Tenancy of kiosk in underground station – Business dependent upon passenger use of particular exit – Landlord confining use to few hours each day – Whether landlord derogating from grant – Whether implied obligation displaced by express reservation in lease – Damages – Tenant renting second kiosk in different part of station – Whether landlord to be credited with extra business won by second kiosk – Whether alternative claim permissible for expenditure wasted as a result of entering into transaction
The defendant owned and operated Goodge Street underground station on the west side of Tottenham Court Road, London. The station possessed two areas for passenger use at street level: the north area and the south area. The former, which included the booking hall, was continuously used as both an entrance and exit. Automatic barriers ensured that the latter could only be used as an exit (the southern exit). Passengers’ ability to use the southern exit depended upon whether the defendant chose to operate one or both of the sliding doors fitted to the lifts rising from the platforms. On 21 January 1991 the claimants took a five-year lease of a kiosk in the south area (the southern kiosk) for the purpose of selling refreshments. On the same date they took a similar lease of a kiosk in the north area to be run as a bureau de change. Both parties accepted at the time that the southern kiosk would depend almost entirely for its business upon passengers leaving the station via the southern exit. Clause 5.6 of the lease declared that the claimant would “not be entitled to raise any objection in respect of the construction, working, or carrying on by the Company of its present or any future undertaking or works… and the Company shall not be liable for any damage… which may arise in consequence of… its present or any future undertaking of works”.
In February 1994 the claimants ceased to trade from the southern kiosk, allegedly because of the defendant’s practice of closing off the southern exit for a large proportion of the period that the station was open. Complaining that they had suffered a trading loss in excess of £130,000, and relying, inter alia, upon Aldin v Latimer Clark Muirhead & Co [1894] 2 Ch 437 and Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200, the claimants brought an action contending that the adoption of that practice amounted to a breach by the defendant of its implied covenant not to derogate from its grant. The judge, having considered the correspondence between the parties and the manner in which the station was operated over the two years of negotiation prior to the grant of the leases, found as a fact that it was contemplated by the parties that the southern exit would be functional during the time that the station was open, albeit subject to possible closure in the evenings and at weekends.
Held: The defendant was liable, but not for the full amount claimed.
What would otherwise have been a derogation from grant could not be justified by the reference to “undertaking” in clause 5.6. That clause could not be construed as giving the defendant carte blanche to manage its undertaking, irrespective of the damage that might be caused to the business at the kiosk, without rendering the clause void as being repugnant to “the irreducible minimum” implicit in the grant itself: see per Hart J in Petra Investments Ltd v Jeffrey Rogers plc [2000] L&TR 451 at p471. A relatively strict approach to interpretation was appropriate because the purpose of the clause was to cut down the right granted. Further, as a matter of language, there was no reason why the restriction against objecting should go beyond the nature of the undertaking and its unavoidable consequences. The clause did not refer to the way that the station was operated, let alone changes in the manner of operation.
While the court had not been asked at this stage to assess damages, there were two points to be noted on quantum. First, there was no reason why credit should not be given to the defendant for any extra business enjoyed by the bureau de change as a result of the very event that foreseeably caused damage to the southern kiosk; cf the independent transactions held to be res inter alios acta in Haviland v Long [1952] 2 QB 80 and Hussey v Eels [1990] 1 EGLR 215. Second, such a requirement could not be avoided by putting the claim on the “no transaction” basis, as allowed, for example, in Lloyd v Stanbury [1971] 1 WLR 535. The case fell well outside the limited category where the claimant could, instead of claiming the normal measure for breach of contract, seek to recover the expenditure wasted as a result of entering into the contract: see McGregor on Damages (16th ed) paras 47-52, Chitty on Contracts (28th ed) vol 1 para 27.065, and the observations of Ackner LJ in C&P Haulage v Middleton [1983] 1 WLR 1461 at pp1467-8.
Catherine Taskis (instructed by Landau Zeffertt Dresden) appeared for the claimants; Richard Harrison (instructed by the solicitor to London Underground Ltd) appeared for the defendant.
Alan Cooklin, barrister
