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Cite as: [2017] EWHC 2751 (TCC)

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Neutral Citation Number: [2017] EWHC 2751 (TCC)
Case No: HT-2016-000157


Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
2 November 2017

B e f o r e :


- and -



Ms Wendy Mathers (instructed by Bude Nathan Iwanier LLP) for the Claimant
Mr Jonathan Chew (instructed by Browne Jacobson LLP) for the Defendant
Hearing date: 2 November 2017



Crown Copyright ©

    The Hon. Mr Justice Coulson :

  1. This is a dilapidations claim. It is common ground that the defendant, Boots Opticians Professional Services Limited ("BOPSL"), is part of the Boots group of companies and is the wrong defendant to these proceedings. It is also common ground that the right defendant is European Vision Limited ("EVL"), which is also part of the Boots group of companies. By an application dated 25 July 2017, the claimant landlord ("Manorshow") seeks to substitute BOPSL with EVL. That application is resisted by BOPSL, and there is a witness statement from Ms Shepherd to that effect. In addition, BOPSL have issued their own application, dated 29 August 2017, to strike out the proceedings.
  2. Manorshow are the reversioner to the lease in respect of an opticians premises at 47, High Street, Ramsgate, Kent ("the premises"). EVL, who were originally called Dolland & Aitchison Limited ("D&A") were the tenants. The terms of the original lease expired on 28 February 2009, but the lease was subject to and continued, under Part II of the Landlord and Tenant Act 1954.
  3. On 17 September 2009, D&A wrote to Manorshow about the premises. They said:
  4. "You will no doubt be aware that the business of Dolland & Aitchison has now merged with Boots Opticians to create a new bigger and better company with a combined portfolio of just under 700 stores throughout the UK. The new company is now part of the Boots Opticians group and part of Alliance Boots and it will operate under the Boots brand.
    The current legal tenant under the lease of this property, Dolland & Aitchison…has now formally changed its name to European Vision Limited (EVL) and we enclose a copy of the change of name certificate for your records.
    As a result of this merger a business transfer agreement has been completed and the optical retail business of D&A has been transferred into a new corporate structure and the beneficial interest in all its properties has been transferred to a new company now also known as Dolland & Aitchison Limited (company number 6776823). However with effect from 1st September Dolland & Aitchison Limited (company number 6776823) will transfer the whole of its business and assets and therefore the beneficial interest in all of its properties to Boots Opticians Professional Services Limited…
    We are now instructing our solicitors in connection with a formal assignment of the Leases from EVL to BOPS and your client should receive an application from them for formal consent to the assignment in the near future. In the meantime, pending a formal assignment, all invoices should be addressed to EVL at…
    As part of the corporate restructure we also intend to convert most of our properties from D&A Opticians to Boots Opticians and will be undertaking a rebranding exercise in the near future including a change of the external fascia signage…"
  5. It is plain from that letter that BOPSL would now be the occupier of all relevant properties, including the premises. That was borne out by the fact that, subsequently, BOPSL took up physical occupation of the premises.
  6. On 29 May 2014, Manorshow served a Section 25 notice terminating the tenancy. That was served on both BOPSL and EVL, because it was unclear whether the assignment from EVL to BOPSL had actually occurred. However, the subsequent correspondence shows that EVL played no part in what happened next. Instead, it was solicitors who were expressly acting for BOPSL who formally responded to the notice and sought to extend the relevant time limit. Thereafter, those same solicitors entered into negotiations for a further lease. That new lease, called a Counterpart Further Lease, was agreed and signed by Manorshow and BOPSL on 7 June 2016. Ms Mathers pointed out that, amongst other things, that document formally recorded that BOPSL were surrendering their existing tenancy of the premises and obtaining a fresh tenancy by way of the new lease.
  7. That left the dilapidations claim, which had of course arisen under the old lease. That claim had originally been triggered by the service on BOPSL, in October 2015, of a schedule of dilapidations. Subsequently, other documents relating to the dilapidations claim were sent to BOPSL. It appears that these were, in the main, ignored (although I note that there was apparently an involvement of a Boots surveyor called Ms Bridget Foster). At all events, no one from EVL had any involvement in the dilapidations claim.
  8. By the middle of 2016, having got nowhere in relation to the dilapidations claim, Manorshow decided to commence these proceedings. On 16 May 2016, Manorshow's solicitors asked BOPSL's solicitors to "provide documentary evidence as to how your client acquired the lease from Dolland & Aitchison as my client is having trouble locating the licence to assign and notice of transfer." In reply, on 23 May 2016, BOPSL's solicitors said that the question of the assignment was "historical and the acquisition goes back to 2009". The email went on to say that, because of this, "tracking down paperwork could prove problematic for my client."
  9. On 11 June 2016, Manorshow commenced these proceedings against BOPSL. On 1 July 2016, Ms Jacqui Hoyland of Boots, wrote to Maonrshow's solicitors to say that "we are unable to find an assignment from European Vision Limited to Boots Opticians Professional Services Limited so all the documents have been served on the wrong party." Manorshow's solicitors replied on 3 July 2016, to say that they did not understand the point being made, "given that your clients are in occupation and have been making the rent payments!"
  10. On 20 July 2016, Manorshow obtained judgment in default against BOPSL. On 15 August 2016, by consent, that judgment was set aside, with no order as to costs. Thereafter, the parties agreed a number of stays of the proceedings, which meant that the proceedings effectively slept until 26 June 2017. I am told that this was for the purposes of negotiations, but that those have failed to resolve this claim. As a consequence, the application to substitute was only made in July this year.
  11. CPR 19.2(4) provides that:
  12. "(4) The court may order a new party to be substituted for an existing one if—
    (a) the existing party's interest or liability has passed to the new party; and
    (b) it is desirable to substitute the new party so that the court can resolve the matters in dispute in the proceedings."

    Ms Mathers drew my attention to the Court of Appeal case of Hounslow LBC v Cumar [2012] EWCA Civ 1426 in which it was held that the court had a wide jurisdiction to substitute defendants, which was not limited to the two criteria noted in the rule. However, it does seem to me that sub-rule (b) is wide enough to cover most applications to substitute that may arise and that, in any event, if Manorshow's submissions are made out in this case, sub-rule (b) is certainly wide enough to cover the applications here.

  13. So, should Manorshow's application to substitute be allowed? In my view, it should. That is primarily because I am persuaded that BOPSL were mistakenly made the defendant in these proceedings as a result of their own conduct. In particular, I note:
  14. (a) The letter of 17 September 2009 said that BOPSL would be the assignees of the lease of the premises.

    (b) BOPSL took over occupation of the premises at about that time, which was only consistent with there having been such an assignment.

    (c) Solicitors acting on behalf of BOPSL dealt with both the continuation of the lease and the negotiations for a new lease. Nobody from EVL was involved.

    (d) BOPSL agreed a new lease which expressly recorded that they were surrendering their existing interest in the premises. Pursuant to that new lease, BOPSL continued to occupy the premises.

    (e) Prior to, and indeed after proceedings were commenced, BOPSL's solicitors did not say that there had been no assignment to BOPSL. On the contrary, they indicated that there had been such an assignment, but that they could not find the documentation (see the emails of 23 May and 1 July 2016).

  15. In addition, it is clear that, if I were to order substitution, there would be no prejudice to EVL (who have been aware of these proceedings for over a year), and no prejudice to BOPSL. I reiterate that they are related companies.
  16. Accordingly, I am unhesitatingly of the view that the error was the responsibility of BOPSL, and that justice requires the substitution to be made.
  17. The only additional document to which I had not been referred before his oral submissions, but on which Mr Chew expressly relied, was a payment advice dated 23 March 2016, which came from BOPSL and evidenced a quarterly rental payment for the premises. The document said that the payment "is made on behalf of European Vision Limited". Mr Chew argued that, as a result, Manorshow knew from that document that the correct tenant was EVL.
  18. I do not accept that submission. No one could criticise Manorshow either for failing to spot the small print in the payment advice or, (even if they had spotted it) concluding that the words in question were a matter between BOPSL and EVL only. Nothing in the use of the expression "on behalf of EVL", relating to a rental payment, could detract from the weight of all the other evidence, which I have set out above, which entitled Manorshow to assume that BOPSL were the tenants.
  19. I confess to having been slightly taken aback by the aggressive stance adopted by BOPSL in the recent documents and their evidence. I deal with the other points that they have made as follows:
  20. (a) It is in my view wrong to say that Manorshow pursued this case in the knowledge that it was suing the wrong defendant. On the contrary, it was suing the party that everyone (including that party) had said or indicated was the right party. The only problem, which was nothing to do with Manorshow, was an apparent failure to find the right legal documents.

    (b) For similar reasons, Manorshow were entitled to enter judgment in default. They did so before they realised that, contrary to what BOPSL had been saying for so long, there never had been an assignment.

    (c) The fact that amendments may now be required to the Particulars of Claim (because the defendant is EVL not BOPSL) cannot, of itself, be a reason not to allow the substitution. The Particulars of Claim will have to be amended and, in the usual way, Manorshow will have to pay the costs of and occasioned by the amendments.

  21. In addition, it follows from what I have said that the application to strike out was unnecessary. Either the application to substitute EVL for BOPSL was going to succeed, or it was not. If it failed, then the claim would have been struck out anyway. In those circumstances, there was no need to issue the separate application to strike out. That was an unnecessary waste of costs, and it follows that BOPSL must pay the costs of that otiose application.
  22. I turn to deal with the remaining issues of costs between the parties. As to the costs of Manorshow's application to substitute, the usual order (because of course one defendant is being substituted for another) is that the claimant would normally pay the costs of that application. But I think Ms Mathers is right to say that, if the application to substitute had only been necessitated by the conduct of the wrong defendant, then the wrong defendant should pay those costs.
  23. In this case, I consider that, for the reasons set out at paragraph 11 above, the joining of BOPSL was the responsibility of BOPSL and not Manorshow. I acknowledge that a zealous Chancery lawyer might argue in response that, because there could be a difference between the identity of the occupant, on the one hand, and the identity of the legal tenant, on the other, Manorshow should have done more research on the topic. But I have to consider everything in the round and to look at this from a practical perspective. In my view, Manorshow did all they reasonably could; they were not privy to the niceties of the inter-company exchanges identified in the letter of 17 September 2009 (paragraph 3 above). This was ultimately a matter on which they were entitled to rely on what they were told by BOPSL and on BOPSL's conduct.
  24. I consider therefore that the costs of the application have been caused by BOPSL's failure to make the true position plain. Their conduct was only consistent with the ultimately mistaken conclusion that BOPSL were the tenant (and therefore the right defendant). Accordingly, I am of the view that Manorshow are entitled to their costs of the substitution application.
  25. That leaves the question of other costs incurred by BOPSL, who of course, after today, will no longer be a defendant. It seems to me that those costs need to be broken down carefully. Their original costs were incurred in setting aside the default judgment. It was agreed that there was to be no order as to costs in relation to that work, so BOPSL are not now entitled to those costs.
  26. Then there were the various costs incurred by BOPSL as a result of the repeated stays of the proceedings, which were agreed between the parties. Again, since those stays were agreed as part of the negotiations between the parties, and were what both parties wanted at the time, it seems to me that it would not be right now to make the claimant pay those costs. Accordingly, those costs should lie where they fall.
  27. However, once Manorshow had brought the stays to an end, and the action was back up and running, then it seems to me that Manorshow were on risk as to costs. Manorshow knew by then that they had sued the wrong defendant. Although Ms Mathers said that BOPSL did not need to serve a defence, because they could not have expected there to have been a judgment in default, I would respond to that by noting there had already been one such judgment, and BOPSL were quite entitled to protect themselves from the risk of it happening again.
  28. So, I think that BOPSL are entitled to the costs of the defence and any other costs following the cessation of the stay, but which are not caught either by the application to substitute (which for the reasons already given, are Manorshow's costs in any event) or, the costs of the strike out application (which are again Manorshow's costs in any event). But, if in addition to the costs of the defence, there are any other costs incurred more recently, not caught by either of those applications, then those would be costs which, in the usual way, Manorshow would have to pay.

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