BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £5, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | ||
England and Wales Court of Appeal (Civil Division) Decisions |
||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Princes House Ltd & Anor v Distinctive Clubs Ltd [2007] EWCA Civ 374 (27 March 2007) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2007/374.html Cite as: [2007] EWCA Civ 374 |
[New search] [Printable RTF version] [Help]
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JONATHAN GAUNT QC)
Strand, London, WC2A 2LL |
||
B e f o r e :
LORD JUSTICE DYSON
and
LORD JUSTICE THOMAS
____________________
PRINCES HOUSE LIMITED & ANR |
Appellant |
|
- and - |
||
DISTINCTIVE CLUBS LIMITED |
Respondent |
____________________
WordWave International Limited
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
MR K MUNRO (instructed by Messrs Shoosmiths) appeared on behalf of the Respondent.
____________________
Crown Copyright ©
Lord Justice Chadwick:
"Repair of building and provision of services.
Subject to the Tenant paying the Service rent, unless prevented by strikes knock-outs electrical breakdown or interruption works of repair or replacement or other causes beyond the Landlords' control to use all reasonable endeavours to comply with the obligations in paragraph 2 of the Fourth Schedule so far as is consistent with the principles of good estate management."
Paragraph 2 of the Fourth Schedule contains a covenant by the landlords to provide the services set out under paragraphs 3.1.1 to 3.1.17 in that schedule. Paragraph 3.1.7 of the Fourth Schedule is in these terms:
"Maintenance, repair and redecoration of Bafta block. The repair, including maintaining, renewing, replacing, rebuilding and decorating, external lighting and cleaning the foundations, roofs, outside walls, stonework and structural parts of the Bafta block and any plant machinery and equipment servicing the Bafta block and the service conduits and appliances therein."
The BAFTA block is defined by reference to the plan to the lease.
"The Landlord will not be liable to the Tenant in respect of any failure by the Landlord to perform or provide the services referred to in the Fourth Schedule unless and until the Tenant has notified the Landlord of such failure and the Landlord has failed within a reasonable time to remedy the same."
"Please find attached the expenditure budget for the year ending 31 December 2003.
Of particular note, you will see that your landlord proposes to replace Bafta's roof next year which is scheduled to take place in the summer. Preliminary advice includes a cost in the order of £500,000. There is currently £100,000 in the sinking fund which can be applied towards the cost, leaving a balance of £400,000 which needs to be collected under the budget for 2003 to pay for the work.
Under the terms of your lease you are required to contribute towards the cost of the work. Your percentage contribution is 28.07%. Based on the above percentage, your proportion of the cost of the work will be £116,490.50. If the total cost of the work is more or less than the budget figure an adjustment will be made and an appropriate debit or credit will be raised."
"99. Mr Wonnacott [counsel for the landlords] conceded that, had there been a simple covenant to repair the roof, the Claimants would have been in breach of it from the moment that they acquired the reversion on 6th March 2001 but, he said, the obligation was qualified."
- Secondly, the Claimants invoke clause 5.5.2 and rely on the fact that the Defendant had never notified them of any failure to perform their repairing obligation as a complete defence to any claim for consequential loss."
He then quoted from the closing submissions made on behalf of the landlords. I need read only three paragraphs of that quotation:
"99. C's obligation, from the moment it acquired the reversion, was 'to use all reasonable endeavours to comply with the obligations in paragraph 2 of the Fourth Schedule so far as consistent with the principles of good estate management'.
…
"103. In fact, what C did, using 'reasonable endeavours' and 'in accordance with the principles of good estate management,' was to continue patching the roof, whilst it got up a scheme for the complete replacement of the roof, which it then implemented at a time and in a way that was least inconvenient for the tenant who would be most affected by the works.
"104. That, as Mr Shaw [an expert witness] explained, was not unreasonable: it would have been unreasonable to decide not to replace the roof at all; but is perfectly consistent with the principles of good estate management to decide to delay the implementation of a major capital project, provided that it is actually done in the end."
"100. It seems to me that this last point is lacking in both merit and realism in a situation where:
(a) the failure in question is to look after a part of the building to which the tenant does not have access; and
(b) the landlord had himself told the tenant that the roof needed replacing, that his building surveyor had so advised and that he had scheduled to do remedial work for the next year (2003)"
"I am, however, inclined to agree that the exclusion in clause 5.5.2 could not have been intended to apply to (a) a failure that could not of its nature be known to the tenant (except fortuitously) and/or (b) a situation where the landlord already knew of the state of affairs constituting the failure and had himself told the tenant of it and stated that he was intending to attend to it within a time scale that was reasonable. Had the troublesome officious bystander asked the contracting parties whether they were really requiring the tenant to give the landlord notice of the landlord's failure in these circumstances, both parties would surely have dismissed the suggestion contemptuously."
"Nevertheless, it appears from the correspondence that had matters got underway soon enough, BAFTA would have been perfectly happy for the work to have taken place in the summer of 2003 rather than the summer of 2004."
BAFTA were, in that context, the immediately subjacent tenant -- in that the works to the roof of the BAFTA block would have immediate effect on their occupation.
"The interests of BAFTA to have major works co-ordinated with their Summer shut down could have been accommodated in 2003 if the Claimants had started earlier or moved with more urgency and not allowed themselves to have become side tracked by other plans and aspirations."
So he held that the tenant was entitled to succeed on its counterclaim.
"There have been no calls on the Fund to date. Based on our internal projections the first call on the Fund is likely to be in early 2003."
With that letter the tenants were sent a spreadsheet setting out projected expenditure to be recovered from the fund, which included an item, in 2003, of £767,000 to replace the roof of 190-196 Piccadilly. So it is clear that, in June 2002, the landlords, through their agents, were telling the tenant that the works to the BAFTA roof were to be carried out in 2003.
"FOM [who were the project managers -- Fyans Oliver Mills] pressed ahead with the project during February 2003. They pressed BAFTA for information about their plant requirements and prepared a feasibility report with costings which estimated the costs at just under £668,000 plus VAT. They prepared a program in the form of a bar chart which showed the plant being relocated during July, the new roof works taking place in August and September and the site being cleared by the end of October 2003. They held a meeting with the planners."
The judge went on, in paragraph 36, to explain that -- on 11 March 2003 in the course of a meeting about moving the plant -- BAFTA suggested that the plant relocation should take place during 2003 and the works to the roof fabric during summer 2004. It is clear, therefore, that the judge's finding was that up to March 2003 matters were progressing on the basis that the work would be done in the summer of 2003 and completed by the end of October 2003. The suggestion that the work would not be, or might not be, done and completed by October 2003 was not made until March 2003. At paragraph 37 of his judgment, the judge noted that, by June 2003, it appeared that the proposal to do any significant work in 2003 had been abandoned. The project managers then produced a revised program providing for the relocation of the plant between January and April 2004 and the roof works between May and October 2004.
"Thank you for your letter of 25th July 2003. As you are aware we are carrying out the tender process as it is part of the programme of works which will enable us to carry out the roof works next year to fit in with your refurbishment programme and closure."
That letter was described in the defendant's skeleton prepared for use at the trial as "the single most important document at the trial". But that letter must be read in the context of a later minute of a meeting between BAFTA and the landlords held on 5 November 2003 to which the judge referred at paragraph 39 of his judgment. The judge observed that there was a minute of that meeting at which Mr Price of BAFTA had asked for an assurance that the work would, after all, be done in 2004 and had protested:
"'BAFTA had to plan ahead and after making arrangements for the work to be done last year, they did not want the same thing to happen this year as it cost them money'."
The judge observed that that minute confirmed that, at least initially, BAFTA would have been happy for the work to have been done in the summer of 2003.
"I have had to reconstruct the events of 2003 as best I can from the documents included in the trial bundles. It is a curious feature of this case that, although it was part of the Defendant's pleaded case that the Landlords should have repaired the roof in 2003 and that this failure gave the Defendant a complete defence to the claim, none of the Claimant's witnesses in their witness statements gave any account at all of what was happening during 2003 or why roof repairs, which had been identified as being needed in 2001 and 2002 and had been scheduled to be done in 2003, were not carried out then."
"As I have already commentated, the Claimant's witnesses 'ducked' giving a coherent explanation of the events of 2003 in their witness statements. Moreover, no witness was called on behalf of the Claimants to explain why nothing happened between March 2001 and the end of 2002."
Lord Justice Dyson:
Lord Justice Thomas:
Order: Appeal dismissed.