Capitol Park Leeds Plc v Global Radio Services Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Newey,Lady Justice Elisabeth Laing,Lord Justice Moylan |
| Judgment Date | 05 July 2021 |
| Neutral Citation | [2021] EWCA Civ 995 |
| Docket Number | Case No: A3/2021/0171 |
| Court | Court of Appeal (Civil Division) |
[2021] EWCA Civ 995
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN LEEDS
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
Benjamin Nolan QC (sitting as a Deputy High Court Judge)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Moylan
Lord Justice Newey
and
Lady Justice Elisabeth Laing
Case No: A3/2021/0171
Mr John Male QC (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Appellant
Ms Joanne Wicks QC (instructed by DWF LLP) for the Respondents
Hearing date: 17 June 2021
Approved Judgment
The question raised by this appeal is whether the appellant, Global Radio Services Limited (“Global”), has terminated a lease of 1 Sterling Court, Capitol Park, Topcliffe Lane, Tingley, Leeds (“1 Sterling Court”) by the exercise of a break clause in the lease. Mr Benjamin Nolan QC (“the Judge”), sitting as a Deputy High Court Judge, concluded that the lease continued because Global had failed to give “vacant possession of the Premises” in accordance with the break clause. Global challenges that decision.
The lease in question (“the Lease”) is dated 4 March 2002 and provided for the “Premises” to be demised for 24 years from 12 November 2001. Clause 1.1 of the Lease defined “Premises” as:
“the property known as 1 Sterling Court, Capitol Park, Topcliffe Lane, Tingley, Leeds shown for the purpose of identification only edged red on the Plan including the airspace 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 original tenant, Real Radio (Yorkshire) Limited, used 1 Sterling Court as a broadcasting studio, but Global took an assignment of the Lease in 2014 following its acquisition of Guardian Media Group's radio business and did not need the property. On 15 February 2017, therefore, Global sought to bring the Lease to an end on 12 November 2017 by exercising the “option to determine” found in clause 10 of the Lease. This reads:
“10.1 The Tenant may terminate this Lease on either [NB Insert day and month of term commencement date] day of 2009 and 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 intention to do so
10.1.2 in respect of the first Tenant's Break Date accompanies the notice with a payment equivalent to two years Rent then reserved and payable pursuant to this Lease plus any VAT that may be properly payable
10.1.3 has at the date of the notice paid the Rent and all other payments due under this 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 of 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]”.
It is common ground between the parties that the opening words of clause 10.1 of the Lease should be read as referring to 12 November 2017.
The Lease further provided as follows:
i) By clause 3.3.1, the tenant covenanted to keep the Premises in repair, “but excluding any damage or destruction by any of the Insured Risks unless the insurance is vitiated or payment refused as a result of any act neglect default or omission of Tenant or anyone at the Premises expressly or by implication with the Tenant's consent”;
ii) By clause 3.4, the tenant covenanted not to make any structural or external alterations to the Premises and not to carry out non-structural alterations without consent in writing and, where such consent had been given, to carry out the works in accordance with the plans and specifications supplied to the landlord;
iii) By clause 3.20.1, the tenant gave a covenant in these terms:
“To yield up the Premises to the Landlord at the End of the Term with vacant possession in a state of repair condition and decoration which is consistent with the proper performance of the Tenant's covenants in this Lease”;
iv) By clause 4, the landlord covenanted to insure against damage or destruction by the “Insured Risks” and, if any of the “Insured Risks” resulted in any loss or damage to the Premises, to make good the loss or damage carrying out the necessary work of reinstatement or rebuilding as soon as reasonably practicable.
The first respondent, Capitol Park Leeds plc, was the freehold owner of 1 Sterling Court and so Global's landlord when it sought to exercise the break clause in the Lease. More recently, title to 1 Sterling Court has been transferred to the second respondent, Capitol Park Barnsley Limited. I shall refer to both respondents as “Capitol” in this judgment.
It is common ground that by 12 November 2017 Global had stripped out from 1 Sterling Court a range of items. These comprised ceiling grids, ceiling tiles, fire barriers, boxing to columns, floor finishes, window sills, fan coil units, ventilation duct work, pipework connections for the fan coil unit system, office lighting, smoke detection system, emergency lighting, radiators, heating pipework to serve radiators, floor boxes, ceiling void small power and sub mains cables. The evidence before the Judge showed that these features had been part of the original base build specification and so landlord's fixtures or, perhaps, elements of the building itself.
It is Capitol's case that, in the circumstances, Global did not give “vacant possession of the Premises” on 12 November 2017 and so failed to comply with clause 10.1.4 of the Lease. That being so, Global's purported exercise of the break clause was, Capitol maintains, ineffective and the Lease continues.
At trial, the Judge rejected a contention advanced on behalf of Global to the effect that Capitol was estopped from relying on the alleged failure to satisfy clause 10.1.4 of the Lease. He further concluded that Global had not complied with clause 10.1.4 and, accordingly, granted a declaration that the Lease did not terminate on 12 November 2017 and continues until the end of its term. In this connection, the Judge said this in his judgment:
“65. Both Counsel accept that the authorities do not address the situation here where the Property may have been left empty but devoid of essential fixtures and fittings, whether part of the base build or ‘additions and improvements made to the Premises’. As the M&E Report exhibited by Mr Burns points out:
‘Deterioration of the condition of building services plant and installations can lead to failures resulting in a number of undesirable outcomes:
• Significant losses due to business disruptions;
• Non-compliance with legal requirements;
• Damage to property;
• Health and safety problems;
• Depreciation of asset value;
• Increase of energy and environmental costs.’
66. In my judgment, these were generically the sort of outcomes against which the Claimant was guarding when it drafted or adopted the definition of ‘the Premises’. Moreover, it made commercial common sense so to guard. By including the words ‘all fixtures and fittings at the Premises whenever fixed (except Tenant's fixtures)’ and ‘all additions and improvements made to the Premises’, the Claimant was ensuring that a Tenant exercising its Break Option could not do so by handing back an empty shell of a building which was dysfunctional and unoccupiable.
67. But in the end, this is what the Defendant did. On my findings, they stopped the work unilaterally in the hope of...
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