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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Crestfort Ltd. & Ors v Tesco Stores Ltd & Anor  EWHC 805 (Ch) (25 May 2005)
Cite as:  EWHC 805 (Ch)
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Strand, London, WC2A 2LL
B e f o r e :
| CRESTFORT LIMITED
YORKSTREAM PROPERTIES LIMITED
Claimants/Part 20 Defendants
|- and -
|TESCO STORES LIMITED
|Defendant/Part 20 Claimant
Mr Stephen Jourdan (instructed by Dewar Hogan, 4 Creed Court, 5 Ludgate Hill, London EC4M 7AA) for the First Defendant /Part 20 Claimant
Miss Elizabeth Fitzgerald (instructed by Pickworths, 6 Victoria Street, St Albans, Hertfordshire AL1 3JB) for the Second Defendant
Hearing dates: 6th – 8th April, 18th – 19th April & 22nd April 2005
Crown Copyright ©
Mr Justice Lightman:
i) (by clause 2) it was provided that the rent should be reviewed every five years. The current reviewed rent is £400,000 per annum;
ii) (by clause 4(5)-(8)) the tenant covenanted that the tenant should repair and decorate the Premises and keep the open areas in good order and by clause 4(14) the tenant covenanted to repair defects of which the landlord gave notice;
iii) (by clause 4(15)) it was provided that, if the tenant failed to repair after the landlord gave notice, the landlord could enter the Premises and repair at the tenant's expense;
iv) (by clause 4(27) the tenant covenanted not to assign, underlet or part with possession of part only of the Premises;
v) (by clause 4(28)) the tenant entered into a covenant regarding assignment in the following terms:
"Not to assign underlet or part with or share the possession of the whole of the demised premises without the previous consent in writing of the Landlord (which consent shall not be unreasonably withheld) PROVIDED ALWAYS that:-
(a) In the case of an assignment any intended assignee has first by deed covenanted directly with the Landlord that during the residue of the term then subsisting the assignee will pay the rent reserved by and will observe and perform the covenants and conditions contained herein including a covenant not to further assign the demised premises without such consent as aforesaid
(b) On the grant of any permitted Underlease the Tenant shall obtain:-
(i) an unqualified covenant on the part of the Underlessee not to assign or underlet or part with the possession of part only of the premises thereby demised and
(ii) a covenant on the part of the Underlessee that the Underlessee will not assign underlet or part with or share the possession of the whole of the premises thereby demised without obtaining the previous written consent of the Landlord such consent not to be unreasonably withheld or delayed and to provide in such Underlease that any underleases granted out of such Underlease whether immediate or mediate shall contain a similar provision
(c) The Tenant will not accept or pay or agree to accept or pay any fine or premium in consideration for the grant of any Underlease or tenancy that may at any time relate to the demised premises
(d) Any permitted Underlease shall be granted subject to like covenants and conditions as are herein contained except as to the rent thereby reserved and the length of the term thereby granted."
vi) (by clause 5(ii)) the landlord covenanted to insure the Premises against "the insured risks" and (if so required) to produce evidence of payment of the current premium for such insurance to the tenant once yearly and a certified copy of the insurance policy on reasonable demand. Clause 1(2) defined "insured risks" as including property owners' liabilities and three years' loss of rent;
vii) (by clause 2) the tenant covenanted to pay by way of additional rent the insurance premium expended by the landlord.
"4. Repairing Obligation:
The sub-tenants repairing liability will be limited to maintaining the premises in no worse state of repair, then [sic] their present condition, to be evidenced by a photographic schedule of condition. This will need to include the roof.
5. Tenant's Covenants:
We know that the proposed sub-lessee is a young company who were incorporated at the beginning of 2003. We will therefore require a rental deposit equivalent to £50,000. This will be held in a high interest bearing account, to which my Clients are entitled to draw upon in the event of a default by the Tenant. The deposit will be returned to the Tenant on expiry of the term assuming that it has not been necessary for the Landlords to draw down on it.
I understand Magspeed Limited are keen to take occupation as quickly as possible. My Clients Lawyers have therefore been instructed to urgently prepare draft documentation. However Superior Landlords consent will be required to the underlease and it may therefore be necessary for your Clients to initially take occupation by way of a Licence. However I suggest this matter be resolved by the Lawyers."
"1. The policy will have to be issued on a stand-alone basis away from the Tesco block policy in the sole name of my client and my client's mortgagees. Their interests will need to be noted as first loss payee under the policy.
2. A specified sum insured will have to be shown under the policy in accordance with the mortgagee's requirements
3. The policy will have to confirm that Property Owners Liability cover is provided subject to a limit of indemnity of no less than £5 million.
4. A mortgagee non-invalidation/no lapse agreement will have to be provided under the policy in favour of my client's mortgagees
5. The scope of cover provided under the terms and conditions of the policy will need to be broadly in line with the cover which is currently being provided by my client under our policy."
The email dated the 11th February 2004 ended: "I look forward to hearing from you further on the terms of the draft Licence and with your undertaking for costs". It is clear that the Landlords were not entitled to impose these conditions.
"Your clients have been aware of the disrepair for some time. In light of the arrangements your clients are seeking with the Under tenant [imposing a more limited repairing obligation on the Under tenant] it is clear that there appears to be no present intention on the part of your clients to carry out the repairs. Our clients propose to carry out the repairs pursuant to the terms of the lease and are currently arranging for the works to be costed and arrangements will be made to carry out the works and recover all costs and expenses from your client pursuant to the terms of the lease."
i) the Underlease was granted in breach of covenant because the Landlords did not consent to it, and the Underlease is on different terms to the Lease, because of the limitation on Magspeed's repairing obligations, and the absence of a right of entry permitting the Landlords to enter and repair and decorate;
ii) Magspeed was party to such breach because the covenant against underletting was a restrictive covenant, and/or Magspeed knowingly and intentionally procured and induced the breach to the damage of the Landlords.
"10 Further or alternatively the [Landlords] waived the provisions of clause 4(28)(d) of the Underlease."
ENTITLEMENT TO SEEK CONSENT
REASONABLENESS OF REFUSAL OF CONSENT
"The only negative covenants which are restrictive covenants are covenants which are restrictive of user of land. Thus, whilst a covenant against using land for any purpose other than a private dwelling house is a restrictive, a covenant not to sell land for less (or more) than a stated price or a covenant not to sue an adjoining owner for nuisance would not satisfy this requirement. Such covenants, though restrictive, do not restrict the user of land."
GRANT OF MANDATORY ORDER
DAMAGES IN ADDITION
i) the first was to grant an underlease on full repairing terms, with the subtenant indemnified against costs in excess of those needed to maintain the Premises in their current condition by a company in the same group of companies as Tesco (the course in fact later followed by Tesco); or
ii) the second was to negotiate terms with the Landlords to vary the Lease so as to permit the subletting subject to the schedule of condition.