Landlord and tenant – Assignment of lease – Injunction – Defendant holding lease of business premises – Claimant alleging assignment of lease to him – Defendant changing locks – Claimant obtaining interim injunction ordering defendant to give up possession – Defendant applying to discharge injunction, strike out claim and for possession of premises – Whether serious issue to be tried – Whether damages being adequate remedy – Application dismissed
The defendant was the tenant of premises known as 482 Great West Road, Hounslow, west London, under a lease for a term of 18 years from 25 March 2009 at a rent of £18,000 per year. The claimant claimed that from April 2015, he had been running a takeaway from that address, the defendant having agreed to assign the tenancy to him for £45,000. He claimed that he had been allowed into possession pending completion of the assignment, having paid £25,000 on account to the defendant and carried out £48,000 worth of improvements. The defendant subsequently changed to locks on the shop and the claimant applied for an injunction.
The defendant argued that the claimant had never been in occupation and someone else had been running the takeaway. He said that no agreement had ever been concluded, although there had been negotiations and solicitors had been instructed, nor had he received any money. Various emails referring to a sale “subject to contract” had been exchanged but no agreement concluded. The claimant said he had paid the rates and utility bills for the takeaway and paid sums equal to quarterly rent to the defendant. The judge found that there was a serious issue to be tried and granted an interim injunction, ordering the defendant to give up possession and enjoining him, until trial or further order, from interfering with the claimant’s quiet enjoyment.
The defendant applied to discharge the interim injunction and strike out the claimant’s claim and for an order requiring the claimant to give possession of premises back to the defendant.
Held: The application was dismissed.
(1) The court had to consider the application by applying the approach to the grant of interim injunctions laid down by the House of Lords in American Cyanamid Co v Ethicon Ltd [1975] AC 396 bearing in mind the claimants’ delay in issuing proceedings, the defendant’s greater delay in issuing the present application and the fact that the claimant was in possession of the premises and conducting an apparently profitable trade. The claimant had not issued proceedings until three months after the injunction was granted which was a factor against continuing the injunction. Further, his particulars of claim disclosed no cause of action and the so-called “sale agreement” was a document which was not dated or signed and was in extremely unusual terms which left one wondering whether it was produced later to bolster the claimant’s claim or a nullity because it had not been signed by both parties.
(2) The questions for the court were whether there was a serious issue to be tried and whether, if the application were to succeed, damages were an adequate remedy. When negotiations were conducted “subject to contract”, either party could resile at any point before completion thus precluding any claim based on proprietary estoppel. It was no part of the court’s function at the present stage of the litigation to try to resolve conflicts of evidence on affidavit as to the facts on which the claims of either party might ultimately depend nor to decide difficult questions of law which called for detailed argument and mature consideration. If the claimant’s account of the agreement to assign, his payment of £25,000 in cash, and his entry into possession and subsequent trading was accepted at trial, his claim of proprietary estoppel might be made good. In principle, damages would be an adequate remedy, being the profits which the defendant would have made if he had been in a position to trade from the premises.
(3) There was little evidence whether the claimant would be in a financial position to pay damages, other than a suggestion that he might be able to borrow £20,000 from friends and family. Similarly, there was no evidence as to the defendant’s ability to satisfy an undertaking in damages. In those circumstances the court was thrown back on the general balance of convenience. In view of the fact that the claimant was in occupation of the premises and had an active and established business, and of the defendant’s long and unexplained delay in bringing the present application, the best solution was to leave the claimant in occupation on terms that he paid monies into court sufficient to compensate the defendant for the loss of the ability to trade in the event that the claim failed. Whether the claimant succeeded or not, he would owe the defendant substantial sums, either the sum he agreed to pay on completion of the sale or his undertaking in damages.
(4) Accordingly, the injunction in the claimant’s favour would continue on the terms that he pay sums into court at the end of each month until judgment following trial; that he continued to pay the rates and utility bills; and that he paid to the defendant seven days before each rent day a sum equal to the quarter’s rent due to the landlord. Furthermore, within 14 days of the handing down of the present judgment, the claimant had to issue an application to amend his particulars of claim and for directions for disposal of the matter. In the event of breach of any of the conditions, the injunction would be discharged and the defendant at liberty to apply for an order for possession.
Arman Alam (instructed by 12 Bridge Solicitors, of Middlesex) appeared for the claimant; Ezra MacDonald (instructed by Direct Access) appeared for the defendant.
Eileen O’Grady, barrister
