(1) Crossco No. 4 Unlimited (2) Piccadilly and Another v (1) Jolan Ltd (2) Jolan Piccadilly Ltd and Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE MORGAN,Mr Justice Morgan |
| Judgment Date | 31 March 2011 |
| Neutral Citation | [2011] EWHC 803 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC10C00830 |
| Date | 31 March 2011 |
[2011] EWHC 803 (Ch)
Mr Justice Morgan
Case No: HC10C00830
CASE NO: HC10C01748
Mr Michael Driscoll QC and Mr Ciaran Keller (instructed by Pinsent Masons LLP) for the Claimants in Claim no. HC10C00830 and the Defendant in Claim no.HC10C01748
Mr Romie Tager QC and Mr Justin Kitson (instructed by Addleshaw Goddard LLP) for the Defendants in Claim no. HC10C00830 and the Claimant in Claim no. HC10C01748
Hearing dates: 1 st to 3 rd, 6 th to 10 th, 13 th to 17 th, 20 th, 21 st December 2010, 13 th, 14 th, 17 th to 21 st, 24 th to 28 th, 31 st January, 1 st to 3 rd, 9 th to 11 th, 14 th February 2011
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
| Heading | Paragraph |
| The case in outline | 1 |
| The building | 13 |
| The freehold | 14 |
| The lease | 18 |
| The side letters relating to the building | 21 |
| The Travelodge agreement | 25 |
| The application for planning permission etc | 26 |
| The break notice and the section 25 notice | 27 |
| The 1954 Act proceedings | 28 |
| The grant of planning permission | 29 |
| The main claim | 31 |
| The Waitrose agreement | 32 |
| The Ask agreement | 33 |
| The Nando's agreement | 34 |
| The demerger | 35 |
| Knowledge of the break clause | 159 |
| What Gill's side thought | 174 |
| After the demerger | 182 |
| Any binding contract? | 221 |
| The side letters | 229 |
| Rectification | 234 |
| Estoppel and constructive trust: the Claimants' submissions | 256 |
| Proprietary estoppel and constructive trust: the law | 272 |
| Promissory estoppel: the law | 332 |
| Estoppel by convention: the law | 333 |
| Estoppel: reasoning and conclusions | 335 |
| Constructive trust: reasoning and conclusions | 362 |
| Self dealing | 371 |
| The 1954 Act proceedings | 377 |
| The overall result | 428 |
Mr Justice Morgan:
The case in outline
There are two sets of proceedings before the court. Both sets of proceedings concern a large building at 19/31 Piccadilly, Manchester ("the building"). The parties fall into two camps. One camp consists of Mr Philip Noble and companies associated with him. These companies are Crossco No. 4 Unlimited and Piccadilly. Crossco No. 4 Unlimited was formerly the freehold owner of the building. It transferred the freehold of the building to Jolan Piccadilly Ltd on 9 th April 2009. Piccadilly is the lessee of the building pursuant to a lease granted to it by Crossco No. 4 Unlimited on 27 th November 2007, that is, before the transfer of the freehold to Jolan Piccadilly Ltd.
The other camp consists of Mrs Gill Noble, Mr Barnsley and companies associated with Gill Noble. She is the sister in law of Philip Noble. Her husband, Michael Noble, who was Philip's brother, died on 19 th April 2006. Mr Barnsley is an accountant and has had various roles relevant to this litigation. They include being an executor of Michael Noble's will; the other executors are Gill Noble and Philip Noble. Mr Barnsley also acted as an adviser to Gill Noble in connection with the negotiations which are described later in this judgment. The companies associated with Gill Noble are Jolan Piccadilly Ltd and Jolan Ltd, which wholly owns Jolan Piccadilly Ltd. On 10 th March 2009, Jolan Ltd contracted with Crossco No. 4 Unlimited to acquire the freehold of the building. On 9 th April 2009, the freehold was transferred by Crossco No. 4 Unlimited to Jolan Piccadilly Ltd, who is therefore now the landlord of Piccadilly, who holds under the lease of 27 th November 2007.
The lease dated 27 th November 2007 demised the building to Piccadilly for a term of 15 years commencing on 27 th November 2007 and expiring on 26 th November 2022. Clause 9 of the lease is a landlord's break clause which permits the landlord to determine the lease on 3 month's notice. It is this break clause which has given rise to the two sets of proceedings between the parties. The lessee, Piccadilly, trades from the ground floor of the building, operating an amusement arcade. The lease is within the security of tenure provisions of Part II of the Landlord and Tenant Act 1954 ("the 1954 Act").
Subject to arguments which I will consider in due course, the landlord, Jolan Piccadilly Ltd, wishes to carry out an extensive conversion and development of the building. The landlord wishes to convert the ground floor and basement into 3 retail or restaurant units and to convert the upper parts (adding a further floor in the process) into a 157 bedroom Travelodge hotel. The landlord has obtained planning permission for this development. The landlord has pre-let the ground floor and basement units to Waitrose Ltd (Unit 1), Nando's Chickenland Ltd (Unit 2) and Ask Restaurants Ltd (Unit 3). The landlord has pre-let the upper parts to Travelodge Hotels Ltd.
The landlord has served a notice on Piccadilly to operate the break clause in the lease and has also served a notice on Piccadilly pursuant to section 25 of the 1954 Act. The landlord opposes the grant of a new tenancy to Piccadilly on the grounds that the landlord intends to redevelop the building and it relies on the ground of opposition in section 30(1)(f) of the 1954 Act. The landlord has brought the first set of proceedings which is before me in order to obtain the termination of the tenancy pursuant to section 29 of the 1954 Act.
The landlord contends that the case is a simple one. It says that it has served a valid break notice and a valid section 25 notice. It says that it has the necessary intention to carry out the development. If so, the court can do no other than terminate Piccadilly's tenancy. Piccadilly will be obliged to cease its business on the ground floor and to vacate the building. Piccadilly will be entitled to statutory compensation assessed in accordance with section 37 of the 1954 Act.
In relation to the first set of proceedings, the tenant, Piccadilly, contends that the landlord has not proved the necessary intention to develop for the purposes of section 30(1)(f) of the 1954 Act. If the tenant is right about that, then the tenant will be entitled to a new tenancy. The parties are agreed that "the holding" as defined in the 1954 Act extends to the whole building and is not confined to the ground floor from which the tenant trades. Thus, the tenant will be entitled to a new tenancy of the whole building. The development will not take place, at any rate not at present. The terms of the new tenancy will have to be agreed between the parties or determined by the court. It seems likely that, in such an event, the landlord will ask the court to insert into the new tenancy a redevelopment break clause under which the landlord could in the future seek to determine the term of the new tenancy and seek its termination under the 1954 Act.
In addition to the contentions which Piccadilly puts forward as to the landlord's attempt to prove its intention to redevelop the building, Piccadilly and indeed Crossco No. 4 Unlimited and Philip Noble have a much more far reaching case. They say that the rights and obligations of the parties are not to be determined by a simple application of clause 9 of the lease and the provisions of the 1954 Act. They say that clause 9 of the lease should simply not be available to be relied upon by the landlord, at any rate not in relation to the ground floor of the building from which Piccadilly trades. They say that it is necessary to do more than look at the formal conveyancing documents such as the transfer of the freehold and the terms of the lease. It is necessary to consider the events leading up to March and April 2009.
The events relied upon by Philip Noble and the companies associated with him involved a very complicated demerger of a large group of companies and of other interests. Those many interests existed under the umbrella of "the Noble Organisation". This grouping was, ultimately, owned by Philip Noble and Gill Noble and their respective family trusts and other interests associated with them. Philip Noble and Gill Noble agreed to split the group, that is, to "demerge". The intended demerger happened. The deal was negotiated over many months and was entered into on 10 th March 200For most of the period covered by the negotiations, the parties intended that the freehold and the lease of the building would be owned by companies associated with Philip Noble. The two companies concerned with the building, as landlord and as tenant respectively, would ultimately be controlled by the same persons. On 18 th February 2009, that intention changed. At a meeting on that date, the future ownership of the building was discussed for about 15 minutes. Those carrying on the negotiations on that date reached a "commercial agreement" that the freehold of the building would be transferred to a company associated with Gill Noble. On 10 th March 2009, as I have described, Crossco No. 4 Unlimited, a company associated with Philip Noble, contracted to transfer the freehold of the building to Jolan Ltd, a company associated with Gill Noble. The consideration for the transfer was expressed to be £1 although, as part of the commercial agreement on 18 th February 2009, it had been agreed that the amount of value passing between the two sides to the demerger as a result of the transfer of the freehold of the building was some £5 million. There were some communications between the parties between...
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