Business Environment Group Ltd. v Wendy Fair (Wembley) Group Ltd & Anor [2005] EWCA Civ 1230

Case No A3/2005/1486

Case No A3/2005/1455

[2005] EWCA Civ 1230

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

(MR JUSTICE HART)

Venue Royal Courts of Justice

Date Wednesday, 8 August 2005

Strand

London, WC2A 2LL

B E F O R E:

LORD JUSTICE CLARKE

LORD JUSTICE JACOB

LORD JUSTICE NEUBERGER

Between

BUSINESS ENVIRONMENT GROUP LIMITEDRespondent

-v-

Between

WENDY FAIR (WEMBLEY) GROUP LIMITEDAppellant

WEMBLEY (LONDON) LIMITEDAppellant

(Computer-Aided Transcript of the Stenograph Notes of

Smith Bernal Wordwave Limited

190 Fleet Street, London EC4A 2AG

Tel No: 020 7404 1400 Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

MR PAUL MARSHALL (instructed by Davidson Mason and Carr,) appeared for Appellant

MR ALAN BISHOP (instructed by Messrs Howard Kennedy, London) appeared for Respondent

J U D G M E N T

LORD JUSTICE CLARKE:

[1]I will ask Lord Justice Neuberger to give the first judgment.

LORD JUSTICE NEUBERGER: The claimant, Business Environment Group Ltd, is the leasehold owner of a large office building, 1 Olympic Way in Wembley ("the premises"). About half of the premises is let to the Government, and the other half is licensed out as serviced offices. There are two means of access to (and egress from) the building: a front gate on Olympic Way and a rear gate on North End Road. There are constraints on the rear gate access, namely weight limits, height restrictions and manoeuvring limitations. Accordingly, the only practical means of access for large vehicles is along Olympic Way through the front gate.

[3]In 1991, Olympic Way was pedestrianised by the local highway authority, Brent London Borough Council ("the Council") to the extent that vehicular access was only permitted for emergency services and for properties abutting Olympic Way.

[4]The second defendant, Wembley (London) Ltd, is the owner of Olympic Way, as well as of a substantial amount of land in the area.

[5]The first defendant, Wembley Fair (Wembley) Ltd, is the operator of a weekly Sunday market ("the market"), possibly the biggest Sunday market in the country. The market was operated near Olympic Way in an area known as East Lake Car Park, but on 20 February 2005 that car park area was needed, as a result of the reconstruction of the Wembley Arena, as a temporary music performance site. Accordingly, on 27 February 2005 the market was temporarily relocated on Olympic Way and adjoining land.

[6]According to the terms of a planning permission granted (after the hearing below) that relocation will continue until the end of January 2006, when the market will presumably move back to East Lake Car Park.

[7]The market use of Olympic Way has resulted in the access to the buildings along Olympic Way, and in particular to the premises, being to a significant extent interfered with, at least according to the evidence of the claimant.

[8]On 10 March the claimant's solicitors wrote complaining about the interference with the access in some detail. This resulted in a modus vivendi, which was agreed between the claimant and the defendants, and which operated for the markets held on 27 March and 3 April. This involved there being no effective market operation, along a sufficiently wide part of Olympic Way to satisfy the claimant, together with a turning circle.

[9]On 5 April the Council, in the capacity of the highway authority, wrote to the first defendant indicating that "access to office premises on Olympic Way will be maintained through the provision of a 6 metre wide vehicle access way" and that there would be provision for signage and for "sufficient trained stewards."

[10]On that basis the defendants indicated to the claimant that they would no longer continue with the modus vivendi which had been operated on the two previous Sundays. On 10 April the defendants should have implemented, and no doubt sought to implement, the requirements of the Council. However, the judge found that on that Sunday the market operation did impede access to the premises at least to the extent of four separate individuals who were seeking such access; the details are set out in paragraphs 12-15 of the judgment.

[11]On 11 April, the claimant issued the present proceedings seeking injunctive relief and damages against the defendants for private nuisance, public nuisance, trespass and negligence. On 12 April the claimant issued an application seeking an interlocutory injunction, the terms of which I will describe in more detail later.

[12]The following Sunday, 17 April, it appears that that access was achieved to the premises but there were difficulties.

The judge put it in these terms in paragraph 16 of his judgment:

"The drivers of the vehicles concerned must have required considerable skill and some courage to execute the required manoeuvres, which were in the event successfully concluded."

No problems arose in relation to the 1st May Sunday markets. But there were problems on 8 May which are described in paragraph 18 of the judgment.

[13]The claimant also said that it had been told that various of its skip suppliers would not be prepared to make deliveries on a Sunday when the market was in operation, as the judge explained in paragraph 20 of his judgment.

[14]In summary, the claimant's case as summarised by

the judge was that:

"... the operation of the market has the practical effect of substantially interfering with its right to use the highway since there have been in the past, and are likely to be in the future, occasions where the stewarding system put in place either by the first defendant or the second defendant breaks down."

[15]The application for summary relief came before Hart J and was heard by him on Thursday and Friday, 23 and 24 June. He gave a judgment on Monday 27 June granting the claimant's application for an interlocutory injunction. The order records, as one would expect, the normal form of cross-undertaking in damages by the claimant in favour of the defendants, and the injunction itself restrains the defendants, or either of them:

"(a) from authorising, causing or permitting any object, market stall, vehicle or other obstruction whatsoever to be placed in Olympic Way... within the area... identified by the heavy dotted lines on the attached plan."

It further restrains the defendants: "(b) from authorising, permitting, setting-up, dismantling, operating or carrying on that part of the Wembley Sunday Market held... on... Olympic Way between..." - and then it identifies a certain area by reference to the plan.

[16]I do not need to go into the precise detail of the land, the subject of this injunction, because the argument in this court has centred on the principle of the grant of the injunction and not the details.

[17]The following Friday, the matter came back before the judge. He had to determine various issues, including the allocation of the costs of the interlocutory injunction application. He ordered that 75 per cent of the claimant's costs be "the claimant's costs in the case". In other words he ordered that, if the claimant succeeded a trial, the claimant should recover 75 per cent of its costs, but if the claimant failed at trial there would be, in effect, no order for costs in relation to the costs of the application. There was an appeal sought to be mounted against that order for costs by the claimant but it was (sensibly) abandoned before the appeal was called on for hearing.

[18]Unusually, the judge was also invited by the defendants to reconsider, on 1 July, his grant of the interlocutory injunction. He decided that it was open to him to reconsider that issue, but that it was inappropriate to do so, but he did give the defendants permission to appeal. Hence this appeal.

[19]Before the judge, although it was not referred to in his judgment expressly, the evidence was that if the injunction was granted the first defendant would suffer losses in the region of £2,000 per week. On the assumption that the interlocutory injunction would last until 31 January 2006, this would, according to the defendants' skeleton argument, mean a total loss of around £64,000. In addition, the second defendant was likely to suffer some damages as well, such damages being based on the amount the first defendant would pay to the second defendant for use of Olympic Way and they would appear to be easily quantifiable and would be significantly less than £64,000.

[20]The claimant's case, as refined before the judge, was in summary that the Sunday market activities as carried on after 5 April amounted to a public nuisance in that they involved an unreasonable use of Olympic Way, bearing in mind its highway status and the use to which the claimant was entitled to put it. It was said this nuisance occurred not merely during the time the market was in operation, but also, and perhaps in some ways even more acutely, during the three hours in which the market was being set up before it started and the three hours when the market was being dismantled after it had stopped.

[21]Access to the premises during the whole of the operation of the market and the three-hour periods either side of it, was said to be seriously impeded, and sometimes impossible for large vehicles such as skip deliveries, other trade suppliers, refurbishers of the building and other persons dealing with the claimants. This is said to have impinged to a substantial extent on the claimant's business in a way which might be difficult to quantify.

The judge summarised the claimant's case in paragraph 21 of his judgment in these terms:

"21. ... This is, it is submitted, unreasonably disruptive to the claimant's business and in particular its need, or at any rate desire, to use the weekends to do maintenance and refurbishment work on its building. Furthermore, the process of setting up and dismantling the market involves substantial periods of time on the evidence before the court. Some three hours or more are required for the setting up and some three hours for the dismantling. During those periods, Olympic Way is completely blocked. During those periods, it is submitted, passage for emergency services would not be available if required. The claimant is not able, with one trivial exception in respect of a wasted journey by Mr Higginbotham, the plumber, in respect of which an invoice for £175 has been raised, to point to any quantifiable pecuniary loss to date, but claims that it has suffered and will continue to suffer damage from its inability to carry on its business in the manner in which it desires to operate it, in particular with regard to weekend programmes of maintenance and refurbishment and in the loss of amenities which it is able to make available or advertise to its present or prospective licensees. This damage is hard to quantify but, it is submitted, real nonetheless."

[23]Following argument as to the precise way in which the claimant put, or should put, the case, the judge accepted the formulation put forward on behalf of the defendants, who were represented by Mr Paul Marshall, who appears for them today. He set out the correct analysis of the claimant's case in paragraph 25 in a passage which Mr Marshall realistically accepts that he cannot challenge in this court. The passage reads as follows:

"25. I have therefore to approach the matter on the footing that the market is a lawful user of Olympic Way and that it will only be a public nuisance if, having regard to the claimant's competing rights, the user can be said to be unreasonable. It may be the case that the claimant's pleading is technically deficient in not pleading the unreasonableness of the market user. Whether or not that is strictly the case, I do not myself regard this as a ground on which the claim should be struck out. It cannot, in my judgment, be said that the claimant has no real prospect of establishing such unreasonableness at the trial. Indeed, given the extent to which theclaimant's rights are being interfered with, whichseem to me to be considerable, and the relativelysmall steps which need to be taken in order toensure that those rights are preserved, I wouldmyself think that the claimant has a reasonably goodprospect at trial of establishing unreasonablenessin relation to the market user"

(emphasis added).

[24]Having decided that the claimant had what he called in paragraph 27, a real prospect of success,

the judge then said that it was:

"... accepted by the defendants that this is the kind of case which is unlikely to come to trial and that strict application of the Cyanamid principles is not therefore appropriate. For that reason it is necessary for the court to form some view as to the relative merits of the parties' cases. It also renders it less appropriate than it otherwise might be to consider whether damages in respect of the period pre-trial will be an adequate remedy."

He then went on to consider the point that, in the absence of an injunction, there would be real damage caused to the claimant which was "inherently difficult to quantify" - see paragraph 28.

[25]He expressed difficulty about the interest of other parties, and also with the fact that the Council were not involved in the proceedings. Neither factor, he concluded, should deter him from granting an injunction. He then went on to say this, in paragraph 32:

"... the relative absence of evidence of direct financial loss to the claimant from the current manner of operation of the market, has led me to doubt when it is appropriate to grant the specific form of interlocutory relief which is now sought by the claimants..."

He decided, however, it was appropriate. He concluded by saying this:

"Since the claimant is good for the damages on its cross-undertaking, I have narrowly concluded that the just solution which will hold the right balance between the parties until trial and in practice until the end of the market's operations in January next year is to accede to the claimant's application for injunctive relief."

[26]The defendants' main objection to the judge's conclusion is that he failed to take into account sufficiently or properly the fact that his decision on the interlocutory application would effectively be determinative of the rights of the parties as any trial would not come on until after the end of January 2006, when the first defendant's use of Olympic Way would have ceased. As the judge recorded at one point in his judgment there would, therefore, be likely to be no trial at all. In other words the argument advanced is that the judge's decision was effectively determinative of the issue between the parties, and in those circumstances it was wrong in principle for the judge to have granted the injunction on the ground that he did, or alternatively that we can and should review his decision to grant the injunction that he did because he erred in principle. In particular, it is said that he should not have held it relevant, let alone decisive, that the claimant was good on its undertaking if there was not going to be a trial - ie so that the undertaking would not be called on.

[27]The principle which the judge is said to have disregarded, or not properly applied, is effectively embodied in the decision of this court in Cayne v Global Natural Resources plc

[1984] 1 All ER 225

[28]To my mind, great care must be applied before one simply transfers the reasoning of the Court in one case relating to the grant or refusal of an interlocutory injunction to another case. I note that in his judgment in Cayne Eveleigh LJ said at 232G:

"I have reached the conclusion that this case is one that the court has to approach on a broad principle: what can the court do in its best endeavour to avoid injustice?"

This was a point repeated, effectively, when he came to reach his decision at 233F.

[29]In his judgment, Kerr LJ put the point rather differently, at 234G, although it amounted to much the same thing:

"It must also be remembered that the grant or refusal of an injunction is ultimately a matter of statutory discretion, and that the powers of the courts in this regard cannot be fettered by decisions in general terms, when the facts of cases will vary infinitely."

It is fair to say that in his judgment Kerr LJ did make one point which is of assistance to the defendants. Having held that it was very unlikely that there would be a trial in that case, he said this, at 234J to 235A:

"The question whether the defendant can be adequately compensated in damages normally only arises if the case is in fact taken to trial by the plaintiff. True, if the plaintiff does not do so, the defendant could still claim damages against the plaintiff's cross-undertaking on the ground that no injunction should ever have been granted. But this is no answer, since it is for the plaintiff to make out a case for the exercise of the court's discretion in his favour; and, in any event, defendants rarely proceed to trial of issues whose investigation they had not sought, but were concerned to resist."

[30]As my Lord, Clarke LJ, pointed out in argument, the penultimate sentence of that quotation is not precisely accurate. It is not a question of whether the interlocutory injunction "should ever have been granted"; it is a question of whether, with the wisdom of hindsight, the claimant had a cause of action. It is only fair to call on his cross-undertaking in damages to compensate the defendants for the injunction which was not, as it turns out with the wisdom of hindsight, based on a good claim. Similarly, with all due respect to Kerr LJ, to say in every case that the defendant can claim damages on the plaintiff's cross-undertaking "is no answer" cannot, to my mind, be regarded as a generally applicable principle. Indeed, I do not think that it can have been intended to be such, particularly in light of Kerr LJ's previous observations which I have quoted. It is right to say, however, that if one grants an interlocutory injunction, which will effectively expire before the hearing of the claim, one could be said to be thrusting the conduct of the case on to an unwilling defendant, whose only source of compensation is to call on the cross-undertaking in damages, as the claimant will often have effectively obtained what he wants at the interlocutory stage. In many cases, that may well be a factor against granting an interlocutory injunction, and, where it applies, the court should think carefully before taking such a course.

[31]In this case, it seems to me the essential point in that connection is this. At least in the absence of either party applying for expedition for the final hearing, the chances are high that that hearing would not occur before the value of any injunctive relief obtained by the claimant would have expired. In those circumstances it would be a commercial decision for the claimant (if the injunction is refused) or for the defendant (if the injunction is granted) whether to proceed to trial to recover damages for public nuisance (in the first case) or for damages pursuant to the claimant's cross-undertaking (in the second case).

[32]In my judgment, the decision of the judge in the present instance was one which he was entitled to reach in the circumstances of this case, and it is therefore one with which we should not interfere.

[33]The judge was faced with an application for an interlocutory injunction based on a well arguable case on the part of the claimant, on the basis that the injunction was required to restrain a public nuisance.

[34]The judge formed the view, as I read in the passage at the end of paragraph 25 of his judgment, that at least on the evidence and arguments before him the claimant had at least, and probably a somewhat better than, evens prospect of success. It was of course difficult, and potentially dangerous, to assess the likely or final outcome at the interlocutory stage, but it was an exercise which counsel for the appellant defendants accepts, indeed contended, was appropriate to carry out, given that the question whether to grant an injunction would not come on for determination before the value of the injunction had passed.

[35]Further, the risk of damage to the claimant if the injunction was refused would be real and substantial, but it would be difficult to assess. On the other hand, the risk of damage to the defendants was certain but was relatively small, unlikely to be more than a £100,000 in all, and very easy to assess - indeed it would almost certainly, as I understand the evidence, be agreed.

[36]The claimant was clearly good for any damages which the defendants could claim on the cross-undertaking.

[37]Additionally, there was the fact that the grant or refusal of the interlocutory injunction would probably be decisive in terms of the outcome of the case in relation to the position on the ground. Refusal of an interlocutory injunction would have the result that the claimant would be left with a claim for damages. The grant of the injunction would mean that the defendants would be left to call on the cross-undertaking.

[38]Both the grant and the refusal of injunction could lead to injustice in the sense that it would force the defendants, or the claimant as the case may be, to litigate about money and to suffer the refusal or grant of an interlocutory injunction which might turn out to be unjustified.

[39]Accordingly, to grant the injunction would have the consequence of(a) avoiding a potentially serious interference with the claimant's running of the building;

(b) having the potential for a relatively short hearing on the cross-undertaking in damages where the only issue would be whether or not the defendants had been guilty of a public nuisance, a point on which virtually all the evidence was in, the legal principles had been identified, and the likely length of the hearing would be no more on the day.

[40]On the other hand, to refuse an injunction would have the consequences of(a) avoiding certain, but not very substantial, damage to the defendants, and

(b) having the potential for a claim for damages in public nuisance being brought by the claimant which would not only involve the same issue as the defendants' claim based on the cross-undertaking would involve, but could raise much more difficult and hard to assess issue namely identifying the damage which the claimant had suffered.

[41]As my Lord, Jacob LJ, put to counsel for the defendants during argument, given these factors, what was the judge to do? In my judgment, he had to carry out a difficult balancing exercise. It is, I accept, at first sight surprising that the clinching factor was the claimant being good on its cross-undertaking in damages, given that the judge apparently thought that it was unlikely that there would be a trial. But the unlikelihood of there being a trial was in relation to the determination of whether or not the interlocutory injunction should be continued, because it was unlikely that the trial would occur before 31 January 2006 when the market use of Olympic Way would cease. The issue of whether or not there would have been a trial on the cross-undertaking in the event of the injunction being granted (as it was), or on the claim if the injunction was to have been refused, ultimately turned on a commercial decision for the party involved - namely the defendant as the injunction was granted.

[42]It is true that the "injunction" can be said to have put the onus of conducting the proceedings on the defendants rather than the claimant. On the other hand the judge thought the claimant had a pretty strong case. Further, it is worth mentioning that the judge's order for costs, which is not appealed now by either side, means that the commercial value of having a trial is effectively increased by some £50,000. That is because it is only once there has been a trial that it can be decided whether or not the claimant can recover 75 per cent of its costs of the interlocutory injunction hearing from the defendants. This factor means that the claimant also has an interest in pursuing the claim to trial.

[43]In my judgment, for these reasons, the judge was entitled to come to the conclusion that he did and, in those circumstances, despite the attractive and well-sustained arguments that have been presented on behalf of the defendants, I would dismiss this appeal.

LORD JUSTICE JACOB: I agree.

LORD JUSTICE CLARKE: I also agree. (Appeal dismissed; appellant to pay the respondent's costs, such costs to be subject to detailed assessment if not agreed).