Talisman Property Company (UK) Ltd and Norton Rose (A Firm)
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE LINDSAY,Mr Justice Lindsay |
| Judgment Date | 18 November 2005 |
| Neutral Citation | [2005] EWHC 85 (Ch),[2005] EWHC 2793 (Ch) |
| Docket Number | Case No: HC04C01587,CASE NO: HC04C01587 |
| Court | Chancery Division |
| Date | 18 November 2005 |
[2005] EWHC 2793 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
His Honour Judge Behrens
CASE NO: HC04C01587
This is the assessment of damages in a professional negligence action by Talisman Property Co (UK) Limited ("Talisman") against its former solicitors Norton Rose ("NR").
The action arises out of admitted negligence by NR in connection with a lease renewal in relation to premises in Park Royal, Acton. The premises were let for 20 years expiring on 24 th December 2001. Talisman acquired the freehold reversion in July 2001. There is an issue as to identity of the tenant between Lewis DMR Ltd ("Lewis DMR") and Wyko Industrial Services Limited ("Wyko"). Lewis DMR and Wyko are both companies in the same group and are subsidiaries of Wyko Group plc ("WG"). Lewis DMR was the legal assignee of the term but had been dormant since about 1998. The premises were occupied for the purposes of Wyko's business. Wyko had been treated by the landlord as the tenant.
Prior to the acquisition of the reversion by Talisman Lewis DMR had served on its then landlord a notice under section 26 of the Landlord and Tenant Act 1954 requesting a new tenancy. The landlord had served a counter-notice stating that it intended to oppose the grant of a new tenancy on ground (f) of section 30(1). The effect of such a notice was to give the tenant a vested right to compensation on quitting. The amount of compensation was significant-£179,000. In June 2001 Lewis DMR made an application to Court for a new tenancy.
Another significant factor was that there were substantial breaches of the repairing covenants in the lease. The cost of repairing the premises was likely to exceed by a substantial amount the statutory compensation recoverable. On the other hand if the landlord genuinely intended to redevelop the damages recoverable for non repair would be limited and might be nil.
During the period whilst it was negotiating and immediately after it acquired the freehold Talisman considered its strategy with regard to the property. It had a number of meetings with its agents and with its lawyers to consider its options.
From a commercial point of view it preferred to have Wyko (which was trading profitably) as a tenant rather than Lewis DMR (which was dormant). Equally it wished to avoid, if possible, paying statutory compensation if no new tenancy was granted.
It is not wholly clear when Talisman abandoned the option of redeveloping the premises. Certainly they took no steps to put themselves in a position where they would be able to establish the necessary intention to the satisfaction of the court.
It is now accepted that on 28 th September 2001 Talisman instructed NR to serve on Wyko a notice under section 25 of the Act which did not oppose the grant of a new tenancy. It is equally accepted by NR that contrary to the express instructions a notice was served that expressly opposed the grant of a new tenancy on ground (f). It is accepted that the service of that notice was negligent.
Following the service of the wrong notice there were negotiations between the parties for a new lease. Those negotiations comprised in the main 3 meetings in December 2001, January 2002, and July 2002.
Whilst those negotiations were continuing Wyko issued its own proceedings under the Act. The two sets of proceedings were listed for a preliminary hearing in November 2002 to determine whether the tenant was Wyko or Lewis DMR.
Shortly before the hearing Wyko and Lewis DMR discontinued their respective proceedings with the result that the tenancies came to an end in February 2003 and no new tenancy was granted to either Wyko or Lewis DMR.
Wyko duly vacated the premises in February 2003. In subsequent negotiations Wyko agreed the level of compensation payable in respect of dilapidations. The sum of £179,000 in respect of the statutory compensation was set off in full against the sum agreed for dilapidations.
Talisman puts its claim against NR in two ways:
1. It asserts that Wyko was in fact the tenant with the result that it was caused to pay the statutory compensation of £179,000 as a result of the negligence.
2. It asserts that it lost the chance of reducing the liability to pay compensation to nil. It also asserts that if an unopposed notice had been served the negotiations for a new tenancy would have succeeded with the result that it would have received more than the interim rent it actually received and the capital value of the premises would have been enhanced.
NR admits that it was negligent but contends that there was no loss. NR was so confident that it was right that at an early stage in these proceedings it made an application before Lindsay J for summary judgment and for the claim to be struck out. Lindsay J refused to strike out the claim and ordered it to go to trial.
Talisman were represented by Mr Bernard Livesey QC and Mark Loveday instructed by Messrs Vizards Livesey Cameron Walker. NR was represented by Mr Roger Stewart QC and Mr David Halpern instructed by Barlow Lyde & Gilbert.
Counsel produced detailed written skeleton arguments before the trial commenced and detailed written closing submissions before the final speeches. As the law involved in this case is by no means straightforward and-at least to some extent-in a state of development I am grateful for the full exposition in the skeletons.
5 witnesses gave evidence on behalf of Talisman-Mr O'Brien, a Litigation partner at Eversheds LLP practising in Birmingham and specialising in commercial property litigation; Mr Davidson, the Property Manager employed by Wyko, Mr Winton, a Director of Talisman and a Surveyor, Mr Parnell, the Property Manager with CHP-the in house management company of the group of companies including Talisman, and Mr Jansons, a partner in the firm of surveyors advising Talisman.
A number of witness statements were prepared on behalf of NR including a statement from Mr Davidson. When he gave evidence Mr Davidson confirmed that that statement was true. In any event Mr Stewart QC decided to call no evidence.
Each side instructed experts. However following their meeting the expert evidence was agreed and I was presented with the agreed conclusions.
Talisman
Talisman is, as its name suggests, a property Company. It is an associated company of the William Pears Group of Companies Limited. It manages its properties by CHP Management Ltd ("CHP")-an in-house management company within the group.
Malcolm Parnell ("Mr Parnell") was the employee within CHP as Commercial Estates Manager responsible for the day to day management and protection of Talisman's interests. The Director responsible for strategy and more significant matters was Mr Adam Winton ("Mr Winton").
Wyko/Lewis DMR
Lewis DMR is a company that since 1986 manufactured electrical coils at the premises. It was acquired by WG in 1996. After a short time WG decided to consolidate all of its coil manufacturing in Newcastle. The business moved in 1998 and thereafter Lewis DMR ceased to trade.
Wyko adopted the trading name "Lewis BERL" for a part of its business and attached a nameplate on the outside of the premises. Wyko then went into exclusive occupation of the premises and carried on a variety of business activities there. Wyko preserved Lewis DMR solely in order to prevent another company using the trading name.
Paul Davidson ("Mr Davidson") was the property manager employed by Wyko. His responsibilities included the management of the portfolio of the properties in respect of which Wyko has an interest. These include landlord and tenant issues and acquisitions and disposals.
Although he was involved in the negotiations for the new lease Mr Davidson agreed that he was not responsible for the ultimate decision whether Wyko left the premises in Acton or renewed the lease.
Lewis DMR's accounts confirm that it was dormant for the relevant period. Wyko's accounts show that its financial position deteriorated between 2000 and 2003. The position may be summarised in the following table:
| 2000 | 2001 | 2002 | 2003 | |
| £000 | £000 | £000 | £000 | |
| Profit after tax | 5,980 | 4,579 | 1,410 | (2,505) |
| Dividend | 7,000 | 7,000 | 2,000 | 0 |
| Net assets | 3,636 | 1,215 | 625 | (1,877) |
By a lease dated 16 th February 2002 of business premises at 158 and 158X Duke's Road, Park Royal, London W3 ("the premises") were let for a term of 20 years expiring on 24 th December 2001. The lease provided for 5 yearly rent reviews. In fact the rent was last reviewed in 1991 at £107,500 p.a. The property consisted of a light industrial unit on an industrial estate in Park Royal.
The lease contained a number of what may be regarded as common clauses. These included covenants to repair, against alienation or parting with possession and a proviso for re-entry. It also contained what Counsel have referred to as a Jervis v Harris clause. Under such a clause if a tenant fails within 3 months to comply with a notice of disrepair served by the landlord, the landlord is entitled to enter the premises, carry out the repairs himself and recover the cost from the tenant.
The lease contains a covenant in clause 3(17)(b) against alienation and parting with possession in reasonably standard terms. It contains a proviso
PROVIDED ALWAYS that the tenants may share the occupation or part with the possession of the demised premises to an associated or subsidiary company but no tenancy shall be created thereby.
Thus where the tenant is itself a subsidiary of a parent company this proviso expressly permits him to share or part with...
To continue reading
Request your trial
-
Dayman v Lawrence Graham
...Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602 at 1609H – 1611C, 1611F-G; Talisman Property Co (UK) Ltd v Norton Rose [2005] EWHC 85 (Ch) and, on appeal, [2006] EWCA Civ 1104; Stone Heritage Developments Ltd v David Blank Furniss, unrep. 1 st June 2006 at paras 323–335, affi......
- Talisman Property Company (UK) Ltd and Norton Rose (A Firm)