The Old Monk Company Plc v Puzzle Pub Company Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE LINDSAY |
| Judgment Date | 23 July 2004 |
| Neutral Citation | [2004] EWHC 3457 (Ch) |
| Court | Chancery Division |
| Date | 23 July 2004 |
| Docket Number | 034426 |
[2004] EWHC 3457 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Lindsay
034426
MR SEITLER QC (instructed by DLA) appeared on behalf of the CLAIMANT
MR K REYNOLDS QC (instructed by Osborne Clarke) appeared on behalf of the DEFENDANT
Friday, 23 rd July 2004
I have before me an application in the action between the Old Monk Co Plc, in administration, and the Puzzle Pub Company Ltd, the defendant. The Old Monk Co Plc appears by Mr Seitler QC and the Puzzle Pub Co by Mr Kirk Reynolds QC.
The application before me is a notice of 23 rd March 2004, which says this, although at this juncture it will not make all that much sense because it refers to pleadings:
“The defendant intends to apply for an order that (1) paragraph 9 of the particulars of claim and/or paragraph 14 thereof and/or the entire claim, and/or the claim in so far as it relates to the Leman Street contract, and/or the claim in so far as it relates to the Victoria Street contract be struck out under the court's case management powers, and/or (2) summary judgment under CPR Part 24 be entered for the defendant dismissing the entire claim, alternatively the claim as it relates to the Leman Street contract, alternatively the claim as it relates to the Victoria Street contract.” [Quotation unchecked]
Of course there is a request for an order for costs.
The argument does vary, depending whether one is looking at what were there called the Leman Street premises and the Victoria Street premises, and I will take them separately although there is a good deal of overlap and common ground between the two.
Looking first to the position as it relates to Victoria Street and the contract as to Victoria Street, the chronology begins with a lease of 6 th December 1989 made between County & District Properties Ltd and Whitbread & Co Plc as tenant. At clause 22(a) and 23 one finds provisions as to assignment and under letting and so on, the most material of which is at 23, which reads as follows:
“Not at any time during the said term to assign the whole of the demised premises without the lessors written licence first had and obtained but shall not be unreasonably withheld provided that every such licence shall be by deed to be prepared by the lessor but at the expense of the lessee to which the intended assignee shall be a party in order to covenant and, if affirm, then jointly and severally by all its partners directly with the lessor to pay the rents reserved in advance to pay interest [and so it goes on].” [Quotation unchecked]
There was a provision for requiring, should the lessor so demand it reasonably, that at least two of the directors of the proposed assignee should be joined as sureties. So there is a provision which gives rise to the issues in the case, or does when coupled with the next relevant instrument, which is that on 13 th September 2002 there was a contract for the sale of the leasehold interest in the Victoria Street premises.
The premises were called “The Exchange” 61–71 (odd), Victoria Street, London, and on 13 th September 2002 a contract was made between The Old Monk Co Plc, the claimant, and The Puzzle Pub Co Ltd, as the buyer (the defendant in other words) as the other party. Standard Commercial Conditions 1 st edition were incorporated. There was a provision as to the contract being said to incorporate all the terms of agreement between buyer and seller which had been agreed; that was clause 9.
At clause 11 one finds this “Incorporation of Schedule”:
“The provisions of the schedules are to apply and the seller and the buyer [that is to say the claimant and the defendant] will comply with their respective obligations in them.”
Then turning to that schedule, Schedule 2 is headed “The seller's landlord's consent”. Consent is a defined term, it means the written consent of the seller's landlord to the assignment of the lease to the buyer in accordance with the terms of the lease. The seller's landlord is defined as the person from time to time entitled to the reversion expectant on the determination of the lease and includes, where the context admits, any person or persons entitled to the reversion expectant on the determination of any interests superior to the lease.
At paragraph 2 on that Schedule, one has the heading “The seller's obligations”.
“2.1:The seller will:
2.1.1 apply to the seller's landlord for consent and use its reasonable endeavours to obtain it.
2.1.2 give the buyer written notice as soon as reasonably practicable after consent has been obtained.”
3 is as to a guarantee but I do not need to explore that. More importantly for immediate purposes is 2.2:
“Where the seller's landlord lawfully requires the buyer will:
2.2.1 promptly provide all information and references requested by the seller's landlord;
2.2.2 promptly respond to all correspondence relating to the application for consent;
2.2.3 covenant directly with the seller's landlord to pay the rents reserved by and to comply with the tenant's obligations and conditions in the lease if the lease so requires;
2.3 the buyer will properly execute any licence containing the consent and return it to the seller promptly after receipt by it of the engrossed licence.”
Paragraph 3 of that schedule is to do with court proceedings in relation to a consent that has been withheld. Paragraph 4 is as to completion date:
“The completion date shall be the date five working days after the later of the date consent had been obtained or the date of the grant of planning permission in accordance with clause 19 of this contract.” [Quotation unchecked]
Continuing:
“5 Termination:
5.1 If either or both the consent or planning permission as required under clause 19 of this contract have not been obtained six months after the date of this contract, either the buyer or the seller may end this contract by notice to the other so long as at the time the notice is given:
5.1.1 the consent has still not been obtained.
5.1.2 the application to the court has not been outstanding.
5.1.3 no declaration has been obtained from the court that the consent has been unreasonably withheld or delayed.
5.1.4 the party serving the notice is not in breach of the terms of this contract.
5.2 on the service of a lawful notice under paragraph 5.1 standard conditions at 7.2 will apply.”
The battleground, as it will transpire, is the area covered by 5.1.4:
“The party serving the notice is not in breach of the terms of this contract.”
That, as I say, was a contract of 13 th September 2002. Only a little later, 9 th October 2002, the claimant company went into administration. Correspondence began between all necessary parties. The defendant declined to give a guarantee or to procure someone else to give a guarantee and that led to a degree of correspondence.
Thus, on 11 th October, it was written:
“To come to the main point, we are not prepared to offer you either a rent deposit or a guarantee. After having taken legal advice, we do not believe it is reasonable for you to withhold your consent without extra security. If you are not convinced after considering this e-mail, the next stage is to take the matter to court.”
That did not prove necessary and by 6 th November 2002 the position was that the solicitors to the company in administration, the claimant company, wrote to the solicitors acting for the prospective buyer, the defendant, as follows:
“Please find enclosed the draft licence to assign in receipt from the landlord's solicitors for approval.” [Quotation unchecked]
So at that stage already there was a draft from the landlord's solicitors.
A little puzzling, at any rate to me, on 28 th November the same solicitors wrote to the same solicitor recipients:
“I enclose herewith the licence to assign for your client's execution. The landlord's solicitors have told me that they still await instructions in relation to your client's proposed alterations.” [Quotation unchecked]
So plainly there is a draft licence to assign. But by now it seems that it may well have been engrossed, I am not sure.
On 17 th December the solicitors acting for the administrators sent an e-mail to, amongst others, the solicitors for the defendant prospective buyers saying, so far as concerns Victoria Street, which was being assigned for £420,000:
“Licence out for signature with Puzzle. Not received back by DLA [that is to say the administrators' solicitors] or Farnworths [that is to say the company's original solicitors] yet planning permission required as condition of completion. The property now ready to re-open following flooding. Old Monk and Puzzle to liaise directly on the logistics of this.” [Quotation unchecked]
I have not explored the references to planning permission because, in the event, it does not prove necessary to do so, but there was, as will have been seen already, provision as to a planning consent. The e-mail continues:
“Andy, please can you chase up the execution of licenses where these are held by your client.” [Quotation unchecked]
On 23 rd January 2003 the company's original solicitors, Farnworths, wrote to the defendants' solicitors under the heading “61/71 Victoria Street”:
“Further in the above matter I enclose a copy of the draft licence to assign and retrospective consent for external works for your perusal.”
What seems to have happened—although one cannot be entirely sure, because I do not think this bundle of papers includes all correspondence between all necessary parties—is that what had originally been put forward as merely a draft licence to assign...
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