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England and Wales High Court (Queen's Bench Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Malmesbury & Ors v Strutt & Parker (a partnership) & Anor [2007] EWHC 999 (QB) (11 May 2007) URL: http://www.bailii.org/ew/cases/EWHC/QB/2007/999.html Cite as: [2007] EWHC 999 (QB) |
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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| (1) Seventh Earl of Malmesbury (2) William John Maltby (3) Kathleen Hobbs (4) Wilsco 283 Limited |
Claimants |
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| - and - |
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| Strutt & Parker (A partnership) |
1st Defendant/Additional Claimant |
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| Wilsons (A partnership) |
2nd Defendant/First Third Party |
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| and |
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| Peter Robin Fitzgerald |
2nd Third Party |
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Timothy Lamb QC, Edwin Johnson QC & John Gallagher (instructed by Williams Holden Cooklin Gibbons LLP) for the 1st Defendant
Michael Douglas QC (instructed by Simmons & Simmons) for the 1st & 2nd Third Party
Hearing dates: 5 - 23 Feb & 1, 2 March 2007
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Crown Copyright ©
| A. Introduction, | paragraphs 1 6 |
| B. The history, | paragraphs 7 62 |
| C. The Estate's view of the Airport Road, | paragraphs 63 69 |
| D. The Airport witnesses, | paragraphs 70 81 |
| E. The evidence of Mr Ashworth and Lord Malmesbury, | paragraphs 82 98 |
| F. The evidence of the car park experts, | paragraphs 99 103 |
| G. The evidence of the surveyor experts, | paragraphs 104 107 |
| H. The duty of Strutt & Parker, | paragraphs 108 111 |
| I. Breach of duty in relation to the 2000 lease, | paragraphs 112 123 |
| J. Breach of duty in relation to the 2002 lease, | paragraphs 124 147 |
| K. Breach of duty in relation to the 2003 leases, | paragraph 148 |
| L. The lost chance, | paragraphs 149 166 |
| M. The measure of loss, | paragraphs 167 193 |
| N. Other quantum issues, | paragraphs 194 201 |
| O. The status of the Airport Road, | paragraphs 202 215 |
| P. Strutt & Parker's claim against Wilsons and Mr Fitzgerald, | paragraphs 216 226 |
| Q. Contributory negligence, | paragraphs 227 - 231 |
| R. Strutt & Parker's counterclaim for fees, | paragraph 232 |
| S. Conclusions, | paragraph 233 |
Mr Justice Jack :
A. Introduction.
B. The history
| Turnover | Operating profit | Operating profit | Operating profit | Operating profit |
| Air traffic | Property/commercial | Air traffic | Property/commercial | |
| 1996 | £2,566K | £3,835K | (£762K) | £1,208K |
| 2000 | 3,101K | 5,451K | (1,044K) | 1,884K |
| 2005 | 7,318K | 4,275K | £2,879K (net £1,650K) | £2,879K (net £1,650K) |
In 1996 and 2000 commercial activities included car parking the evidence of Mr Baron, Day 7, page 101. The income from car parking in those years is unknown. In 1997 it was £283K, and in 1999 £310K. I have included under air traffic turnover for 2005 car parking £854K, and concessions £1,842K, as these are related to the air traffic business. Aviation income in 2005 by itself was £4,622K. The operating profit was not divided into divisions in 2005. The years are financial years ending in the years stated.
"We firmly believe that the combination of the change of ownership of the Airport and the impending Consultation Draft of the Christchurch Borough Local Plan gives an ideal opportunity to maximise the potential development value of the land near Hurn Airport. Indeed, it is particularly fortunate that the Local Plan procedure is now underway but, in turn, this means that action needs to be taken immediately.
The situation at the Airport is now so different that we believe that a fresh approach to the new owners could well be beneficial. The forthcoming Consultation Draft of the Local Plan gives the opportunity to work with National Express to mutual benefit. Such an approach needs to be well coordinated and attractive to National Express. We believe we are well suited to this task. We are well known in this field of development and we know the Senior Executive Directors of National Express. We have the necessary expertise to conduct and coordinate these negotiations and we can call upon assistance within the firm, as well as work with your existing advisors and any others that may be necessary. Until National Express' intentions are known, it is not possible to advise the precise team of advisors needed."
The surveyor in question was Mr Ian Ashworth, a partner in Strutt & Parker who specialised in commercial property. He was the author of the letter. By letter of 14 April 1995 Lord Malmesbury made the appointment.
The 1997 lease
The 2000 lease
1997 270,000
1998 300,000
1999 400,000
The opening of the new terminal would coincide with a throughput of about 500,000 passengers p.a. It was agreed that Mr Holland should pursue the extension of the car park lease as a matter of urgency.
The 2002 lease
"The Estate is cooperating with [the Airport] to enable the new car park to be properly surfaced and this will involve the surrender of the current lease with a simultaneous renewal for a longer term to facilitate the funding of the re-surfacing work. The new lease will incorporate an additional area of approximately 3 acres with an obligation on [the Airport] to implement the outstanding element of the extant planning permission for car park development."
The greater part of the letter was taken up with road or access improvement matters, where the situation did not look favourable to the Estate.
The 2003 lease
Later events
C. The evidence relating to the Estate's view of the Airport Road between 1980 and 2005
D. The Airport witnesses
'If Ian Ashworth had insisted upon a turn-over rent during the pre-renewal lease negotiations, this could possibly have been accommodated although it would have been very much against our wishes and I may well have refused.'
'If we had been pushed to the limit in negotiations we would have yielded on the principle of a turnover rent. The Estate could have dug their heels in and insisted on a turnover rent and we would have had no alternative. We needed car parking facilities and there was no other land available in the south [east] sector.' [First witness statement, paragraph 26]
He referred to BIA's ownership of the Airport Road. He referred to the lack of security for parking in the north west sector and the costs of bussing passengers to there. He referred to the improvement in BIA's fortunes after the millennium. He said that as of 2002 the leased car park was only covered with gravel and only used by staff. (I note that it seems plain there was by then some passenger use.) He said: 'Passenger growth was improving and discussions were being held with other airlines. It was obviously necessary to negotiate for an extension to the car park lease.' He said that he suggested to Mr Ashworth the season ticket rent review provision. It was important to the Airport that car park usage could increase without an increase in rent. The Airport wanted the longest term it could get, and 25 years was as long as he thought the Estate would grant. He was worried that with the planned increase in passengers the Airport might be left with inadequate parking. He said:
'We were lucky that the Estate was amenable in 2002 to negotiations to extend the lease term at all. We would have been placed in a far worse position if the Estate had refused to negotiate with us and allowed that lease to expire. My concern for future car parking from 22nd December 2001 to August 2002 is evident from the written pressure which I was exerting on Mr Ashworth to agree the terms that I had been proposing. I was clearly worried that, with the planned expansion of flights from the airport, BIA would be left with a wholly inadequate provision for car parking growth.
If the Estate had refused to grant us a renewal lease on those terms then we would have paid more. A rent of £9,000 per annum is not a large sum of money for BIA with its turnover of £11 million. I cannot say how much higher BIA would have gone. We probably would have conceded a turnover rent at the time. We were negotiating with Buzz and we could not afford to land ourselves in a situation where we would not have car parking to service our passengers.' [First witness statement, paragraphs 41 and 42]
As to rent review he stated:
'I would have expected that in the normal negotiations, there would have been a proper rent review every 5 years. BIA would have been prepared to pay market price and I would have asked people whom I knew in the aviation industry what the market price was.' [Third witness statement, from paragraph 11]
In the summer of 2003 he decided that he should obtain a lease over Field C, and negotiated one with Mr Ashworth. It was very cheap. BIA considered that the problem would be to obtain planning permission. In his third witness statement he gave his view that it was the Estate which was in a strong negotiating position rather than BIA. He also stated that the chief executive of Manchester Airport Group had told him that he thought the 2002 lease was 'the deal of the decade'.
E. The evidence of Mr Ashworth as to the negotiations and his advice, the evidence of Lord Malmesbury.
F. The evidence of the car park experts
"In looking at the negotiations for the leases, BIA demonstrably had the upper hand. It would have been unlikely in any negotiations that they would have given up the major income stream which derived from car parking (and which, in any event, was apparently crucial to the overall revenue and profitability of BIA) or otherwise increased their costs by paying additional rent. " [paragraph 3.08]
He stated that before investing in the Estate's car parking land an operator such as NCP would have required a number of safeguards such as unhindered access and guarantees as to revenue, and also information as to BIA's own intentions as to car parking.
G. The evidence of the surveyor experts
"In my opinion, the importance of protecting the Estate's longer term commercial position out-weighed the risk inherent in trying to achieve shorter term gains from the Airport. I believe the outcome achieved by the Defendants in securing the Estate's longer term commercial position in relation to the land, whilst at the same time generating an income stream in excess of that which might have been achieved from its agricultural use, represents a successful outcome under difficult circumstances. In the circumstances I am drawn to the conclusion that on balance, the Defendants were not negligent in their negotiations carried out on behalf of the Claimants in respect of the various leases negotiated with BIA."
That may be thought to be delicately expressed. He returned to the point later in his report, saying:
"I believe Strutt & Parker had to balance achieving the best level of rent against the risk BIA might walk away from the negotiations. Under difficult circumstances I believe Strutt and Parker achieved a level of rent in excess of agricultural rental values whilst at the same time protecting the Estate's longer term commercial position in relation to the Site. I believe Strutt & Parker were in a weak negotiating position and in the circumstances, I find it difficult to criticise the level of return that they achieved."
H. The duty of Strutt & Parker
"The standard of care to be applied in negligence actions against an advocate is the same as that applicable to any other skilled professional who has to work in an environment where decisions and exercises of judgment have to be made in often difficult and time constrained circumstances. It requires a plaintiff to show that the error was one which no reasonably competent member of the relevant profession would have made."
That is not intended to imply that the standard to be expected of a specialist Queen's Counsel is the same as that to be expected of a white-wigged junior. Mr Ashworth was more in the position of the specialist Queen's Counsel.
I. Breach of duty and negligence in relation to the 2000 lease, 1988 2000