Altonwood Ltd and Crystal Palace F.C. (2000) Ltd
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE LIGHTMAN,Mr Justice Lightman |
| Judgment Date | 07 March 2005 |
| Neutral Citation | [2005] EWHC 292 (Ch) |
| Docket Number | Case No: HC02CO1044 |
| Court | Chancery Division |
| Date | 07 March 2005 |
[2005] EWHC 292 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Lightman
Case No: HC02CO1044
Mr Michael Barnes QC & Mr Mark Warwick (instructed by Addleshaw Goddard, 150 Aldersgate Street, London EC1A 4EJ) for the Claimant
Mr Paul Morgan QC & Mr Mark Sefton (instructed by DLA, 3 Noble street, London EC2V 7EE) for the Defendant
Hearing dates: 22 nd–24 th February 2005
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.
Mr Justice Lightman
INTRODUCTION
At issue in this action are the rights and obligations of the landlord, the claimant Altonwood Limited, ("Altonwood") and the tenant, the defendant Crystal Palace FC (2000) Limited ("CPFC") in respect of payment of rent under the terms of a lease dated the 5 th July 2000 ("the Lease") of Selhurst Park Stadium, Whitehorse Lane, South Norwood, London SE25 6PU ("the Stadium"). By the Lease Altonwood demised the Stadium to CPFC for 10 years commencing on the 4 th July 2000. Previously Crystal Palace FC (1986) Limited ("CPFC 1986") had held since 1986 a lease of the Stadium on substantially the same terms as the Lease save as to the length of the term. On the 31 st March 1999 CPFC 1986 went into administration and on the 1st July 2000 the assets of CPFC 1986 were acquired by CPFC. The Lease was granted four days later. The rent claimed relates to the period when CPFC was in the First Division of the Football League ("the First Division") now called the Championship League. CPFC since the beginning of the present season (2004–5) has been in the Premier League.
Altonwood issued these proceedings on the 21 st March 2003. In these proceedings Altonwood seeks orders for payment of rent, declarations, accounts and damages. On the 25 th April 2003, Altonwood applied for summary judgment. That application was dismissed by Lewison J on the 1 st October 2003. On the 21 st June 2004 Master Bowles ordered the trial of seven preliminary issues. Those preliminary issues came before me on the 13 th December 2004. In the course of the hearing I considered that it was unsatisfactory to try and resolve those issues without determining the underlying issues of fact. This most particularly was so in respect of the issue raised whether CPFC was obliged to make a payment to Altonwood in respect of its supply of complimentary tickets, for on that issue Altonwood was relying on a disputed "common practice" in the football world. I accordingly gave directions for a full trial of those issues to be listed for hearing in February 2005. That trial is now before me. By the date of trial three of those issues no longer remained alive. Most significantly Altonwood abandoned its claim in respect of the issue of complimentary tickets.
The live issues between the parties relate to the true construction of the Lease and the impact on the terms of the Lease of the provisions of: (a) a licence providing for sharing of the Stadium with The Wimbledon Football Club Limited ("WFCL") dated the 24 th August 1996 made between CPFC 1986 and WFCL ("the Licence"); (b) two letters dated the 5 th July 2000 one passing between CPFC and WFCL and the other between CPFC and Altonwood contemporaneous with the Lease ("the Side Letters"); (c) an undated operation agreement ("the Operation Agreement") made on the 23 rd August 2003 between WFCL (in administration) and CPFC; and (d) a letter dated the 23 rd August 2003 from CPFC to WFCL ("the 2003 Letter").
THE LEASE
The Lease commences in clause 1 with a series of definitions. Clauses 1.1.1.2. provides that the term "Initial Basic Rent" means (so long as CPFC is a member of the First Division and subject to review in July 2005) the annual sum of £156,000. Clause 1.1.2 provides that the term "Basic Rent" means "the Initial Basic Rent" (i.e. £156,000) or such greater sum as may be calculated in accordance with clause 4.2. The following further provisions of Clause 1 require to be set out in full:
"1.1.4 Interest means interest at the rate of four percentage points above the base rate for the time being of Midland Bank Plc….
1.1.7 Cup Matches means all first team competitive matches in cup competitions whether domestic European or international (including without limitation the Football Association Cup and the Football League Cup and successor cups of the same) or cup matches of a similar or comparable nature and all obligatory youth team cup matches;
…
1.1.12 Gross Gate Receipts means all admission money including money received from room hire Club Membership Fees Season Ticket room hire and Executive Box Sales less any Value Added Tax charged on that admission money Provided that all monies paid for season tickets in respect of the 2000–2001 season and currently held on trust by the administrators of Crystal Palace FC (1986) Limited shall immediately on the date being 21 days after the date of this Lease be included in the calculation of Gross Gate Receipts and the Tenant shall immediately on such date pay to the Landlord 7 1/2% of those monies as rent;
…
1.1.17 League Matches means all first team competitive matches played under the authorisation of the Football Association and/or the Football League and/or the Premier League and/or any European association football league;
…
1.1.26 the Rent means the greater of the Basic Rent and the Turnover Rent;
1.1.27 Season means the period beginning on 1 st June in any year of the Term and ending on 31 st May in the following year;
1.1.28 the Subsisting Licence [means the] Licence;
1.1.29 the Turnover Rent the annual sum ascertained from time to time in accordance with Clause 4.3;"
Clause 2.4.3 provides that the Lease is granted subject to the Licence.
Clause 4.3.1 defines the term "the Turnover Rent". This clause reads as follows:
"4.3.1 The Turnover Rent shall be (subject to Clause 4.3.3) Ten per centum (10%) of the aggregate of:—
4.3.1.1 the Gross Gate Receipts taken in respect of League Matches and Friendly Matches played or to be played by the Tenant at the Demised Premises in a Season;
4.3.1.2 the Tenant's share of the Gross Gate Receipts taken in respect of Cup Matches played or to be played by the Tenant at the Demised Premises in a Season; and
4.3.1.3 the Gross Gate Receipts taken in respect of any other League Matches Friendly Matches Cup Matches European matches international matches or any other matches where the Tenant is not a participant team and including (without limitation) where the Demised Premises have been used as a neutral venue or as a venue for any England international association football team but not including the Gross Gate Receipts taken under the Subsisting Licence (subject to the Landlord receiving in full all licence fees payable under the Subsisting Licence)
in each case including Gross Gate Receipts received before the beginning of the relevant Season such sum to be calculated on a quarterly basis for the quarters expiring on 31 st August 30 th November 28 th February and 31 st May in each Season."
Clause 4.3.3 however provides that the Turnover Rent shall be reduced during the time that the Licence shall subsist or there shall subsist some other ground sharing agreement:
"4.3.3 During such time as the Subsisting Licence shall subsist or during such time as there shall subsist any other ground sharing licence in respect of the Demised Premises permitted under Clause 5.13 the turnover percentage provided for in Clause 4.3.1 shall be reduced to 7.5% (subject to the Tenant paying to the Landlord all licence fees received under the Subsisting Licence or such other ground sharing licence or licences pursuant to Clause 5.13.6) Provided that the aggregate Rent payable from time to time to the Landlord shall not at any time be less than the Rent which would be payable by the Tenant if no ground sharing licence were subsisting."
Clause 5 contains covenants on the part of CPFC. It begins with the covenant to pay the Rent. Clause 5.1. reads (so far as material) as follows:
"5.1.1 To pay the Rent by first paying the Basic Rent … without deduction or set-off by twelve equal payments [of £39,000] in advance …
5.1.2 To pay any balance of the Rent due under Clause 4.3 [i.e. of Turnover Rent] by equal quarterly payments in arrear on the 1 September, 1 December, 1 March and 1 June in each year credit being given for any overpayments made in respect of a previous quarter such payments to be made without deduction or set off."
It is clear on a full and fair reading of the Lease, as it is (I think) common ground, that the word "equal" in clause 5.1.2 has been inserted by the draftsman by error, has no place in the provision and is to be ignored.
Clause 5.9.1 requires CPFC to use the Stadium for the playing of association football matches.
Clause 5.11.1 requires CPFC to promote ground sharing:
"To use reasonable endeavours to promote ground sharing at the Demised Premises with a professional association football club which is a member of the Football League or the Premier League subject to the provisions of clause 5.13 PROVIDED THAT so long as any such ground sharing agreements are subsisting the Tenant shall be entitled to receive a sum representing a fair proportion of the proper costs of operating the Demised Premises as a football stadium (excluding the licence fee) from any ground sharers and such sum will not be payable to the Landlord under any provision herein."
Clause 5.13.1 and 5.13.3.3 contain provisions of significance relating to "ground sharing agreements" including a definition of such an agreement...
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