Part 20 claimant
||Part 20 defendant
Mr. Charles Harpum, instructed by Rochman Landau LLP, appeared for the claimant.
Mr. Alan Tunkel, instructed by Messrs Blount Petre Kramert appeared for the 1st defendant and Part 20 defendant.
Mr. Anthony Radevsky, instructed by Wallace LLP, appeared for the 2nd defendant and Part 20 claimant.
Hearing dates 18th-22nd October 2010.
HTML VERSION OF JUDGMENT
Crown Copyright ©
- This action relates to a large block of flats at nos. 45-7 Grosvenor Square, London. Most of the building consists of the ground floor plus 7 upper floors in height but, in one area at least, it had only 5 upper floors in 1984.
- The dispute is essentially between the claimant ("Rosebery"), which is the lessee of flat 15 on the 6th floor, and the 2nd defendant ("Eaglestone"), which is the lessee of flats 16 and 17 on the 7th floor. The 1st defendant ("Rocklee") was the lessor in each case. Part of flat 17 is above flat 15. Flat 15 is above flat 12, which is on the 5th floor. The dispute arises from an underlease granted to Rosebery in 1984 of what had previously been an empty roof space at the level of the 6th floor, above flat 12 and outside flat 15, and from permission subsequently given to build an extension on it.
- Put shortly, the principal contention of Mr. Charles Harpum on behalf of Rosebery is that the underlease of the roof terrace demised not only (as is accepted) the airspace up to the height of flat 15, but also the airspace above it including that which adjoins flat 17. The effect of this would be that Rosebery would be entitled to use the roof of the extension at 7th floor level as a roof terrace or, subject to obtaining planning consent, and the consent of the new freeholders following enfranchisement, to build on it.
- Mr. Harpum's alternative contention is that, even if the demise was restricted vertically to the height of flat 15, Rosebery is still the lessee of the extension which it built, including its roof. The effect of this would be that nobody would be able to use the roof of the extension except for maintenance. Rosebery would not be able to use it, because it would have no rights over the airspace above it. Rocklee and its successors would have no right to use it because it belongs to Rosebery.
- The event which triggered the dispute was the grant by Rocklee to Eaglestone in January 2008 of an underlease of the roof of the extension. Eaglestone's object in entering into the underlease was (I accept, despite one letter which suggests the contrary) to preserve its privacy at 7th floor level. It was not to make any use of the roof of the extension as a roof terrace. If either of Rosebery's arguments is correct, this underlease can only take effect in reversion, save insofar as it relates to a lobby which is unaffected by the dispute over the roof terrace.
- Both defendants take issue with Rosebery's case. They contend (a) that the underlease of flat 15 demised the roof terrace above flat 12 to Rosebery, together with the airspace above it up to the height of flat 15 but no higher, and (b) that, whilst Rosebery has acquired an additional foot or two in height by encroachment when the extension was built, the demise did not, and does not as a result of the encroachment, include the flat roof above the extension. Therefore Rocklee was free to lease it to Eaglestone, as it did, and the lease takes immediate effect.
- Rosebery is a Cayman Islands company owned by Mr. Shlomo Moussaieff and his wife Alisa. They occupy flat 15. Mrs. Alisa Moussaieff provided a witness statement and gave oral evidence, as did one of her daughters, Dorrit Moussaieff.
- Eaglestone, the owner of flats 16 and 17, is a Liberian company owned by the Israni family, which occupies these flats. Mr. Israni provided a witness statement and also gave oral evidence.
- Rocklee was the lessor, and one of its directors, Mr. Anthony Kemp, also provided a witness statement and gave oral evidence.
- There was a short uncontroversial witness statement provided by Mr. Peter Dan Neidle of Eaglestone's solicitors, Robert Brand & Co.
The detailed facts
- At all relevant times, the freehold owner was Grosvenor (Mayfair) Estates, which is owned by the Duke of Westminster. On 5th May 1972, this and other buildings were leased to Grand Metropolitan Hotels by the head lease for a period of 140 years. At some time not later than 1979, the head lease was assigned to Sarounsa Limited ("Sarounsa"), then it was assigned to Ventgrant Limited ("Ventgrant") in 1985, and then to Rocklee in 1992. The head lease was surrendered on 22nd October 2009 when enfranchisement took place. The freehold is now owned by the lessees through a company which has a 999 year lease. Rocklee has no further interest in the building, except for these proceedings.
- It is convenient to start with the underlease of the flat at 5th floor level, flat 12 ("the flat 12 underlease"). The only provision to which I must draw attention is the parcels clause, which demises:-
"ALL THAT the Flat... Numbered 12 ... on the Fifth Floor of the Building ... known as 47 Grosvenor Square ... (including one-half part in depth of the concrete beams between the ceilings of the flat and floors of the flat above it and the internal and external walls of the Flat 7 up to the same level)".
- The greater part of the area of the flat lay immediately under flat 15 on the floor above, and it is clear that in this area the vertical extent of the demise was up to the mid-point of the concrete beams above the ceiling of flat 12.
- However, part of flat 12 did not lie under any other flat, but just had a flat roof above it. Therefore the definition of the vertical extent, read literally, does not cover the vertical height of that area. It is however common ground that the vertical height of that area of flat 12 must have been the same. The parties cannot have intended the height to increase in this area so as to encompass the roof above the flat. The flat roof was part of the premises demised to the head lessor and there was no underlease in respect of it. The head lessor was therefore entitled to underlet it to Rosebery.
- I do not have the exact dimensions of the roof terrace, but it seems from a photograph taken in about 1984 to have been about 8 by 5 metres. It was protected by railings. On one side there was (and there still is) a part of the building, rising to the level of the roof terrace above the 7th floor, which contains a service staircase and the service lift. In it, overlooking one corner of the terrace, there was quite a large window. Adjacent to that was apart of the wall of flat 15 and, above it, part of flat 17. At the level of flat 17, there was (and is) a large barred window, which is the window of one of the bathrooms in that flat.
- On 15th August 1975, Grand Metropolitan underleased flat 15 to Scitis Limited ("the main flat 15 underlease") for 100 years and a quarter from 25th December 1969. Scitis assigned the benefit of this underlease to Rosebery on 8th March 1983. Title was registered on 14th July 1983. Mr. and Mrs. Moussariaff have occupied it ever since.
- The parcels clause in the main flat 15 underlease is in the same terms as the corresponding clause in the flat 12 underlease (see §12 above). It defines the area and the height of the demise. At that time, there was a flat above what was then the whole area of flat 15. The parcels clause referred to a plan, which was the same plan as was referred to in the main underlease, and consisted of a cross-section of each floor, including the 6th floor. It can be seen from the plan that the area of the roof terrace is not built on, either at 6th or 7th floor level, whereas it is at all the lower levels.
- There are, as one would expect, provisions governing contributions to the lessor's costs of maintaining (inter alia) the main structure of the building including the roofs and boundary walls and railings in accordance with the covenants in the head lease (clauses 2(a) and 5(2) and Third Schedule §1), painting and maintenance of the inside of the flat and anything not within the landlord's obligations (clauses 2(7) and (8)), prohibition against altering the construction, height, elevation or architectural appearance of the flat (clause 2(14)(a)), and a covenant by the landlord to permit peaceable enjoyment (clause 5(7)).
- On 2nd August 1982, Sarounsa underleased flats 16 and 17 on the 7th floor to Castleton Properties Limited for a similar period. I have not been shown the plan which was attached to this lease. The underlease was assigned to Eaglestone in April 1985 and since then Mr. Israni and his family have occupied the flats. This underlease was replaced in July 2007 by two separate underleases, one for each flat, but nothing turns on this.
- On 17th July 1984, Sarounsa granted an underlease of the roof space over flats 16 and 17 to Alanine Inc., which is probably a Panamanian company. The parcels clause defined the demised property in the following terms:-
"ALL THAT the exterior of the roof situate immediately over the Seventh Floor of the building ... known as 45 and 47 Grosvenor Square ... as the said roof is shown edged red on the attached plan (hereinafter called "the Roof Space" which expression is deemed to include all premises and structures and any flat that may at any time hereafter be erected thereon or any part of parts thereof) including the surface materials and structure of the said roof and airspace above the same ..(my emphasis)
Thus, in this underlease, the airspace above the roof was explicitly demised. However, there is no evidence to show that the existence of this underlease, or its terms, became known to Rosebery at the time of the supplemental flat 15 underlease a few months later, or that knowledge of it was available to Rosebery. This underlease was assigned to Eaglestone in 1991.
- Next, there is the supplemental flat 15 underlease relating to the roof terrace above flat 12. This was completed in November 1984. I have been shown a few letters passing between Rosebery's solicitors and Mrs. Moussaieff, and between Rosebery's solicitors and Sarounsa's solicitors, starting in December 1983. On the basis of those letters, I find, on the balance of probabilities, that it was known to Sarounsa that Rosebery intended, or at least was contemplating as a possibility, the erection of a conservatory on the roof terrace.
- Mrs. Moussaieff s evidence is that the intention was to build a swimming pool or a roof terrace on top of an extension. I do not accept her evidence on this point, which is inconsistent with the correspondence, and in any event there is no evidence that any such contemplated use, or any contemplated use at 7th floor level, was known to Sarounsa. Therefore the factual background which is relevant to the construction of the demise is that Sarounsa knew that Rosebery would or might not use the terrace just as a terrace, but the only specific project known to it was the erection or possible erection of a conservatory; however an extension was an obvious possibility.
- The roof terrace was the subject of an underlease between Sarounsa and Rosebery dated 13th November 1984 ("the supplemental flat 15 underlease"). It is convenient to set out the relevant terms in full here:-
(i) This Deed is supplemental to an Underlease (hereinafter called "the Underlease") dated 15th August 1975 and made between Grand Metropolitan Limited of the first part Mecca Limited of the second part of Scitis Limited of the third part whereby the premises known as Flat 15 47 Grosvenor Square London W1 (hereinafter called "the premises") were demised to the said Scitis Limited for a term of one hundred years and one quarter of another year (less 5 days) from 25th December 1969 subject to the payment of the yearly rent thereby reserved and the performance and observance of the covenants on the part of the Lessee and conditions therein contained
(ii) The reversion immediately expectant on the term created by the Underlease is now vested in the Lessor
(iii) The Underlease is now vested in the Lessee for all the unexpired residue of the term of years thereby created subject to payment of the rent thereby reserved and to the Lessee's covenants and conditions therein contained
(iv) The Lessee has requested the Lessor (and the Lessor has agreed) to grant to the Lessee a further demise of the terrace adjoining the premises for the term hereinafter mentioned in consideration of a sum of SEVENTEEN THOUSAND FIVE HUNDRED POUNDS (£17,500) and subject to the stipulations and exceptions and reservations hereinafter mentioned
NOW THIS DEED WITNESSETH as follows:
1. IN consideration of the sum of SEVENTEEN THOUSAND FIVE HUNDRED POUNDS (£17,500) now paid by the Lessee to the Lessor (the receipt whereof is hereby acknowledged) the Lessor hereby demises to the Lessee the terrace adjoining the premises as the same is more particularly delineated on the plan annexed hereto and thereon edged red (hereinafter called "the additional premises") SUBJECT TO the stipulations and exceptions and reservations hereinafter mentioned TO HOLD the same unto the Lessee for a term of one hundred years and one quarter of another year (less 5 days) computed from 25th December 1969 YIELDING AND PAYING therefor an annual rent of a peppercorn
2. IT IS HEREBY AGREED AND DECLARED that there shall be deemed to be included in the Underlease a covenant by the Lessee to well and substantially repair cleanse maintain paint and decorate the additional premises at all times during the term created hereby in accordance with clauses 2(7) and 2(8) of the Underlease
3. THERE are excepted and reserved from this demise the following rights:
(i) The right for the Lessor and its respective agents and workmen at reasonable hours in the daytime but only after due written notice (except in case of emergency) to enter upon the additional premises to execute repairs or alterations to or upon the additional premises or upon adjoining or adjacent premises such persons as aforesaid making good damage thereby done to the additional premises
(ii) The right in particular for the Lessor and its respective agents and workmen at reasonable hours in the daytime to gain access to adjoining or adjacent premises through a door at the top of the service staircase which is situate in the additional premises such persons as aforesaid making good all damage thereby done to the additional premises
4. IT IS HEREBY DECLARED that in all other respects the Underlease shall remain in full force and effect and the obligations therein contained shall continue and be binding upon the parties hereto henceforth during the residue of the terms of years granted and the parties hereto will respectively perform and observe the several covenants and conditions contained in the Underlease as if the same were repeated in full herein ..."
- The plan which is annexed to the supplemental flat 15 underlease is the same plan, dated February 1975, which was annexed to the main flat 15 underlease: see §17 above.
- The Register of Title describes the property as "the Leasehold Land shown edged in red on the plan of the above Title filed at the Registry and being part of 47 Grosvenor Square" and adds "NOTE: Only the sixth floor roof terrace is included in the Title". It was suggested on behalf of the defendants that significance was to be attached to the fact that there is no reference to the air space above the roof terrace, but this does not seem to be right. Exactly the same wording is used in relation to a later underlease to Eaglestone dated 27th July 1992 of the roof space above 7th floor level, where the air space was expressly demised.
- On 29th October 1986, the City of Westminster gave planning permission for a proposal described as "Mansard extension to existing roof terrace to provide residential accommodation" in accordance with plans numbered 65/06, 07, 08 and photographs. One of the photographs has been described at §15 above.
- Plan 65-08 was an axonometric plan showing the proposed residential accommodation of covering the area of the roof terrace, with three skylights in it.
- Plan 65/07 shows the roof level of the extension as being slightly lower than the top of the window of Flat 15. It therefore falls within what, on either view, is within the vertical extent of what is demised by the supplemental flat 15 underlease. The plan shows with two sky lights extending above the roof level, at approximately the height of Flat 15. The plan shows no safety measures for the skylights, and no railings at 2nd floor level.
- Plan 65/06 is a plan which shows the existing flat 15 and a profile of the new extension. It also has a more detailed plan of the extension, showing a layout which was subsequently altered. The plan is dated 28th July 1986, but it bears a notation dated 6th July 1989, signed by the managing director of Grosvenor (Mayfair) Estate, confirming that he has no objection in principle to it. There are notes on it relating to the means of entrance and exit. They show that the entrance to the extension is by direct access from the existing flat 15. There is then a door which leads to a lobby in the part of the building housing the service staircase and lift, which is referred to as "alternative means of escape from extension to Common Parts by way of ex. Door D2." The notes then continue "means of escape of the Apartment above (i.e. flat 17) will be by way of new doorway onto the flat roof of the new extension (above D2) D3". This plan shows only one skylight.
- On 17th December 1986, Grosvenor (Mayfair) Estate wrote to the managing agents acting for the head lessor (now Ventgrant), referring to the application and plans submitted for "...the proposed additional sixth floor part mansarded storey to rear addition, to provide additional accommodation for the existing self-contained Flat 15, for continuation of private residential user". The Grosvenor Estate confirmed that there was no objection in principle subject to a number of conditions, including completion of the work within six months, the submission and approval of copies of a more detailed floor plan, together with the proposed design of external railings. The letter ended as follows:-
"This approval is granted on the strict understanding that the door opening D2 on the approved drawing is used only for fire escape purposes, and to no separate sub-letting of this extension, as it must form part of Flat 15."
- Although the times for commencement and completion of the work were extended to the end of 1988, it was not done by then, but there was a further application which resulted in permission being given to Ventgrant on 6th July 1989. This was in very similar terms to the previous permission, and referred to plan 65/06B (which is not before the court). The conditions imposed included provision for a more detailed plan of the proposed layout of the extension showing the proposed design of the external railings which were to be provided. The concluding passage in the previous consent was repeated in substantially the same terms as condition 7.
- On 16th October 1989, the Grosvenor Estate acknowledged receipt of additional drawings and documents necessary to satisfy the outstanding approval conditions, and confirm that the work would proceed. By way of formal approval it enclosed an endorsed copy of plan 65/01D. This plan is not in the documents before the court, and nor are the plans relating to changes to the layout referred to in a letter from Rosebery's architects to Mrs. Moussaieff dated 20th December 1989.
- As built, the extension differs from the plans approved in July 1989, in that there is a large bedroom instead of a smaller room and a kitchen. I accept Mrs. Moussaieff s evidence that this was because the extension was originally planned for her mother to live in, and possibly to accommodate a residential nurse, but her mother then died. Mrs. Moussaieff said that there were many amendments to the plans, and that not all of them were before the court. Other features of the extension as built are that the skylights do not appear to be in the originally planned positions, and that there is folding ladder inside the extension which leads to the largest of them. As built, all the skylights could be opened, as indicated by plan 65/07.
- Mrs. Moussaieff and her daughter gave evidence as to the regular use of the roof of the extension, or sunbathing, picnics etc., from the time it was completed in about 1990 onwards. Mr. Harpum indicated that he placed no reliance on this evidence in support of either of the arguments he advanced, and it is therefore unnecessary for me to deal with it in detail. I should record however that I did not believe the evidence about these matters.
- The evidence shows that the height of the extension is greater than the height of the remainder of flat 15, by between one and two feet. There is no evidence that this was permitted, but no objection was made to it at the time. In a letter dated 15 January 2007, well over twelve years after the extension had been built, Rocklee complained of 2 allegedly unauthorised skylights, but that is all. Therefore the demise now includes the additional height, and the right to open the skylights as presently positioned. On top of the extension, Rosebery installed the railings required by the Grosvenor Estate. In part, they are placed on a low parapet wall also built by Rosebery. There is no evidence as to whether this too was required by the Grosvenor Estate, but it is quite likely, and in any event they must have inspected and approved it.
- Finally, on 25th January 2008, Rocklee granted an underlease to Eaglestone of the roof terrace adjacent to flat 17 including the air space above ("the flat 17 supplemental underlease"). As noted earlier, Mr. Israni's evidence is that he bought this underlease in order to maintain the privacy of his existing flats, not to use it as a roof terrace. But a subsequent owner would, of course, be able to use it as a roof terrace, and possibly to build an extension on it, if it takes effect in possession. It was this lease, of the roof of the extension built by Rosebery, that led to the present proceedings.
The effect of the supplemental flat 15 underlease
- It is common ground between the parties that the vertical extent of the demise is a matter of construction of the supplemental flat 15 underlease, governed by the ordinary principles of contractual interpretation.
- However, Mr. Harpum submits that the starting point is a presumption that the demise of the roof terrace included the column of air above it, up to such height as was necessary for the ordinary use of it, and of any structures built on it. He relied on Kelsen v. Imperial Tobacco Co.  2 Q.B. 334 at 488 and Bocardo S.A. v. Star Energy UK Onshore Ltd  3 WLR 654, at §20 per Lord Hope, for the proposition that this defined the vertical extent of a freehold owner's interest. This is not controversial.
- He also relied on the decision of the Court of Appeal in Grigsby v. Melville  1 W.L.R. 80 in which it was held that a conveyance of land unless otherwise stated includes everything beneath the surface including a cellar. This was said by Stamp L.J. at 85G to be "axiomatic" and at 88A-B James L.J. described it as "a fundamental proposition" that:
"... a conveyance of land includes, unless the conveyance is to be construed to the contrary, everything beneath the surface of the land conveyed and the space directly above ..." (my emphasis)
- However, in Straudley Investments Ltd. v. Barpress Ltd.  1 E.G.L.R. 69, the Court of Appeal held that a long lease of a terrace of 8 houses included the roof and exterior walls. This was because it plainly could not have been intended that the lessor's repairing covenants did not cover them. Nicholls L.J. added at 704:-
"... this lease, being a long lease of a whole building or whole buildings, is quite different from a lease or tenancy of a top-floor flat of a building which has been divided horizontally into flats ..."
- In Pavies v. Yadegar  1 E.G.L.R. 71, however, the Court of Appeal held that where a house had been divided horizontally into two, and the demise of the upper part included the roof space and the roof, it also included the this space above it. Woolf L.J., who gave the leading judgment, said:-
"On a demise of this sort of premises and the roof, the demise includes the airspace above the roof and, accordingly, there is no trespass involved in carrying out an alteration which alters the profile of the roof so as to protrude further into the airspace above the existing roof. Mr. Bickford-Smith submits to the contrary that the airspace above the roof is not included in the demise and he does so because he submits a different principle applies where one is dealing with a property which is divided into flats. He submits that, in a case where a property is so divided, all that is in fact included in the demise is the actual area occupied by the flat. The demise is restricted laterally by the extent of the flat. He accepts, and clearly rightly accepts, that, if this were not a demise of a flat but a demise of the whole building, it would have included the air space above the roof, but he submits a different situation exists because this was merely a demise of a flat.
I can well see that, in a different situation where one is considering a block of flats containing a number of different premises occupied by different tenants where no tenant has included in his demise the roof, a position different from that which I have indicated could exist. However, in the situation that we are dealing with hereof what was once a single residential unit which has been divided into two flats, Mr. Bickford-Smith's submission, in my view, has no application. The roof space and the roof were included in the demise and the logical intent would be that the airspace above should be included in that demise. Were the position otherwise, one can easily see that all sorts of absurd results would follow: if the tenant of the upper flat wished to alter his chimney he would not be in a position to do so: if he wished to erect an aerial on the roof he would not be in a position to do so; if he wished to change the flue on the roof because of changes in building practices he would not be in a position to do so without the consent of the lessor, and the lessor would have completely unfettered discretion to refuse the consent. (My emphasis)
- Sir Roger Ormrod agreed:-
"The appellant's case in this case depends wholly and entirely on establishing that any alteration to the roof or in raising its height or altering its profile would amount to a trespass, that is to say an interference with the airspace which it is presumed for the purpose of this argument is retained by the landlord. But I think that that is a fallacy, because it is , to my mind, quite plain from the terms of the lease that there were demised to the respondent to this appeal, the tenant, the first-floor flat at 13 Beechcroft Avenue and the roof and roof space thereover; and that, it seems to me, clearly distinguishes this case from any authority that has been cited to us, in particular Cockburn v. Smith  2 KB 119, because there is all the difference in the world between demising horizontal flats and retaining the roof and roof space, and demising a flat together with the roof and roof space. In the first case the landlord retains the roof and roof space and so there is no possibility of the tenant's relying upon a column of airspace above his flat, and that is enough to provide the answer to this case."
- In my opinion, the authorities do not support the proposition advanced by Mr. Harpum that there is a presumption in any lease of, or including, a roof that it extends upwards to the full height of the airspace availabl e to the lessor. Davies v. Yadegar was a case in which the demise included the whole of the top floor and the whole of the roof. The passage emphasised in the judgment of Woolf L.J. above suggests that, where the demise is of the roof of a small part of the building, in circumstances in which its use could affect tenants on other floors, no such presumption applies. I agree with Lewison on Interpretation of Contacts, 4th ed. at §11-12 that there are no clear presumptions relating to divisions of individual parts of a building.
- I therefore approach this issue unhampered by any presumption. I must consider what a reasonable third party, equipped with the relevant background knowledge available to both parties, would conclude: see the Investors Compensation case  1 WLR 896 at 912-3. On that basis, my clear view is that the supplemental flat 15 underlease did not extend to the air space above the roof, for the following reasons:-
(a) It is common ground that the flat 12 underlease did not include the roof or the air space above it. Otherwise the flat 15 underlease to Rosebery could not have taken effect. The flat 15 underlease is identical in its terms. This strongly suggests that the air space is not included in the flat 15 underlease either. Whether the roof is included is a separate question, considered at §48-50 below.
(b) The natural expectation, where a 6th floor terrace is added by a supplemental underlease to a 6th floor flat is that it will occupy only the 6lh floor, and not (unless otherwise specified) upper floors.
(c) That this is so is supported by the fact that the leases referred to at §20 and 25 above do expressly include the air space. These are not part of the factual matrix, in the sense that their terms were known to both parties at the time of the flat 15 underlease, but they do reinforce the view that, where this is the intention, the parties to the lease would probably say so expressly. That is because the inclusion of the air space would have been of great practical and commercial importance to both parties and, in a building of this kind, unusual especially if it would affect other occupiers. Therefore, if this had been the intention, one would have expected to see it spelt out in the terms.
(d) Both the preamble at (iii) and clause 1 refer to the demise as being of "the terrace adjoining the premises as the same is more particularly delineated on the plan". Mr. Harpum submits that, taken in conjunction with the plan, this refers only to the horizontal plain, and has no bearing on the vertical extent of the demise. I do not agree. I think that the natural meaning of "the terrace adjoining the premises", where nothing is said about height, is that the height is the same as the height of the flat; the air space above that height does not "adjoin" the premises.
(e) I also think that Mr. Radevsky is right to submit that the plan supports this conclusion. It shows a thick red outline round the demised roof space at 6th floor level, but not at 7th floor level. Had it been intended that the demise should include the air space at 7th floor level and above, the outline would, logically, have been shown at both levels.
(f) Rosebery's construction is an unlikely one. To permit one tenant of a block of flats the use of space outside the bathroom window of the tenant of an upper floor would be likely to lead to trouble, and is unlikely to have been intended by a responsible landlord. Although there is no evidence that an extension had been discussed with Sarounsa at the time of the flat 15 supplemental underlease, this was an obvious possibility; a landlord contemplating it would have appreciated that the tenant of flat 17 might well object to a roof terrace over the extension, with a direct view into his bathroom.
- I have been referred to the decision of the Court of Appeal in Ali v. Lane  1 EGLR 71, from which it is clear that, as an exception to the usual rules governing the construction of contracts, in cases involving a conveyance, evidence of subsequent conduct on the part of one of the original parties to it which is inconsistent with the construction which is being advanced by him or by a successor in title is admissible. Further, it seems from the facts of the case that the conduct may be the conduct of one party only. It does not have to be conduct which is common to both parties.
- In the present case, there is in my view conduct on the part of Rosebery which is inconsistent with an intention on its part that the air space above the height of the flat was to be demised to it, or any belief that this had been agreed. The main points are as follows:-
(a) The plans for the extension were for additional residential accommodation, and made no reference to any proposed use of the roof.
(b) The plans for the extension did not provide for any safety railings either round the roof, or round the skylights, such as would have been needed if it had been intended to use it as a terrace.
(c) Doors d2 and d3 on the plans were referred to as means of escape only, not, as would have been natural if the intention had been to use the roof as a terrace, as a means of access to it.
(d) The extension had an internal ladder giving access to the main skylight. If it had been intended to use the roof as a terrace, Rosebery would have sought and obtained a right of way through to d2 and/or d3 and up by the service staircase. I did not find Mrs. Moussaieff s evidence that she did not want such access because of dustbins near that staircase convincing. Access via the staircase would have been far more convenient.
(e) Rosebery did not answer complaints about unauthorised use of d3, and the installation of a satellite dish, but desisted from the conduct complained of.
- Rosebery's alternative case was developed during the course of the hearing. It is, I think, to be decided by reference to the same principles of contractual construction. The facts set out at §26-31 above amount to an agreement between Rosebery, Sarounsa/Ventgrant and the Grosvenor Estate, whereby the extension which Rosebery wanted to build would be permitted. The roof which would be part of the extension would obviously become part of the freehold, and therefore part of what the Grosvenor Estate leased to Sarounsa/Ventgrant. The question is whether, on the proper construction of the agreement, the roof was also to be part of what was leased by the supplemental flat 15 underlease to Rosebery.
- The defendants submitted:-
(a) that since (i) the demise of flat 12 did not include the roof (see §14 above) and (ii) the parcels clause in the flat 15 underlease was in exactly the same terms, the flat 15 underlease did not include the roof either;
(b) that Sarounsa/Ventgrant (and now Rocklee) was obliged to maintain the roof, and that this supported the argument that the roof was to belong to the lessor; and
(c) that Rosebery had also built railings and a balustrade at the request of the Grosvenor Estate, which did not belong to it.
- On behalf of Rosebery, Mr. Harpum submitted:-
(a) that the ownership of the roof depended on the particular circumstances relevant to it;
(b) that, since it was part of what Rosebery was to build, if the parties had intended it to be excluded from the demise they would have said so;
(c) that there was no true comparison with flat 12 since:-
(i) the roof of flat 12 was part of the original structure of the block of flats when it was built, whereas this roof was part of the extension built by Rosebery;
(ii) even on the assumption (which in considering this issue is to be made) that his main argument was wrong, the roof was to be built within the vertical extent of what the supplemental flat 15 underlease demised to Rosebery (see §28 above); and (iii) the intention as regards the ownership of the roof cannot have been changed by the encroachment, which took it outside the vertical extent of the demise, and Sarounsa/Ventgrant/Rocklee's failure to object to it;
(d) that the repairing obligations were a factor but not conclusive; and
(e) that the ownership of the balustrade and the railings was a separate question; the railings at least (and possibly the balustrade on which part of them was placed) had been requested by the Grosvenor Estate.
- Mr. Harpum also relied on the skylights as demonstrating an intention that the roof was to be included in the demise. They clearly precluded the building of an extension at 7th floor level. If it had been intended that the roof should be available as a terrace at that level, one would have expected to see some protection around the skylights in the plans, to ensure safety and privacy, especially as they opened.
- In my view, Mr. Harpum is right on this issue. The natural inference to draw, where an extension is to be built by a lessee within the space demised to him, is that the whole of it is to be within the demise unless otherwise stated. For that reason, the position differs from flat 12, where the roof was not part of what was demised. I do not think that the fact that the roof was built higher than it should have been alters this, and the points made about the skylights are persuasive. The other matters relied on by the defendants are not sufficient to compel a different conclusion.
- For the reasons set out above, I hold that the extension, including its roof but not any airspace above it, was demised to Rosebery by the supplemental flat 15 underlease.
- I hope that it is possible for the defendants to reach agreement on the consequences of this in the Part 20 proceedings. If not, I will hear further argument on this. If the parties are able to agree on the terms of the order, there is no need for anyone to attend the handing down of the judgment. I am very grateful to all counsel for their very helpful and cogent submissions.
20th January 2011