London & Regional Investments Ltd v (1) TBI Plc (2) BELFAST International Airport Ltd

JurisdictionEngland & Wales
JudgeLord Justice Mummery,Mr Justice Douglas Brown,Lord Justice Dyson
Judgment Date22 March 2002
Neutral Citation[2002] EWCA Civ 355
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A3/2001/0720
Date22 March 2002

[2002] EWCA Civ 355

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM MR PETER SMITH QC

SITTING AS A DEPUTY JUDGE OF THE

CHANCERY DIVISION

Royal Courts of Justice

Strand,

London, WC2A 2LL

Before

Lord Justice Mummery

Lord Justice Dyson and

Mr Justice Douglas Brown

Case No: A3/2001/0720

Between
London & Regional Investments Limited
Appellant
and
(1) TBI Plc
(2) Belfast International Airport Limited
Respondent

Mr Mark Howard QC & Mr Mark Warwick (instructed by McDermott Will & Emery) for the Appellant

Mr Michael Briggs QC (instructed by Norton Rose) for the Respondent

Lord Justice Mummery
1

This is an appeal from an order made by Mr Peter Smith QC, sitting as a Deputy Judge of the Chancery Division, on 9 March 2001. He dismissed the claims of London & Regional Investments Ltd (L&R). He also gave summary judgment for the defendants, TBI plc (TBI) and Belfast International Airport Ltd (BIA), on their counterclaim. The orders were made on the application of TBI and BIA pursuant to CPR Part 3.4(2)(a) and Part 24.2. The order also contained a consequential declaration and ancillary relief. Permission to appeal was refused by the Deputy Judge and by the single Lord Justice, but was granted on a renewed oral application in open court on 22 June 2001.

Summary Judgment

2

The parties agree that the correct approach to an application for summary judgment under the Civil Procedure Rules is stated by Lord Hope in Three Rivers District Council v Bank of England (No3) [2001] 2 All ER 513 at 541f to 543a:

"94… I think that the question is whether the claim has no real prospect of succeeding at trial and it has to be answered having regard to the overriding objective of dealing with the case justly.

95… The method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well-recognised exceptions. For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf MR said in Swain's case [2001] 1 All ER 91 at 95, that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all."

3

Mr Mark Howard QC, who appeared for L&R, also cited the following passage from Lord Hutton's speech at 562g:

"143…But at this stage in the proceedings a court is not concerned to try to assess which side will probably succeed if there is a trial: the question is whether there is material which shows that there are issues which should be investigated at a trial…."

The Facts in Outline

4

Since its incorporation in December 1994 L&R has carried on the business of property investment and development.

5

TBI, a quoted company, carried on a substantial business embracing both property investment and development and the ownership and management of airports. By September 1998, however, TBI had decided to focus its activities on its airport interests and to dispose of most of its property interests. The negotiations for the sale of TBI's property portfolio to L&R began at a chance meeting in September 1998 at Palma Airport in Majorca between the Managing Director of L&R, Mr Ian Livingstone, and the Chief Executive of TBI, Mr Keith Brooks.

6

The principal negotiations were concluded on 13 May 1999 when a written agreement (the Sale Agreement) was made between TBI and L&R for the sale and purchase of the issued share capital of TBI Investments Ltd and other companies holding properties in TBI's property portfolio. This method of acquisition achieved a saving of stamp duty. A total purchase price of £190m was to be paid in accordance with the detailed provisions of the Sale Agreement. The payment of £20m was to be deferred and satisfied by the issue of Loan Notes. The balance was to be paid in cash.

7

The Sale Agreement also provided:

"8.7 The Vendor and the Purchaser shall use reasonable endeavours to agree the terms of a joint venture regarding Cardiff and Belfast Airports having regard to the principles set out in the note in the agreed form, each party recognising that the Vendor's Agreement to the final terms of the joint venture will be subject to governmental and regulatory approvals, share holders' consent, if relevant, and to operational constraints."

"13.1This Agreement….sets out the entire agreement and understanding between the parties in connection with the Target Group and the sale and purchase and other matters described in it."

8

The "note in the agreed form" mentioned in clause 8.7 was one of a number of "Agreed form documents" listed in the "Contents" part of the Sale Agreement. The Sale Agreement, which was completed on 21 June 1999, did not dispose of any interests in land at either Cardiff or Belfast Airports: BIA, a wholly owned subsidiary of TBI, held about 188 acres of development land adjoining Belfast Airport; and TBI was entitled to an option to purchase development land adjacent to Cardiff Airport.

9

A copy of "the note in the agreed form" is appended to this judgment. A manuscript document concerning "joint venture terms for Remus side deal" was sent to Mr Richard Livingstone, the Managing Director's brother, by L&R's solicitors, Lawrence Graham, for his comments on 2 May 1999. It was faxed back to Lawrence Graham, who faxed a typed 1 page document "Heads of Terms for the proposed Joint Venture" marked "subject to contract" to TBI's solicitors, Norton Rose, on 10 May 1999. Copies were also faxed to Mr Keith Brooks and to Mr Richard Livingstone. As can be seen from the re-typed amended agreed note appended to this judgment, it is headed

"Principles for Joint Venture

(referred to in clause 8.7)

SUBJECT TO CONTRACT"

10

Clause 1 of the note, omitting the deletions, stated

"1 … The surplus land at the Airport will be … transferred at cost to…a joint venture company ("Newco") for deferred consideration. The consideration will be paid in tranches as parts are developed and sold (or if development retained) by reference to value(s) of developed parts."

11

On 8 June 1999 Lawrence Graham prepared a draft Joint Venture Agreement to reflect the heads of terms attached to the Sale Agreement and sent it to Norton Rose to consider, requesting finalisation prior to completion on 21 June. Nothing was agreed or signed. Mr Brooks was away on business in Australia. Lawrence Graham were informed by Norton Rose on 10 June that it was unrealistic to plan on exchanging that agreement before completion on the 21 st and that agreement of the terms of the joint venture was a post-completion matter. After the completion of the Sale Agreement on 21 June L&R took on TBI's property manager, Mr Geoffrey Springer, and the TBI property team. There was further correspondence between the solicitors about the Joint Venture Agreement, but no final agreement was ever reached. On 1 October 1999 Norton Rose wrote to Lawrence Graham about

"the proposals to enter into a joint venture arrangement relating to the commercial development of land at Cardiff and Belfast Airports."

12

The letter explained that, in the light of a report commissioned by TBI's internal property committee, it had been decided not to pursue the joint venture with L&R. The letter concluded

"In the light of this very substantial change of TBI's development plans the Board has concluded that it is not in TBI shareholders' interests to proceed with the proposed joint venture and that they would not be able to recommend such a venture to shareholders in general meeting. Consequently, TBI thinks it inappropriate to continue discussions relating to a joint venture. TBI recognises that this will be a disappointment to London & Regional but against the background of the advice received the Board feels it must accept this advice in order to act in the best interests of TBI and its shareholders."

13

Lawrence Graham's response on 15 December 1999 was that there was a breach of clause 8.7 of the Sale Agreement.

The Proceedings

14

On 9 August 2000 L&R issued proceedings against TBI and BIA. In the Particulars of Claim dated 23 August 2000, as amended, L&R claimed declarations that (a) BIA holds the freehold land adjacent to Belfast International Airport (the Belfast Land) on trust for L&R and BIA in equal shares and (b) TBI holds its option in respect of land in the vicinity of Cardiff International Airport (the Cardiff Land) on trust for L&R and TBI in equal shares. An order is sought for the transfer of one half of the respective interests in the Belfast Land and Cardiff Land to L&R. There are other claims for misrepresentation of intentions regarding the making of a joint venture agreement with L&R, breach of the trust...

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