England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		4th April 2007

The Chancellor :

Introduction
1. The claimant ("WNSL") is a wholly owned subsidiary of the Football Association Ltd. It was formed for the purpose of acquiring the Wembley Stadium ("the Old Stadium") and building a new stadium on the same site. The site of the Old Stadium and much of the surrounding land comprising a conference centre, car parks, merchandising booths roads and footpaths was owned by the first defendant ("WLL"). By a transfer and a lease both dated 15th March 1999 WLL sold the Old Stadium and the land on which it stood to WNSL and leased ("the Lease") certain parking, access and other rights over its retained land to WNSL for a term of 125 years. The price for the land was £93.7m. The consideration for the lease included payment of a service charge. The Old Stadium was closed to major events in November 2000 but minor events continued into early 2001. Thereafter the Old Stadium was demolished and the building of a new one commenced.
2. On 13th July 2001, for reasons of their own connected with prospective liabilities to stamp duty, WLL transferred the freehold of land including land over which it had demised rights by the Lease and subject to the Lease to the second to fifth defendants (together "Gideon"). In both the transfer of the freehold of that property and in separate documents executed by each of those defendants Gideon declared that they held the same as nominee and trustee for WLL absolutely and would deal with the same in accordance with the directions of WLL. The transfer to Gideon was registered on 7th June 2002. The shares in all the defendants were acquired by Quintain Estates and Developments plc in August 2002.
3. The building of the new stadium proceeded. The car parks were used by employees of the builders, Multiplex, and the necessary contact between the lessor and lessee was maintained between employees of WLL and WNSL. The building of the new stadium ("the New Stadium") was practically completed on 9th March 2007. It is intended that the FA Cup Final will be played there on 19th May 2007.
4. In the meantime by a letter dated 17th November 2006 WLL sought payment by WNSL of six invoices totalling £660,831 for sums allegedly due under the Lease in respect of the service charge. Enclosed with it were various calculations setting out how WLL considered that the service charge should be computed in the future. Correspondence and telephone conversations ensued between solicitors for WLL and WNSL. They failed to resolve the issues and this action was commenced by WNSL on 14th December 2006.
5. Initially WNSL sought declarations to the effect that it was not liable to pay any of the amounts to which the invoices referred. The response of the defendants was the service of a s.146 notice on 21st December 2006 and a defence and counterclaim on 5th January 2007 seeking, inter alia, forfeiture of the lease. On 26th January 2007 WNSL served a reply and defence to counterclaim alleging that the notice and forfeiture claim were both in breach of an agreement made between the solicitors for the parties on 7th/8th December 2006. By a consent order made on 29th January 2007 WLL and Gideon agreed to comply with the terms of the Lease pending final determination of this action. On 9th March 2007 Blackburne J gave WLL and Gideon permission to amend their defence and counterclaim so as to abandon any claim based on the invoices dated 14th November 2006 but to claim certain declarations instead. Then on 15th March 2007 WNSL amended its reply and defence to counterclaim.
6. Thus the issues to be determined by me at the trial on 27th to 29th March 2007 were those arising from the amended defence and counterclaim and the amended reply and defence to counterclaim. They may be grouped under four headings (1) which of WLL and Gideon is to be treated as the Lessor for the purposes of the Lease, (2) what heads of expenditure incurred by the Lessor are recoverable by means of the Service Charge payable under the Lease, (3) whether WNSL is liable to pay to the Lessor the advance payments in respect of the Service Charge for which the Lease provides amounting in all to £120,000 together with interest and (4) certain residual disputes.
7. The evidence consisted of substantial bundles of documents, the oral evidence of two witnesses and an expert's report. I shall deal with the various factual issues which arose under the appropriate heading in due course. First it is necessary to explain the relevant provisions of the Lease.
The Lease
8. In view of the extent to which different parts are relevant to different issues and for the sake of completeness I have set out all the material passages in the appendix to this judgment. At this stage I shall refer to the parts necessary to an understanding of the various issues.
9. In relation to the issue as to the identity of the lessor the description of the parties starts with a reference to WLL under its then name "Wembley Stadium Ltd" followed by the address of its registered office and the abbreviation for later use indicated by the addition "("the Lessor")". Clause 1 contains a large number of definitions to be used "where the context so admits or requires". They include:

"'Lessor' includes the reversioner for the time being expectant on the determination of the Term"

"'Service Charge' means all the moneys referred to and payable in accordance with Clause 7 hereof"

10. By clause 3.1.2 the Lessee covenanted "with the Lessor that the Lessee will....pay to the Lessor the Service Charge in accordance with Clause 7". The Lessor's covenants contained in clause 4 open with the words:

"The Lessor during the period whilst it is the Lessor and without liability in respect of any subsequent period HEREBY COVENANTS with the Lessee as follows:-"

After covenants in relation to insurance and quiet enjoyment there is the following provision:

"4.3 Lessor's Services

4.3.1 subject to the Lessee paying the Service Charge and to clause 5.3 to perform the Lessor's Services as set out in Schedule 2"

11. The issues under the other two groups arise from broadly the same provisions in the Lease. Clause 2 contains the demise, habendum and reddendum. The relevant part is in the following terms:

"the Lessor hereby demises unto the Lessee ALL the Demised Rights only for the use and enjoyment of the Existing Stadium and after practical completion for the use and enjoyment of the New Stadium....YIELDING AND PAYING therefore unto the Lessor throughout the Term FIRST the yearly rent of ONE POUND (£1) if demanded and then payable in advance of midsummer's day in every year SECONDLY the Service Charge in accordance with Clause 7 hereof..."

12. The Demised Rights are defined in clause 1 by reference to the First Schedule. The First Schedule contains rights of access from the car parks and along the footpaths, rights to use the merchandising booths and the Olympic Way on certain days defined as Major Event Days, rights to use a certain number of parking spaces in the car parks the numbers depending on whether the day is an Event Day and if so whether it is an Event Day of a particular description and miscellaneous other rights. Most of these rights are expressed to be exercisable by "Authorised Users" which is defined in Clause 1 as meaning:

"the Lessee its employees and agents and contractors and all visitors to the Property and all spectators of and performers competitors and officials at any Event..."

Some of the rights vary depending not only on the nature of the event but by reference to the construction of the New Stadium. Thus in relation to Non-Event Days the parking rights of employees of the Lessee and visitors to the property vary according to whether they are to be exercised before the closure of the Old Stadium, between then and practical completion of the New Stadium and after practical completion of the New Stadium.

13. Clause 7 deals with the Service Charge payable by the Lessee to the Lessor. Clause 7.1 contains the crucial definition:

"7.1.1 "Expenditure" means the aggregate of all costs fees expenses and outgoings whatsoever properly incurred by the Lessor in complying with its obligations in respect of the Lessor's Services...."

There follow definitions of "Financial Year", "Estimated Expenditure" and "Accountant". Clause 7.1.5 states that:

"Service Charge" means a fair and reasonable proportion of the Expenditure as the Lessor may determine as being payable by the Lessee after due regard to:-

7.1.5.1 the user of the Common Parts by the Authorised Users and the user thereof by the Lessor and others entitled to lawfully use the same

7.1.5.2 any other factors which the Lessor may reasonably consider relevant."

14. The basic structure of the Service Charge requires the Lessor to prepare an account of his expenditure (as defined) in any given financial year (as defined) as soon as reasonably practicable after the year end (Clause 7.2). Save for manifest error that account is conclusive evidence of all matters of fact stated therein (ibid). Clause 7.3.1 provides for Advance Payments to be made on account of the Service Charge for the current financial year by equal quarterly payments in advance. The amount is to be that

"calculated by the Lessor".. "provided...that if no such calculation has been notified to the Lessee before the beginning of any Financial Year the payment on account until such notification shall be at the same quarterly rate as the Advance Payment made on the last quarter day of the immediately preceding Financial Year."

Provision is made in clause 7.3.2 for further Advance Payments called Supplemental Payments to be paid in respect of items of Expenditure incurred during the relevant Financial Year to be paid by the Lessee within 21 days of a written demand.

15. Clause 7.4.1 provides for the amount by which the Service Charge exceeds the Advance or Supplemental Payments to be paid to the Lessor within 21 days of a written demand. If the Advance and Supplemental Payments exceed the amount of the Service Charge then

"the overpayment shall be credited to the Lessee against the next or subsequent quarterly payment of the Service Charge or in the last year of the Term shall be repaid by the Lessor to the Lessee within 21 days after the expiration of the then current accounting period."

16. Clause 7.5 entitles the Lessor to charge expenditure omitted from one year to a later year. Clause 7.6 provides that:

"In performing its obligations contained in Schedule 2 the Lessor shall be entitled in its reasonable discretion to employ agents (including managing agents) contractors and such other persons as it may reasonably think fit and to delegate its duties and powers to them and their proper and reasonable fees and expenses including VAT shall form part of the Expenditure."

Clause 7.7 provides that:

"The Lessor may withhold add to extend vary or make alterations to any of the Lessor's Services from time to time if the Lessor at its reasonable discretion having regard to the principles of good estate management deems it desirable to do so"

17. The remaining clauses in the Lease are not material to any issue before me. I have already referred to the material provisions of Schedule 1. Schedule 2 describes the Lessor's Services to be provided pursuant to the Lessor's covenant in clause 4.3.1. They include maintenance of the common parts, including the car parks (paragraphs 1 and 9), traffic control (paragraph 4), maintaining liability insurance (paragraph 5) and compliance with statutory requirements (paragraph 8). Paragraph 10 provides:

"The Lessor may employ such suitable and reputable staff and/or contractor to perform or carry out the Lessor's obligations (or any of them) specified in this Schedule and may provide purchase hire maintain renew and replace all such vehicles fixtures and fittings bins receptacles tools appliances materials equipment and other things which the Lessor may acting reasonably deem necessary for the maintenance appearance upkeep cleanliness of the Common Parts or for the provision of the Lessor's Services."

Which of WLL and Gideon is to be treated as the lessor for the purposes of the Lease?
18. I turn then to the issues which arise under this heading. The point first emerged in the original particulars of claim of WNSL served with the claim form on 14th December 2006. WNSL contended in paragraph 3.2.1 that WLL having transferred the reversionary interests expectant on the interests created by the Lease to Gideon in July 2001 had had no entitlement since then to claim any sums due under the Lease. By its original defence WLL denied the allegation and relied on the provisions of a Deed dated 13th October 2006 made between Gideon and WLL whereby the former appointed the latter as their agent to provide the Lessor's Services under and for the purpose of the Lease. In their amended defence served on 9th March 2007 WLL and Gideon claimed in addition that WLL was described in the Lease as the lessor and was and is the absolute beneficial owner of the property over which the rights were leased. Further they asserted that WNSL was estopped by convention from alleging otherwise by virtue of the various documents and dealings between WNSL and WLL since 7th June 2002.
19. Thus, under this heading, there are three issues (1) whether WLL ceased to be the Lessor under the Lease on the assignment of the freehold of the surrounding land subject to the Lease in July 2001 or on its registration on 7th June 2002; and if so (2) whether it remained or became entitled to render the Lessor's Services and receive the Advance Payments and Service Charge as agent for Gideon pursuant to the Deed dated 13th October 2006; and if not (3) whether WNSL is estopped by convention from denying that WLL is and at all material times has been the Lessor under the Lease and entitled to render the Lessor's Services and to receive the Advance Payments and Service Charge.
20. Counsel for WNSL submitted that the effect of the assignment of the reversion by WLL to Gideon was to transfer the benefit of the tenant's covenants to Gideon. She relied alternatively on s.141 Law of Property Act 1925 and s.3 Landlord and Tenant (Covenants) Act 1995. Which Act applies depends on whether the Lease was a new tenancy for the purposes of s.1(1) Landlord and Tenant (Covenants) Act 1995. S.1(3) provides that, with immaterial exceptions, a tenancy is a new tenancy if it is granted on or after the date on which the Act came into force. That was the 1st January 1996. Thus, provided the Lease is a 'tenancy' within the meaning of the Act it is a new tenancy and s.141 Law of Property Act 1925 cannot apply, see s.30(4)(b).
21. At the very end of her submissions on new points raised by counsel for WLL in reply counsel for WNSL suggested that the Lease was not a tenancy within the meaning of the 1995 Act. The basis for this submission is that 'tenancy' is not defined but is used from time to time in conjunction with the words 'the premises', see for example s.3(1)(b), 3(2)(b). She suggested that the word 'premises' naturally referred to corporeal property so that a lease of incorporeal rights could not be a tenancy. I do not accept that submission. In the two statutory contexts to which I have referred the word 'premises' is used in the sense of 'demised premises'. That phrase is commonly used to describe all the property subject to the demise not only corporeal property. It would completely undermine the purposes of the Act to limit its operation to tenancies of or covenants relating to corporeal property only.
22. Accordingly the provisions relevant to the issues before me are those to be found in the 1995 Act as applied to new tenancies. Counsel for WNSL relied on the terms of s.3(1) and (3). So far as material they provide:

"(1) The benefit and burden of all landlord and tenant covenants of a tenancy-

(a) shall be annexed and incident to the whole, and to each and every part, of the premises demised by the tenancy and of the reversion in them, and

(b) shall in accordance with this section pass on an assignment of the whole or any part of those premises or of the reversion in them."

"(3) Where the assignment is by the landlord under the tenancy, then as from the assignment the assignee –

(a) becomes bound by the landlord covenants of the tenancy except to the extent that-

(i) immediately before the assignment they did not bind the assignor, or

(ii) they fall to be complied with in relation to any demised premises not comprised in the assignment; and

(b) becomes entitled to the benefit of the tenant covenants of the tenancy except to the extent that they fall to be complied within relation to any such premises."

23. She submitted that the proper application of those provisions entailed the result that Gideon alone was entitled to claim and sue for the Service Charge or Advance payments because it was entitled to the benefit of the covenants to pay them. She also submitted that the burden of the Landlord's covenants passed to Gideon too. If that is correct then the consequence would be that the expenditure incurred by WLL would not be recoverable at all because it would not comply with the definition of 'expenditure' contained in clause 7.1.1.
24. Counsel for WLL disputed these propositions. He relied on the provisions of s.6(2), 15(1), 23 and 28(1). They provide, so far as material, as follows:

"6 [(1)]

(2) If the landlord assigns the reversion in the whole of the premises of which he is the landlord—

(a) he may apply to be released from the landlord covenants of the tenancy in accordance with section 8; and

(b) if he is so released from all of those covenants, he ceases to be entitled to the benefit of the tenant covenants of the tenancy as from the assignment."

"15. Enforcement of covenants.

(1) Where any tenant covenant of a tenancy, or any right of re-entry contained in a tenancy, is enforceable by the reversioner in respect of any premises demised by the tenancy, it shall also be so enforceable by—

(a) any person (other than the reversioner) who, as the holder of the immediate reversion in those premises, is for the time being entitled to the rents and profits under the tenancy in respect of those premises, or"

"23. Effects of becoming subject to liability under, or entitled to benefit of, covenant etc.

(1) Where as a result of an assignment a person becomes, by virtue of this Act, bound by or entitled to the benefit of a covenant, he shall not by virtue of this Act have any liability or rights under the covenant in relation to any time falling before the assignment.

(2) Subsection (1) does not preclude any such rights being expressly assigned to the person in question."

"28 Interpretation

(1) In this Act (unless the context otherwise requires)-

"assignment" includes equitable assignment and in addition (subject to section 11) assignment in breach of a covenant of a tenancy or by operation of law;"

25. From these provisions he derives support for a number of propositions. He claimed that the terms of s.6(2) show that absent a release under s.8, and there was none in this case, WLL remained liable under the Lessor's covenants and entitled to the benefit of the tenant's covenants. As the absolute beneficial owner of the reversion pursuant to the declarations of trust contained in the transfer to Gideon and in the separate documents executed by each of the second to fifth defendants WLL was and remained at all times entitled to enforce the tenants' covenants as the equitable assignee of the person entitled to the reversion at law.
26. I was also referred to various opinions expressed in relation to the effect of the 1995 Act. They were A Property Company v HM Inspector of Taxes an anonymised decision of the Special Commissioners of Income Tax given on 5th October 2004 and passages in Megarry and Wade on the Law of Real Property 6th Edition para 15-070 and 15-082. Counsel for WNSL also relied on footnote 35 on page 982.
27. I will deal first with the burden of the Lessor's covenants. It is plain from the description of the parties to the Lease and the definition of Lessor contained in clause 1 that the word Lessor referred to WLL, whether or not it included anyone else, so that WLL was contractually bound to WNSL to perform the Lessor's Services as provided by clause 4.3.1. Whether or not the burden of that covenant passed to Gideon on the assignment it is clear that WLL was not released from it for that is plainly implicit in s.6(2). It follows that both before and after the assignment of the reversion to Gideon WLL was bound to provide the Lessor's Services and the expenditure incurred by WLL to that end is expenditure falling within clause 7.1.1.
28. The question whether WLL was and is entitled to the benefit of the tenant's covenants, specifically those contained in clause 7 to pay the Service Charge and Advance Payments elicits more than one answer. First the original contractual entitlement of WLL was not discharged by the Landlord and Tenant (Covenants) Act 1995 because in the circumstances of this case s.6(2) so provides. Second, as the absolute beneficial owner of the reversion WLL has always been entitled to sue for the Service Charge and Advance Payments either in its own name, if necessary, joining Gideon as a defendant or in the name of Gideon. Counsel for WNSL disputed this conclusion on the basis of the Court of Appeal's decision in Schalit v Joseph Nadler Ltd [1933] 2 KB 79 but that case concerned the effect (if any) of s.141 Law of Property Act 1925 on the right to distrain for rent. It did not qualify the ability of an absolute beneficial owner to recover rent by either of the procedural means to which I have referred. The later decision of the Court of Appeal in Scribes West Ltd v Resa Anstalt [2005] 1 WLR 1847 reached the opposite conclusion to that in Schalit in relation to a right of forfeiture. Thirdly, the various declarations of trust to which I have referred were assignments within the definition contained in s.28(1) and entitled the absolute beneficial owner of the rents and profits under the tenancy, namely WLL to enforce the tenants covenants pursuant to s.15(1). Fourthly, the terms of s.23 indicate clearly that the equitable assignee is entitled to the benefit of a tenant's covenant at least after its assignment to him and before if it expressly so provides. For all these reasons I conclude that at all times since the grant of the Lease on 15th March 1999 WLL has been bound by the Lessor's covenants and entitled to the benefit of the Lessee's covenants under the Lease.
29. Such has been the concern of WLL and its advisers that from time to time attempts have been made to put the matter beyond doubt. Thus on 13th October 2006 Gideon and WLL entered into a Deed relating to the provision of services under the Lease. The Deed recites the Lease, that WLL was the Lessor and owner of adjacent land called the Wembley Complex and the transfer of the legal title to the Wembley Complex by WLL to Gideon. The recital continues:

"On such transfer, Gideon became Lessor under the [Lease] but the Services continued to be provided by WLL. The Services were then and have since been provided by WLL on behalf of Gideon under an informal arrangement. The purposes of this Deed is to recognise and formalise the prior and continuing arrangement between the parties."

The Deed then confirmed the authority of WLL to provide such services on behalf of Gideon and indemnities in a wide form from Gideon to WLL against any liabilities incurred when so acting.

30. This is an extraordinary document for it inverted the true legal position. As absolute beneficial owner WLL was the effective principal and the obligations of indemnity were imposed on WLL in favour of Gideon as a bare trustee or nominee, not the other way round. But as it has been within the power of WLL, at all times, to procure its discharge I do not think that it can have affected the legal relations between WLL and Gideon.
31. In this connection I should also refer to various resolutions of the Boards of each of the Gideon defendants passed on 22nd February 2007. They purported to confirm and ratify various actions of WLL and "if or so far as" the relevant action should have been that of the Gideon companies to take the like action. The relevant actions of WLL were the determination of the Financial Years for the purposes of clause 7.1.2 of the Lease and the proportion of the total Expenditure it was fair and reasonable to attribute to the Lessee under clause 7.1.5. In addition they confirmed and ratified the demand and accounts contained in the letter dated 17th November 2006. None of these resolutions affects my conclusions in respect of the obligation and entitlement of WLL to perform the Lessor's Services and to receive the Service Charge and Advance payments for which clauses 4.3.1 and 7 provide.
32. For these reasons I will make a declaration in the form of the first alternative shown in the draft Minute of Order produced by counsel for WLL. In the light of my conclusion on the first issue to which I have referred in paragraph 19 above the second and third issues do not arise. However I should deal with the third issue insofar as it is necessary to find the facts relevant to an estoppel by convention so that that issue may be dealt with by an appellate court if it is found that I am wrong on the first issue.
33. There is no dispute as to the relevant principles to be applied. They are set out in the passages from Spencer Bower "Estoppel by Representation" 4th Edition to which I was referred. Thus WLL must establish:

(a) a relevant proposition to which WLL and WNSL have mutually and unequivocally assented, expressly or by implication,

(b) a sufficient communication of that assumption,

(c) WLL will be significantly 'worse off' if WNSL is permitted to resile from the convention.

34. The relevant proposition on which WLL relies is that pleaded in paragraph 6(b) of its amended defence and counterclaim namely that WLL was to be treated as the Lessor for all purposes connected with the Lease. In support of that proposition WLL relied on correspondence and material dealings between WLL and WNSL since 7th June 2002. Counsel for WNSL contended that in subsequent documents the range of correspondence and material dealings relied on was restricted in an exchange of correspondence between the parties' respective solicitors. I do not agree. On 14th March 2007 the solicitors for WNSL wrote to those for WLL seeking confirmation that

"the only correspondence or dealings on which you rely are those referred to in the particulars referred to in paragraph 6(b)."

The reply dated 15th March 2007 from the solicitors for WLL was

"Our clients rely on the matters referred to in paragraph 6(b) of the Amended Defence and Counterclaim."

This reply did not restrict but reaffirmed reliance on all the matters pleaded.

35. The relevant witnesses were Mrs Viazzani for WLL and Mr Roger Maslin for WNSL. Mrs Viazzani became the managing director of WLL in March 1999. She remained a director of WLL when Quintain became its holding company in August 2002. She has been a director of each of the Gideon defendants at all material times. Mr Roger Maslin has been the finance director of WNSL since 1st February 1999 and still is.
36. In her witness statement made on 5th March 2007 Mrs Viazzani dealt in paragraphs 29 to 34 with what she described as WLL's role in relation to the Lease. She stated that WLL had been aware for several years of the existence of Gideon and that they held the bare legal title to the Wembley Complex. She referred to a Supplementary Agreement to which, amongst others, WNSL, WLL and Gideon had been parties. She stated that notwithstanding its awareness of the actual position WNSL had only ever corresponded with her as managing director of WLL. She stated that she reasonably understood that WNSL would not take any point as to who in law was the Lessor and relied on that understanding.
37. Mr Maslin dealt with these matters in his second witness statement made on 15th March 2007 in paragraphs 19 to 23. He admitted that WNSL had discussed general issues relating to the Lease with WLL "this was not in acknowledgement of the status of any particular entity". He denied that WNSL had acted on the basis of WLL being the Lessor and relied on the fact that there were no demands or payments in respect of service charge from early 2001 to 17th November 2006.
38. Both witnesses were cross-examined on their witness statements. Mrs Viazzani emphasised that WLL had done nothing to lead WNSL to think that it was not the Lessor. Mr Maslin admitted that he had known of the assignment to Gideon in July 2001, at least by the time of the Supplemental Agreement in September 2002, and had known from the latter date that, though the reversion may have been assigned to Gideon, WLL retained sufficient interest to necessitate its consent to the various matters with which the Supplemental Agreement dealt. He accepted that WLL incurred costs in relation to the provision of the Lessor's services in the period following the assignment to Gideon but did not think WNSL was liable to pay the Service Charge before practical completion of the New Stadium.
39. The issue of estoppel by convention does not arise unless I am wrong on the first point. Accordingly I have to assume that the expenditure on the provision of services by WLL in the period after July 2001 would not qualify as Expenditure for the purposes of clause 7.1.1 of the Lease but, even if it did, WLL would not be entitled to claim payment of the Service Charge. In that event my conclusions would be as follows:

(1) At all material times WNSL dealt with WLL as if it were the Lessor under the Lease. There is no evidence of WNSL seeking to deal with anyone else, least of all with any of the Gideon companies. In the Supplemental Agreement dated 26th September 2002 the consent and agreement of WLL was required in respect of all relevant matters as though it continued to be the Lessor albeit in conjunction with Gideon. The clear assumption of both WLL and WNSL was that it should continue to be treated as the Lessor under the Lease notwithstanding some interest therein, whatever it was, of Gideon. Insofar as communication of the mutual assumption is required the Supplemental Agreement supplied it.

(2) In the period after July 2001 WLL incurred expense in performing the Lessor's Services under the Lease. This must have been obvious to all, in particular to Mr Maslin. The fact that he did not think that WNSL would be liable for it on other grounds is immaterial. Similarly it was obvious to Mr Maslin, or would have been if he had asked himself the question, that WLL was incurring that expenditure in the belief that it was obliged to do so and entitled to recover the cost in each case in accordance with the provisions of the Lease.

(3) If WNSL is now permitted to resile from the convention it will mean that WLL is unable to recover any expenditure incurred in providing the Lessor's Services. To that extent it would be obviously and considerably 'worse off'.

40. The fact that no accounts or invoices were rendered between July 2001 and 17th November 2006 by WLL to WNSL cannot affect the clear conclusion that all the necessary ingredients of an estoppel by convention are made out. Accordingly were it necessary to do so I would find that WNSL is estopped by convention from denying that WLL is the Lessor for all purposes connected with the Lease.
What heads of expenditure incurred by the Lessor are recoverable by means of the Service Charge payable under the Lease?
41. Many issues have been raised under this heading. They may be collected under two general descriptions, namely (1) whether expenditure of the relevant description comes within the definition of Expenditure in clause 7.1.1 of the Lease, and if it does (2) what (if any) remedy is available to WLL. The relevant definition is:

"Expenditure" means the aggregate of all costs fees expenses and outgoings whatsoever properly incurred by the Lessor in complying with its obligations in respect of the Lessor's Services.."

The relevant obligations are those contained in Schedule 2, in particular the maintenance of the common parts, including the car parks, traffic control, maintaining liability insurance and compliance with statutory requirements.

42. In paragraph 16 of her witness statement Mrs Viazzani set out a list of heads of expenditure taken from WLL's electronic ledger in which are entered all third party invoices for supplying goods or services of the relevant description. These were eventually admitted by WNSL in paragraph 39 of its amended reply and defence to counterclaim served on 15th March 2007. Even then in his second witness statement made on the same date Mr Maslin did not unequivocally do so.
43. In that context the only remaining issue is whether and if so to what extent the cost is within the definition of "Expenditure" if those goods and services are supplied not by a third party contractor but 'in house' by WLL's own employees. This depends on the proper construction of the phrase "..all costs, fees, expenses and outgoings whatsoever properly incurred by the Lessor". In my view it is plain that the cost of providing the requisite service through WLL's own staff must be included as a cost, expense or outgoing incurred by the Lessor. If confirmation were required it is provided by clause 7.6. An entitlement to provide the services through agents and contractors must presuppose that if the power is not exercised then the relevant functions are performed by the Lessor's own employees. Any other construction would preclude their performance altogether if an appropriate agent or contractor could not be found.
44. The principal dispute in this context was whether the costs of management might be included and if so to what heads of expenditure they might extend. For WNSL it was contended that provisions relating to service charges are restrictively interpreted, see per Mummery LJ in Gilje v Charlgrove Securities Ltd [2002] 1 EGLR 41, para 32. No doubt, too, it is appropriate for the interpretation to be more restrictive in the case of residential tenancies as opposed to a commercial transaction between two substantial parties. At all events I can find nothing in the wording of this Lease in general and the definition of "Expenditure" in particular to confine the relevant services to the actual service to the exclusion of any management cost incurred in its provision. Why, for example, should the wages of the employee who actually applied the tarmac to the surface of the car park be included but the salary of he who arranged for the employee to do it and for the tarmac to be available for such application be excluded. In my judgment the wording of the definition embraces both.
45. Counsel for WNSL referred me to a number of authorities in this connection which, she submitted, demonstrated the converse. They were Shapiro's Service Charges – Law and Practice, Cleve House Properties v Schildof (1980) CLY 1641, Plough Investments Ltd v Manchester City Council [1989] EGLR 244, Earl of Cadogan v 27/29 Sloane Gardens [2006] 24 EG 178 and Capital & Counties Freehold Equity Trust Ltd v BL plc [1987] 2 EGLR 49. I do not think that any of them assists in the interpretation of the definition of Expenditure in the Lease.
46. In relation to the heads of expenditure to which the cost of management might extend Mrs Viazzani set out a list in paragraph 17(b) of her witness statement. The list included office accommodation, training, medical insurance and pensions. It is said that these items of expenditure are all ingredients in the cost of providing the Lessor's Services. It is contended on behalf of WNSL that such costs could not be shown to have been "properly incurred by the Lessor in complying with its obligations". That does not appear to me to be a sufficient response to the contention of WLL. If such expenditure can be shown to have been so incurred I see nothing in the definition to exclude it. The further from actual compliance with the Lessor's obligations the incurring of the cost or expense lies the less likely it will be that such expenditure was incurred "in" such compliance. But I see no reason in principle to exclude indirect costs of management and corresponding 'overhead' expenses.
47. WNSL sought to draw a distinction in this respect between attendance at meetings with the Metropolitan Police, the London Borough of Brent and the London Development Agency. Indeed this was the matter which was raised in correspondence in the first half of 2006 and lead to WLL refusing to attend any further such meetings unless WNSL agreed specifically to pay for them to do so. I see no reason why such expenditure should be excluded if it is properly incurred in complying with the Lessor's obligations in Schedule 2. They include controlling the traffic and complying with statutory requirements. For those purposes such meetings may well be necessary. The principal objection of WNSL was to the effect that WLL might have good reasons of its own to attend such meetings. I agree; and to that extent the costs might not qualify as "Expenditure" because they were not "properly incurred by the Lessor in complying with its obligations". But that is no reason for excluding the costs when they were properly incurred for the relevant purpose.
48. Finally in this context WNSL contend that costs properly incurred by WLL in complying with its obligations do not constitute "Expenditure" in any case where they were incurred in relation to an Event, as defined, which, for whatever reason, was cancelled or did not take place. I can see no justification whatever for recognising such a distinction. If the costs and expenses are properly incurred by the Lessor in complying with its obligations they are recoverable whether or not any particular event takes place. This is because the obligations undertaken by the Lessor in Schedule 2 arise irrespective of any particular event.
49. I turn then to the second aspect of this group of issues, namely what (if any) remedy is available to WLL. The remedy sought is a series of declarations. Those suggested by counsel for WLL are in the following form:

"The following costs fees expenses and outgoings are and have since the date of the Lease been "Expenditure" for the purpose of Clause 7.1.1. of the Lease if and insofar as they are and have been properly incurred by the Lessor in complying with its obligations in respect of the Lessor's Services (as defined in the Lease) namely:

(a) costs fees expenses and outgoings incurred by the Lessor (whether through the engagement of third parties or by the use of its own employees to carry them out) directly in carrying out the services listed in the Schedule hereto including the cost of labour materials equipment and storage of materials and equipment costs fees expenses and outgoings incurred by the Lessor (whether as aforesaid) in managing the provision of the Lessor's Services under the Lease, including in respect of its own employees a proportion of (1) the sums paid to or on their behalf in respect of their (i) salaries, (ii) pensions, (iii) medical insurance, (iv) life insurance, (v) travel, and (vi) staff meals and (2) the sums paid by way of provision for those employees of (i) office accommodation, (ii) office supplies and stationery, (iii) utilities, (iv) postage, (v) telephones and IT equipment, (vi) accountancy, (vii) training, and (viii) human resources;

(b) costs fees expenses and outgoings incurred by the Lessor (whether as aforesaid) in and in connection with the participation of representatives of the Lessor in meetings with the Metropolitan Police, the London Borough of Brent and/or the London Development Agency and/or others to discuss and to be advised as to the traffic and/or security and/or anti-terrorism measures to be implemented on the Common Parts and the approaches thereto on the occasion of and in anticipation of an Event (as defined in the Lease) at the Stadium (as defined in the Lease), including for this purpose the costs, fees, expenses and/or outgoings incurred in and in connection with (i) preparation for such meetings, (ii) travel to and from such meetings, (iii) attendance at such meetings, (iv) developing strategies and/or proposals for the purposes of or to address issues arising at or from such meetings (including the costs fees expenses and/or outgoings of and associated with instructing and/or employing external consultants for these purposes), (iv) considering strategies and/or proposals prepared by others for the purposes of or to address issues arising at or from such meetings;

(c) costs, fees, expenses and outgoings incurred by the Lessor in complying with its obligations in respect of the Lessor's Services (as defined in the Lease) under the Lease whether or not they are incurred in relation to an Event (as defined in the Lease) which is subsequently cancelled or does not otherwise take place provided that the cancellation or failure to take place has not been caused by any breach of obligation on the part of the Lessor under the Lease.

50. The suggested schedule to which paragraph (a) refers is as follows:

THE SCHEDULE

1. Maintaining and repairing the Common Parts (meaning the Car Parks, the Footpaths, the Roads, Olympic Way and the Merchandising Booths, as defined in the Lease), including the carrying out of (i) tarmac repairs, (ii) drain and gully maintenance, (iii) door maintenance in the multi-storey car park, (iv) preventative maintenance, (v) hard and soft landscaping, (vi) plant bed maintenance, (vii) barrier maintenance, (viii) fence maintenance, (ix) lamp maintenance, (x) electricity supplies, (xi) water supplies, and (xii) waste removal and management.

2. All other Services as described in Schedule 2 of the Lease.

51. Counsel for WNSL objects to the grant of each of these declarations on one or more of the grounds that it is (a) unnecessary because there is no relevant dispute, (b) it concerns a future and/or hypothetical event, (c) it involves re-writing the Lease and (d) it involves a question of construction which cannot be resolved without reference to the relevant facts. I do not doubt the general validity of these grounds of objection. They are amply born out by the cases and extracts from Zamir & Woolf on The Declaratory Judgment to which I have been referred. I also bear in mind that a declaration is a discretionary remedy. In determining how to exercise that discretion the court will have regard to all the circumstances including justice to each party, whether the grant of a declaration would serve a useful purpose and whether there are any special reasons in favour of or against the declaration sought, see Financial Services Authority v Rourke (The Times 12th November 2001 unreported).
52. In paragraphs 41 to 48 above I have dealt with the various points of construction on the meaning and effect of the definition of "Expenditure" in clause 7.1.1 which have been in dispute between the parties. There was nothing hypothetical or future about those disputes. Nor do I consider that my conclusions on those points of construction involve 're-writing' the Lease. It is true that the declarations as sought will not finally resolve all disputes because the application of the definition of "Expenditure" in the circumstances of specific items of expenditure may still give rise to further issues, such as whether the relevant item was "properly incurred by the Lessor in complying with its obligations". But that is no reason not to grant the declarations sought because they are framed as subject to compliance with that condition.
53. In truth the objections of counsel for WNSL boil down to the contention that because the declarations cannot resolve all disputes none should be granted. I would agree if it were the case that the particular declaration could not resolve any dispute. But if it will resolve some that is a good reason to grant it, notwithstanding that it will not resolve all of them.
54. I consider that each of the declarations sought will resolve one or more present and real disputes; each will to that extent reduce the range of differences between WNSL and WLL; accordingly each will narrow the issues and to that extent facilitate either an agreement on what is or may be due by way of Service Charge or the resolution of future disputes in relation to a particular item of expenditure. I see no good reason for not granting each of the declarations sought. Accordingly I will do so.
Is WNSL liable to pay to the WLL £120,000 by way of Advance Payments?
55. Under this heading WLL seeks judgment for £120,000. In addition various issues arise in that connection of wider relevance. The relevant provisions of the Lease are all contained in Clause 7. I have already described the machinery in paragraphs 14 and 15 above. Before returning to those provisions it is necessary to describe further facts.
56. On 24th July 2000 WNSL paid £20,000 to WLL against an invoice dated 30th June 2000 in respect of "Service Charge for period 16th March 1999 to 31st December 1999". In his first witness statement made on 5th March 2007 Mr Maslin accepted that this had been determined as a fair and reasonable proportion of the total Expenditure for the period incurred by WLL, namely £100,000. It is not suggested that the account required by clause 7.2 had not been prepared for the relevant period and Mr Maslin accepts that the Service Charge as defined in clause 7.1.5 had been properly ascertained. No further account, as required by clause 7.2, was prepared until at least 17th November 2006 and no Estimated Expenditure, as defined in clause 7.1.3 had been ascertained by the Lessor's Accountant, as defined in clause 7.1.4, until at least the same date. It follows that the liability for an Advance Payment against the Service Charge for the year 2000 and its amount depends on the application of the second proviso to clause 7.3.1. That states:

"that if no such calculation by the Lessor has been notified to the Lessee before the beginning of any Financial Year the payment on account until such notification shall be at the same quarterly rate as the Advance Payment made on the last quarter day of the immediately preceding Financial Year.

57. Five quarterly payments of £5,000 were made by WNSL to WLL. Two of them were paid on 24th July 2000 against two invoices each dated 30th June 2000 for 'Service Charge' for the quarters 1st January to 31st March 2000. Two more were paid on 2nd October 2000 against two invoices dated respectively 31st July and 11th September 2000 for 'Service Charge' for the periods 1st April to 30th June and 1st July to 30th September 2000. The fifth was paid on 26th January 2001 against an invoice dated 13th December 2000 for 'Service Charge' for the period 1st October to 31st December 2000.
58. In these circumstances Counsel for WNSL claims that there was no liability to make any Advance Payments. She submits that the provisions of the proviso to clause 7.3.1 were not complied with in a number of respects. First none of the sums of £5,000 to which I have referred were claimed or paid as 'Advance Payments, nor were they claimed or made by reference to the usual quarter days. In his oral evidence Mr Maslin accepted that each sum of £5,000 was paid on account of the Service Charge but maintained that none was an Advance Payment as defined. In cross-examination he reluctantly admitted that the only liability of WNSL to WLL in respect of which those sums could have been paid was that arising under clause 7.3.1. That admission was plainly correct. Thus whatever label either party may have put on them and irrespective of the date by reference to which they were demanded or paid all were Advance Payments.
59. After some confusion counsel for WLL accepted that Advance Payments had been made by WNSL for all quarters up to and including that ended 31st March 2001. 24 quarters have elapsed since then and he seeks judgment in favour of WLL for £120,000. Such liability is disputed by counsel for WNSL on the following grounds: (1) no Advance Payments were due under the Lease for any quarter after the closure of the Old Stadium and before practical completion of the building of the New Stadium, (2) any right to receive an Advance Payment is waived by a claim for actual expenditure, such as that made in the letter dated 17th November 2006, (3) any obligation to make an Advance Payment is discharged by the failure of WLL to produce the accounts required by clause 7.2 as soon as reasonably practicable after the end of the relevant financial year or at all and (4) Advance Payments are only payable on demand and no demand was made. I will deal with those submissions in turn.
60. The case for WNSL on the first point arises from the part of clause 2 which provides that

"...the Lessor hereby demises unto the Lessee all the Demised Rights to hold the Demised Rights only for the use and enjoyment of the Existing Stadium and after Practical Completion for the use and enjoyment of the New Stadium..."

In addition there are provisions in the Lease relating to various periods before and after the closure of the Existing Stadium and Practical Completion of the New Stadium. Thus clause 5.6(a)(i) makes separate provision for the designation of parking spaces after Practical Completion, clause 10 entitles the Lessor to determine the Lease if the development of the site of the Old Stadium is not commenced within three years of its closure and the Demised Rights as set out in Schedule 1 vary according to times before and after the Closure Date and Practical Completion.

61. Counsel for WNSL contends that the Advance Payments were on account of the Service Charge (cl.7.3.1) and the Service Charge was to be a fair and reasonable proportion of the Expenditure (cl.7.1.5) having due regard to, inter alia, the user of the Common Parts by the Authorised Users and others lawfully entitled to use the same. She submitted that following the closure of the Old Stadium there could be no use of the Common Parts by Authorised Users. Consequently there could be no fair and reasonable proportion attributable to WNSL.
62. I do not accept that submission. The Expenditure, as defined in clause 7.1.1, is related to the performance of the Lessor's obligations in respect of Lessor's Services as described in Schedule 2. Those services were to be rendered at all times, not just before closure of the Old Stadium and after Practical Completion of the New Stadium. Authorised Users, as defined in clause 1, included the Lessee's contractors. As Mr Maslin admitted 150 car parking spaces were allotted to and used by the contractors building the New Stadium and their employees and sub-contractors. Thus there was some Expenditure, as defined, after closure of the Old Stadium and before Practical Completion of the New Stadium. The form of the demise quoted in paragraph 60 above is accounted for by the need in a lease of incorporeal rights to identify the dominant tenement. The Lease itself was continuous and the obligation to render the Lessor's Services uninterrupted from the commencement of the demise until the expiration or sooner determination of the term.
63. I turn then to the second point referred to in paragraph 59. The letter dated 17th November 2006 from WLL to WNSL professed to give details of "the historic, current and future arrangements we propose to implement". It did so under the headings of Historic Charges, Abortive Event Planning, Current period, Anticipated Event Future Costs, Future Annual Service Charges and Implementing the Car Parking Lease. With the letter were enclosed invoices demanding payment of sums alleged to be due under each of the headings. The invoice for historic costs sought payment by return of £436,700 plus VAT for various periods in the years 2001 to 2006 both inclusive. No credit was given for any Advance Payments and no such payments were sought. The claim for payment of the invoices was maintained in the defence and counterclaim served on 5th January 2007 but abandoned in the amended version served on 9th March 2007.
64. In these circumstances counsel for WNSL contends that any claim for Advance Payments for the same years, that is 2001 to 2006 was waived. She suggests that there can be no claim for a payment on account if the liability for which it is such a payment is abandoned. She suggests that this conclusion is justified by the provisions of clause 7.4.2.
65. Again, I am unable to accept any of these submissions. WLL has not abandoned ultimate recovery of the Service Charge. It has not released the liability of WNSL to pay it as and when properly determined. No contract or estoppel to that effect is asserted. The fact is that a contingent liability for Service Charge still exists, no such charge has been paid for any year since 1999 and there is nothing, in my judgment, to exclude liability for Advance Payments under clause 7.3.1 as a payment properly on account of the liability for the Service Charge.
66. I turn then to the third point. It is alleged by counsel for WNSL that as no accounts have been produced as required by clause 7.2 nor any assessment by the Accountant as required by clause 7.3.1 there can be no liability for an Advance Payment. This was linked to the previous point in that it was asserted that as the claim to payment of the Service Charge had been abandoned so there was no intention to produce the necessary accounts. As I have rejected the premise I likewise reject this conclusion. But in oral argument I understood this point to be advanced on the alternative basis that the breach by WLL of its express or implied obligations under clauses 7.2 and 7.1.3 released or discharged WNSL from any liability to make an Advance Payment under clause 7.3.1.
67. I do not accept this submission either. The obligation of WNSL to make Advance Payments necessarily precedes that of WLL to produce the account of Expenditure. Thus the former is in no sense dependent on the latter. I can understand WNSL having a justifiable complaint if WLL fails to produce the account of Expenditure promptly and by that means perpetuates a liability under the second proviso to clause 7.3.1 on WNSL to make Advance Payments in excess of what should be due. But that is not this case. And if it were the remedy for WNSL would lie in respect of the breach of clause 7.2 and such relief by way of injunction, specific performance and set-off to which it might in the circumstances give rise.
68. Finally, in relation to the claim of WLL to the Advance Payments WNSL contends that they are only payable on demand and no such demand has been made. Though listed by counsel for WNSL as one of the outstanding issues no argument was addressed to me in support of it. The point is, in my judgment, untenable. It is clear from clause 2 of the Lease that the draftsman was well aware of the distinction. The reddendum specifies three rents; the first and third are expressly made payable on demand, the second relating to the Service Charge is not. The same distinction is made in clause 7 itself. Thus clause 7.3.2 provides for WNSL to make supplemental payments "on demand". Similarly clause 7.4.1 provides for Service Charge in excess of the Advance Payments to be paid by WNSL on demand. By contrast the liability to make the Advance Payments in accordance with clause 7.3.1 arises on a specified day in an ascertainable amount. There is no reason why that liability should only arise on demand and the terms of the Lease as a whole show that no such requirement could have been intended.
69. In respect of these issues WLL seeks judgment for £120,000 and declarations in the following form:

"An Advance Payment (as defined in Clause 7.3.1 of the Lease) is payable under Clause 7.3.1 of the Lease in respect of a Financial Year (as defined in the Lease):

(a) Whether formally demanded or not;

(b) Whether or not an account has been prepared of Expenditure for the or any previous Financial Year (as defined in the Lease) under clause 7.2 of the Lease;

(c) Whether or not the Lessor's Accountant (as defined in the Lease) has specified the Estimated Expenditure (as defined in the Lease) and/or the Lessee has been notified of the calculation of Estimated Expenditure (as defined in the Lease) for that Financial Year under clause 7.1.3 of the Lease."

70. The same points were made by counsel for WNSL in opposition to the grant of these declarations. But the course of these proceedings shows that each of these issues is both present and real. Whilst they may not resolve all the differences between these parties they may help. I cannot see that they can do any harm or cause confusion. Accordingly for these reasons I will give judgment in favour of WLL for £120,000 and interest in accordance with clause 3.19 and I will make the declarations sought.
Residual Disputes
71. There remain two residual matters in dispute. The first relates to the identification of the Financial Year as defined in clause 7.1.2. The second concerns the matters necessary to constitute an account for the purposes of clause 7.2 and whether the information contained in Appendices I and IV sent with the letter dated 17th November 2006 by WLL to WNSL is sufficient to constitute such an account. WLL seeks declarations in respect of both matters.
72. Clause 7.1.2 states that:

"Financial Year" means the period from and including the 1st day of January in every year up to and including the 31st day of December of the same year or such other period as the Lessor may in its absolute discretion from time to time reasonably determine and notify in writing to the Lessee"

WLL seeks a declaration that:

"The Financial Year under clause 7.1.2 of the Lease is and with effect from 1 January 2002 has been each of the following periods, namely (i) from 1 January 2002 up to and including 5 August 2002, (ii) from 6 August 2002 up to and including 31 March 2003, (iii) thereafter each successive 12 month period commencing on 1 April in one year and ending on 31 March in the next following year."

73. The basis for this claim is that as from the acquisition of the shares in the defendants by Quintain their financial years were changed to run from the 1st April to 31st March. For the year in which the acquisition took place, namely August 2002 the year was broken so as to run for 7 months to 6th August 2002 and 8 months to 31st March 2003. Since then their accounting year has been 1st April to 31st March. These changes of date were notified to WNSL by WLL in the letter from their solicitors dated 17th November 2006 and by Gideon in a further letter from their solicitors dated 1st March 2007.
74. Counsel for WNSL suggested that such notification after the ends of the relevant years was ineffective but gave no reason why. I can well understand that if some action had been taken by WNSL on the basis of a financial year as originally defined then a notification after the end of the year might be too late. But nothing of the sort is alleged. Nor do I see why an ex post facto notification should prejudice WNSL. Accordingly I conclude that the notifications were effective when given. Given my conclusions as to the identity of the Lessor for the purposes of the Lease such notification was made on 17th November 2006. Though no submission was made to this effect it seems to me that the change can only take effect as from the notification, that is 17th November 2006, not the date given in the declaration which WLL seeks. But with that alteration I see no reason not to grant the declaration sought.
75. The letter from WLL dated 17th November 2006 enclosed, in addition to the invoices, four appendices. I am not concerned with appendices II and III but WLL seeks a declaration that:

"The information contained in Appendices I and IV of the letter from the First Defendant to the Claimant dated 17 November 2006 (a copy of which is attached to this Order marked "A") is sufficient to constitute an account for the purpose of Clause 7.2 of the Lease."

76. Appendix I sets out figures in six columns for each of the financial years or shorter periods notified in the letter for the maintenance costs of the car parks. They are broken down into direct costs comprising car park maintenance, tarmac repairs, "Bgt in labour", "Bgt in materials" and cleaning waste and indirect costs comprising management & technical overheads and administration @ 10%. A percentage usage for WNSL is set out and that percentage is applied to the total expenditure so as to produce a specific amount allocated to WNSL. The methodology is then explained in some detail. The second page of Appendix I carries out the same exercise on estimates for future years from 1st April 2005 to 31st March 2011. Appendix IV contains detailed figures for car park usage for the years 2001 to 2006.
77. The figures in Appendix I page 1 are very similar to but not the same as those contained in an account of car parking expenditure reviewed by KPMG in its capacity as the Accountant as defined in clause 7.1.4 of the Lease. They were sent to WLL by KPMG under cover of a letter dated 7th November 2006. From these figures KPMG derived a fair and reasonable proportion of the Expenditure to allocate to WNSL so as to constitute the Service Charge for the purposes of clause 7.1.5. It is the Service Charge so ascertained which formed the basis for the invoice dated 14th November 2006 for £436,700 plus VAT which was one of the six invoices enclosed with the letter dated 17th November 2006. Initially WLL sought judgment based on those issues but abandoned that claim in its amended defence and counterclaim served on 9th March 2007.
78. These and other documents were reviewed by Mr Christopher Edwards FRICS. He was instructed as an expert by WNSL. He criticises the figures contained in Appendix I page 1 on a number of grounds which he summarises in paragraph 4.3.3 of his report in these words:

"..the combination of the above factors causes me to doubt whether KPMG's accounts represent an accurate picture of each constituent element. The direct costs are reconstituted; the management and technical overheads are based on a budget and not expenditure properly incurred; the administration charges are demonstrated through the disclosed documents to be higher than the costs incurred; and I cannot see from the documentation supporting the apportionment whether or not all the users of the car parks etc have been included in the apportionment matrix."

Mr Edwards was not cross-examined on his report.

79. In his closing submissions counsel for WLL suggested that WNSL had misunderstood the nature of the declaration sought by WLL. It is not, he explained, to establish liability to pay the sums set out in Appendix I or IV but the nature of the obligation imposed by clause 7.2. What information is required to be provided and in what form? He submits that Appendices I and IV satisfy those requirements. In his oral submissions he specifically disclaimed any reliance before me on any of the actual figures.
80. Clause 7.2 requires an account

"showing the Expenditure for that Financial Year and containing a summary of the various items comprising the Expenditure"

Expenditure is

"the aggregate of all costs fees expenses and outgoings whatsoever properly incurred by the Lessor in complying with its obligations in respect of the Lessor's Services"

81. In earlier sections of this judgment I have indicated that I am prepared to make declarations in respect of certain specific items of expenditure. Given those declarations and given that the figures in Appendices I and IV are not relied on it seems to me that a declaration in the form sought would be both unnecessary and potentially confusing and misleading. Nor does it appear that there is any real dispute as to what clauses 7.2 and 7.1.1 require. What is or may be in dispute is whether and to what extent specific items of expenditure are properly included. That is not a dispute which the declaration sought would resolve. Accordingly I shall not grant any declaration in respect of the contents of Appendices I or IV to the letter dated 17th November 2006.
Summary of conclusions
82. For all these reasons I will, subject to any further argument as to the details of my order:

(1) give judgment to WLL for £120,000 plus interest in accordance with clause 3.19 of the Lease,

(2) make the following declarations:

(a) The First Defendant is and has all times since July 2002 been the Lessor for all the purposes of the Lease.

(b) The following costs fees expenses and outgoings are and have since the date of the Lease been "Expenditure" for the purpose of Clause 7.1.1. of the Lease if and insofar as they are and have been properly incurred by the Lessor in complying with its obligations in respect of the Lessor's Services (as defined in the Lease) namely

(i) costs fees expenses and outgoings incurred by the Lessor (whether through the engagement of third parties or by the use of its own employees to carry them out) directly in carrying out the services listed in the Schedule hereto including the cost of labour materials equipment and storage of materials and equipment.

(ii) costs fees expenses and outgoings incurred by the Lessor (whether as aforesaid) in managing the provision of the Lessor's Services under the Lease, including in respect of its own employees a proportion of (1) the sums paid to or on their behalf in respect of their (i) salaries, (ii) pensions, (iii) medical insurance, (iv) life insurance, (v) travel, and (vi) staff meals and (2) the sums paid by way of provision for those employees of (i) office accommodation, (ii) office supplies and stationery, (iii) utilities, (iv) postage, (v) telephones and IT equipment, (vi) accountancy, (vii) training, and (viii) human resources.

(iii) costs fees expenses and outgoings incurred by the Lessor (whether as aforesaid) in and in connection with the participation of representatives of the Lessor in meetings with the Metropolitan Police, the London Borough of Brent and/or the London Development Agency and/or others to discuss and to be advised as to the traffic and/or security and/or anti-terrorism measures to be implemented on the Common Parts and the approaches thereto on the occasion of and in anticipation of an Event (as defined in the Lease) at the Stadium (as defined in the Lease), including for this purpose the costs, fees, expenses and/or outgoings incurred in and in connection with (i) preparation for such meetings, (ii) travel to and from such meetings, (iii) attendance at such meetings, (iv) developing strategies and/or proposals for the purposes of or to address issues arising at or from such meetings (including the costs fees expenses and/or outgoings of and associated with instructing and/or employing external consultants for these purposes), (iv) considering strategies and/or proposals prepared by others for the purposes of or to address issues arising at or from such meetings.

(iv) costs, fees, expenses and outgoings incurred by the Lessor in complying with its obligations in respect of the Lessor's Services (as defined in the Lease) under the Lease whether or not they are incurred in relation to an Event (as defined in the Lease) which is subsequently cancelled or does not otherwise take place provided that the cancellation or failure to take place has not been caused by any breach of obligation on the part of the Lessor under the Lease.

(c) An Advance Payment (as defined in Clause 7.3.1 of the Lease) is payable under Clause 7.3.1 of the Lease in respect of a Financial Year (as defined in the Lease):

(i) Whether formally demanded or not;

(ii) Whether or not an account has been prepared of Expenditure for the or any previous Financial Year (as defined in the Lease) under clause 7.2 of the Lease;

(iii) Whether or not the Lessor's Accountant (as defined in the Lease) has specified the Estimated Expenditure (as defined in the Lease) and/or the Lessee has been notified of the calculation of Estimated Expenditure (as defined in the Lease) for that Financial Year under clause 7.1.3 of the Lease.

(d) The Financial Year under clause 7.1.2 of the Lease is and with effect from 17th November 2006 has been each of the following periods, namely (i) from 1 January 2002 up to and including 5 August 2002, (ii) from 6 August 2002 up to and including 31 March 2003, (iii) thereafter each successive 12 month period commencing on 1 April in one year and ending on 31 March in the next following year.

THE SCHEDULE

1. Maintaining and repairing the Common Parts (meaning the Car Parks, the Footpaths, the Roads, Olympic Way and the Merchandising Booths, as defined in the Lease), including the carrying out of (i) tarmac repairs, (ii) drain and gully maintenance, (iii) door maintenance in the multi-storey car park, (iv) preventative maintenance, (v) hard and soft landscaping, (vi) plant bed maintenance, (vii) barrier maintenance, (viii) fence maintenance, (ix) lamp maintenance, (x) electricity supplies, (xi) water supplies, and (xii) waste removal and management.

2. All other Services as described in Schedule 2 of the Lease.

83. Before parting with this case there are two observations I should like to make. The first relates to the wanton copying of a very large quantity of documents. I was presented with 10 lever arch files of documents and three more of authorities. Five of the ten lever arch files, all marked E, contained some 3,000 sheets. None was ever referred to, nor, given that they were mostly the accounts of WLL for the years down to 2006, were they ever likely to be. Of the remaining bundles the number of sheets actually referred to was capable of being reduced to a very modest core bundle as ultimately and at my insistence they were. I was told that the solicitors for WNSL charge 20p per page for photocopying. Not only does such excessive copying increase the already large cost of litigation but it is also a considerable waste of resources. The solicitors for WNSL agreed to bear the cost of the five bundles E themselves. Had they not done so I should have made such costs orders as would have ensured that they did.
84. Secondly I am concerned that this dispute should ever have come to court. WNSL is a wholly owned subsidiary of the Football Association Ltd. WLL is a subsidiary of a very substantial property company, the shares in which are quoted on the London Stock Exchange. If they wish to avoid, through their subsidiaries, being locked in litigation for the foreseeable future they will take immediate steps to conclude a sensible commercial settlement.
Appendix

THIS LEASE made the 15^th day of March 1999

BETWEEN

(1) WEMBLEY STADIUM LIMITED (a company registered in England number 223957) whose registered office is at Wembley Stadium Wembley HA9 0DW ("the Lessor") and

(2) THE ENGLISH NATIONAL STADIUM DEVELOPMENT COMPANY LIMITED (a company registered in England number 3388437) whose registered office is 30 Aylesbury Street London EC1R OER ("the Lessee") and

WHEREAS:-

(A) By the Transfer (as hereinafter defined) the Lessor transferred to the Lessee the Property

(B) The Lessor agreed to grant the Lessee certain parking and access rights for the benefit of the Existing Stadium (as hereinafter defined) and following Practical Completion (as hereinafter defined) for the benefit of the New Stadium (as hereinafter defined) on the terms and conditions hereinafter contained

(C) By an agreement relating (inter alia) to the transfer of the Property and the grant of this Lease the Lessee agreed to pay to the Lessor the sum of £2,500,000 in consideration of the grant of this Lease.

W I T N E S S E T H as follows:-

1. Definitions

In this lease where the context so admits or requires:-

`Authorised Users' means the Lessee its employees and agents and contractors and all visitors to the Property and all spectators of and performers competitors and officials at any Event and any members of the press or any television or radio broadcaster accredited by the Lessee or the Event owner, organiser or promoter for any Event and any Event owner organiser or promoter.

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`the Closure Date' means the date upon which the Existing Stadium is closed in readiness for the construction on the Property of the Preferred Development or the Alternative Development (as defined in the Transfer)

`Common Parts' means the Car Parks the Footpaths the Roads Olympic Way and the Merchandising Booths.

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`the Construction Period' means the period commencing on and from the Closure Date and ending on Practical Completion.

`Demised Rights' means the rights which are more particularly described in Schedule 1.

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`Insured Risks' means such risks in respect of fire lightning earthquake subsidence heave landslip explosion aircraft (other than hostile aircraft) and other aerial devices or articles dropped therefrom riot and civil commotion and malicious damage storm or tempest bursting or overflowing of boilers water tanks apparatus or pipes flood impact (otherwise called collision) by road vehicles failure of lifts and property owner's public and third party liability for damage to property….

`this Lease' includes any deed or document supplemental hereto

`Lessee' includes the successors in title of the Lessee to the Property for an estate in fee simple

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`Lessor' includes the reversioner for the time being expectant on the determination of the Term

`the Lessor's Services' means the services set out in Schedule 2

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`New Stadium' means the New National Stadium (as defined in the Transfer) to be constructed on the Property by the Lessee in accordance with the Transfer.

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`Service Charge' means all monies referred to and payable in accordance with Clause 7 hereof.

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2. Demise and Reddendum
2.1 IN consideration of the sum of TWO MILLION FIVE HUNDRED THOUSAND POUNDS (£2,500,000) paid by the Lessee to the Lessor (the receipt of which is hereby acknowledged) and of the rents hereby reserved and of the covenants on the part of the Lessee hereinafter contained the Lessor HEREBY DEMISES unto the Lessee ALL the Demised Rights TO HOLD the Demised Rights only for the use and enjoyment of the Existing Stadium and after Practical Completion for the use and enjoyment of the New Stadium SUBJECT to all (if any) covenants restrictions stipulations conditions rights quasi-rights privileges and easements or quasi-easements affecting the Common Parts UNTO the Lessee for a term of one hundred and twenty five (125) years commencing on and from the date hereof (subject to earlier determination as hereinafter provided) YIELDING AND PAYING therefor unto the Lessor thought the Term FIRST the yearly rent of ONE POUND (£1.00) if demanded and then payable in advance on midsummer's day in every year SECONDLY the Service Charge in accordance with Clause 7 hereof and THIRDLY on demand a fair and reasonable proportion of the costs incurred by the Lessor in complying with Clause 4.1 hereof.

3. Lessee's Covenants

THE Lessee HEREBY COVENANTS with the Lessor that the Lessee will:-

3.1 Pay rent

3.1.1 pay to the Lessor the rent first and thirdly hereinbefore reserved in accordance with Clause 2.1.

3.1.2 pay to the Lessor the Service Charge in accordance with Clause 7.

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3.19 Interest

3.19.1 if any monies payable by the Lessee hereunder are not paid on the due date then in addition thereto the Lessee shall pay interest thereon at the rate of two per centum (2%) above the base rate from time to time of Barclays Bank plc calculated on a daily basis from the date payment is due until the date of actual payment (whether before or after any judgment).

4. Lessor's Covenants

THE Lessor during the period whilst it is the Lessor and without liability in respect of any subsequent period HEREBY COVENANTS with the Lessee as follows:-

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4.3 Lessor's Services

4.3.1 subject to the Lessee paying the Service Charge and to Clause 5.3 to perform the Lessor's Services as set out in Schedule 2.

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7. Service Charge

7..1 FOR the purpose of this Lease the following expressions shall have the following meanings:-

7.1.1 "Expenditure" means the aggregate of all costs fees expenses and outgoings whatsoever properly incurred by the Lessor in complying with its obligations in respect of the Lessor's Services and any value added tax incurred by the Lessor on such costs fees expenses and outgoings save to the extent (if any) that the same is recovered by the Lessor as input tax

7.1.2 "Financial Year" means the period from and including the 1^st day of January in every year up to and including the 31^st day of December of the same year or such other period as the Lessor may in its absolute discretion from time to time reasonably determine and notify in writing to the Lessee

7.1.3 "Estimated Expenditure" means for any Financial Year during the Term such sum as the Lessor's Accountant shall from time to time reasonably specify as a fair and reasonable estimate of the Expenditure for the current Financial Year Provided That the Lessor may from time to time during any Financial Year as appropriate submit to the Lessee a revised budget or budgets of its estimate of the Expenditure for that Financial Year whereupon appropriate adjustments shall be made to such sum to reflect the revised budget or budgets

7.1.4 "Accountant" means any properly qualified accountant appointed by the Lessor to perform the function of an accountant in relation to the Expenditure

7.1.5 "Service Charge" means a fair and reasonable proportion of the Expenditure as the Lessor may determine as being payable by the Lessee after due regard to:-

7.1.5.1 the user of the Common Parts by the Authorised Users and the user thereof by the Lessor and others entitled to lawfully use the same

7.1.5.2 any other factors which the Lessor may reasonably consider relevant

7.2 The Lessor shall as soon as reasonably practicable after the end of each Financial Year prepare an account showing the Expenditure for that Financial Year and containing a summary of the various items comprising the Expenditure and the same shall in the absence of manifest error to be conclusive evidence for the purposes of this Lease of all matters of fact referred to in the account
7.3 The Lessee shall pay to the Lessor:-

7.3.1 on account of the Service Charge for the period commencing on the date hereof down to the end of the following Financial Year and thereafter during each subsequent Financial Year during the Term a payment on account of the Service Charge ("the Advance Payment") calculated by the Lessor to be made by equal quarterly payments in advance on the usual quarter days (subject to adjustment if the Estimated Expenditure is revised by the Lessor) Provided That the first Advance Payment being a proportionate sum of the Estimated Expenditure from and including the date hereof to the day immediately preceding the quarter day following the date hereof shall be made on the execution hereof Provided Further that if no such calculation by the Lessor has been notified to the Lessee before the beginning of any Financial Year the payment on account until such notification shall be at the same quarterly rate as the Advance Payment made on the last quarter day of the immediately preceding Financial Year.

7.3.2 within twenty-one (21) days of written demand such further amount (being part of the Service Charge but not already included in the Advance Payment) incurred by the Lessor in respect of items of Expenditure ("the Supplemental Payment") incurred during the relevant Financial Year

PROVIDED THAT the Service Charge shall not include any capital expenditure incurred in the rebuilding or reconstruction of the Multi Storey Car Park AND Provided Further That unless and until the Olympic Way Pedway existing at the date hereof has been rebuilt or reconstructed the Service Charge shall not include any capital expenditure incurred in the rebuilding or reconstruction of the Olympic Way Pedway

7.4 If the Service Charge for any Financial Year shall:-

7.4.1 exceed the aggregate of the Advance Payment and any Supplemental Payment for that Financial Year the excess shall be paid by the Lessee to the Lessor within twenty one (21) days of written demand or

7.4.2 be less than the aggregate of the Advance Payment and any Supplemental Payment for that Financial Year the overpayment shall be credited to the Lessee against the next or subsequent quarterly payment of the Service Charge or in the last year of the Term shall be repaid by the Lessor to the Lessee within twenty one (21) days after the expiration of the then current accounting period

7.5 Any Omission by the Lessor to include in any Financial Year a sum expended or a liability incurred in that Financial Year shall not preclude the Lessor from including such sum or the amount of such liability in any subsequent Financial Year as the Lessor shall reasonably determine

7.6 In performing its obligations contained in Schedule 2 the Lessor shall be entitled in its reasonable discretion to employ agents (including managing agents) contractors and such other persons as it may reasonably think fit and to delegate its duties and powers to them and their proper and reasonable fees and expenses including VAT shall form part of the Expenditure

7.7 The Lessor may withhold add to extend vary or make alterations to any of the Lessor's Services from time to time if the Lessor at its reasonable discretion having regard to the principles of good estate management deems it desirable to do so

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SCHEDULE 1 The Demised Rights

Access

1. The right for the purpose only of gaining access to and egress from the Car Parks which at that time the Lessee is entitled to use pursuant to Schedule 1 and (to the extent (if any) that such right is not granted by the Transfer) the Property with or without vehicles at all times for all Authorised Users to pass and along the Roads
2. The right for the purpose only of gaining access to and egress from the Property from and to the Car Parks on foot only for all Authorised Users to pass over and along the Footpaths and Olympic Way Pedway and so far as the Lessor can lawfully grant same Olympic Way.
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SCHEDULE 2 The Lessor's Services .....

4. Traffic

Control traffic on the Roads and in the Car Parks (as deemed desirable by the Lessor

5. Insurance

Take out and maintain in force an effective insurance policy or policies against any and every liability of the Lessor for injury to or death of any person (including every agent servant and workman of the Lessor) and damage to or destruction of the property of any such person arising out of the management and/or maintenance and/or occupation of the Common Parts and in particular but without limiting the generality of the foregoing.

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8. Statutory Requirements etc.

As deemed desirable or expedient by the Lessor comply with or make representations against or otherwise contesting the incidence of the provisions of any statute bye-law or notice concerning town planning public health highways streets drainage or other matters relating to or alleged to relate to the Common Parts other than those for which any of the Lessor's lessees are directly liable.

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10. The Lessor may employ such suitable and reputable staff and/or contractor to perform or carry out the Lessor's obligations (or any of them) specified in this Schedule and may provide purchase hire maintain renew and replace all such vehicles fixtures and fittings bins receptacles tools appliances materials equipment and other things which the Lessor may acting reasonably deem necessary for the maintenance appearance upkeep cleanliness of the Common Parts or for the provision of the Lessor's Services.