Land – Development – Misrepresentation – Claimant company managing public leisure facility on behalf of defendant local authority – Agreement providing for profit share — Claimant entering creditors voluntary arrangement – Defendants reaching agreement for transfer of facility to third party with defendants providing vacant possession – Defendants serving notice on claimant – Defendants commencing possession proceedings – Deputy master giving summary judgment for defendants – Claimants seeking damages for misrepresentation – Deputy master giving summary judgment for defendants – Whether defendants representing settled intention to demolish – Whether proper disclosure having occurred – Whether defendants taking decision with proper authority – Appeal dismissed
The claimant company managed Romford Ice Arena, a public leisure facility, on behalf of the defendant local authority. The agreement provided for a profit share between the parties. There was no intention to confer exclusive possession. In 2009, the claimant entered into a company voluntary arrangement.
By 2011, the defendants had reached an agreement for the transfer of the facility to a third-party supermarket group. As part of the agreement, the defendants had to provide vacant possession of the site and served a notice on the claimant pursuant to section 25 of the Landlord and Tenant Act 1954. The notice was expressly served without prejudice to the defendants’ contention that the claimant had no tenancy of the facility and opposed any statutory renewal on grounds (b) (persistent non-payment of rent) and (f) (landlord’s intention to redevelop).
The defendants commenced possession proceedings against the claimant and claimed a money judgment for the profit share, which it alleged had never been paid. The claimant disputed the money claim, asserting that the management agreement had been amended and was a tenancy, and seeking an order that the tenancy be renewed at a nil rent. The defendants asserted that: (i) the management agreement was not a tenancy; (ii) if it was, then it was not a protected tenancy under the 1954 Act because the claimant was not in occupation for the purposes of a business carried on by it therein for the purposes of section 23 of the 1954 Act; and (iii) if there was a protected tenancy, a renewal should be refused under either ground (b) or (f).
The defendants decided to demolish the premises if necessary, if the court considered that the claimant had a protected tenancy so that the defendants were required to carry out acts including demolition to secure possession. In fact, demolition did not occur because the defendants paid the claimant £150,000 and the claimant vacated the premises. In 2013, the claimant commenced proceedings against the defendants for misrepresentation and the deputy master gave summary judgment for the defendants on the basis that they had never represented that they intended to demolish the premises whatever the circumstances.
The claimant appealed contending that the defendants had: (i) represented that they had a settled intention to demolish the premises within two months of the termination of any tenancy and had failed to do so, causing the claimant loss and damage; (ii) not fulfilled their obligations regarding disclosure; and (iii) had not taken the decision to demolish the premises with proper authority.
Held: The appeal was dismissed.
(1) On an application for summary judgment the court had to consider whether the defendant has a realistic prospect of success. A realistic defence was one that carried some degree of conviction and was more than merely arguable. In reaching its conclusion the court must not conduct a mini-trial. That did not mean that the court had to take at face value and without analysis everything that a defendant said in his statements before the court. However, in reaching its conclusion the court had to take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that could reasonably be expected to be available at trial: Federal Republic of Nigeria v Santolina Investment Corporation and others [2007] EWHC 437, Swain v Hillman [2001] 2 All ER 91, ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 and Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550 considered.
(2) Although a case might turn out at trial not to be really complicated, it did not follow that it should be decided without the fuller investigation into the facts at trial than was possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there was no obvious conflict of fact at the time of the application, where reasonable grounds existed for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case. Although there was no longer an absolute bar on obtaining summary judgment when fraud was alleged, the fact that a claim was based on fraud was a relevant factor. The risk of a finding of dishonesty might itself provide a compelling reason for allowing a case to proceed to trial: Wrexham Association Football Club Ltd v Crucialmove Ltd [2006] EWCA Civ 237 and Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63 considered.
(3) An appeal from a master was limited to a review of the decision of the lower court unless a practice direction provided otherwise (which was not the case here) or the court considered that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing: CPR 52.11(1). The appeal would be allowed where the decision of the master was wrong or unjust because of a serious procedural or other irregularity in the proceedings in the lower court: CPR 52.11(3). In considering whether an appeal should be a review or a re-hearing, the general rule was that appeals at all levels would be by way of review. A decision to hold a re-hearing would only be justified where the appeal court considered that in the circumstances of the individual appeal it was in the interests of justice to do so. In a case involving some procedural or other irregularity in the lower court it would be material for the appeal court, when considering whether to hold a re-hearing, to have regard to the fact that an appeal would be allowed where the decision of the lower court was rendered unjust because of serious procedural or other irregularity. The precise meaning and application of review and re-hearing will depend upon the circumstances of the case. The court was satisfied in the particular circumstances of this case that it was in the interests of justice to deal with the appeal on the basis of a re-hearing: Audergon v La Baguette Ltd [2002] EWCA Civ 10 applied.
(4) On the evidence, the defendants had not misrepresented that they had intended to demolish the premises whatever the circumstances but only if the claimant was found to have a protected tenancy. As regards disclosure, there had been no missing documents, nor had the defendants failed to serve and file the evidence on which they had relied. Furthermore, it was clear that the decision to demolish the premises if necessary had been taken with full, proper authority.
The claimant appeared by its representative; Mark Sefton (instructed by Hogan Lovells International LLP) appeared for the defendants.
Eileen O’Grady, barrister
Click here to download the transcript of Saturn Leisure Ltd v Havering London Borough Council
