ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
HHJ KAYE QC (SITTING AS A HIGH COURT JUDGE)
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE BRIGGS
MRS JUSTICE PROUDMAN
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HC12F01351 |
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Blueco Limited |
Respondents |
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- and - |
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1. BWAT Retail Nominee (1) Limited 2. BWAT Retail Nominee (2) Limited 3. The Prudential Assurance Company Limited |
Appellants |
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AND BETWEEN: |
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HC12F01748 |
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1. The Prudential Assurance Company Limited 2. BWAT Retail Nominee (1) Limited 3. BWAT Retail Nominee (2) Limited |
Appellants |
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- and - |
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1. Blueco Limited 2. Lend Lease Global Investment Plc 3. Bluewater Lend Lease Limited 4. Lend Lease Corporation Limited |
Respondents |
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WordWave International Limited
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Robin Dicker QC and Julian Greenhill (instructed by Linklaters LLP) for the Respondents
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Crown Copyright ©
The Chancellor (Sir Terence Etherton):
The background
i) the Basic Rent under clause 2.1 (being £40,000, reducing to £10,000 from 1999), which would then be paid by the Banks back to Blueco as the rent under the Ground Lease;
ii) the Variable Rent under clause 2.2 and schedule 4, which was calculated by reference to the amount of the Banks' lending plus interest, and for which the Final Rent Date was 20 June 2034, by which time the lending was scheduled to be repaid; and
iii) the Participation Rent under clause 2.3 and schedule 5, which was based on a percentage of the net rents received from the occupational tenants.
"The Tenant:
2.1 within the period of three months before or one month after any of the Blueco Option Dates shall serve a notice (a Blueco Call Notice) on the Landlord if it is considering exercising or has exercised one of the Blueco Options or
2.2 if by the 30 September 2011 Blueco has not exercised any of the Blueco Options but BMBF has exercised its rights under the BMBF Option shall serve a notice (a BMBF Notice) on the Landlord
requiring that the Landlord notifies the Tenant within twenty Working Days of receipt of the Blueco Call Notice or BMBF Notice (as the case may be) whether the Landlord conditionally wishes to increase the Percentage from 15 per cent to 30 per cent."
"In consideration of the Prudential's consent given above [BLUECO] HEREBY CONFIRM[S] the following:
1. the [FSA] remains unaltered other than as contemplated by the consent given by Prudential …"
The proceedings and the Judge's judgment
107. It was quite plain from the evidence of Mr Taylor on the Prudential side alone, that Prudential from the outset had not initially wanted to be committed to acquiring an extra 15%. As repeatedly stated, Mr Taylor described it as a "journey" towards acquiring 50%. It was also quite clear from his evidence that there was no guarantee at all that Prudential would acquire the extra 15% under the provisions of Sch 10. It was only by exercising the Options that the 15% became available. Mr Taylor conceded, gallantly, that there was no guarantee. It was more in the nature of an expectation under an inheritance and as he recognised "There's no guarantee on anything in life". His expectation from the outset had been very strong that Blueco would exercise one of its Options, but he also accepted Prudential had no legal right to require this.
108. The position had not changed in 1998. At the end of his evidence the following exchange occurred between him and Mr Nugee (a passage I have referred to above):
"Q. …. I think the answer to my question that in 1998 the question of what would happen if Blueco didn't exercise their options simply wasn't on the table?
A. It wasn't discussed.
Q. So it was not your understanding in 1998 that if Blueco, for some reason, didn't exercise its options, that Prudential would get an extra right to claim the 15 per cent on 30 September 2011. It simply wasn't part of the discussion?
A. That is correct. I have to accept that."
109. Mr Lander's evidence in the witness box showed that his understanding was the same as Mr Taylor's. Prudential's right to the 15% was dependent on Blueco exercising one of its Options and Prudential had no legal right to require Blueco to do so (indeed this was expressly stated as part of the Heads of Terms in both 1996 and 1998 also as noted above). Mr Lander said of his understanding in 2003: "It was still our understanding at the time that we could only exercise that 15 per cent when Blueco itself had exercised it."
110. Having regard to the evidence overall, documentary, witness statements, and oral, nothing has therefore persuaded me that the common intention of the parties was other than as in fact expressed in para 2 of the Tenth Schedule to the Management Lease.
111. It also therefore follows that I reject, on the basis of Prudential's own evidence, as set out above, that there was any unilateral mistake by Prudential which might have entitled them to seek rectification under this head too.
"A substantial amount of the case, particularly as regards rectification, must have been devoted to being dependent, so far as the unilateral mistake is concerned, on making an allegation of dishonesty against the officers of Lend Lease, which, on the footing of the findings that I made as to the common intention of the parties, was never going to get off the ground."
The appeal
Construction
Costs
"The position as to whether Pru's pre-emption would in effect lapse if we leave the finance lease in place is as you would imagine very sensitive in that we are sure this is not Pru's interpretation and thus might be subject to legal challenge."
Discussion
Construction
Costs
Conclusion
Lord Justice Briggs
Mrs Justice Proudman