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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Sight & Sound Education Ltd v Books Etc Ltd [1998] EWHC 319 (Ch) (13 November 1998) URL: http://www.bailii.org/ew/cases/EWHC/Ch/1998/319.html Cite as: [1999] 3 EGLR 45, [1998] EWHC 319 (Ch), [2000] L & TR 146, [1999] 43 EG 161

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice
		Friday, 13th November 1998

Friday, 13th November 1998

1. JUDGE PRYOR: The question I have to determine in this a case is a point of construction of a few words in the Landlord & Tenant Act 1954. The plaintiff was until 28th September 1997 the tenant of premises at 118/120 Charing Cross Road and occupied those premises for the purposes of its business. In fact, it occupied under three separate leases but nothing turns on that. They all had the same expiry date, which was 28th September 1997 and they were all for terms which exceeded 14 years.
2. Since the plaintiff occupied for the purpose of its business, the 1954 Act applied to the tenancy with the result that, by virtue of s.24, the tenancy would not come to an end on its term date because the tenant had the protection of that Act, but there was substituted by the Act new statutory methods of termination with which this case is concerned.
3. What happened in fact was that in February 1997, on 27th February, the landlord served appropriate notices pursuant to s.25 of the Act, giving as the date for termination of the tenancy the 25th February 1998. That meant that, according to the terms of the Act, 25th February 1998 became the termination date for the tenancy instead of 28th September 1997, provided - and it is an important proviso - the tenant continued to occupy for the purpose of its business up until 25th February 1998.
4. Upon the service of a notice under s.25 the tenant has rights to protect its interest by serving a counter-notice within two months expressing its unwillingness to give up possession. Thereafter, within another two months, it can apply to the court for a new tenancy and that application will go through the process of court proceedings. In this case the issue would be determined - if the matter proceeded to a conclusion - whether the landlord could establish the grounds for opposition to the grant of a new tenancy which it had asserted in its original notices.
5. Those grounds were the grounds set out in sub-paras.(f) and (g) of s.30(1) of the Act. Paragraph (f) provides that if the landlord proves an intention to demolish or reconstruct the holding or a substantial part of the holding then a new tenancy will not be granted. Paragraph (g) has a similar consequence if the landlord proves an intention to occupy for the purposes of its own business.
6. What happened in this case was that the tenant duly served a counter-notice of unwillingness to give up possession and issued its application to the court. Both steps were taken within proper time. The defendant landlord filed an answer in July 1997 so, in effect, the issue was joined on the question of whether a new tenancy should be granted or not.
7. The matter never came to a hearing because the tenant decided to discontinue its application and vacate the premises. There is some dispute as to the precise date on which the tenant vacated, but nothing turns on that because it is accepted that the few days between the date when the tenant vacated - whichever it was, somewhere between 19th and 24th September - and the contractual date for termination, 28th September 1997, those few days were not sufficient to break the continuity of occupation for business purposes if 28th September 1997 is the crucial date for testing that question.
8. As I have said, the tenant vacated shortly before 28th September 1997, the original contractual term date, and the consequence of that was that, having vacated with no intention to resume occupation, the tenant ceased to enjoy the protection of the 1954 Act. The Act ceased to apply and so the contractual arrangements re-asserted themselves, if one can put it in that way, with the result that the tenancy, or tenancies, expired by effluxion of time on 28th September 1997. That is the consequence of a decision of the Court of Appeal in Esselte AB & Anor. v. Pearl Assurance [1997] 1 Estates Gazette Law Reports 73.
9. The result, summarising it, therefore was that the tenant vacated, the tenancy came to an end, the tenant's obligation to pay rent came to an end and the tenant's right of occupation came to an end. The tenant could not have remained in occupation or resumed occupation having discontinued its proceedings and vacated without being a trespasser after 28th September 1997.
10. The relationship of landlord and tenant came to an end in that way, but the impact of the Act did not because the circumstances are such that provided certain conditions are satisfied the tenant is entitled to compensation on vacating the holding. The right to compensation arises where the ground for opposition asserted by the landlord is one which is a ground inserted into the Act purely for the benefit of the landlord in the sense that the landlord only has to prove its own intentions as to its own activities without proving any default of any kind on the part of the tenant. If that is the reason why the landlord is entitled to refuse the grant of a new tenancy then the Act provides that the tenant shall be compensated. The provisions for compensation are found in s.37 of the Act, the main provisions for compensation.
11. I think it is convenient at this stage to recite the terms of s.37(1) and I will read it in full in its present form after amendment. It reads as follows:

"Where on the making of an application under section twenty-four of this Act the court is precluded (whether by subsection (1) or subsection (2) of section thirty-one of this Act) from making an order for the grant of a new tenancy by reason of any of the grounds specified in paragraphs (e), (f) and (g) of subsection (1) of section thirty of this Act and not on any ground specified in any other paragraph of that subsection, or where no other ground is specified in the landlord's notice under section twenty-five of this Act or, as the case may be under section twenty-six subsection (6) thereof, than those specified in the said paragraphs (e), (f) and (g) and either no application under the said section twenty-four is made or such an application is withdrawn then, subject to the provisions of this Act, the tenant shall be entitled on quitting the holding to recover from the landlord by way of compensation in an amount determined in accordance with the following provisions of this section."

12. The words in the middle of that sub-section from "or where no other ground" to "such an application is withdrawn" were inserted by amendment in 1969. There were two or three amendments in the Law of Property Act 1969 to cover difficulties which had arisen in the operation of the Act in its first 15 years of existence. The amending passage in this sub-section was, it seems to me, clearly inserted in order to avoid what had the previous rather cumbersome procedure which had to be gone through if a tenant was to get compensation.
13. What happened before the amendment was that the tenant's application had to be carried through to a conclusion in court, however strong the landlord's grounds of opposition might be, as disclosed in pleadings and evidence. If the tenant were to get compensation the matter would proceed to a hearing and the court would make its ruling under s.31 to the effect that no new tenancy should be granted because the landlord succeeded. It would certify the grounds on which the landlord had succeeded and if those grounds included those provided in paras.(e), (f) and (g) and no others, or any one of those paragraphs and no other, then, subject to the conditions of the Act, the tenant could get compensation. That was plainly an expensive, unnecessary and cumbersome procedure which added costs for both parties and cluttered up court lists. The amendment was inserted, in my view clearly, in order to enable the tenant who realistically accepted that it had no prospect of success against its landlord, or indeed decided not to proceed for any other reason that it might be entirely within the tenant's own considerations, to get compensation if the landlord's ground of opposition was that asserted in the paragraphs I have mentioned and either the tenant decided not to go before the court or withdrew any application it actually made. I accept entirely Mr. Brock's argument that that was the obvious purpose of this amendment.
14. That does not conclude the matter because the following sub-sections of s.37 provide for the manner in which compensation is to be calculated and they lay down certain conditions that have to be satisfied. Sub-section (2) provides that the tenant, on quitting the holding, should either receive one times the rateable value of the holding - that is just simply the rateable value - or, if other conditions are satisfied, it should receive twice the rateable value, and it is that provision which is at the centre of this argument. Section 37(3) provides that one of the conditions for the tenant to be paid twice the rateable value is this:

"(a) that, during the whole of the fourteen years immediately preceding the termination of the current tenancy, the premises being or comprised in the holding have been occupied for the purposes of business carried on by the occupier or for those and other purposes."

15. Both parties before me accept the crucial words that I have to consider are "immediately preceding the termination of the current tenancy".
16. To anticipate the argument slightly, the tenant says that the only sensible construction that can properly be put on those words in the circumstances I have outlined involves finding that the termination of the current tenancy for this purpose was 28th September 1997. If that is accepted as the date for termination it is conceded on behalf of the landlord that the tenant was in occupation for the whole of the 14 years immediately preceding that date.
17. The landlord does not accept that argument and relies on a very powerful argument derived from s.37(7), which defines the termination of the current tenancy and it reads as follows:

"In this section ..."

- that is s.37 -

"... the reference to the termination of the current tenancy is a reference to the date of termination specified in the landlord's notice under section twenty-five of this Act or, as the case may be, the date specified in the tenant's request for a new tenancy as the date from which the new tenancy is to begin."

18. In parenthesis I should perhaps have mentioned s.26 which gives the tenant a right as the contractual period draws to a close, or indeed after it has drawn to a close provided the tenant is still in occupation and the Act still applies, to give notice to the landlord requesting the grant of a new tenancy, then the landlord can put in a ground of opposition similar to that which he can put into his original notice, if he serves one, and the matter can then proceed to court on the same basis. I need not refer further to s.26, save to this extent: that one sees here the Act substituting for the common law or contractual grounds for terminating a tenancy an entirely new statutory framework which provides for both parties means by which they can adjust their affairs by either seeking to terminate the tenancy or asking for a new tenancy. It is an entirely separate statutory framework created by the Act which applies wherever the Act continues to apply to a tenancy where the premises are occupied for business purposes.
19. So that is the condition that has to be satisfied in s.37(3) and there is the definition in s.37(7). Mr. Denehan, on behalf of the landlord, says that is as clear as anything could be and when one reads it back into the phrase "immediately preceding the termination of the current tenancy" then for the purposes of this case and the facts I have outlined the only date that the court can arrive at as being the termination of the current tenancy is 25th February 1998, which was the date inserted in the landlord's original notice.
20. There are the battle lines drawn, as it were, and I have to decide which of those constructions of the section is the right one and whether, as Mr. Brock argues, there is any room for putting a gloss on the definition in s.37(7) by adding words which would make it possible to construe that definition as referring not simply to the date in the landlord's notice but to the actual date when, by the combined operation of the contractual provisions and the statutory provisions, the tenancy actually does come to an end.
21. There is some authority which is helpful. Two cases are reported where the wording that I have quoted from s.37(3) has been considered. The first was the Department of the Environment v. Royal Insurance Plc [1987] 1 Estates Gazette Law Reports 83. That case also concerned compensation and indeed was concerned with precisely this wording in the same section. The issue was in the very narrowest compass because what had happened was that the tenant had been in occupation under a term for 14 years and had vacated at the end of the 14 years and one would have thought that the tenant would automatically have satisfied the requirements because it had had the full 14 years. I have recited the facts in a rather careless way because the whole issue was: had the tenant been in occupation for the whole of the 14 years? The argument for the landlord was, no, it had not because it had not gone into occupation until after the first, or perhaps the second, day of the term granted. There was one day at least when the tenant had left the premises empty. It had then gone in and started making some alterations preparatory to going into occupation.
22. The whole case turned on the question of whether the tenant had been in occupation for the whole of 14 years immediately preceding the termination of the current tenancy. It was accepted on both sides, I think - no argument was addressed to the point in any event - that the 14 year period must be a period which runs up to the termination of the current tenancy. That has been accepted in this case and, in my view, it follows from the language I have quoted, namely "immediately preceding". That is a phrase which refers to the timing of the occupation and "immediately preceding" means "right up to the relevant date".
23. The problem was not precisely the same in that case because what was being looked at was not the end of the 14 year period, but the beginning. Mr. Justice Falconer was persuaded that the loss of one day was fatal to the tenant's application and so the tenant only got one times the rateable value instead of two times the rateable value.
24. That case came up for consideration in a subsequent decision of the Court of Appeal, namely Bacchiocchi v. Academic Agency Ltd. [1998] 2 All ER 241. That case was not concerned with s.37(3) precisely. It was concerned with similar wording which appears in s.38(2). I need not go into the detail, I think, save to just say this: s.38 is a section designed to prohibit contracting out from the obligation to pay compensation. The condition which brings the prohibition into play includes the words:

"... where, during the whole of the five years immediately preceding the date on which the tenant under a tenancy to which this part of this Act applies is to quit the holding, the premises had been occupied for the purposes of the business."

25. The issue in that case was whether the tenant had been in occupation during the whole of the five years immediately preceding the date on which the tenant is to quit the holding. So the "immediately preceding" phrase was identical and, whilst the date on which the tenant is to quit was a different one, the considerations were, as the court said, identical: could the tenant prove the necessary occupation up to the date on which it was to quit?
26. Without going into the details of that case what happened was that the tenant actually moved out something like 12 days before the date on which it was to quit with, at that stage, no intention of re-occupying. The question was whether the court should apply the sort of strict analysis that Mr. Justice Falconer had applied in the previous case - we are looking at the other end of the period in question - and say, "Well, the tenant has gone out 12 days before the end of the term, cannot therefore assert that the condition is satisfied, therefore the contracting out from the obligation to pay compensation applies". The court rejected that argument but they rejected it - and I do not propose to go through the judgments in any detail at all - not on the ground of any construction of the phrase "immediately preceding the date on which the tenant was to quit", but by approaching the question of occupation for business purposes in a relatively liberal way. I hope I do not do injustice to what their Lordships said if I say that what they really said was that where you have a relatively short period - in that case something like 12 days - the end of the period in question - and the tenant is in a position where he has got to make up his mind whether to stay or go and he makes his arrangements and leaves a few days before the end of the term which he could have enjoyed, it really flies in the face of common sense to say that by so doing he has ceased to occupy for business purposes. The process of moving out and timing your move out is part of the general process of occupation and a few days either at the beginning or the end - at the beginning when you take up occupation or at the end when you go out of occupation - cannot destroy the general continuity of occupation for business purposes.
27. That is what they held, generally speaking, putting it far more elegantly than I have. They therefore concluded that the tenant did satisfy the condition in that case of being in occupation during the five years immediately preceding the date when it was to quit. They also held that the previous case I have mentioned had been wrongly decided.
28. I emphasise that the decision of the Court of Appeal in Bacchiocchi was entirely based on the proper understanding of the phrase in s.23 of the Act, "occupied for the purposes of a business carried on by the tenant". They held, as I have said and I repeat, that a few days at either end in the circumstances of the two cases they had under consideration were not sufficient to break the continuity of occupation.
29. That argument does not run in this case, as I see it, and Mr. Brock does not try to run it because he accepts that not only is the period too long that he has to bridge if his interpretation of termination of the tenancy is wrong, but also in the circumstances that have arisen the tenant had actually moved out and therefore would have been a trespasser if it had tried to move back in again or hang on to the premises in some way until February 1998.
30. That being so it seems to me that Mr. Brock can only succeed if he is able to persuade the court by his concluding argument that this is a case in which the court can say that the intention of Parliament is so overwhelmingly clear that the Act must be regarded as being deficient of some necessary or appropriate provision to make it work in accordance with the obvious intention of Parliament. What Mr. Brock says, and he derives support from observations which I have not quoted which are to be seen in some of the judgments in the Bacchiocchi case, is that Parliament was plainly, in the amendment inserted in 1969, making provision to make it possible for tenants in particular to organise their affairs sensibly to avoid the necessity of going to court, with all the costs and irritation that that can give rise to, in order to get their compensation. Mr. Brock says that where the tenant has been in occupation for 14 years before it vacates the whole underlying object of the compensation provision is satisfied and the tenant ought therefore to get its compensation. Parliament cannot have intended, Mr. Brock says, that, in a situation of the kind that has arisen in this case, the tenant who has done no more than accept the inevitable and re-arranged its affairs in a sensible and prudent way should lose its compensation simply because it has not hung on until the last moment.
31. I can see considerable force in that argument as a general statement of the problem. What I do not find it possible to accept are two things: first, that the Act is not clear and does not work properly. In my view, it can be made to work, although inconveniently and perhaps very inconveniently for a tenant, but it can clearly be made to work if construed in accordance with its literal meaning. That is the first point.
32. Secondly, I do not feel able to reach any conclusion as to, first, whether the sort of problem which has arisen in this case was ever considered at all. I strongly suspect, as I said in the course of argument, that it was not considered when this amendment was being drafted, but I cannot know that. Second, and perhaps more important in this aspect of the case, I do not find it at all possible to speculate with certainty as to what Parliament might have done by way of substituting some additional provision.
33. It is argued in this case that the merits are all in favour of the tenant. The tenant has been perfectly sensible in its assessment of its situation. A tenant - not just this tenant but any tenant - under threat from a landlord's notice of this kind must consider its position, first of all, no doubt, as to whether or not it has a good run to fight the landlord's ground of opposition; secondly, whether it indeed wants to or whether the moment has come when it can sensibly reorganise its affairs; thirdly, when it comes to moving, particularly out of substantial premises, it is not something that you can do at the drop of a hat, it has to be planned in advance and a tenant ought not to be put in the position, it may be said, where it has to hang on to two sets of premises simply in order to be able to maintain the continuity of its business. One can see all of those difficulties.
34. However, I do not think it follows that the merits are all necessarily one way. The difficulty, as I see it, about this kind of legislation is that as soon as it interferes with common law or contractual rights it creates a different framework from that which the parties to the contract originally organised for themselves. It establishes various steps that need to be taken or conditions that need to be satisfied if the new statutory provisions are to supplant the former common law or contractual provisions.
35. There are many cases where it has, in the past certainly, been said that Acts of Parliament which interfere with the common law or contractual rights of the parties should be construed strictly, so that a party who is, in effect, seeking the benefit of a statutory provision which in some way abrogates the previous legal relationship which might have existed has got to bring himself precisely within the requirements of the statute in order to achieve the advantage. That was certainly an old strict approach the courts adopted in regard to legislation of this kind. I think it is right to say that the approach has probably changed and in many respects what is described as a more purposive approach has been adopted. The court has, certainly in cases of any ambiguity in the Act, looked to see what is the legislative purpose behind the provision in order to resolve any difficulty of meaning which the words actually used may throw up.
36. The merits, I repeat, are not necessarily all one way. It is both parties who find themselves faced with different arrangements for dealing with their contractual relationship from those which they originally bargained for. They were in no sense taken by surprise in this case because the Act has been in existence since 1954 and everybody knew about it. But knowing the terms of the Act the parties no doubt look at it closely to see what may be the consequences of any particular action they propose to take.
37. What is sauce for the goose is sauce for the gander, it seems to me, and although there is no evidence in this case as to what calculations the landlord made before serving its notice, if it made any, the fact is that the landlord served a notice for as long as it possibly could. I did not mention this, but the notice given under s.25 has to be for a period of not less than six nor more than 12 months. The landlord here chose 12 months, which in effect extended the contractual life of the tenancy by some five months from September 1997 to February 1998. Why the landlord did that is not revealed in the evidence, and it does not need to be for this purpose. The fact of the matter is that here the landlord has given a date beyond the contractual date that the landlord could have relied on because - and again I say it in parenthesis - the Act does not allow the landlord to terminate the tenancy at a date earlier than it could have been terminated or would have expired by effluxion of time under the normal rules.
38. Here, and in many other cases, a landlord can choose to serve a notice which gives the tenant the opportunity to stay in occupation beyond the contractual term and that is what happened here. It does not require a great deal of imagination to suppose that a landlord, in considering the possibility of demolishing or reconstructing or reoccupying the premises, thinks about the date when that intention could be put into effect, is aware that compensation will have to be paid, and is aware of the amount of the rent that is payable under the tenancy. In calculating or working out what is the landlord's sensible course of action he will take into account the obligation to pay compensation and the right to obtain rent and the other benefits of having a tenant in occupation and will arrive at a date for termination of the tenancy with such considerations in mind.
39. I do not know - there is no evidence in this case - whether that happened, but it is a possibility thrown up by the provisions of the Act. As I say, where an Act of Parliament of this kind interferes with the arrangements which the parties can agree as between themselves they are both entitled to scan it closely and to see how they can operate it to their best advantage. That is why I think it is dangerous to conclude that the merits are all one way. I do not think it is obvious what ought to happen.
40. That is enough for me to reject the argument that Mr. Brock advances in favour of putting a gloss on s.37(7). What he suggested was that there should be added at an appropriate point a definition of the date for termination as being either the date in the landlord's notice or the tenants' request, as the case may be, "or if earlier the date on which the tenancy actually determines". I do not feel confident that there is any basis on which the court can be satisfied that that would indeed give full effect to the intention of Parliament. I cannot accept that argument.
41. I have not been through the authorities which Mr. Brock relied on. He based his argument to a large extent on arguments advanced in the third edition of Bennion on Statutory Drafting or Interpretation. He also referred me to the case of University College, Oxford v. Durdy [1982] 1 All E.R. 1108, which was a case under the Agricultural Holdings Act. Without going into the facts in any detail it concerned the appointment of an arbitrator to determine a question which had arisen out a notice to quit under the Agricultural Holdings Act and the question to be considered by the court was what was the date at which the arbitrator was appointed? Was it when he was actually appointed or was it when the parties were notified of his appointment? The court held that it was the date of his appointment, but the point relied on here arose out of a requirement that the parties - in that case the tenant - should within 28 days deliver a statement of case. That was said to be within 28 days of the arbitrator's appointment.
42. If you look at those provisions carefully it becomes immediately obvious that if something has got be done within 28 days of some event the party on whom the obligation to act is imposed has got to know when the event happened. Otherwise how could he possibly comply with a requirement to act within 28 days? The relevant provision had no reference to notification of the appointment of the arbitrator and the court held that it was possible to read into the requirement to deliver a statement of case within 28 days a condition that the tenant in that case should have been notified of the appointment. So it was within 28 days not of the appointment but of notification of the appointment. That involved the implication, one may say, of a provision into the regulations.
43. If one considers it in the purest theory one can say that here the court is adding words to the statutory provision in order to give it sensible effect. Mr. Brock says that that is all he is asking the court to do in this case. I do not accept that as a parallel, because in the case of University College v. Durdy the provision for statement of case within 28 days simply could not be made to operate with any sort of fairness at all unless the tenant had been notified of the appointment. The court said that the requirement had to be read with that gloss in order to make it work at all.
44. That is not the case here. The provision in s.37(3) no doubt creates potential difficulties and no doubt leaves the tenant in a very awkward situation of having to remain in occupation up until the end in order to get compensation, but it is perfectly workable. It is perfectly clear what has got to happen and both sides can adjust their affairs on that basis. I cannot see the phrase "during the whole of the 14 years immediately preceding the termination of the current tenancy", nor the definition of the "current tenancy" in s.37(7) as being in any way unworkable if construed by giving the normal sense to the language used. It is awkward, tiresome, for the tenant no doubt but it is by no means unworkable. So I do not think the parallel with University College v. Durdy stands up and I do not feel it is possible, I repeat, to put that gloss on the language.
45. The result is that I conclude that the plaintiff tenant does not satisfy the condition for recovery of twice the rateable value. I will ask counsel to consider the precise form of my order, but the way in which the matter arises is that the tenant originally issued a writ claiming double the rateable which I have concluded cannot succeed. The landlord counterclaimed for dilapidations. That counterclaim is, the tenant argues, without foundation, but that is not before me so that counterclaim stands.
46. I will hear argument as to whether I should give judgment for one times the rateable value or what I should do now in consequence of my ruling.
47. MR. BROCK: My Lord, it seems to me - my learned friend will have an application for costs, I am not troubled by that - that your Lordship should give judgment in favour of the defendant on the Ord.14A summons. That means they get unconditional leave to defend on the Ord.14 summons because that follows, because the matter will then have to go off. If my learned friend seeks the costs of the Ord.14 summons I cannot resist that.
48. JUDGE PRYOR: So the judgment I should give, you say, is judgment for the plaintiff in the sum of ----
49. MR. BROCK: I do not know whether there is any need for that because that was always conceded ----
50. JUDGE PRYOR: I am sorry, Mr. Denehan, what were you going to say?
51. MR. DENEHAN: The starting point is the statement of claim and that claim is £328,000. That is the twice the rateable value. The defence and counterclaim denies that the plaintiff is entitled to any of that money because, one, it is only half, the lower level, and in any event there is a counterclaim. That is the pleading. It is rubbish says Mr. Brock, but that is how it is pleaded.
52. The summons under Ord.14 is at p.15 of the small bundle, one, final judgment for £328,000 and determination whether entitled to twice. The proper order, in my submission, would be for your Lordship to determine that the plaintiff was not entitled to putting the holding to twice the rateable value - that is what the summons says - and then to dismiss the plaintiff's claim. There is no claim in the alternative for half the amount and we have got a defence. They cannot win for £328,000.
53. JUDGE PRYOR: No, they cannot win for that, but can they not win for whatever the half is?
54. MR. DENEHAN: My Lord, I am reminded from behind that the summons was seeking a judgment for the amount claimed in the statement of claim. They do not plead in the alternative.
55. JUDGE PRYOR: Does the court not have power to award the alternative?
56. MR. DENEHAN: In my submission, no, and in any event not in this case because, of course, there is the defence of set-off and counterclaim in any event.
57. JUDGE PRYOR: What about judgment with a stay depending on the outcome of the counterclaim?
58. MR. DENEHAN: My Lord, because we have got a defence to the claim, so why should the plaintiff have judgment now? That is not the matter before your Lordship. The counterclaim is pleaded as ----
59. JUDGE PRYOR: It is pleaded as set-off so it is also a defence.
60. MR. DENEHAN: If the plaintiff's claim stays it stays, but certainly not judgment for the plaintiff in this instance.
61. MR. BROCK: My Lord, we are agreed. I have just said there should be unconditional leave to defend on the basis of a set-off. There is no need for my friend ----
62. JUDGE PRYOR: I am sorry, it is me being obtuse, Mr. Brock.
63. MR. BROCK: No, it is not, my Lord.
64. JUDGE PRYOR: I will make the declaration.
65. MR. BROCK: Yes, you make the declaration in favour of my learned friend under Ord.14A, so he wins on that point finally, subject to the Court of Appeal.
66. JUDGE PRYOR: Then he has leave to defend.
67. MR. BROCK: He has leave to defend because he is the defendant and he has got an equitable set-off. We are going to get the half, of course ----
68. JUDGE PRYOR: You will get it one day.
69. MR. BROCK: Of course the £164,000 is subsumed in the £328,000. My learned friend has forgotten that we treated the statement of claim as a genuinely enforceable writ. There is no argument about this. My learned friend is not going to have judgment against him for the ----
70. JUDGE PRYOR: Very well.
71. MR. BROCK: He gets unconditional leave to defend on the basis of an equitable set-off. He has nothing whatever to complain about. He gets the costs of ----
72. MR. DENEHAN: With respect, my Lord, I have been accused of confusing the court. It is not been treated as a genuinely enforceable writ. It is a statement of claim that says £328,000.
73. JUDGE PRYOR: Can I just suggest that what I do is make a declaration that the plaintiff is entitled to one times the rateable value, not two?
74. MR. DENEHAN: My Lord, no.
75. JUDGE PRYOR: Why not?
76. MR. DENEHAN: Because he might not be entitled to any money.
77. JUDGE PRYOR: Formulate it in some other way.
78. MR. DENEHAN: The plaintiff's summons at p.15, para.2, there is a point of law to be determined. That is what before your Lordship.
79. JUDGE PRYOR: Well, I determine it then. I am stating it wrongly, sorry, Mr. Denehan. This is all semantics. What I am trying to say is that I determine that the tenant satisfies the conditions to be paid one times the rateable value, not two.
80. MR. DENEHAN: I am listening to your Lordship and to my learned friend at the same time which is an unfortunate ----
81. JUDGE PRYOR: Mr. Brock was merely muttering, you can ignore it.
82. MR. DENEHAN: I have been ignoring it.
83. MR. BROCK: Just give me a minute, please.
84. JUDGE PRYOR: Is that not enough, Mr. Denehan, just to say that they have satisfied the conditions of one times the rateable value, not two?
85. MR. DENEHAN: I would suggest, and against I start ----
86. JUDGE PRYOR: Just give me the form of what you suggest I should order?
87. MR. DENEHAN: The plaintiff was not entitled upon quitting the holding at 118/120 Charing Cross Road to receive compensation pursuant to s.37(1) of the Landlord & Tenant Act 1954 equivalent to twice the rateable value of the holding. That is what they seek in the summons.
88. JUDGE PRYOR: It follows that they get one times your rateable value if they can blow your counterclaim away.
89. MR. DENEHAN: At this stage, in my submission, using the plaintiff's own summons ----
90. JUDGE PRYOR: Is that good enough, Mr. Brock?
91. MR. BROCK: Not really, because I want to be absolutely clear, my Lord. It is admitted that the defendants are entitled to £164,000 subject to the set-off.
92. JUDGE PRYOR: Well, if it is admitted, that is good enough, is it not?
93. MR. BROCK: My Lord, yes, I am not going to argue. I am sure my learned friend and I can agree a minute. I am getting a little bit irritable because, as I told your Lordship yesterday, I have got a motion and ----
94. JUDGE PRYOR: I am sorry, it is my fault.
95. MR. BROCK: It is not your fault, my Lord. Can I suggest we all calm down and on Monday morning my learned friend and I will prepare a minute.
96. JUDGE PRYOR: We are all quite calm, Mr. Brock.
97. MR. BROCK: We will agree a minute. Can we agree a minute? I am sure we can.
98. JUDGE PRYOR: I will ask you to agree the form of order.
99. MR. DENEHAN: Just in case it is thought I was delaying Mr. Brock, I was due at a conference five minutes ago.
100. MR. BROCK: Let us agree a minute. I am sure we can. My Lord, as I say, I cannot object to my learned friend having the costs.
101. JUDGE PRYOR: I do not propose to have it brought it back in front of me. You can agree a minute. We all know what has happened.
102. MR. DENEHAN: My Lord, lest it be said I have forgotten to actually say this, because my learned friend has said it on my behalf four times ----
103. JUDGE PRYOR: You can have your costs.
104. MR. DENEHAN: I will have my costs.
105. JUDGE PRYOR: You can have your costs of this application.
106. MR. DENEHAN: Of the summons in any event.
107. MR. BROCK: My Lord, that of course I accept. My Lord, I do not think I need leave to appeal, because the Ord.14A summons on which I am concerned is ----
108. JUDGE PRYOR: If you do need leave I am not going to give it to you. My main reason for not giving it to you is because I think the matter is very clear.
109. MR. BROCK: I understand, my Lord.
110. JUDGE PRYOR: Thank you.

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