England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CROYDON COUNTY COURT
(HIS HONOUR JUDGE CONINGSBY)

		Royal Courts of Justice Strand London WC2 Friday, 19th January 2001

Friday, 19th January 2001

1. LORD JUSTICE MANCE: This is a renewed application for permission to appeal. It has been very well argued and presented. It is an application in circumstances where the matter has been considered already by two courts, each of which reached the same conclusion. Accordingly, it is by statute and by the rules subject to the principle that leave should only be given if the appeal would raise an important point of principle or practice or there is some other compelling reason for the Court of Appeal to hear it.
2. The outline and the circumstances is uncontroversial. The claimant respondent is the owner of a shopping centre, the Royal Oak Shopping Centre, Brighton Road, Purley. It leased part of the centre to the defendant for 15 years in 1993. Arrears of rent developed over the years. By the end of 1997 they were around £22,000; by July 1998 they were as high as £75,400.
3. The lease of the shopping centre incorporates a plan which shows the centre to have a pedestrian way which runs through it from the Brighton Road (which represents, broadly, the northern side of the centre) and then in a broadly easterly direction to the defendant's leased premises which are in the south-eastern corner of the whole site. It then runs round and down the east side of the defendant's premises to the junction of two other roads, the Riddlesdown Road and Purley Down Road.
4. Under the lease the defendant applicant was given not merely a demise of the premises but a demise of the premises together with the easements and rights specified in the Second Part of the Schedule, but excepting and reserving as mentioned in the Third Part of the Schedule in respect of the easements and rights specified. The easements and rights specified in the Second Part of the Schedule included a right-of-way for the tenants and all persons authorised by it on foot only over and along the pedestrian precinct edged grey upon the said plan and over the staircases leading to the car park. The pedestrian precinct is the way which I have described, running from the Brighton Road broadly easterly, and then southerly, down to the junction of the Riddlesdown and Purely Down Roads.
5. The exception and reservations in the Third Part of the Schedule include an exception (in Part 3A) of:

"Full right and liberty to build upon or to heighten or extend buildings from time to time standing on any land adjoining or adjacent to the land hereby demised notwithstanding that the access of light and air to the demised premises and the lights thereof may be affected, and notwithstanding that the pedestrian access to the north of the precinct may thereby be altered."

6. There is one other provision that I ought to read and that is Clause 4 of the lease whereby:

"It is agreed and declared that the demised premises"

7. - by definition that includes both the premises and the easements and rights going with the premises -

"are held subject to all rights of light and air and all other easements or rights (if any) now enjoyed by the adjoining or neighbouring lands, building and properties over the demised premises and the tenant shall not be entitled to any rights of access of light or air or other easements or rights to any building for the time being comprised herein which would restrict or interfere with the user of any adjoining or neighbouring land for building and for any other purpose."

8. In early 1998 at latest, it appears that the claimant, as landlord, conceived the idea of leasing other unoccupied parts of this apparently rather unsuccessful development to other tenants in a way which would involve building over the part of the pedestrian access which runs easterly to the defendant's premises.
9. A plan put before me (on the evidence the plan which was used for the planning application) shows that building over would necessarily prevent any access from the Brighton Road down the former pedestrian access to the defendant's premises. In particular it shows that the premises would include a mixed gym, then a reception retail cafe and then a creche nursery and play area, all directly in the way of any such access.
10. The landlord's case supported by Mr Summers' witness statements is that this plan was the subject of some considerable discussion with the applicant, who encouraged it, conceiving that it would be beneficial to upgrade the general tone of the development and evidently not objectionable to him to be confined to the access from the Riddlesdown Road/Purley Down end. Furthermore, Mr Summers says that that was discussed specifically in terms of the plan to which I have referred, and that this was shown to the applicant who was never other than encouraging.
11. Planning permission was given and a lease was granted for the use of the premises as a fitness centre to a concern called LA Fitness, in September 1998. The building works were carried out and evidently took some six months or so. No objection was ever received from the defendant. But his financial trading was, he says, ever less successful, despite various steps which he took to try and improve his premises. In the spring of 1999 (evidently having constructed gates across the access at the Riddlesdown/Purley Down end) the defendant approached the landlord with a view to installing seating screens and planters in the remaining precinct area outside his premises so that that could be used by his customers. That was the subject of an initial discussion but the proposal was overtaken, as I understand it, by a decision by the claimant/landlord's Board to forfeit the lease because of the arrears of rent. That took place some time around July 1999 when these proceedings were begun. It was at that point that the defendant raised various defences, including the suggestion that his trading was being very adversely affected, not merely by bad repairs and that sort of thing, but also by the blockage of the pedestrian access.
12. Both the courts below have considered the matter in very considerable detail. Indeed, Miss Windsor, in her helpful submissions, has submitted that they went into it in far too much detail. This case should, she submits, have been sent for trial, and the judges below really exceeded their proper function on a summary judgment application under Part 24.
13. The summary judgment application was issued in February 2000 with a witness statement in support from Mr Summers. At this stage the defendant was legally represented. He put in a witness statement on 10th May and Mr Summers put in a further witness statement on 15th May. The matter came before the district judge on 28th June. Permission to appeal was granted. The defendant ceased to be legally represented, I am told, shortly after the district judge's detailed judgment. One further witness statement was then put in by the defendant on 20th September.
14. The matter came before His Honour Judge Coningsby in early November 2000. He took the trouble, at the invitation of the parties, to inspect the mall, and he too gave a detailed judgment.
15. The question which the district judge and then judge Coningsby had to consider was whether the claimant had a real prospect of succeeding on the claim or issue. Under Part 24(2):

"The court may only give summary judgment against a claimant on the whole of a claim or on a particular issue if it considers that the claimant has no real prospect of succeeding on the claim or issue and there is no other compelling reason why the case or issue should be disposed of at trial."

16. Three points of substance arise. One concerns the construction of the lease, namely whether it in any event permitted the building over of the pedestrian access to the north of the demised premises or to the north and west of the demised premises. The second is whether in any event the defendant is estopped from complaining about that. The third is whether, if he had a real prospect of success on either of those issues, he had any real prospect of showing that he had suffered loss due to any breach of contract which there may have been by the landlord.
17. Miss Windsor submits that on each of those three issues the courts below were wrong. However, for the reason I have indicated she has to go further than that. She has to show that she can satisfy the test in Part 52.13 that the appeal would raise an important point of principle or practice or there is some other compelling reason for the Court of Appeal to hear it. She submits that in relation to the issue of estoppel, and in relation to the issue of causation and damages, the important point of principle or practice is found in the approach of the district judge and circuit judge to applications of this nature. In particular, she instances the detail into which they went when considering the question of estoppel, although she also criticises them both for failing to separate and address the ingredients of the relevant estoppel. As regards causation and damages she instances their willingness to examine an area which was, she submits, preeminently one for expert evidence, at a stage when the court had not yet considered whether there should be a joint expert appointed. On the first issue (the issue of construction) she concedes that she cannot suggest that that raises any important point of principle or practice but she says that her client's case on that is so strong as to constitute some other compelling reason for the Court of Appeal to hear an appeal. However, even if on the construction point one formed the view that the defendant had a real prospect of success and that the judges below were, on the face of it wrong, still, one would have to (and I think Miss Windsor fully accepts this) go on to consider the other two points because they are alternative grounds on which the courts below thought that the application should in any event succeed.
18. Miss Windsor suggests that the attitude of the judges below on these alternative grounds was, even if only subconsciously, affected by the view they took on construction. I bear in mind that risk, though the points are true alternative objections to the defendant's prospects. Taking the points in turn I am prepared to accept that the interpretation of the lease is by no means a straightforward matter and that there are some difficulties in the approach which was taken below. The approach below, of His Honour Judge Coningsby at any rate, was evidently to some extent influenced by Clause 4, but it seems to me that there is a strong case to be made for saying that that must be irrelevant and cannot extend the exception and reservation expressed in Part 3A of the Schedule to the lease. It seems to me likely, as Miss Windsor submits, that Clause 4 was directed (perhaps as a matter of belt and braces) to other situations. Treating Part 3A as the crucial clause, the issue is whether the pedestrian access to the north of the precinct was altered by what occurred. The respondent's argument is that it must be altered because it was blocked. Pedestrian access seems to me a factual concept rather than a reference to the easement over the grey shadowed area. The clause refers to pedestrian access to the north of the precinct, referring, on the face of it, to the whole of the grey shadowed area in that direction. The judge below thought that there was a mere alteration even though the new building blocked the precinct to the west of the defendant's premises because access could still be obtained from the south-eastern corner. Even if one started in the north one could still obtain access either by walking round the whole premises or by entering the precinct going up the stairs, across the car park and down the other stairs, over both of which stairs a right-of-way was conferred. A problem about that may be that there is no express right-of-way between the top of the stairs across the car park, except at least for vehicles in the context of vehicular use. So I see the force of Miss Windsor's criticisms of the judge. She frankly accepts, as I have said, that they do not raise any important point of principle or practice. This is a one-off situation. However she says that her prospects are so strong that on that ground there is a compelling reason for appeal. I have to say that I do not rate her client's prospects as being as strong as she submits. But, if other considerations were sufficiently favourable from the defendant's point of view, I would question whether that alone would be a reason for refusing permission.
19. I turn therefore to the other considerations. The first involves the issue of estoppel. It seems to me, to start with, difficult to accept Miss Windsor's submission that some important point of principle or practice would be raised by any appeal which might be allowed on this issue. Essentially, what the courts below did was grapple with the evidence and reach a conclusion. They considered, albeit in broad terms, that this was a case where there would inevitably be an estoppel. It is right, as Miss Windsor said, that neither court below examined in detail the ingredients of estoppel. But I must say for my part that it seems to me that the facts were extremely strong. Firstly, the parties had a substantial number of discussions. The account given by Mr Summers in his evidence is this:

"We did not believe that the Defendant could prevent us from blocking off the Precinct to the north of the Premises because of the express provisions in the Lease. (Schedule 1 part 3(a)). We did however want to consult him and keep him informed about our plans which I recall discussing with him at a cite meeting."

20. - he then gives the dates. The first date is evidently 1997. He then says:

"I had a further discussion with him during late April 1997 as a result of his letter of 21st April 1997 to Mr Smith, and my reply dated 29th April 1997..."

21. - that refers to a letter of 21st April which the defendant wrote after dealing with arrears and stopped cheques and a number of matters of that nature. The defendant added:

"Whilst writing, this may be an appropriate time to ask you what is planned for the Royal Oak precinct. The place is looking somewhat depressed, and although we are a nighttime business, our trade of late is very dismal, obviously I have plans in hand to remedy the situation, I am just now respectfully asking if you have any plans as well."

22. In response to that Mr Summers suggested a meeting. Mr Summers then goes on in his letter:

"This was not the first occasion upon which I informed him or his partner Wendy Gould of what the Claimant's proposals were, and he was very enthusiastic. We both thought that a casino"

23. - which was what was under consideration at that stage -

"would generate extra business for him and the club. There was no suggestion at any time by Mr Sibley that we could not block off the Precinct or that he could or would try to prevent us from doing so."

24. Then Mr Summers describes how the plan changed to one for a health club, and says:

"Over the following months I went to the Premises on a number of occasions to explain and discuss our proposals, and took plans to show what was to be done. On most of my visits I saw Wendy Gould, who was living with him, as appears from the address she gave when she witnessed his signature on the Lease. She was the manageress of the night-club and I have no doubt that she reported what I told her to the defendant...

On 28th September 1998 the Claimant granted a lease to LA Fitness and a licence to carry out the necessary building works... The claimant entered into those arguments in the belief that it and its tenant LA Fitness had the right to build on the Precinct. That belief was reinforced by the Defendant's failure to raise any objection, and by his enthusiastic support."

25. The defendant in response said that he was particularly excited by the proposals to use the rest of the shopping centre as a casino. He said:

"It is right that I was consulted by the Claimant about this proposal. Indeed the Claimant also told me that they planned to build across the pedestrian precinct of the shopping centre. I was surprised because that effectively meant that the Royal Oak was no longer a shopping centre. It completely changed the whole nature of the place. Nevertheless I was enthusiastic because the shopping centre was being shifted in the direction of my business - towards leisure. In those circumstances I was willing to countenance the obvious breach of covenant in the Schedule to the Lease Part 2 1(c) - the easement allowing customers to walk down the pedestrian precinct. It is staggering, and an adverse measure of the Claimant's credibility, that Mr Summers is willing to say in a court document that the Claimant had the right to close that precinct.

Moreover, when this was discussed, we were mooting passage through in some way via the precinct, or knocking through the connecting wall with the adjacent unit where the casino would be, so that the casino could benefit from my 3am music and dance licence."

26. Turning to the later plans for the health club he said:

"Other plans, including a health club were being floated. Nothing much had changed. They were being proactive in their attempts to get the rest of the centre let with leisure-based tenants which would be to a greater or lesser extent compatible with mine. Certainly that was better than them standing empty and derelict. I was supportive. The closing of the precinct was a hangover from the casino idea, which was still a possibility. There was the possibility of its being applied to a new project, in which case the same compensatory through-ways were still on the table...

Mr Summers is correct when he says that I did not suggest that I would try to prevent the Claimant from blocking off the precinct. We were still talking in terms of co-operation. It was obvious that I had the right to do so that it went unmentioned at that meeting; to mention it would have gone against the co-operative spirit of the conversation."

27. As to the planning application for the health club, he says in paragraph 11:

"No plans were submitted which showed the bridging of the pedestrian precinct. Nothing in those plans or the application itself conflicted with the assurances that I had been given on some form of access."

28. In response to that - and this is important - Mr Summers produced in his second witness statement this evidence:

"Mr Sibley admits having seen the planning application for the fitness club and the plans (para 11). His recollection of them is however faulty."

29. He then produced a copy of the application and the floor plan, and said:

"As can be seen,

(a) The application was for full permission, not outline permission;

(b) There was no provision for any passageway through the fitness club, and no possibility of providing one.

Again, the suggestion that there was any possibility of access through the fitness club, or of incorporating the night club in the fitness club, is ludicrous. The proposed opening hours for the fitness club were 7am to 10pm Monday to Friday and 9am to 7pm on Saturdays and Sundays. The opening hours, needed for security and clientele make any through access or combined use out of the question."

30. No evidence was put in in response to that by the defendant for the hearing before the district judge. The only subsequent evidence put in by the defendant on 20th September 2000 does not address or challenge the evidence about the plan given by Mr Summers. In those circumstances Miss Windsor's submission that there is an issue which ought to have been tried as to whether the defendant had seen the relevant plan and whether he only acquiesced in the building over of the pedestrian access on the basis that there would be access through the health club to his premises from the north seems to me to relate to issues on which the defendant could have no real prospect of success at all, let alone to raise any issue of a type which would assist Miss Windsor's client on a second application of this nature.
31. Miss Windsor suggests that the courts below did not satisfactorily address other elements of proprietary estoppel, the sort of estoppel with which one is concerned. She has referred me to passages in Megarry & Wade's The Law of Real Property. As both Megarry and the judgment of Oliver J in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133 indicate, estoppel is a flexible remedy and its application in the present context may be tailored by the court according to whether the court is concerned with active or passive encouragement. The primary considerations are whether in the context of whatever encouragement there has been, and bearing in mind the extent to which it may have led the other party to act to his detriment in reliance on such encouragement, it would be unconscionable to allow the party encouraging the conduct or acquiescing in the conduct to go back on his position. Proprietary estoppel here arises because it is said that the defendant effectively encouraged, or at least acquiesced in, the landlord's building a building which infringed the defendant's alleged easement.
32. It is said by Miss Windsor that there was no evidence of detrimental reliance. It seems to me two points arise in relation to that. Firstly, the thing speaks for itself. The landlords here discussed the matter on a regular basis with an enthusiastic tenant. It may be, as Miss Windsor points out, that they believed that they were entitled to act as they did. But the whole point of such discussions was obviously to keep the tenant informed and happy and to take into account, no doubt, any representations he might make, because, amongst other things, he might not only have rights under his lease but also at the planning permission stage. Those are considerations of obvious common sense and do not, it seems to me, need evidence.
33. Quite apart from that Mr Summers has said specifically in his witness statements that the claimant entered into the agreements he did with LA Fitness in the belief that it and its new tenant had the right to build on the precinct, reinforced by the defendant's failure to raise any objection and by his enthusiastic support. If the defendant had objected at that stage it seems to me that, again as a matter of obvious common sense, matters would have proceeded differently. It is most unlikely that the defendant would not, in the circumstances in which he was in, have reached some accommodation in relation to his objection - possibly one which was financially beneficial to him, possibly one which was beneficial in some other way, possibly (in the light of his enthusiasm) one which did not involve any quid pro quo at all. It seems to me highly implausible to suggest that he would not have continued in one way or another to go along with what was proposed. The present problem would then, without doubt, have been one which could not have arisen.
34. On the question of reliance (and this is the second point), Megarry points out at 739 that reliance will readily be inferred once it is shown that one person has encouraged another and the person has acted to his detriment. In such circumstance the onus will be on the person encouraging to show that there was no reliance. It seems to me, for that reason too, the point on reliance is a bad one. Here, there was clear encouragement. There was far more than mere acquiescence. The landlords went along without any awareness that there was a potential problem, believing that there was not, as a result of such encouragement; so the onus is on the defendant.
35. As to unconscionability it is said that that has not been established. On the contrary, it seems to me, again, that it is as clear as can be, and that the instincts of the courts below was quite correct. It would be surprising indeed, if after going along with proposals with enthusiasm (as the evidence indicates here) a tenant could turn round and say "you were in breach and now I am entitled to attribute my loss of business to your breach". It seems to me quite unconscionable, all the more so when in this case, (unlike for example, Taylors Fashions) the tenant says that he was fully aware that there was a breach of the lease. He asserts that he had it in mind, but deliberately decided not to raise it. In Taylors Fashions there was a mutual mistake; so this case is considerably stronger in that respect. It follows, in my view, that the courts below reached the right result even if they did not reason it out as fully as they might have done. Far from considering that this is a case where Miss Windsor can support her prospects on the construction point by saying that on other points she has a strong ground for thinking she can succeed, I consider that on the question of proprietary estoppel there was never any real prospect of success and that there is certainly not any important point of principle or practice or any compelling reason for this court to hear an appeal.
36. I need not, in the circumstances, deal at any length with the question of causation and damages. There is force in Miss Windsor's point that in cases involving expert evidence courts should not criticise a litigant for failing to produce expert evidence before courts have given directions. On the other hand, as has been pointed out, here the defendant himself, in response to a challenge, sought to establish his case by approaching experts. The results were, one can only say, extremely weak. I am not surprised at the comments made by the courts below on the subject of valuation and loss. Neither the consultants' evidence nor the accountant's evidence gets one anywhere at all. The consultant's evidence of actual valuation may be correct, but it says nothing about any difference in valuation. The case made is also based on a remarkable turnover figure. The accountant's letter attesting to fall in turnover from October 1998 onwards does nothing to attribute that to the asserted problems about pedestrian access. The enthusiasm about the change of the precinct, and the failure to complain until these proceedings were begun are further telling factors in relation to the merits of any claim. There were other factors before the courts below in relation to the merits but I need not go into them.
37. The upshot is that, in my judgment, an appeal would not only have no real prospect of success, but would not come near crossing the hurdle required by Part 52.13, namely, that it should raise an important point of principle or practice or there should be some other compelling reason for the Court of Appeal to hear it. That is the decisive test which I have to apply. I therefore dismiss this renewed application.
(Application refused with costs).