Business Environment Bow Lane Ltd v Deanwater Estates Ltd
| Jurisdiction | England & Wales |
| Judge | The Chancellor,Lord Justice May,the Chancellor,Lord Justice Lloyd |
| Judgment Date | 27 June 2007 |
| Neutral Citation | [2007] EWCA Civ 622 |
| Date | 27 June 2007 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2006/2690 |
[2007] EWCA Civ 622
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT, CHANCERY DIVISION
MR JUSTICE BRIGGS
HC06C00638
Royal Courts of Justice
Strand, London, WC2A 2LL
The Chancellor
Lord Justice May and
Lord Justice Lloyd
Case No: A3/2006/2690
Mr M Warwick (instructed by Messrs Howard Kennedy) for the Appellant
Mr J Ferris (instructed by Messrs Michael Conn Goldsobel) for the Respondent
Hearing date: 6th June, 2007
Introduction
In October 2001 the defendant, Deanwater Estates Ltd (“the Lessee”), was the lessee and the claimant's predecessor in title the lessor under a lease (“the Old Lease”) of the basement, ground and four upper floors of 7 Bow Lane/73 Watling Street, London, EC4 (“the Building”) for the residue of a term of 25 years granted by the Church Commissioners in April 1980. Between October 2001 and January 2002 negotiations took place for the surrender of the Old Lease and the grant by the predecessor in title of the claimant to the Lessee of a new lease (“the New Lease”) for a term of five years in respect of the four upper floors and parts only of the ground floor of the Building. The Old Lease was duly surrendered and the New Lease granted on 18th January 2002. By clause 2(5) the lessee covenanted to keep the property in good and tenantable repair and condition and, subject to an immaterial condition, to deliver up the same in such condition at the expiration or sooner determination of the term. Ss.24–28 of the Landlord and Tenant Act 1954 were excluded.
The New Lease was terminated by the Lessee in accordance with the provisions of clause 4(10)(a) thereof on 25th December 2004. In April 2005 the interest in the Building of its predecessor in title was acquired by the claimant (“the Lessor”). By an assignment dated 6th April 2005 the Lessor became entitled to the benefit of the repairing covenants contained in the New Lease and the right to enforce them against the Lessee. The Lessor sought to do so in proceedings it commenced against the Lessee on 22nd February 2006 in respect of dilapidations to a value of £416,632 specified in a schedule served on 14th April 2005. By its defence served on 30th April 2006 the Lessee claimed that the Lessor was precluded from so enforcing the repairing covenants contained in the New Lease by a collateral contract and/or a promissory estoppel arising from communications between the parties and their representatives leading up to and concluding with the execution of the New Lease. A preliminary issue whether those contentions afforded a defence to the Lessor's claim came before Briggs J. For the reasons explained in his judgment given on 5th December 2006 Briggs J considered that they did and dismissed the action. He stated that his mind had wavered on the issue more than once and gave the Lessor permission to appeal.
Before us it is common ground that the defence of promissory estoppel adds nothing to the defence of collateral contract; to that extent the preliminary issue has been narrowed. In addition both parties accept that the judge was right to have concluded that the oral evidence before him added nothing either, so that the defence depended on the documentary evidence and inferences properly drawn from it. Accordingly I shall describe the relevant documentary evidence in some detail before considering the judgment of Briggs J, the parties' submissions on this appeal and my conclusions.
The Documentary Evidence
In the period 1996 to 2000 there had been negotiations between the Lessee and the then lessor with regard to a straight surrender of the Old Lease. These came to nothing. In April 2000 the reversion was acquired by various companies to which I shall refer collectively as Lionbrook and negotiations restarted. There was some debate before us whether or not Lionbrook was anxious to obtain a surrender of the Old Lease. It is unnecessary to consider that matter in order to resolve the issue on this appeal.
The relevant starting point is a letter dated 10th October 2001 from Mr Martin Chilcott, a director of the Lessee, to Mr Simon Latham of Baring Houston and Saunders, the surveyors for Lionbrook. He set out his understanding of the provisional agreement which they had reached. It included the following passages:
“Surrender of Lease
[The Lessee] will surrender the lease dated 22 April 1980 on the property known as 7 Bow Lane and 73 Watling Street, London, EC4. At that time all liabilities under the terms of that lease will cease. Contemporaneously [The Lessee] will enter into a new lease on terms set out below.”
“Lease
A lease will be granted for a term of 5 years from the 25 December 2001 or such earlier date as can be agreed, subject to a tenant's only option to determine the lease on six months notice prior to the 25 December 2004. If this option is exercised by [the Lessee] all existing and future contingent liabilities will cease and any sub-tenants in place will become the direct responsibility of the landlord. The lease will be drawn on internal repairing and insuring covenants. [The Lessee] will retain responsibility for maintaining but not replacing any plant and machinery including boiler, lift and other plant solely serving the upper parts of the building.”
“Alienation
The tenant will have normal rights of alienation to sub-let in part or whole and to assign the whole. Other covenants in the lease will follow the basis of the original lease.”
“Other terms
The new lease will be contracted out of the Landlord & Tenant Act 1954 (as amended) and the end or sooner determination of the term there will be no liability for dilapidations or reinstatement.”
Mr Latham responded on 11th October 2001 with comments on other parts of the letter. On 19th October 2001 Mr Latham e-mailed Mr Chilcott stating that he was happy with the broad heads of terms which by then included an external repairing obligation, that he had instructed solicitors and a draft lease would be with the solicitors for the Lessee the following week. On 22nd October 2001 Ms Kate Potts of Dechert, the solicitors for Lionbrook, wrote to Mr Tuthill of William Sturges, the solicitors for the Lessee indicating that she would prepare a draft lease and send it to him shortly. She added:
“I do not anticipate that the negotiation of the new lease will be a lengthy one as the lease to be granted is based largely on both your clients existing lease and the lease which was previously to be granted to 110 Limited, copies of both of which you already have.”
On 24th October 2001 she duly sent Mr Tuthill drafts of the New Lease and a surrender of the Old Lease. The repairing covenants in the draft New Lease required the tenant to put and keep the premises in good and substantial repair including any necessary rebuilding or renewal. It contained nothing derogating from a full dilapidations responsibility on the tenant on termination. The solicitors then corresponded on matters not material to this appeal.
Mr Tuthill sent a copy of the drafts to Mr Chilcott. On 12th November 2001 Mr Chilcott wrote at some length to Mr Tuthill with his observations on the draft New Lease. They included the following:
“ Repairing Requirements
The wording of the Draft Lease appears to put a more onerous responsibility upon us than has been agreed. As noted above we are purely to be responsible for keeping the premises in repair and there is to be no replacement or renewal. Specifically, and I cannot see it noted in the documentation there is to be no responsibility for dilapidations at the end of the term. This must be absolutely clear in the documentation. We will deliver up at the end or sooner determination of the lease, with the building as is both internally and externally.”
“We will not be liable for redecorating the premises in the last year of the term specifically.”
“You will need to qualify the rights of entry by the landlord to repair as we do not wish for:
(a) Any interim schedules of dilapidations to be served
(b) The Landlords to insist that we carry out works or items of repair that we do not consider necessary or appropriate.”
“The drafting does not reflect our agreement, although you have amended the wording it must be made abundantly clear that our repairing liability is limited and there are no dilapidations at the term and no rights for the Landlord to enter to force us to carry out any other repairs during the currency of the lease.”
“There are clearly a number of issues which need to be resolved and discussed. It seems to me that Decherts are exceeding their instructions and I will be discussing the matter with Lionbrook's surveyors, to clarify one or two matters.”
Seemingly a copy of that letter was supplied to both Dechert and Mr Latham and discussions took place between Mr Latham and Mr Chilcott in relation to the matters raised by the latter. This prompted a letter dated 13th November from Ms Potts to Mr Tuthill, with which the travelling draft New Lease was enclosed, suggesting that
“if your client has any further concerns these are reflected by your amendments to the document rather than by comments direct to my client.”
Much the same point was made in an e-mail of the same date from Mr Latham to Mr Chilcott in which he wrote:
“Could I suggest that rather than make single alterations on an ad hoc basis, you speak to your solicitor once the revised lease, which is being sent back to him today, has been reviewed so that all the changes can be incorporated as one.”
On 15th November 2001 Mr Tuthill...
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