The Picture Warehouse Ltd v Cornhill Investments Ltd. [2008] EWHC 45 (QB)

[2008] EWHC 45 (QB)Case No CC/2007/PTA/364IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONON APPEAL FROM HHJ SIMPSONCLAIM NUMBER 6CL51036Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 23/01/2008
Before
MR JUSTICE JACK
Between
THE PICTURE WAREHOUSE LIMITEDAppellantCORNHILL INVESTMENTS LIMITEDRespondent
Miss Sara Benbow (instructed by Gowans LLP) for AppellantMr David Warner (instructed by Gillhams) for RespondentHearing Hearing date: 21st December 2007
Judgment
[1]This appeal concerns parking rights in the context of an application for a new business tenancy under Part II of the Landlord & Tenant Act 1954. In his judgment delivered in the Mayor’s & City of London Court on 4 June 2007 His Honour Judge Simpson held that no provision as to parking should be included in the new tenancy. The tenant, Picture Warehouse Limited, appeals against that decision by permission of Nelson J granted on 8 October 2007.[2]The tenant carries on business as picture framers and sellers of pictures and prints from premises in a building known as the Abbey Road Motorists Centre at 131-179 Belsize Road, London NW6, and has done so since 1980. Much of the building is used as a multi-storey car park. The landlord, Cornhill Investments Limited, purchased the head lease in 1997. The freeholder is the London Borough of Camden. Until 17 July 2003 the controlling shareholder in the tenant was Mr Norman Raddon. On that date he sold his interest to Mr and Mrs Gerald McNeil-Halward. At all times the business has been run on a day to day basis by Mr Nigel Scott, who was also a director until Mr and Mrs McNeil-Halward’s purchase. The landlord is controlled by Mr Christopher Orriss.[3]The tenant’s original lease is said in the witness statement of Mr Scott to have run for 25 years from 2 January 1980, in which case it would not have terminated until January 2005. Whether or not that is correct, in late 1999 and early 2002 there were negotiations for the terms of a new lease. Agreed heads of terms were set out in a letter to Mr Scott dated 10 February 2000. They provided for the tenant to vacate the space it occupied on the second floor and to take up space on the ground floor. The landlord was to carry out the necessary building work. The tenant was to retain the three parking spaces which it had on the first floor. There were then further discussions whereby it was agreed that the tenant would give up two of the three spaces and would instead be provided with two designated spaces on land at the front of the building. The spaces were shown on a plan enclosed with a letter to Mr Scott dated 18 April, which set out the new agreement. The rent was to be reduced by £500 in consequence. It is clear from the opening paragraph of the letter that this alternative parking provision was to be included in the lease. Although the plan is no longer available, there is no doubt that the spaces were to be on land in front of the building which had been ill-kept grass and which Mr Orriss was in the process of bricking over so it could be kept tidy and used for parking.[4]This work to the grassed area and perhaps other plans for the building had brought Mr Orriss into dispute with Camden. By a letter of 25 May 2005 Camden required Mr Orriss to make a planning application for the bricking-over, or to face enforcement proceedings. By a further letter dated 27 June Camden informed Mr Orriss that Cornhill was in breach of its lease by carrying out the work without consent, and requested that the grass be restored. Those are the only two letters passing from or to Camden which were put in evidence. The dispute between Camden and Cornhill is apparently still unresolved, though whether Camden is actively pursuing the matter is unclear.[5]The tenant moved from the second to the ground floor at the end of that October, the necessary building work presumably having been done by the landlord, Cornhill. Prior to that, on 19 October, the tenant’s solicitors wrote the landlord’s solicitors by fax raising three outstanding points on the lease. The third was:
“Our client [ie the tenant, presumably in the person of Mr Scott] has written to your client requesting an assurance letter re: the availability of parking on the forecourt outside the building.”
The letter referred to has unfortunately not been found: it may well have been helpful as to Mr Scott’s state of mind. Beside the passage quoted Mr Orriss noted in manuscript ‘Agree dim with Nigel’, ‘dim’ being short for ‘demise’ and ‘Nigel’ being Mr Scott. There is nothing, however, to suggest that that happened. The agents for the landlord replied to the three points in a letter delivered by hand dated the next day, 20 October. In respect of the parking the letter stated:
“You, your customers and deliveries are allowed to park on the front block paved area for maximum of 30 minutes (pick-up, drop-off point). I can confirm that this must be adhered to avoid [sic] further conflict with the London Borough of Camden.”
[6]The move took place, but the preparation of the new lease went into abeyance. There was no evidence as to why. The tenant retained one parking space within the building on the first floor which was within the area to be covered by the new lease and so did not require a separate provision. Customers and delivery vehicles used the area outside without difficulty. There were no designated spaces. It was only after the acquisition of the tenant by Mr and Mrs McNeil-Halward that a new lease was entered into. It was finally dated 17 November 2003 and ran for 5 years from 25 March 2000. Save that one internal space was included within the area demised, it did not refer to the provision of parking. It does not appear that any suggestion was made that it should. The rent was £500 less than had been provided in the original letter of 10 February 2000. The tenant’s covenants included the following:
“(21) Not to allow any vehicles belonging to the Tenant its staff or invitees to remain on any access way or road other than for the purpose of collection or delivery of goods and not to obstruct the free access of adjoining occupiers.”
[7]In 2005 parking problems began. The parking area was often occupied by the vehicles of other tenants. A skip took up some of it at times. At one point it was chained off. Mr Orriss accepted responsibility for that. He also accepted that he had removed signs placed by the tenant to show where visitors could park. Towards the end of his cross-examination this exchange occurred:
“Counsel: And yet you accept that my clients have the rights for their visitors to stop in that area to pick up and drop off? Mr Orriss: Now, you know, they’re allowed to do that because I’ve agreed that that’s what they could do, and I stand by that. Even today they’re allowed to do it.”
[8]The Particulars of Claim dated 17 March 2006 made no reference to parking rights, but, rent apart, asked for a new lease on the same terms as the old lease. By an order of 29 November 2006 it was provided that ‘the issue of what new express term related to parking outside the premises demised by the lease, if any, should be included in a new lease shall be tried as a preliminary issue.’ The term which the tenant sought to have included was set out in the tenant’s schedule dated 20 December 2006, as follows “The right to park within the area edged green on the plan annexed hereto during the hours which the tenant is open for business any car, van, motorcycle or other vehicle belonging to the tenant, its employees, customers, suppliers or any visitor to the demised premises for the purpose of delivering to or collecting from the demised premises goods and/or materials in connection with the tenants business provided that(1) no more than one vehicle shall be parked at any one time and(2) no vehicle shall remain parked for more than 30 minutes at a time.” At the hearing of the issue the reference to ‘no more than one vehicle’ was corrected to ‘no more than two vehicles’. I emphasise “The right to” … .[9]The judge heard evidence from Mr Scott, Mr McNeil-Halward and Mr Orriss. Mr Scott said he was not aware of the specifics of the dispute between Cornhill and Camden. He said that he did not think he had been aware that permission to use the parking in front of the building was not to be incorporated into the lease. He said that, if the landlord had not been prepared to grant formal rights to park, he would not have been prepared to move. Mr McNeil-Halward could not speak as to what had occurred in 2000. He referred to what was in the letter of 20 October as ‘a gentleman’s agreement’ and stated that he wanted it honoured. Mr Orriss stated that he had talked to Mr Scott about his problems with Camden prior to February 2000. He said that he had never been prepared to give the tenant a formal right to park outside because of the problems with Camden, and that he had told Mr Scott that, hence the letter of 20 October.[10]The main findings of the judge in his ex tempore judgment were to the following effect. The tenant had obtained two advantages by the move and surrender of two parking spaces within the building, namely a reduction of rent and a greater visibility for its business. The provision of designated parking spaces referred to in the letter of 18 April 2000 was intended to be a term of the lease. That position was changed by the dispute with Camden. In October 2000 the tenant was asking for a letter of assurance and not for formal rights. (So it is implicit in the judgment that the judge found that Mr Scott knew by October 2000 that the landlord was not prepared to include a provision for parking in the lease, and that this was because of the dispute with Camden.). The letter of 20 October did not state how many vehicles were allowed. It provided a bare licence. No consideration was given, there being no corresponding obligation on the tenant. It had been submitted that it amounted to the grant of an equitable easement. That could not be found in the terms of the paragraph. The lease of 17 November 2003 was drafted as it was because the landlord did not want a formal grant, and the tenant accepted that. He had a wide discretion under the Act and could include even a personal right in a lease. It would be a wrong exercise of his discretion to insert a right as the tenant wanted because what the tenant had was a bare licence which could be determined at any time, the reason for that being the dispute with Camden.[11]Before me Miss Sara Benbow submitted that the relevant paragraph in the letter of 20 October 2000 provided the foundation for an equitable estoppel in that, in reliance on it, the tenant had given up its previous occupation. She accepted that it could not amount to the grant of an easement. She also accepted that it could not amount to an equitable easement, that is, an enforceable contract to grant an easement. For it was not a deed, nor did it meet section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. She asserted that equitable estoppel was how she had put her case before the judge, although that was not accepted by Mr David Warner on behalf of the landlord. It is not something which was dealt with by the judge in express terms. I consider, however, that his findings do cover it. For he found that the paragraph gave simply a bare licence, revocable at any time. If that was all it promised, the tenant could not complain that he had not got more.[12]The correspondence makes clear that there was a change between the position in April 2000 and that in October because of the dispute with Camden. What had been set out in the letter of 18 April as to a provision in the lease for designated parking spaces outside was replaced by a letter of assurance. I have no doubt that the judge was right to hold that the lease of 17 November 2003 correctly made no provision for outside parking, and that the right of the tenant as to outside parking, whatever it was, was to be found in the terms of the paragraph in the letter of 20 October. I think that the judge was right to call what was given a ‘licence’. An alternative word would be permission. It was a ‘permission’ for the tenant’s visitors, that is, customers and delivery men, to park for up to 30 minutes. There was no guarantee that space would be available: it was not a right to have parking space. I cannot, however, agree with the judge that it was a licence or permission obtained for no consideration because there was no corresponding obligation on the tenant. In my judgment the transaction must be looked at as a whole. The tenant was agreeing, inter alia, to move, to give up the two parking spaces inside, and to pay a new rent reduced by £500 on account of the latter. The landlord was agreeing, inter alia, to carry out the building work, to give the new tenancy, and, instead of designated outside parking being provided in the lease, to permit visitors to park outside. In my view that permission was supported by consideration on the tenant’s side.[13]The fact that it was, in my view, supported by consideration, does not wholly alter the nature of the provision. It remains a licence or permission. It is plain from the circumstances that it was not to be irrevocable. Here I again agree with the judge. I did not, however, hear argument as to whether notice of termination would be required and, if so, as to what notice. Nor did I hear argument as to whether notice could be given in any circumstances and so in effect at the landlord’s whim, and, if not, as to the circumstances in which notice might be given. Nor, I think, did the judge. It is not appropriate to say anything about those matters.[14]Miss Benbow relied on two sections of the Act in support of her submission that a term as to parking should be included in the new lease, namely sections 32(3) and 35(1).[15]Section 32(3) provides:
“32(3) Where the current tenancy includes rights enjoyed by the tenant in connection with the holding, those rights shall be included in a tenancy ordered to be granted under section 29 of this Act, except as otherwise agreed between the landlord and the tenant or, in default of such agreement, determined by the court.”
[16]“The holding” is defined by section 23(3):
“23(3) In the following provisions of this Part of this Act the expression “the holding”, in relation to a tenancy to which this Part of this Act applies, means the property comprised in the tenancy, there being excluded any part thereof which is occupied neither by the tenant nor a person employed by the tenant and so employed for the purposes of a business by reason of which the tenancy is one to which this Part of this Act applies.”
Here the property comprised in the tenancy is the area within the building demised to the tenant under the 2003 lease, and that is ‘the holding’.[17]The problem under section 32(3) is that the 2003 lease does not include any rights as to external parking. Whatever rights the tenant has are outside the lease, and so are outside the section. This follows from the plain wording of the statute. Miss Benbow submitted that the section should be read broadly to include rights not included in the tenancy but which are enjoyed in connection with the tenancy. The section is worded as it is, and there is no reason to strain its wording to give it a wider meaning. That is particularly so given the court’s wider discretion under section 35. I do not find reference to section 32(3) in Orlik (Meat Products) Ltd v Hastings & Thanet Building Society (1975) 29 P&CR 126 at 133 helpful here.[18]So I come to section 35(1). In so far as relevant it provides:
“35(1) The terms of a tenancy granted by order of the court under this Part of this Act (…..) ….. shall be such as may be agreed between the landlord and the tenant or as, in default of such agreement, may be determined by the court; and in determining those terms the court shall have regard to the terms of the current tenancy and to all relevant circumstances.”
[19]Mr Warner accepted that, if, for example, a tenant had established a right of way by means of a promissory estoppel as in Crabb v Arun District Council [1976] Ch 179, that could be incorporated into a lease in the exercise of a court’s discretion under section 35(1). What he said could not be done was to enlarge the tenant’s holding by the creation of a right which the tenant had not previously had, and he cited the following passage in Orlik at page 133:
“The object of Part II of the Act is to give security of tenure to business tenants by, inter alia, conferring power on the court to order a new tenancy on the property comprised in “the holding”, ….. and, however widely expressed, section 35 cannot, in our judgment, consistently with the scheme found in Part II, be construed to enable the court to enlarge the holding, for example, by ordering the grant of an easement over the landlord’s land or conferring rights over the landlord’s land not hitherto enjoyed.”
This concept was referred to with approval by Peter Gibson LJ giving the leading judgment in the Court of Appeal in Murphy & Sons Ltd v Railtrack [2202] 2 EGLR 48 at 51. What would be permissible here is to include in the lease a provision conferring on the tenant a right no greater than that given by the letter of 20 October. Such a term could be drafted. It would be very different from that proposed by the tenant, which I have previously set out. The judge declined to exercise his discretion to insert such a provision. He held that it was a bare licence that could be determined at any time. I have disagreed that it was a bare licence in the sense of being unsupported by consideration. I have made no finding as to whether it can simply be determined at the whim of the landlord, though that is the landlord’s case. I do nonetheless think that the judge exercised his discretion correctly in the circumstances of the case. The landlord had previously refused to include a provision for parking in the lease: the tenant had accepted that both in October 2000 and in 2003 when the lease was finally entered into. The tenant has not established any case to have a term in the lease giving him an irrevocable right to have parking for two cars outside the building. I should say that it is plain that the tenant seeks a right to have space rather than a permission which is shared with other tenants with no certainty of space. I think that in these circumstances it is plainly right to leave the tenant to rely on the terms of the letter for such rights as the letter gives it. As Mr Orriss said in evidence in the passage I have quoted earlier, and in another passage, those rights are still available to the tenant.[20]Lastly I must refer to Miss Benbow’s submissions made in connection with the rights of the tenant under Article 1 of the First Protocol to the European Convention on Human Rights, entitled Protection of Property. She submitted that by not including a term such as was asked for in the tenancy the court was depriving the tenant of the tenant’s property. As the operation of Part II of the 1954 Act is to give the tenant a new tenancy which he would not otherwise have, it may well be that any such submission in this context is flawed. But there is a second straightforward answer, namely that the grant of a new tenancy without parking rights does not deprive the tenant of its parking rights but leaves them as they are.[21]The appeal must be dismissed.