How to interpret a word in a lease

The interpretation of words used in a lease can sometimes be challenged. A landlord may believe that a word means one thing, while a tenant interprets the same word another way. The impact of how a word is construed can have severe consequences, which can lead to litigation, as was the case in Triplerose Limited v Patel, Patel & Patel [2018] UKUT 0374 (LC).

The Disputed Word

In the Triplerose case the word in dispute was “elevation.” The lease contained a clause which prohibited the tenant from making alterations to the “elevation” of the property. The rear elevation of the property had been altered, in breach of the clause. The landlord brought a claim for breach of the lease pursuant to section 168(4) of the Commonhold and Leasehold Reform Act 2002.

First Instance Decision

At first instance, the First Tier Tribunal decided that the word “elevation” only included the front of the building based on the decision of Joseph v London County Council (1914) 111 LT 276. The First Tier Tribunal followed this decision to find that an alteration to the rear of the property would therefore not amount to the alteration of the “elevation” of the property.

Upper Tribunal Decision

On appeal, the Upper Tribunal preferred the landlord’s interpretation of how the word “elevation” should be construed in the context of this particular lease.

The Upper Tribunal took into account the overall purpose of the clause in which the word “elevation” appeared, rather than looking at the word in isolation. In looking at the relevant clause in this manner, the Upper Tribunal determined that the purpose of the clause was to ensure that the building is returned to the landlord in substantially the same form in which it was demised. The Upper Tribunal did not feel that the clause only intended for the tenant to be prohibited from altering the front of the building.

In reviewing the wider context of the clause, the Upper Tribunal had the principles of how to interpret leases, as set down in Arnold v Britton [2015] AC 1619:

Arnold v Britton stated that in order to interpret the meaning of a lease, consideration should be given to the following:

1. The natural and ordinary meaning of the clause.
2. Any other relevant provision in the lease.
3. The overall purpose of the clauses and the lease.
4. The facts and circumstances known or assumed by the parties at the time that the document was executed.
5. Commercial common-sense, but disregarding subjective evidence of any party’s intentions.

Consider what it means

Careful consideration should be given to words in leases, before interpreting how a Court or Tribunal may apply them. In the Tripelrose case, it would appear that even the First Tier Tribunal misinterpreted how the word “elevation” should apply, this demonstrates the difficulties landlords and tenants often have when reading their leases. In order to understand the meaning of a word in a lease, one should follow the steps set down in Arnold v Britton, as set out above.

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