Pullman Foods Ltd v The Welsh Ministers
|England & Wales
|23 September 2020
| EWHC 2521 (TCC)
|Queen's Bench Division (Technology and Construction Court)
|23 September 2020
|Case No: F50CF002
 EWHC 2521 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Cardiff Civil Justice Centre
2 Park Street, Cardiff, CF10 1ET
HIS HONOUR JUDGE Keyser Q.C.
sitting as a Judge of the High Court
Case No: F50CF002
James Hanham (instructed by Bryan Cave Leighton Paisner LLP) for the Claimant and the Third Party
Emyr Jones (instructed by Hugh James) for the Defendant
Hearing dates: 17, 20, 21, 22, 27, 29 July 2020
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.
HIS HONOUR JUDGE Keyser Q.C.
JUDGE Keyser QC:
For some years the claimant, Pullman Foods Limited (“Pullman”), was the lessee of a parcel of land on the south side of Langdon Road, Swansea Dock (“the Site”). Latterly the reversion of the lease was held by the defendant, the Welsh Ministers (for convenience, “the Welsh Government”). In 2013 the Welsh Government served on Pullman a notice under section 25 of the Landlord and Tenant Act 1954 (“the 1954 Act”) to terminate the lease. The notice stated that the Welsh Government opposed the grant of a new tenancy. Pullman did not seek a new tenancy and, after an agreed extension of time, the lease ended and Pullman vacated the Site on 6 February 2015.
On 6 February 2019, Pullman commenced these proceedings in the County Court at Swansea, claiming £42,500 as compensation for the termination of the tenancy, pursuant to section 37 of the 1954 Act. The Welsh Government does not dispute Pullman's entitlement to statutory compensation. The proceedings now solely concern the counterclaim brought by the Welsh Government against Pullman and its parent company, the Third Party, BFS Group Limited (“BFS”).
In brief summary, the Welsh Government's case is as follows. Pullman's covenants under the lease obliged it to remove the buildings that had been erected on the Site and to reinstate it at the end of the lease. Pullman failed to comply with that obligation, because it left on the Site remains of the buildings, which contained asbestos-containing materials (“ACMs”). The Welsh Government then granted two successive licences to BFS to enable it to go onto the Site and remove the remains of the buildings and the ACMs. However, some of the ACMs were not removed and ended up being spread widely over the Site, with the result that the Site was contaminated with asbestos and required expensive remediation works. The Welsh Government claims against BFS an indemnity for the cost of the remediation works pursuant to a provision of the licences; in the alternative, it claims damages: against Pullman for breach of its lessee's covenants, and against BFS for breach of its obligations under the licences.
The rest of this judgment will be structured as follows. First, I shall set out the facts; these are most reliably taken from the documents, to which I shall refer at some length. Second, I shall summarise in rather more detail the issues arising on the Welsh Government's case. Third, I shall discuss the issues.
The trial was held over a period of six days by means of Skype for Business. I am grateful to Mr James Hanham and Mr Emyr Jones, counsel respectively for Pullman and BFS and for the Welsh Government, for their assistance in the conduct of the hearing and for their helpful written and oral submissions.
Background and the Lease
The Site is located immediately to the north-east of the Prince of Wales Dock in Swansea, a little over a mile to the east of Swansea city centre, and extends over 4,240m 2. To the north of the Site is the western part of Langdon Road. To the west is a residential housing development; an access way lies between the Site and the housing.
By a lease (“the Lease”) dated 8 November 1972, British Transport Docks Board demised the Site to Abertawe Fresh and Frozen Foods Limited for a term of 42 years from 29 September 1972. Clause 2 of the Lease contained lessee's covenants as follows:
“(4) To obtain all necessary consents and approvals and to commence and within Twelve months from the date of these presents to complete upon the demised premises the following works namely:
(i) the first stage of a cold storage and distribution depot at an estimated value of Forty-five thousand pounds
(ii) the erection of fences on the Northern Eastern and Southern boundaries of the demised premises
(iii) an adequate septic tank for the disposal of waste effluent from the demised premises
the whole of such works to be in accordance with plans drawings and specifications to be previously submitted to and approved by the Board and to be executed to the satisfaction of the Docks Engineer of the Board's Swansea Docks and to the satisfaction of any Local or Public Authority having jurisdiction in the matter.”
“(10) At the expiration or sooner determination of the said term quietly and peaceably to deliver up the demised premises leaving the same in good and substantial repair and condition to the satisfaction of the Board having first (if required by the Board to do so) removed any buildings or works and having made good to the satisfaction of the Board all damage occasioned to the demised premises by or in such removal.”
The expression “the Board” was stated “where the context so admits [to] include the person for the time being entitled to the reversion immediately expectant on the determination of the term hereby created”.
Pursuant to the covenant in clause 2(4) of the Lease, Abertawe Fresh and Frozen Foods Limited erected buildings on the Site in the early 1970s. Two interconnecting cold-store warehouses occupied most of the south-west quarter of the Site. A separate single-storey office building extended across the central part of the northern end of the Site. The remaining area, extending over perhaps 60% of the Site, comprised a yard and hardstanding for vehicles.
In due course, the Lease was assigned to Pullman. Upon the privatisation of the British Transport Docks Board, the freehold reversion vested in Associated British Ports, from whom it was purchased later by the Welsh Development Agency. The freehold title was subsequently registered in the name of the National Assembly for Wales. By virtue of paragraph 39(1) of Schedule 11 to the Government of Wales Act 2006, by 2013 that title had been transferred to and vested in the Welsh Ministers.
The purchase of the Site by the Welsh Development Agency was with a view to its inclusion in what became known as the Swansea SA1 Waterfront Redevelopment Project (“the SA1 Development”), which comprises a mixed development including modern housing, student accommodation, hotels and restaurants. The Welsh Government identified the Site as the major part of Plot E6 within the SA1 Development; Plot E6 extended a little beyond the boundaries of the Site. The eastern part of the Site was to be acquired by the University of Wales Trinity Saint David as part of its Swansea City Centre campus. The western part of the Site was to comprise public open space. Across the central part of the Site, in a roughly north-south orientation, was to be a new link road from Langdon Road to Marina Road. The construction of the link road was to be carried out under what became known as Highways Finishing Contract 6.
The person at the Welsh Government with day-to-day management responsibility for the SA1 Development was Mr Peter Kaminaris, a land surveyor. He reported to Mr Paul Williams, his line manager, and high-level decisions were taken by a Property Leadership Team. The Welsh Government's Project Managers for the SA1 Development were Hyder Consulting, which by 2015 had been acquired by Arcadis NV and later that year became known as Arcadis Consulting. Mr Len Burgess, a senior engineer at Hyder Consulting, had worked almost continuously at the SA1 Development for several years, though he had no involvement with the Site until February 2015.
Under cover of a letter dated 31 October 2013, the Welsh Government served on Pullman a notice pursuant to section 25 of the 1954 Act, terminating the Lease on 28 September 2014 and opposing the grant of a new tenancy on the grounds that it intended to redevelop the Site. The letter said:
“Please also note that the Welsh Ministers (as your Landlord) will require the removal of any buildings on the Property by the end of the term and all damage to be made good in accordance with clause 2(10) of the Lease.”
Pullman and the Welsh Government subsequently agreed extensions pursuant to section 29B of the 1954 Act, the effect of which was that the Lease would not expire until 6 February 2015.
In December 2014 Wakemans Limited (“Wakemans”), the property consultants retained by Pullman/BFS, produced an Asbestos Demolition Survey Report in respect of the Site (“the Wakemans Report”). The Wakemans Report identified only two sources of notifiable (brown or blue) asbestos on site: insulating board in a room in one of the cold-stores, and insulation in part of the office block. The presence of this asbestos would have to be notified to the Health and Safety Executive (“HSE”), and it would have to be removed by specialist removal contractors licensed in that regard by the HSE. Otherwise, the asbestos on site was Chrysotile (white asbestos), which was non-notifiable and could be removed by the demolition contractor's own personnel, provided they were sufficiently...
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