Warborough Investments Ltd v Central Midland Estates Ltd and Another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE BRIGGS |
| Judgment Date | 14 June 2006 |
| Neutral Citation | [2006] EWHC 2622 (Ch) |
| Court | Chancery Division |
| Date | 14 June 2006 |
| Docket Number | Case No: HCO5CO1648 |
[2006] EWHC 2622 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice Briggs
Case No: HCO5CO1648
MR EDWIN JOHNSON (instructed by Juliet Bellis & Co) appeared on behalf of the Claimant
MR FANCOURT QC (instructed by Eversheds) appeared on behalf of the Defendant
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This case is about the validity and effect of an attempt by the lessor of supermarket premises at 121 High Street, Cradley Heath, Rowley in the West Midlands, to implement a second rent review pursuant to a lease dated 1 August 1963, and made between John T Bell & Sons Limited and Finefare Limited.
The relevant facts are, for the most part, un-contentious and largely proved by documents. There are two remaining issues which I am called upon to decide: firstly, whether the rent notice, by which the attempted implementation of the rent review was to be triggered, was in fact delivered to the demised premises at all by the process server instructed by the claimant for that purpose. Secondly, an issue as to the motivation of the claimant in deciding to serve the rent notice on the demised premises, rather than, or in addition to, the defendants' last known business address in Litchfield.
The claimant, Warborough Investments Limited, had called their director, Mr Paul Upward, also a Mr John Dawkins of JP Dawkins Limited, who are bailiffs and process servers, a Miss Carrie Boyce, the administration manager at Dawkins and their solicitor, Mr Rex Cowell of Juliet Bellis & Co. They also relied on a written report made in manuscript and signed by a Mr Alan Stagg, the process server instructed for the purpose of service, and also upon hearsay evidence of statements made orally by him, both to Miss Boyce and Mr Cowell. Mr Stagg, having become untraceable during the currency of this litigation, and probably, so it appeared from inquiries made by inquiry agents, emigrated to Canada after leaving Dawkins with effect from 1 July 2005.
The defendants called a Mr David Gregory, the Regional Estates Manager of the second defendant, and also relied upon a manuscript note by the manager of the supermarket premises, but he was not called.
Generally speaking I find all the witnesses to be clear, honest and helpful in their evidence. I have no difficulty in relying upon the evidence which they have given, despite one unresolved factual issue arising as between Miss Boyce and Mr Cowell. I should say, however, that I have been unable entirely to accept Mr Upward's evidence as to the plaintiff's motivation, for reasons which will appear in due course.
The lease, which has given rise to the issues in these proceedings, was for a term of 63 years, from 24 June 1963, with upward only rent reviews every 21 years. Since a number of issues of construction arise from the lease I must read certain of its provisions. In clause 1, the demise, the reservation of rent is expressed as follows:
"Yielding and paying, therefore, the yearly rent of £8,740 (variable as hereafter provided) by equal quarterly payments on the usual quarter days in every year without any deduction."
In clause 2, the rent payment covenants are as follows:
"2 The lessee hereby covenants with the lessor in manner following: (1) that it will pay the reserved rents on the days and in the manner aforesaid. [And then in clause 2(2)] If the rent hereby reserved and made payable shall be increased by agreement (actual or deemed) or by arbitration pursuant to the provisions of clause 5(2) hereof, the lessee will, as from the review date (as herein defined) pay such increased rent at the times and in the manner aforesaid and the rent as so increased shall remain payable until the same shall be further increased pursuant to the provisions of clause 5(2) hereof, or until the exploration of the term hereby granted (whichever shall first occur)."
Clause 2(5) includes provision for payment of insurance premiums by the lessee to the lessor. Clause 5(1) contains a proviso for re-entry, to which I shall have to return briefly in due course. The most important clause is clause 5(2), which reads as follows:
"Provided always and it is hereby agreed and declared as follows. [And then 5(2)] That at any time during the three months commencing nine months before and ending six months before the expiration of the twenty-first and forty-second years of the term hereby granted the lessor may serve on the lessee a notice on writing (hereinafter called a "Rent Notice") providing for an increase of the rent payable hereunder, as from the expiration of the year of the term then current (hereinafter called "the review date") to an amount specified in the rent notice and thereupon the following provision shall have effect:
(i) The lessee within 28 days after the receipt of the rent notice may serve on the lessor a counter-notice calling upon the lessor to negotiate with the lessee the amount of rent to be paid hereunder, as from the review date.
(ii) If the lessee shall fail to serve a counter-notice within the period aforesaid it shall be deemed to have agreed to pay the increased rent specified in the rent notice as from the review date.
(iii) If the lessee shall serve on the lessor a counter-notice calling upon the lessor to negotiate with it as aforesaid, then the lessor and the lessee shall forthwith consult together and use their best endeavours to reach agreement as to the amount of the rent to be paid hereunder as from the review date but failing agreement within 28 days after service of such counter-notice (or within such extended period as the lessor and the lessee shall mutually agree) the question of whether any, and if so what, increased rent should be payable hereunder shall be referred to the arbitration of a single arbitrator (whose costs shall be borne in equal shares by the lessor and the lessee) who (failing agreement between the parties hereto) should be nominated on the joint application of the lessor and the lessee (or if either of them shall neglect forthwith to concur in such application then on the sole application of the other of them) by the President for the time being of the Royal Institution of Chartered Surveyors, and such arbitrator shall determine the question so referred to him by ascertaining first the annual rack rental value of the demised premises at the review date that is to say the annual rent or agreed annual rents at which the demise premises might reasonably be expected to be let without premium in the open market as between willing landlord and willing tenant or tenants on a lease or lease for 21 years commencing on the review date on the terms of this lease, other than those relating to rent, and assuming that the lessee has observed and performed all the covenants and conditions by it to be observed and performed but disregarding [and there follow three typical disregards]. And then calculating such increased rent as aforesaid by reference to sub-clause (iv) hereof. [And then there follows sub-clause (iv).
(iv) Provided always that any increased rent whether specified in a rent notice or determined by arbitration as hereinbefore provided shall be in an amount equal to the amount of the rent hereby reserved, together with three-fourths of the different between the amount of the rent hereby reserved and the rack-rental value (as defined in sub-clause (iii) hereof) at the review date but in no time during the term hereby created shall the rent payable by the lessee to the lessor be less than £8,740 per annum."
I should add that the amount referred to in the last line was included in manuscript in the lease as executed. Clause 5 contained a general arbitration clause, for the purpose of resolving all disputes, all differences arising, touching the provision of the lease, or the operation or construction of it, or the rights and liabilities of the parties. There then follows clause 7, which is as follows:
"Any notice under this lease shall be in writing. Any notice to the lessee shall be sufficiently served, if left addressed to it on the demised premises or sent to it by registered post to, or left addressed to it at its last known address in Great Britain or Ireland (whether Ere or Northern Ireland). And any notice to the lessor shall be sufficiently served if delivered to it personally or sent to it by registered post to or left addressed to it at its last known address in Great Britain or Ireland (whether Eire or Northern Ireland) or if served on any agent authorised by it to receive, or who has in fact on its behalf collected the rent of the demised property."
I have already stated that the demised premises are and have always been a supermarket. The first rent review fell due on 24 June 1984 and the rent was raised £24,685 per annum. On 9 June 1992, the claimant became entitled to the reversion expectant on the determination of the lease. By then the first or second defendant was the tenant and the whole of the demise premises had been underlet to Kwik Save, a supermarket operator.
I should explain my reference to the first or second defendants. There is apparently an issue between the parties as to whether the lessee is the first defendant or the second defendant. The first defendant, Central Midland Estates Limited is a wholly owned subsidiary of the second defendant, Midlands Co-operative Society Limited. The first defendant is registered as the lessee at HM Land Registry, but the second defendant has always been treated as the lessee.
The defendants have...
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