Design Progression Ltd v Thurloe Properties Ltd [2004] EWHC 324 (Ch)

Case No HC02C03752

[2004] EWHC 324 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 25 th February 2004

Before

THE HONOURABLE MR JUSTICE PETER SMITH

Between

DESIGN PROGRESSION LIMITEDClaimant

THURLOE PROPERTIES LIMITEDDefendant

Mr Jonathan Brock QC (instructed by Webster Dixon) for Claimant

Mr Peter Dodge (instructed by Stevensons) for Defendant

Hearing Hearing dates: 2 nd, 3 rd, 4 th and 5 th February 2004

Judgment

INTRODUCTION

[1]The qualified covenant against assigning is a powerful weapon in the hands of unscrupulous landlords. The need to obtain licence to assign from a landlord has been regularly exploited by unscrupulous landlords for their own devices. The ability to delay a transaction and thus to cause it to go off was regularly abused by Landlords if they desired to obtain possession of premises or desired to extract collateral advantages for their own benefit unrelated to the considerations that were properly relevant to the granting of a licence to assign. The landlords were able to exploit this because prior to the Landlord & Tenant Act 1988 the only remedy available to a tenant was either to call the landlord’s bluff and assign or to seek proceedings for a declaration that the landlord had unreasonably refused its licence to assign. Despite the elaborate case law designed to assist Tenants in this area, culminating in a leading case of International Drilling Fluids v Louisville Investments

[1986] Ch.513

,neither remedy was particularly effective for the Tenant.

[2]The former required the prospective assignee to be confident that there were no reasonable grounds and complete the transaction with the risk that the Landlord might establish a breach and place the assignment in jeopardy. The latter remedy was unsatisfactory for two reasons. First, obtaining the necessary declaration in court took time and second there was no provision whereby the Tenant could be compensated for any loss or inconvenience caused by the unreasonable stance of the landlord.

[3]The Landlord & Tenant Act 1988 introduced a regime which was designed to address these deficiencies.

[4]First, by Section 1(3) Landlord & Tenant Act 1988 where a Landlord is served with a written application by the Tenant for consent to a transaction he owes a duty within a reasonable time(a) to give consent, except where it is reasonable not to give consent,

(b) to serve on the tenant written notice of a decision whether or not to give consent specifying in addition (i) if the consent is given subject to conditions, the conditions (ii) if the consent is withheld, the reasons for withholding it.

[5]By sub-section 1(6) the burden of showing where he gave it within a reasonable time is on him and equally the burden as to conditions for the giving of consent is also on him.

[6]Second, sub-section 4 provides that “a claim that a person has broken any duty under this Act may be made the subject of civil proceedings in like manner as any other claim in tort for breach of statutory duty”.

THE PRESENT CLAIM

[7]The present claim is for failure on the part of the Defendant to comply with its statutory duty because it never set out any reason as to whether to grant consent with or without reasons and is accordingly allegedly deemed to have unreasonably refused its consent.

[8]Alternatively, it is alleged that the Defendant is in breach of its statutory duty in that in effect it did not respond to the application within a reasonable time and made unreasonable repeated requests for information, never made a decision or never communicated a decision and never offered consent subject to conditions reasonable or otherwise and in the event would have been unreasonable had it refused consent.

[9]No consent nor any consent subject to conditions was ever given in this case, so the primary claim is the failure on the part of the Landlord/Defendant to give any decision within the reasonable time imposed on it by Section 1 of the Landlord & Tenant Act 1988.

[10]It is important to appreciate the case law in this area. The authorities culminate in Go West Limited v Spigarolo

[2003] QB 1140

considering Norwich Union Life Insurance Society v Shipmoor Ltd.

[1999] 1 WLR 531

andFootwear Corporation Ltd. v Amplight Properties Ltd

[1999] 1 WLR 551

. In the Go West decision the leading judgment of the Court of Appeal was given by Munby J.

[11]The thrust of the earlier authorities (approved in Go West) was that if by the time a reasonable time for compliance with the duty to consider the application expired, no reasons had been given, the Landlord was deemed to be giving unreasonable refusal to licence to consent and it was not open to the landlord subsequently to rely upon reasons at a later stage. It follows therefore, that where there is a failure to give any decision within a reasonable time, the Landlord once it has established a reasonable time has elapsed is inevitably in breach of its statutory duty.

[12]The policy reasons for this are to be found in paragraph 24 of Go West approving what Sir Richard Scott V.C. had to say about the purpose of the 1988 Act at page 544:- “The Act was intended to remedy the state of affairs in which a landlord by his dilatory failure to respond to an application for consent to assignment or to sub-letting, could cause substantial financial dam age to the Tenant without the Tenant having any remedy for that damage. A tenant might lose a valuable property transaction because of the landlord’s failure to deal expeditiously with the application for consent. It is clear that it was an intention of the Act to remedy that state of affairs. The Act creates a statutory duty requiring landlords to attempt promptly to applications for consent to assignments, or under letting or parting with possession of the premises comprised in the tenancy where there is a covenant not to do those things without consent.”

[13]Where the question of a reasonable time is the matter for consideration as Go West shows in paragraphs 28-38, the question ‘what is a reasonable time’ is to be assessed taking into account all the circumstances of the particular case, including but not confined to the circumstances known to the landlord and tenant when the tenant makes the application, although subsequent events have also to be taken into account so that the position must be tested by reference to the state of affairs at the expiry of the reasonable time.

[14]It follows that the reasonable time for consideration can be delayed by (for example) delay on the part of the Tenant, see paragraph 36 of Go West.

[15]However, as paragraph 37 shows, subsequent events may serve to abbreviate what might at the outset have been thought to have been a reasonable period. However, the key point is the determination of a reasonable time. That is the cut-off date. By that time the Landlord must make his decision, either granting or refusing or granting conditionally. If he makes no decision he will be deemed to be in breach of his statutory duty and it does not matter whether or not he had reasonable grounds for refusing licence to assign nor whether or not he was subsequently in a position to provide reasonable grounds for refusing licence to assign. As Go West says at paragraph 41:- “As Sir Richard Scott V.C. pertinently commented in the Norwich Union case

[1999] 1 WLR 531

, 545 and his words bear repeating: There seems to me to be no reason of convenience why the ability of the landlord to still keep in doubt the entitlement of the tenant to assign should survive any longer than the reasonable time which the landlord may need for considering the tenant’s application for consent.”

[16]Thus the key factual matter to determine is what would have been a reasonable time in this case for the Landlord to be in a position to make his decision.

[17]I should say that there is no suggestion in this case that the Tenant is by virtue of an estoppel or waiver alleged to have prevented it from asserting that a reasonable time had not elapsed by its conduct subsequent to any such reasonable time. It is important to appreciate that the tenant will have an accrued right once the reasonable time has elapsed and absent any estoppel or waiver, the mere fact that the tenant for pragmatic reasons co-operates in requests made by the landlord for further information after the reasonable period is expired is neither here nor there, see for example Pill L.J. at paragraph 80 in Go West.17. These authorities were considered by me in the case of Mount Eden Ltd .v(1) Folia Ltd and

(2) Prohibition London Ltd.

[2003] EWHC 1815

, a judgment to which I will refer later in this judgment on the aspect of damages.

THE LEASE

[18]The Lease was in respect of the ground floor shop premises at 143-145 Fulham Road, (‘the premises’). This is part of a block of premises and the adjoining property at Pond Place where the freehold is owned by the Defendant and an associated company. The Defendant apparently acquired the freehold subject to existing leases in early 2000. Little is known about the Defendant. It chose to adduce no evidence in relation to what decisions it actually made. It is a company registered in the British Virgin Islands and apparently operates by virtue of a Power of Attorney dated 14th April 2000 granted by it to Robert Keith Corkill an attorney in the Isle of Man. Its company secretary is a limited company Cototrust Secretaries Ltd. and its interests and officers remain shrouded in mystery.

[19]The Premises were demised to the Claimant by a Lease (‘the Lease’) dated 23rd June 1994 made between Viscount Chelsea(1), Chelsea Land Ltd (2), Cadogan Holdings Company (3), the claimant(4), and Simon Anthony Fussell (‘the surety’)(5).

[20]The demise was for a term commencing on 23rd June 1994 and expiring on 24th March 2004 with an initial rent of £50,000 per annum, subject to review on 25th March 1999 and 1st March 2004 (i.e. shortly before the expiry of the contractual term). The rent review provided that the rent was £100,000 per annum but the claimant benefited from a personal concession whilst it remained in occupation to pay £95,000 per annum. It is accepted by all parties that by 2002 when the licence to assign the subject matter of the present dispute was sought, the premises were significantly under-rented in that an open market rental of the premises on a lease granted at that time would command a rent of between £139,000 and £155,000 per annum as summarised in a note of a Mr Lillie a partner in Matthews & Goodman, the Defendant’s Managing Agents, dated 29th January 2002.

[21]This Lease was an “Old Lease” for the purposes of the Landlord & Tenant (Covenants) Act 1995 (one of the many points which escaped the Defendant’s other agents entirely). That meant that the Tenant and its surety would remain liable for the rent until the expiry of the term,notwithstanding assignment. It has never been suggested in these proceedings that the Claimant and Mr Fussell, the surety, would not have been good to pay the rent in the event that any prospective assignee defaulted.

[22]The Lease was not an onerous lease in that there was (Clause 2(3)) an obligation to repair internally only (see the definition of Demised Premises as set out in the First Schedule). There was a keep open covenant, which would have had significance in the events which have happened.

[23]The alienation clause (2(17)) was unexceptional in that it had a proviso that where a Lessee decided to assign to a limited company or any other corporate body or to an individual domiciled outside England, Scotland or Wales in such eventuality the Landlord was entitled to require two guarantors for the assignee’s liability. This too is a point, the significance of which appears to have eluded the Defendant’s other advisors.

[24]The application to assign was made on 21st January 2002. I will deal with this application in more detail further in this judgment.

[25]However, it is important to appreciate what was being sought to be assigned because that is a significant factor, which appears not to have featured in the Defendant’s other agents’ prognostications at all. First, the assignment was for a two-year residue only. Although Mr Dodge, who appears for the Defendant, submits that the Landlord was entitled to take into account the ability of a prospective assignee to pay an increased rent that would occur upon renewal, under the Landlord and Tenant Act 1954, I reject such a contention. There is a strong suspicion that part of the Defendant’s agents’ consideration was on the mistaken belief that the Lease was for upwards rent review on 24th March 2004 as opposed to expiry (subject to statutory continuation at the option of the Tenant under the provisions of the Landlord & Tenant Act 1954). I do not see how the ability of the Tenant to meet a future rent if it seeks to assert its statutory rights can possibly be a relevant factor. All that the tenant is seeking at this stage is to take over the term of years unexpired under the Lease. It may be that at the end of that period, it would form a view that it could not pay the increased market rental.

[26]In those circumstances, it would not exercise its statutory rights and would depart. It can of course do that after it has sought a new tenancy, after the terms of the new tenancy have been disputed and after the new terms have been determined by the court. Even then, the Tenant has a right to elect whether or not to take the new terms. What however cannot be done is that Tenant can be forced to take a new lease.

[27]Further, let us suppose that the Tenant in the two years breaches its obligations to pay rent. In the circumstances of this case, that would not be a disadvantage to the Landlord for two reasons. First, as the evidence shows, the premises were under rented; a failure by the tenant to pay rent would enable the Landlord to seek forfeiture of the premises and upon forfeiture, it would be able to re-let at a higher rental. The Landlord is in a better position in a rising market where breaches occur when the premises are under rented. Second, if there is a persistent breach of covenant, the Landlord could oppose a new tenancy under a ground section specified in Section 30(1)(a) (LTA 1954). Although this is a discretionary ground, it would be open to the Landlord to assert that whilst it granted its consent for the two year limited period, given the history of the tenant’s (bad performance), it would be appropriate not to grant this tenant a renewal because it would not be able to pay the higher rent. The other possibility of course would be to use that argument as a platform for seeking a surety or some other form of security. In the context of the present case, a further factor to pray in aid by the Landlord will be the fact that upon a renewal under the 1954 Act, the Claimant and the Surety would drop out as underwriters of any assignee’s rent obligations. All of these analyses once again apparently eluded the Defendant’s other Advisors.

[28]It is essential therefore to appreciate that whilst the consideration of the strength of the assignees covenant to pay is a relevant factor, it is not to be taken in isolation from the above facts, which existed. This was not a complicated transaction and the reality is that an assignment would have given the Defendant an extra person who would be liable to pay the rent. It also has to be borne in mind that the regime contemplated by Clause 2(17) is that the Landlord can be expected to seek to fortify an assignee’s covenant where the assignee is a limited company or is an individual resident outside the jurisdiction. The converse is that it would not ordinarily be the case that the Defendant could seek to fortify an assignment where the assignee is an individual and is in effect pledging the entirety of his/her assets as security for his/her obligations under the Lease. That is of course not an absolute factor and if there was an obvious inability on the part of the Assignee to pay, for example if he were a bankrupt, the Defendant could clearly refuse licence to assign in that case. Nevertheless, the Defendant viewing an application by an assignee in this case, has to bear in mind clearly all the other factors, which I have set out above, in deciding whether or not to give consent.

[29]The premises are, as I have said, a ground floor shop premises. Although they were situated in a popular area where rentals were rising, there was nothing particularly complicated about the transaction. There were no difficulties, which require careful consideration for a prolonged period. All that in effect is required in this case is for the Defendant on the information provided to it, to come to a decision within a reasonable time whether or not there are doubts about the ability of the prospective assignee to pay the rent of a sufficiently serious nature as to justify reasonably refusing licence to assign. Such an exercise necessarily involves consideration of the above factors already referred to in this judgment.

THE ASSIGNEE

[30]The prospective Assignee was a Ms Kelly Hoppen. She was apparently a well-known Interior Designer and had been trading for 26 years. Her business had grown from the very beginning when she commenced trading at the age of 17 to its present position as a highly regarded and sought after brand. The business is a household name to many people in the design business although I accept that would not necessarily be known to the Defendant or its agents. The business appears to be successful in that (for example) its turnover to May 2001 was £4.6 million. The proposal to acquire the Premises was a new venture in that the premises were to be acquired for a retail outlet, something which Ms Hoppen had not had before. The proposal was therefore something new to her, a factor which can be borne in mind.

DECISION TO SELL BY THE CLAIMANTS

[31]In early August 2001, the Claimant decided to market the premises. Mrs Fussell, who is a director of the Claimant and who gave evidence before me, set out the details of the marketing process and the decision to sell. It was contemplated that the Claimant, if the premises were disposed of, would move to other premises which were leased by an associated company, London Lighting Co. at no.135 Fulham Road.

[32]By November 2001 they had retained Jones Lang LaSalle (Mr David Sanderson acting who also gave evidence before me). He advised that in his opinion the premises were located in a good accommodation area. He believed the rental value was £125,000 per annum and that given that a retailer would be willing to pay a premium for the assignment of the residue of the term of the Lease in the order of £50,000 possibly up to £60,000. He accordingly marketed the Premises on that basis. Ms Hoppen initially at the end of November, offered £50,000, which was rejected. By 4th December, she made a revised offer of £75,000, which was accepted subject to contract. As Mr Sanderson’s letter of 4th December 2001 addressed to Mr Fussell showed, he had enclosed accounts of Ms Hoppen to May 2001, which showed a turnover of £4.6 million and net profits of £323,000, an increase from the previous year of £2.6 million and £233,000 respectively. He had obtained an information pack and expected that the Defendants would be well aware of Ms Hoppen’s business and he expected the landlord to be particularly interested in her business and to be an a-ttractive occupier for them both in terms of covenant and operation.

[33]It is instructive to note the Landlord’s thought processes at that same time. As I have already set out, the Defendant had Matthews & Goodman acting in some way for them in relation to this estate. I say in some way because there were apparently no written terms of engagement (which even surprised Mr Smallwood, Matthews & Goodman’s senior partner). What they were doing was not made clear to me. The reason it was not made clear to me is because it is plain when one analyses the evidence and the documentation, that the Defendant, via its agents with the assistance of Matthews & Goodman, had embarked upon a strategy designed to achieve, so far as possible, a maximum rental return from the Premises and the other properties comprised in the block as soon as possible.

[34]Although Mr De Lerios, the witness put up by the Defendant, denied there was a strategy, I reject that evidence. The Defendant’s evidence in this case was more interesting in the evidence that was not called as opposed to the evidence that was called. There were three main players in their decision-making processes. First there was Ms Kay Brandeaux who apparently occupied part of the premises occupied by Chancery St James Plc (who employed Mr De Lerios), apparently the Defendant’s managing agent, who was not called, although it is quite clear that she had apparently the most significant role in the decision-making process. There was no suggestion she was not available and no reason was given why she was not called. Absent any explanation for her non attendance, I am bound to conclude that the reason she did not give evidence, was because her evidence would not be favourable to the Defendant and would reveal matters to its disadvantage. I have already observed that no Officers of the Defendant deigned to attend and no explanation was given for that. I was therefore given no evidence as to the policy of the Defendant nor its reasons for making any decisions or non decisions as the case may be.

[35]The second absent player was a Mr Stevenson, the sole proprietor of the firm of Stevenson, solicitors of Huntingdon. He too had a major role in the events and matters raised by him certainly raised questions which needed to be answered. Although he was present in court for the first hour (during which an application relating to the admissibility of certain evidence was heard and the case briefly opened), and was aware of criticisms of his stance made by Mr Brock Q.C., who appeared for the Claimant, no attempt was made to call him; he departed after the first day. I draw the like inference for his absence as I do with Ms Brandeaux.

[36]The third absent player is Mr Lillie who was the partner of Matthews & Goodman in charge for the bulk of the period when the Claimant’s application was under consideration. His absence is self-evident. His recommendations to the Defendant were to grant licence to assign. For having the temerity to make that recommendation, he was (after an apparently acrimonious meeting), removed off the case. Mr Smallwood, the senior partner, was put up by the Defendant in a desperate way to provide support for the stance he took. It is a matter of regret in my judgment that Mr Smallwood allowed himself to give evidence, the sole purpose of which was to undermine his former partner who, so far as I can see, was the only person acting on behalf of the Defendant who approached this matter with any kind of proper and correct consideration of the issues and principles. Mr Smallwood’s attendance probably reflects the way in which professionals nowadays are willing to subordinate principles for the benefit of clients who are perceived to be of value.

[37]Chancery St James Plc is a management company. It apparently has officers, none of whom gave evidence before me. Mr De Lerios described as the Property Director (but not actually a Director) gave evidence before me. He was a completely unsatisfactory witness and I am quite satisfied, having seen him and the cross-examination of him by Mr Brock Q.C., that not only was his evidence unsatisfactory, he lied to me on a number of occasions. Mr De Lerios is aged 29 and graduated from the LSE in History. He then went to work for Chancery St James Plc. He has no experience of or training in landlord and tenant matters. In the course of his five years at Chancery, he had apparently only considered two assignment cases. His knowledge of the law of landlord and tenant was virtually non-existent. He was utterly unaware of the principles of the 1995 Act and had nothing more than a generalised impression of the principles of the 1988 Act although he was aware of the existence of an actual Act. He was totally unqualified to offer an opinion on a licence to assign, save possibly in financial matters although in that regard, I note he had no formal professional financial qualifications either. He certainly did not understand the law of landlord and tenant and did not appreciate the implications of the Lease, the tenant’s primary obligations and the term of years and the impact that those factors would have necessarily on the Defendant’s decision-making process.

[38]He apparently reported to Ms Brandeaux who in some vague way reported to the Defendant. All of this was shrouded in mystery and I conclude deliberately so, to avoid presenting a true and accurate picture of the Defendant’s motivation. The reason for that, I conclude, was because the reality is, as I have said, the Defendant was indeed embarked on a strategy to seek to recover the premises if possible with a view to granting a fresh lease at a longer term at a full market rental as opposed to the below market rental passing under the Lease. DEFENDANT’S ACTIONS

[39]It is to be noted that Matthews & Goodman became aware of the proposed disposal of the premises and sought sales particulars, see the fax dated 5th December 2001. This was of course before any approach was made to the Defendant for licence to assign. Mr Adams of Matthews & Goodman sent an e-mail to Mr de Lerios on 6th December 2001 referring to the Claimant’s Lease. In his e-mail he said “As discussed, this is obviously an opportunity to buy it in to re-let at a current market rental rather than wait until the Lease expire in 2004. They are seeking a premium of £60,000. However, we could always approach them to structure a deal where, for example, we take the unit back say in March (to allow marketing) and let them off the remainder of the lease.”

[40]Mr de Lerios replied the next day saying that he had spoken to Ms Brandeaux about the matter and that they agreed that Matthews & Goodman should approach the Claimant with the kind of deal you are suggesting. Mr de Lerios denied that there was any retainer of Matthews & Goodman in this respect and this was all spontaneously put forward by them. I reject that. It is quite plain that there was an initial strategy to seek to recover the premises, which accorded with the Defendant’s desire.

[41]It is further evidence of the continuation of the strategy which whilst perfectly proper if it is pursued with legitimate means, is completely improper if the application for licence to assign is frustrated by the Defendant with a design to see off the Assignee with a view to recovering the premises back. I will refer to the instances in more detail when I come to analyse the correspondence.

[42]However, for these purposes, I should make reference to two paragraphs of Mrs Fussell’s witness statement. In paragraph 19 she refers to a conversation between her and Mr Sanderson (he confirmed the veracity of his conversation when giving evidence himself). He was contacted in June 2002 by Michael Hole, an agent acting for the Defendant who asked if the Claimant would then surrender the lease for nil premium. That was rejected. This evidence was not challenged by the Defendant and it is plain that the approach was made in June 2002 because the process of seeing off Ms Hoppen by that time had been achieved. Similarly in paragraph 21, Mrs Fussell refers to a conversation recounted to her by a Mr Horwitz who was an advisor to Ms Hoppen. Once again, he recounts that Michael Hole and Duncan Lillie of Matthews & Goodman had been in a meeting with Ms Brandeaux in around March 2002. At that meeting, Miss Brandeaux is said to have told Mr Lillie ‘I don’t want Kelly Hoppen there’. This too was not challenged and of course Ms Brandeaux did not give evidence before me.

[43]It is plain that these are clear instances of evidence which shows bad faith on the part of the Defendant and a motivation extraneous to their duties to consider the application for licence to assign. It did not want Ms Hoppen because of the nature of her operation allegedly. Alternatively, it wanted Ms Hoppen at a higher rental. It is significant for example, that the calculations of Mr Lillie at the meeting of 29th January 2002 which took place between him, Ms Brandeaux and Mr De Lerios contemplate Ms Hoppen as a tenant for a substantial lease at a rental as high as £152,900. This document was only obtained after a disclosure application. The rental figures were based on computerised calculations prepared by Mr Lillie. It gives the lie to the Defendant’s professed belief that they were concerned as to the ability of Ms Hoppen to pay the rent and thus needed more information. On 29th January 2002 (seven days after the first application), they were contemplating granting her a lease at a figure of £52,900 in excess of the passing rent. That contemplation simply would not have happened if they had a doubt about her as a tenant, especially bearing in mind such a lease would not have the Claimant and Mr Fussell as sureties and would be a longer term commitment.

[44]Mr De Lerios effected not to recall this discussion. He lied. I am quite satisfied that he well remembered the conversation but it was inconvenient for him to have to recollect it before me. His whole evidence as, I have already observed, was evasive and untruthful in material respects. This is one instance of his untruthfulness. THE APPLICATION

[45]Mr Sanderson submitted the application by letter of 21st January 2002 addressed to Mr Lillie. He made it clear that he believed that Ms Hoppen would be well known to him and the Defendant, but nevertheless enclosed an information pack that had been forwarded to his clients by Ms Hoppen. The Defendant later asserted that it did not receive the pack. I reject that evidence. It is quite clear that Mr Sanderson was enclosing three things namely, the pack, the trading accounts of 31st May 2000 and references (four in total). Mr Smallwood, in his so-called review of the Matthews & Goodman file (in the absence of Mr Lillie) in paragraph three suggested the accounts were not enclosed. It is quite plain that the accounts were disclosed as he admitted in cross-examination by Mr Brock Q.C. Equally, he conceded that the references were enclosed although he did not consider those apparently.

[46]He did concede that if Mr Lillie had not received the enclosures he would have asked for them. Mr Sanderson also gave evidence to the like effect. I am quite satisfied that the information pack which contains a detailed review of Ms Hoppen’s business with trade and press releases was sent to Matthews & Goodman on 21st January. REFERENCES

[47]Four references were enclosed. One was from Lloyds TSB. That stated that Ms Hoppen was ‘respectable and trustworthy should prove good for your figure and purpose”. The Defendant’s agents’ consideration of these references was so irrelevant that they never asked anybody what the figure was quoted. Had they done so they would have seen that the figure was £100,000.00, i.e. the current rent. Ms Hoppen’s solicitors provided a personal reference stating that they had no reason to believe she would enter into a financial commitment that she could not see her way to fulfil. They did make it clear that they had no information concerning her financial affairs. Nevertheless, the reference is significant given by solicitors expressing a belief as to the attitude of Ms Hoppen. The third was a trade reference from Paul Glover Furniture Ltd. which stated that she had been a respectable customer for a number of years and that she proved to be very responsible and judged that she would be well able to pay £100,000 rental as detailed in the letter. That reference is not qualified by any disclaimer. Equally, Bosanquet Ives Ltd. (the fourth reference) stated that they had been customers of Ms Hoppen for five years with an average annual purchase turnover of between £300/£350,000. It stated that the company had a good reputation and appeared to be rapidly expanding in buoyant business and that they had no hesitation in recommending her as a possible tenant based on the prompt payment record that had been demonstrated over the trading period. Helpfully, if any further information was sought, a contact telephone number was given.

[48]Mr de Lerios in his evidence suggested these references were in some way inadequate. I cannot see that. These references in my judgment are very good references. They show Ms Hoppen as being an experienced responsible trader with a good credit history of a significant amount. In any event, as I have said, not one word of criticism of the worth of these references has been raised by the Defendant (nor for that matter the subsequent references from her existing landlords which were provided). SUBSEQUENT EVENTS

[49]Unfortunately Mr Sanderson made a mistake. He failed to enclose the trading accounts to 31st May 2001. The ones he did enclose contained a confirmation by Ms Hoppen that she had made available all relevant records and information for their preparation. They also apparently contained a statement (albeit unsigned) by her accountants Summers, Morgan, that in accordance with instructions given without carrying out an audit, they had prepared the accounts from Ms Hoppen’s accounting records from information and explanation supplied to them.

[50]That is of course a standard form of notation of accounts for sole traders. (Such as Barristers, Solicitors, Estate Agents and Surgeons to name a few). It is not an audit and is of course not a statutory form of accounts, for example under the Companies Act 1985, which are required to be provided to show a true and fair view. Nevertheless, they are accounts which have to be produced to the Inland Revenue and any errors or defects in those will lead to an expensive visitation from the Inland Revenue.

[51]The figures for 31st May 2000 also included the figures for 31st May 1999 and they show an increased profit from a loss of £63,788 to a profit of £232,920. The loss sustained in the 1999 year is plainly attributable to the significant amount of one-off expenditure on a home as an office (£320,318).

[52]Mr Lillie was alive to the omission and after a meeting with Mr De Lerios and Ms Brandeaux on 29th January 2002, which I shall deal with in more detail further, he requested the accounts to 31st May 2001 and in addition sought management accounts from 1st June 2001 to the then present date. The professed reason given was the Defendant’s experience elsewhere of those desiring to take on retail outlets, experiencing difficult trading conditions post 11 September 2001. The source of this difficulty was never identified and is contrary to his experience set out above. Mr Sanderson denied there was any such factor of significance, but I cannot exclude it as a possibility and a reasonable request. Significantly, Mr Lillie did not complain about the form of the accounts and in particular did not complain about them not being audited.

[53]He did not complain about the references but then that is quite understandable. The references are good references. He communicated that to Mr De Lerios on 24th January 2002. This is a significant letter. In the second paragraph he reported that the Claimant had secured an assignee and therefore had rebuffed his approach to obtain a surrender. Once again this is evidence of a strategy contrary to Mr De Lerios’ evidence before me. Significantly of course, Mr De Lerios did not write back to Mr Lillie and ask what he was talking about or challenging. In the third paragraph, Mr Lillie identified that this would be a first retail outset, but “this does not concern me as their references appear to be in order”.

[54]Mr Smallwood has given evidence to suggest that it was outside the remit of Mr Lillie to comment on references. I find that extremely surprising. I am not convinced that it would not be inappropriate for him to offer an opinion. Once again, this is part perhaps of the modern approach of delimiting one’s commitments for the purpose of avoiding professional negligence claims. It is a symptom of avoiding giving an answer rather than giving an answer and is perhaps symptomatic of modern times for professionals.

[55]The Defendant’s case is that this was totally outside Mr Lillie’s remit and as appears later, it asserts that this is why it dispensed with his services. Surprisingly, Mr De Lerios did not complain about this breach of his duty on 24th January; quite to the contrary, he attended a meeting on 29th January where the case (and others) were considered in significant detail. He professed not to remember anything about the meetings. I pause to observe that by this stage a reasonable time had not elapsed because the Claimant’s agents had not provided full information to enable the Defendant to be in a position to make an informed decision because of the failure to enclose the latest accounts and because of the outstanding management accounts requested on 4th February 2002.

[56]Nevertheless, the letter of 24th January 2002 showed to Mr De Lerios that the attempt to obtain possession (by legitimate means) had failed and that they were faced with a prospective assignee who would put the premium in the Claimant’s pockets rather than theirs and the clear indication from Mr Lillie was that there would probably be no realistic grounds for opposing a licence to assign to Ms Hoppen. MEETING 29TH JANUARY 2002

[57]Mr Lillie’s notes of the meeting have been provided. Neither Ms Brandeaux nor Mr De Lerios apparently took any notes although I view that with considerable scepticism. Nevertheless none has been produced. I have already referred to those notes and it is quite plain (contrary to the evidence of Mr De Lerios) that the discussion centred on the advantages of obtaining possession of the premises and granting a new fresh lease to Ms Hoppen at a significantly higher rental. A similar policy was discussed in relation to other premises in the block.

[58]On 30th January 2002 Mr Lillie wrote a long and detailed letter to Mr De Lerios. The preamble says this:- “It was good to meet Kay Brandeaux and yourself yesterday afternoon which gave us an opportunity to discuss our strategy for maximising the value of your property holding on the Fulham Road.” Faced with that, Mr De Lerios denied there was any such strategy. I reject his evidence. He is plainly lying. The strategy was designed to maximise the value of the property holding. I reject his evidence that the Defendant’s strategy is long term and not concerned necessarily with short-term rental gains. As Mr Brock Q.C. submitted in his closing speech, the increase in a rental value would have a significant increase in the capital value of the Defendant’s holding. The amount posited by Mr Lillie was as much as £106,000 over two years. Now I do not know of course what the Defendant’s worth is, it being shrouded in mystery, but nevertheless that is a significant figure. A further document, which gives a lie to the non-strategy issue, is that when Mr Lillie discussed fees with Mr De Lerios, he did not talk about fees for considering licence to assign, but his fees were expressed at between 25 and 20% of any increased rental accrual that was obtained. It is plain that there was a strategy. What developed, as I will show on analysing the correspondence, is that the Defendant having been thwarted in a legitimate attempt to pursue the strategy, pursued an illegitimate attempt by obstructing the licence to assign.

[59]Reverting to Mr Lillie’s letter, in the first paragraph he indicated he would seek the further financial information. In the second paragraph, he suggests he would see whether there were any better tenants that could be obtained (as referred to in the conversation in paragraph 22 of Mrs Fussell’s witness statement) and finally, at the end, he comments that he trusts that the letter summarises the matters discussed but if not would welcome Mr De Lerios’ comments.

[60]Mr De Lerios replied by a letter dated 1st February 2002:- “Thank you for your letter of 30th January 2002, which summarises our discussions during the very helpful meeting which took place at our offices earlier this week”.

[61]Before me, Mr De Lerios said that that paragraph did not mean that he agreed the note, but was merely a formal thank you letter. In my judgment, he lied again. It is quite plain that Mr Lillie sent a detailed record of the meeting, invited comments as to its correctness and was told by Mr De Lerios that it was an accurate summary of what was discussed. It was of course inconvenient for Mr De Lerios and the Defendant for that to be the stance because it showed that there was a pre-ordained strategy in place on the part of the Defendant to seek to maximise its rental return on the Premises.

[62]On 31st January 2002, in discussing fees, Mr Lillie noted that he was told to hold off Kelly Hoppen, attempt quiet marketing and have discussions with the tenants on an exit deal, and have back-to-back discussions with the new tenant. Once again, this shows that there was a strategy to try and frustrate an assignment in favour of Miss Hoppen, simultaneously to attempt to market premises elsewhere, to obtain a retail tenant as opposed to Miss Hoppen and try and negotiate with the Claimant possibly to pay a premium of up to £70,000 on the basis that the rental will uplift, giving at least a £10,000 profit. On that basis he suggested he should have a fee of 25% and that was reflected in his letter of 11th February 2002 to Ms Brandeaux. Mr De Lerios suggested that the reference to the Claimant in that letter was a mistake and it was only applicable to the other tenants. Once again, he lied. It is quite plain that Mr Lillie and Ms Brandeaux (as I have already said both absent players in the proceedings before me) were discussing a strategy across all the tenants. That strategy is set out in paragraph 2:- “Our main objective is to acquire the leases for the lowest possible premium with a view to re-letting at rents that will create a new tone of value for the retail parade.”

[63]Mr Smallwood was copied into that correspondence yet offers no evidence in relation to it.

[64]There was then an exchange of e-mails between Michael Horowitz, Mr Lloyd-Platt, Ms Hoppen’s chief executive, and Mr Sanderson, enclosing the accounts to 31st May 2001, commenting that the business had not been affected by the September 11th events and that there were no management accounts then available.

[65]On 18th January 2002, the Claimant had exchanged contracts with Miss Hoppen to assign the lease in exchange for a premium of £75,000 with completion conditional on obtaining the Defendant’s licence with completion to take place on 25th March 2002. There was an option on the part of the Claimant to extend that period to 22nd April 2002 in the event that the Defendant’s licence had not been obtained by 25th March 2002.

[66]The accounts to 31st May 2001 showed an increase in turnover to £4.6 million and net profits increased to £321,788, i.e. more than three times the annual rent passing under the Lease. Some surveyors take that as a good test, although as Neuberger J, as he was then, pointed out, in the Footwear case at page 63 (b), he was not satisfied there was such a test and, even if there was it should not be applied blindly. The only other mention of it is in the case of British Bakeries (Midlands) Ltd. v Michael Testler

[1986] 1 EGLR 64

(where Neuberger L.J. as he now is, appeared as junior counsel for the landlord/defendant.) It is by no means clear that Peter Gibson LJ. was considering matters as a rule of thumb as Neuberger J. pointed out in the Footwear case.

[67]Nevertheless the figures do support even this high rule of thumb, if it can be properly so called. On 8th February 2002, Mr Lillie wrote to Mr De Lerios enclosing the accounts to 31st May 2001 and the e-mails to which I have made reference. He sought an indication as to what was the proposed strategy. The strategy is enshrined in his letter of 12th February 2002, addressed to Mr Sanderson where he presses for management accounts. Mr Sanderson, in a letter of 15th February 2002 addressed to Mr Rind, Ms Hoppen’s solicitor, passes that request on expressing the view that it was unreasonable given the fact that they have been provided with three years of audited accounts. Of course audited accounts were not provided and I accept that Mr Sanderson meant accounts with the usual signature on to be found in the case of a sole trader. He also expressed the view that Ms Hoppen was actually a stronger covenant than the Claimant and that she was taking the lease personally but nevertheless he requested the management accounts if possible. Mr Horwitz at about the same time (letter 15 February 2002) advised Ms Hoppen that one way to get round this would be to offer a six month rent deposit.

[68]On 22nd February 2002 Mr Lloyd-Platt sent the Management Accounts to Mr Horwitz who passed them onto Mr Sanderson on 25th February 2002. They are passed on to Mr Lillie almost immediately. He received them on 1st March 2002 according to the dates on the letter of Mr Hooper, Mr Sanderson’s associate, dated 27th February 2002. As that letter says the Claimant was looking to a swift conclusion to the proposed assignment by that time.

[69]Mr Lillie had written to Mr De Lerios the day before indicating that the strategy needed reviewing in respect of the Claimant and the adjoining tenant and that the matter was urgent.

[70]The Claimant’s solicitors on 1st March 2002 wrote to the Defendant’s solicitors, Stevensons, in the light of the enclosed financial information seeking a draft licence to assign.

[71]On the same day Mr Lillie wrote to Ms Brandeaux. The letter set out his thoughts on the Claimant’s position and two other adjoining tenants. He said that he thought it would be useful to set out his advice and recommendations. In respect of the Claimant’s premises, he indicated the assignment premium, which Ms Hoppen was hoping is expecting to pay. He enclosed the Management Accounts and expressed the view “There is no doubt in my mind that they financially represent an acceptable covenant and although you may prefer a different type of retailer, I believe the introduction of Kelly Hoppen into this retail parade would compliment the existing retailers”.

[72]That seems to me to be a perfectly proper opinion to express. I have already commented on the references. The Management Accounts showed a turnover of eight and a half months at £3.3million and net profits of £220,801, despite any alleged fears arising out of September 11th.

[73]Mr Lillie then went on to consider the question of whether or not a better rental can be obtained. He suggested that the Defendant buy in the Claimant’s lease and then re-let it to Ms Hoppen at full open market rental. Once again, privately the Defendant’s experienced surveyors and the Defendant are addressing the possibility of seeking a rental from Ms Hoppen of £146,000 per annum. This is again totally at variance with a genuine suspicion as to the inadequacy of the strength of Miss Hoppen’s covenant.

[74]This letter apparently so inflamed the Defendant that it decided that it could no longer have any confidence in Mr Lillie. What inflamed it was apparently him having the temerity to offer a view as to the financial acceptability of the covenant. This is quite extraordinary. I reject it as a basis for dispensing with Mr Lillie. What it did not like was the content of his advice. It wanted somebody who would say that the covenant was not acceptable so that licence to assign could be refused. It is plain that Mr Lillie believed the opposite. He was correct in my view in his belief. Ms Brandeaux and Mr De Lerios had no experience of landlord and tenant matters to a significant or relevant degree. It is plain that they unlike Mr Lillie have no appreciation of the balancing exercise required when dealing with an application in respect of these premises and this Lease especially with the Claimant and Mr Fussell and the Covenant offered by Miss Hoppen. The other possibility is that they know full well what the position is, but they do not like it and what they want to do is to continue the strategy of seeking to obtain possession. What they did not like about Mr Lillie’s advice was his advice that they would have to buy in the Claimants’ Lease. They wanted to secure it for nothing. They hoped to achieve that by delaying matters in the hope that Ms Hoppen would then depart, and then Mr Hole could make his offer to the distressed Claimant of letting it off the future rent under the Lease after the event with a surrender for a nil premium.

[75]It is a matter of regret to my mind that Mr Smallwood felt able to give evidence to support this Defendant’s stance and contradict the perfectly proper stance taken by his former partner.

[76]In the meantime on the 5th March 2002 Stevensons entered the lists when they said that their clients had not received any audited accounts and not received any detailed profile. The first matter is self evident and irrelevant, for reasons which I have already set out, and the second is incorrect. They then went on to request three years audited accounts.

[77]On 6th March 2002 in an effort to clear up any existing doubts, the Claimant’s solicitors wrote back to Stevensons saying that they had already been provided with all the information, namely, full accounts for the years ended 31st May 2000 31st May 2002, Management Accounts ended 14th February 2002, trade and solicitors’ references, a full information pack and description of the goods that Ms Hoppen would hope to sell.

[78]In the circumstances they requested confirmation that the licence to assign would be forthcoming, and in the event they had not received such confirmation by the 8th March they would have no alternative but to advise their client that the Defendant was acting unreasonably.

[79]Stevensons’ letter of the 7th March 2002 shows the negative stance which the Defendant’s representatives had determined upon. They note the admission that there were no audited accounts, and assert that any application for a licence to assign cannot be taken seriously given the high amount of rent until they are received. This is disingenuous. Nobody could expect audited accounts from Ms Hoppen. The Defendant’s unrealistic stance was reinforced by the evidence of Mr Golder. He is a chartered accountant and a partner in the firm of Wilkins Kennedy, and has acted for the Defendant and its Managing Agents, Chancery St. James. He participated in a review of the situation on the 20th March 2002, to which I shall make reference, but had no further involvement beyond being sent an Accountant’s Report of Ms Hoppen’s business in April 2002 by Mr Stevenson, but was told not to look at it.

[80]In the course of his evidence, he expressed the view that audited accounts were essential, and that an organisation with audited accounts was a stronger financial organisation than an organisation which did not have audited accounts. Thus for example, he was driven to explain that stance by Mr Brock QC when comparing the audited accounts of a £100 company with the un-audited accounts of a successful surgeon. This inability properly to answer that question demonstrated the unrealistic nature of his stance, which echoes the stance taken by Stevensons.

[81]It is also of course contrary to the thrust of Clause 2(17) of the Lease which contemplates a surety covenant when there is an assignment to a limited company (albeit its accounts will be audited) but not one when there is an assignment to an individual (albeit though an individual would not provide audited accounts).

[82]The Claimant’s solicitors responded to Stevensons’ letter by return, pointing out that as Ms Hoppen was a sole trader, she cannot provide audited accounts. They referred to the letter of Mr Sanderson of 21st January, which included the information pack.

[83]The same day Stevensons put up another barrier expressing the irrelevant view that the enclosures sent by the Claimant’s solicitors were interesting but frankly almost totally irrelevant. They then assert that they need accounts signed or certified by Ms Hoppen’s accountants. It is to be noted that is the first time that such a request is made on behalf of the Defendant, nearly two months after the original application was made. They also requested current landlords’ references and suggested that in advance of this material being provided the Claimants’ application could not be treated seriously.

[84]They then introduced yet another obstacle, an undertaking in respect of costs at £395 plus VAT. This is the start of a pattern on the part of the Defendant’s representatives of making requests and then when the information requested is provided seeking further information. This is plainly a tactic on their part to avoid giving an answer which they know they must give namely that there are no reasonable grounds for refusing licence to assign. The motivation for this is the cynical one, namely they hope Ms Hoppen will give up and the Claimant will be forced to treat with them.

[85]On 8th March 2002, Browne Jacobson, Ms Hoppen’s solicitors, who had given a reference on her behalf, told Stevensons that the passing rent under the existing premises were £110,000 and in the region of £30,000 respectively, and that references will be sought. On 11th March 2002 a reference was obtained from Ms Hoppen’s existing Landlord of 2 Munden Street where she had occupied for 2 years on a 9 year lease at £110,000 per annum. They observed that she always appeared to look after the building and had paid her rent on time and kept to the conditions of the Lease. Stevensons acknowledged the letter but then sought another £250 plus VAT for the Defendants’ agents. This was apparently a reference to Mr De Lerios who charges both the Claimant and the Defendant for his time apparently.

[86]On the 11th March 2002, Mr Lillie sent a memorandum to Mr Smallwood. He confirmed his view already expressed, as far as he was concerned Ms Hoppen’s accounts were sufficient, and suggested those were left in the hands of Kay Brandeaux “whose advisors seem to take a different view to everyone else”. As far as I can discern that is a reference to Mr De Lerios whose incompetence to consider these matters I have already set out. He then calculated his costings and says significantly “certainly at present I have no great desire to do any further work for Kay Brandeaux”. Absent Ms Brandeaux I conclude looking at the situation that Mr Lillie offered perfectly correct professional advice which the Defendant’s advisors considered to be unacceptable because it thwarted them in their desire to obtain the full current rental value out of the premises. I suspect that Mr Lillie was not prepared to compromise his professional position (unlike other professionals in this case) by taking a stance which he thought was untenable. Thus whilst he was prepared earlier to recommend actions which were perfectly proper to take to benefit the Defendant what he was plainly not prepared to do was to compromise his professional integrity and put his name to an illegitimate method of seeking to obtain the same benefits. He is to be commended for such a stance and it is a matter of regret that he was criticised by his former partner and tainted in such a way by the Defendant and its advisors.

[87]On 14th March 2002 Stevensons received the reference in respect of Miss Hoppen’s other premises, which confirmed that she had paid her rent promptly, (£28,500) on time and was in every other respect complying with her obligations under the Lease.

[88]On 19th March 2002 Mr Lillie passed on to Mr De Lerios a request from Mr Sanderson for a meeting with the Defendant’s representatives that which Miss Hoppen would attend. No response was provided to them.

[89]Another delaying tactic was attempted on 21st March 2002 when Stevensons raised a question of licence for alterations, plainly designed to try and find a breach of covenant against altering the premises and use that as an excuse to refuse licence to assign. On the same day in a separate letter Stevensons acknowledged receipt of the second Landlord’s reference without qualification. Prior to that Browne Jacobson had sent direct to Stevensons a copy of the signed accounts to 31st May 2000 and confirmed that those and the 2001 accounts had been provided to the Inland Revenue.

[90]Thus by 21st March 2002 the Defendant’s advisors had received the following:-(1) Three years trading accounts signed in the appropriate manner for a sole trader. Those accounts showed a profitable business that was rising (despite September 11th) and was making substantial profits well in excess of the proposed rent. The net profits exceeded the passing rent by a factor of 3.

(2) Management accounts which showed a continuation of the upwards trend to 14th February 2002.

(3) Six references including one banker’s reference, one personal solicitor’s reference, two trading references and two landlords’ references all of which were not challengeable and were never challenged by the Defendant.

[91]In addition, they were aware or ought to have been aware that the rent in question was 8 quarters only, and is in respect of a lease where there would be likely to be minimal residual obligations at the end, and where the performance of Ms Hoppen’s obligations was reinforced by the Claimant’s and Mr Fussell’s covenants.

[92]Finally, from the promotional material they would have been aware (if they were not already aware) that Ms Hoppen was an experienced business woman who had traded for several decades and was obviously a person who was unlikely to take on a reckless commitment. She was also of course willing to take a personal liability on the assignment. She had requested a meeting but had been rebuffed.

[93]A meeting took place on the 20th March 2002, between Mr De Lerios, Mr Stevenson and Mr Golder. I have not been provided with any note of what was discussed at that meeting. What came out of the meeting was a long letter from Stevensons dated 22nd March 2002 requesting numerous amounts of information in respect of Ms Hoppen’s business. To say that the requests are ludicrous is to understate the position seriously. Thus I cannot imagine upon what basis it can be relevant, given the factors that I have set out above, to demand a detailed analysis of the trade debtors and the amount owed for each of a number of debtors. This was a request which Mr Golder persisted in as being reasonable when he gave evidence. Equally the request in respect of trade creditors is just as wide ranging and just as irrelevant. A request for the breakdown of staff costs is irrelevant, and requests for details of refurbishment of Roland Gardens are irrelevant.

[94]The letter then proceeded to ignore all the past information and instead suggested that they needed a financial or trading business plan as being the key document which had not been received, and which allegedly made it very difficult for their client to give appropriate attention to the Claimant’s application where the rent was substantial.

[95]I reject Mr Golder’s and Mr De Lerios’ evidence that the purpose of the meeting was to review the paperwork which had been received and form a view about whether or not an assignment could be consented to based on the information. In my view the purpose of the meeting was to cobble together a series of objections disguised as a request for information to create further obstacles. As Mr Golder was forced to concede in cross-examination and in response to questions put by me, there was absolutely no reason why he could not have made a decision on the information provided as to whether or not Ms Hoppen’s accounts showed a sufficient financial standing for the purposes of the rent liability. Of course, Mr Golder does not have the requisite expertise or experience to address all the other landlord and tenant matters which are a necessary part of the consideration of whether or not to grant licence to assign. He never read the lease. He was unaware of Mr Fussell having been a surety. He was unaware of the alienation provisions. He never saw the references. It is difficult to see how any decision he could make would have any credibility given that withholding of information. Mr De Lerios said that the information was “available”. That is hardly the same as giving all the information to Mr Golder to make an informed decision.

[96]Mr Golder acknowledged in his evidence that if he had been asked to given an answer to the question as to the strength of Ms Hoppen’s covenant, he could have answered that question in one day. He was not asked that question. He was not asked that question because the Defendant’s advisors knew what the answer would be looked at in the totality. It would be as Mr Lillie had said, namely, that the covenant was good and there were no reasonable grounds based on her financial standing given all the circumstances to refuse licence to assign. It was the question the Defendants’ agents dared not ask. So they did not ask it. Instead they asked Mr Golder to think of a large number of irrelevant questions to maintain the pretence that they had serious doubts about Miss Hoppen’s ability to service the rent. I reject Mr De Lerios’ evidence of this meeting.

[97]It will be recalled that by this time two meetings had taken place, where the possibility of granting a lease to her at a figure of around £150,000 was seriously discussed. It is plain that Stevensons fell in with the same design to raise irrelevant smoke screen letters rather than address the issues. CONCLUSION AS AT 21ST MARCH 2002

[98]I conclude that the Defendant by the 21st March 2002 had all the relevant information in its possession for the purpose of enabling it to make a decision whether or not to give licence to assign. Accordingly, I determine that was the latest date when a reasonable time had been given it to consider the position. Self evidently, Stevensons’ letter did not communicate a decision. It requested more information and in that respect it was not a genuinely intended letter.

[99]It follows from that, by the 21st March 2002 (whether or not the Defendant had reasonable grounds for refusing licence to assign) it had failed to provide an answer within a reasonable time, and it was accordingly in breach of its statutory obligation under the Landlord and Tenant Act 1988 to provide an answer within a reasonable time.

[100]For the avoidance of doubt however, I should say I am firmly of the view that any decision that they would have made at the 21st March could only have led them to conclude that licence to assign should be given. A refusal to grant licence to assign based on the information before the agents at that time would in my judgment had been plainly an unreasonable refusal of licence to assign. SUBSEQUENT EVENTS

[101]For a month or so the Claimant attempted to address the increasingly unreasonable demands addressed by the Defendants’ advisors. As set out in the reasoning in Go West that does not enlarge the reasonable period of time which elapsed, as I have said, on 21st March 2002 in view of Mr Golder’s concession that he could have made a decision within one day of the meeting at 20th March 2002.

[102]On 25th March 2002 Browne Jacobson provided a detailed answer to all of the relevant questions raised by Stevensons.

[103]On 25th March 2002 Mr Lloyd-Platt wrote to Mr De Lerios enclosing a personal letter from Ms Hoppen requesting a meeting and consideration. Mr De Lerios (like his inability to return other calls) did not even give that letter the courtesy of a reply.

[104]On 27th March 2002, Browne Jacobson wrote offering a rent deposit of six months to be released in the event that her accounts of 31st May 2003 showed a net profits to be three times the annual rent. A time limit of 4 p.m. the next day was imposed. The significance of this is twofold. First, the rent deposit would cover 25% of the total rent liability of Ms Hoppen. It would accordingly be a significant rental deposit. Second, it as Mr Horwitz correctly observed in his letter would have obviated any need to be concerned with an examination of the financial position.

[105]That letter crossed with a further letter from Stevensons dated 27th March 2002. It then requested a detailed analysis of Miss Hoppen’s financial and trading position past, present and future. It reiterated, wrongly, that the information pack had not been received. It requested a financial and trading report to be provided by the Accountant. This request was first made over two months after the initial licence to assign was sought. No explanation was provided as to why it suddenly became a necessary requirement so far back down the line. Absent such an explanation the inevitable conclusion is that it was not a genuine request, and was simply the erecting of a further barrier when all the other previous questions had been answered. Second, it raised the question whether or not there would be a guarantee or rent deposit, and then “reminded” Browne Jacobson of the difficulties posed by the fact that Ms Hoppen was a sole trader with admitted unaudited accounts.

[106]Browne Jacobson replied on the 28th March referring to their fax offering the rent deposit, and drawing to Stevensons’ attention the self evident proposition that as a sole trader that did not present additional difficulties as her liabilities were unlimited and she did not have a corporate body to hide behind. It further reminded them of a self evident proposition that there was no requirement for her to have audited accounts, but that accounts had been provided signed off by her accountants and presented to the Inland Revenue for taxation purposes.

[107]Stevensons on 2nd April 2002 returned to the accountant’s report and the rent deposit. On 3rd April 2002 Browne Jacobson confirmed an accountant’s report was being prepared, and offered the rent deposit provided a decision was made by the 5th April.

[108]On 3rd April 2002 Stevensons then raised the question of costs of assessing the accountant’s report. This had not been raised before. Further delays are created, as no attempt would be made to assess the report until a quotation was obtained from the Accountants and then a further undertaking would be sought to those costs. Paradoxically the last paragraph asked for confirmation that a rent deposit or guarantee would not be provided.

[109]On 17th April 2002 Ms Hoppen’s accountants had prepared a comprehensive report in respect of her business, and that was sent on to Stevensons on the 18th April 2002. It was not signed at that stage because the accountant was away from his office. There was a promise of a signed copy on his return.

[110]On the 19th April 2002 the Claimant’s solicitors wrote to Stevensons reiterating all the information which had been provided by that time, including Ms Hoppen’s Accountant’s report.

[111]The concluding paragraphs said that in accordance with Counsel’s advice their views were confirmed that sufficient information had been provided to enable the Defendant to be satisfied as to the suitability of Ms Hoppen as a tenant. Further, it was said it was unreasonable in the light of the information for the Defendant to withhold its consent. The last paragraph required advice by 12 noon on 25th April 2002 whether or not licence was going to be refused, and that in the event that consent was not forthcoming, reasons were required. Proceedings would be commenced if that deadline passed.

[112]I have already observed that the contractual date for completion of the Agreement for the assignment of the Lease was extendable by the Claimant until 22nd April 2002. Around that time Ms Hoppen in obvious exasperation as to what had gone on signed heads of agreement for other premises on Fulham Road.

[113]Stevensons reply to the Claimants’ solicitors’ letter of 19th April is dated 24th April i.e. the day before the expiry of the deadline. The second paragraph is ironic “we must say to you in unambiguous language that we think that the threats and aggression are completely uncalled for”. It is difficult to see a more unmeritorious response to the Claimants’ solicitors’ letter given the exchange of correspondence that had taken place in the past.

[114]The letter went on to raise the question of the rent deposit, and then required an undertaking that the Accountants’ costs of £1,350 plus VAT would be paid and Management Agents’ costs of £750 would be paid (although what Mr De Lerios had done to justify such an increase is impossible to see) and that their costs would be increased to £850 plus VAT. The letter then went on in effect to say that nothing would be done until the undertakings were provided. Finally, the letter required an apology from the Claimants’ solicitors as it was factually incorrect in that they did not have Kelly Hoppen’s signed accountants’ report. And it went on to suggest there had been long delay in receiving replies.

[115]Mr Brock QC described this as an outrageous letter. I agree. The conduct of the Claimant’s advisors is beyond reproach in my view. The only error that was made was Mr Sanderson’s failure to enclose Ms Hoppen’s accounts to 31st May 2001 in his original letter of 21st January 2002. Thereafter they have received a whole series of demands, which they have addressed, and each time the demand has been addressed a fresh demand has arisen.

[116]This last letter seeks to impose more unreasonable demands in relation to financial provision, and shows that the Defendant’s agents were not prepared to consider the case on the merits. The only complaint about the Accountants’ report is the lame one that it was not signed. Stevensons knew that, because they were told that on the 19th April. However, it is not a matter of substance because a signed form was promised and was ultimately given. Mr Golder’s evidence confirmed, (as indeed did Mr De Lerios) that neither of them looked at the Accountant’s report despite the fact that they had wanted to see that for several weeks. The only person who appears to have considered it is Mr Stevenson, and then only for the purpose of seeing it was not signed.

[117]By this time three months had elapsed since the original request and a further month had elapsed since as I have determined above a reasonable time had elapsed.

[118]If I am wrong on fixing the date as 21st March 2002 as being a reasonable time, it is plain that a reasonable time would have elapsed by the 25th April 2002. Mr Golder would have been in a position to evaluate all this evidence within a day of its receipt. In fact there was no reasonable justification for requesting that additional information.

[119]The Claimant’s solicitors refused to give an undertaking as to the Defendant’s agents’ and accountants’ costs as that was down to their unreasonable conduct. I agree. That is sufficient to dispose of the Defendant’s counterclaim.

[120]The day after Stevensons wrote to the Claimant’s solicitors they wrote to Mr Golder. It is clear that Mr Golder had received the report, but he was expressly told by Mr Stevenson not to do anything. He then made two suggestions that Mr Golder should include in his report. First he suggested that the Claimant had not made it clear whether or not there would be a rent deposit or guarantee, (which is patently incorrect) and second, he suggested that Mr Golder might like to say that he could not advise licence to assign should be granted unless a suitable rent deposit or guarantee was given. This shows again the Defendant’s advisors behaving in an improper manner in seeking to create difficulties which are simply not justified.

[121]On 26th April 2002 the Claimant’s solicitors, as I have said, refused to pay the costs, gave the Defendant one last opportunity to complete but made it quite clear there would be a claim for damages for delay in any event, because the matter could have been completed by the 25th March. The claim would have been limited at that stage to £10,150.68 being the rent that it was obliged to pay during the period from 25th March 2002 to 3rd May 2002. Thus the Claimant gave the Defendant a last opportunity to stop behaving in the way it had been through its agents, and sign the licence to assign. Stevensons’ letter in reply of 26th April 2002 continues the irrelevant objections. By that time the only matters that the Defendant could raise was the alleged failure to offer a rent deposit or guarantee, the failure to give an undertaking as to reasonable costs, the failure to give an undertaking to the client’s accountant’s costs, and the fact that only an unsigned accountant’s report had been received.

[122]What is totally missing from any of those objections, is any decision as to refusal based on the merits. If there was any merit in those objections, they could have been covered by a conditional consent. I have no doubt that the Claimant (albeit grudgingly) would have given those conditions at that stage. I have no doubt that Ms Hoppen would have given the rent deposit subject to the terms proffered in her solicitor’s earlier letter, namely, against a release on accounts to 31st May 2002 showing the profits in excess of three times the rent. In that context I accept Mr Lloyd-Platt’s evidence as to Ms Hoppen’s stance. If the premises could have been obtained at that stage, Miss Hoppen would have taken them even though she had signed heads of agreement in respect of other premises. Those other premises were in a terrible state, and apparently required expenditure of something like £175,000. Although she agreed to take an assignment of the existing leases, she entered into a new lease at a rental of £120,000 and I accept his evidence that they would have lost expenditure which they incurred in respect of these premises. These were their preferred premises and the other ones were a last resort. I have no doubt that had the matter become available by the latest of 30th April 2002 the assignment would have been completed. It is possible (although it was not suggested) that there might have been some haggling as between the Claimant and Ms Hoppen over the initial premium, but I have no reason to doubt Ms Hoppen’s integrity. She appears on the evidence before me to have been very keen on the premises and would in my view have proceeded in all probability on the same terms.

[123]Accordingly, the Defendant was plainly in breach in any event by its failure to grant licence to assign by the 25th April 2002.

[124]The reason why no decision was given was because the Defendant through its agents was pursuing a deliberately obstructive policy designed to prevent the assignment going through. If it was thought that the assignment could be prevented it was then hoped that it would be able to negotiate a surrender with a nil premium, because of the difficult situation the Claimant would have been thereby put in. It would then expect to be able to re-let the premises to Ms Hoppen at a significantly higher rent, and if she was not interested it would be very confident of letting it on the open market to a retailer at the same figure. This is a cynical process which the 1988 Act is designed to avoid.

[125]Accordingly, I determine that the Defendant was in breach of its obligation to give a decision within a reasonable time and that time expired at 21st March 2002 or alternatively, in case I am wrong in that regard, by the 25th April 2002. It follows that the Defendant is liable to the Claimant in damages for breach of its statutory duty.

[126]The purpose of any damages is to put the Claimant in the position it would have been but for the Defendant’s breach of duty. Had the Defendant not broken its duty the assignment of the lease would have taken place on the 25th March 2002, in accordance with the original provisions in the Agreement for assignment to Ms Hoppen. On that date the Claimant would have received a premium of £75,000 and it would have been relieved of any further obligations to pay the rent. By reason of the Defendant’s breach, it has lost the premium and prima facie is exposed to the balance of the rent over the two years. That figure totals (including a figure for rates) approximately £293,000. It is self evident that the lease is a wasting asset and its capital value diminishes on a daily basis as the end of the term approaches, and the expenses increase on a corresponding basis as the Claimant is obliged to continue to make the payments.

[127]The Claimant is under a duty to mitigate its loss. It was not suggested that it did not mitigate its loss in this case.

[128]It had stripped out the premises at a cost of £7,725 around the 10th March 2002 in anticipation of completion. That included cutting down the shelving units to accommodate them in no. 135 Fulham Road. That cost is claimed as damages. I do not see how that can be claimed as the expenditure is incurred as a result of the Claimant’s decision to leave the Premises as opposed to a breach of duty on the part of the Defendant. It would have incurred those expenses in any event. I have the same observation with respect to the Claimant’s solicitor’s costs so those are not recoverable either.

[129]The Claimant made the decision to return to the Premises. That was completed by the 10th June 2002. It was not said on behalf of the Defendant that that decision was unreasonable. It is self evident that it could not say it was unreasonable. First, there is a keep open covenant in the Lease. Second, the premises are obviously more likely to be better protected and preserved if there is occupation. That led to the Claimant incurring costs of £15,611.50 in reinstating. It emerged in the cross-examination of Ms Fussell that that included the creation of new shop fitting units which were required to replace the ones which were cut down and left in no. 135. No precise details of the costs of such units has been provided. The Claimant now intends to vacate the premises upon the expiry of the Lease on 24th March 2002. It will have the value of those fixtures and fittings once removed. I have no evidence as to the value and because of the likely modest costs the parties do not invite me to direct an enquiry. I suspect that removed fixture and fittings that are some 18 months old (unless they are of some kind of special value and that is not suggested), will have a very little value. The bulk of the costs Ms Fussell said in her evidence were not actually attributable to the fixture and fittings themselves. It seems to me that I should reduce the figure of £15,611 by a figure of £1,611.50 so that the amount claimable under that head is £14,000 plus the requisite amount of VAT on that figure.

[130]The Claimant also claims the quarter’s rent to the June quarter. This is a period when the premises were empty, and it seems to me that that is wasted expenditure which is recoverable. It is plain that under the Agreement had completion taken place on the 25th March the entirety of that quarter would have been paid by Miss Hoppen. In the event the completion had taken place on the 25th April 2002 they would have been apportionment under the terms of Standard Conditions or alternatively under the Apportionment Act 1870 as regards future rent. That opportunity has been lost. If I am right in my primary determination to 21st March the Claimant is entitled entirely to this quarter (I disregard the 10 days or so at the end). If I am wrong and the correct dates should be 25th April 2002 then it is entitled to claim an apportioned amount of the rent from 25th April 2002 to 24th June 2002.

[131]In addition it claimed a figure of £50,000 for loss of goodwill and turnover in respect of the Claimants’ business caused by its removal from the premises, temporary relocation in 153 Fulham Road and subsequent relocation back to the premises. At the opening of the trial, I was informed that the figure had been agreed at £22,500 so that the Accountancy evidence was not adduced in the trial. During the course of his closing submissions on the relationship between the various heads of loss Mr Dodge for the Defendant wished to refer to the experts’ reports for the purpose of explaining the precise nature of the loss of profit claim and how it had arisen. I refused to allow him to do so as it seemed to me that if the parties agreed a figure that was the end of it, and I was not in a position, and nor should I attempt to revisit selectively (without cross examination) evidence that had not been put in the court before me.

[132]Finally the Claimant claims the loss of the premium of £75,000.

[133]The Defendant contends that these losses do not flow from the Defendant’s breach as the Claimant had the beneficial use of the asset namely the lease, and it traded from it and thereby made profits.

[134]This is an artificial analysis in my judgment. The premium has been plainly lost. The prima facie losses are those that I have set out above, namely the loss of premium and the continued obligations. Of course it could have been said by the Defendant that the Claimant should have remarketed the premises but it is not so alleged. Nor is it alleged that it was unreasonable to go back. The consequence of going back is that the Claimant has limited its claim for wasted rental expenditure to the period which expired on 10th June 2002. Thus the future rentals and expenses are subsumed in its loss of profit claim. It therefore mitigated its loss because by using the Premises beneficially; it has reduced what would otherwise be a substantial claim. The consequence of that of course is that the premium is not realisable, but it is artificial to describe the lease as an asset still retained by the Claimant, as the capital value of that premium diminished over the period in which it was trading in mitigation of its loss. Even giving allowance for the premium and the loss of profits claim, the figures claimed are still less than the amount that would be claimable if the Claimant sought the return of the premium and the next two years rent and rates.

[135]I reject Mr Dodge’s submission that the Claimant might have had to go into other premises and incurred a similar expense. There was no evidence to support that and Ms Fussell was not cross-examined in that regard. The Claimant’s position as to what it intended to do was clearly dependent on the outcome of this litigation. However, as I have said, the decision to go to the other premises would have relieved it of the obligations of the Lease and gathered in the premium. Had everything else been equal and the Defendant had complied with its obligation I have no doubt that it would have stayed in no. 153. The decision to go back was a reasonable one and has not been challenged. I reject any suggestion that the figures should be discounted to take into account the possibility of the Claimant having to take alternative premises.

[136]Had the Defendant wished to put these matters in issue, then what it could have done would have been to analyse the trading position that would have appertained and would have been achieved had the Claimant remained in the premises to which it removed as against the trading position on the basis that it went back. Equally, it could have put in issue the decision to go back. It has done none of this and accordingly, in my judgment both the premium and the loss of profit claim in addition to the reduced stripping out costs and the quarter rental are all properly claimable. EXEMPLARY DAMAGES

[137]At the end of the evidence I reminded the parties’ legal representatives of my decision in Mount Eden Land referred to above, and in particular 108 where I raised the possibility of a claim for exemplary or punitive damages if a breach of the statutory duty imposed by the Landlord & Tenant Act 1988 was raised.

[138]Mr Brock QC considered the matter overnight, and considered it proper in the light of the evidence and in particular the cross examination (but not before) to make an application for permission to amend the Particulars of Claim to include a claim for exemplary damages. This was opposed by Mr Dodge, but after argument I granted permission. I should indicate that based on the way in which Mr Brock QC presented the claim Mr Dodge considered that there would be no prejudice suffered by the Defendant occasioned by the lateness of the application to amend.

[139]Accordingly, I granted permission to amend, dispensed with re-service and dispensed with the need to serve a Defence on the basis that the Defendant denied any liability and gave Mr Dodge the opportunity to have the final word in response to what Mr Brock QC said in this regard.

[140]In the light of the authorities referred to in my earlier decision, and in the light of the House of Lords decision in Kuddus v. Chief Constable of Leicester Constabulary

[2002] 2 AC 122

I am of the opinion that there is a right to seek punitive or exemplary damages against a Landlord for breach of its statutory duty under L & T Act 1988. THE BASIS OF CLAIM FOR EXEMPLARY DAMAGES

[141]Mr Brock QC confined his claim to exemplary damages. I refer to the analysis of the Kuddus case in McGregor on “Damages” paragraph 11-011. An award of exemplary damages is available where there is unacceptable behaviour on the part of the Defendant, and that behaviour displays features which merit punishment, where the Defendant acts in a way calculated to make a profit for himself which might well exceed the compensation payable to a Claimant. Although it is clear that there was much debate in the House of Lords in Kuddus as to whether or not the punitive role of exemplary damages, in the case of the second limb ought to be addressed more in restitutionary terms (see paragraph 109 of the speech of Lord Scott of Foscote) it is clear that the existing basis for the award of exemplary damages, namely to punish a wrong doer for his conduct, remains the law. Further, as the speech of Lord Nicholls of Birkenhead indicated (paragraphs 50-52), whilst there may be some cases where damages may be awarded by stripping the wrong doer of his profits as per Attorney General v. Blake

[2001] 1 AC 668

, 278-280 there may be other circumstances recognised where punishment is appropriate in a civil court. He said at paragraph 52:- “52. Punishment is a function par excellence of the criminal law, rather than civil law. But in Rookes v. Barnard

[1964] AC 1129

the House recognised that there are circumstances where, generally speaking, the conduct is not criminal and an award of exemplary damages would serve a useful purpose in vindicating the strength of the law. This purpose would afford “a practical justification for admitting in the civil law a principle which ought logically to belong to the criminal court “where this was wrongful conduct calculated to yield a benefit in excess of the compensation likely to be payable to the Plaintiff.”…”

He reverted to this at paragraph 67:

“67. Nor, I may add, am I wholly persuaded by Lord Devlin’s formulation of his second category (wrongful conduct expected to yield the benefit and excess of any compensatory award likely to be made). The law of unjust enrichment had developed apace in recent years. In so far as there may be need to go further, the key here would seem to be the same as that already discussed: outrageous conduct on the part of the Defendant. There is an obvious reason why, if exemplary damages are to be available, the profit motive should suffice but a malicious motive did not.”

It is clear that the second categorisation of Lord Devlin in Rookes namely, where the Defendant’s conduct had been calculated by him to make a profit for himself, which may exceed the compensation payable to the Plaintiff is still a relevant basis for awarding exemplary damages. The requirement is:

“Where a Defendant with a cynical disregard for a Plaintiff’s rights has calculated that the money to be made out of his wrong doing would probably exceed the damages at risk, it is necessary for the law to show that it cannot be broken with impunity. This category is not confined to money making in a strict sense. It extends to cases in which the Defendant is seeking to gain at the expense of the Plaintiff some object – perhaps some property which he coverts – which he could either not obtain at all or not obtain except at a price higher than he wants to put down”

. This was applied by the Court of Appeal in the case of Drane v. Evangelou

[1978] 1 WLR 455

(page 459E). He reverted to this at paragraph 67:

[142]In that judgment at the same page Lord Denning MR said this in relation to a submission that £1000 damages was far too high even exemplary damages:- “In my opinion a sum awarded by the way of exemplary damages is not to be weighed in any scales. It is a question for the judge, having heard all the evidence, towards such sum as he thinks proper. …” (page 459H). Goff LJ also made reference to a further passage of Lord Devlin’s speech (page 462H):- “In a case in which exemplary damages are appropriate a jury should be directed that if, but only, the sum which they have in mind to award as compensation (which may, of course, if some aggravated by the way in which the Defendant has behaved to the Plaintiff) is inadequate to punish him for his outrageous conduct, to mark their disapproval of such conduct and to deter him from repeating, then it can award some larger sum …” Goff LJ also made reference to a further passage of Lord Devlin’s speech (page 462H):-

[143]I refer to the analysis of this category in McGregor paragraph 11-021 through to 11-028.

[144]It is clear in my judgment that the Defendant through its agents operated in a cynical way designed to frustrate the Claimant in obtaining its legitimate expectation namely an assignment of the premises coupled with a receipt of the £75,000 premium and an ending of its further obligations under the Lease. It was done to extract for itself the value of the property by virtue of the difference between the passing rent and the market rent when it had no legitimate reason for acting the way it did in response to the Claimant’s application for licence to assign. As I have said already there is nothing illegitimate in a landlord seeking to recover possession by negotiation in order to achieve that (as postulated by Matthews & Goodman initially). What is illegitimate is an abuse of the procedures under the 1988 Act designed to achieve the same purpose.

[145]Mr Dodge submitted that there has a difference here because the Defendant was unsuccessful in its design. It was true it was unsuccessful. That is why in my view there is still a residual value to exemplary damages where a restitutionary claim would not suffice. Let us suppose that the Defendant with its approach by Mr Hole in June 2002 secured a surrender from the Claimant at nil value. Let us suppose that the Claimant then became alerted to the unreasonable conduct of the Defendant. It would have lost the premium of £75,000. However, if the Defendant had followed through its successful designs it would have obtained a rental of some £100,000. On that analysis, compensating the Claimant by awarding it £75,000 damages still enables the Defendant to retain a net illicit profit of some £25,000. Thus the restitutionary basis for a claim would not be sufficient to strip the entirety of the profits away from the Defendant.

[146]There are no strict rules for the assessment of an award of exemplary damages. I have no doubt for the reasons that I have set out in this judgment, that the Defendant’s conduct is well within the requirements of the second limb of Lord Devlin’s judgment in Rookes and Barnard. I have set out at length in this judgment their conduct and it is deplorable. I now turn to consider the question of the amount of exemplary damages. Once again I refer to the criteria set out in McGregor paragraphs 11-032 to 11-045. I note the observation of the learned authors in 11-042 that these criteria have no relevance when the award of damages designs to operate an indirect method to extracting profits tortiously obtained. That is not the case here because the Defendant failed in its design. Merely because it failed does not mean that it is not appropriate to award exemplary damages because of its failure. That is precisely the reason why exemplary damages ought to be awarded to discourage it from seeking to attempt such actions in the future, and to mark a disapproval of the way in which it went about its discharge of its duties.

[147]It is clear that the Claimant was a victim of punishable behaviour, even though it was not completely successful. I note the second requirement that awards should be moderate. What is moderate depends on each particular case. In Broome v. Cassell

[1972] AC 1027

the moderate level of damages was £25,000 now worth some £250,000. In various landlord and tenant cases where residential property is being involved, a modest figure of £1000 has generally been awarded but that has to be measured against the actual breach and conduct. In the context of the cases £1000 was a significant sum. The third criterion is the means of the parties. I have no evidence of the means of the Defendant but I assume it is significant. The further category is the conduct. The Defendant has expressed no regret; indeed, the way in which it conducted the case, in particular the evidence that was put forward and the evidence which was not put forward was calculated to aggravate the situation in my judgment. The fifth category is relevant and that is the amount of compensation. The more that is awarded by way of compensation, the less that should be awarded by exemplary damages. Category six (criminal penalty) has no application. The other categories seven, eight and nine are of no relevance.

[148]As I have said the calculation of the exemplary damages is not to be done by nice legal principles. It is to be assessed by an appropriate amount, having regard to the general criteria summarised above to mark the displeasure of the court of the Defendant’s conduct. Had it been successful, it would have obtained an extra income of a little over £100,000. This would have increased the value of its holding in capitalisation terms significantly. I disregard Mr Brock QC’s submission that the figure would have been as much as £800,000. Awarding the Claimant the lost premium, and the rental of approximately £25,000 which it paid, which of course went into the Defendants’ pocket is a significant level of compensation. The loss of profits claim also further buttresses that position.

[149]As I have set out above, if the Defendants designs had been successful, and discovered later, it is likely that they would have still made a profit of some £25,000 odd .

[150]It seems to me that it is important to mark the court’s disapproval by a sum which will cause the Defendant to consider seriously its future conduct. The sum should not be excessive; it should be moderate. Moderate however, is to be assessed in the overall facts of the case and in the light of the conduct and the need to mark disapproval. It is important for landlords to appreciate that they should not resort to tactics to frustrate legitimate expectation of tenants by raising long and irrelevant queries designed to avoid giving the answer to the application for a licence to assign. This is the more so when the conduct is calculated to achieve an extraneous benefit for itself at the expense of the Tenant. I reject Mr Brock QC’s analysis by reference to the parties referred to in the case which I have previously decided. I have to have regard solely to the Defendants’ conduct. It seems to me that the way to mark the disapproval is to award the Claimant an additional sum of £25,000 by way of exemplary damages.

[151]I would be provisionally of the view that all of the heads of damages to which I have made reference should carry interest from the 21st March 2002 until payment at 8%.

[152]I also dismiss the Counterclaim, as none of the sums were properly claimable by the Defendant.

[153]I will hear submissions as to the working out of the final order including any orders for costs I am invited to make. JC/PT/WORD 2000/SHARED/DESIGN.SMITHJ