Capitol Park Leeds Plc v Global Radio Services Ltd
| Jurisdiction | England & Wales |
| Judge | Benjamin Nolan |
| Judgment Date | 23 October 2020 |
| Neutral Citation | [2020] EWHC 2750 (Ch) |
| Date | 23 October 2020 |
| Court | Chancery Division |
[2020] EWHC 2750 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN LEEDS
PROPERTY TRUSTS AND PROBATE LIST (ChD)
The Court House
Oxford Row
Leeds LS1 3BG
DEPUTY HIGH COURT JUDGE Benjamin Nolan QC
(Sitting as a Judge of the High Court)
Hearing date: 18 th – 21 st August 2020
Date handed down: 23 rd October 2020 at 10am
1 Sterling Court, Capitol Park, Topcliffe Lane, Tingley, Leeds (“the Property”) is a threestorey modern commercial unit constructed in 2000.
By a Lease dated 4 th March 2002, the Property was demised to Real Radio (Yorkshire) Limited for a term of 24 years from and including 12 th November 2001 (i.e. to expire 11 th November 2025).
In June 2014, the Defendant (“Global”) took an assignment of the Lease. The assignment was part of a corporate acquisition by Global of The Guardian Media Group, which included provisions for the transfer to Global of all properties owned by the Group. This resulted in Global acquiring more properties than it needed, and from the date of the assignment the Property, which was being used by Real Radio as a broadcasting studio, was surplus to requirements.
The Lease contained a Break Clause, as follows:
“ 10. OPTION TO DETERMINE
10.1 The Tenant may terminate the Lease on …… the 12 th November 2017 (“Tenant's Break Date”) if the Tenant:
10.1.1 Gives the Landlord at least six months and not more than nine months written notice to expire on the Tenant's Break Date of its intentions to do so.
10.1.2 (not applicable)
10.1.3 Has, at the date of the notice paid the rent and all other payments due under the Lease.
10.1.4 Gives vacant possession of the Premises to the Landlord on the relevant Tenant's Break Date.
10.2 The Landlord may in its absolute discretion and at any time expressly waive compliance with all or any of the conditions in clause 10.1.
10.3 The termination of the Lease under this clause shall be without prejudice to any right of action of either party in respect of any previous breach of covenant or condition or this Lease by the other.
10.4 The termination of the Lease under this clause shall be without prejudice to the right of the Landlord to demand from the Tenant the amount of any increase in the rent for any period from a review date to the end of the term together with any interest which is due and payable on the increase where the rent payable from that review date has not been determined or agreed by the end of the term.”
On the 15 th February 2017, Global purported to exercise the break clause by giving written notice under clause 10.1 to terminate the Lease on the 12 th November 2017. At or around the 12 th November 2017, Global returned the keys to the Property to the Claimant.
It is common ground that prior to the 12 th November 2017, Global and/or Real Radio had stripped out various features of the Property and/or fixtures, namely:
(i) Ceiling grids;
(ii) Ceiling tiles;
(iii) Fire barriers;
(iv) Boxing to columns;
(v) Floor finishes to offices and the majority of the common areas;
(vi) Window sills;
(vii) Fan coil units;
(viii) Ventilation duct work;
(ix) Pipework connections for the fan coil unit system;
(x) Office lighting;
(xi) Smoke detection system;
(xii) Emergency lighting;
(xiii) Radiators;
(xiv) Heating pipework to serve radiators;
(xv) Floor boxes;
(xvi) Ceiling void small power; and
(xvii) Sub mains cables.
The option to terminate set out at paragraph 10 of the Lease is conditional upon giving “ vacant possession of the Premises to the Landlord on the relevant Tenant's Break Date”. (see 10.1.4 above). The Premises are defined in the Lease as follows:
“ “Premises” means the property known as 1 Sterling Court, Capitol Park, Topcliffe Lane, Tingley, Leeds, shown for the purposes of identification only edged red on the plan, including the air space lying above the existing roof of the building but including all fixtures and fittings at the Premises whenever fixed, except those which are generally regarded as tenant's or trade fixtures and fittings, and all additions and improvements made to the Premises and any outside parts and any signage erected by or on behalf of the Tenant upon the estate and references to the Premises include any part of it.”
The Claimant's case is that in returning the Property on the 12 th November 2017, minus those elements and/or fixtures which had been stripped out, Global were not complying with the condition under paragraph 10.1.4 of the Lease to “give vacant possession of the Premises”. The Defendant's case is that, acknowledging that it may be in breach of covenant in respect of the repairing obligations under the Lease and therefore liable for dilapidations, it nevertheless gave vacant possession of the Premises on 12 th November 2017 and thereby complied with the condition in paragraph 10.1.4. The first question for determination therefore is whether the Defendant effectively complied with clause 10.1.4 on the 12 th November 2017. If not, as the Claimant contends, the Lease continues until its term date in 2025 and the Claimant seeks a declaration accordingly. That question is very substantially a question of law to which I will return in some detail. But there is a second issue upon which there is a significant dispute of fact, namely, whether the Claimant is estopped from relying upon the alleged failure to deliver up the Premises with vacant possession in accordance with clause 10.1.4. The estoppel is said to arise from the circumstances of a meeting between the representatives of the parties on the 9 th June 2017.
The Claimant's representative at that meeting was Mr David Burns, an experienced Chartered Building Surveyor and, at the time, an associate in the firm Knight Frank LLP. Mr Burns is the Claimant's only witness. He has made a statement dated the 28 th October 2019, to which he has exhibited a copy of his report dated the 23 rd November 2018. Although that report was prepared in connection with the dispute which is central to these proceedings, large parts of it are uncontroversial. Mr Burns was familiar with the Property and with the adjacent units (2 and 3) which were contemporaneous in build and had very similar specifications. Moreover, Mr Burns had access to a considerable amount of historical data, including the original building and engineering specifications and drawing, and various photographs taken at different times over the usage and occupation of the Property. Thus, Mr Burns was able, confidently, to describe the ‘base build’ of the Property and to chart the various changes to the Property over the years since its initial occupation. Some of those changes were ephemeral, e.g. Real Radio had created various offices and studios by erecting partition walls. They had also added additional air conditioning units. These changes could be and were reversed by contractors instructed by Global at or about the time of the service of the Break Notice. Other changes were much more substantial, and their reversal represented a much greater engineering challenge. Details are set out in Mr Burns' report. The summary is as contained in the Particulars of Claim and repeated at paragraph 6 above.
The Defendant's representative at the meeting of the 9 th June 2017 was Mr Gavin Foxton. Mr Foxton is also a Chartered Surveyor and, at the time, was an Associate Director of Colliers International. Mr Foxton was first instructed to inspect the Property on behalf of the Defendant in September 2014. This was to undertake an early dilapidations assessment of the Property for indicative purposes on behalf of Global following acquisition of the Property earlier that year. At this stage, Mr Foxton thought there was some uncertainty as to which elements of the Property formed part of the base build (and were therefore subject to the Tenant's repairing obligations) and which elements were Tenant's improvements carried out during the term (which might therefore constitute Tenant's fixtures which could be removed). Mr Foxton indicates that the main area of uncertainty was in relation to the mechanical systems and, in particular, to the air conditioning system. However, he reached a reasonably firm view about the base build of the Property which was not dissimilar to the position being taken by Mr Burns.
In November 2016, Mr Foxton was instructed to contact the Landlord's agent in order to attempt to get an agreement as to the extent of Global's potential dilapidations liability. Accordingly, he met with Mr Burns on the 15 th November 2016, and various emails passed between them, between then and the service of the Break Notice in February 2017. Mr Burns's position on behalf of the Landlord was that the Property should effectively be restored to its base build open plan condition, though there was some uncertainty as to the mechanical and engineering implications of this. Mr Foxton effectively agreed with this course in principle at this stage, though I note the references in his statement and in his evidence to the telephone call with his client (Mr Lowther of Global) on the 22 nd March 2017, when they discussed “strategy”. Neither Mr Foxton nor Mr Lowther made any secret of the fact that from this point forward there was a degree of bluffing going on. Indeed, Mr Foxton at paragraph 23 of his statement outlines his strategy and effectively admits that the offer to restore to base build and therefore outmoded condition was disingenuous. Mr Burns, as an experienced and skilful negotiator, doubtless would have appreciated this and played his hand accordingly.
On the 13 th April 2017, the Claimant's solicitors (DWF LLP) served the Schedule of Dilapidations dated the 14 th March 2017. The letter served in accordance with the pre-action “dilapidations protocol” stated:
“ Take this letter and the...
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