Century Projects Ltd v Almacantar (Centre Point) Ltd and others

Landlord and tenant – Repairs – Injunction – Claimant holding lease of bar and restaurant at top of building – Defendant landlords proposing to carry out necessary repairs – Claimant contending that consequent obstruction of view from its premises by scaffolding amounting to breach of covenant for quiet enjoyment or derogation from grant – Whether claimant entitled to interlocutory injunction restraining erection of scaffolding and requiring claimant’s agreement to method of works – Strength of respective cases – Balance of convenience – Application dismissed The claimant held a lease of commercial premises spread over two floors, plus a viewing gallery, at the top of the 117m-high Centre Point Tower on new Oxford Street, London. The permitted use under the lease was as a high-class restaurant, bar and/or private members’ club. The defendants, as the landlords and owners of the building, proposed to carry out necessary external repairs to the load-bearing concrete façade of the building. Those parts of the building were not included in the claimant’s demise but were retained by the landlords, who had covenanted to “keep or cause to be kept the structure and external parts of the Complex and the Common Parts in a good and tenantable state of repair and maintenance”.The defendants proposed to erect scaffolding to facilitate the works, which reports from their main contractor and others identified as the only viable option. The claimant contended that this would involve both a breach of the covenant for quiet enjoyment in the lease and a derogation from grant, since it would obstruct the stunning views across London that were the unique selling point of its premises and would consequently ruin its business. It applied to the court for an interlocutory injunction to restrain the defendants from erecting scaffolding or carrying out the works without first agreeing a method to minimise disruption to the claimant.The defendants contended that the works were required by the landlords’ repairing covenant or were permitted by: (i) clause 3.1 of the lease, conferring on the landlord the “power… to erect… within the curtilage of the Complex… any building or works whatsoever and to make alterations and additions to any buildings whether such buildings alterations or additions shall or shall not affect or diminish the light or air which may now or at any time or times during the Term be enjoyed by the Tenant…”; and (ii) a reservation, contained in a schedule to the lease, of “Full rights to use and build upon or alter any property now or hereafter belonging to the Landlord or the Landlord’s tenants…”. Held: The application was dismissed. (1) There was a serious question to be tried as to whether the proposed acts of the landlords were, on the true construction of the lease, capable of either constituting a breach of the covenant for quiet enjoyment or of the implied obligation not to derogate from their grant. The terms of the lease, by themselves, were not a conclusive answer to the application and did not establish that there was no serious issue to be tried.While it might be that there was no breach of a covenant for quiet enjoyment if the only interference was with a view, and the demise did not include any right to a view, it was not clear that the covenant for quiet enjoyment and the implied obligation not to derogate from the grant were in all cases the same. The language of the authorities, referring to “frustrating the purpose” for which the land had been leased or acts that were “completely effective to stop” its continued use for the purpose for which it was let, seemed to contemplate a wider inquiry than the narrow question of whether there has been an interference in what had been demised in the sense of property rights: Southwark London Borough Council v Mills [2001] 1 AC 1; [1999] 3 EGLR 35; [1999] 45 EG 179, Chartered Trust plc v Davies (1997) 76 P&CR 396; [1997] 2 EGLR 83; [1997] 49 EG 135 and Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200 considered.The provisions of the lease relied on by the defendants were not sufficiently straightforward as to allow questions of construction to be decided in their favour on an application for an interlocutory injunction. While the repair works could, on a literal reading, be described as “works” within the curtilage of the Complex or as “alterations” permitted by the lease provisions, there were also arguments the other way. Clause 3.1 of the lease was a fairly standard sort clause introduced into leases to act as a consent under section 3 of the Prescription Act 1832 and hence prevent the tenant acquiring the right to light over the adjoining land of its own landlord so as to prevent the landlord from developing such land. Given that its primary purpose was to permit development on adjoining land, it was doubtful whether the reasonable objective observer would understand it as saying anything about the right of a landlord to carry out works to the exterior of the very building demised. The clause raised a point of construction of some difficulty, which was unsuitable for determination after the short argument available on the instant application. It was similarly doubtful whether cleaning and repairing the building amounted to either using it or building on it within the meaning of the reservation in the schedule.The defendants were on stronger grounds in relation to the obligation to repair. It was common ground that the repairs were necessary and that the defendants had a right and a duty to carry them out. Although the landlords’ duty and right to do repairs did not give them carte blanche to carry them out in whatever way they liked, regardless of the impact on the tenant’s business, neither could the tenant say that, having given the covenant for quiet enjoyment, the landlords could not carry out any work unless it was shown to cause the least possible interference with the tenant’s business. Both positions were too extreme. Instead, where a landlord had let premises for a particular purpose and the lease contained both a covenant for quiet enjoyment and an obligation or right on the landlord to do repairs, neither provision trumped the other. The two provisions fit together by entitling the landlord to carry out work provided it acted reasonably in the exercise of its right: Goldmile Properties Ltd v Lechouritis [2003] EWCA Civ 49; [2003] 1 EGLR 60; [2003] 15 EG 143 considered. The defendants, as landlords, appeared to have thoroughly investigated the question of whether cradles were a suitable alternative to scaffolding and concluded with the benefit of professional advice that they were not. In those these circumstances, the claimant faced an uphill task in establishing that the defendants, in following the consistent advice of their contractors, civil engineers and structural engineers, would be acting in breach of covenant. While the court could not resolve the conflicts of evidence at the present stage and therefore could not conclude that there was no serious issue to be tried, the difficulties in the claimant’s case were highly relevant to the appropriateness of relief.(4) The court was sceptical of the claimant’s evidence that the lack of a view would have a devastating effect on its business but there was, at least, a significant risk of serious damage to the claimant’s business. Although the claimant’s potential loss, in the event that the works went ahead but it turned out at trial that the defendants in breach of covenant, could in principle be compensated by an award of damages, there would be a risk of some uncompensatable disadvantage in the possible destruction of what was currently a flourishing enterprise. However, looked at from the other side, the defendants would not be adequately compensated by the claimant’s cross-undertaking in damages in the event that an injunction were granted but the defendants then succeeded at trial in establishing their right to carry out the repairs using scaffolding. The defendants’ evidence was that the likely three-month delay that a trial would result in losses of £3.75m, related to the knock-on impact of a delayed start of the main refurbishment works to the building. Although that evidence had not been tested, there was, at the lowest, a substantial risk that the defendants’ losses might be of that order. The claimant’s management accounts for previous years gave the court no confidence that it was able to meet such losses under its cross-undertaking. While that did not, in itself, preclude the grant of an injunction, the balance of convenience lay in favour of refusing it.The relevant factors pointed all one way. The defendants appeared on the evidence to have a disproportionately stronger case than the claimant. The effect of granting the injunctions sought would be to hand over to the claimant the right to dictate to the defendants what works were to be carried out and, effectively, to force the use of cradles. It was not the practice of the court to grant mandatory injunctions requiring work to be done in a particular way and, although this would not be a mandatory injunction in form, its practical effect would not be far different. The balance of convenience pointed inevitably to refusing an injunction and leaving the defendants to proceed with the contract as they have been advised to do, in the full knowledge that they would be liable for damages if they committed a breach of covenant thereby: American Cyanamid Co v Ethicon [1975] AC 396 applied. Jonathan Gaunt QC and Jonathan Davey (instructed by Enyo Law LLP) appeared for the claimant; Jonathan Seitler QC and Jonathan Chew (instructed by Berwin Leighton Paisner LLP) appeared for the respondents. Sally Dobson, barrister