Rail Safety and Standards Board Ltd v British Telecommunications Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Etherton,Lord Justice Carnwath,Mr Justice Briggs |
| Judgment Date | 31 January 2012 |
| Neutral Citation | [2012] EWCA Civ 553 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2011/2148 |
| Date | 31 January 2012 |
[2012] EWCA Civ 553
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, CHANCERY DIVISION
MR ROBIN KNOWLES QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Carnwath
Lord Justice Etherton
and
Mr Justice Briggs
Case No: A3/2011/2148
Mr Nicholas Taggart (instructed by Winckworth Sherwood LLP) appeared on behalf of the Appellant.
Mr David Mitchell (instructed by Gateley LLP) appeared on behalf of the Respondent.
This is an appeal from the order dated 27 July 2011 of Mr Robin Knowles QC, sitting as a deputy judge in the Chancery Division, by which he ordered judgment for the claimant British Telecommunications Plc ("BT"). The Deputy Judge gave permission to appeal.
The claim is for damages for the failure of the defendant, Rail Safety and Standards Board Limited ("RSSB"), to take an underlease of the first floor and an underlease of the second floor of the building at 120 Holborn, London EC1 ("the Building"), pursuant to an agreement between BT and RSSB dated 4 September 2007 ("the Agreement"). RSSB intended to carry out substantial works to those premises.
The case turns on the proper interpretation of the provisions in the Agreement entitling either party to determine the Agreement with immediate effect if the "Superior Landlord's Consent" was not obtained by 5 October 2007. That is what RSSB purported to do, but the Deputy Judge held that it was not entitled to do.
The Agreement
BT is the tenant of the Building under a lease dated 3 August 1984 between the Prudential Insurance Company Limited and BT ("the Headlease"). The reversion on the Headlease became vested in Holborn Management Limited and 120 Holborn PropCo Limited (together "the Superior Landlord"). By the Agreement BT agreed to grant, and RSSB agreed to take, a lease of the first floor and a lease of the second floor of the Building.
In the Agreement BT was defined as "the Landlord", RSSB was defined as "the Tenant", the underleases to be granted by BT to RSSB were defined as "the Leases", and the works to be carried out by RSSB were defined as "Tenant's Works".
Clause 1.2 of the Agreement defined the following expressions as follows:
" Superior Landlord's Consent means the consent of the Superior Landlord to the grant of the Leases by way of the Licence to Underlet and to the Tenant's Works by way of the Licence for Alterations.
Licence for Alterations means the licence for alterations to be entered into between (1) the Superior Landlord (2) the Landlord and (3) the Tenant which shall be in the form in Schedule 4 subject to any amendments that the Superior Landlord may require to make as shall be approved by the Landlord and the Tenant such approval not to be unreasonably withheld or delayed.
Licence to Underlet means the licence to underlet to be entered into between (1) the Superior Landlord (2) the Landlord and (3) the Tenant which shall be in the form in Schedule 3"
Under the Agreement completion was to take place five working days after (1) the receipt by BT of the Superior Landlord's Consent, or (2) the date of the notice given in terms of clause 3.2 of the Agreement.
Clause 2 of the Agreement was as follows, so far as relevant:
" Superior Landlord's Consent
2.1 Subject to the Tenant complying with its obligations under clause 2.2, the Landlord shall use reasonable endeavours to obtain the Superior Landlord's Consent as soon as reasonably practicable after the date of this Agreement
2.2 The Tenant agrees:
(a) to provide all such reasonable assistance as may be necessary to facilitate the grant of the Superior Landlord's Consent;
(b) to join in the Licence to Underlet;
(c) that as soon as reasonably practicable after the date of this Agreement to provide such detailed drawings, plans and specifications detailing the Tenant's Works to the Landlord and the Superior Landlord as the Landlord and the Superior Landlord may require in order to properly consider the Tenant's application for consent to carry out such fit-out works;
(d) that as soon as the drawings, plans and specifications detailing the Tenant's Works have been agreed to provide as many copies of the same as the Superior Landlord and the Landlord properly require; and
(e) to join in the Licence for Alterations, relating to the Tenant's Works and to reimburse the Landlord's and the Superior Landlord's proper and reasonable costs relating to the grant thereof."
Clause 3 of the Agreement contained provisions applicable if the Superior Landlord's Consent could not be obtained by 5 October 2007. It provided as follows:
" Determination: Non Fulfilment
3.1 Subject to the terms of clause 3.2, if Superior Landlord's Consent has not been obtained by 5 October 2007 then either party may at any time thereafter serve notice in writing to the other to determine this Agreement with immediate effect but without prejudice to any right of action either party may have against the other for any antecedent breach of the obligations contained in this Agreement Provided That any notice served pursuant to this clause 3 shall be void and of no effect if the Superior Landlord's Consent shall have been granted prior to the date of service of the notice and Provided That the Tenant's obligations in clause 2.2(e) shall not determine upon determination of this Agreement under this clause.
3.2 If the Superior Landlord's Consent has not been obtained by 5 October 2007 but the Landlord has received the Superior Landlord's consent to the grant of the Leases by way of the Licence to Underlet the Tenant may at any time up until either party has served notice to determine this Agreement in terms of clause 3.1 notify the Landlord in writing that it wishes to complete the Leases without the benefit of the Licence for Alterations and the Completion Date shall be the date five working days after the date of such notice."
The proceedings
On 13 September 2007 draft Licences to Underlet signed on behalf of BT were sent to RSSB's solicitors. They were signed on behalf of RSSB and returned to BT's solicitors on 28 September 2007. On 7 November 2007 the Superior Landlord's solicitor stated by email that she was holding the executed Licence to Underlet. The draft Licence for Alterations was signed by BT on about 12 November 2007. On 16 November 2007 the Superior Landlord's solicitor sent an email stating as follows:
"I am holding an executed licence for alterations (as well as the licence to underlet which is also on my files signed by my client). I will therefore be in a position to complete these licences as soon as I have received the various fees from you in respect of the same."
On 19 November 2007 BT's solicitors asked RSSB's solicitor for the sums necessary to pay the Superior Landlord's costs. On 20 November 2007 RSSB served a notice of termination pursuant to clause 3.1 of the Agreement.
BT refused to accept the validity of that notice of termination because it contends that the "Superior Landlord's Consent" had already been granted. It served a Notice to Complete on 19 December 2007. RSSB did not complete on the grounds that it had already lawfully terminated the Agreement. BT purported to rescind the Agreement on 11 January 2008.
BT commenced the present proceedings on 9 August 2010 for damages in excess of £1.5 million.
The Deputy Judge dealt with the issue of liability only. He summarised (in paragraph [8]) the argument of Mr David Mitchell, counsel for BT, as being that by "Superior Landlord's Consent" the parties did not mean completion of Licences to Underlet and for Alterations; the unilateral act of consent in principle from the Superior Landlord was sufficient; entry into the Licences as tripartite agreements would follow after consent in principle but was not the requirement.
The Deputy Judge set out in his careful judgment (at paragraph [10]) a number of principles of interpretation which he derived from Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896; Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 79; Multi-Link Leisure Development Ltd v North Lanarkshire Council [2010] UKSC 47; Deutsche Genossenschaftsbank v Burnhope [1996] 1 Lloyd's Rep 113; and Ravennavi SpA v New Century Shipbuilding Co Ltd [2007] EWCA Civ 58, [2007] 2 Lloyd's Rep 24. He also referred (in paragraph [11]) to Mount Eden Land Ltd v Prudential Insurance Company Ltd [1997] P&CR 377, Aubergine Enterprises Ltd v Lakewood International Ltd [2002] EWCA Civ 177; and The Old Monk Co plc v Puzzle Pub Co Ltd [2004] EWHC 3457 (Ch). Having done so, the Deputy Judge agreed with BT and concluded (in paragraph [12]):
"…the term 'Superior Landlord's Consent' [in the Agreement] refers to the consent of [the Superior Landlord] and not to the completion of the Licence to Underlet and the Licence for Alterations."
The Deputy Judge said in paragraph [13] of his...
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