First Tower Trustees Ltd and Another v CDS (Superstores International) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Michael Brindle |
| Judgment Date | 20 February 2017 |
| Neutral Citation | [2017] EWHC 891 (Ch) |
| Docket Number | Claim Number: HC-2015-004437 |
| Court | Chancery Division |
| Date | 20 February 2017 |
[2017] EWHC 891 (Ch)
Mr Michael Brindle QC
(Sitting as a Deputy Judge of the Chancery Division)
Claim Number: HC-2015-004437
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Michael Gadd and Matthew Watson (instructed by Olswang LLP) for the Claimants
Edwin Johnson QC (instructed by Ashfords LLP) for the Defendant
Hearing dates: 30 January – 1 February 2017
Mr Michael Brindle QC:
This action concerns warehouse premises at Dearne Mills, Darton, Barnsley. Four bays are relevant namely Bays 1–3, which were the subject of a Lease, and Bay 4, which was the subject of an Agreement for a Lease, which was never completed. The Claimants were landlords, and the Defendant was tenant.
On 30 th April 2015 the Claimants granted a Lease to the Defendant over Bays 1 – 3. Those Bays were, or appeared to be, ready for immediate occupation. Bay 4 was somewhat behind, being the subject of other occupation. On 30 th April 2015, the parties entered into an Agreement for a Lease in respect of Bay 4. Under the terms of the Lease of Bays 1–3, the Defendant was obliged to carry our certain works, and for this purpose entered into possession on 6 th May 2015.
Almost immediately, asbestos was discovered. This started on 14 th May 2015. On 25 th May 2015, further asbestos was discovered, and the Defendant ceased the works. On 12 th June 2015 the previous tenancy over Bay 4 came to an end, but on 16 th June 2015 asbestos was discovered there as well. Although the Claimants gave notice that the Vacant Possession Condition had been satisfied, the Defendant did not accept it. However, there was a condition subsequent in clause 4.3 of the Agreement whereby if the costs required to put Bay 4 into a condition making it fit for occupation by the Defendant were not agreed by a certain date after vacant possession was obtained, either party was at liberty to terminate the Agreement. This right of termination was exercised by the Defendant on 5 th August, when the Defendant wrote stating that agreement had not been reached within Clause 4.3, and that the Agreement was terminated. There is no present dispute about the validity of that termination.
Remedial work on Bays 1–3 commenced in November 2015, and in respect of Bay 3 were completed on 11 th December 2015. The premises were ready for occupation on 18 th December 2015. It is claimed that Bays 1 and 2 were ready for occupation on 15 th January 2016, and damages are claimed from 1 st May 2015 to 15 th January 2016.
Initially, it was the Claimants who took the initiative, claiming for rent unpaid and for specific performance of the Agreement relating to Bay 4. However, this has fallen away. All rent due has been paid, and the Claimants do not now persist in the claim for specific performance, recognising that the Agreement for a Lease relating to Bay 4 has been validly terminated. All that remains, therefore, is the Counterclaim for damages by the Defendant, relating to the losses alleged to have been suffered as a result of the unavailability of the premises due to asbestos damage.
When the matter was called on for hearing, the first matter for consideration was the Claimants' application for permission to amend its pleadings to allege that any liability of the Claimants was limited to the extent of the funds available within the Trusts, and did not extend to full personal liability on behalf of each of the trustees ("the trustee limitation issue"). I have separately issued my judgment allowing this application to amend, and I do not repeat my reasoning here. I consider the merits of this argument below.
The simple fact is that it is only the Counterclaim which remains to be decided, firstly as to whether it is well founded as a matter of liability, secondly as to the measure of damages and thirdly as to the trustee limitation issue. I consider first the question of liability.
Liability
The Claimants elected to call no evidence at all. The Defendant called two witnesses, Mr Simpkin and Mr Adlard, who were both cross-examined. There were two other witnesses, Mr Pickard and Mr Chatterton, an expert witness, whom the Claimants did not wish to cross-examine. However, the Defendant wished to adduce this evidence (unchallenged) and I have accepted it. Both Mr Simpkin and Mr Adlard gave truthful evidence, which evidence I accept. I set out below the essential effect of that evidence.
Mr Simpkin explained that the Defendant entered into the Lease and the Agreement for a Lease on the basis of a number of representations, namely: —
(i) The S2 Report Misrepresentation. The Defendant was provided, before contract, with a report which was said to them to relate to the demised premises prepared by S2. This indicated to the Defendant that there were no problems with asbestos. Curiously, the Claimants have denied that the S2 Report related to Bays 1–4 at all. The Defendant is unable to contest this, although I have my doubts as a result of the evidence of Mr Adlard. Be that as it may, the report was certainly held out to the Defendant as relating to Bays 1–3 (at least) and led them to believe, as I accept, that there were no significant asbestos problems. A further report was produced by William Martin Firefly ("Firefly"), which did not actually reach the Defendant until 1st May 2015, after the Lease had been entered into. However, this report was treated by Mr Simpkin as essentially "clear". There were some presence of asbestos, but none was significant, save for one area relating to the insulation of a metal tank, but I accept Mr Simpkin's evidence that this was not regarded by him as of any importance, since it was well away from any of the works which the Defendant needed to undertake, and was regarded, when the report was read by Mr Simpkin, as of no real consequence. The Claimants did not contest this point in cross-examination.
(ii) More importantly, there were two significant representations arising out of the Replies to Enquiries dated 16 th February 2015. In particular, answers 15.5 and 15.7 are relied upon. 15.2, in respect of "notices" etc., relating to environmental problems, was answered to the effect that the Claimants were not aware of any such notices, "but the Buyer must satisfy itself". As for 15.7, the question was as to details of any actual, alleged or potential breaches of environmental law… or other environmental problems relating to the Property. The answer was "The Seller has not been notified of any such breaches or environmental problems relating to the Property but the Buyer must satisfy itself." Paragraph 6 of the interpretation section of the Replies provided that prior to contract or completion the Claimants would notify the Defendant on becoming aware of anything which might cause any reply that had been given to be incorrect.
The answers set out at (ii) above were not updated prior to 30 th April 2015, despite the facts that (i) the Firefly Report, which did reveal the presence of asbestos, came into the Claimants' hands on 16 th April 2015 and (ii) an e-mail was sent by VPS, a specialist firm used by the Claimants, on 20 th April 2015, which had reported a health and safety risk caused by the presence of asbestos near the loading bay, which contained the following sentence": —
"Please be advised that we have added a notice onto our system and we are unable to enter this property until we receive the relevant confirmation from yourselves that the site is safe. This would have to be in the form of a Clean Air Certificate or Asbestos Report."
The remarks of VPS related specifically to Bays 1 to 3, which were untenanted at the time, but they also raised the possibility that Bay 4, at that time let to Kingspan Limited, might be unsafe to enter for the same reason.
I have no doubt that each of the representations set out on paragraph 9 above was false. The S2 Report was represented to relate to Bays 1 to 4, but according to the Claimants' own pleaded case it did not. It said nothing relevant about the asbestos problem which existed and prevented the premises from being occupied until remedial work was carried out. This is made patently clear by the VPS e-mail, of which the Defendant had no knowledge until after the Lease and Agreement had been entered into. It has been stressed on behalf of the Claimants that the Defendant had significant remedial work to do in any event, on a not insubstantial scale, but this does not in my judgment derogate from the clear fact that the premises required substantial further work to remedy the asbestos problem, which was wholly contrary to what the Defendant had been told before the Lease (and the Agreement for a Lease) were entered into. I should note that I reject the submission that this report was somehow out-of-date.
The Replies under 15.7 did not remain true as at 30 th April 2015, in the light of the VPS e-mail which the Claimants had received two weeks earlier but had not passed on to the Defendant. The Claimants get no help from the words "…the Buyer must satisfy himself since those words are preceded by " The Seller has not been notified of any such breaches or environmental problems relating to the property". That was untrue. Although the tenant is invited to satisfy himself, this means to satisfy himself about environmental problems in the context that the Claimants do not know of any. In fact, by 30 th April 2015 the Claimants knew full well that there was a problem. I am less sure that 15.5 is engaged, since what VPS had sent was not an official notice of the sort with which 15.5 seems to me to be concerned. This does not matter, since the case is clear under 15.7.
I do not think that any...
To continue reading
Request your trial
-
First Tower Trustees Ltd v CDS (Superstores International) Ltd
...Division, held that the landlords were liable, and gave judgment against them for £1.4 million plus interest. His judgment is at [2017] EWHC 891 (Ch), [2017] 4 WLR 73. 2 The misrepresentation was contained in replies to enquiries before contract. Enquiries before contract form an importan......
-
Rock Advertising Ltd v MWB Business Exchange Centres Ltd
... [2013] EWHC 3386 (QB), paras 93–101; Moran Yacht & Ship Inc v Pisarev [2016] 1 Lloyd's Rep 625 (CA), para 18; First Tower Trustees Ltd v CDS (Superstores International) Ltd [2017] 4 WLR 73, paras 17, 26; Adibe v National Westminster Bank Plc [2017] EWHC 1655 (Ch), para 29; Triple Point ......
-
Specialist Building Products Ltd (trading as Profile 22 Systems) v New Century Doors Ltd
...Moran Yacht & Ship Inc v Pisarev [2016] 1 Lloyd's Rep 625 (CA), para 18; First Tower Trustees Ltd v CDS (Superstores International) Ltd [2017] 4 WLR 73, paras 17, 26; Adibe v National Westminster Bank Plc [2017] EWHC 1655 (Ch), para 29; Triple Point Technology Inc v PTT Public Co Ltd [20......
-
Pre-Contract Enquiries: Another Case Of Caveat Empty
...of the Chancery Division, held that FT was liable, and gave judgment against them for £1.4 million plus interest. His judgment is at [2017] EWHC 891 (Ch), [2017] 4 WLR The Deputy High Court Judge considered that there was a clear case of misrepresentation, and went on to consider whether FT......