England and Wales High Court (Chancery Division) Decisions

Chancery Division

		16 August 1994

1. Giving judgment, Jacob J said: I have before me an application for interim relief by some landlords, now called Hemingway Securities Ltd. The interim relief concerns some property at 54 St John Street, London, in Islington. These premises were let by the landlords by a lease dated June 7 1990 for a term of 25 years at an initial rent of £ 145,000 pa. The lessee was the first defendant, Dunraven Ltd, as it is now called.
2. The lease contains, as is common, provisions against alienation of the lease without certain conditions being satisfied. The particular clause is clause 8(18), which provides as follows:

Save as permitted by the proviso to this provision

-- not, that is to say, the lessee will not --

make or suffer any assignment underletting sharing or parting with possession or charge or mortgage of part only of the demised premises or suffer any person to occupy the whole or any part of the demised premises as licensee or tenant at will, provided that the consent of the lessor shall not be unreasonably withheld to underletting assignment charge or mortgage of the whole of the demised premises or the underletting of the whole of one or more individual floors of the demised premises.

3. Clause 8(18)(d) contains the precondition that:

before any underletting or assignment of the demised premises as a whole to procure that the underlessee or assignee shall enter, prior to completion of any underlease or assignment and as a condition precedent to the lessor giving the lessor's consent thereto, into a deed of covenant with the lessor containing a direct covenant with the lessor to pay the rent reserved in this lease except in the case of an underletting in which case the rent reserved in the underlease shall be substituted for the rent reserved by this lease, and to observe the form of the lessee's covenant and the stipulations agreements provisions and conditions contained in this lease.

4. This was a precondition of a direct covenant. There were also preconditions as to the form of the underlease being first approved by the lessor's solicitors and a precondition inherent in the system that there should be a request for consent which might be granted depending on whether the request was reasonable.
5. On July 15 1994 the lessors received a letter from the first defendant's solicitors, which stated that the first defendant had sold its business as surveyors and was no longer trading and that its former board of directors had resigned. The letter went on to say:

54 St John Street is presently being occupied on a short term basis by the successor to the practice which acquired the business. Once this arrangement comes to an end our clients will have no further requirement for the premises.

6. The letter was silent as to the short-term basis. It was silent as to who the successor to the practice was.
7. The true facts emerged piecemeal. In fact, as emerged only yesterday, I think, the lessees had on July 11 1994 executed an underlease of the premises to four individuals as trustees for a partnership called Robinson Low & Francis, who are the second defendants.
8. I cannot understand why the letter of July 15 did not reveal that fact. It is said that it would have been revealed in due course in negotiations, which were sought by the letter. Even to have sprung it in negotiations would hardly have been attractive. Manifestly, the entering into the sublease involved a breach of clause 8(18). That is not disputed. Manifestly, the first defendant knew it was acting in breach of that clause when it entered into the sublease. Manifestly, the second defendants knew, when they entered into the sublease, that a breach of the main lease was taking place.
9. I say the latter not only because it is conceded but, by looking at the terms of the sublease, one can also see that in a number of places it refers to the main lease so that those entering into it must have had it in front of them. In particular, there is reference, among other things, to clause 8(18).
10. The commercial background to what was happening here is that the first defendant had conducted the business of chartered surveyors and was merging its business with another business. It seems that the new merged entity did not want these premises for the future. For a short while they did; that is why a letter of July 15 speaks of a 'short term basis which may come to an end and we have no further requirement for the premises'.
11. I do not know the full details of the merger because little evidence has been filed on behalf of either of the defendants. It seems that the second defendants are now in possession of the premises, and I was told that they are willing to give an undertaking to vacate those premises by the end of September.
12. The plaintiffs say this is a straightforward case to which there is no defence. They put their case in two ways: one at common law and one based upon the doctrine of Tulk v Moxhay (1848) 2 Ph 774. I deal with the common law position first.
13. The plaintiffs say here was a plain contractual obligation given by the first defendant; it broke it; the second defendants knew that it was being broken; here is a plain case of inducing or aiding a breach of contract, knowing that there is a breach. I do not see any answer to that claim.
14. Mr Simon Berry QC said that this was a case where in effect a conspiracy was being alleged and it should therefore he established that: (1) there was an agreement; (2) there was knowledge of the right in question; and (3) there was an intent to injure the plaintiffs.
15. It seems to me that, even on that analysis, all those elements are shown. Plainly there was an agreement. Plainly there was knowledge of the rights in question; indeed, so much was conceded. Mr Berry concentrated on an intent to injure. It seems to me that to defy a clear contractual right of the landlords so that their commercial position is changed is an intent to injure. It is an intent which certainly can be spelled out in the sense that it is the natural and probable consequence of the act concerned.
16. I therefore come to the conclusion that, on the first way the case is put, there is no defence. The question is: what can be done about it?
17. In Esso Petroleum Co Ltd v Kingswood Motors (Addlestone) Ltd [1974] QB 142 Bridge J (as he then was) was faced with a similar problem. In that case a solus tie was broken and the defendants argued that it was now too late for the court to intervene. Bridge J would have none of it, even on an interlocutory application. He said at p156H:

I am asked to enforce the personal liability incurred by a tortfeasor to undo the consequences of his tort which could have been restrained before it was committed. In a proper case, I ask myself: what reason can there be in principle why the tortfeasor should not be ordered to undo that which he has done?

18. He then went on to grant a mandatory injunction, which he did on the basis that the defendants there had been stealing a march on the plaintiffs.
19. It seems to me that exactly the same principle applies here and I think it is appropriate that a mandatory injunction undoing the consequences of inducing the breach of contract by the second defendant should be granted.
20. My only reservation related to the time point. As I have said, the second defendants are willing to leave the premises by the end of September, that being the period when their underlease expires in any event. But, once I have concluded that there is no triable defence, and I have so concluded, it seems to me that it would be wrong in principle to allow the second defendants to stay on and in effect to get the benefit of their tort. True it is that they may find themselves in more difficulty having to make a sudden exit than they would have been in if they had not caused the restrictive covenant to be broken; but that is a problem they made for themselves.
21. I should say that the plaintiffs put their case also on the doctrine of Tulk v Moxhay. They say here is a restrictive covenant; it is well settled that a restrictive covenant for the benefit of the landlords' reversion counts for the purposes for the doctrine of Tulk v Moxhay;the restrictive covenant accordingly runs with the land; it accordingly binds the second defendants; they are acting in breach of it and therefore, again, an injunction to compel them to stop acting in breach of it and in effect to gain a mandatory injunction should be granted.
22. Again, I do not see the answer to this way of putting the plaintiffs' case. It was suggested that a covenant against alienation is not a restrictive covenant for the purposes of the Tulk v Moxhay doctrine. That doctrine was limited to covenants in respect of the mode of user of property. No direct authority was cited to that effect and I do not see why, in principle, it should be so. One can have covenants subject to the doctrine not to build things without showing plans first; covenants against multiple occupation; and I do not see why this particular restrictive covenant against alienation should be treated differently.
23. On that ground, too, I would therefore grant the injunction which I have indicated I intend to grant. The injunction will require the second defendants to surrender the sublease. I do not propose to make any other injunction requiring the second defendants to vacate the premises. However, the legal analysis appears to be that, if they remain in possession knowing of the cessation of their right to occupy, and are so permitted by the first defendant, there would be the natural consequences of an assistance of breach of a court order. I will hear counsel as to the precise form of order.

Orders accordingly.

The electronic text of this judgment was provided by Estates Gazette, whose assistance is gratefully acknowledged.