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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 >> Design Progression Ltd v Thurloe Properties Ltd  EWHC 324 (Ch) (25 February 2004)
Cite as:  EWHC 324 (Ch),  1 WLR 1,  1 EGLR 121,  WLR 1
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Strand, London, WC2A 2LL
B e f o r e :
| DESIGN PROGRESSION LIMITED
|- and -
|THURLOE PROPERTIES LIMITED
Mr Peter Dodge (instructed by Stevensons) for the Defendant
Hearing dates: 2nd, 3rd, 4th and 5th February 2004
Crown Copyright ©
Mr Justice Peter Smith:
THE PRESENT CLAIM
"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."
"As Sir Richard Scott V.C. pertinently commented in the Norwich Union case  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."
DECISION TO SELL BY THE CLAIMANTS
"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."
MEETING 29TH JANUARY 2002
"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.
"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".
"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."
(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.
CONCLUSION AS AT 21ST MARCH 2002
THE BASIS OF CLAIM FOR EXEMPLARY DAMAGES
"52. Punishment is a function par excellence of the criminal law, rather than civil law. But in Rookes v. Barnard  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  1 WLR 455 (page 459E).
"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 …"