Commercial lease expiring 2003 – Tenant local authority in breach of interior repairing covenant but offering undertaking to repair at end of term – Lease permitting landlord to enter and effect repairs – Tenant apprehending grave disruption – Landlord seeking to restrain tenant from impeding entry – Whether damages an adequate remedy in circumstances – Injunction refused – Damages awarded under section 50 Supreme Court Act 1981
A local authority (the council) occupied four floors of an office building in King Street, Hammersmith, under a 10-year lease expressed to expire on 24 March 2003. The duty to repair the interior, including heating and electrical installations, lay upon the council. Clause 3(11) of the lease declared that, in the event of default by the council, it would be lawful for the landlord to enter and carry out such repair, and charge the council with the reasonable cost of so doing. Schedule 3 to the lease reserved in favour of the landlord an express right of entry for the same purpose. In earlier litigation between the parties (see [1998] 3 EGLR 35), relating to a seriously defective under-floor heating system, it was established that the council could not discharge their repairing obligation by providing wall-mounted heaters. Subsequently the parties agreed that the defects affecting floors 1-3 could and should be attended to by repairing each circuit separately, a process that would not cause undue disruption. However the council refused to extend that operation to the ground floor, having installed on it a mainframe computer together with essential cooling apparatus. Nor was it possible for the council to move the computer (as well as 13 data lines) elsewhere without suffering serious disruption and incurring heavy expense. The council offered an undertaking to perform all necessary works at the end of the lease and to provide, in the meantime, by way of security, a deposit sufficient to cover the estimated cost. The landlord refused the offer, eventually giving as its reasons the possibility of the council renewing the lease, and the adverse effect of the disrepair on the value of the building.
Faced with the council’s resolve that the ground-floor heating installation should remain undisturbed for the rest of the lease, the landlord sought an injunction to restrain the council from obstructing or otherwise interfering with the exercise by the landlord of the rights conferred by clause (11) and the third schedule to the lease. The council invited the court to exercise its discretion under section of 50 of the Supreme Court Act 1981 (historically Lord Cairns’ Act 1858) to make an award of damages in lieu of an injunction. The landlord, relying on a celebrated dictum of Lord Cairns in Doherty v Allman (1878) 3 App Cas 709 at p719, contended that an injunction to enforce a negative stipulation should issue as of course, the court having little or no discretion in the matter.
Held: Injunction refused: order for damages to be assessed.
1. The distinction between a positive and a negative obligation was frequently elusive: compare a promise not to impede entry by the landlord with a promise to permit the same. The dictum relied on by the landlord had now to be read in the light of modern practice, which for example did not discourage the making of interlocutory mandatory awards where appropriate. While the court would normally enforce an undertaking freely given, a monetary award should be made where, on the particular facts of the case, specific enforcement would operate oppressively on the defendant: see Jaggard v Sawyer [1995] 1 EGLR 146.
2. Applying the guidelines to be found in Shelfer v City of London Electric Lighting Co Ltd [1895] 1 ChD 287, it was plain that the reasons advanced by the landlord for wishing to effect the repairs did not stand up to examination. There was no evidence that the landlord intended to sell. Moreover, given the standing of the council as tenant and the undertakings they had offered, it would be surprising if a prospective buyer of the landlord’s interest would be dissuaded by the state of repair of the ground floor. Nor had the landlord attempted to quantify its loss. By contrast, the damage apprehended by the council, if the order were to be granted, was quite disproportionate.
Kim Lewison QC (instructed by the solicitor to Hammersmith and Fulham London Borough Council) appeared for the claimants; John Cherryman QC and John L Davies (instructed by the solicitor to Creston plc) appeared for the defendant.
Alan Cooklin, barrister
