Ridgewood Properties Group Ltd and Others v Valero Energy Ltd (Pannone & Partners (A Firm), Part 20 defendant)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Proudman: |
| Judgment Date | 30 January 2013 |
| Neutral Citation | [2013] EWHC 98 (Ch) |
| Docket Number | Case No: HC 11 C01652 |
| Court | Chancery Division |
| Date | 30 January 2013 |
[2013] EWHC 98 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Proudman
Case No: HC 11 C01652
Christopher Pymont QC and Adam Rosenthal (instructed by Mishcon de Reya) for the Claimants
Guy Fetherstonhaugh QC and Graeme Robertson (instructed by Herbert Smith Freehills LLP) for the Defendant
James Ayliffe QC (instructed by Clyde & Co LLP) for the Part 20 Defendant
Hearing dates: 10/11/12 and 15 October 2012
Approved Judgment
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.
The issue
This is the trial of a preliminary issue as to liability only in an action (or more accurately two consolidated actions—the issue is similar in both) for damages for breach of ten different agreements known as "the airspace agreements", all of which were entered into (in three phases, the phase I and II agreements being subject to supplemental agreements which (among other things) extended the termination date) between 23 March 2001 and 30 July 2004 and all of which are contracts and not deeds.
The Phase I agreements comprised an agreement to grant a building lease but completion of the building lease was conditional upon certain matters relating to the grant of satisfactory planning permission, a defined term. On completion of the development, the freehold was to be transferred with a leaseback of the forecourt and shop. The Phase II and III agreements were in the form of options to take a building lease, again subject to conditions. The Phase I and Phase II agreements were all subject to supplemental agreements.
All of the airspace agreements were entered into between the first claimant ("Ridgewood"), and the defendant (then known as Texaco Limited and for present purposes called "Texaco") but the benefit of five of them has, as a result of a joint venture agreement, been assigned by Ridgewood to the second to sixth claimants.
The claimants were represented at this hearing by Mr Pymont QC leading Mr Rosenthal and Texaco was represented by Mr Fetherstonhaugh QC leading Mr Robertson. The only live witness was Mr Norman Lynch, a consultant to Ridgewood and its subsidiaries.
All the properties were filling stations operated by Texaco. The plan was to build flats and offices above and around each filling station and shop; hence the name airspace agreements. In brief, Ridgewood was to apply for planning permission to redevelop the relevant site and once a final satisfactory planning permission had been granted, (permission had to be obtained before a date specified in each case) it would develop the site pursuant to a building lease. On completion of the development, the building lease was to be surrendered (or, in the case of the Phase I agreements, merged) and the first claimant was to acquire a freehold or long leasehold interest in the site subject to Texaco retaining or being granted an interest to enable it to continue to operate the filling station and shop on the site. Each of the airspace agreements has annexed to it the required form of building lease and of the grant back to Texaco.
The principal basis for the claim is that on 21 June 2005 Texaco transferred its interest in all of the properties to two transferees, Azure Properties Limited ("Azure"), a company formed for the purchase connected to Somerfield Stores Limited ("Somerfield"), and Somerfield itself. Two only went to Somerfield, the properties known as "Hove" and "Blue Star", of which Texaco held long leasehold titles, and the others, of which Texaco held the freehold, "Crouch End", "Clerkenwell, "St Katherine's", "Caledonian Road", "Lansdowne", "Forty Avenue", "The Dome" and "Hendon Way" went to Azure, although Azure proposed to lease them on to Somerfield. The contract (following a Memorandum of Understanding) was dated 28 April 2005 but discussions were held from at least 18 March 2004.
The claimants allege that the effect of the sale was that Texaco was in breach of the agreements, put it out of its power to perform them, renouncing them, rendering them impossible to perform and committing a repudiatory breach. The claimants now also claim damages for breach of contract but there is a dispute as to whether this is open to them on their pleaded case.
The claimants rely on an alleged implied term that Texaco would not dispose of its interest in the relevant property subject to each airspace agreement until that agreement had been terminated in accordance with its terms. It is alleged that such a term falls to be implied to give business efficacy to the agreements and/or as the obvious intention of the parties. Texaco accepts that it was bound not to do anything which would put it out of its power to perform the airspace agreements but says that the implied terms go no further than that. In particular Texaco denies that it was not permitted to assign the properties by virtue of any term, express or implied. It maintains that it remained fully able to bring about performance of the agreements by compelling Somerfield and Azure to comply with them.
In short, the claimants' case is:
(a) it was an implied term of the agreements that Texaco would not, save by mutual consent, dispose of the properties until the airspace agreements had been terminated;
(b) in selling the properties, Texaco put it out of its power to perform its obligations under the agreements;
(c) in so doing, Texaco repudiated the agreements;
(d) the claimants accepted the repudiation;
(e) the agreements thereby terminated and as a result the claimants have lost the substantial capital value of the interest to which they would have been entitled had the agreements been performed in accordance with their terms, or have alternatively wasted their expenditure.
Again in brief, Texaco's case is as follows:
(a) the implied term is much more limited in scope than that contended for by the claimants;
(b) there was no breach of the implied term as Texaco was able to perform the airspace agreements; the claimants were entitled to protect their interests by registration and Texaco took covenants from Somerfield and Azure to comply with the airspace agreements;
(c) Texaco did not repudiate the airspace agreements;
(d) the claimants in any event affirmed them;
(e) the claimants did not in any event accept the alleged repudiatory breach or notify such acceptance;
(f) in any event the claimants are time-barred since the relevant breach date is the date of the sale agreements, namely 28 April 2005, more than six years before commencement of proceedings. On this latter point the claimants' case is that the relevant date for limitation purposes is the date of completion, namely 21 June 2005, and the claim is not therefore time-barred.
Texaco sues its former solicitors, Pannone & Partners, now Pannone LLP, ("Pannone"), as Part 20 defendants in the event that, contrary to its contention, it is held liable to the claimants. The Part 20 claims were stayed by an order of Master Teverson of 28 September 2011 but Pannone was given permission to participate in this trial. Mr Ayliffe QC accordingly attended on Pannone's behalf and made submissions. For present purposes Pannone makes common cause with Texaco.
The sale
The contract for sale dated 28 April 2005 between (among others) Texaco, Azure and Somerfield ("the Sale Agreement") provided that each of the freehold and leasehold sites (respectively), " is sold free from encumbrances other than (a) any disclosed matters". "Disclosed" refers to a Disclosure Letter and item 12 in the schedule to that letter includes references to the airspace agreements. Further, by the conditions set out in Schedule 7 to the Sale Agreement, the sale was made subject to the rights benefiting the properties.
Further, Clause 11.2 of each of the transfers dated 21 June 2005 ("the Transfers") completing the Sale Agreement contained a covenant by the relevant transferee as follows:
" The Transferee covenants with the Transferor to observe and perform at all times hereafter the covenants restrictions and stipulations contained in or referred to in the Registers of Title Numbers referred to in the Schedule hereto so far as they are still subsisting and capable of taking effect and affect the properties and to indemnify the Transferor against all actions proceedings costs claims expenses and demands whatsoever in respect of any breach non-observance or non-performance of all or any of the covenants restrictions and stipulations."
Throughout there was a pattern of reassurance by Texaco to Ridgewood as to the enforceability by the claimants of the airspace agreements against the purchasers from Texaco. Mr Lynch gave evidence that he first heard rumours of the proposed sale in February or March 2005. He contacted Mr Dixon of Texaco to ask if the rumours were correct and was assured that if the sale went ahead the claimants' position would be protected. On 3 June 2005 Mr Lynch was told directly by Somerfield about the proposed purchase and, on telephoning Mr Dixon, was again reassured that the claimants' interest was protected. On 9 June 2005 Mr Johnstone of the claimants' solicitors was told by Somerfield's solicitors of the contract between Somerfield, Azure and Texaco and the scheduled date for completion.
On 25 July 2005, after the Transfers, Mr Bailey, Somerfield's internal legal adviser, wrote to Mr Johnstone enquiring about the...
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