RSC Ord 14 — Application by freehold owners of land for summary judgment in relation to part — Whether defendants had put forward any arguable defence which merited a trial — The plaintiffs had acquired the land (which was registered) in 1986 pursuant to a contract which provided for them to obtain vacant possession — There was already on the land an advertising station, consisting of panels for the exhibition of posters, which had been set up under an agreement made in 1980 between predecessors of the plaintiffs and an advertising company whose rights had become vested in the defendants — The question in these summary proceedings was whether the defendants could show some claim of right, by the grant of a lease or otherwise, which could defeat the plaintiffs’ prima facie entitlement to full possession of their own property
possibly arguable defences were put forward on behalf of the defendants: first,
that they had a lease; second, that in the circumstances the conscience of the
plaintiffs had been affected by a constructive trust; third, that
correspondence in 1988 concerning the payment of rent for the advertising
station had resulted in a contractual arrangement giving the defendants a right
to resist dispossession — The judge decided that no arguable defence had been
shown under any of these three headings — He accordingly granted a declaration
that the defendants were not entitled to retain their advertising station on
the plaintiffs’ land
The following cases
are referred to in this report.
Ashburn
Anstalt v Arnold (No 2) [1988] 2 WLR 706;
[1988] 2 All ER 147; (1988) 55 P&CR 137; [1988] 1 EGLR 64; [1988] 23 EG
128, CA
Provincial
Bill Posting Co v Low Moor Iron Co [1909] 2
KB 344
Shell-Mex
& BP Ltd v Manchester Garages Ltd [1971]
1 WLR 612; [1971] 1 All ER 841; [1971] EGD 303; (1971) 218 EG 285, CA
Taylor v Pendleton Overseers (1887) 19 QB
Wilson v Taverner [1901] 1 Ch 578
This was an
application by the plaintiffs, Kewal Investments Ltd, for summary judgment for
a declaration under RSC Ord 14 in respect of a part of land at Commercial Road,
London E1, of which they were the registered proprietors. The defendants
claimed the right to maintain their advertising station on the land.
Kim Lewison
(instructed by Ingledew Brown Bennison & Garrett) appeared on behalf of the
plaintiffs; Anthony Trace (instructed by Alsop Wilkinson) represented the
defendants.
Giving
judgment, MR THOMAS MORISON QC said: I am going to deliver an extempore
judgment in this matter and the parties will appreciate that this judgment must
be read subject to that constraint. I have been entertained today with
interesting, compelling and well-presented arguments on both sides on a motion
by order which comes before me under the provisions of Ord 14. The facts giving
rise to this case may be very shortly stated.
First, the
plaintiffs are freehold owners of land at Commercial Road, London, which they
acquired by a transfer executed in about March 1986. The plaintiffs’ interest
in the land was registered on August 24 1987. They contracted to acquire vacant
possession by a contract entered into between themselves and a Mr Ratin Singh.
Second, in
about 1980, by a contract in writing, the Greater London Council granted to an
advertising company the right to erect a hoarding on part of that land and to
create what was referred to in the document, I think, as an advertising
station.
Third, at some
stage the defendants ‘took over’ the right granted to that advertising company
by the GLC, and between August 1985 and June 1987 the defendants paid to Mr
Ratin Singh sums calculated in accordance with the provisions of such
agreement.
Fourth, the
whole of the advertising station is within the boundary of the plaintiffs’ land
and is shown on photographs which are exhibited in the evidence.
Fifth, on
about January 22 1988 the plaintiffs wrote a letter to the defendants saying
that they understood that the defendants were already using part of the site
for advertising. They said that they had not received any payment since they
bought the property in March 1986: ‘Would you please investigate this matter.
We are, however, interested in any offer you have to make for advertising
around the whole site.’
In response to
that letter the defendants replied in a document dated February 3 1988, marked
‘without prejudice’ and ‘subject to contract’, saying:
I have made
enquiries of our rental department and have learned that the rent for this site
was paid to Mr Ratin Singh until the end of June 1987. I have now made
arrangements for you to be paid until March 25 1988, and unless I hear from you
to the contrary, you will receive a cheque on every Quarter Day until such time
as the site is developed. On another note, if you are interested in offering me
the adjacent site for a minimum of twelve months I could build a further three
panels and increase the rental to £2,000 per annum in total for the four
panels. Please think about this and let me know.
Further to
that letter the defendants sent to the plaintiffs a cheque for £291.81, being
the rental due on the above — that is the advertising site — for the period
from July 1 1987 to March 24 1988. On the affidavit evidence it is said that
that rental cheque was paid into the plaintiffs’ bank in error, in the absence
abroad of the relevant senior officer, and in due time in July, when the
payment had been discovered, it was sent back to the defendants, and since then
the parties have been in disagreement about their respective positions.
It is alleged
by the plaintiffs that the defendants have no right to continue to keep their
advertising hoardings on the plaintiffs’ land, and the defendants challenge
that contention. To be more precise, the way the case is presented to me is
that the plaintiffs have a prima facie right to possession of their own
property and the defendants can defeat that right only by showing that they
have some right, which binds the plaintiffs, to maintain the hoardings on the
plaintiffs’ land.
The way the
argument goes for the plaintiffs is that the agreement to which I have referred
in 1980 created a licence. If it created a licence, then when the land was sold
to the plaintiffs the licence was not binding upon the plaintiffs unless the
principle of constructive trust were to apply. If, on the other hand, the
agreement in 1980 created a lease, then it is accepted that the defendants
would have a good claim to continue their lease against the plaintiffs under
the Land Registration Act. So, the first issue between the parties is
whether there is an arguable case shown to me by the defendants that they are
lessees as opposed to mere licensees.
I therefore
turn to that issue and, as it seems to me, the correct approach is to construe
the rights and obligations of the parties as best one can from the document in
question, ignoring any labels that the parties have used as a description of
their respective interests. One should carry out this construction, so as to
ascertain the true intention of the parties, unconfused by any labelling.
In the
agreement in question — which has been exhibited in the evidence — the GLC
granted the original advertising contractors permission to form an advertising
station consisting of five 16-sheet panels at the site in question,
‘hereinafter called the advertising station’, and to exhibit advertising
posters on it, and to have access to the advertising station at all reasonable
times for the purpose of inspecting, maintaining and repairing the said
advertising station and of changing or renewing the posters thereon. And it was
provided in clause 2 that by way of acknowledgement of the licence and
permission the sum of £400 per annum would be payable in advance on the first
day of every month from a date in August 1978. There was an obligation upon the
advertising company to keep the station in a clean and tidy condition and free
from litter; to comply with the provisions of the Town and Country Planning
(Control of Advertisements) Regulations; and to pay all outgoings whatsoever which
may be demanded in respect of the station; to keep covered the whole of the
surface of the display panels excluding margins; and not to part with their
interest in the agreement or any part thereof to any person or company. The
contractors are obliged to remove from the advertising station any advertising
matter to which reasonable objection is taken by the GLC within 24 hours of
receiving from the council notice in writing of such objection. Then there is a
provision relating to building operations or development work being carried out
by the council on or near to the advertising station during the continuance of
the agreement and a requirement that the advertising company shall, at its own
expense, remove such parts of the advertising station or make alterations, and
so forth, as may be required. Then in clause 5 it is provided that the
agreement may be determined by either party giving to the other one month’s
notice in writing to expire at any time.
It is
contended by counsel for the plaintiffs that if one looks at that agreement and
construes it correctly, what it amounts to is no more than permission granted
to the advertising company to place their own chattel, namely the advertising
hoarding, on the land in question, but that it carries no right to exclusive
possession of any part of the land, and accordingly this cannot be, so he
submitted, a tenancy.
If that be
right, and if I am satisfied that it is unarguably the case, then the next
point to consider would be whether there is a constructive trust binding on the
conscience of the plaintiffs.
The defendants
argued that this is not an appropriate case for Ord 14. Mr Lewison, for the
plaintiffs, draws my attention to the Shell-Mex* case and points out to
me that there has been — as indeed there has — sophisticated and fairly
complicated legal argument, and where there is a point of law requiring such
argument he says that it would be inappropriate for the court to give judgment
unless the court can see at once that the point is misconceived.
*Editor’s
note: This refers to Shell-Mex & BP Ltd v Manchester Garages Ltd
[1971] 1 All ER 841.
On the
question as to whether the document in question creates a lease or licence,
counsel for the defendants drew my attention to an authority decided in 1887,
the Taylor case, reported in 19 QBD 288 at p 293.† There, the court was prepared to construe
two agreements relating to advertising as creating a leasehold interest in the
land. That case was followed subsequently, in terms of chronology, by a case,
which came before Joyce J sitting as a puisne judge in 1901, called Wilson.** It does not appear that the Taylor
case was cited to Joyce J, but in Wilson the facts appear to me to be,
broadly speaking, almost indistinguishable from the facts of the present case.
In that case Joyce J decided that the agreement giving rise to the right to put
up the advertising hoardings did not constitute a tenancy because it created no
interest in land. That case was followed by Provincial Bill-Posting Co v
Low Moor Iron Co [1909] 2 KB 344 in the Court of Appeal in which Taylor
was cited. It was also a case relating to advertising hoardings. It seems to me
that the approach in the Court of Appeal, which led to the conclusion that
there was no tenancy but a licence, was one which I should follow. I consider
that the Taylor case was decided on its own special facts and is
distinguishable from the facts in the present case.
† Editor’s
note: This refers to Taylor v Pendleton Overseers (1887) 19 QBD
288.
**Editor’s
note: This refers to Wilson v Taverner [1901] 1 Ch 578.
Accordingly,
just looking at the matter overall, my initial reaction was that the contention
of the defendants in this case that the erection of an advertising hoarding on
someone else’s land gave exclusive possession to the advertising company so as
to create a tenancy is misconceived and unarguable. This initial view is, I
think, confirmed by the authorities, save for the case of Taylor which
is distinguishable. My conclusion, therefore, is that, although this is an Ord
14 application, I am satisfied on the first issue that there is no arguable
case for the contention that the 1980 agreement created a leasehold or any
interest in land such as to bind the plaintiffs.
I therefore
turn to the issue as to whether there is an arguable defence that none the less
the agreement is binding on the conscience of the plaintiffs under the doctrine
of constructive trust, which has been elucidated in a recent Court of Appeal
decision in Ashburn Anstalt v Arnold [1988] 2 WLR 706†† . The
test which emerges from that authority, as I read it, is whether the owner of
the property has so conducted himself that it would be inequitable to allow him
to deny the claimant an interest in the property, and in deciding whether it
would be inequitable one must examine the conscience of the estate owner so
that one can decide whether as a matter of justice a trust should be imposed on
him. It is also apparent from the decision in that case that notice of the
alleged licence is not enough. The plaintiffs in this case accept, as indeed I
believe they must, that whatever the relevant date is for determining whether
the estate owner has so conducted himself, the plaintiffs knew that there was
on the land the defendants’ advertising hoarding which belonged to, and was
operated by, the defendants. However, in all the examples that were given by
the learned judges in the Court of Appeal in the Ashburn case of
situations where a constructive trust does bind the conscience, it is
noteworthy that the estate owners in question acquired the relevant property
subject to the interest which the other party was claiming operated against
them. Here the plaintiffs acquired vacant possession of the property. This is
not a case where they have acquired a property subject to a licence which they
have then sought to go behind.
†† Editor’s
note: Also reported at [1988] 1 EGLR 64; [1988] 23 EG 128.
Accordingly,
in my judgment, there are no reasons whatever, even at this preliminary stage,
for concluding that there is an arguable defence that the plaintiffs are bound
by a constructive trust.
So I turn now
to the next matter which has been canvassed before me, which is whether the
defendants have shown that they have an arguable defence, on the basis that by
reason of the events which took place in 1988, to which I have already
referred, there was created a contractual relationship of some kind between the
plaintiffs and the defendants, by virtue of the correspondence in 1988 and
thereafter the payment of rent and subsequent return of the rental instalment.
In my
judgment, it is plain that it is simply not possible on that material to spell
out any kind of contract by conduct and I think the facts speak for themselves.
In those circumstances, it does not fall for me to consider whether, if some
kind of contract had been created between the parties by reason of the events
to which I have just referred, such arrangement had been terminated.
In case this
matter goes further, I ought, perhaps, to indicate my view on that issue. I do
not think it realistic to treat any new arrangement, on the assumption that
such a new arrangement was arrived at, as being simply for a period of time
limited to the period covered by the payment in the way which has been
suggested in argument by the plaintiffs. Accordingly, in my view, some form of
notice was required. I would not have been satisfied that the letters of July
21 1988, September 14 1988 and January 16 1989 were sufficient to terminate any
such arrangement. In so far as the letter of February 20 1989 is concerned,
counsel for the defendants pointed out, and I agree, that that letter was served
after these proceedings had commenced and, accordingly, could not be relied
upon.
There is one
matter to which I should have referred, although I think it does not carry the
matter very much further forward. On the evidence it would appear that part of
the hoarding lies within a fenced-in area which is locked at night and policed
regularly by the plaintiffs’ attendant, the area in question being a car park.
It is suggested that the locking of the gates so that the defendants may not be
able to get at the hoarding is inconsistent with the defendants being
granted any kind of exclusive possession of any part of the plaintiffs’ land. I
see the force of that contention, but it follows from what I have already said
that I have reached the view independently, by construction of the licence
document to which I have referred, that in any event the defendants have not
been granted exclusive possession of any part of the plaintiffs’ land.
In those
circumstances, applying the test required of me under Ord 14, I am satisfied
that there is no arguable defence to the plaintiffs’ claim for a declaration,
and I understand that if I grant the declaration for which the plaintiffs ask
there will be no requirement for this court to make any mandatory order that
the advertising hoardings should be removed. Accordingly, I will confine this
judgment to the granting of an appropriate declaration, the wording of which I
hope will be agreed between the parties.
I understand
that this matter is of importance to the defendants, and I would be grateful
for an opportunity to look at the draft of my judgment which is going to be
presented to the Court of Appeal because, as I have indicated, this is an
extempore judgment and I hope I shall be forgiven if I try to improve it, where
appropriate, by trying to remove some of the more obvious discrepancies in it.
An
appropriate declaration was granted in favour of the plaintiffs with costs.
