IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY
(HIS HONOUR JUDGE SIMPSON)
Strand London WC2 |
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B e f o r e :
LORD JUSTICE BUXTON
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JACK BASCH |
Claimant/Applicant |
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- v - |
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(1) RONALD STEKEL (2) SULLAMITH REIF |
Defendants/Respondents |
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Smith Bernal Reporting Limited, 190 Fleet Street,
London EC4A 2AG
Tel: 0171 421 4040
Official Shorthand Writers to the Court)
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Crown Copyright ©
"8. The Guarantor covenants with the person named in clause 1.1.1 [meaning Mr Basch] and without the need for any express assignment with all his successors in title that:
8.1 During the term the Tenant shall punctually pay the rents and observe and perform the covenants and other terms of this lease and if at any time during the Term the Tenant shall make any default in payment of the rents and observe and perform the covenants or terms in respect of which the Tenant shall be in default and make good to the Landlord on demand and indemnify the Landlord against all losses damages costs and expenses arising or incurred by the Landlord as a result of such non-payment non-performance or non-observance notwithstanding:
8.1.1 any time or indulgence granted by the Landlord to the Tenant or any neglect or forbearance of the Landlord in enforcing the payment of rents or the observance or performance of the covenants or other terms of this lease...
8.1.2 that the terms of this lease may have been varied by agreement between the parties
8.1.3 that the Tenant shall have surrendered part of the Premises ... and
8.1.4 any other act or thing by which but for this provision the Guarantor would have been released
"...and if at any time during the term the Tenant shall make any default in payment of the rents [and in observing and performing the covenants or terms, then the Guarantor shall pay the rents] and observe and perform the covenant or terms in respect of which the Tenant shall be in default"
"Re: Buckingham House.
- This agreement is made totally without prejudice to either party's position with regard to proceedings shortly to be issued by Mr Basch against Mr Stekel and Mr Reif for specific performance of their obligation to take up a new lease of the above premises.
- Neither party shall be entitled to rely upon this agreement or any actions taken pursuant to it (including the proposed joint marketing of the property or of any subsequent letting of it whether by Mr Basch or by Mr Stekel and/or Mr Reif ("the estate") in the proposed forthcoming litigation or any other litigation raising the same or similar issues and in particular shall not seek to rely upon the same as evidence that Mr Basch has accepted the waiver of the lease by the Liquidator or that he has elected not to call on the estate to take a new lease or that he has waived his rights to claim rent under the old lease or that he has elected to treat the old lease as being at an end or as evidence that the estate has any continuing obligations of any nature whatsoever in respect of the property.
- The property shall be jointly marketed by ourselves and yourselves on behalf of our respective clients. All costs of marketing shall be born equally by the parties and the party who is unsuccessful in the litigation will reimburse the successful party.
- Mr Basch will not be obliged to grant a lease to any intending lessee to whom the property shall have been marketed to.
- We shall jointly agree with our respective clients those estate agents who are to be instructed to market the property and we shall jointly sign their instructions as agents for our respective clients."
"3.1The expressions "the Landlord" and "the Tenant" wherever the context admits include the person for the time being entitled to the reversion immediately expectant on the determination of the Term and the Tenant's successors in title respectively..."
"3.4 The expression "Guarantor" includes not only the person referred to herein (if any) but also any person who enters into covenants with the landlord pursuant to clause 5 hereof."
"There is no reason why the expression 'Guarantor' should be extended ... because it is easy to see that ... there would be an inconvenience in the distribution of the guarantor's estate and that distribution might be held up for a long time. There is also the question of the severance of the link between the guarantor and the company. I do not think that the parties to this document, having regard to the language which they have used, intended that the obligation of the guarantor should survive and devolve on to his personal representatives. One can easily see the inconvenience which would arise if this were so."
"(4)A disclaimer under this section -
(a) operates so as to determine,as from the date of the disclaimer, the rights interests and liabilities of the company in or in respect of the property disclaimed; but
(b) does not, except so far as is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person."
"The statute provides that a disclaimer operates to determine the interest of the tenant in the disclaimed property but not so as to affect the rights or liabilities of any other person. Thus when the lease is disclaimed it is determined and the reversion accelerated but the rights and liabilities of others, such as guarantors and original tenants, are to remain as though the lease had continued and not been determined. In this way the determination of the lease is not permitted to affect the rights or liabilities of other persons. Statute has so provided."
"If no vesting order is made and the landlord takes possession, the liabilities of other persons to pay the rent and perform the tenant's covenants will come to an end so far as the future is concerned. If the landlord acts in this way, he is no longer merely the involuntary recipient of a disclaimed lease. By his own act of taking possession he has demonstrated that he regards the lease as ended for all purposes. His conduct is inconsistent with there being a continuing liability on others to perform the tenant's covenants in the lease. He cannot have possession of the property and, at the same time, claim rent for the property from others."
Order: Application dismissed. The claimant to have judgment for the amount of rent from 25th March 1998 to 22nd October 1999, a total of £19,537.708, with interest under the rate prevailing under the County Court Act. No order for payment of insurance moneys or rates. Order not to be drawn up for a period of 7 days. If, within that period, the parties have agreed an amount for insurance and rates that amount may be included in the order. If no amount is agreed, the fact that there was an opportunity to agree it and include it in the order is to be brought to the attention of any other court which has to consider a claim for insurance and rates in further proceedings so that that court can take that into account when deciding what an appropriate order for costs in that action might be. Appellant to have the costs of the appeal, including the costs of 14th June. The order for costs made by the judge below should be set aside and the matter be left with no order for costs in the Crown Court.
1. LORD JUSTICE CHADWICK: Mr Staddon, what do you want to say about the form of order?
2. MR STADDON: My Lord, should your Lordships be minded (referring to paragraph 17 of my further submissions), I would seek the relief granted in paragraph 17 together with interest on those sums, which my learned friend and I could deal with. The rate of interest under the lease is the usual, or not unusual, 4% above Barclays' base rate. But should your Lordships say that you do not have sufficient material to deal with this, or should your Lordships say the rent can be claimed but the insurance and rates must be remitted to the county court, or new proceedings must be issued, then so be it. I would hope that my learned friend would be able to agree the relief which might be granted; but I am not sure what the position is.
3. LORD JUSTICE CHADWICK: Is there any dispute as to the period over which the rent the runs?
4. MR DENEHAM: My Lord, no, not the period of the rent.
5. LORD JUSTICE CHADWICK: So the rent runs from 25th March 1998 for six quarters. That is accepted?
6. MR DENEHAM: My Lord, yes.
7. MR STADDON: And 23 days, my Lord, for the final order.
8. LORD JUSTICE CHADWICK: And 23 days.
9. MR DENEHAM: Yes.
10. LORD JUSTICE CHADWICK: Mr Deneham, do you want to continue to resist insurance and rates?
11. MR DENEHAM: Those are my instructions, my Lord. It may well be that even if it is a little stick, it is one that my lay clients can waive at the landlord before he commences his new action. There may be some mileage in it. If not they will pay it up. I have said all I can say about that.
12. In respect of the claim for interest, I will just check the pleading. Of course, there is no claim for contractual interest in the particulars but merely interest under section 69 of the County Courts Act 1984. I may have shot myself in the foot, because that may be higher than the contractual rate, but I doubt it. That is how the claim is pleaded. Of course, if that is the claim that the defendant is meeting the landlord should be bound by that rather than now advancing the contractual claim. Again, it is a small point which may not sound very much in terms of real money, but I take the point because it is there. As of principle, the interest should follow the six quarters and 23, but the claim is based upon the statutory right and I would say that the court should limit the landlord to that.
13. LORD JUSTICE CHADWICK: The order that we think appropriate is this. The claimant is to have judgment for the amount of rent from 25th March 1998 to 22nd October 1999, a total of £19,537.78, with interest on that sum under the rate prevailing under the County Courts Act. We make no order for the payment of insurance moneys or rates; but our order is not to be drawn up for a period of seven days. If, within that period, the parties have agreed an amount for insurance and rates, then that amount may be included in the order. If no amount is agreed, then the fact that there was an opportunity to agree it and to include it in the order is to be brought to the attention of any other court which has to consider a claim for insurance and rates so that they can take that into account when deciding what an appropriate order for costs in that action might be.
14. Do you want to say anything about costs in this action?
15. MR STADDON: Yes, my Lord. I have an application for costs both here and below.
16. May I mention two things about below? Mr Basch lost on the specific performance below, but that was overtaken by events which happened. I know your Lordship is concerned that perhaps the letter of 29th May 1998, or the agreement embodied in the letter, should have been drawn to the attention of His Honour Judge Simpson; but, my Lord, that was written without prejudice. Both counsel who were there (and I was one of them) thought it inappropriate in those circumstances to draw it to the County Court Judge's attention because it was without prejudice. Indeed, had an order for specific performance been made, as I understand it, it would have been enforced: it would have been relied upon even though marketing had been going on in the meantime. As your Lordships will see, the lease was not granted until some considerable time after the order was made dismissing the application.
17. I would ask for the costs of this appeal and indeed the costs below to be subject to detailed assessment. Perhaps it should be taxation below, as it was entirely done under the old regime.
18. MR DENEHAM: My Lord, in respect of the case below, I was not there, but it would appear from the judgment, indeed the issues and how they are reflected in the original skeleton arguments, that the bulk of the period below was taken up arguing the case for specific performance -- I do not invite the court to have regard to that letter at all for these purposes -- and that is something that the landlord lost upon. It may well be that the construction point that the judge relied upon was wrong in that when it came to discretion, your Lordship -- one of the first things your Lordship mentioned to me about the great difficulties of putting that (inaudible) under grade two. It may be that although events over took the judgment, that element of the judge's judgment would have survived the appeal. So, in my submission, the landlord should not get all the costs below; there should be a discount. I suggest a 75% discount in respect of the specific performance.
19. In respect of the appeal, ordinarily I would not trouble the court with any submissions; but on 14th June, when we had half a day set aside for the arguments to this appeal, we were in your Lordships' court for about 45 minutes and not an hour. I certainly came to court on that day prepared to argue a specific performance point and was told, not by my learned friend but other counsel outside, that the point was no longer being pursued. In my submission, in those circumstances, whilst the landlord should get the costs of the appeal they ought not to include the costs incurred on 14th June of counsel attending before your Lordships, which costs should be the respondents and should be paid by the landlord.
20. LORD JUSTICE CHADWICK: On 14th June both counsel told us that that matter had been settled, save for, I think, some agreement as between the executors themselves.
21. MR DENEHAM: Those are my instructions, yes.
22. LORD JUSTICE BUXTON: That is what we were told. Had we not been told that, we would have proceeded to hear it on 14th June.
23. MR DENEHAM: Notwithstanding that, I don't go behind what is said, but the specific performance element of the appeal was simply abandoned so far as I was concerned on the morning of 14th, and therefore such costs as were incurred in respect of those matters were incurred and wasted. That should be reflected in some element in the costs of the 14th.
24. LORD JUSTICE CHADWICK: Mr Staddon, unless you want to make further submissions to us, the order for costs we propose to make is that the appellant should have the costs of this appeal, including the costs of 14th June, but that the order for costs made by the judge below should be set aside and the matter be left with no order for costs in the Crown Court on the basis that, had the judge been told about this letter, as to my mind he plainly should have been, he would not have embarked on the consideration of whether specific performance was an appropriate remedy because plainly it was not in the circumstances. All the parties were concerned about is who should pay the interim rent before the property was embarked upon.
25. MR STADDON: I once had the unhappy experience of a County Court Judge explaining what his preliminary view was on costs. As a result of my arguing, it ended up with a far worse order than had initially been proposed. My Lord, may I grasp
26. LORD JUSTICE CHADWICK: You are not using that threat.
27. MR STADDON: If the threat were there. May I grasp the nettle? In my respectful submission that would be inappropriate. First of all, I say this. There were two counsel there. Therefore I was there, fairly long in the tooth, and there was Mr David Eadie(?) of counsel, who is a very experienced Chancery practitioner, who is even longer in the tooth. Both of us thought it was appropriate to refer to a matter which was without prejudice. It was not that we were just arguing about the interim rent, so far as specific performance was concerned the marketing had not been successful. Had we got an order for specific performance, we would have enforced it. If then the new tenant or tenants had wished to carry on marketing the property and found someone suitable to take over the liability from them, so be it. That is fine. But, of course, there was no certainty at all in November 1998 that a new tenant would be found for the property. Indeed, in practice it took another nine months or so before a new tenant could be found for the property. It was a serious application for specific performance then. It was not just going through the motions for negotiating purposes, we wanted specific performance, and the fact that there had been a joint marketing exercise with a view to mitigating someone or other's loss if it proved to be successful should not deprive, in my respectful submission, the appellant of his costs.
28. LORD JUSTICE BUXTON: You lost your application.
29. MR STADDON: We lost on that application but the reason we are not appealing it----
30. LORD JUSTICE BUXTON: I understand that, but nonetheless you lost. As far as the case below is concerned, you lost on that point.
31. MR STADDON: Yes, but we also lost on another point. As my Lord Chadwick has pointed out, in a way it did not matter which we went for because in substance we would have got the rent either way. Whether it be under, if you like, an equitable lease -- so soon as it is found we had a right to specific performance -- or under clause 8.1, it matters not. But, my Lord, we won on one of the issues. The other point has been abandoned because events have been overtaken. In my submission, even if both counsel had gone behind the without prejudice document and told the judge, it still would not have meant that we were binding anyone in the claim for specific performance, or that it would have been a matter which the judge properly could have taken into account in refusing the specific performance.
32. Those are my submissions, for what they are worth.
33. LORD JUSTICE CHADWICK: No. The order which we will make is as I have indicated.
(The Court Adjourned)