Mount Eden Land Ltd v Folia Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Peter Smith |
| Judgment Date | 22 July 2003 |
| Neutral Citation | [2003] EWHC 1815 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC02C02414 |
| Date | 22 July 2003 |
[2003] EWHC 1815 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Peter Smtth
Case No: HC02C02414
Mr David Holland (instructed by Stephenson Harwood) for the Claimant
Mr Edward Denehan (instructed by Freeman Box) for the First Defendant
Mr David Bridgman (instructed by Druces & Attlee) for the Second Defendant
Hearing dates: 1st, 2nd, 3rd and 4th July 2003
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
Approved Judgment
INTRODUCTION
In this action the Claimant's ("Mount Eden") claim is for injunctive and declaratory relief in relation to the retail shop at 160, Oxford Street, London W1 ("the Premises"). Mount Eden is the freehold owner. The Premises were demised to the First Defendant ("Folia") pursuant to a Lease ("the Lease") dated 3rd August 2000. The Lease expires on 2nd August 2006.
In June 2002 Folia applied for consent to underlet the Premises to the Second Defendant ("Prohibition"). On 15th July 2002 Mount Eden refused such consent.
Although Prohibition appeared at the commencement of the trial it is content to be bound by the result (subject to any order as to costs) and after initial opening it took no further part in the hearing.
Mount Eden claims that any subletting of the Premises by Folia to Prohibition will be a breach of the terms of the Lease, a declaration that it has lawfully and reasonably refused to consent to the proposed subletting to Prohibition and an order that Folia be restrained from so letting the Premises to Prohibition, and an order that Folia terminates Prohibition's occupation of the Premises. That latter prayer for relief is not relevant at the moment because the evidence is that Prohibition vacated the Premises earlier this year.
Folia counterclaims for a declaration that Mount Eden is in breach of its statutory duty under Section 1 of Landlord and Tenant Act 1988 ("L and T 88"), and seeks an order that Mount Eden forthwith gives its consent to the proposed subletting by it to Prohibition. Alternatively it is seeking a declaration that it might lawfully sublet the Premises to Prohibition without the written or other consent of Mount Eden. It also seeks a declaration that the activity described in paragraph 32 of the Defence (in respect of labels stuck on the shop front) is not a breach of the Lease. Finally, it claims damages for breach of statutory duty and interest. Mr Denehan who appears for Folia accepts that if the question of damages arises, that should be the subject matter of an enquiry. That itself will be subject to a question as to whether or not Folia can compel Prohibition to complete the underlease in the event that it is successful in the Counterclaim. Mount Eden contended that the damages issue (if any) should be determined now. I indicated when I. reserved Judgment that I would deal with the question of damages when the Judgment was handed down and hear submissions then.
TERMS OF LEASE
The Lease is for a term commencing on the 2nd August 2000 and expiring on the 2nd August 2006. The rent payable for the first year was £200,000.00 (Two Hundred Thousand Pounds) rising to £215,000.00 (Two Hundred and Fifteen Thousand Pounds) per year from 3rd August 2001 to 2nd August 2005 and with the rent payable in the final year of the term to be subject to review in accordance with the sixth schedule to the Lease. A rent-free period was granted of a little over three months, until 9th November 2000.
Under clause 1 6 of the Lease an obligation not to do anything is deemed to include a covenant not to permit or suffer the doing of such act or thing. That might be of significance in relation to one of Mr Holland's submissions in relation to the keep open covenant to which I will make reference further in this Judgment.
Clause 4.17 is an alienation clause. Under clause 4.17 it is provided that:-
[Folia covenanted not to]
"(a) charge mortgage assign underlet part with or share possession or occupation of the Demised Premises as a whole except as regards an assignment or underletting where the conditions of clauses 4.17.2 4.17.3 4.17.4 4.17.5 4.17.6 4.17.7and 4.17.8 have been fulfilled…".
Under clause 4.17.3 it is provided as follows:-
"That neither the Tenant nor any person deriving title under the Tenant … will … assign or underlet the Demised Premises as a whole except to a person who shall previously to any such assignment or underlease enter into a direct covenant with the Landlord to observe and perform the covenants by the Tenant and the conditions herein contained (but so that in the case of any such underletting the direct covenant with the Landlord shall be limited to the duration of such undertenant's tenancy and shall not include the covenant to pay the rents reserved by this Lease) Provided Always that every underlease of the whole of the Demised Premises shall include provisions (mutates mutandis) in similar terms to those of this sub-clause and so that the prohibitions contained in clauses 4.17.1 and 4.17.8 of this sub-clause shall be absolute and shall include an agreement excluding the underlease from the provisions of Sections 24–28 (inclusive) of the Landlord and Tenant Act 1954."
Clause 4.17.4 provides:-
"That neither the Tenant nor any person deriving title under the Tenant (including any undertenant whether immediate or not) will (but without prejudice to the foregoing) underlet the Demised Premises at a rent or other annual sum less than the full market rent thereof for the time being obtainable (without taking a fine or premium or other valuable consideration) the amount of each such rent or other annual sum to be first approved in writing by the Landlord or the Landlord's Surveyor (such approval not to be unreasonably withheld)."
Under clause 4.17.7 it is provided that:-
"Without prejudice to or in any way derogating from the foregoing covenants in this sub-clause contained no assignment underletting of the whole of the Demised Premises whether by the Tenant or any person deriving title under the Tenant (including any undertenant whether immediate or not) shall be made without the previous consent in writing of the Landlord".
I should observe that in the case of an assignment, subject to consent not to be unreasonably withheld (4.17.2.1), Mount Eden is entitled (for the purposes of section 19(1A) of the Landlord and Tenant Act 1927 ("L & T 27") to withhold its consent in any other circumstances set out in 4.17.1.3 and to impose all and any of the matters set out in clause 4.17.1.4. The actual sub clauses are 4.17.2.3 and 4.17.2.4, but nobody has suggested that that typographical error is significant. In the case of the latter sub clause, the conditions relate to an authorised guarantee agreement under section 16 of the Landlord and Tenant (Covenants) Act 1995 ("L & TC 95"), the payment of rent arrears and the execution to the Landlord and delivery prior to the assignment of a rent deposit deed in such sum as the Landlord may reasonably determine or in such form as the Landlord may reasonably require together with payment by way of cleared funds and the sums specified in the rent deposit deed.
None of those provisions is applicable to an underlease. The Lease is therefore covered by the provisions of L & TC 95 and subject to the conditions referred to in that sub clause. Folia would be released from its covenants contained in the Lease upon any assignment. [I should say also, that at the time when negotiations were ensuing in relation to a proposed assignment of the Lease to Prohibition, it was not suggested by Mount Eden that those matters would be required except the rent deposit, which Prohibition refused to give.]
There are other covenants that feature in the litigation. An obligation under 4.15.4(c) to keep the shop portion of the Premises open for retail trade during the usual hours of business in the locality. Under 4.15.4(d) the Tenant is obligated to keep the windows of the shop portion of the Premises dressed and to keep the windows and facia sign illuminated in a suitable manner and in keeping with the good class parade of shops and under clause 4.19.1 it covenanted not to place, display, fix or exhibit on or upon the outside of the Premises or the building or in or upon the windows thereof any aerial, signs, signboard, advertisement, hoarding, facia, placard, bill, notice, poster or other notification whatsoever (whether illuminated or not) with a proviso that it could display its name in a style as approved by Mount Eden.
Under clause 4.26 it was provided that in the event of a breach or non-observance and then any of the covenants contained in the Lease by any underlessee, that the Tenant would forthwith upon discovering the same take and institute at its own expense all necessary steps and proceedings to remedy such breach, non-performance or non-observance.
Mount Eden has not repaid the deposit. It has asserted that Folia is in breach of the Lease, which entitles it to retain the deposit, but it has not suggested that it has suffered loss by any of the alleged breaches. None of this is for consideration before me; the issue before me relates solely as to whether or not licence to underlet was validly refused by Mount Eden. It is however, indicative of Mount Eden's stance in my view, which at all times has been to improve its rent deposit beyond the expiry of the period covered by the rent deposit deed.
UNDER LEASE
The purpose of the Lease was to provide a retail outlet for products...
To continue reading
Request your trial
-
Design Progression Ltd v Thurloe Properties Ltd
...here nor there, see for example Pill L.J. at paragraph 80 in Go West. 17. These authorities were considered by me in the case of Mount Eden Ltd .v (1) Folia Ltd and (2) Prohibition London Ltd. [2003] EWHC 1815, a judgment to which I will refer later in this judgment on the aspect of damages......
-
Design Progression Ltd v Thurloe Properties Ltd
...damages for breach of statutory duty and I refer to the case as analysed by me in my decision of Mount Eden Land Ltd v Folia Ltd & Or [2003] EWHC 1815 Ch. 6 Whether or not it is appropriate to grant an award of exemplary damages will depend on the claimant establishing the necessary finding......