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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 >> London Baggage Company v Railtrack Plc (No. 1) [2000] EWHC 459 (Ch) (17 April 2000) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2000/459.html Cite as: [2000] EWHC 459 (Ch), (2000) 80 P & CR D38, [2000] L & TR 439, [2000] EG 57

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand London WC2
		Monday 17th April 2000

1. MR JUSTICE PUMFREY: In this action the claimant, the London Baggage Company, Charing Cross Limited (London Baggage), seeks a declaration that it occupies Unit 26 on the station concourse at Charing Cross station pursuant to a periodic tenancy, to which Part II of the Landlord and Tenant Act 1954 applies. It also seeks an injunction to restrain the defendant, Railtrack Plc (Railtrack) from entering the premises or seeking to evict London Baggage from them.
2. As its name may suggest, London Baggage runs the left luggage office at Charing Cross. It entered into a lease with Railtrack on 15th July 1996, which is expressed to have commenced on 30th October 1994. The tenancy was a periodic tenancy and the minimum yearly rent payable was £18,000 with an additional rent computed on the basis of the annual cross receipts of the business carried on at the premises. The minimum yearly rent was payable in advance on the usual quarter days. The additional rent was payable annually in arrears but with a prepayment on the usual quarter days and estimated additional rent, if any, in advance.
3. On 23rd February 1998 Railtrack served a notice under section 25 of the Landlord and Tenant Act 1954 specifying ground (f) under section 30 as the ground upon which the landlord would oppose the grant of any new tenancy.
4. Ground (f) is that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises, or to carry out substantial works of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding.
5. The original tenancy terminated on 29th September 1998. The last date for the tenant's notice to the landlord had been 22nd April 1998. No such notice was given. Accordingly, in June, the landlord's agent CB Hillier Parker made an entry on its computer system intended to ensure that no rent paid to Hillier Parker would be transferred to Railtrack without the latter's express consent. I call this the stop notice.
6. After the termination of the tenancy in September rent was tendered to Hillier Parker on five occasions: on 14th January 1999, by CHAPS transfer; 26th March 1999, by CHAPS; on 28th June by CHAPS and on 25th October by CHAPS. There was one final tender on 25th January 2000 by cheque.
7. None of the payments was transferred by CB Hillier Parker to Railtrack. One only, that of 26th March 1999 was returned to London Baggage. The remaining payments were retained by Hillier Parker. London Baggage continued in occupation at Unit 26. Threatened with a notice to quit in February 2000, London Baggage started these proceedings on 14th March 2000. On 21st March 2000, Lightman J made an order by consent for an expedited trial which took place before me on 13th April 2000.
8. It will be apparent that London Baggage now asserts that it now holds Unit 26 on a periodic tenancy. It relies, principally, upon the payment and acceptance of rent. Railtrack assert that London Baggage is a tenant at will, holding over after the determination of its existing periodic tenancy. It being said that in all the circumstances it is not possible to infer a periodic tenancy.
9. Before me, Mr Locksley, the managing Director of London Baggage, gave evidence on the latter's behalf. He was a frank witness. He was obviously annoyed and upset at the way in which he felt that he had been treated by Railtrack, but I do not think this coloured his evidence. Mr Quinn, Miss Holder, Mr Ames and Miss Choudly respectively and an Associate Director of CB Hillier Parker, the retail portfolio manager of Railtrack, the commercial manager, Major Stations of Railtrack, and a credit controller of CB Hillier Parker gave evidence for Railtrack. The reliability of their evidence was not challenged.
10. The history of the relationship between the parties is as follows: when Mr Locksley entered into the lease on behalf of London Baggage in July 1996, Railtrack already had in mind to redevelop the concourse in such a way that Unit 26 would not continue to be suitable for the use as a left luggage office. London Baggage had gone into occupation 2 years previously, but it was not suggested that Mr Locksley was aware of any redevelopment proposals which would affect Unit 26 until February 1998.
11. By 23rd February 1999, the date of the notice under section 25, Railtrack had worked out a proposal for the development of the concourse, which would involve removing the left luggage office to a position halfway down platforms 5 and 6 and extending the neighbouring branch of W H Smith into Unit 26.
12. This proposal was not communicated to or discussed directly with Mr Locksley. About 1 month before the section 21 notice, surveyors had visited Unit 26, informing the staff that the office was to be closed and moved onto the platform. Another surveyor, this time from W H Smith, presented himself to the left luggage office, wanting to measure up the day before the section 25 notice was received.
13. This resulted in the first of a number of protests from Mr Locksley to Railtrack. It is plain from the documents that Railtrack were themselves unhappy at the fact that a section 25 notice had been given. It does not appear that any finalised plan was available until July 1998 for any redevelopment, when the first proposal was sent out to the train operating companies and various consultative bodies for approval.
14. On 5th August 1998 it was clear to all parties that a redevelopment would take place and Mr Locksley was invited to tender for the new left luggage office on platforms 5 and 6. Mr Locksley tendered on 19th August 1998. By this date, however, it was already beginning to become clear that there were substantial objections to siting the left luggage office on the platforms and in a part of the station where the possession of a ticket was obligatory.
15. Mr Locksley was not told of this. A revised scheme proposal, in which the left luggage office would come in two parts, was produced by 17th December but by this date Mr Locksley had been told that his tender for the first scheme had been successful.
16. Approval for the first scheme was refused by the office of the Rail Regulator on 2nd November 1998. Mr Locksley told me, and I accept, that after he had been told he was successful in his tender, he expected to remain in occupation of Unit 26 until the new premises on platforms 5 and 6 were ready. Notwithstanding the refusal by the office of the Rail Regulator to approve the first scheme, Mr Locksley was sent heads of terms in relation to the first scheme on 1st December 1998.
17. These heads of terms specified a lease for 6 years which would be contracted out of the Landlord and Tenant Act 1954 and would include a 6 months landlords break clause for estate redevelopment.
18. Up to this stage it had been CB Hillier Parker's practice to send rent demands to London Baggage and on 17th December Mr Locksley telephoned Miss Choudly asking why he had not received a rent demand. It is not clear whether this call, which was logged by Miss Choudly on a telephone log sheet relating to London Baggage, related to Unit 26 or another left luggage business which Mr Locksley had at Waterloo. An additional note which reads "also send stop details again", is unexplained. It may or may not relate to Unit 26 at Charing Cross.
19. On 15th January 1999 London Baggage transferred a sum equal to one quarter's rent at Charing Cross by CHAPS to Hillier Parker. Hillier Parker knew the money should not be transferred to Railtrack and accordingly did not transfer. Miss Choudly's telephone log contained a note dated 15th January 1999 which suggest that she left a telephone message for Mr Locksley to tell him that Hillier Parker "cannot cash the money as lease negotiations still in progress." Miss Choudly says Mr Locksley returned this call, although his reply is not recorded on the telephone log. This was not put to Mr Locksley and I have felt uncertain whether this message ever reached him. Certainly the money never did.
20. I do not think that this mattered to Mr Locksley. His evidence was that he knew he would have to pay in respect of his occupation of Unit 26, sooner or later, and that he would not be able pay it all at once. I accept that he paid the minimum rent in arrears in January 1998, in respect of his occupation of Unit 26 while waiting for his new lease. Unfortunately for Mr Locksley, the new lease would not be forthcoming. Having known of the refusal of the office of the Rail Regulator to grant consent for the first scheme in November, Railtrack got round to telling Mr Locksley about it at a meeting which took place between him and Miss Holder on 6th February 1999, when Miss Holder informed Mr Locksley that he would have to re tender.
21. As I understand Miss Holder's evidence, the principal reason for the re tender was that a new contractor had come on the scene, a contractor which Miss Holder considered might be preferable to London Baggage. Relying upon the fact that the acceptance of Mr Locksley's tender for the first scheme had been subject to contract Miss Holder was, of course, entitled to ask him to tender again. The second scheme was finally approved after all consultations on 7th July 1999, and on 4th August Mr Locksley was invited to tender for the second scheme.
22. While he acknowledged receipt of this invitation to tender, Mr Locksley never tendered on behalf of London Baggage. The closing date for tenders was 1st September 1999. Mr Locksley wrote on 16th September to the chief executive of Railtrack complaining again about the treatment he had received. The letter contains the following passage:

"I have still not officially (letter) received any correspondence from anyone regarding the situation at Charing Cross since December 1998. At the moment I do not feel inclined to waste of lot of money and time helping to justify a process that I feel has been handled on Railtrack's behalf by staff of their own agenda to pursue.

I have already won the tender, August 1998, and until anyone at Railtrack has the courtesy to write and justify to me why I must reapply shall carry on.

At Waterloo my lease was terminated on 28th May 1999; today 16th September 1999 we are still operating. What minimal contact my company had with Railtrack or Hillier Parker has disappeared behind the safety of annual leave.

We are in despite with Railtrack over several issues including compensation but still we have had no contact apart from Railtrack's solicitors."

23. He told me that he knew that the writing was on the wall for him from February. In reply to his letter of 16th, in a letter drafted by a Mr Middleton, who is the Commercial Director of Railtrack wrote, so far as relevant to Mr Locksley as follows:

"The decision to re tender Charing Cross arose from a change in location of the new Unit. London Baggage were awarded a contract extension on the original site which is significantly inferior to the site now proposed. I note that London Baggage have declined to re tender on this site. At Waterloo the left luggage office has been re tendered following its move to its new location in the centre of the station. Unfortunately London Baggage was not successful on this occasion, as the financial terms design and overall customer service benefits were considered inferior to those of the successful tender Excess Baggage."

24. Mr Locksley replied as follows:

"The comments regarding Charing Cross I must disagree with the reports you have been given. The location has not changed significantly and we have not been given a contract extension on the original site, as I complained about in my original letter. We have had no contract officially with any member of your staff or staff from Hillier Parker since the heads of agreement sent by Hillier Parker in December 1998."

25. Plainly, Mr Middleton and Mr Locksley were at cross purposes on what the original site was. But Mr Locksley acknowledged under cross-examination that he did not consider that he had received any extension in respect of Unit 26.
26. On 3rd November 1999, in a letter to Deborah Richards, head of major stations of Railtrack, Mr Locksley asserted, for the first time, that he considered that London Baggage had a periodic tenancy in respect of Unit 26.
27. Against this background London Baggage must show that in all the circumstances, important among which is the tender and acceptance of rent by the landlord's agents, that London Baggage endure a periodic tenancy. The legal considerations may be summarized as follows:

(i) There is no rule that in a case in which the tenant holds over after the previous tenancy has been determined, tender and acceptance of rent will raise the presumption of a periodic tenancy.

(ii) In deciding whether a periodic tenancy has come into existence, the court will look at the intention of the parties and all the surrounding circumstances (see Javad v Aquil [1991] 1 All ER 243.

(iii) It is not settled whether the intention of the parties, to which regard must be had, include their subjective and uncommunicated intentions. In Land v Sykes [1992] 1 EGLR 1, at page 4 Lord Justice Scott said this:

"The learned deputy judge held that an implied grant of a tenancy had not been established, but he appears to have taken into account subjective evidence on the lack of Mrs Land's part of any intention to grant the alleged tenancy. He referred to a number of authorities, and concluded that evidence was subjective and intention was admissible.

One of Mr Morgan's grounds of appeal is that the judge was in error in this respect and the test to be applied to the conduct relied on in order to determine whether or not an intention to grant the tenancy, or for that matter licence, should be implied therefrom was an objective one.

My instinctive reaction is that Mr Morgan must be right. I do not see any reason why the approached formation of contract. In landlord and tenant cases should be any different from the approach of formation of contracts generally."

28. The judge cited an observation of Lord Mansfield in Doed Cherry v Batton [1775] 1 Cowper, 243 at 245 that:

"The question therefore is quo animo the rent was received and what the real intention of both parties was. This observation does not deal with the manner in which the intention is to be ascertained and, for my part, I think it should be ascertained as an objective approach to what has been said and done."

29. With this judgment Farquharson LJ and Parker LJ agreed. There is authority of the Court of Appeal to the contrary. In Longrigg Burrough Troumson v Smith [1979] 2 EGLR 42, at page 43, Lord Scarman, sitting in the Court of Appeal, with whom Ormerod LJ and Tatton LJ agreed, plainly considered that subjective evidence of intention was admissible, although the point appears not to have been argued. He said that this:

"I think it is significant that for a very long time in the law the element of statutory protection under the Rent Act has been considered relevant in determining whether or not the acceptance of rent was a factor from which a new tenancy could be created. It was certainly recognised as such an element by Russell LJ in the Lewis case and by Denning LJ in the Marcroft Wagon case. It goes back much further than that. We were referred to what is now a very old case, Pavies v Bristow.

In that case, which was a Divisional Court of appeal from a County Court, both Nash J and Shearman J attached importance to the fact that the claim for statutory protection was a matter to be borne in mind when deciding whether or not the influence of the creation of a new tenancy could be sustained. In that case they reached a conclusion they could not.

Indeed, one would have thought that today, where tenants having in one respect or another the protection of law for possession of premises to which they would have had common-law no contractual entitlement, the courts would not be as quick to infer the new tenancy in the old days. They would have been, where there was nothing to explain the presence of a defendant upon the premises or upon the land other than a trespass or a contract.

I have come to the conclusion that the judge did not pay sufficient attention to the correspondence to which I have referred, nor would it appear that he paid any attention to the evidence of a perfectly respectful Mr Transon, a partner in the plaintiff firm solicitors who, when he was giving evidence, was asked why the rent had been accepted and said that he had thought that it was being accepted as being profits. Only a straw in the wind but a piece of evidence coming from a perfectly respectable and credible witness."

30. It is plain that the evidence from Mr Transon, the solicitor, weighed heavily with Lord Scarman in that case. Edmund Davies LJ said much the same thing in Sector Properties v Mear [1974] Estates Gazette 1097, at page 1103. Having set out the evidence of the intention of the agents when they send out a rent demand Edmund Davies LJ continues:

"The learned County Court judge added, 'I accept this evidence being evidence which was elicited from these witnesses in cross-examination. Yet if Mr Barnes was correct and the court ought not to have been concerned to enquire into the real intention of the parties such cross-examination was wholly relevant.'. On the contrary, however, he [his Lordship] was of the opinion that Mr Barnes' submission was unsound. He was significant as that as he frankly said he could cite no authority for it and indeed it appeared irreconcilable with such cases as Clark and Grant. Circumstances of the kind the court was always concerned to enquire into the intention of the parties. What the landlord agent's had in mind was to posed to as accepted by Judge Richards, and Mr Barnes conceded that he could not go behind his finding.

What the tenant, on the other hand, had in mind in paying the rent demanded was left to be speculated upon. No evidence being called on his behalf. It was by no means clear that he necessary thought he was paying under a new tenancy, for it was at least equally open to conjecture that he regarded himself as still paying under the old tenancy which if, indeed, it had not been effectively determined by a valid section 26 request, would still be subsisting by virtue of section 24(1). Be that as it might, the intention of both parties being relevant, and that of the landlords being conclusive founding, consistent with any intention to create a new tenancy, no such result followed from the demand and acceptance of further rent after April 21st 1971."

31. It is to be observed Edmund Davies LJ refers to Clark v Grant [1950] 1 KB, 104, where Goddard LJ says this:

"Where the finding of the County Court was as follows: The agent stated in evidence which was not challenged that he received that sum in the belief that it was for rent which had accrued due that was for rent in arrear of the previous month. In fact the rent had always been paid in advance. Therefore the agent was mistakenly accepting as rent paid for the month that it had expired, the sum which the tenant was paying as rent in advance."

32. Lord Goddard said this:

"It is impossible to find that the parties here intended that there should be new tenancy. The landlord was all the time desiring to have possession of the premises that is why he had given the notice to quit. The mere mistake of his agent in accepting as rent which had already accrued, rent which was in fact payable, if it was payable at all in advance, cannot be used to establish that the landlord was agreeing to a new tenancy."

33. Again evidence of subjective intention was admitted, but there was no challenge to admissibility.
34. Finally, in Dreamgate Properties Limited v John Walter Francis Arnott, for which I refer to the Court of Appeal transcript of 18th July 1997, Hirst LJ expressly left open the point, in the light of another judgment in the Court of Appeal consisting of Waite LJ and Sir Ralph Gibson, who had refused to consider subjective impressions or reservations, preferring to deal with the case on objective evidence of intention only.
35. It seems to me that I am confronted with a straight conflict between decisions of the Court of Appeal on this point, in two at least of which the matter has been expressly considered. As Scott LJ observed in Land v Sykes it is difficult to see why the rules as to the relevance of subjective intention should be any different in the case of the formation of a lease from the principles applicable to the formation of any other contract.
36. The question is very apt to be confused if refuge is taken in the tag from Lord Mansfield which is quoted by Scott LJ and is frequently quoted elsewhere. One only has to ask whether the animus referred to is merely the objectively ascertained animus contrahendi or the subjective intention. It is best to leave the latin on one side.
37. The principles in relation to necessary intention to form a contract are, in my judgment, the same in the case of a lease as they are in the case of any other contractual relationship and may be taken to be correctly stated in Chitt on Contracts, paragraphs 2.147 and 2.148.

(iv) Where a contractual relationship is said to arise from conduct, the onus is on the party relying on the contract. This is clear from Javad v Aquil above.

(v) The holding over during the negotiation for a new tenancy is a classic instance of a case in which the only relationship which it is necessary to imply is a tenancy at will: See Javad v Aquil.

38. Applying these principles to the facts of the present case, I think it is clear that London Baggage's case is exceptionally difficult to establish, notwithstanding the very attractive argument that was advanced by Mr Lord. It is quite clear that Mr Locksley knew, from at least the date of his first tender, that redevelopment was planned and that Unit 26 would not survive as a left luggage facility for much longer. It was not suggested that Railtrack ever did anything that might suggest that this intention had changed. The acceptance of the rent down to September 1999, which is the last date of the new tender, is equivocal because during this period London Baggage was still potentially a tenant of the new left luggage office, on terms including a profit rent and contracting out of the Landlord and Tenant Act. Thereafter the correspondence which I have quoted makes it clear that Railtrack will put in a new tenant of the left luggage office and Mr Locksley very fairly accepted that he could not reasonably have expected that there would be two left luggage offices at Charing Cross.
39. Thus, viewed objectively, I consider that the acts of each party vis a vis the other are quite inconsistent with any intention to create a new periodic tenancy of Unit 26 and without a profit element to the rent. Mr Lord made a careful and well sustained attempt to show that in fact any possibility of London Baggage becoming a tenant was extinct by May as a matter of reality. He did this in order to rely upon rather more payments than he could rely on if the correct date was September. But the evidence did not establish that the invitation to retender was colourable or was given in bad faith.
40. Having regard to Mr Ames' evidence concerning the re tender, I think that while Railtrack's predominant intention was certainly to give Excess Baggage, the rival company, an opportunity to quote, the redesign of the facility giving an useful opportunity, they would have considered a competitive tender from London Baggage seriously. But, in any event, I consider that all the indications from Railtrack were that London Baggage would have to go eventually having failed to retender.
41. I should add that if it is right to consider subjective intention, none of the evidence which I heard would have affected my view. The most significant matter is the retention of the rent by Hillier Parker and its non payment to Railtrack, of which London Baggage was of course wholly unaware. It was clear on the evidence that this money was retained because Hillier Parker feared that it might be difficult to recover mean profits from London Baggage at a later date. This is of course consistent with the objectively assessed intention of Railtrack that no tenancy should be created.
42. But for the reasons I have given, an acceptance without explanation should, I believe, be entitled to weight when assessing the objectively manifested intention of the party accepting the rent. For all these reasons the action fails.
43. MR COLE: My Lord, I would invite your Lordship to dismiss the claim, but there is a counterclaim which is really the other side of the coin, where a relief is sought in bundle A on page 229.
44. MR JUSTICE PUMFREY: Would you give me one moment. Please excuse me by the way if my voice now fails wholly.
45. MR COLE: Page 229 in bundle A. It is underneath tab 14, and the defendant counterclaims a declaration that the claimant occupied the premises, which is Unit 26, as a tenant at will, after 29th September 1998. A declaration that the tenancy at will was terminated and the defendant would be entitled to possession of the premises no later than 8th May, and then damages to produce an occupation for the rate pleaded.
46. MR JUSTICE PUMFREY: Why on earth do you need damages, you have been retaining the rent?
47. MR COLE: Because there is a shortfall, it is about £13,000, which Mr Quinn gave evidence about in his short second statement, which was not challenged, and my learned friend agrees the figures. What Mr Quinn did there was to set out the amounts which have been paid and to give credit for them on the assumption that the cheque which was tendered in January would be met on presentation and the figure.
48. MR JUSTICE PUMFREY: There was not a cheque in January, it was CHAPS.
49. MR COLE: January this year.
50. MR JUSTICE PUMFREY: I am so sorry.
51. MR COLE: The sum, I understand, is agreed as a figure of 13,124.80.
52. MR JUSTICE PUMFREY: I am very reluctant to order an enquiry, which is just further expense. On the face of it, I cannot see what is wrong with the two declarations that you are asking for. Mr Lord, what is your position on this?
53. MR LORD: I cannot object to the two declarations, equally figures are agreed. 13 unwanted, 484 will not all be due until 8th May. It is accepted that the latter amount would be due as at that date; some of it is due now. So, my Lord, I think you can properly order that we pay that sum on 8th May, subject to an application I will make in a minute for a stay.
54. MR JUSTICE PUMFREY: Look, there are two things here. If you are going to ask for a stay of execution, that is one thing. If you are going to stay of the order for damages, I would not normally stay a money judgment.
55. MR LORD: My Lord, can I just explain why. It is slightly unusual, because we would contend that we are entitled to statutory compensation pursuant to section 37 on footing on 8th May. I believe that there may well be an issue about that. But if we are entitled to statutory compensation, we believe that that sum will probably be in excess of £100,000. Again, I am sure there will be an issue about the quantum of it. But, my Lord, looking at the whole matter in the round, in my submission, it is fair and right for the general accounting, at the end of the day, to take place once all the matters have been considered. Whilst I am quite happy for there to be a judgment, an order for payment of the £13,000 odd, I would seek a stay of that, pending the determination of whether or not we are entitled to statutory compensation and, if so, how much.
56. MR JUSTICE PUMFREY: You potentially quantify your statutory compensation on what basis of the £100,000?
57. MR LORD: My Lord, the confusion is: what is the ratable value of Unit 26? As I understand the matter, there is no actual assessment to rate because it is an exception, being a railway. I am going to be a little bit vague at this stage because I have not really quite got to the bottom of it. One has to consider whether or not there is a ratable value for the purposes of section 37 and, if so, what it would be.
58. MR JUSTICE PUMFREY: Okay. But first two declarations are all right. But you want in fact you are asking for account, are you not?
59. MR LORD: My Lord, save that we do agree the figures. It seems a bit pointless for there to be any actual action adding up exercise because we agree.
60. MR JUSTICE PUMFREY: Mr Cole?
61. MR COLE: My Lord, there is an issue about whether London Baggage is entitled to compensation on quitting in principle and also as to the amount. The position is that the whole of the railway station is rated, but not this individual complex.
62. MR JUSTICE PUMFREY: (inaudible). Have you never had one of these before?
63. MR COLE: We have.
64. MR JUSTICE PUMFREY: It may be a good place to start.
65. MR COLE: We have, but not at Charing Cross. We had them at Waterloo.
66. MR JUSTICE PUMFREY: What happened?
67. MR COLE: And some sort of allocation... I understand it was agreed between the parties. But if it is not agreed, section 37 of the Landlord and Tenant Act 1954 makes provision for determination by, I think, the district valuer. I am speaking off the top of my head, but there is provision in section 37.
68. MR JUSTICE PUMFREY: I am just looking at it now.
69. MR COLE: For that question to be resolved if it cannot be agreed.
70. MR JUSTICE PUMFREY: There can be various threshold questions.
71. MR COLE: Yes, there is an issue in principle which arises out of the construction of the lease itself, which contained a provision which disentitled the tenant from compensation in so far as that was permitted by section 38 of the Act, which does permit contracting out of the entitlement to compensation but in a slightly convoluted way. The question I think is whether----
72. MR JUSTICE PUMFREY: This is an X - 1 piece of drafting, is it? We pick on a section we do not understand, so you say 'We will exclude ourselves to the extent which is not prevented by an incomprehensible section in the statute' and thereby making the whole thing even more difficult to understand than it already would be.
73. MR COLE: I think the principle is that you can contract out where you have not occupied for 5 years. Now, standing here today, of course, London Baggage, has occupied for 5 years.
74. MR JUSTICE PUMFREY: There is a point about the moment when it...
75. MR COLE: If you take 29th September 1998, it had not occupied for 5 years. So one can see arguments either way.
76. MR JUSTICE PUMFREY: Is there any doubt about the 14 years?
77. MR COLE: No.
78. MR JUSTICE PUMFREY: So section 37 will apply, subject to the second section 38, to the extent which you are effected?
79. MR COLE: Yes.
80. MR JUSTICE PUMFREY: I suppose we could deal with it now, or try to. Is there any reason why not?
81. MR COLE: I would invite your Lordship not to. It is not an issue to which I have addressed any thought because it was not....
82. MR JUSTICE PUMFREY: We will do it quicker then.
83. MR COLE: I agreed with my learned friend earlier in the week, last week, when we spoke about it, that that was not going to be an issue, and there is some authority on it. So, I do not invite your Lordship not.
84. MR JUSTICE PUMFREY: Who do you want to send it off to? You see we have got one point of law, and then the district valuer. This is horrific. Do you want me to remit it to the local County Court? I cannot help feeling it would have been in everybody's interest to, all things being equal, this could have carried on any way, but there it is.
85. MR COLE: My Lord, I venture to suggest, if your Lordship was willing, that we could come back next term for an hour or 2 hours before your Lordship, just to decide the point of law.
86. MR JUSTICE PUMFREY: I see absolutely nothing wrong with that, I mean if you are prepared to let me have it on paper first, and then come back, I mean literally for -- the position is that I am Patens Court next term. I am going to have to find some point which is not full of Patens to deal with you. That probably means either 9.30 in the morning or 4 o'clock in the evening. If you can face that, then we would do it as soon as may be next term. But I have to retain this because it is ridiculous to send it off to anybody else.
87. MR COLE: I suggest that perhaps we should between us work out a mechanism.
88. MR JUSTICE PUMFREY: Could you use the usual channels for the clerk to the Paten's Court. Explain what the position is and tell him it has got to come before me at all convenient speed.
89. MR COLE: It is not yet an issue on the pleadings but we could exchange points of claim and points of reply and something of that kind and clarify the issue and then make submissions on it.
90. MR JUSTICE PUMFREY: Do you need pleadings now? I think you probably do, do you not?
91. MR COLE: Probably do.
92. MR JUSTICE PUMFREY: Statement of case as to why it does; statement of case as to why it does not, then we can send it off to the district valuer.
93. MR COLE: The point of law, I think, would not be one which....
94. MR JUSTICE PUMFREY: That is what I mean. After we have decided it, we can either send it off to the district valuer or not as the case may be; if it is the district valuer, is it?
95. MR COLE: I am guessing there.
96. MR JUSTICE PUMFREY: Yes, Commissioners of Inland Revenue, here we are. Yes, and a splendid appeal this time to the Land'S Tribunal. Actually, oddly enough, one of the things we can do is constitute ourselves as the Land's Tribunal, we do that from time to time.
97. MR COLE: It may be, and I am speculating that the amount can be agreed I. I have never known a case in which it has been a necessary to apply to.
98. MR JUSTICE PUMFREY: I am not going to make a money judgment if there is a rule point here, which has got to be gone into. That just is not sensible. You have got substantial security for your claim any way, because you got four-fifths of it.
99. MR COLE: I was not going to ask, in the circumstances, where you going accept that there is a legitimate claim, a claim which has to be investigated. If the figure is agreeable and there is a possibility of Railtrack having to pay much more, then it would be plainly right to say----
100. MR JUSTICE PUMFREY: I am going to stay it over the question of (a) whether London Baggage Charing Cross Limited are entitled to compensation under section 37 and the determination of that sum, if any. But I give judgment stayed in that respect.
101. MR COLE: I am grateful.
102. MR JUSTICE PUMFREY: The two declarations, yes, you are entitled to, and that leaves, does it, the question of costs.
103. MR COLE: It leaves the questions of costs.
104. MR JUSTICE PUMFREY: I have had two schedules, I believe.
105. MR COLE: Your Lordship will see that the defendant's total is £17,252, so I can take your Lordship through the constituent went parts of that, that the claimants schedule was a bit more, totalling £24,482, so the defendant's is about three-quarters. The constituent element to the defendant's schedule involves one (inaudible) whereas the claimant's involves two, which I explains for part of the difference.
106. MR JUSTICE PUMFREY: Could you just wait a moment. I have presently mislaid the claimant's schedule. I think it may still be on my desk.
107. MR LORD: I have got another copy.
108. MR COLE: The claimants allow for two fees, a grade 1, £175 and grade 2, at £120, whereas the defendants allow for one fee owner only.
109. MR JUSTICE PUMFREY: This, I take it, goes right through the entire proceedings because the order from Lightman J was costs in cause and the witness statements that were used for the interlocutory are to all intents and purposes the witness statements you used in front of me. Is that right.
110. MR COLE: No, that is not right. There were two witness statements before Lightman J from the claimant and two from the defendant and there were three more, I think, from the defendant and two more from the claimant, although only one of them was relied on in the end as to what evidence was not relied on. It does accumulate everything including the time before their Lordship.
111. MR JUSTICE PUMFREY: You will forgive me for observing that disbursements are 50% of this bill.
112. MR COLE: Yes.
113. MR JUSTICE PUMFREY: Almost precisely as it happens. Have you got any observations?
114. MR LORD: My Lord, can I just address you on the principle as to whether or not we should pay the costs?
115. MR JUSTICE PUMFREY: A day hearing, or so close, it does not

matter?

116. MR LORD: My Lord, one of the things which you are entitled to take into account is the conduct of the parties, and at least to some extent, in my submission, Railtrack have bought all this on themselves simply because of their failure to communicate to Mr Locksley what they were doing.
117. MR JUSTICE PUMFREY: Are you making an application for costs in your favour?
118. MR LORD: I am certainly not doing that.
119. MR JUSTICE PUMFREY: As I understand it, if I were to start making, I have got to decide which way costs go. One thing I cannot do on a summary assessment is to make an allowance because I think it was all your fault. Is that not right? It has got to be part of the -- all of their fault -- it has got to be part of the substantive order as to costs, if I do that, does it not?
120. MR LORD: My Lord, in my submission, it is one of the matters that----
121. MR JUSTICE PUMFREY: Is it one of things that I am told I can take into account any way.
122. MR LORD: My Lord, yes, it is page 567, page 544. Rule 3 (4), in deciding what order, if any, to make about costs, the court must have regard to all the circumstances, including (a) the conduct of the parties and then in sub-rule (5) conduct of the parties include conduct before as well as during the proceedings.
123. MR JUSTICE PUMFREY: You see I can understand the point that is being taken that Railtrack were uncommunicative. At the same time, I do not think there was ever any case, I do not it was ever anything but clear that London Baggage, as I think I made clear in the judgment, that London Baggage would either have to tender or go, tender successfully or go. That is really put on a (inaudible) the judgment.
124. The judgments speaks for itself, so far as the course of proceedings are concerned and the failure to communicate what was going on. At the moment it is not quite clear to me whether, on the footing that even with a lack of communication this should not come as any surprise. Therefore, it was not a surprise, it was an irritation. It was not a surprise. At the same time it was communicated in a clumsy, or not communicated, in a clumsy way. In other words, the main point which was: was it objectively obvious that Railtrack would not, in the business of granting a further periodic tenancy in relation to these premises? That must be clear throughout. It is just the way they dealt with it which caused the problem. To a certain extent, as I indicated during the trial, I think created a rod for their own back. But it does not seem to me, at that moment, that ought affect an order for their. It cannot, I do not believe, affect an assessment, it has got to affect the nature of the order. In other words, I am going to have to rely. You will be asking me to discount the costs, if I say 80 or 280 or 70 or 60 or something of that description. Tomorrow I might disapprove of what had gone before. Is that not right?
125. MR LORD: My Lord, yes. In my submission, if Railtrack had communicated properly, we would not have ever been here.
126. MR JUSTICE PUMFREY: That is so they would not have got one very angry tenant. But is that enough?
127. MR LORD: My Lord, in my submission, if they had simply written at an early stage and said 'We consider you are holding over. We are putting this money in a suspense account, on account of (inaudible) and we consider you are occupying as a tenant at work'
128. MR JUSTICE PUMFREY: But, of course, it might be argued, though it was not argued at trial, that there was a very good reason for non communication and that is that when the notice under section 25 was given there was no concluded plan.
129. The last thing that they want to tell the tenant, when there is no concluded plan, is that there is no concluded plan. Is that not right?
130. MR LORD: The other thing last, two things last things that they did not want to tell Mr Locksley, was that he was merely a tenant at will because as he might have left.
131. MR JUSTICE PUMFREY: But you see, might have I do not think that is consistent with the judgment.
132. MR LORD: My Lord, there we are, that is my submission.
133. MR JUSTICE PUMFREY: I understand the point. What do you say about that?
134. MR COLE: My submission is that we are in court today because London Baggage company started these proceedings. We were not the claimant in them. There was correspondence going on and the reason why the costs that your Lordship is considering today are being incurred is because the assertion, as it turned out incorrect, by London Baggage company, that it was a periodic tenant.
135. MR JUSTICE PUMFREY: Can I have a look at the circumstances surrounding the section 25 notice?
136. MR COLE: In my submission not, because the question whether Railtrack could have made out their intention is a question which is determined not at the date when the notice is served on the authorities but on the date when that issue comes to be tried, so if -- on one would be speculating -- an application had been made and Mr Locksley was seeking a new tenancy and the court had to decide whether the landlord had the requisite intention, that question would have been decided probably some time in early 1999 and the court would have then taken into account the evidence it then stood about whether or not the landlord had a fixed intention to execute within a reasonable period after the termination of the lease, so that under section 64 the lease continues after the judgment for about 4 months, and so the court has to decide at that date or within a reasonable time of it, which might be in three or four month, the landlord made out the necessary intention. One is speculating a very great deal, but one could not say that this was being brought about by Railtrack service of a fraudulent notice or.
137. MR JUSTICE PUMFREY: No. It is not suggested, it is a fraudulent notice, it is just a bit previous.
138. MR COLE: Yes, as events turned out, it was a bit previous but, if the matter had gone to the hearing in the County Court in ground F, my submission is that by the time we got to a hearing, Railtrack's tackle would have been sufficiently in order for London Baggage company to have been denied a new tenancy. That of course is utter speculation, but not unrealistic speculation. So coming back to this case, the cost which have been incurred in those proceedings have not incurred by any lack of communication or candour on which your Lordship has observed unfavourably but because of London Baggage Company, the assertion it made last month that it did not have to go because it was a periodic tenant and all of these costs were incurred after that time, and relate to that issue which London Baggage Company has been unsuccessful on. So I invite your Lordship not to.
139. MR JUSTICE PUMFREY: The order for costs will be an order for the claimant to pay the defendant's costs. The only thing now, I have heard Mr Cole in fact on quantum a bit in anticipation. Do you have anything to say about the quantum?
140. MR COLE: I do not think I have any submission in particular to make. Your Lordship has them, has the schedule.
141. MR JUSTICE PUMFREY: The usual rule on these occasions is that the claimant's cost are always rather greater than the defendant's cost, particularly if there has been an interlocutory application because the speed goes rather.... At the moment I cannot see. We have here two outings, one in front of Lightman J, and one in front of me, taking a day and a half, a day and a bit, and preparation for an interlocutory. Very well, I cannot actually see any basis upon which I can reduce this, but I tend to reduce them into a round sum. Can we just have a look at the time spent talking to the dockers?
142. MR COLE: It is about the same in each case. In the claimants's statement it is put at 1403 minutes, for the second (inaudible) 549 for the first, which I totalled at 1952 minutes which I make about 32 and half-an-hours. In the defendant's bill it is 34, so they are very similar.
143. MR JUSTICE PUMFREY: It is a remarkably long time to spend. Of course it includes any discovery.
144. MR COLE: Includes any discovery and compiling the witness statements.
145. MR JUSTICE PUMFREY: And the attendances on others, normally I think. Probably not in these. Yes, all right. The disbursement in each case are very similar.
146. MR LORD: I think one other feature which distinguishes is in Railtrack there is no VAT, whereas there is the claimant's term.
147. MR JUSTICE PUMFREY: A little worried about the one hour and 15 minutes travel and waiting. You arrived from Chisel Street.
148. MR LORD: That was on 21st March.
149. MR JUSTICE PUMFREY: Same for 13th April which was the hearing in front of me.
150. I cannot actually see any reason for reducing these substantially at all, having regard to the magnitude of both sides' bills. What I propose to do is make an order for costs in the round of sum of £17,000 including VAT -- Hold on, these are in fact VAT free costs.
151. MR COLE: There is no VAT in the summary.
152. MR JUSTICE PUMFREY: My order has to include VAT if VAT is payable. I take it Railtrack is not exempt from VAT, is it?
153. MR COLE: So there is no VAT on these sums. VAT is payable on counsels' fees whatever the status of the....
154. MR JUSTICE PUMFREY: I see that counsels' fees have come in free of VAT. Is that right? Looking at the sums in question.
155. MR COLE: They do not add VAT.
156. MR JUSTICE PUMFREY: This is in VAT free bill, so it is going to have to be £17,000 plus VAT. How long do you want?
157. MR COLE: It is really the same point.
158. MR JUSTICE PUMFREY: It is not actually the same point because this is costs. What you say is again -- to this extent is the same point, if there is a counterclaim which could extinguish
159. MR COLE: In my submission it is better to have a totalling up at the end of the day.
160. MR JUSTICE PUMFREY: There has been payment already for 4 months mean profits. What do you say about?
161. MR COLE: My Lord, if part of it is going to be stayed, it makes sense the rest is going to be stayed. Absolute instructions on what your....
162. MR JUSTICE PUMFREY: You are quite right. I am going to stay it on the same terms. Once we have got the question of statutory compensation sorted out then I will lift the stays.
163. Have you got an application?
164. MR COLE: My Lord, I have not. Is that everything then?
165. MR COLE: I think it is.
166. MR JUSTICE PUMFREY: Thank you very much both indeed.