Choose Your Words Carefully: Arnold V Britton And Others 2015

“The case of Arnold v Britton and others [2015] is the type of case which, some might say, could well give the Law the reputation of being an “Ass”. Arnold v Britton is a contractual interpretation case. The case was about the service charge provisions in leases of chalets. It is “ a rare example of a residential service charge provision falling entirely through the statutory framework”. The wording in most of the leases is as follows;-

“To pay to the Lessor without any deductions in addition to the rent as a proportionate part of the expenses and outgoings incurred by the Lessor in the repair maintenance and renewal of the facilities of the Estate and the provision of services hereinafter set out the yearly sum of Ninety Pounds and Value Added Tax (if any) for the first year of the term hereby granted increasing thereafter by Ten Pounds per hundred for every subsequent year part thereof”.

Each of the leases is for a term of 99 years and the literal meaning of the clause meant that a 99 year lease which started out with a service charge of £90 would have a service charge by the end of the term of £1,025,004!! The parties litigated about whether this was the intended purpose of the clause.

The majority of the Judges decided, in their wisdom, that commercial common sense could not be invoked to undervalue the language of the provisions to be construed and common sense cannot be invoked retrospectively. The Court was only prepared to depart from the natural meaning of the words if the drafting of the words was clearly bad. The Court essentially ignored the commercial consequences of the transaction. Basically, the fact that the parties may not have contemplated the commercial consequences was ignored by the Judges because the language of the clause was clear (well, clear to a lawyer, at least).

The voice of reason in this case was that of the dissenting Judge who, to paraphrase, said that it “beggars belief” that the lessees would have entered into such a “bad bargain” (accepted as being an understatement) intentionally.

This case is a salutary lesson to lawyers drafting documents to remember to choose their words carefully. It is a useful reminder.”

Elaine Allen
Partner – Social Housing Development
Direct Line: 020 8799 1870
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