Henry Anthony Shinners and Nicholas Myers (Joint Administrators of London Bridge Entertainment Partners LLP) v London Trocadero (2015) LLP
| Jurisdiction | England & Wales |
| Judge | Barber |
| Judgment Date | 12 November 2019 |
| Neutral Citation | [2019] EWHC 2932 (Ch) |
| Date | 12 November 2019 |
| Docket Number | CR-2017-007215 |
| Court | Chancery Court |
[2019] EWHC 2932 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST
IN THE MATTER OF LONDON BRIDGE ENTERTAINMENT PARTNERS LLP (IN ADMINISTRATION)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
AND THE LIMITED LIABILITY PARTNERSHIP REGULATIONS 2001
Royal Courts of Justice
7 The Rolls Building
Fetter Lane
London
EC4A 1NL
ICC JUDGE Barber
CR-2017-007215
Stephen Robins (instructed by Howard Kennedy LLP) for the Applicants
Zia Bhaloo QC (instructed by Hogan Lovells LLP) for the Respondent
Hearing dates: 4 April and 16 July 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
ICC Judge Barber
This is the application of Henry Shinners and Nicholas Myers, as joint administrators of London Bridge Entertainment Partners LLP (‘the Company’), for directions under paragraph 63 of Schedule B1 to the Insolvency Act 1986 as to:
(1) Whether the obligation of the Company to provide further security to the Respondent, London Trocadero (2015) LLP (‘the Landlord’) under clause 5 of a rent deposit deed dated 2 November 2007 (‘the Rent Deposit Deed’) is a debt owed by the Company to the Landlord which is capable of falling within the principle in Re Lundy Granite Co Ltd (1871) LR 6 Ch App 462 in the administration of the Company, as opposed to a contractual obligation of the Company of the type (outside the Company's administration) that would ordinarily fall to be enforced by an action by the Landlord for specific performance;
(2) Whether the provision of further security to the Landlord under clause 5 of the Rent Deposit Deed would be contrary to the pari passu rule in the Company's administration, or otherwise contravene the statutory scheme for administration under Schedule Bl; and, if so, whether the Applicants, as the joint administrators of the Company, should decline on that basis to provide any further security to the Landlord;
(3) Depending on the Court's answers to the questions in paragraphs (1) and (2) above, whether the Landlord's application by Amended Application Notice dated 26 January 2018 (‘the First Application’) and/or the Landlord's application by Application Notice dated 5 November 2018 (‘the Second Application’) should be struck out or dismissed;
(4) Costs, including, if appropriate, the costs of the First Application and/or the Second Application;
(5) Such further or other relief as the Court thinks fit.
The Parties
The Respondent is the registered proprietor of The London Pavillion, 1 Piccadilly, London W1 (‘the Building’), a large five-storey building situated in a prominent location occupying a corner site on Piccadilly Circus. The Company was the lessee of parts of the Building under various leases. The premises demised to the Company were used as a museum trading under the name ‘Ripley's Believe it or Not!’ The Applicants (‘the Administrators’) are the joint administrators of the Company, having been appointed on 29 September 2017.
Agreement for Lease
By an agreement for lease dated 4 July 2007 made between (1) London Trocadero Limited and (2) the Company (‘the Agreement for Lease’), it was agreed (a) that London Trocadero Limited would grant and the Company would accept a lease in the terms summarised in Paragraph 4 below and (b) that the parties would enter into a rent deposit deed in the terms summarised at Paragraphs 6 to 8 below.
The Lease
By a lease dated 2 November 2007 made between (1) London Trocadero Limited and (2) the Company (‘the Lease’), Units G3, G4, G7, C9 and CIO and parts of the first, second, third, fourth, and fifth floors of the Building (‘the Property’) were demised to the Company for a term of 25 years commencing on 2 November 2007 at an initial basic rent of £1,750,000 per annum, payable quarterly in advance on the modern quarter days (1 January, 1 April, 1 July and 1 October). The passing rent at the date of forfeiture was £2,051,924.35. The Lease included, at Clauses 4.3, 4.4 and 4.5, covenants to repair, decorate and maintain the Property and fixtures and fittings therein. Clause 4.8 of the Lease contained a covenant against alterations.
By a further lease dated 10 July 2008 and made between London Trocadero Limited and the Company (‘the Plant Room Lease’), a plant room on the fourth floor of the Building was demised to the Company for a term commensurate with the term of the Lease. The rent under the Plant Room Lease was a peppercorn rent.
The Rent Deposit Deed
The parties to the Lease entered into a rent deposit deed on the same date as the Lease (‘the Rent Deposit Deed’, or ‘Deed’), under which the Company paid the Landlord the sum of £2,056,250 (‘the Rent Deposit’). This was placed in a specifically designated treasury deposit account with a UK clearing bank (‘the Account’) in the name of the Landlord together with any other sums paid into the Account by the Company pursuant to the terms of the Rent Deposit Deed and any interest credited to the Account.
The Rent Deposit Deed contained, inter alia, the following provisions:
‘1.1 Definitions
…‘the Tenant's Obligations’ means the obligations of the Tenant to pay the rents reserved by the Lease and to perform and observe the covenants and conditions on the part of the Tenant contained in the Lease
…‘the Deposited Sum’ means the sum of Two Million and Fifty Six Thousand Two Hundred and Fifty Pounds (£2,056,250.00) paid by the Tenant to the Landlord on or before the date hereof and placed in a specifically designated treasury deposit account with a UK Clearing Bank (‘the Account’) in the name of the Landlord together with any other sums paid into the Account by the tenant pursuant to the terms of this Deed and any interest credited to the Account and which has not been released to the Tenant
2. Charge
The Tenant hereby charges with full title guarantee by way of fixed charge the Deposited Sum to the Landlord as a continuing security for the payment and discharge of any of the Tenant's Obligations from time to time existing and also for any proper loss which the Landlord may incur in or incidental to and consequent upon forfeiture of the Lease
3. Withdrawals
3.1 The Tenant hereby agrees that in addition to any other right or remedy which the Landlord may have under the Lease or otherwise if and whenever any rent or other payment due to the Landlord under the Lease is not paid on the due date or if and whenever the Landlord becomes liable for any payments which should be payable by the Tenant and the Tenant shall not pay the same within fourteen days of written demand then in any such case the Landlord may at any time and without notice to the Tenant withdraw for its own use and benefit all or any part of the Deposited Sum as may be required to satisfy the same
3.2 The Landlord shall promptly upon any such withdrawal having been made give written notice thereof to the Tenant
4. The Tenant hereby agrees that in addition to any other right or remedy which the Landlord may have under the Lease or otherwise the Landlord may at any time and without notice to the Tenant withdraw for its own use and benefit all or any part of the Deposited Sum as may be required to satisfy all or any proper loss which the Landlord may incur in or incidental to and consequent upon forfeiture of the Lease including without limiting the generality of the foregoing legal costs and expenses on a Solicitor and own client basis Counsel's fees and Bailiff's costs and Value Added Tax thereon in obtaining and enforcing judgement for forfeiture and an order for possession
5. Replenishment of Account
The Tenant hereby agrees and covenants with the Landlord that if the Landlord shall on any occasion find it necessary to resort to the Deposited Sum then the Tenant will within fourteen days of written demand pay into the Account a sum equal to the amount in respect of which the Landlord has resorted to the Deposited Sum to the intent that the Deposited Sum exclusive of Interest shall remain at not less than the sum specified in Clause 1 hereof [ie the sum of £2,056,250.00]
6. The Tenant hereby agrees that the Landlord need not have recourse to the Deposited Sum until it has exhausted all other remedies available to it against the Tenant but that the Landlord shall equally be entitled to have recourse to the Deposited Sum upon any breach of the Tenant's Obligations in accordance with the terms of this Deed….
9. Repayment
The Deposited Sum shall be repaid to the Tenant as soon as reasonably practicable after the earlier of the following dates namely:
9.1 the date of expiration or sooner determination of the term of years granted by the Lease;
9.2 the date on which the Tenant can demonstrate to the Landlord's reasonable satisfaction that the Tenant's net profits after deduction of tax for the three previous consecutive years have been equal to at least three times the basic annual rent then payable under the Lease
9.3 the date of the assignment of the Lease with the Landlord's prior written consent
PROVIDED that if on such date (but excluding the date specified in clause 9.3 hereof) there shall be a subsisting material breach of any of the Tenant's Obligations the Landlord shall not be obliged to release the Deposited Sum until fourteen days after all such breaches have been remedied to the Landlord's reasonable satisfaction
10. Forfeiture
10.1 If the Lease shall be forfeited the Deposited Sum shall continue to be available to the Landlord in the manner hereinbefore provided until it shall be exhausted or until there shall be no further liability of the Tenant to the Landlord...
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