General Motors UK Ltd v The Manchester Ship Canal Company Ltd No 2
| Jurisdiction | England & Wales |
| Judge | John Behrens |
| Judgment Date | 13 January 2017 |
| Neutral Citation | [2017] EWHC 21 (Ch) |
| Court | Chancery Division |
| Date | 13 January 2017 |
| Docket Number | Case No: HC-2015-000920 |
[2017] EWHC 21 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building
7 Rolls Buildings
New Fetter Lane
London EC4 1NL
His Honour John Behrens sitting as a Judge of the High Court.
Case No: HC-2015-000920
William Norris QC, Simon EdwardsandDaniel Stedman Jones (instructed by Duane Morris) for the Claimant
Katharine Holland QC and Katie Helmore (instructed by Hill Dickinson LLP) for the Defendant
Hearing date: 30 November 2016
Judgment (No 2) Approved
Introduction
. Judgment was formally handed down on 30 th November 2016. Fortunately, the parties were able to agree on a number of the outstanding matters. However, there were a large number of matters where there was no agreement and the argument in respect of the disputed items lasted for more than half a day. The principal area of dispute centred around costs. There was a wide difference between the parties' respective submissions.
. Following the submissions and in the light of the substantial amount of costs involved I decided to reserve judgment.
. In this judgment I shall adopt the abbreviations in the earlier judgment.
Areas of Agreement/Disagreement
. The parties were agreed that GM should be responsible for MSCC's costs on an indemnity basis in respect of the costs of terminating the Licence and defending the Claimant's claim for relief from forfeiture up to and including the service of the Defence. There was a wide difference between the parties as to the costs of the application for relief after that date. GM suggested that MSCC should pay its costs in relation to the application for relief after that date. For the most part those costs were to be paid on the standard basis. However, a without prejudice letter was sent on 22 July 2016. In the light of that letter GM contends that the costs should be paid on an indemnity basis after that date. MSCC on the other hand contends that GM should pay its costs of defending the claim for relief on an indemnity basis up to 9 September 2016. Thereafter there should be no order for costs on this issue.
. The parties were agreed that the rate of interest on the arrears of rent should be 3.5%. They were also agreed that MSCC should be entitled to interest on any damages it is entitled to if the appeal is allowed. Although the figure was not agreed Ms Holland QC accepted that the rate of 3.5% was appropriate.
. There was a major disagreement over the costs of the claim under the 1885 Act. Ms Holland QC contended that this was a case for an issue based order and that MSCC should be entitled to its costs of the issue on a standard basis. Mr Norris QC urged me not to make an issue based order. He submitted that I should simply reduce the costs to which GM was entitled by 10% to reflect that GM had failed on this issue.
. There was some dispute as to the extent to which I should grant permission to appeal. I gave a separate ruling on this and do not now repeat it. In summary I granted permission to appeal/cross appeal on questions relating to the granting of relief from forfeiture including the exercise of my discretion, the ruling in relation to damages for breach of clause 3(k) of the licence and the ruling in relation to the 1885 Act. I was not asked to grant permission on the estoppel issue or the quantum of damages for either the trespass or the breach of clause 3(k)
. There was no dispute that if there was to be an issue based order as to costs MSCC should pay the costs of the estoppel issue.
. There was no dispute that MSCC should pay the costs of the failed application it made on 18 October 2016 to adduce further evidence and to raise a question as to the quality of the water discharged by GM in the Canal.
. There are minor disputes over 2 orders where costs were reserved on 26 August 2016. One concerned the costs of the amendments to the Particulars of Claim when the claim under the 1885 Act was introduced. The other related to the order for specific disclosure when MSCC were ordered to disclose the comparable rents it had achieved in relation to the discharge into the Canal.
. There was a dispute as to the costs of the Counterclaim. GM points out that the Counterclaim was dismissed and that accordingly MSCC should pay GM's costs of the Counterclaim. MSCC submits that there should be no order as to costs.
. The parties were agreed that there should be a stay on the assessment of costs and on the assessment of the loss suffered by MSCC as a result of the delay in making the application for relief pending the outcome of the appeal.
. It will come as no surprise that the level of costs involved is high. GM's costs budget as at 9 September 2016 was in the sum of £626,436.95. MSCC's budget as at the same date was £730,584. In fact, I was told at the hearing that MSCC's costs were less than its budget and were approximately £590,000.
History
. In the light of the submissions it is necessary to set out the history of the proceedings in a little detail.
The pre-action correspondence.
. On 30 January 2015 Duane Morris on behalf of GM wrote to MSCC and asserted that GM was entitled to apply for relief against forfeiture. It is not necessary to set out the letter in detail but it is to be noted that the basis for the claim is set out in an analysis with five lettered paragraphs. Paragraph B asserted that GM's rights " although expressed to be a 'licence' were proprietary in nature and recognisable as an easement".
. MSCC's in house solicitor replied to Duane Morris on 5 February 2015. The letter took issue with a number of points. In paragraph 3 he asserted that the Licence did not take effect as a lease and there was no right to relief from forfeiture. In any event the delay of more than 6 months was fatal.
. Duane Morris replied on 13 February 2015. As paragraph 3 of this letter is relied by Mr Norris QC I shall set out the relevant part:
"The Court's discretion to grant relief from forfeiture is not limited to a lease but can be applied to any right which is proprietary or possessory in nature. For the reasons stated in our letter of 30 January 2015 we are satisfied the remedy is available."
. Mr Norris QC relied on this passage because of the reference to rights which are possessory in nature. However, as Ms Holland QC pointed out, the letter refers back to the reasons given in the letter of 30 January 2015. That letter made no reference to possessory rights and asserted that the licence created an easement.
The pleaded cases prior to amendment
. Proceedings commenced in March 2015. In the original Particulars of Claim GM asserted that the forfeiture was invalid. In paragraph 17 it asserted that GM was ready willing able to pay the arrears of rent and had offered to do so but MSCC had refused to accept it. In the prayer to relief GM sought relief against forfeiture on such terms as may be just and equitable.
. Thus, at this stage, other than the assertion in paragraph 17, GM had not particularised the basis of the claim for relief and had not particularised the terms upon which it said that relief was appropriate.
. The original Defence filed by MSCC concentrated on the allegation that the licence had not been terminated. However, in paragraph 21, it denied that GM was entitled to any relief whether as sought or at all.
. It included two Counterclaims – one in respect of the trespass/licence at will in respect of the discharge of surface water following the termination of the licence; the other in respect of the failure to remove the spillway, the costs of which were then estimated to be £150,000.
The original costs budget
. GM's first cost budget was dated 11 June 2015 and was in the sum of £227,732.95. It included provision for one expert and estimated the trial would last 4 days.
. MSCC's first costs budget also dated 11 June 2015 was in the sum of £341,755.62. It included provision for 2 experts and also estimated a 4 day trial.
The notification of the amended case
. Although permission to amend was not granted until August 2016, Duane Morris first notified Hill Dickinson of the proposal to rely on the 1885 Act in March 2016. It was accepted at the hearing before me in the light of the impending trial date that work would have started on the 1885 Act claim at about that time.
The without prejudice negotiations
. It is not in dispute that MSCC took a relatively hard line in negotiations. In July 2015 it made a without prejudice offer to reduce the rent from £440,000 to £400,000 per annum. In August 2016 it rejected the offer made by GM and made no counter proposals.
. The without prejudice offer relied on by GM is dated 22 July 2016 – that is to say before the pleadings were amended but after GM had notified MSCC that the claim that the termination was invalid was to be discontinued.
. The offer was to pay:
1. The arrears of rent at £150 +VAT
2. An advance payment of rent for 100 years in the sum of £5,000 plus VAT
3. A contribution to MSCC's reasonable disbursements and compensation for managerial time spent being assessed on the basis of marginal costs incurred with the negotiations for the new licence.
4. Payment of GM's costs of the discontinued claims on the standard basis. Each side would otherwise pay its own costs.
. As already noted this offer was rejected in August 2016. It is, however, significantly less advantageous to MSCC than the order actually achieved. It contains no order in respect of MSCC's costs in effecting the forfeiture or in respect of any part of the application for relief. It does not make clear what contribution is being offered in respect of MSCC's time; it limits the basis of the...
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