John Smith & Company (Edinburgh) Ltd v Hill
| Jurisdiction | England & Wales |
| Judge | Mr Justice Briggs |
| Judgment Date | 11 May 2010 |
| Neutral Citation | [2010] EWHC 1016 (Ch) |
| Court | Chancery Division |
| Date | 11 May 2010 |
| Docket Number | Case No: HC09C03328 |
[2010] EWHC 1016 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Before: Mr Justice Briggs
Case No: HC09C03328
Mr Mark Wonnacott ( instructed by Davenport Lyons, 30 Old Burlington Street, London W1S 3NL) for the Claimant
Mr Jeremy Bamford (instructed by Hammonds, Rutland House, 148 Edmund Street, Birmingham B3 2JR) for the First and Second Defendants
Hearing date: 29 th April 2010
Mr Justice Briggs:
INTRODUCTION
There are before me two cross-applications for summary judgment by, respectively, the first two defendants and the claimant in proceedings which, as between them, constitute a claim in nuisance by a reversioner upon a lease, against the Administrators of the reversioner's own landlord. There is, as will appear, very little dispute as to primary fact, but both the proceedings and the cross-applications raise two issues of law, at least one of which is of some considerable interest and difficulty.
The first issue is whether there is, on rather unusual facts, an exception to the generally recognised and longstanding principle that a reversioner cannot sue upon a merely temporary nuisance until his reversion falls into possession. The second issue is whether administrators of an insolvent company incur personal liability for a nuisance committed by the company, in circumstances where the company's conduct is the result of their exercise of statutory powers to control the company's affairs.
THE FACTS
The third defendant Eldridge Pope & Co Ltd is the tenant in possession of premises on the ground floor and basement of a six storey building in Bristol known as St Stephen's House, Colston Avenue, Bristol BS1 4SP (“the Property) pursuant to a lease (“the Occupational Sublease”) dated 7 th February 1997 for a term of thirty years from 25 th December 1996 at an initial rent of £60,000 per annum for the first year, rising in annual steps to £85,000 in the fifth year. The use of the ground floor and basement contemplated by the Occupational Sublease was that of a public house, and until January 2007 the defendant traded from the Property as “Bar Excellence”, whereupon it gave up occupation, and has not returned. By then, the freeholder of the Property was Kenmore St Stephen's Ltd (“Kenmore”).
On 30 th April 2007 Kenmore granted a 999 lease of the first to fourth floors inclusive of the Property to Urbis St Stephen's House Residential Ltd (“Urbis Residential”) at a premium of £2.2 million and a peppercorn rent. At about the same time Urbis St Stephen's House Freehold Ltd (“Urbis Freehold”) acquired the freehold of the whole of the Property from Kenmore, and thereby became the immediate landlord of the third defendant. The two Urbis companies acquired their respective interests in the Property with a view to redevelopment of the first to fourth floors. For that purpose, scaffolding was erected around the whole of the Property in February 2008 by Ashton Scaffolding Services Ltd (“Ashton”) pursuant to a subcontract from the main development contractors SRC Property Build Ltd.
On 29 th February 2008 Urbis Freehold granted the claimant John Smith & Co (Edinburgh) Ltd a 999 concurrent lease of the basement and ground floor of the Property at a premium of £1.5 million and at a peppercorn rent, subject to the third defendant's rights under the Occupational Sublease. The claimant thereby replaced Urbis Freehold as the immediate landlord of the third defendant.
Both the concurrent lease and the Occupational Sublease contained provisions which, albeit differently worded, enabled the respective landlords thereunder to erect and maintain scaffolding around the Property for the purpose (inter alia) of redevelopment, with the proviso that the redevelopment and its associated scaffolding should respectively be completed and removed as quickly as reasonably possible, causing as little nuisance, inconvenience, annoyance or disturbance to the tenant as reasonably possible, without thereby committing a breach of the respective, standard form, qualified covenants for quiet enjoyment. Nothing turns on the differences of language used in those reservations of rights by the respective lessors, as counsel were, eventually, constrained to agree. It is therefore unnecessary for me to set them out in full.
The redevelopment of the upper part of the Property ran into difficulties later in 2008, with the consequence that development work ceased when only 80% complete in September, and the first and second defendants, Richard Hill and Jonathan Pope of KPMG LLP were appointed Administrators of both Urbis Freehold and Urbis Residential by the directors of those companies on 30 th October. The scaffolding was, at that date, still in place, but all development work at the Property had by then ceased.
The Administrators were faced with the decision whether to attempt to arrange for the completion of the development or whether to seek to sell the Urbis companies' interests in the Property as it stood. They decided, for reasons which do not matter for present purposes, to arrange for the minimal work to be done necessary to keep the partly developed upper floors wind and water-tight, but otherwise to seek a buyer for that part of the Property as it stood. Marketing began in December 2008, and the Urbis companies' interests in the Property were in due course sold on 10 th August 2009.
On the reasonable assumption that any purchaser of the upper floors of the Property would wish to complete its redevelopment, the Administrators took no steps to have the scaffolding surrounding the Property removed. On the contrary, and (I infer) faced with a threat by Ashton to remove the scaffolding, the Administrators made arrangements for payment of scaffolding rentals to be made to Ashton by or on behalf of the Urbis companies, funded by the secured creditors in the administration, payments commencing in May 200The consequence was that the scaffolding remained in place around the Property throughout the intermission in its redevelopment which began in September 2008 and ended at some time after the sale in August 2009.
Although not in occupation of the ground floor and basement, the third defendant began complaining about the continued presence of the scaffolding, alleging in particular that it interfered with safe access to and egress from those premises, and that it was substantially interfering with the third defendant's attempts to market the ground floor and basement, by way of an assignment of the Occupational Sublease. The third defendant's complaints were duly passed by the claimant up the tenurial chain to the Administrators.
Eventually, the third defendant sought to rely upon the breach of the claimant's covenant for quiet enjoyment constituted by the continued presence of the scaffolding after the cessation of development works, as a reason for refusing to pay its rent, leading to the commencement of the present proceedings by claim form issued against all three defendants on 16 th September 2009. As against the third defendant it was a claim for arrears of rent, to which the third defendant responded by a defence and counterclaim, seeking damages for breach of the claimant's covenant for quiet enjoyment (which it had inherited upon the grant of the concurrent lease) and claiming a set-off of those damages against liability for the rent. As against the Administrators as first and second defendants, the claim was for nuisance, in the form of an indemnity, by way of damages, for any sum which a court might decide that the third defendant was entitled to recover or withhold by way of set-off, together with costs, in respect of the period up to 10 th August 2009. Understandably, the claimant did not waste powder and shot by a claim against Urbis Freehold under the covenant for quiet enjoyment in the concurrent lease, due to its hopeless insolvency. Such a claim would during the administration have required the court's permission.
By application notice dated 4 th December 2009 the Administrators sought defendants' summary judgment against the claimant, upon the sole ground that the temporary interference (if any) caused by the continued presence of the scaffolding between September 2008 and August 2009 could not possibly qualify as the basis for a nuisance claim by the claimant as reversioner upon the Occupational Sublease. By their defence (but not by way of knockout blow justifying summary judgment) the Administrators contend in addition first that the continued presence of the scaffolding was not a nuisance even as against the third defendant, secondly that in any event it went no further than that which was permitted by the reservations permitting scaffolding in the concurrent lease, and thirdly that they incurred no liability as Administrators in connection with the retention of the scaffolding by the Urbis companies, even if those companies might have incurred a liability in nuisance.
Finally, the claimant made its own application for summary judgment on liability against the Administrators by application notice dated 22 nd December 2009. Its position is that, while it concurs with the Administrators in denying that the third defendant has anything to complain about, it seeks to pass on any liability to the Administrators by way of what Mr Wonnacott for the claimant described as an unanswerable claim for an indemnity, to the extent that the third defendant established any right of set-off against its otherwise admitted liability for rent under the Occupational Sublease.
THE ISSUES
There is a partial asymmetry between the respective positions of the claimant and the Administrators. The only thing about...
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