Arnold v Britton [2015]

Court: Supreme Court

Facts: Ninety-one chalets in Oxwich Leisure Park were leased for 99 years from 1974. The leases included a service charge clause, which stipulated annual service charges that increased by 10% every year. The tenants argued that the compounded increases would result in exorbitant charges over time, which they believed could not have been the original intention of the parties. The lessor argued that the clause's plain meaning was clear and binding.

Issue: Should the service charge clause be interpreted as requiring compounded annual increases, or should an interpretation more in line with commercial common sense prevail?

Held: The Supreme Court ruled in favour of the lessor, finding that the tenants were bound to the service charge increases as stipulated in the lease.

Key Judicial Statement: The court emphasised that commercial common sense and surrounding circumstances should not be invoked to undervalue the importance of the language of the provisions. The court stressed that it should be cautious about departing from the natural meaning of the contract, even if the consequences are harsh for one party.

💡 Leveluplaw: This case reaffirms the principle that the clear language of a contract should take precedence over arguments based on commercial common sense. It serves as a reminder that parties are bound by the terms they agree to, even if the outcomes later seem imprudent or unexpected.