Ansa Logistics Ltd (Claimant) Towerbeg Ltd (Defendant) Ford Motor Company Ltd (Third Party)
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Floyd,Mr Justice Floyd |
| Judgment Date | 18 December 2012 |
| Neutral Citation | [2012] EWHC 3651 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC12C00594 |
| Date | 18 December 2012 |
[2012] EWHC 3651 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, London, EC4A 1NL
The Hon Mr Justice Floyd
Case No: HC12C00594
Nicholas Dowding QC and Alan Johns (instructed by Clarke Willmott LLP) for the Claimant
Mark Warwick and Henry Webb (instructed by Addleshaw Goddard LLP) for the Defendant
Martin Hutchings QC and Simon Atkinson (instructed by Weightmans LLP) for the Third Party
Hearing dates: November 14 th, 15 th and 19 th 2012
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.
There is a large area of land at Speke in Liverpool which is used for the storage and marshalling of motor vehicles. The claimant Ansa Logistics Limited ("Ansa") is the lessee of this land under two long leases. Ansa wishes to sub-let the land to the third party, Ford Motor Company Limited ("Ford"). For this sub-letting, Ansa needs the consent of its landlord, Towerbeg Limited ("Towerbeg"). Towerbeg has refused its consent. So Ansa has commenced this action for declarations that Towerbeg's refusal to grant consent to the sub-letting was unreasonable. Towerbeg denies unreasonableness, and makes its own additional claim for possession against both Ansa and Ford based on what it alleges is an earlier breach of covenant by Ansa in allowing Ford into possession without the consent of Towerbeg. Ansa and Ford deny the breach of covenant. If it is found that there was a breach of covenant by allowing Ford into possession, Ansa and Ford maintain that the breach has been waived by Towerbeg's acceptance of rent with knowledge of the breach. If they are wrong about that, they claim that the court can and should grant them relief against forfeiture.
Towerbeg's parent company was called Benmore, and Ansa's was Autologic. I will use the terms Towerbeg and Ansa to cover each parent and subsidiary, rather than distinguishing between them as no points were made about their separate legal personality. Towerbeg's guiding minds are, and were, Cathal Maneely and Kevin Mackay.
The leases in question were granted by Towerbeg's predecessor in title (British Transport Docks Board) to Ansa's predecessor in title (Silcock & Colling Limited). The terms of the leases were 99 years from 1 st January 1970. The first was dated 6 th May 1971 ("the Principal Lease") and the second was dated 8 th December 1971 ("the Additional Lease"). Thus the leases run until 2069, but they contain a term allowing the landlord to break the lease in 2043. Even taking that into account, the leases are valuable property in the hands of Ansa. The two leases relate to different areas, but nothing turns on the details of that. Together, the demised premises, which I will refer to as "the Speke site" consist of an area (approximately 42 acres) of primarily open and surfaced land with some buildings and a railway siding.
The leases included (in the case of the Principal Lease expressly and in the case of the Additional Lease by cross-reference) a covenant against alienation by the tenant in the following, familiar terms:
"Not to assign, underlet or part with the possession of the demised premises or any part thereof without the previous consent in writing of the [landlord] which consent shall not unreasonably be withheld".
The Speke site was developed in the 1960s for use by Ford for the storage and transportation of motor vehicles. Silcock and Colling, the original tenant, held the contract for transport and storage of vehicles from Ford ("the Ford logistics contract"). Clause 2(6) of the Principal Lease reflected this use by obliging the tenant to use the demised premises only:
". … for the purpose of marshalling and storage of motor vehicles the operation of motor vehicle transporters warehousing of containers and loose goods (including open storage) garaging and operation of equipment to handle such items together with facilities to maintain such equipment and administrative offices ancillary thereto (such being an approximate description of the Lessees' business of Car Delivery Agents and Road Transport Undertakers)."
In May 1999 Ansa took over the Ford logistics contract. At some point in 2000 the leases were assigned to Ansa. Ansa was registered as proprietor of the leases on 23 rd February 2000. The Speke site continued to be used by Ansa in connection with the Ford logistics contract.
Towerbeg acquired the Speke site, subject to the leases, in April 2006. In August 2007 Ford gave notice to Ansa that it would be terminating the Ford logistics contract and taking over the conduct of the logistics with effect from November of that year. This represented a serious financial blow for Ansa. Thereafter, Ford operated its own logistics from the Speke site.
On 3 rd November 2007, Ansa and Ford agreed heads of terms ("the 2007 HoTs") which allowed Ford to remain on the site, whilst allowing for "an orderly transition of the Ansa business to Ford on 3 November 2007". Ansa's employees were to be transferred to Ford under the TUPE Regulations. Ford subsequently took over the pension liabilities of the staff.
Under the heading "Property" in the 2007 HoTs, Ansa was to allow Ford to occupy the Speke site "under the licence agreements to be agreed". The parties were:
"in good faith [to] seek to agree on or before 14 November 2007 a process and form of words that will give Ford the right to occupy [the Speke site] whilst protecting the interests of [Ansa]."
In the absence of agreement about the licences, the terms of a Schedule were to apply. These terms gave Ford the right to call for an underlease for a term of five years from the date of the 2007 HoTs. The grant of the underlease was subject to all necessary licences to underlet being obtained. By clause 4 of the Schedule, if the landlord refused to grant a licence to underlet by 4 th February 2008, Ansa was obliged to make an application to the Court for a declaration that such consent had been unreasonably refused.
Clause 5.1 of the Schedule allowed Ford to "go into occupation" of the Speke site. It was to pay or otherwise indemnify Ansa against all rents, outgoings and expenses which would be the responsibility of Ford if underleases were granted. Ford was not to make any alterations to the site. Ford was to reimburse all reasonable costs that Ansa incurred in providing occupation. In addition Ford was to pay an "Infrastructure Facility Fee" as set out in a further Schedule 3. That fee amounted to a sum of £57,000 a month or £680,000 a year. Ford was also to purchase from Ansa the assets and stocks held by Ansa in connection with the business.
The 2007 HoTs also provided for Ford to continue to hire from Ansa a number of vehicle transporters. Ansa and Ford were also to co-operate in establishing a joint working party to investigate and develop cost saving opportunities. The evidence showed that there was some investigation of this, involving storing General Motors vehicles at the site, but the idea was subsequently thwarted by the unions.
The terms of the 2007 HoTs were to be confidential as between Ford and Ansa.
A rent review under the leases was initiated in 2008. In July 2008 Ansa's solicitors were in communication with Ford's solicitors over the terms of the underlease provided for in the Schedule to the 2007 HoTs, and were awaiting Ford's instructions. Ansa accordingly took the lead in the rent review negotiations, but agreed to keep Ford fully informed. In practice Ansa sought approval and comments from Ford of submissions which were made to the appointed expert in connection with the rent review.
In April 2008 a Mr David Bass, who had previously been advising Ansa as a surveyor, and who clearly had detailed knowledge of the Speke site gained in that capacity, approached Towerbeg to offer his assistance with the rent review process for the Speke site. In a very detailed email dated 3 rd April 2008 to Towerbeg, he said:
"Ford has to all intents and purposes acquired Ansa, albeit that the company remains in Autologic hands in pretty much name only. The staff and trucks have been transferred across. The rent is paid by Ansa/Autologic but there may be a request shortly for a sublease to be put in place for the Ford Company, or indeed the Ansa property interest could be transferred to Ford."
In a subsequent email dated March 2009 Mr Bass suggested to Francis Murphy of Towerbeg that Mr Murphy should look at Ansa's published results for 2008. He drew attention to a note which said that the Ansa site at Southampton had been novated to Ford, and that there was no such statement in respect of Speke. Ansa subsequently realised that Mr Bass was now helping Towerbeg. Mr Light of Ansa wrote an email saying that it appeared that Mr Bass had not "blown the gaff on our Ford arrangements". Mr Light explained that this was a reference to the Infrastructure Facility Fee payable under the 2007 HoTs. I accept that his concern was with the Fee. The fact of the additional payment of £680,000 a year would plainly have provided ammunition for Towerbeg in the rent review. I do not think it shows that Ansa thought that the Ford arrangements were a breach of any term in the leases.
An internal meeting note of Towerbeg sometime before April 2009 shows that Towerbeg had, by then, become aware of the fact that the Ford logistics contract had not been renewed and made an action note to investigate. Towerbeg's submission for the rent review dated 24 th April 2009 noted that Ansa kept "a close guard over the occupational details of the sites"....
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What Is Reasonable?
...recent case of ANSA Logistics Ltd v Towerberg Ltd [2012] EWHC 3651 (Ch) considered a common tenant's covenant: Not to assign, underlet or part with possession of the demised premises or any part thereof without the previous consent of the landlord, which consent shall not be reasonably The......