Lymington Marina Ltd v Macnamara and Others
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Sir Martin Nourse,Lord Justice Pill |
| Judgment Date | 02 March 2007 |
| Neutral Citation | [2007] EWCA Civ 151 |
| Docket Number | Case No: A3/2006/0992 |
| Court | Court of Appeal (Civil Division) |
| Date | 02 March 2007 |
[2007] EWCA Civ 151
Lord Justice Pill
Lady Justice Arden and
Sir Martin Nourse
Case No: A3/2006/0992
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
Patten J
HC03 C03838
Royal Courts of Justice
Strand, London, WC2A 2LL
Edward Bartley Jones QC (instructed by Messrs Pannone LLP) for the Appellant
Michael Norman (instructed by Clive Sutton Solicitors) for the Respondents
Hearing dates : 7/8 December 2006
Introduction
In 1969, Lymington Marina Limited (“LML”), the appellant to this appeal, developed land at Lymington forming part of the premises of the boatyard run by Berthon Boat Company Ltd (“Berthon”), its parent company, as a marina. To finance this development, it issued 52 debentures for £4,000 each and granted each debenture holder a 98 year licence to berth a yacht in the marina. One licence was issued to a Mr R. S. Armitage. On 1 January 1973, Mr Armitage transferred his licence to Air Commodore B.R. Macnamara, a keen yachtsman. In July 1999, Air Commodore Macnamara died, leaving three sons: I will refer to Air Commodore Macnamara's sons by their first names: Bingham, John and Rory. After a protracted dispute, the licence was assigned by the executor of Air Commodore Macnamara, with the approval of LML, to Bingham. In the course of this dispute, there was substantial correspondence between the executor, Mr Clive Sutton, a solicitor, and LML. I will need to refer to some of this correspondence below. In the course of the dispute, Mr Sutton issued proceedings in the Southampton County Court. These proceedings were compromised when the licence was assigned to Bingham.
Bingham, a s assignee from the executor of his late father of the licence, now wishes to grant sub licences, to his brothers John and Rory. This appeal concerns the powers of LML under the licence to withhold its approval to sub licences to John and Rory in the events which have happened. As part of its case, LML relies on certain passages in letters written by Mr Sutton during the dispute referred to in the preceding paragraph. In short, whereas Bingham had a yacht at the time of the correspondence which he proposed to berth in Lymington, he no longer has such a yacht and he now wishes to grant sub licences for short periods on a recurring basis to his two brothers. Sub licences of this kind have been referred to in argument as “rotational”.
The judge set out the facts in detail in his judgment. For the purposes of this judgment it is sufficient to refer to the salient events. On 25 March 2002, Bingham sought the approval of LML to a sub licence in favour of Rory. LML declined to give its approval on the footing that Bingham had not yet taken up residence. Bingham started proceedings challenging the refusal to give approval. The proceedings were defended on the basis of an argument that the sublicensee had to use the licensee's yacht. Bingham obtained summary judgment from the district judge, which was upheld by HHJ Thompson QC, on appeal on 2 January 2003. This court subsequently refused permission for a second appeal from the order of HHJ Thompson QC.
Bingham then applied to LML for approval of a sub licence to John for May and June 2003 and to Rory for July to September of that year. Approval was given. On the 15th September 2003, Mr Sutton applied for consent to sub licences in favour of John from 1 October 2003 to 31 May 2004 and in favour of Rory from 1 June 2004 to 30 September 2004. LML refused its approval.
The terms of the licence
The licence granted by LML is purely contractual and confers no interest in any tangible property. The material terms of the licence are as follows:
“T H I S L I C E N C E is made the 11 th day of March One thousand nine hundred and sixty nine B E T W E E N LYMINGTON MARINA LIMITED whose Registered Office is situate at The Shipyard Lymington Hampshire (hereinafter called “the Company” which expression where the context so admits shall include its successors in title to the property hereafter described) of the one part and [,as from 5 February 2002, Bingham as assignee] (hereinafter called “the Licensee” which expression where the context so admits shall include persons deriving title under the Licensee) of the other part.
1. IN consideration of the sum of ONE THOUSAND POUNDS paid by the Licensee to the Company the receipt whereof the Company hereby acknowledges the Company HEREBY GRANTS unto the Licensee for NINETY EIGHT YEARS from the First day of April One thousand nine hundred and sixty nine (a) the right to moor a yacht not exceeding Fifty five feet in length overall or Twenty feet in beam owned by the Licensee and nominated by him in writing to the Company not less than one month before exercising the rights hereby granted at such place within the Marina at Lymington Hampshire owned by the Company as the Company may from time to time indicate (b) the right to park not more than two private cars in such place or places as may from time to time be indicated by the Company adjacent to the Marina and (c) to use such lavatories showers and washing facilities as are to be provided adjacent to the Marina.
2. THE Licensee shall pay to the Company a yearly sum of FIFTY POUNDS per annum in advance on the First day of March in each year the first payment to be made on the First day of March One thousand nine hundred and sixty nine
3. The Licensee HEREBY AGREES AND UNDERTAKES with the Company:
(a) to pay the sum hereby made payable promptly on the day and in the manner aforesaid…
(k) not to assign transfer charge or otherwise alienate this Licence or the rights hereby granted or any of them and will not [sic] part with possession or occupation or use or grant any licence in respect of the said rights or any of them or any part thereof
PROVIDED ALWAYS that the Licensee may:
(i) assign this Licence as a whole (but not any of the rights hereby granted separately) to an assignee approved by the Company which approval may be granted or withheld at the Company's absolute discretion or
(ii) authorise a third party to exercise all the rights hereby granted as a whole but not any of the rights hereby granted separately for a period of not less than one month and not more than twelve months PROVIDED ALWAYS that such third party shall first be approved by the Company or
(iii) serve on the Company three months' notice in writing calling on the Company to accept a surrender of this Licence and on the expiry of such notice the Company shall in exchange for such surrender pay to the Licensee the market value of the licence at such date of surrender. The market value is to be decided in default of agreement between the parties by an independent expert to be appointed by the President for the time being of the Institute of Chartered Accountants in England and Wales acting as an expert and not as an arbitrator
(l) that the Licensee will within four weeks after the date of every assignment or sub-licence leave the assignment or instrument of devolution with the Company for the purpose of registration…“
I refer below to (a) proviso (ii) to clause 3(k) simply as “clause 3(k)(ii)”; (b) third parties authorised to exercise rights under clause 3(k)(ii) as “sub licensees”, and (c) a period of a sub licence within clause 3(k)(ii), that is not less than one month and not more than twelve months, as a “permitted period”.
According to LML, one of the original reasons for setting up the marina was to provide Berthon with a regular clientele and a source of income for its repairing business. LML fears that sub licensees would be casual users of berths in the marina and therefore would be much less likely to make use of the repair facilities than long-term users. LML also has a concern that the sub licensees may not fit into the ethos of the marina, and that this would discourage annual licence holders, who are attracted by the social atmosphere of the marina. LML does not suggest that John or Rory would not fit in with the ethos of the marina.
LML's position was that clause 3(k)(ii) of the licence agreement did not, on its true construction, permit the grant of successive sub licences and only permitted the grant of temporary and occasional sub licences. LML contended, firstly, that it had had an absolute discretion whether or not to approve a third party under clause 3(k)(ii). The only restriction was that it should act honestly and in good faith. Secondly, it contended that the licence holder could not exercise the power in clause 3(k)(ii) on a “revolving” basis so as to grant successive sub licences and thirdly, the licence had been assigned to Bingham on the basis of Bingham's representations that there would be no “sharing” of the licence and any sub licences would be temporary and ancillary to its own use of the mooring, and that the request for approval of the sub licences to Rory and John was in breach of those representations. There would appear to be an unspoken concern that the grant to John and Rory of sub licences for 2003 and 2004 would be repeated in future years so long as Bingham had no immediate use for the licence himself.
Judgment of Patten J
Patten J, in his judgment dated 4 April 2006 ( [2006] 2 All ER (Comm) 200), considered the circumstances in which LML had agreed to the assignment of the licence by the executor of Air Commodore Macnamara to Bingham. The judge rejected the argument that LML's consent to the assignment had been procured by misrepresentation on the part of Bingham, although this, in fact, was not in issue in this action.
The judge considered the interpretation of the licence in detail. He held that the right of the licensee to grant sub licences of his mooring rights was subject...
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