The Royal Bank of Scotland v Victoria Street (No 3) Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE MORGAN |
| Judgment Date | 28 October 2008 |
| Neutral Citation | [2008] EWHC 3052 (Ch) |
| Docket Number | Case No: CC/185/08 |
| Court | Chancery Division |
| Date | 28 October 2008 |
[2008] EWHC 3052 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Morgan
Case No: CC/185/08
MR SIMON BRILLIANT (Instructed by Oswang) appeared on behalf of the Claimant
MR TIMOTHY FANCOURT Q.C. (Instructed by Lovells LLP) appeared on behalf of the Defendant
1. The claim
The Claimant is the Royal Bank of Scotland plc, which is represented by Mr Brilliant. The Defendant is Victoria Street (No. 3) Limited, which is represented by Mr Fancourt, QC. The Claimant claims a declaration as follows: under s.19(1) of the Landlord and Tenant Act 1927 that the Defendant's refusal to permit the Claimant to assign his leasehold premises at Longcroft House, 2 Victoria Avenue, Bishopsgate, London EC2 to Office Investments (Bishopsgate) Limited, manifested in a letter of 10 October 2007, from the Defendant's solicitor to the Claimant's solicitor was an unreasonable refusal of consent to the assignment. The claim form also claimed damages, but that claim has not been pursued at this trial.
2. The lease
The lease is dated 29 September 1970. The premises demised by that lease are office premises at Longcroft House, 2 Victoria Avenue, Bishopsgate, London EC2. I have been told nothing in addition as to the character of the premises, save that they are office premises.
3. The original parties to the lease were, as landlord, Victoria Avenue Bishopsgate Limited and, as tenant, Williams & Glyns Bank Limited. At all material times the reversion on the lease was vested in Victoria Street (No. 3) Limited, the Defendant herein. The term of the lease as I have described, was originally vested in Williams & Glyn's Bank Limited, later Williams & Glyn's Bank plc. In or around 1985 the lease became subject to the provisions of the Royal Bank of Scotland Bank 1985. That provided for a number of matters including a merger of Williams & Glyn's Bank plc with the Royal Bank of Scotland plc. There are two provisions that are material to the present dispute. The first is s.5(1), which provides that on an appointed day the undertaking of what is called “a present bank” is transferred so as to vest in the Royal Bank of Scotland plc, to the intent that the latter bank succeeds to the whole undertaking of such present bank. Williams & Glyn's Bank plc was defined in the Act as a present bank. I have not been told the precise date which was the appointed day, but it is plain it is many years ago, no doubt in or around 1985. It is also relevant to refer to s.6(1) (a) of the 1985 Act. That provides that, without prejudice to the generality of any other provision, all leases are to be construed and are to have effect from the appointed day as if instead of the present bank, the Royal Bank of Scotland plc had been the person by whom the lease was entered into, with whom the lease was made, to or by whom the lease was given, or to whom the relevant document was addressed. Therefore, by force of statute, following the appointed day, the term of the lease vested in Royal Bank of Scotland plc and the covenants contained in the lease have the effect as if they were given in the first instance by Royal Bank of Scotland plc. Those statutory provisions have the consequence that Royal Bank of Scotland plc is liable to the reversioner on the lease as if it had given the original covenants in the lease. Because the 1970 lease was granted before the coming into force of the Landlord and Tenant (Covenants) Act 1995, Royal Bank of Scotland plc remains liable on those covenants even in the event of an assignment by it of the term of the lease.
4. Returning to the provisions of the lease itself, I draw attention to the fact that the premises were demised for a term of 42 years from 25 December 1969, that is, expiring on or about 25 December 2011. The rent payable under the lease was reviewed to £405,000 per annum with effect from 25 December 2004. There is no further review of that rent during the residue of the term. The lease is a full repairing and insuring lease.
5. The covenant against alienation contained in clause 2(15)
Clause 2(15)(B) is in these terms:
“Not to assign the demised premises or underlet or part with the possession of the demised premises or any part thereof or of this lease without the written consent of the landlord such consent however not to be unreasonably withheld in the case of a respectable and responsible assignee or sub-tenant Provided that the Landlord may require the proposed assignee to enter into direct covenants with the Landlord to perform and to preserve all covenants and conditions herein contained and on the Tenant's part to be performed and observed.”
I refer more briefly to the user covenant in clause 2(18) and in particular paragraph (b) of it, which restricts the use of the premises to use for the business of bankers and services ancillary thereto or as offices with ancillary car parking. Clause 4(1) is a standard form proviso for re-entry by way of forfeiture.
6. The application for consent
On 3 October 2007, Olswang solicitors, acting for Royal Bank of Scotland plc wrote the following letter addressed to the landlord. The letter was marked for the attention of a Mr Benny Stone and the letter was sent by fax to the landlord's office and by post. Despite the length of the letter, I fear I do need to read quite a large part of it as follows:
“Re: Longcroft House, 2 Victoria Avenue, London EC2.
We act for the Royal Bank of Scotland plc, your tenant.
You will be aware that our client vacated the above premises in January 2007, since when they have been searching for a suitable replacement tenant.
Our client is now pleased to report that they have located what they consider to be a suitable replacement tenant and as such they have asked us to represent them in making an application for the assignment of their lease over the above premises.
As such, please therefore treat this letter as their formal application as follows.
As your records will show:
(1) our client's lease over the above premises is dated 29 September 1970 and is not due to expire until 25 December 2011; and
(2) clause 2(15) therefore prohibits our client from assigning the same without your previous written consent, such consent not to be unreasonably withheld.”
I break off reading the letter at that point and I will summarise the next part of the letter. The next part of the letter refers to the well known provisions in s.1 of the Landlord and Tenant Act 1988 dealing with what is required of a landlord who receives an application by a tenant for a licence to assign. The letter also offers some views as to what would be a reasonable time for the landlord to respond to the application made in the letter. It is fair to say that the purpose of including that part of the letter must have been to bring home to the landlord the serious consequences of not providing a prompt response to the application contained in the letter.
7. The letter continues under the heading:
“Details of the proposed assignee.”
“The Proposed Assignee is Office Investments (Bishopsgate) Limited (“OI”) for whom we also act.
OI is a company incorporated on 13 August 2007 in England and Wales. Its company number is 06340653 and its registered office is at 235 Old Marylebone Road, London NW1 5QT.
OI is in the business of providing professional property services for a number of UK and European clients. OI assists private landlords in the strategic asset management of UK property interests, together with the provision of financial and investment advice. OI also provides project management services in achieving the strategic goals of their clients.
It is understood that OI have been looking to find premises to best suit the needs of their clients, many of whom are based within central London and finding a headquarters building within the heart of the City was a key objective for them. OI has identified Bishopsgate as the most suitable location.
OI's intended use of the premises will be as offices with ancillary parking in accordance with the lease, viz clause 2(18)(b).
We shall be providing references in respect of the Directors of the company from their accountants Wilder & Co, together with further references from Stephenson Harwood LLP and ourselves.”
Then there is the heading “Security and Authorised Guarantee Agreement where applicable.” In fact, the text under that heading does not refer to any guarantee agreement, but is in these terms:
“In order to provide you with additional security following the assignment OI is prepared to offer a 3 month rent deposit to secure its obligations under the lease.”
I break off reading the letter at that point as I can summarise the next few paragraphs of the letter. Olswang, the author of the letter, made certain proposals as to how the matter might be taken forward and how the licence to assign might be drafted. The letter also mentioned the question of fees and provided for the applicant to pay those fees and the last sentence of the letter is in these terms”
“Our clients would be grateful if you would consider this application urgently and to that end we look forward to receiving consent in principle in writing as soon as possible.”
8. By reason of Jewish holidays, the letter of 3 October 2007 was not seen by a representative of the landlord until Monday, 8 October 2007. The first thing that happened in relation to the application of 3 October 2007 was a response on the headed notepaper of A W Charitable Trust. The response is dated 9...
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