Leonora Investment Company Ltd v Mott Macdonald Ltd
| Jurisdiction | England & Wales |
| Judge | HIS HONOUR JUDGE RICHARD SEYMOUR Q.C. |
| Judgment Date | 07 February 2008 |
| Neutral Citation | [2008] EWHC 136 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ 07X00728 |
| Date | 07 February 2008 |
[2008] EWHC 136 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Richard Seymour Q.c.
(sitting As A Judge Of The High Court)
Case No: HQ 07X00728
David Holland (instructed by Speechly Bircham LLP) for the Claimant
Mark Warwick (instructed by asb law) for the Defendant
Hearing date: 24 January 2008
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.
Introduction
Until 17 January 2003 the claimant, Leonora Investment Co. Ltd. (“Leonora”), was the freehold owner of the building known as and situate at St. Anne House, 20 – 26 Wellesley Road, Croydon, Surrey (“the Building”).
The Building is a structure constructed in the mid – 1960s as an office block. It comprises a ground floor and twelve upper floors.
Leonora was formerly known as Laing Investment Co. Ltd. (“Laing”).
By a lease (“the Ground Floor Lease”) dated 7 July 2000 and made between Laing and the defendant, Mott Macdonald Ltd. (“MM”) Laing demised to MM the greater part of the ground floor of the Building, retaining some part of the ground floor as common parts. By three other leases (“the MM Leases”) also dated 7 July 2000 and made between Laing and MM Laing demised to MM the greater part of each of the first, second and third floors of the Building. A separate lease was entered into in respect of each of the floors let. So far as is presently material each of the MM Leases was in the same terms as the Ground Floor Lease, and it is convenient to treat the relevant provisions of the Ground Floor Lease as representative also of the provisions of the MM Leases. In this judgment I shall refer to the Ground Floor Lease and the MM Leases collectively as “the Leases”. The term created by each of the Leases was 10 years from 24 June 2000.
In this action Leonora claims:-
“the sum of £250,043.02 in respect of service charges plus VAT of £43,757.52 due from the Defendant as tenant to the Claimant as landlord in respect of the Defendant's occupation of the premises at Ground, First, Second and Third Floors, St Anne House, 20/26 Wellesley Road, Croydon, Surrey.”
together with interest on those sums.
The claims made by Leonora are resisted by MM on a number of grounds.
By an order dated 5 July 2007 Master Eyre directed that there be tried a preliminary issue in the following terms:-
“Whether
Having regard to the service-charge provisions in the four leases dated 4 [in fact 7] July 2000, made between the Claimant and the Defendant, relating to St Anne House, 20–26 Wellesley Road, Croydon, Surrey, the Defendant has any liability to the Claimant pursuant to the Claimant's invoice SUN102979 dated 15 January 2003 (demanding the total sum of £263,117.22)”.
The significance of the reference to the invoice numbered SUN102979 (“the Invoice”) is that, notwithstanding how the matter was put in paragraph 1 of the Particulars of Claim, from which I have quoted at paragraph 5 above, the first indication of a claim in respect of the matters alleged to justify the claims made in this action was in fact when Mr. Edward Wilson of P&O Properties Ltd. (“P&O”), a company associated with Leonora, wrote to Mr. Michael Selby of MM a letter dated 15 January 2003 in the following terms:-
“St Anne House, 20/26 Wellesley Road, Croydon
Common parts redecoration etc
I refer to past discussions and our telephone conversation on Monday regarding the above. In particular Mott MacDonald's contribution towards the cost of the works involved, and in accordance with the leases between our respective companies.
To this end I enclose our invoice number SUN102979 to which is attached a schedule detailing the work involved and, costs incurred by your Landlord. By way of information the schedule indicates the overall cost and that apportioned to Mott MacDonald. The apportionment of cost under items such as joinery I have indicated the repair cost only to Mott's, not the full costs renewing the items. I have done so on the basis that it was not economically viable to repair these items.
The landlord looks forward to receipt of your payment.”
The Invoice enclosed with that letter was printed on the stationery of P&O Property Group. It included:-
“Re: LEONORA INVESTMENT COMPANY LIMITED
ST ANNE HOUSE, 20/26 WELLESLEY ROAD, CROYDON.”
but did not otherwise identify on whose behalf it was rendered. It was addressed to MM at the Building, but identified as the tenant:-
“MOTT MACDONALD LIMITED
GROUND FLOOR, ST ANNE HOUSE,
WELLESLEY ROAD, CROYDON”
In a section entitled “Details of Amount Due for Payment” appeared the words, “contribution for redecoration etc as att schedule”. The amount claimed was £223,929.55, together with Value Added Tax of £39,187.67.
It has fallen to me to try the preliminary issue directed by Master Eyre to be tried.
The material terms of the Ground Floor Lease
For the purposes of the trial of the preliminary issue the material provisions of the Ground Floor Lease were, first, clause 2:-
“ DEMISE AND RENT RESERVATION
The Landlord HEREBY DEMISES unto the Tenant the Premises TOGETHER WITH the easements and rights specified in the SCHEDULE OF RIGHTS EXCEPT AND RESERVED unto the Landlord and others the easements and rights specified in the SCHEDULE OF RESERVATIONS TO HOLD the Premises unto the Tenant for the Contractual Term SUBJECT TO the provisions of the deeds and documents referred to in the SCHEDULE OF DEEDS YIELDING AND PAYING therefor to the Landlord during the Term yearly and proportionately for any fraction of a year the rents set out hereunder:
2.1 until the Review Date the Initial Rent
2.2 during the Review Period a rent equal to the Rent payable immediately before the Review Date or such revised Rent as shall be ascertained in accordance with THE RENT REVIEW SCHEDULE whichever shall be the greater
to be paid by equal quarterly payments in advance on the usual quarter days in every year the first payment (apportioned in respect of the period from the Rent Start Date up to and including the day immediately preceding the next following quarter day) to be paid on the Rent Start Date
2.3 the Additional Rents – to be payable from the Rent Start Date and to be paid to the Landlord within fourteen days of demand (except as otherwise provided)”.
By clause 1.1 of the Ground Floor Lease the expression “Additional Rents” was defined, at clause 1.1.2, as including “the Service Charge (as hereinafter defined)”. The material definition was to be found in clause 1.16:-
““Service Charge”
the sum payable by the Tenant in accordance with Part 2 of the SCHEDULE OF SERVICES hereto.”
The other elements included in the definition of the expression “Additional Rents” were:-
“1.1.1 the Insurance Rent (as hereinafter defined)
1.1.2 …
1.1.3 any interest chargeable under this lease
1.1.4 all expenses costs fees and other sums incurred under the provisions of the sub-clauses of this Lease headed Landlord's costs Landlord may repair on Tenant's default and Value added tax
1.1.5 any additional insurance premiums payable by the Tenant under the sub-clause headed Insurance”
For present purposes the relevant provisions of Part 2 of the Schedule of Services were:-
“1. The Service Charge to be paid by the Tenant shall be such fair proportion (which may if appropriate be the whole amount) of the actual or anticipated Service Costs for each Service Charge Year which shall be assessed by the Landlord or its Surveyor according to a reasonable and proper basis for apportionment applicable from time to time to the Premises.
2. The Landlord may make and send to the Tenant notice in writing of the Landlord's estimate of the anticipated Service Costs and the Service Charge applicable to the Premises for the coming Service Charge Year and the Tenant shall pay such estimate of the Service Charge by equal quarterly instalments in advance on the usual quarter days.
3. The Landlord will (unless prevented by causes beyond its control) prepare and send to the Tenant a statement of the actual Service Costs and Service Charge for each Service Charge Year as soon as practicable after the end of such year and in the event of the Service Charge for the Premises exceeding the aggregate amount paid by the Tenant for such year the Tenant will pay the balance due to the Landlord within fourteen days of demand and in the event of the aggregate amount being greater the excess will be credited by the Landlord by way of set-off against the next instalment of Service Charge due from the Tenant but so that any credit held for the Tenant shall be refunded to the Tenant on the expiry of the Term.”
The expression “Service Costs” was defined in clause 1.15 of the Ground Floor Lease by reference to the contents of Part 1 of the Schedule of Services, but the detail is not presently material.
In clause 1.17 of the Ground Floor Lease the expression “Service Charge Year” was defined as:-
“the period of twelve months up to the 24th of December in each year or such other period as the Landlord shall from time to time choose.”
In fact the Service Charge Year adopted was that up to 24 December in each year.
While not particularly relevant to any issue which I have to decide, the “Rent Start Date” was defined in the Lease Particulars of the Ground Floor Lease as 24 June 2000.
By clause 3.1.1 of the Ground Floor Lease MM covenanted:-
“To pay the reserved rents at the times and in the manner aforesaid without any deduction or set off.”
The Service Charge Year ending 24 December...
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Leonora Investment Company Ltd v Mott Macdonald Ltd
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