England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (Lands Chamber)
Mr P R Francis FRICS
[2010] UKUT 99 (LC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/02/2011

Lord Justice Tomlinson :

1. This is an appeal from a decision of the Upper Tribunal (Lands Chamber) made by Mr PR Francis on 9 April 2010. By that decision it was determined that the compensation payable by the Respondent acquiring authority to Mr Terence Welford, the Claimant below and the Appellant here, in respect of losses alleged to have occurred as a result of the compulsory acquisition of his freehold interest in a piece of land in East London was £8,641.50. His claim had been for some £136,000 odd. It related to the acquisition of a very small piece (20 square metres) of forecourt and access yard to the front of office, warehouse and showroom premises at Worldwide House, Lanrick Road, London E14 together with half of the road width (about 134 square metres) of Lanrick Road. The road width was agreed to have no monetary value and no claim was made by the Appellant in respect of the value of the forecourt and access yard. The claim was therefore very largely for loss of rent and injurious affection and was made under the Rules contained in s.5 of the Land Compensation Act 1961, particularly Rule 5(6) and s.7 of the Compulsory Purchase Act 1965 which provide, respectively, as follows:-

"Land Compensation Act 1961

Part II

Provisions determining amount of compensation

General provisions

5 Rules for assessing compensation

Compensation in respect of any compulsory acquisition shall be assessed in accordance with the following rules:

. . .

(6) The provisions of rule (2) shall not affect the assessment of compensation for disturbance or any other matter not directly based on the value of land:

. . .

Compulsory Purchase Act 1965

7 Measure of compensation in case of severence

In assessing the compensation to be paid by the acquiring authority under this Act regard shall be had only to the value of the land to be purchased by the acquiring authority, but also to the damage, if any, to be sustained by the owner of the land by reason of the severing of the land purchased from the other land of the owner, or otherwise injuriously affecting that other land by the exercise of the powers conferred by this or the special Act."

2. Determination of this straightforward claim involved the resolution of some factual issues and a relatively routine assessment of loss. It was no doubt for this reason that Mr Christiaan Zwart for the Claimant in his opening skeleton argument to the tribunal said:

"No points of law arise in this reference, and the claimant relies on trite law."

Mr Francis records at paragraph 52 of the decision that Mr Richard Honey for his part, for the Respondent Transport for London, to which I will refer hereafter as "TfL" agreed that the claim did not raise any novel point of law, but said it did raise legal issues relating to the compensation code. So it did, but these issues were familiar and well-travelled territory. At the end of two days of oral evidence Mr Francis directed that closing submissions should be put into writing rather than adjourning for oral submissions. It is not I think said that at the time either counsel suggested that this was an inappropriate course. Indeed, it must have appeared to be the appropriate and the proportionate course. It is right to record that Mr Honey's Closing Submissions, which arrived first, ran to 54 pages, with reference to 16 authorities, but this consisted of a commentary on the evidence and an attempt to summarise the largely uncontroversial principles which should inform the tribunal when assessing compensation as enunciated in the various authorities. I doubt if anything said in this document came as a surprise either to Mr Francis or to Mr Welford and his advisers in the light of the manner in which the authority had presented its case at the hearing. It evidently was a surprise to Mr Francis to receive thereafter from Mr Zwart a document 89 pages in length accompanied by 49 authorities, to which reference was therein made. Mr Francis was undaunted by this approach, simply recording:-

"54. It has to be said, I think, that the length and detail of the claimant's submissions were out of all proportion to the nature, extent and quantum of the dispute between the parties, and also, in part, sought to advance arguments that were clearly contrary to the agreed statement.  It would equally be disproportionate for me to make any attempt [to] summarise those submissions at any length.  I simply refer to them, as far as is necessary within my conclusions below."

However he felt moved to make some more general observations, drawing on what has recently been said in this court about a pernicious modern tendency. Thus he went on:-

"55.        The closing submissions were, of course, in addition to full and lengthy skeleton arguments that had been received from both parties prior to the hearing.  The nature of skeleton arguments, and volumes of papers generally before the court have been the subject of critical comment in two recent judgments of the Court of Appeal: see Tombstone Ltd v Raja and Another [2008] All ER (D) 180 (paragraphs 122 – 128) and Midgulf International Ltd v Groupe Chimique Tunisien [2010] EWCA Civ 66 (paragraphs 71 – 75).   In Midgulf, Toulson LJ said, after summarising the extent of Midgulf's documentation:

"72    I am afraid that this case is a grotesque example of a tendency to burden the court with documents of grossly disproportionate quantity and length.   It is a practice which must stop.   Far from assisting the court, it makes the work of the court infinitely harder. Hours had to be spent reading through Midgulf's voluminous skeleton arguments, and they were largely wasted hours.  It will no doubt have added greatly and unnecessarily to the costs of the appeal." 

At para 73, after pointing out that the issue before the court was a very short one, he said:

" … The ordinary principles of contract law in this area are so well known there was no need for reference to authorities, let alone well over 100 authorities."

He went on to refer to Tombstone and set out paras 125 – 128 of that judgment before concluding:

"75    The problem has not lessened, and the present is a particularly egregious example… That [the burdening of the court] may accord with the practice in other jurisdictions, where it is customary for appellate courts to limit the time allowed for oral argument to a short period, but it is emphatically not the proper practice in this jurisdiction."

56. Although the criticisms in those cases were aimed particularly towards skeleton arguments and other documentation placed before the court, I think that those preparing closing submissions should be mindful of what was said.  Whilst reference to authorities, and inclusion of those that are particularly relevant to the particular case before the Tribunal, are of course to be encouraged, it is clear to me that what I received here was, as I have said, totally disproportionate to the matter in hand."

3. I sympathise with Mr Francis, of whom it is now said by Mr Zwart in his Grounds of Appeal that in making his determination he came to a "hasty" decision, acted contrary to the principles of natural justice and furthermore that his "criticisms" suggest that he failed to comprehend the parties' submissions.
4. Mr Zwart's Closing Submissions are fortunately not before us and so I shall be circumspect in my language. However it cannot be said too strongly that it is simply unacceptable to burden a tribunal in the manner which apparently occurred here. It is unhelpful, wasteful and disproportionate. It is also self-defeating. It could well lead to a tribunal losing sight of the wood for the trees, although to his credit Mr Francis was not led astray. The particular vice here however was that the principal arguments presented apparently flew in the face of facts which were agreed and were inconsistent with the Claimant's own evidence. Of course in fairness to Mr Zwart when he put in his closing submissions to the tribunal he did not know how certain issues of fact would be resolved. However I regret to say that his written submissions to this court suffered from the same vice and were also for the most part upon analysis irrelevant to anything which the tribunal had to decide, and, therefore, irrelevant to anything which this court has to decide.
5. I can take from the decision the facts, the claim and the issues:-

"Facts

6.           The parties produced a statement of agreed facts and issues remaining to be determined by the Tribunal from which, together with the evidence, I find the following facts.   The subject premises comprised a post-war two storey brick and flat roofed showroom/office building together with an adjacent single storey steel framed and metal clad warehouse located on the north west side of Lanrick Road, E14 on the inside of a point where the road performed a 90 degree turn to the left (approaching from the west).   The office building comprised ground floor showroom, office and kitchen of 122.9 sq m (1,323 sq ft) with offices and kitchen above of 79.5 sq m (856 sq ft) and further offices of 26.2 sq m (281 sq ft).  The front elevation of this building, which included the main staff/customer access faced approximately due north and gave onto a triangular concreted car park which was shared with an adjacent building (referred to as the "City Eggs building"), and accessed off the north-west going section of Lanrick Road.   The warehouse building of 289.1 sq m (3,112 sq ft) was attached to the rear, south, elevation of the World Wide House offices, and faced onto a small, separate, yard which had vehicular access off the north–east going part of Lanrick Road.  Between the two yards was a further small triangular yard formerly used for storage.     

7.           The premises were located off the A13 East India Dock Road, from which Lanrick Road was accessed, and in the vicinity were a waste transfer station (opposite), further offices (adjacent to and outside the claimant's ownership), the City Eggs Building (owned by the claimant), two further warehouses and the Blackwall Trading Estate.  The scheme necessitating the purchase by TfL of a small part of the yard serving the World Wide House warehouse building (and the half-road width) encompassed major improvements to the alignment of the A13.   This included a minor change to the layout of Lanrick Road, effectively moving the north-east going section (off which the warehouse was accessed) about 20' to the north, thus reducing the size of the entrance yard by approximately that amount.  

8.     The entirety of World Wide House was let to World Class Gifts Ltd (WCG) – with which there was a family connection between the claimant and a director – under a lease dated 2 May 1989 for a term of 20 years at an initial rent of £10,400 pa subject to 5 yearly rent reviews.   It was agreed that the market rental value at May 1999 was £26,000 and, at the valuation date, £30,000.  WCG undertook the import and onward distribution of giftware sourced principally from Europe and received regular deliveries to the warehouse building by particularly large, 15m long, European articulated trucks.   On 27 January 1999, Notice to Treat was served on the tenant (the same date as the Notice served upon the claimant).   In June 1999, a highways engineer (appointed by the claimant freeholder) concluded that:

"…the proposed re-alignment of Lanrick Road has a significantly detrimental impact on [World Wide House] in that it results in the building no longer being able to be serviced by the commonly used 15m articulated vehicles." 

TfL's expert technical highways advisor, in a letter of 3 August 1999, accepted that:

"….it is not possible to position a 15m articulated vehicle on or adjacent to the delivery bay without obstructing the footway or carriageway…"

and said

   "In conclusion we concur it is not possible to position a 15m articulated vehicle without obstructing the public highway … it would be possible to use a 10m or 12m long unit with the tractor units removed, although the 12m long uncoupled unit might still infringe 1m into the footway." 

9.           On 4 November 1999, the claimant agreed a rent concession, requested by the tenant in respect of alleged trading difficulties caused by the scheme, to £13,000 pa "for the forthcoming year".     On 27 April 2000 WCG's agents submitted a compensation claim based on relocation of the business, but it subsequently transpired that no suitable alternative premises could be found and, on 2 October 2000, TfL agreed to proceed on the basis of total extinguishment. WCG vacated World Wide House on 12 January 2001 and the tenant's claim was settled by agreement (following a reference to this Tribunal) in September 2003 at £214,324.91 plus costs.

10.        The acquiring authority said that it took over the rights and obligations of the WCG lease at the valuation date, but did not occupy the premises.  TfL subsequently entered into a Deed of Surrender on 29 June 2001 on payment of a premium to Mr Welford in the sum of £21,625.   The premises remained vacant from the date WCG left until it was re-let to Mainport Ltd in September 2002 at £31,200 pa. 

11.        The adjacent City Eggs building, which lies to the north of World Wide House, was not affected by the CPO in terms of land requirement.  It extended to 390 sq m (4,197 sq ft) and was a modern steel framed and clad warehouse which was let by the claimant to City Eggs on a periodic tenancy at a rent of £26,000 pa.  That figure was agreed to be the market rental value as at the valuation date.   City Eggs gave to the claimant notice of intention to leave on 24 August 2001, said to be due to the inability to operate a food business in the scheme works environment, and vacated the premises on 28 September 2001.   They were re-let to Docklands Eggs some 34 weeks later, in June 2002, at the same rental.

The claim

12.        The freeholder's claim was thus:

(1)         Reimbursement of the rent concession allowed to the tenant from May 1999 to December 2000:  £21,666.

(2)         Loss of rent on World Wide House from February 2001 to September 2002: £45,000 (Less the surrender premium of £21,625) leaving £23,375.

(3)         Injurious affection – Reduction in freehold value to World Wide House due to access restrictions: £63,750.

(4)         Injurious affection – loss of rent on City Eggs unit: £17,000.

(5)         Claimant's personal time: £10,000.

               Total £135,791.

(6)         Pre reference costs

 Issues

13.        The issues to be determined by the Tribunal are:

1.      Whether the alleged loss of pre-possession rental income from WCG (£21,666) is compensatable, and if so whether any is due.

2.      Whether any loss associated with the post-possession letting void of World Wide House (£23,375 net) is compensatable, and if so whether any is due.

3.      Injurious affection – loss of value to World Wide House (£63,750).

4.      Injurious affection - loss of rent on the City Eggs building (£17,000)

5.      Claimant's personal time in relation to the reference.

6.      Pre-reference costs"

6. The acquiring authority valued compensation at £1,750. This comprised an arbitrary £1,000 for Mr Welford's personal time spent on matters relating to the reference and an arbitrary £750 in respect of the value of the land taken, for which, as I have already mentioned, no claim was in fact made. This was said by Mr Moore, the acquiring authority's consulting surveyor, to be in line with sums paid for other small pieces of land that had no particular or material value.
7. Mr Francis heard oral evidence from Mr Welford and from the two consultant surveyors, who gave expert valuation evidence, Mr Cobb for Mr Welford and Mr Moore for TfL.
8. At paragraphs 14-51 of his decision Mr Francis comprehensively summarised the evidence given to him and the cases advanced by the respective parties in reliance thereon.
9. At paragraphs 52-56 Mr Francis lamented the nature of the Claimant's written submissions in terms which I have already largely reproduced.
10. At paragraphs 57-81 he expressed his conclusions. I can summarise them quite shortly as follows:-

Pre-acquisition loss of rent

Noting that the principle of pre-possession losses of rent being compensatable was agreed (see Pattle v Secretary of State for Transport 2009 UK UT 141 (LC)) he directed himself that the question here was whether the three principles stated by Lord Nicholls in Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111 at page 126 were satisfied. Those principles are, first, that there must be a causal connection between the acquisition and the loss in question, second, that the loss must not be too remote and third that the Claimant must have taken all reasonable steps to eliminate or reduce the loss. Mr Francis concluded that it was not the prospective acquisition of the reference land and any potential effect this might have on rental value that caused the Claimant's alleged loss in this regard, but the prospect of the roadworks. He also concluded, at paragraph 62, that it was not reasonable for the Claimant to agree what was a purely arbitrary reduction in rent for the period prior to the events that were claimed to have caused the loss in rental value. Mr Welford had confirmed in cross-examination that there were no roadworks in Lanrick Road prior to the date of possession, and that the premises were not affected during that period. He had not checked with the acquiring authority when the works were expected to start, nor did he take any legal or professional advice before agreeing to the abatement.

Loss of rent during letting void

It was here that Mr Francis was faced with an argument, repeated before us, that since the lease to WCG was not written under deed, the obligation to pay rent was incapable of assignment and so the acquiring authority was under no liability thereunder. Mr Francis concluded that "in the absence of a deed, the lease took effect in equity only and there can be no assignment of an equitable interest entitling the landlord to sue the purported assignee for the rent." However he also pointed out that the parties by entering into the Deed of Surrender came to a contractual agreement that assumed that an assignment of the lease had taken place. Under that agreement TfL had paid the rent due under the lease from 27 February to 24 December 2001. TfL took over all of WCG's liabilities and stood in its shoes as tenant. This had been acknowledged by the parties in their Agreed Statement of Facts prepared for the purpose of the determination of a Preliminary Issue by the President of the Lands Tribunal, as it then was. Mr Francis set out the relevant clauses of the Deed of Surrender, to which I will return hereafter, and concluded:-

"72.        This is clear, and the arguments advanced by Mr Zwart on this issue are therefore not only new, but fly in the face of what was indisputably understood, and agreed, by the parties.   The parties, by entering into the deed of surrender, came to a contractual agreement that assumed an assignment had taken place.  That, in my view, precludes the claimant from arguing that the lease had not been assigned on the date of entry, or at all.   The claimant is estopped from so asserting and from asserting that, in the absence of a deed, the acquiring authority would not have been liable as tenant for the rent for the rest of the term.  For the purposes of my decision on the issues of post acquisition rental void, and injurious affection, therefore, I proceed on that basis."

In any event there was no loss of rent between 27 February and 24 December 2001, as the Claimant acknowledged by giving credit for the surrender premium, which expressly comprised the rent due under the lease for that period, together with the equivalent of empty rate liability for the premises over that same period. As to the balance of the period of the letting void, Mr Welford, as he acknowledged, had been under no obligation to accept the surrender. It was an entirely commercial decision taken by him. Although not expressly noted by Mr Francis at this point in his determination, the inducement to Mr Welford had been that TfL would release the £60,000 that it had been holding against WCG's compensation in case Mr Welford pursued it as successor to WCG for arrears of rent and dilapidations – see paragraph 18 of his decision. Mr Welford's sister, Mrs Savic, was one of the directors of WCG. Finally and for good measure Mr Francis concluded that Mr Welford had failed properly to mitigate his loss. At paragraph 73 he said this:-

". . . .   I find that, in any event, Mr Welford failed to mitigate the losses that he did incur.  Although the evidence suggests that, during the roadworks, the area was in a mess and could have been considered unattractive to potential tenants, I am sure any prospective occupier would have realised they were only temporary.  Access to the premises was, as confirmed by the HA, maintained at all times and I am far from convinced that the claimant could not have found an agent willing and able to market the building.   It was suggested that people of the claimant's ilk often do not employ agents because of their contacts network, but to fail to do so, in my view, suggests that reasonable steps were not taken to mitigate any losses.  I also note that Mr Welford admitted that he did not bother to promote the premises to the market "for some time after October 2001" because he thought he would be wasting his time.  I do not accept this as taking reasonable steps.   It is a fact that he achieved, when he did re-let the building, a rent that was higher than that to which TfL would have been committed until the next rent review in 2004."

Injurious affection – effect on value of Worldwide House

Apart from resolving a debate as to the date of valuation, his decision as to which is not I think challenged, Mr Francis expressed his conclusion in paragraph 75:-

"On the basis of the evidence, I am satisfied that the compulsory acquisition of the reference land value did not adversely affect the value of the premises as an investment.   Mr Cobb accepted in cross-examination that World Wide House was a "hybrid" building and not principally a warehouse.  The majority of potential users would not, therefore, have the same, unique, requirement for access by very large articulated vehicles that WCG had.  No objective evidence was produced to support Mr Cobb's opinion that the rental value and yields would reduce, and I find that his arguments are not made out."

Injurious affection – City Eggs Building

Mr Francis' conclusion is at paragraph 77:-

"This head of claim was made under section 7 of the Compulsory Purchase Act 1965.  However, putting aside whether or not the land was held with the subject land, there was no suggestion that the value of the land had been depreciated – it was simply a claim for loss of rent.   I do not consider it necessary to go into all the legal argument that ensued on this issue as, in my judgment, the loss of rent cannot be put down to the CPO, the subject of this reference.   The tenants vacated (without giving the required 3 months notice) in August 2001 some 6 months after the date of entry into World Wide House.  By then, the majority (but not all) of the roadworks had been completed, and I accept the acquiring authority's evidence that it had no records of any complaints being made by City Eggs, or for that matter, any of the other local occupiers.  It was also stated that the waste transfer station opposite had been relocated, and there is no reason therefore not to suppose that by a time very soon after City Eggs left, the area would, if anything, be better than it had been previously.  I also note that there was no evidence that Mr Welford took steps to market the premises, and he thus again failed to take reasonable steps to mitigate his loss."

Claimant's personal time

Mr Welford claimed for two visits per week for two hours at £100 per week for a period of eighteen months from February 2001 until September 2002. This claim failed, on the basis that the parties had agreed that until 29 June 2001 TfL had taken over the rights and responsibilities of the former tenant. Whilst TfL did not physically occupy the premises they would have been responsible for any damage or dilapidations and it was not Mr Welford's job to carry out regular inspections. It was Mr Welford's choice to accept the surrender and the time he spent at the building thereafter was his concern. In the absence of any records Mr Francis allowed fifty hours at £50 per hour (agreed by the acquiring authority to be an acceptable rate for time spent on matters relating to the reference.)

Pre-reference costs

There is no challenge to the assessment by Mr Francis in the sum of £5,391.50.

Value of land taken

Unsurprisingly, there is again no challenge to the award of £750 in respect of a head of claim which had not been made.

11. Mr Francis summarised his award at paragraph 82:

"82.        The compensation payable to the claimant is determined as follows:
1.      Pre-possession loss of rent	Nil
2.      Post-possession letting void	Nil
3.      Injurious affection to World Wide House	Nil
4.      City Eggs loss of rent	Nil
5.      Claimant's personal time	£2,500.00
6.      Pre-reference costs	£5,391.50
Value of land taken	£   750.00
Total	£8,641.50"

The arguments on appeal

12. At the outset of the discussion I would observe that the conclusions reached by Mr Francis seem to me to rest entirely upon his findings of fact, directing himself where necessary to principles of law which either were not or could not sensibly be disputed.
13. The principal argument addressed to us on the appeal related to the tribunal's conclusion at paragraph 72. It was said that TfL had placed no reliance upon an estoppel and that the Claimant had had no opportunity to meet that point. It was said that no estoppel could be spelled out of the terms of the Deed of Surrender. It was said that Mr Francis was wrong to treat the "lease of tenure" as an equitable lease because it failed to identify the premises demised. It was said that over and above the problems caused by the absence of a deed there could in any event as at 27 February 2001 have been no effective assignment of the lease to TfL because s.2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 requires that a contract for the sale or other disposition of an interest in land be made in writing, which was lacking until the deed of 29 June 2001 as was any consideration for the assignment.
14. These arguments are, I think, unrealistic in the light of the manner in which the parties and WCG had at all times treated the nature of the relationship between themselves. Furthermore these arguments are, in my view, simply irrelevant to the very narrow factual issues which the tribunal had to resolve. This was a straightforward case, which it was unnecessary to complicate.
15. I can understand that had the acquiring authority pursued an argument to the effect that the claim for injurious affection to Worldwide House was defeated by the betterment created by the superior (blue chip) covenant of TfL as the tenant thereof, it might have been necessary to examine more closely the position as it stood at the date of valuation. Mr Moore had indeed pursued such an argument in his report of 15 January 2009. That was challenged by Mr Cobb, amongst other grounds on the basis that Worldwide House was not retained land enhanced by development carried out under the scheme for the purposes of s.7 of the Land Compensation Act 1961. The betterment was identified as an issue to be determined in a Joint Statement of Agreed Facts and Issues prepared in May 2009. However as Mr Francis records at paragraph 38 of the decision, at the commencement of his examination in chief Mr Moore accepted that any betterment figure should not be deducted from any compensation otherwise due. That point therefore fell away. It is certainly not a live issue now.
16. Furthermore, at an early stage in the dialogue between the parties, TfL had asserted that the "lease" was in fact an annual periodic tenancy that could be terminated on six months notice. That assertion was contained in a letter from Mr Moore, written on behalf of TfL, on 7 June 2001. That had been a negotiating stance as Mr Moore explained in evidence – see paragraph 39 of the decision. However at the hearing Mr Honey for TfL accepted that the tenancy would have subsisted until 2009 if it had not been consensually surrendered – see paragraph 25 of the decision. As it happens that coincided with Mr Welford's evidence, presumably of his contemporary understanding, that the single paragraph lease did not contain a break clause and, therefore, were it not for the surrender, TfL would have continued to be liable for the rent.
17. By the time Mr Francis came to make his decision therefore all this was water under the bridge. It is worth reflecting how matters then stood.

i) The Lease of Tenure is a single page document which records:

Twenty year Lease commencing 2 May 1989

Rent per annum £10,400

Reviewed every five years

Signed on Behalf of Mr T Welford, Landlord and

Signed on behalf of 'World Class'

Between the signatures on behalf of 'World Class' by Mr C Defoe and Ms V Savic is the stamp of World Class Gifts Ltd, with its address, Lanrick Road, E14 6JF and its telephone number

ii) On 25 October 1999 WCG, over the signature of Vivienne Savic, wrote to Mr Welford in these terms:-

Dear Mr Welford,

Regarding the forthcoming rent review, would you please consider the imminent road works and disruption these will cause to our business. We feel that due to the long standing tenancy we have had and good record of payment, would you please be able to reduce the rent for the coming year.

iii) On 4 November 1999 Mr Welford replied to Ms Savic as follows:-

Dear Mrs Savic

With reference to your recent communication, I have instructed my solicitor to notify you that due to our long standing relationship I have agreed a reduction to £13,000 per annum for the forthcoming year.

iv) On 8 February 2001 Messrs Hughmans, solicitors for Mr Welford, wrote to Mr Cobb as follows:-

Dear Mr Cobb

"RE: Worldwide House

Further to correspondence, I confirm I act on behalf of Terry Welford Esq, the freeholder and lessor of the above premises.

The terms under which the premises were let to World Class Gifts Limited were as follows:

1. 20 year term from 1989

2. 5 year rent review;

3. Internal redecoration only;

4. The last rent review was 1999 when a rental therefrom was agreed at £500.00 per week.

I understand however, that due to the uncertainty of the pending development a concessionary rental was agreed between the parties at the rate of £13,000 p.a. This was personal to the Lessee. The rent has been paid to date by the Lessees up and until 25^th December 2000.

You indicated that Transport for London was now taking over the Lease and obviously rental is accruing at the rate of £500.00 per week as from December 25^th and there is now outstanding 6 weeks, namely £3,000.00 to which statutory interest of 8% is accruing.

I look forward to hearing from you."

v) The Deed of Surrender is dated 29 June 2001. It provided, inter alia:-

"1. Definition and Interpretation

1.1 In this deed the words and expressions in this clause are to have the meanings specified below:

Expression Meaning

"Lease" means the lease or sublease details of which are given in Schedule 1;

"Premises" the premises demised by the Lease;

. . .

2. Recitals

2.1 This deed is supplemental to the Lease and the Documents

2.2 Devolution of title

(a) The reversion immediately expectant on the terms of years granted by the Lease remain vested in the Landlord.

(b) Pursuant to the Compulsory Purchase Order No. P513 1998 ("CPO") and TfL having entered into possession of the Premises on or about 27^th February 2001 ("Date of Entry") TfL are in occupation of the Premises.

(c) Prior to TfL entering into possession of the Premises the residue of the term of the Lease was vested in World Class Gifts Limited (Company Number 02766850) whose registered office is at Tish Press & Co. of Cambridge House 27 Cambridge Park London E11 2PU ("World Class Gifts").

(d) The interest of World Class Gifts in the Premises has been or is in the course of compulsory acquisition by TfL

2.3 Agreement to surrender

It has been agreed that TfL will surrender all his estate and interest in the Premises to the Landlord in consideration of payment by TfL to the Landlord of the amounts specified in Clause 3.1 and the release of TfL by the Landlord contained in this deed and that the Landlord will accept such a surrender in consideration of the payment by TfL of the amounts specified in Clause 3.1 and the release of the Landlord by TfL contained in this deed.

3. Surrender and Acceptance

3.1 Surrender

In consideration of

(a) the sum of £8,320 representing rent due under the Lease from the Date of Entry to the 23^rd June 2001; and

(b) the sum of £13,000 representing rent due under the Lease from 24th June 2001 to 24^th December 2001; and

(c) the sum of £305 representing the equivalent of empty rate liability of the Premises for a period ending 24^th December 2001

now paid by TfL to the Landlord (receipt of which the Landlord acknowledges) and of the release of TfL by the Landlord contained in this deed TfL with full title guarantee surrenders yields up and releases to the Landlord all his estate interest and rights in the Premises (if any), to the intent that the residue of the term of years granted by the lease and all or any other estate interest or rights of TfL in the Premises, whether granted by or arising from the Lease, is to merge and be extinguished in the reversion immediately expectant on the term of years granted by the Lease.

. . .

4. Release

The Landlord and TfL each release the other party from all his obligations contained in and all liabilities whatever under the Lease, whether past present or future and all damages, actions, proceedings, costs, claims, demands and expenses arising from such obligations and liabilities.

. . .

6. Compensation

TfL shall have the right to refer to the existence of this Deed when calculating net compensation payable to the Landlord pursuant to or as a consequence of the CPO and may refer to any dispute resolution procedure or the Lands Tribunal to this Deed.

. . .

Schedule 1

Lease

Date Parties Premises Term

Undated Mr T Welford (1) World Wide House 20years commencing

World Class Gifts (2) Lanrick Road 02.05.1989

London E14"

vi) With the possible exception of the words "if any" bracketed in clause 3.1 this document presupposes that TfL has succeeded to the interest and obligations of WCG under the lease commencing 2 May 1989. Mr Zwart suggested that the use of those words introduced an element of doubt. It is certainly cautious drafting, but it does not detract from the sense of the document. Mr Zwart also submitted that the lease referred to in the Schedule is not the same as the lease between Mr Welford and WCG which began on 2 May 1989 because the latter did not identify the demised premises. I am afraid that I regard that submission as absurd.

vii) On 8 August 2001 Mr Moore wrote to TfL:-

"You will recall that we recently arranged an agreement between Mr Welford, World Class Gifts and TfL to surrender the remaining term of the agreement which TfL took over from World Class Gifts.

As part of that agreement, TfL undertook to pay a total of £21,625 to release them from the ongoing rental liability of £25,000 per annum for the remaining term."

viii) Notice of reference of the Claimant's claim to the Lands Tribunal was not sent until 22 February 2007. This gave rise to a dispute as to whether the reference was out of time. This was resolved as a Preliminary Issue by the President, Mr George Bartlett QC, by a decision of 10 April 2008 following a hearing on 11 January 2008. For the purposes of that hearing the parties' solicitors, Messrs Hughmans for Mr Welford and Messrs Eversheds for TfL, prepared and signed an Agreed Statement of Facts. That read:-

"1. For the purposes of the A13 Trunk Road (Ironbridge to Canning Town Improvement) Compulsory Purchase Order (No. PS13) 1998, land was identified as Plot 24;

2. The land identified as Plot 24 comprised part of Lanrick Road and part of the forecourt of premises known as World Wide House.

3. At the time of making the Compulsory Purchase Order the freeholder owner of the property was the Claimant.

4. At the time of making the Compulsory Purchase Order, a company known as World Class Gifts Limited held a leasehold interest in World Wide House and operated a business from those premises.

5. Notice to Treat in respect of Plot 24 was served on the Claimant on 27 January 1999.

6. Notice to Enter in respect of Plot 24 was subsequently served on the Claimant.

7. The Claimant was given notification of the Acquiring Authority's intention to enter and take possession of Plot 24 on 27 November 2000, by letter dated 10 October 2000.

8. World Class Gifts Limited continued to trade from World Wide House until 27 February 2001.

9. World Class Gifts Limited was not able to properly operate its business without plot 24 and consequently that business was compensated on a total extinguishment basis by the Acquiring Authority.

10. The Acquiring Authority took over the lease of World Wide House from World Class Gifts Limited on 27 February 2001.

11. On 29 June 2001 the parties entered into a Deed of Surrender by which the Acquiring Authority agreed to give up its interest in World Wide House and to pay the Claimant £21,625, in respect of loss of rent under the lease from 27 February 2001 to 24 December 2001."

This could not be more clear as to the way in which the parties treated the position.

ix) The President was not satisfied on the evidence before him that the acquiring authority had taken possession of any part of Plot 24 before 27 February 2001. That was therefore the date of entry on the land. Somewhat ironically as it now appears Mr Zwart had argued in the alternative that because the Deed of Surrender identifies the date of entry as 27 February 2001 so TfL was estopped from contending for any other date. The President did not need to deal with this argument, but in the course of expressing his view on it he remarked that the lease was "somewhat exiguous" and noted that it did not identify the premises. He did not however cast any doubt upon its efficacy as a lease, at any rate for any purpose relevant to the determination of the compensation due to Mr Welford.

x) There was a further Joint Statement of Agreed Facts and Issues to be determined prepared by the two consulting surveyors on 28 May 2009 for the purpose of the hearing before Mr Francis. I have already referred to it at paragraph 15 above. That read, in part:-

". . .

2.2 World Wide House was let to World Class Gifts Ltd ("WCG") under a Lease from 2 May 1989 for a term of 20 years at an initial rent of £10,400 per annum exclusive, subject to five yearly rent reviews.

. . .

6.1 Under a Deed of Surrender dated 29 June 2001 the Claimant received a payment of £21,625 from TfL in consideration of the surrender of the lease of the Property"

xi) Finally at the hearing Mr Welford gave evidence as to his understanding that TfL had become successors of WCG under the lease. The retention from WCG's compensation was posited on his ability to pursue TfL for arrears of rent and repairs and the surrender presupposed an on-going liability.

18. By the end of the hearing before Mr Francis the only question to which the on-going status of the lease after 27 February 2001 was of any relevance was the loss of rent between then and September 2002. This was claimed at £26,000 per annum, which was agreed to be the rental value at the review date of May 1999, notwithstanding that that review had been missed. Hence Mr Welford described his rent concession to £13,000 per annum as being 50%, notwithstanding the rent actually being paid at the time of the concession was £18,000 per annum. TfL paid rent at the rate of £26,000 per annum for the period 27 February to 24 December 2001. There only remained therefore the claim in respect of the period between 24 December 2001 and September 2002. As to that there is a clear finding that Mr Welford failed to take reasonable steps to find a tenant.
19. In these circumstances the principal arguments raised on appeal seem to me of no relevance to the outcome of the claim. It is true that Mr Francis also found that Mr Welford was not obliged to accept the surrender, and that if he had not done so no void would have occurred. That finding is predicated upon TfL being bound by the lease before the surrender was agreed. But Mr Francis immediately follows that finding with his further finding that, in any event, Mr Welford failed to mitigate the losses that he did incur. The earlier finding was therefore unnecessary to the ultimate conclusion.
20. I would however go further. Against the background which I have set out Mr Honey submitted to Mr Francis, as he records at paragraphs 68 and 69 of the decision, that the Claimant could not now resile from the proposition (a) that there had been a lease between him and WCG and (b) that TfL had taken over all of WCG's liabilities and stood in its shoes as tenant. That submission was unanswerable, which is why Mr Francis remarks at paragraph 72 of his decision that the new arguments of Mr Zwart advanced by him in his closing written submissions flew in the face of what was indisputably understood and agreed by the parties. The parties agreed to proceed and did proceed on the basis that TfL was liable to pay rent in place of WCG. All that needed to be decided was that the claimed rent had been received until December 2001 and that Mr Welford had not properly marketed the property so as to ensure that it was let thereafter, despite having six months notice of the void.
21. However Mr Francis did go further, and in my judgment he was fully justified in so doing. He decided that the terms of the Deed of Surrender precluded an argument to the effect that TfL had not assumed liability under the lease with effect from 27 February 2001. By that deed TfL surrendered an interest in the premises, which could only be understood as the leasehold interest which until 27 February 2001 had been vested in WCG. I am not sure that the label "estoppel" was either necessary or appropriate. I think that Mr Francis was saying no more than that the parties had made an agreement which dealt with the incidence of the liability for rent under the lease as from 27 February 2001 and that one party could not now unilaterally depart from it. However if that amounts to an estoppel it is certainly not an estoppel by inference of the sort deprecated by Bowen LJ in Onward Building Society v Smithson (1893) 1 Ch 1 at 14. It is rather giving effect to the plain words of the Deed of Settlement.
22. The case is also very different from Re: Distributors and Warehousing Limited [1986] BCLC 129 with which we were much pressed by Mr Zwart. There the conveyance of a freehold reversion expectant on a lease was held insufficient to amount to an assignment of a guarantee in favour of the lessor. A subsequent deed of variation of the lease agreed between the new freeholder and the guarantors, who were party to the lease, was held insufficient as a matter of construction to amount to the undertaking of a fresh obligation of guarantee towards the new freeholder, nor did it estop the guarantors from denying any liability to the new freeholder. The Deed of Surrender here by contrast expressly acknowledges a liability owed by TfL as lessee under the lease formerly with WCG.
23. I also reject the suggestion that the Claimant had been taken by surprise by the approach adopted by Mr Francis. Mr Honey may not have attached the label "estoppel" to the effect of his submissions but at paragraphs 114 and 117 of his own written submissions dated 15 January 2010 he had said this:-

"114. It has long been common ground between the parties that TfL took over the leasehold interest of World Class Gifts Ltd. A string of documents provide the evidence of this. The Claimant cannot now change his position as to the transfer of the lease to TfL, given what was said and done at the time – including the agreement of the Deed of Surrender.

. . .

117. . . . The Deed recognised the existence of TfL's tenancy of the Property. Having agreed that in the Deed, the Claimant cannot now change his position at this late stage."

24. Those passages, which reflect copious other statements to similar effect in the written submissions, and Mr Honey's reference to the other background material which I have summarised above, were in turn summarised by Mr Francis at paragraphs 68 and 69 of the decision and they formed the basis of his conclusion. Mr Zwart had the opportunity to respond. The exception taken to the use of the word "estoppel" is simply semantics. In any event the suggestion that a party is taken by surprise by a proposition to which he has twice agreed in Statements of Facts agreed for the purposes of the proceedings needs to be approached with some reserve.
25. That disposes of grounds 1, 2 and 3 of the Grounds of Appeal. For completeness I set out the Grounds below:-

"Mr Francis :

1. was not entitled in law for the first time in his decision to in fact formulate and rely on behalf of the AA upon an 'estoppel' point not itself expressly advanced or formulated with "clarity" by the AA itself, nor which he had not afforded the Appellant opportunity to meet, and to find against the Appellant on the basis of Mr Francis' novel point (see Article 6(1); Gilbert; Fairmount; Yeoman)

2. was not entitled in law to conclude that the document dated May 1989 entitled "lease of tenure" was a "lease" or an "agreement for a lease" because as a matter of empiric objective fact that document did not identify the "land" (see paragraph 23 of the President's decision in ACQ/26/2007);

3. was not entitled in law to conclude that the document entitled "deed of surrender" or that dated August 2007 entitled "agreed statement of fact" engendered by inference an estoppel (see Re: Distribution; Yeoman; section 2(1) of the 1989 Act);

4. failed to properly direct himself in law on the available objective evidence in reaching his decision; and/or acted irrationally (see Charter Reinsurance; Carter Commercial; Rugby; Slipper; Pattle);

5. gave reasons which remain a mystery as to what moved him on the principal "main issues" identified in the May 2009 "joint statement of agreed facts and issues to be determined" by the "parties" at paragraph 7, and in particular item 7.1; likewise given the matters recorded in the President's judgment; in relation to the Appellant's claim that post-possession losses qualified within section 5(6) of the Land Compensation Act 1961 (see Porter (No, 2)); and the application of Slipper to the assertion that the Appellant was required to not step into the AA's shoes at DL paragraph 62 and his alleged "entirely commercial decisions" at DL paragraph 73)."

26. The only two additional relevant concrete points of principle which I can extract from Grounds 4 and 5 in the light of Mr Zwart's written and oral submissions to us are (i) an assertion that Mr Francis failed properly to construe the letter of 25 October 1999 seeking a reduction in rent and (ii) an assertion that Mr Francis failed to consider the question of injurious affection to the City Eggs Building under Rule 5(6) of the 1961 Act, confining his enquiry to s.7 of the Compulsory Purchase Act 1965.
27. As to the first point, it is true that Mr Francis placed some emphasis upon the fact that in the letter of 25 October 1999 no reference was made to the proposed acquisition of the land required for the scheme but rather reliance was placed upon the imminent roadworks and disruption. However his conclusion was, as he said, based upon the evidence as a whole. He was not construing a contractual document and reliance upon authorities such as Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 is in my view somewhat wide of the mark. Mr Francis also held that it was in any event unreasonable for the Claimant to agree to a purely arbitrary reduction in rent for a period prior to the premises being affected in any way and that the evidence had failed to establish that the premises would have been vacated before they had become unreachable by large lorries if the rent concession had not been granted. There is nothing in this point.
28. As to the second point, it is true that Mr Francis, having recorded at paragraph 57 of the decision that the amounts claimed are based on s.5, Rule (6) of the Land Compensation Act 1961 and on s.7 of the Compulsory Purchase Act 1965, proceeded at paragraph 77 to say that the head of claim for injurious affection to the City Eggs Building was made under s.7 of the 1965 Act. However in that same paragraph he gave two reasons why the claim could not in any event succeed under Rule 5(6). One was that there was no causal connection between the loss of rent and the CPO. The other was that Mr Welford had again failed to take reasonable steps to mitigate his loss. Again, there is nothing in this point.
29. There are many other points raised in Mr Zwart's skeleton argument of 27 January 2011. Some, such as the suggestion at paragraphs 121 and 122 that the decision in Slipper v Tottenham and Hampstead Railway Company (1867) LR 4 Eq 112 invalidates the conclusion that Mr Welford was a free agent in dealing with TfL over the Deed of Surrender, appear wholly misconceived. A common thread running through the submissions is that they contradict the evidence given by Mr Welford at the hearing and/or are irrelevant to any live issue. I do not propose therefore to deal separately with all these points. It is sufficient to say that each is comprehensively refuted by Mr Honey in his skeleton argument of 25 January 2011, which addressed the earlier version of Mr Zwart's skeleton argument deployed on the application for permission to appeal.
30. As I have already remarked the decision made by Mr Francis rested upon his findings of fact. There was ample evidence upon the basis of which he could reach the conclusions which he did, for each of which he gave a clear and cogent explanation. In reaching those conclusions he directed himself correctly by reference to the applicable principles. There was no unfairness in the procedure. There is no basis upon which the decision can properly be impugned.
31. I would dismiss this appeal.

Lord Justice Carnwath

32. I agree

Lord Justice Ward

33. I also agree.