Landlord and Tenant Act 1987 – Tenants failing to assert right of pre-emption against transferee of block of flats – Tenants taking fresh proceedings against transferee and others alleging conspiracy – Whether claim disclosed an arguable cause of action – whether claim in any event an abuse of the process of the court – Claim struck out
In 1992 the first defendant (TWD) became the sole beneficial owner of a large block of flats in Marylebone Road, London, legal title to which was held by its holding company, the second defendant (TWP). In early 1993 TWD agreed in principle to sell the block to the third defendant (F Ltd) for £15.75m, and further agreed to effect the transaction in accordance with a scheme designed to negative any claim by the tenants to a right of first refusal under the Landlord and Tenant Act 1987. One of the steps to be taken under the scheme was the sale and transfer of the block to the fourth defendant (H Ltd), a wholly-owned subsidiary of TWD. All steps were taken on 25 March 1993.
In May 1993 solicitors for the claimant tenants served a notice on H Ltd, under section 11 of the 1987 Act, requiring particulars of the disposal, to which H Ltd replied two days later. By a letter of December 1993, the tenants’ solicitors made various complaints about the reply.
In October 1996 the tenants applied to the court under section 19 of the Act for an order that H Ltd should make good its default in complying with the section 11 notice. By that time the defendants had spent over £19m on refurbishing the block and promoting the sale of the flats. The application was dismissed at first instance. Before the Court of Appeal (see Michaels) v Harley House (Marylebone) Ltd [1998] EGCS 159) the tenants successfully maintained that the scheme had failed to achieve its objective and that the response of H Ltd to the tenants’ notice had failed to convey the information required by section 11(1) of the Act. The court never the less dismissed the appeal, having concluded that the delay on the tenants’ part afforded strong grounds against making an order under the discretionary provisions of section 19.
In February 1999 the tenants brought a claim for damages against the four defendants, contending that their concerted refusal to comply with the section 11 notice amounted to a conspiracy to injure by unlawful means. The defendants applied to have the claim struck out on the ground, inter alia, that no such action lay unless at least one of the alleged conspirators would have been liable if sued alone. The claimants argued that it was sufficient to show that the means employed were unlawful.
Held: The claim should be struck out.
1. Of the two forms of civil conspiracy known to the law, the one at issue was a “wrongful means conspiracy”, there being no allegation that the defendants’ predominant purpose was to cause injury to the claimants: compare the “conspiracy to injure” considered by the House of Lords in Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173. The claimants had rightly accepted that, in view of the express provision of a remedy in section 19 of the 1987 Act, a failure to observe the requirements of section 11 could not have been intended to give rise to a damages claim for breach of statutory duty: see per Lord Diplock in Lonrho at p185 and per Lord Simonds in Cutler v Wandsworth Stadium Ltd [1949] AC 398 at p407. It followed that if the claimants’ argument was correct, they would be able to sidestep the legislative intent not to furnish civil causes of action.
2. Such a conclusion was to be rejected as being inconsistent with the reasoning in Lonrho and Cutler: see also RCA Corp v Pollard [1983] 1 Ch 135. The court was, accordingly, not required to apply dicta that would otherwise have supported the claimants’ case: Island Records Ltd v Corkindale [1978] Ch 122; Williams v Department of Transport unreported 3 December 1993; R v Chief Constable of Devon and Cornwall, ex parte Central Electricity Generating Board [1982] QB 458 considered.
3. As the same issues were being litigated on more than one occasion, it would also have been appropriate, in the circumstances, to strike out the claim as being an abuse of the process of the court: see Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581, applying Henderson v Henderson (1843) 3 Hare 100.
John Mowbray QC, Edward Cousins and Tom Weeks (instructed by Merriman White) appeared for the claimants; John Martin QC and Jonathan Seitler (instructed by CMS Cameron McKenna) appeared for the first and second defendants; Kim Lewison QC and Anthony Tanney (instructed by Titmuss Sainer Dechert) appeared for the third and fourth defendants.
Alan Cooklin, barrister