Where a document, including a company’s articles of association, is ambiguous or reasonably capable of more than one meaning, the document will be given the meaning which is more consistent with the parties’ presumed intention. Where a document contains a clear mistake, and it is obvious what the parties must have intended, the document will be interpreted so as to accord with that intention.
In the Upper Tribunal (Lands Chamber) case of Avon Ground Rents Ltd v 51 Earls Court Square RTM Company Ltd , the Company’s articles of association were in the model form prescribed by the RTM Companies (Model Articles) Regulations 2009. Article 2 recorded that the Company’s name was “51 Earls Court Square, RTM Company Ltd.”
However in the Company’s articles “the Premises” were defined as “Flat 1-13, 51 Earls Court Square, London SW5 9DG”.
The tribunal said the informed reader, might construe the words “Flat 1-13, 51 Earls Court Square” to mean the 13 flats, numbered 1 to 13, in the building known as 51 Earls Court Square, or alternatively to mean the building at 51 Earls Court Square, which comprised those 13 flats.
But the reasonable person would have to ask themselves “whether the object of the Company could sensibly be the acquisition of the statutory right to manage thirteen individual flats (an object which is legally incapable of fulfilment), or whether the parties must have intended that the right would extend to the whole of the Building [which] comprises the thirteen flats.”
The articles could only be interpreted to mean that the parties intended to refer to the whole of the Building, as it was the only unit of property at 51 Earls Court Square which was “a self-contained building or part of a building, with or without appurtenant property” and thereby qualified to be the subject of an application for the acquisition of the right to manage.
This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.