Quirkco Investments Ltd v Aspray Transport Ltd
| Jurisdiction | England & Wales |
| Judge | H.H. Judge Keyser |
| Judgment Date | 23 November 2011 |
| Neutral Citation | [2011] EWHC 3060 (Ch) |
| Docket Number | Claim No. 1LS30318 |
| Court | Chancery Division |
| Date | 23 November 2011 |
[2011] EWHC 3060 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LEEDS DISTRICT REGISTRY
Leeds Combined Court Centre
Oxford Row
Leeds LS1 3BG
His Honour Judge Keyser Q.C.
Sitting as a Judge of the High Court
Claim No. 1LS30318
John Brennan (instructed by Gordons Solicitors LLP of Riverside West, Whitehall Road, Leeds, LS1 4AW) for the Claimant
David Stockill (instructed by Quality Solicitors Silks of 27 Birmingham Street, Oldbury, West Midlands, B69 4DY) for the Defendant
Hearing date: 24 th October 2011
H.H. Judge Keyser Q.C.:
Introduction
For some years, the defendant, Aspray Transport Limited, which carries on a haulage business, was tenant to the claimant, QuirkCo Investments Limited, of commercial premises known as Unit 3, Speedwell Road, Whitwood Lane, Castleford, West Yorkshire ("the Property"). The defendant asserts that it determined the lease by serving a notice pursuant to a break clause in the lease. But the claimant contends that the notice was ineffective because the defendant was in breach of its obligations under the lease and so was prevented by the terms of the lease from serving a valid notice under the break clause.
In these proceedings the claimant claims a declaration that the lease is continuing and a money judgment in respect of arrears of rent. The defendant denies the claim and brings a counterclaim for declarations that the lease was determined by the service of the notice under the break clause and in respect of the extent of its liability under the lease; it also seeks repayment of moneys said to have been overpaid in respect of rent.
By an application notice filed on 1 st September 2011 the claimant applies for summary judgment on its claim pursuant to CPR Part 24 and for an order giving summary judgment for the claimant on the counterclaim or striking out the counterclaim pursuant to CPR r. 3.4 (2) (a).
In support of its application the claimant has relied on two witness statements from its managing director, Mr Darrel Jeremy Quirk, and a witness statement from Mr Jeremy Stewart Webster, its insurance broker. In response to the application, the defendant has relied on a witness statement of Mr Roy Patrick Laight, its Chief Executive Officer and Chairman.
The Background
The lease was made on 3 rd January 2001. The defendant was the tenant named in the lease. The claimant purchased the reversion in 2003 and became the defendant's landlord under the lease.
The term created by the lease was for fifteen years expiring on 17 th December 2015, subject to the provisions of clause 6.11, which so far as material provided as follows:
6.11.1 The Lessee or the Lessor may determine this Lease on 18 December 2010 by serving on the other not less than 9 months prior written notice expiring on that day
6.11.2 This Lease shall only determine as a result of notice served by the Lessee under this sub-clause if at the time of expiring of such notice:
6.11.2.1 there are no arrears of any rents reserved or any other sums payable under this Lease, and
6.11.2.2 there is no other material outstanding breach of any Lessee's covenant; and
6.11.2.3 on or before the intended date of determination the Lessee gives vacant possession of the demised premises to the Landlord; and
6.11.2.4 that notice has been served in accordance with this sub-clause.
6.11.3 If any of the above condition is [scil. conditions in] 6.11.2 above are not satisfied at the date of the expiry of such notice the notice is deemed to be of no effect and this Lease shall continue as before except that the Lessor may in its absolute discretion waive compliance with all or any of the conditions set out in Clause 6.11.2 by giving notice to the Lessee at any time
6.11.4 If the provisions of Clause 6.11.2 are complied with then upon the expiry of the notice of termination this Lease shall determine but without prejudice to any right of action of either party in respect of any previous breach of the covenants in this Lease and without prejudice also the continuing operation of this Clause 6.11
In 2009 the defendant, having no further need of the Property, decided to determine the lease by service of a notice under clause 6.11. Accordingly it sent to the claimant a written Notice to Determine the Lease ("the Notice"), which was dated 8 th March 2010.
The claimant accepts that the terms of the Notice and the manner of its service complied with clause 6.11 of the Lease. However, it contends that the Notice was of no effect, because at the date of expiry of the Notice, namely 18 th December 2010, two of the conditions in clause 6.11.2 were not satisfied: first, it is said that the defendant was in arrear of rent, in particular of insurance rent; second, it is said that the defendant was in material breach of its repairing covenants under the lease. The claimant accepts that there are triable issues in respect of the alleged breach of the repairing covenants. But it contends that there is no answer to the contention that there were at the material time arrears of insurance rent; and on that basis it seeks summary judgment.
The Insurance Charge
In order that the nature of the issue before me can be understood, it is necessary to set out some further provisions of the lease. Clauses 2.2 and 2.3 made provision in respect of the rent due under the lease:
[YIELDING AND PAYING therefor…]
2.2 From and including 18 December 2000 the yearly rent of eighty-five thousand two hundred and twenty-two pounds (£85,222) (subject to the provisions for review hereinafter contained) and so in proportion for any period less than a year such yearly rent to be payable by four equal quarterly payments in advance on the usual quarter days in every year without any deduction whatsoever
2.3 Within 14 days of written demand therefor and by way of further additional yearly rent without any deduction such yearly sum or sums ("the Insurance Charge") (and so in proportion for any part of a year) as the Lessor may from time to time expend in insuring and keeping insured the demised premises in accordance with Clause 5.1
Clause 4.1.1 contained a covenant by the defendant to pay the yearly rent and the Insurance Charge on the days and in the manner mentioned in the lease.
Clause 5.1 of the lease contained the landlord's covenants in respect of insurance.
5.1.1 That the Lessor will at all times during the term … insure and keep insured with reputable insurers the demised premises … against loss or damage by the Insured Risks in such amount as shall from time to time represent the full rebuilding or reinstatement value of the demised premises with provision for inflation to cover the period of rebuilding or reinstatement … and will whenever reasonably required produce to the Lessee the policy or policies of such insurance or other sufficient evidence of the nature extent ant terms thereof and the receipt for or other evidence of the payment of the last premium for the same …
5.1.2 If at anytime it is not possible to insure against any of the Insured Risks then the Lessor shall so advise the Lessee
5.1.3 To use its reasonable endeavours to ensure that a note of the Lessee's interest is endorsed on the insurance policy effected hereunder and that the Insurer waives all rights of subrogation against the Lessee
The claimant arranged insurance cover for its commercial properties through insurance brokers and had for some years taken out a single policy of insurance with Zurich Insurance plc in respect of all those properties. The relevant renewal date for that policy was 30 th November 2010. Mr Webster's evidence is that the insurers calculated the premium attributable to each property on the basis of the activities of the tenants and that to that end the insurers insisted on being provided with details of the tenants and their trading activities and would regularly send out surveyors to update their risk information. The renewal premium for 30 th November 2010 was £21,886.08, of which the Property accounted for £3,609.72 (inclusive of VAT).
The evidence regarding the payment of the renewal premium and the demand for the Insurance Charge is to the following effect. On 9 th November 2010 the broker sent to the claimant the Schedule to the policy relating to the Property. On 23 rd November 2003 the claimant sent to the defendant an invoice for £3,609.72 in respect of "Insurance Premium for the period 1 st December 2010 to 30 th November 2011". The invoice was dated 1 st December 2010—which the claimant appears to have believed to be the renewal date—and said: "Please note payment is due on receipt of this invoice." Having received the invoice, the defendant wrote to the claimant on 25 th November 2010:
With reference to the above invoice regarding the insurance premium for Unit 3 Speedwell Road, I must remind you that we have exercised the lease break clause and thus will be vacating on 18 th December 2010.
Consequently, will you please issue a revised bill for the appropriate period of 18 days.
On 26 th November 2010 the claimant sent to the broker a cheque in respect of the entire sum due for the renewal premium under the policy. That cheque was never received and was subsequently stopped. On 29 th November 2010 the claimant wrote to the defendant as follows:
Further to your letter of 25 th November 2010 we would comment as follows.
Whilst the break notice has been served, there are pre-conditions to that break notice which are to be met for the break to be effective and therefore the premium that has properly fallen due has been properly invoiced.
We therefore look forward to receipt of your payment which his now due.
The renewal premium had not actually been paid to the insurer on 1 st December 2010....
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