English and Welsh Courts - Miscellaneous

IN THE COUNTY COURT AT LEEDS

		The Court House Oxford Row Leeds LS1 3BG
		18 September 2015

Judge Behrens:

1 Introduction

1. This is a landlord and tenant dispute. It is a claim by Kingston Upon Hull City Council ("the Council") for mandatory injunctions against its tenant, Superstadium Management Company Limited ("SMC") arising out of the terms of a tenancy dated 1 September 2004 of a Sports Park to the north of Anlaby Road, Kingston Upon Hull.
2. The two main elements of the Sports Park are: (1) a stadium ("the Stadium") and (2) a sports hall complex, which includes a sports hall building ("the Sports Hall Building"), and other, outside sports facilities, including two all-weather pitches ("the Outside Pitches"). Within the Sports Hall Building is an indoor sports hall ("the Hall").
3. The Stadium is known as the KC Stadium after its sponsor, and it is the home stadium for Hull City Football Club, a professional football club ("Hull City"), and Hull Football Club, a rugby league club ("the Rugby Club"). The Sports Hall Building is known as the Airco Arena, again as a consequence of sponsorship.
4. Until 13 April 2015 the floor surface of the Hall was of a sprung wood construction (effectively a classic gymnasium floor). It has been used by sports clubs, schools and colleges and members of the public for a wide range of sports, including football, hockey, martial arts, badminton, gymnastics, netball, roller skating, boxing and trampolining.
5. On 14 April 2015, a 3G carpet ("the 3G Surface") was laid within the Hall. The 3G Surface is an artificial synthetic turf carpet. It has been laid on the existing flooring with 60 tonnes of rubber and sand deposited on top. No other changes were made to the Hall.
6. Following the installation of the 3G Surface, a number of sports and activities will not be able to utilise the Hall in the same manner as before. However, other sports and activities which were carried out previously can still be carried out following the installation of the 3G Surface. Furthermore sports and activities which previously were unable to utilise the Hall due to the potential for injury on the hard floor or because the hard floor was an unsuitable surface, can now utilise the Hall.
7. It is possible to place a removable hard surface over the 3G Surface. This has occurred when SMC hosted major events such as a National Trampolining competition on 27 and 28 June 2015. These events last for at least a day. Thus the installation of the 3G Surface does not completely preclude those sports being carried out in the Hall in future.
8. The Council contends that the installation of the 3G Surface is a breach of the covenants in the lease. In these proceedings the Council seek mandatory orders requiring the reinstatement of the Hall if necessary by the removal of the 3G Surface. SMC denies that the installation of the 3G Surface is a breach of any of its obligations under the lease. It also contends that the relief sought is not sufficiently precise and would compel SMC to run its business in a way that it does not wish. It accordingly contends that even if there was a breach of the terms of the lease there should be no mandatory injunction.
9. These proceedings have been brought to trial with commendable speed. The claim form was issued on 24 June 2015 and was accompanied by what SMC contends was an optimistic application to Kingston Upon Hull County Court for an interim mandatory injunction. The application was listed before Judge Jack in that Court on 3 July 2015. Judge Jack gave directions for a 3 hour hearing before a Chancery Judge in Leeds on 3 August 2015. On that date Judge Kaye QC directed a speedy trial which was listed for hearing on 12 and 14 August 2015.
10. Within that very short time span the Council has filed a detailed Particulars of Claim supported by witness statements from 8 witnesses. Only 3 of those witnesses were relied on at the trial – Mr Anderson, the Town Clerk, Ms Williams, the director of Coaching at Hull High Fliers Trampoline Club and Mr Topliss who was the Council's Project Manager between 1999 and 2003 when the Airco Arena was built. Only Mr Anderson was cross-examined.
11. The Defendant has filed a detailed Defence and witness statements from 2 witnesses – Mr Ehab Allam and Mr Mark Hagues. Mr Allam is a director of and Vice Chairman of SMC, the shareholding of which is owned by Allamhouse Limited. He is also a director and Vice Chairman of Hull City Tigers Ltd ("Tigers"), Allamhouse Limited being the parent company of Tigers. . Mr Hagues is the Sports Centre manager at the Airco Arena. Both Mr Allam and Mr Hagues were cross-examined.
12. Following the trial judgment was reserved. I indicated in the course of argument that I proposed to give an initial judgment on the issue of whether there was a breach of the covenants in the lease. Any matters arising out of that judgment including the question of the form of any injunction to which the Council might be entitled would be dealt with by way of written submissions. The written submissions (together with drafts of any orders sought) are to be submitted electronically in Word format by 4 p.m 18 September 2014. Judgment will handed down as soon as practicable thereafter.
13. Before dealing with the case it is right that I should acknowledge with gratitude the very considerable assistance I have received from all those involved in the case. The bundles were well prepared, well indexed and comprehensible. The skeleton and oral arguments were concise and of the highest quality. I am, as I have said extremely grateful to all concerned.

2 The Lease

14. As the principal issue between the parties is a question of construction of the lease it is necessary to refer to a number of the clauses. It is convenient to refer to them all in this section.

The Parties

15. The lease is made between the Council as landlord, SMC as Lessee and Adam Pearson who was at the time the holder of the whole of the issued share capital of SMC. Mr Pearson is the owner of the Rugby Club. As noted above he no longer owns any shares in SMC and has taken no part in these proceedings.

The Term and rent

16. The lease is dated 1 September 2004. It creates a lease of the Sports Park for a term of 50 years from 16 December 2002. It reserves the yearly rent of a peppercorn, and the "Additional Payment". The "Additional Payment" is a payment made by SMC to the Council in accordance with schedule 5 to the Lease. Essentially schedule 5 provides that the Defendant is obliged to pay to the Claimant a rising percentage^[1] of the Net Profit before Tax during each of SMC's financial years.

The Demised Premises

17. The lease incorporates a plan showing an area edged red part of which is hatched red.
18. The Premises are defined as the area shown edged red and part hatched red on the Plan. The Sports Hall is defined as that part of the Premises shown hatched red on the Plan. The Stadium is defined as the remainder of the Premises excluding the Sports Hall.
19. It is to be noted that the definitions of the Sports Hall and the Stadium in the lease include parts of the Premises in addition to the physical structures that are the Sports Hall Building and the Stadium, respectively.

The User Covenants

20. The definition section of the lease contains two definitions for the permitted use – one for the Stadium and the other for the Sports Hall. The permitted use for the Sports Hall is in the following terms;

"Use as an indoor sports hall all weather sports pitches and other recreational and sporting facilities (but including conferences exhibitions or similar functions at the Lessee's discretion) from time to time provided with all ancillary facilities."

21. The covenants regulating the use of the Sports Hall are contained in clauses 3.18.1, 3.18.2 and 3.18.3 which provide:

"3.18.1 The Lessee must not use the Premises for any illegal or immoral act or purpose or for a use which materially detracts from the principal use(s) of the Premises as a community facility.

3.18.2 The Lessee must use the Premises for the Permitted Use. The Lessee must not use the Premises other than for the Permitted Use (except on a temporary basis for uses which do not detract from the Permitted Use) without the prior consent of the Council which shall not be unreasonably withheld or delayed but may be made subject to such conditions as the Council may reasonably require having regard to the Permitted Use and the use for which consent is sought.

3.18.3 The Lessee shall operate and manage the Sports Hall so that the facilities of the Sports Hall are available to be used

(a) at all reasonable times;

(b) at charges and conditions broadly comparable to those charged by the Council for similar facilities elsewhere in Kingston upon Hull including concessions given by the Council to certain sectors of the local community;

(c) by any resident of Kingston upon Hull; and

(d) without any requirement to belong to a club, society or other body or otherwise pay any subscription or membership or other charges except for the use of the facilities of the Sports Hall.

Provided that nothing in this Clause shall prevent the Lessee from making such rules and regulations as it properly requires for the proper operation and management of the Sports Hall."

Community Use

22. Clause 1 contains a definition of Community Use Rights in the following terms:

"means use by or on behalf of the Council of any facility within the Stadium or the Sports Hall (excluding use of the pitch and/or playing surface of the Stadium and excluding any parts of the-Stadium or Sports Hall let to or occupied by a third party) in accordance with the provisions of schedule 7. For the avoidance of doubt_: this shall not include use by the Council pursuant to any underlease."

23. Clause 3.21 of the lease contains mutual covenants by the Council and SMC to observe and perform the provisions of schedule 7. It makes clear that the rights were personal to the Council and any statutory successor authority.
24. Schedule 7 of the lease provides:

"The Council and the Lessee will establish a liaison committee …for the purpose of agreeing an annual programme of major events to be held in both the Stadium and the Sports Hall. The liaison committee shall endeavour to agree the annual programme not later than 3 months prior to the start of each annual programme and for the purpose of such programme:

1.1 All regular users of events at the Stadium and the Sports Hall shall take precedence (including but not limited to the playing of football and rugby league on the pitch of the stadium)

1.2 The Council shall be entitled to nominate 20 events to be run by the Council either to be run by the Council either in the whole or part of the Stadium and/or the Sports Hall The Council shall be entitled to a discount of 50% on the Lessee's normal hire or charge rates in respect of each of such 20 events

1.3 The Council shall be entitled to nominate a further 110 events (maximum) for which the Council shall be entitled to a priority reservation. The Lessee's normal hire and charge rates shall apply to each of such 110 events,

1.4 …

Events run by the Council pursuant to paragraph 1.2 and 1.3 above shall be subject to the Lessee's standard terms and conditions from time to time in force in respect of the hiring or use of the Stadium and/or the Sports Hall by third parties."

Alteration covenant

25. Clause 3.4 is the covenant concerned with SMC's right to make alterations. It provides:

"3.4.1 Alterations permitted with consent

The Lessee must not make any structural additions to or any external structural alterations to the buildings forming part of the Premises unless he first

3.4.1.1 obtains and compiles with all necessary consents of any competent authority and pays the authorities' charges for them

3.4.1.2 pays the proper and reasonable fees and costs of the Council, any mortgagee and their respective professional advisers in connection with considering and approving such alterations or additions and negotiating and completing any documents reasonably required by the Council in connection with such alterations or additions

3.4.1.3 Obtains the consent of the Council (which shall not be unreasonably withheld or delayed) and enters into such covenants as the Council reasonably requires as to the execution and reinstatement of such alterations or additions

Provided Always that the Lessee shall be at liberty to carry out any other alterations or additions (Including demountable partitioning) as it shall require without obtaining the consent of the Council."

26. It is no part of the Council's case that the installation of the 3G Surface is a structural alteration within the meaning of Clause 3.4.1. It follows that the consent of the Council under this clause was not required.

3 The facts

Background

27. The Council is the freehold owner of the Sports Park. Its title is registered at the Land Registry under title number HS293630. In 2002 the Council constructed a sports park for the City of Hull on this land. The work was described in the construction contract as follows:

"A state of the art sports park, incorporating a stadium, sports hall, synthetic turf pitches and a comprehensive range of facilities. Owned by the Hull City Council, the stadium will be a new home for both Hull City FC and Hull Rugby Football Club. It will have an initial minimum capacity of 25,000 spectators.

The stadium will also provide accommodation for community learning facilities. The West Park environment shall be improved, to include a multi sports indoor hall, two all weather pitches, and a number of informal areas.

The project is to be a flagship of the highest quality design, incorporating the best standards of environmental design and practice. It shall be a beacon of civic pride for the City, delivering optimal economic and community benefit.

The complex shall be seen to provide:

• A range of sporting, leisure and educational facilities that focus on family and community orientated activities

• A permanent and sustainable facility for both the professional and amateur sporting clubs of Hull

• A "Centre of Excellence" for a variety of sporting and leisure activities, which shall be a key focus of the City's Sports Development Strategy."

28. The Stadium was completed on or about 16 December 2002. It has a capacity of 25,586 for football and rugby matches. The first match to be played at the Stadium, a football match, took place on 18^th December 2002.
29. The Sports Hall complex was completed on or about 9 December 2002. The Sports Hall Building has a large entrance and reception area which leads to a café-bar (called the "Recovery Room") and a viewing area at one end and onto a corridor at the other which leads to a first aid area, the changing area (there are 6 changing rooms, each with shower and toilet facilities), storage rooms, toilets, the first floor staircase, a lift and an interior sports hall, the Hall. On the first floor there is a fixed seating viewing area which looks out onto the Hall.
30. The Hall is approximately 33 metres wide, 54 metres long and 9 metres high. It is accessed by 2 doors leading from the changing area corridor and also by a set of double doors leading from the reception area. In addition to 3 fire exits within the Hall, there are also 4 roller doors which provide access to and from storage areas connected to the Hall. The sides of the Hall are of blockwork construction. There is a viewing window at one end at ground level allowing people in the bar and reception area to see into the Hall.
31. Outside the front of the Sports Hall Building, there is a tarmac car park providing parking for 54 cars, together with a small seating area adjacent to the café-bar which can, weather permitting, be used for eating and drinking outside. To the rear of the Sports Hall Building, there are two sand based astro-turf all-weather pitches with floodlights. Previously there was also a small skate park between the Sports Hall Building and the all-weather pitches but this was removed in or around 2004/2005 due to problems with individuals engaging in anti-social behaviour who were congregating at the skate park.

Use of the Hall.

32. Since being opened in January 2003, the Sports Hall complex has been visited and used by thousands of people for many different purposes, both sports related and otherwise. The external all-weather pitches have been predominantly used by people playing football and hockey, albeit those pitches have been used for fun days, rugby training and netball also. The café-bar area, which is predominantly used by people attending the Sports Hall Building to participate in or watch events, has on occasion been hired for private functions.
33. The Hall is the main internal area of the Sports Hall Building which is utilised by third parties. From a sports and fitness perspective, since it was opened in 2003, the Hall has been used by sports clubs, schools and colleges and members of the public for a wide range of sports, including football, futsal, hockey, martial arts, badminton, gymnastics, netball, roller skating, boxing and trampolining.
34. Large scale sporting events have also been held in the Sports Hall Building, including a televised night of boxing with a headline fight involving James De Gale, now IBF Super Middleweight World Champion, an under 17s Netball European Championship, Yorkshire Jets Super League Netball matches, National Wado Karate Tournament, dance events, Cage Fighting, the Allam British Open Squash Championship and the BDO Darts.
35. From a non-sporting perspective, the Sports Hall Building has hosted a number of conventions and business events, including craft fairs, a cat show, Yorkshire International Business Convention and a Business Expo.
36. In his witness statement Mr Anderson listed a number of community groups that regularly used the Hall. Mr Hagues was asked to comment on the frequency that these groups used the Hall. His comments are contained in the following table.

Humberside Netball,	8 tournaments a year
West Hull Gymnastics,	twice a week
Tumbletime Pre-school club,	2 hours a week
Hull Angels Roller Derby Team (Roller-skating club),	twice a week
Hull High Flyers (trampolining)	twice a week
Hull College	every day during term time
New Generation Wrestling,	once every 3 months
WADO UK — Karate,	once a year
Hull School of Athletics,	once a year
Humberside Sports Partnership,	?
Kingston Panthers Wheelchair Basketball Club,	not for a year
Volley Ball & Badminton.	Part of Hull College

37. Whilst it is true that the rent is only a peppercorn some sums have been paid under the provisions for Additional Payments. Exact figures were not provided but I was told that approximately £50,000 has been paid since 2003. Mr Allam produced the 2014 accounts for SMC which showed, in summary, that whilst the Stadium was profitable, the Sports Hall Building made a loss of approximately £235,000.

The Academy

38. Tigers are an associated company of SMC. Tigers are, in effect, the corporate side of Hull City which, until being relegated in May 2015, was in the Premier League and will in the 2015/2016 season be in the Championship. In addition to the professional team, Tigers also operate an Academy, which develops young players from the age of 8 - 21 with a view to producing future first team regulars.
39. Tigers' Academy was designated as a Category 3 Academy at the time of the inception of the Elite Player Performance Plan (being a youth development scheme initiated by the Premier League) in 2012. From a playing perspective, this means that Tigers' Academy teams play other Level 3 Academy teams.
40. Tigers have for some time been seeking to achieve a Category 2 status which would enable the Academy to compete with more well established and higher quality Academies. Following negotiations and discussions taking place between the appropriate bodies and Tigers regarding Tigers' application for Category 2 Status notice was received by Tigers in or around January/February 2015 that an interim audit to upgrade the Academy to Category 2 status would be carried out on 23 April 2015.
41. One of the requirements for a Category 2 academy is the provision of an indoor artificial surface pitch for the exclusive use of the Academy at all times. Tigers have an agreement with Bishop Burton College under which they use the facilities there. They wish to construct a full size covered pitch at Bishop Burton but that will take 18 months to construct.
42. Mr Allam was aware that other clubs had been granted Category 2 status before there was in place a covered pitch provided there was a plan to construct such a pitch. Accordingly Tigers invited the Premier League to accept their commitment to establish a covered pitch at Bishop Burton to meet the requirement of the audit. This was refused. They considered the possibility of establishing an interim facility at Bishop Burton by using a marquee structure. However this could not be erected until June or July 2015 which was not acceptable to the Premier League.
43. The only remaining option was the installation of the 3G Surface at the Hall. The use of the 3G Surface by the Academy was never intended to be exclusive or to be permanent. It would only be used by the Academy until the permanent solution of a covered pitch either at Bishop Burton or elsewhere was provided. Furthermore the intention was that members of the community would be able to reserve the use of the Hall on the same basis as before.
44. Although it is not in dispute that the desire for Category 2 Academy status was the driving force behind the installation of the 3G Surface both Mr Allam and Mr Hagues told me it was not the only reason.
45. In March 2014 SMC received an estimate in the sum of £30,576 plus VAT in respect of repairs to the floor of the Hall. £23,166 of this was in respect of sanding and sealing of the floor itself. The remainder appears to have been mainly in relation to individual sports. The actual cost of installing the 3G Surface was £38,586.
46. As already noted the use of the Hall was loss making. An analysis of the figures in 2013 showed that the Sports Hall lost money on most activities and only large events and 5-a-side football bookings were profitable. Other venues which could be regarded as competitors for football bookings had indoor 3G pitches. Mr Hagues believed that bookings had been lost to those venues.
47. Thus whilst Mr Allam acknowledged that the installation of the 3G Surface would assist Tigers in their attempt to achieve Category 2 Academy Status he contended that part of the reason was to increase and maximise football use of the Hall and to enable SMC to compete better with rival venues. Furthermore the cost of installing the 3G Surface was comparable to the costs of the estimated repairs necessary to the floor.
48. Mr Denehan invited me not to accept this evidence and submitted that the only reason for the installation was to assist Tigers. I do not accept this submission. Both Mr Allam and Mr Hagues struck me as honest witnesses and I see no reason to disbelieve this evidence. There were commercial reasons for installing the 3G Surface apart from the desire to assist Tigers. Furthermore, as Mr Allam made clear, the use by the Academy will cease in September 2016 when a permanent solution is found. There are no plans to remove the 3G Surface at that time.

The installation of the 3G Surface.

49. On about 13 March 2015 Mr Hagues emailed users such as Humberside Netball and Hull High Flyers that SMC would not be able to accommodate further bookings after 13 April 2015 because of the installation of the 3G Surface.
50. This led to a long letter being sent by Mr Anderson on behalf of the Council to SMC on 16 March 2015. In the letter Mr Anderson drew attention to clauses 3.18.3, 3.21 and schedule 7 of the lease and invited SMC's comments on an apparent breach.
51. Mr Allam replied on 20 March 2015. In the letter he acknowledged that SMC planned to lay the 3G Surface at the Hall. He contended that it did not involve a change of use outside the permitted use. He asserted that there was no breach of clause 3.18.3. He made the point that the facilities would continue to be available to the public for bookings to use the 3G Surface.
52. On 25 March 2015 there was a meeting between Mr Anderson, the Chief Executive of the Council, Mr Allam and his father Dr Allam. Mr Anderson has exhibited a detailed note of that meeting. It is not necessary to refer to the note in any detail. Mr Allam maintained his position that SMC had no option but to continue with the intention to install the 3G Surface.
53. The 3G Surface was duly installed on 14/15 April 2015 at a cost of £38,586 plus VAT.
54. On 15 April 2015 the Council sent a letter before action to SMC. It alleged that there was a breach of clause 13.8.3 and made the point that the installation of the 3G Surface was being carried out at SMC's own risk.

Effect of the 3G Surface

55. It is not in dispute that the 3G Surface has made the Hall unsuitable for some sports. Whilst SMC is willing to place a hard cover on the 3G Surface for major events it will not do so for the ordinary day to day use of he Hall for those sports.
56. Mrs Williams has made a statement setting out the effect on the Hull High Fliers Trampoline Club. In summary:
57. The Club has about 150 members of varying ages. It also offers a session with a gymnastics for preschool children. About 40 children attended on a Thursday morning.
58. The Club has operated from the Hall since it opened in 2003. It had 2 regular sessions a week. It is a centre of excellence for trampolining. Its facilities are amongst the best in Yorkshire. Its equipment was originally funded by the Council and was given to the Club by the Council. A number of members are elite performers.
59. Unsurprisingly the Club was very upset to be given just 4 weeks notice in March 2015.
60. After April 15 the Club has been using facilities at St. Mary's Sports College in the North of the City. The elite performers are unable to practice their routines because there are no other sports premises in Hull that can accommodate the club to continue as it was. No other premises, including St Mary's College are high enough for elite performance and the storage is not big enough to accommodate the Club's trampolines and school trampolines are inferior in technical specification. In addition most facilities are already fully booked up and cannot accommodate the Club. If the Club unable to return to the Hall the national performers will be forced to go to Sheffield or Leeds in order to develop.
57. In paragraphs 29 to 31 of his witness statement Mr Hagues gives examples of sports that cannot now use the Hall, sports which continue to be able to use the Hall and sports which can use the Hall but which previously could not do so:

"29 I acknowledge that following the installation of the 3G Surface, a small number of sports and activities will not be able to utilise the 3G Surface in the same manner as before the 3G Surface was installed. These are mainly sports which involve large, heavy pieces of equipment which could cause significant and costly damage to the 3G Surface such as gymnastics (albeit non-equipment based gymnastics will still be possible) and trampolining, or sports or activities which require smooth, flat, hard flooring, for example netball, basketball or roller skating.

30. However, other sports and activities which were carried out within the Hall previously can still be carried out following the installation of the 3G Surface. These include football, hockey, martial arts, circuit training and the increasingly popular bubble-football.

31. Also, sports and activities which previously were unable to utilise the Hall due to the potential for injury on the hard floor or because the hard floor was an unsuitable surface, can now utilise the Hall. These include rugby, lacrosse and American Football."

58. In paragraph 32 he sets out the 3 major events where a removable hard surface was placed over the 3G Surface throughout the events:

Allam British Open Squash Championship	11- 17 May 2015
Chamber Expo 2015;	2 - 3 June 2015
a National Trampolining competition	27 - 28 June 2015

59. In evidence Mr Hagues explained that the hard surface remained in position for the whole of the period between 11 May 2015 and 28 June 2015 so that there was some opportunity for practice before the trampoline competition.
60. The day to day operation of the Hall has not been affected by the installation of the 3G Surface. The Hall continues to be available to the general public on a first come, first serve basis.
61. In paragraph 36 of his witness statement Mr Hagues lists the events that have been hosted since the installation of the 3G Surface:

Children's Birthday parties	18, 25 April 2015
Futsall	21 April 2015
Mixed under 9's football team	22 April 2015
Hull City Tigers Limited Academy	27 April 2015
Local men's football team	28 April 2015
Tigers Trust event	28 April 2015
DS Active (mixed sports) - working with Children with Downs Syndrome	29 April 2015
Tigers Trust event	30 April 2015
Children's Birthday parties	6, 7, 8 and 13 July 2015
Year 2 Primary School Football Tournament	9 July 2015
Barclays Premier League Work Project - mixed sports event	9 July 2015
Hull City Tigers Limited Academy	11, 13 July 2015
Local men's football team	13 July 2015
Local men's football team	15 July 2015

62. Thus the use has been by a variety of groups and organisations, all of which are local and no-one person, party or club, nor any particular sports, has been given priority of use. The sport or activity to which the Hall/part of the Hall being booked is used for being the choice of the person making the booking, provided that it is not a sport or activity that could damage the 3G Surface. Mr Hagues describes the response from those who have used the 3G Surface as "unanimously positive".
63. It is to be noticed from the above list that the Academy has only used the Hall on 3 occasions (27 April, 11 and 13 July 2015) between 15^th April 2015 and 15 July 2015. It was however accepted that there is likely to be greater use in the winter months.

Booking the Hall

64. The method of booking the Hall or part of the Hall is set out in paragraphs 37 to 40 of Mr Hagues's witness statement. The Booking Conditions are exhibited. It is not in dispute that Booking is on a first come first served basis; block bookings are possible. There is no requirement that the person booking belongs to a club, society or other membership charge.

Charges

65. In paragraphs 41 to 42 of his statement Mr Hagues set out in some detail the charges made for hire of the Hall and compared them with the charges made by other sports and leisure facilities in the area. He concluded that charges at the Sports Hall were comparable to charges applied at Sports and Leisure Centres managed by Hull City Council.
66. He was not cross-examined on this part of his evidence and it is accordingly not necessary for me to set it out in detail.

Council Events

67. As noted above schedule 7 of the lease envisages the establishment of a liaison committee for the purpose of agreeing a programme of major events. It also gives the Council has the right to nominate up to 130 events per annum which are to be run by the Council.
68. Whatever may have been envisaged in 2004 when the lease was executed the reality has turned out to be different. No liaison committee at all was set up between 2003 and 2015. In 2015 a liaison committee has been established. There have been 3 meetings of the liaison committee on 20 April 2015, 17 June 2015 and 8 July 2015. Agreement has been reached that the annual period referred to in schedule 7 will be from 1 July to 30 June. No events have been agreed for the period from 1 July 2015 to 30 June 2016.
69. Since the Sports Hall Building was opened in January 2003, only 2 events have been organised by the Council at the Sports Hall Building as a whole. These were 2 multi sports festivals taking place in 2004 and in August 2012. These events took place on the outdoor all-weather pitches and also in the Hall.
70. Mr Hagues saw no reason why these events could take place again. As he pointed out for major events lasting over a day it is possible to lay a hard surface over the 3G Surface.

Academy Category 2 status.

71. By a letter dated 21^st July 2015 the Professional Game Board ("PGB") of the Football League granted Tigers a licence to operate an Academy with a Category 2 status. The letter however made it clear that the Academy would have to demonstrate Category 2 compliance through the second cycle audit expected to commence in or around July 2016.
72. The letter made the following comment on the 3G Surface.

"…the PGB recognises the current indoor area provision as a temporary measure. The PGB will require assurance in due course that permanent provision is compliant in the next Category 2 audit cycle."

4 Discussion

73. Whilst I have set out the facts in some detail it is important to have clearly in mind what this case is not about. It is not a comparison of the merits of sports such as trampolining and netball as against football. Nor is it about the desirability of the Academy having Category 2 status. Nor is it about the profitability of 5 a side football over trampolining. Nor is it about Mr Allam's motives in putting down the 3G Surface.
74. As both Counsel recognise the issue for me to decide is whether on the true construction of the lease SMC were permitted to install the 3G Surface.

General Principles

75. The general principles to be applied to questions of construction are well- known. Mr Denehan took them from the speech of Lord Hoffmann in Investors Compensation Scheme Limited v. West Bromwich Building Society [1998] 1 WLR 896, where he said this at pages 912F-913F:

"… But I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed. I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v. Simmonds [1971] 1 W.L.R. 1381, 1384–1386 and Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of "legal" interpretation has been discarded. The principles may be summarised as follows.

(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] AC 749

(5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191, 201:

"if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense." …"

76. These principles have been discussed in numerous later cases including Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38; [2009] 1 AC 1101 at [14]-[15] and [21]-[25] and Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900 at [21]-[30]. However in the light of the submissions made it is not necessary for me to refer to the later cases.

General points

77. Before turning to the specific clauses which SMC are alleged to have breached it is necessary to note a number of general points that were made by Counsel in the course of their submissions.
78. It is clear from proposition (3) of Lord Hoffmann's formulation that evidence of negotiations and subjective intention is not part of the admissible background as an aid to construction of the lease. Some hearsay evidence of such intention was contained in the witness statements of Mr Topliss and Mr Anderson. However, as it is not admissible I have not referred to it.
79. The lease is a lease for 50 years. Thus the term is lengthy. Circumstances and sporting activities may be expected to change over a 50 year period. Some sports may decline and become less popular. Some may be expected to increase. New sports may emerge.
80. Some sports can obviously not be accommodated in the Hall. Examples given in the course of argument included swimming and ice hockey. There is no express term in the lease requiring SMC to accommodate particular sports in the Hall at any particular time.
81. The installation of the 3G Surface is not a structural alteration and thus is expressly permitted under the proviso to clause 3.4.1 without the need for the Council's consent. Mr Gaunt QC submitted that the lease had to be construed as a whole and that this was an important factor in the construction of the user and community covenants.
82. Mr Denehan submitted that the lease was not to be construed as a commercial lease between businessmen. He pointed to the facts that the whole complex was funded by the Council, that the term was 50 years at a peppercorn rent and that there were significant provisions in the lease for the benefit of the community. Mr Gaunt QC did not challenge these points but submitted that the lease included quite significant financial obligations on the part of SMC. He speculated that the lease of a Sports Park such as this was unlikely to be a particularly attractive commercial proposition. He supported this by reference to the fact that only relatively modest sums had been payable by way of "Additional Payments"
78. In general terms I agree with these points. In particular I agree with Mr Gaunt QC that the fact that the installation of the 3G Surface is permitted under the proviso to clause 3.4.1 is relevant to the construction of the user covenants.

Clause 3.21

79. As Mr Gaunt QC pointed out the expression "Community Use Rights" is a defined term in clause 1 of the lease. It refers to the use by the Council of any facility in accordance with schedule 7. Schedule 7 sets out the procedure for setting up a liaison committee to agree the annual programme of major events. The liaison committee has not been set up until recently. Only 2 major events have been held in the past. No major events have been agreed for the future.
80. It is, to my mind, difficult to see how the installation of the 3G Surface could possibly be a breach of clause 3.21. Apart from all other considerations SMC can lay a hard surface over the 3G Surface to accommodate major events. They have done so in the past and have indicated they will do so in the future.
81. In my view the installation of the 3G Surface is not a breach of clause 3.21.

Clause 3.18.2

82. Under this covenant SMC are required to use the Sports Hall for the permitted use and prohibited from using it for any other use.
83. Mr Denehan submitted that on its true construction the permitted use of the Hall was as "an indoor sports hall". He submitted that this was a term of art and that the essential feature of an indoor sports hall was a hall with a sprung wooden floor. By covering the floor with the 3G Surface the Hall ceased to be a sports hall. It had become an indoor football pitch. He cited as examples buildings with swimming pools or ice rinks inside them. He submitted that they would not be described as an indoor sports hall. They would be described as an indoor swimming pool or ice rink.
84. Mr Gaunt QC did not accept that the expression "an indoor sports hall" is a term of art. He submitted that the words were ordinary English words. They mean a hall where sports are played. He submitted that the use of the Hall for football was not prohibited by the lease, and that the laying of the 3G Surface was permitted under the proviso to clause 3.4.1. He made the point that there was nothing in the lease which required SMC to accommodate a particular sport such as trampolining or other activity requiring a hard sprung surface.
85. I prefer the submissions of Mr Gaunt QC. When I take into account the length of the lease, the lack of requirement to accommodate any particular sport or activity and the fact that non structural alterations are permitted I see no reason to interpret the "an indoor sports hall" in the narrow way suggested by Mr Denehan.
86. In addition it has to be borne in mind that there is no definition clause for the user of the Hall. The definition clause is for the Sports Hall complex as a whole. It is in wide terms. In addition to permitting use as an indoor sports hall it permits the use as all weather sports pitches and other recreational and sporting facilities. Mr Denehan submitted that the clause had to be broken up into its individual components. Thus the Hall had to be used as "an indoor sports hall", and the outside pitches had to be used as "all weather sports pitches". He submitted that the reference to "other recreational and sporting facilities" was ancillary to the primary definitions with the result that it did not detract from the required use of the Hall as "an indoor sports hall". Whilst I see the force of that submission I do not accept it. If, contrary to my view, the installation of the 3G Surface means that the Hall is not being used as an indoor sports hall it is being used within the meaning of "other recreational and sporting facilities". I do not see why this should be regarded as subsidiary to the other permitted uses.
87. In my view there is no breach of clause 3.18.2.

Clause 3.18.3

88. This is the clause designed to permit residents of the local community to use the facilities of the Sports Hall complex. SMC have to ensure that the facilities are available at all reasonable times, at prices broadly comparable to those charged by the Council for similar facilities (including concessions) without requirement that the user belong to a club or society.
89. It is quite plain on the evidence that the facilities on offer are available to the community and citizens of Kingston Upon Hull on precisely the same basis as they were available before the installation of the 3G Surface. The facilities can still be booked on a first come first served basis. Whilst it is true that the Academy has booked the facilities on 3 occasions there is no evidence that anyone who has wanted to book the facilities has been less able to do so than before 15 April 2015. There is no suggestion that the hours of opening are unreasonable or the charges are not comparable to those charged by the Council. Equally there is no suggestion that SMC require membership of a club or society.
90. The only basis upon which it could be argued that there is a breach of clause 3.18.3 is to submit that the word "facilities" must be interpreted as including an obligation to provide a hard wooden sprung floor. However as Mr Gaunt QC pointed out there is no express term requiring the provision of a hard wooden sprung floor and there is express provision permitting non structural alterations. Thus I reject the argument. In my view the word "facilities" in clause 3.18.3 is a reference to the facilities as they exist from time to time.
91. In my view there is no breach of clause 3.18.3

Clause 3.18.1

92. There is no suggestion that SMC are using the Hall for an illegal or immoral purpose. However Mr Denehan submits that the installation of the 3G Surface means that the use of the Hall materially detracts from the principal use(s) of the Premises as a community facility.
93. It is to be noted that this allegation did not feature in the Council's pleaded case nor in the pre-action correspondence. However, as Mr Gaunt QC accepted, it is a further point of construction based on the same evidence and there is no prejudice to SMC in allowing the Council to pursue it. I accordingly agreed that the point could be taken.
94. Mr Denehan argued that the 3G Surface in the Hall clearly detracts from the use of the Premises as a community facility. He submitted that I had to compare the use before and after the installation of the 3G Surface. He submitted that fewer members of the community would now be able to use the premises as persons needing a hard surface for less than a full day would now be excluded. He made the point that members of the community wishing to play football already had the facility of the outdoor all weather pitches.
95. Mr Gaunt QC did not accept that the comparison suggested by Mr Denehan was required as a matter of construction. He pointed out that the lease had to be construed as at the date of the grant and that over the 50 year period it was likely that the use of the Hall would change. He submitted that the community facilities referred to in clause 3.18.1 were the facilities set out in more detail in clauses 3.18.3 and schedule 7. If SMC complied with 3.18.3 and schedule 7 there was no breach of clause 3.18.1.
96. I prefer the submissions of Mr Gaunt QC. I cannot accept that it was the intention of the parties that for every permitted change of the Hall it was necessary to carry out a comparison of the members of the community who used the facilities before the change and those who were likely to use after the change. It would be impossible to know how many would use the facility after the change with the result that it would be impossible to know if the proposed but permitted change infringed the lease.
97. The facts of this case demonstrate the problem with Mr Denehan's construction. It is plain that some members of the community (such as trampoliners and netball players) who used the facilities before cannot now do so. It is equally clear that other members who could not use it before can now do so. Some already have used it and some (such as rugby players) may do so in the future. It is impossible for me to make a comparison between them. More importantly I cannot accept that it was the intention of the parties in 2004 that I should do so.
98. I accordingly agree with Mr Gaunt QC that the community facilities referred to in clause 3.18.1 are those set out in clauses 3.18.3 and schedule 7. For reasons I have given the installation of the 3G Surface does not detract from the use of the Hall in those respects.
99. It follows that there is no breach of clause 3.18.1.

5 Conclusion

100. It follows that there is no breach of covenant and the claim for an injunction fails.

Note 1    The relevant percentages are: 5% of the Net Profit Before Tax between £1.00 and £999,999.00; 7.5% of the Net Profit Before Tax between £1,000,000.00 and £1,499,999.00; and 10% of the Net Profit Before Tax above £1,500.000.00.    [Back]