MR JUSTICE MORGAN:
Introduction
- This case concerns the rights and obligations of the various parties in relation to the provision of car parking on a site at Heathrow Airport. The site is just north of the Southern Perimeter Road, on the corner of Southampton Road and Sealand Road. For reasons which will become apparent, this land has been referred to as "the Heathrow Express Site" but I will refer to it more simply as "the Site". The Site is roughly rectangular but, to the north west corner of the main area, there is a part of the Site which projects further to the north. This projecting area has been referred to at the trial, somewhat inelegantly, as "the Stub".
- The rights and obligations which are in issue arise under a series of agreements or leases and in particular an agreement entered into in 1990 and leases entered into in 2000 and 2005. In brief outline, the Claimants and the First Defendant, Heathrow Airport Ltd ("HAL") wish to see a car park created on part of the Site so as to provide at least 280 car parking spaces. The relevant part of the Site excludes the Stub. Both the Claimants and HAL contend that the Second Defendant, AP16 Ltd ("AP16") should provide that number of spaces on the Site excluding the Stub. That part of the Site, excluding the Stub, was demised by HAL to AP16 by a lease granted in 2005.
- The Claimants and HAL wish to bring about the creation of 280 spaces on the Site excluding the Stub so that those spaces can be made available, free of charge, to the lessee of land and buildings known as the Catering Base, which is contiguous to the Site. The Claimants and HAL contend that AP16 is obliged to create a car park on the Site excluding the Stub and then make that car park available free of charge as described. AP16 resists this claim. It says that any obligation on it to create a car park on the Site, excluding the Stub, has not yet arisen. That is the principal dispute. If I find against AP16 on that point, there is then a question as to what order the court should make against AP16. The Claimants also seek various orders against HAL.
- I will set out the relevant history and the various agreements entered into between 1990 and 2005 before identifying the many issues which have arisen and explaining how I will approach the resolution of those issues.
The Heathrow Express Railway Bill
- Prior to 25 May 1990, the Heathrow Express Railway Bill had been introduced into Parliament. The purpose of the Bill was to empower HAL and the British Railways Board to construct a railway from Paddington Station in London to Heathrow Airport and, in connection therewith, to execute works and to purchase or to use land and to confer further powers on HAL and on the Board. The Bill was later enacted as the Heathrow Express Railway Act 1991 and received Royal Assent on 9 May 1991. I will refer later in this judgment to the relevant terms of the 1991 Act.
The 1990 Agreement
- On 25 May 1990, HAL and British Airways plc ("BA") entered into an agreement for lease ("the 1990 Agreement") in relation to the Catering Base. The agreement provided that references to "Heathrow Airport Ltd" included the successors and assigns of HAL. By way of contrast, there was no provision whereby references to "British Airways plc" would include its successors and assigns. This contrast was in accordance with clause 16 of the agreement which provided that BA was not at liberty to assign or part with or deal in any way whatsoever with the benefit of the agreement. In other words, the agreement was personal to BA.
- Under the agreement, BA was to carry out certain works and HAL was to carry out other works on the Catering Base and HAL was to grant a lease of the Catering Base to BA in accordance with a draft lease annexed to the agreement; the lease which was later granted on 17 January 1994 was in accordance with the draft lease.
- Clause 1 of the 1990 Agreement contained a number of relevant definitions. Car Park Licence was defined as a licence for BA to park private motor vehicles in the places and in the manner set out in the Third Schedule to the 1990 Agreement. Heathrow Express Site was defined as all of the land shown edged blue on Plan 2 attached to the 1990 Agreement; this is the land I refer to as "the Site". A plan attached to the 1990 Agreement shows a proposed entrance and exit to a car park on the Site and the following words on that plan refer to the Site as follows: "BA Catering Facility staff car park (approx. 280 spaces)".
- By clause 12.2.1, HAL permitted BA "and any other person or persons falling within the definition of Permitted Occupiers as set out in the Lease", following practical completion of the whole of the works to be carried out under the 1990 Agreement and until the grant of the Lease to BA, to enter and remain upon the Catering Base as a licensee. By clause 12.2.2, from the date of practical completion of the works to be carried out under the 1990 Agreement:
"[BA] (and any other person or persons as aforesaid) shall (until terminated pursuant to the provisions of clause 29) have licence to use the car park on the terms of the Car Park Licence and [BA] and such others shall comply with the terms of the Car Park Licence."
I will refer to the terms of Car Park Licence below. It should be noted that the Car Park Licence did not grant rights to park on the Site; it provided for alternative rights of parking.
- Clause 12 of the 1990 Agreement referred to the definition of Permitted Occupiers in the draft lease annexed to the agreement. This definition included any company or companies which were members of the same group of companies within the meaning of section 42 of the Landlord and Tenant Act 1954, as amended and also one named company appointed by the Tenant under the lease for the purposes of managing and operating the catering operations on the demised premises, or a replacement of that named company.
- Clause 19 provided that, notwithstanding the grant of the lease pursuant to the 1990 Agreement, the provisions of that agreement should continue in full force and effect to the extent that they remained to be implemented and performed.
- By clause 27.1, it was provided that no modification alteration or waiver of any of the provisions of the agreement should be effective unless the same were in writing and signed by the party against whom the enforcement of such modification, alteration or waiver was sought. By clause 27.3, it was provided that the failure of any party at any time to require performance by any other party of any provision of the agreement should in no way affect the right of such party to require performance of that provision.
- Clause 29 provided:
"29. HEATHROW EXPRESS RAILWAY
29.1 In this clause "construction of the car park" shall mean the preparation surfacing layout marking fencing lighting and landscaping of the Heathrow Express Site as a car park for use for parking purposes in a good proper and workmanlike manner using suitable materials of their several kinds in accordance with the specification and layout drawings referred to in the Second Schedule.
29.2 At the date of this Agreement there is before Parliament the Heathrow Express Railway Bill ("the Bill") which if the Bill shall pass into law will become an Act of Parliament ("the Act")
29.3 Once HAL reasonably considers that the Bill will not be passed into law HAL shall at its own cost as soon as practicable commence to carry out and diligently proceed with and complete to the reasonable satisfaction of [BA] the construction of the car park on the Heathrow Express Site and upon practical completion of such construction:-
29.3.1 HAL shall give written notice thereof to [BA]
29.3.2 if the Lease shall not have been completed then
29.3.2.1 for the purposes of Clause 12.2.1 the Property shall be deemed to include the Heathrow Express Site and upon the completion of the Lease the Demised Premises (and the red edging on the plan to be annexed thereto) shall include the Heathrow Express Site and
29.3.2.2 Subject to delivery of full vacant possession to [BA] under Clause 29.3.2.1 the Car Park Licence shall automatically cease and determine
29.3.3 if the Lease shall have been completed:-
29.3.3.1 28 days after the giving of such notice under Clause 29.3.1 HAL shall grant and [BA] shall take a Lease (with full vacant possession) of the Heathrow Express Site for a term expiring at the same time as the term of the Lease and at the rent of £1 per annum but otherwise on the same terms and conditions (mutatis mutandis) as the Lease save that the premises demised by the lease shall be used for car parking in connection with the use under the Lease and the lease shall not contain any provision as to the review of rent and that the provision for re-entry by the landlord under the lease shall be restricted to circumstances only whereby the landlord has exercised its rights of re-entry under the terms of the Lease and
29.3.3.2 (subject always to the delivery of full vacant possession to [BA] under Clause 29.3.3.1) the Car Park Licence shall automatically cease and determine
29.4 If the Bill shall be passed into law HAL shall (subject always to HAL's obligations under Clause 3.30.2 of the Lease which shall be deemed to apply whether or not the Lease has been granted) be entitled to utilise the Heathrow Express Site for the purposes authorised by the Act but as soon as practicable in the circumstances upon HAL ceasing to require to utilise the Heathrow Express Site for such purposes HAL shall at its own cost commence to carry out and diligently proceed with and complete the construction of the car park on the Heathrow Express Site and upon practical completion of such construction:-
29.4.1 HAL shall give written notice thereof to [BA]
29.4.2 if the Lease shall have been completed the provisions of clause 29.3.3 shall apply but
29.4.3 if the Lease shall not have been completed the provisions of clause 29.3.2 shall apply
29.5 Notwithstanding any of the foregoing provisions of this clause 29 HAL shall give [BA] not less than ten Working days notice in writing of the time when HAL (or HAL's agent) proposes that inspection should be made for the purposes of issuing the statement/certificate of practical completion (or such other statement/certificate being equivalent thereto) of the completion of the construction of the car park and shall afford to [BA] or to [BA's] Representative all necessary facilities for accompanying HAL or HAL's agent on such inspection and HAL or HAL's agent may (while taking into account such comments from [BA] or [BA's] representative as HAL or HAL's agent thinks fit provided the notice requirements of the Clause 29.5 have been complied with) issue the said statement/certificate
29.6 for the avoidance of doubt the Car Park Licence shall not cease or determine unless and until full vacant possession of the Heathrow Express Site following construction of the car park is made available to [BA] in accordance with the provisions of Clause 29.3 or 29.4"
- The Second Schedule to the agreement identified the specification for the car park as follows:
"Car Park Specification
Surface course - 80mm concrete block
Laying course - 50mm sharp sand
Sub base - 190mm approved sub base material conforming to Dept of Transport Spec.
Security Fencing - Chain link 2.4 m high
Flood lit on column to give a lighting level of 10 – 30 lux
Installation of automatic card operated barriers at entrance and exit
Parking spaces to be white lined
Layout to be per HAL drawing number HFP 35710B"
- The drawing number HFP35710B has now been lost and no copy of it was available at the trial. From the internal evidence of the 1990 Agreement, it is likely that the layout showed 280 spaces on the Site, with some of those spaces being laid out on the Stub. In addition, I heard secondary evidence from a Mr Manners about what was shown on this plan. Mr Manners gave evidence on behalf of AP16 but as it happened he had at one time been employed by HAL and later by BAA Lynton plc. He said that while he was employed by BAA Lynton plc, he had seen a plan which showed a layout of the car park site. The car park was on all of the Site, therefore including the Stub. He agreed when cross-examined that the plan he had seen was not attached to the 1990 Agreement but he thought it was likely to have been the plan referred to in the 1990 Agreement. In any event, I consider that the internal evidence in the 1990 Agreement makes it inherently likely that the Stub was part of the area laid out for car parking and that the layout plan showed car parking spaces on the Stub. It is important to note, at this stage, that the contractual specification was for a surface car park.
- I will refer at this point to a matter which was agreed between the experts. I was initially provided with detailed reports showing how the land which was the subject of the 2005 Lease (and therefore excluding the Stub) could be laid out. On the fourth day of the hearing, I was told by counsel that the experts had agreed that if it were appropriate to apportion 280 spaces between spaces on the Stub and spaces on the remainder of the Site, the right apportionment would be to allocate 15 spaces to the Stub and 265 to the remainder of the Site. That was not, of course, an agreement that the particular layout plan attached to the 1990 Agreement showed a layout of 15 spaces on the Stub but, taking all of the evidence together, I consider that it is more likely than not that the layout plan attached to the 1990 Agreement did show spaces on the Stub and that the number of such spaces was of the order of 15.
- The Third Schedule contained the terms of the Car Park Licence. The licence was to continue "[f]rom the date ascertained under clause 12.2 until the date on which full vacant possession of the Heathrow Express Site is given pursuant to the terms of clause 29 … ". Under the licence, BA and all those authorised by it were to be entitled free of charge to use an alternative car park and the licence contained detailed provisions as to how the right was to be enjoyed. At all material times, pursuant to the Car Park Licence, HAL has provided 350 spaces at a car park, known as P5, save for a period in 2012 when HAL provided spaces at car park P4, instead of P5.
The Heathrow Express Railway Act 1991
- The Heathrow Express Railway Act 1991 received the Royal Assent on 9 May 1991. It conferred certain powers on HAL (referred to in the Act as "the Company") and on the British Railways Board (referred to in the Act as "the Board"). I was shown Sheet No. 12 which was one of the deposited plans referred to in Recital (7) to the Act. I was told that if one read Sheet No. 12 together with sections 5, 20 and 25 of the Act, the position so far as relevant to this case, was:
(1) HAL was authorised to construct the part of the railway, "Work No. 5", which ran underneath the Heathrow Express Site: see section 5;
(2) HAL was authorised to enter upon, take and use a plot numbered 4 on sheet no. 12 and referred to in Schedule 1 to the Act for the purpose of providing permanent ventilation and emergency escape shafts: section 20(2); this plot was later developed as part of a ventilation and emergency escape shaft; this plot does not include any part of the Stub;
(3) HAL was authorised to enter upon and take possession temporarily of land which included land shown numbered 5 in the Borough of Spelthorne which I was told was the land numbered 5 on Sheet No. 12: section 25; this land was the majority of the Site (and included the Stub); this land was to be used as a temporary working site and at the end of its use as a temporary working site, HAL was to remove any structures and vegetation on the land.
- No one contradicted this description of the operation of the 1991 Act and it was not suggested that any other provision of the Act was material.
The 1994 Lease
- By a Lease dated 17 January 1994, granted pursuant to the 1990 Agreement, HAL demised the Catering Base to BA for a term of 25 years from and including 23 October 1991 "together with any continuation arising by reason of statute". The term of the 1994 Lease was assignable, subject to the lessee complying with certain conditions and obtaining the lessor's prior written consent, not to be unreasonably withheld. By clause 3.30.2, HAL covenanted to procure that any works carried out on the Site would be carried out in accordance with the requirements of schedule 8 to the 1994 Lease, which imposed restrictions on the way in which works on the Site could be carried out, so that the effects of the works on the use and enjoyment of the Catering Base would be reduced. Apart from the provisions of clause 3.30.2 and the Eighth Schedule, the 1994 Lease did not confer on the lessee thereunder any rights over the Site. Of course, BA continued to enjoy its personal rights under the 1990 Agreement, notwithstanding the grant of the 1994 Lease.
The transfer of the freehold to Lynton
- On 24 June 1997, HAL transferred its freehold title in relation to the Catering Base and the Site to BAA Lynton plc.
The assignment of the 1994 Lease to Gate Gourmet
- On 1 December 1997, BA assigned to Gate Gourmet (London) Ltd ("Gate Gourmet") the residue of the term of the 1994 Lease. The transfer did not contain any provision dealing with use by Gate Gourmet of the parking spaces provided by HAL to BA under the Car Park Licence. There was no evidence of BA making any arrangement with Gate Gourmet of any kind in relation to those car parking spaces or in relation to the future use of the Site. In practice, HAL continued to provide car parking spaces in accordance with the Car Park Licence and Gate Gourmet enjoyed the use of those spaces. The parties before me agreed that the Car Park Licence continued in existence for the benefit of BA and BA informally authorised Gate Gourmet to enjoy the benefit of the car parking spaces provided by HAL. It was further agreed that the arrangements which existed did not amount to a novation of the Car Park Licence for the benefit of Gate Gourmet. It seemed to me that there could have been significant arguments in favour of such a novation but these arguments were not put forward and I will therefore proceed on the agreed basis that there was no novation in favour of Gate Gourmet.
The use of part of the Site by the Heathrow Express Railway
- The Heathrow Express Railway was constructed so that it ran in a tunnel underneath the Site. On an area of land immediately to the east of the Stub (which land was not part of the Site) there was constructed an escape shaft which connected the tunnel to the surface. This shaft performs a dual function. It allows access to the tunnel for the emergency services and it allows train passengers to escape from the tunnel in the event of an emergency evacuation of a train in the tunnel. The escape shaft has two stairwells to serve the two different functions.
- On the Stub, alongside the escape shaft, there was constructed a road in the shape of a hammerhead to provide a turning area for vehicles visiting the escape shaft. At the present time, one or two vehicles per week visit the escape shaft for routine inspection and maintenance. The hammerhead road is also available for emergency vehicles if there were to be an emergency in the tunnel below the escape shaft. Around the hammerhead road, there is an open grassed area. The hammerhead road, the open grassed area and the area of, and surrounding the escape shaft, are enclosed by a single perimeter fence; there is no barrier between the hammerhead road and the escape shaft.
- I heard evidence from a Mr Philip of Heathrow Express. He told me that it was vital for safety reasons for persons who were evacuated via the escape shaft to be able to assemble on the hammerhead road and the open grassed area. He stressed that it was essential that all of the hammerhead road and the open grassed area was available to the operator of Heathrow Express Railway for the uses described above.
- There was also erected on the Stub the whole of, or a substantial part of, an electricity substation. This substation was later demised to UK Power Networks Services (Contracting) Ltd on 18 July 2012, as referred to later in this judgment. I was told that the substation did not in any way serve the Heathrow Express Railway but instead served the BA World Cargo Centre and other uses. The fencing in the area separates the substation from the other land which is used by Heathrow Express Railway.
The transfer of the freehold back to HAL
- On or about 15 January 1999, BAA Lynton plc transferred its freehold title in the Catering Base and the Site back to HAL.
The 2000 Lease
- On 26 July 2000, HAL granted to an associated company, Heathrow Site No. 5 (CI) Ltd, a lease ("the 2000 Lease") of the Catering Base for a term of 999 years from and including 7 July 2000, subject to and with the benefit of the 1994 Lease. Heathrow Site No. 5 (CI) Ltd held the term of the lease on trust for BAA Partnership Ltd pursuant to a declaration of trust dated 26 July 2000.
- The 2000 Lease contained a number of definitions which are relevant. The Agreement for Lease meant the 1990 Agreement. Car Parking Facilities meant the facilities for car parking set out in schedule 4 to the 2000 Lease. The Existing Lease meant the 1994 Lease. The Occupational Tenant was Gate Gourmet or its successor in title being the tenant under the 1994 Lease. The Retained Land referred to the Site, being the land shown edged green on Plan 2 to the Lease.
- By clause 4 of the 2000 Lease, the lessor covenanted with the lessee to observe and perform the covenants set out in schedule 3 to that lease. Paragraphs 4 and 5 of schedule 3 provided:
"4. Agreement for Lease
To comply fully with the terms and conditions of the Agreement for Lease for so long as the same are still subsisting and are capable of being enforced (unless and to the extent the Occupational Tenant has waived and continues to waive compliance by the Landlord with the same).
5. Car Parking
To comply with the obligations in schedule 4 following termination of the licence for car parking contained in the Third Schedule to the Agreement for Lease."
- Schedule 4 to the 2000 Lease was headed "Car Parking Facilities". Paragraphs 1 and 2 of the schedule 4 to the 2000 Lease provided:
"1. The Landlord shall provide or procure the provision of 280 car parking spaces ("Car Parking Spaces") for use by the Tenant and the occupiers of the Property in connection with the use of the Property.
2. The Car Parking Spaces will be provided in such area of land or parking facility as the Landlord shall from time to time make available for use by the Tenant and the occupiers of the Property on the Retained Land or within the Landlord operated car park nearest to the Property (or such other Landlord operated car park as the Tenant may agree in its discretion)."
- Paragraph 3 of schedule 4 was a detailed provision dealing with the possibility of the Car Parking Spaces being provided in a Landlord operated car park; it is not necessary to refer further to that provision.
- The 2000 Lease was created by HAL in favour of an associated company so as to create an interest which was intended to be marketed and sold. By December 2000, the intention was that the beneficial interest of BAA Partnership Ltd in the 2000 Lease would be transferred to the First Claimant. HAL's solicitors prepared a certificate of title addressed to the First Claimant. The certificate included the statement that HAL intended to construct a multi-storey car park on the Site, with a view to allowing the tenant of the Catering Base to use at least 280 spaces in that car park. A similar statement was made in letters dated 3 and 8 November 2000 from HAL's solicitors to the solicitors for the First Claimant. These statements by HAL fitted in with the obligation undertaken by HAL in Schedule 4 to the 2000 Lease to provide 280 car parking spaces, not necessarily surface spaces. However, these statements do not explain how HAL would comply with its obligation in paragraph 4 of Schedule 3 to the 2000 Lease, which referred to the 1990 Agreement which (pursuant to clause 29 thereof) required HAL to construct a surface car park.
- On 18 December 2000, HAL and Heathrow Site No. 5 (CI) Ltd entered into a deed of "rectification" of the 2000 Lease. Following the rectification or variation effected by that deed, paragraphs 1 and 2 of schedule 4 to the 2000 Lease read as follows:
"1. The Landlord shall provide or procure the provision of 280 car parking spaces ("Car Parking Spaces") for use free of charge by the Tenant and the occupiers of the Property in connection with the use of the Property.
2. The Car Parking Spaces will be provided in such area of land or parking facility as the Landlord shall from time to time make available for use by the Tenant and the occupiers of the Property on the Retained Land (or such other Landlord operated car park as the Tenant may agree in its discretion)."
The sale to the First Claimant
- By a written agreement dated 18 December 2000, BAA Partnership Ltd contracted to sell to the First Claimant the benefit of the 2000 Lease. This agreement was a very short agreement although it referred to a "Master Agreement" which I was not shown. The agreement of 18 December 2000 provided for BAA Partnership Ltd to procure the transfer of the 2000 Lease at an unspecified future date to be agreed between the parties and in a form to be agreed between them. It was further agreed that the First Claimant would pay the price for the transfer on 18 December 2000. It would therefore seem that from 18 December 2000, the beneficial interest in the 2000 Lease which was previously vested in BAA Partnership Ltd was then vested in the First Claimant, alternatively that BAA Partnership Ltd held its interest on a sub-trust for the First Claimant. As will be seen, the 2000 Lease was later transferred (on 7 October 2013) to the Claimants.
The 2005 Lease
- On 7 February 2005, HAL granted to Devon Nominees (No. 1) Ltd and Devon Nominees (No. 2) Ltd a lease of the Site excluding the Stub for a term of 999 years from and including 1 January 2005. The two Devon companies were subsidiaries of HAL. The purpose behind the grant of the lease was to create an asset that could be marketed and sold. Clause 1 of the lease contained a number of relevant definitions. Agreement for Lease was defined to mean the 1990 Agreement. Property was defined to mean the premises demised by the 2005 Lease. Shorthaul Catering Base Lease was defined to mean the 2000 Lease. By clause 3, the lessees covenanted to perform the covenants set out in schedule 2 to the 2005 Lease. Paragraph 15 of schedule 2 provided:
"15 Car Parking Facilities
15.1 To comply with the obligations contained within Schedule 4 of the Shorthaul Catering Base Lease so far as these obligations subsist and affect the Property.
15.2 To comply with the obligations within clause 29 (Heathrow Express) of the Agreement for Lease so far as those obligations subsist and affect the Property."
- There was a certificate of title prepared by HAL's solicitors relating to the 2005 Lease. This stated that Gate Gourmet was entitled to park 350 cars on the P5 site and that HAL had not commenced the construction of a car park on the Site and had no immediate plans to do so but that neither Gate Gourmet, nor the lessee under the 2000 Lease, had taken any action in relation to that matter.
- On 13 August 2008, Devon Nominees (No. 1) Ltd and Devon Nominees (No. 2) Ltd transferred the term of the 2005 Lease to AP 16 Ltd for a consideration of £500,000. AP16 was, and is, a company registered in the Isle of Man.
The Underlease to Gate Gourmet
- By an underlease dated 30 March 2010, Heathrow Site No. 5 (CI) Ltd and Heathrow Site No. 5B (CI) Ltd (in whom the term of the 2000 Lease was at that time vested) demised the Catering Base to Gate Gourmet for a term of 9 years commencing on and including 22 October 2016. By clause 2 of the underlease, the underlessor granted to Gate Gourmet the rights in schedule 2 to the underlease which were expressed to include such rights as were set out in schedule 4 to the 2000 Lease, to the extent that the same were made available to the underlessor pursuant to schedule 4 to the 2000 Lease. The underlease was the subject of a Deed of Rectification on 14 December 2010 to which it is unnecessary to refer.
- Also on 30 March 2010, Heathrow Site No. 5 (CI) Ltd and Heathrow Site No. 5B (CI) Ltd (referred to as "the Landlord") and Gate Gourmet (referred to as "the Tenant") entered into an agreement relating to a claim by the Landlord and/or the Tenant in relation to the provision by HAL of surface parking on the Site and a claim by the Landlord in relation to the provision by HAL of 280 car parking spaces. The agreement provided for the circumstances in which the Landlord agreed to pursue its claims against HAL.
- On 30 October 2013, Heathrow Site No. 5 (CI) Ltd and Heathrow Site No. 5B (CI) Ltd (referred to as "the Landlord") and Gate Gourmet (referred to as "the Tenant") entered into an agreement in substitution for their earlier agreement dated 30 March 2010 dealing with car parking. This further agreement related to claims by the Landlord against HAL whether pursuant to clause 29 of the 1990 Agreement or schedule 4 to the 2000 Lease and provided for the Landlord to pursue such claims and for the consequences of the Landlord succeeding in such claims.
The substation
- On 8 July 2012, HAL demised to UK Power Networks Services (Contracting) Ltd a substation on the Site for a term of 140 years beginning on 25 March 1993.
The assignment of the 2000 Lease
- By a deed of assignment dated 7 October 2013, Heathrow Site No. 5 (CI) Ltd and Heathrow Site No. 5B (CI) Ltd (in whom the term of the 2000 Lease was at that time vested) transferred the term of the 2000 Lease to the Claimants. The Claimants agreed with the transferors to perform the transferors' obligations in a number of documents, one of which was the agreement dated 30 March 2010 between the transferors and Gate Gourmet under which the transferors agreed with Gate Gourmet to pursue a claim relating to the construction of a surface car park under paragraph 4 of schedule 3 to the 2000 Lease. This is said to be relevant to an argument whether the Claimants acquired the benefit of HAL's covenant in paragraph 4 of schedule 3 to the 2000 Lease. The Claimants submit that this agreement with the transferors must have meant that the transferors were thereby assigning the benefit of that covenant to the Claimants.
The operation of the 1990 Agreement
- The following matters are relatively clear as to the intended operation of the 1990 Agreement:
(1) clause 29.1 and the second schedule specify the work to be done to create a surface car park on the Site;
(2) the land which is to be laid out as a car park is the whole of the Site;
(3) the Heathrow Express Railway Bill became the Heathrow Express Railway Act 1991 on 9 May 1991;
(4) the Car Park Licence took effect following completion of the works to construct the Catering Base;
(5) HAL did not construct a car park on the Site;
(6) HAL did not grant to BA a lease of the Site.
The interpretation and application of the contractual documents
- Issues have arisen between the parties under the 1990 Agreement, the 2000 Lease and under the 2005 Lease.
- The principal issues arising under the 1990 Agreement are:
(1) did HAL cease to require to utilise the Heathrow Express Site "for such purposes" i.e. the purposes authorised by the Heathrow Express Railway Act 1991?
(2) if so, when?
- The principal issues arising under the 2000 Lease are:
(1) for the purposes of paragraph 4 of schedule 3, are the terms and conditions of clause 29 of the 1990 Agreement "still subsisting and capable of being enforced"?
(2) did the Occupational Tenant (i.e. Gate Gourmet) waive and continue to waive compliance by the landlord under the 1994 Lease with the terms and conditions of clause 29 of the 1990 Agreement?
(3) for the purposes of paragraph 5 of schedule 3, which refers to "following termination of" the Car Park Licence, when will that licence terminate?
(4) for the purposes of schedule 4, were the 280 spaces to be by way of surface parking or provided in some other way?
(5) how were the obligations in paragraph 4 of schedule 3 (i.e. clause 29 of the 1990 Agreement, which required a surface car park) and in schedule 4 (which did not require a surface car park) to operate?
(6) if a surface car park were created in accordance with clause 29 of the 1990 Agreement, could the lessor under the 2000 Lease then decide to create a multi storey car park?
- The principal issues arising under the 2005 Lease are:
(1) under paragraph 15.1 of schedule 2, all of the above issues as to schedule 4 to the 2000 lease and, in addition, what is meant by the words, "so far as these obligations subsist and affect the Property", given that "the Property" is not all of the land which was the subject matter of schedule 4?
(2) who has the choice about the type of car park spaces to be provided?
(3) is AP16 obliged to provide 280 spaces, or only a smaller number of spaces?
(4) under paragraph 15.2 of schedule 2, the issues as to clause 29 of the 1990 Agreement and, in addition, the issue as to what is meant by the words, "so far as these obligations subsist and affect the Property", given that "the Property" is not all of the land which was the subject matter of clause 29?
HAL's principal claim against AP16
- In the course of the trial, if not before, it emerged clearly that the principal dispute is the one between HAL and AP16 and, in relation to the various issues arising as between them, the principal claim by HAL is its claim against AP16 pursuant to paragraph 15.1 of schedule 2 to the 2005 Lease. HAL asks the court to order AP16 to provide 280 car parking spaces on the Site less the Stub. As this had become the principal matter to be resolved, I will deal with this matter first but I will then, for the sake of completeness, deal with the points which have been argued in relation to HAL's claim against AP16 pursuant to paragraph 15.2 of schedule 2 to the 2005 Lease.
- By paragraph 15.1 of schedule 2 to the 2005 Lease, AP16 covenanted with HAL to comply with the obligations contained within Schedule 4 to the 2000 Lease so far as those obligations subsisted and affected the Site excluding the Stub. Schedule 4 to the 2000 Lease imposed obligations on HAL to provide or procure the provision of 280 spaces. Schedule 4 itself did not state that this obligation only arose following the termination of the Car Park Licence. However, paragraph 5 of schedule 3 to the 2000 Lease was a covenant by HAL to comply with the obligations in schedule 4 to the 2000 Lease "following termination" of the Car Park Licence.
- In the course of its submissions, AP16 assumed that its obligation to HAL under paragraph 15.1 of schedule 2 to the 2005 Lease only arose "following termination" of the Car Park Licence. In its submissions, HAL did not challenge this assumption on the part of AP16. It may be that the assumption is based on the fact that the obligations imposed on HAL under schedule 4 to the 2000 Lease only arise following termination of the Car Park Licence so that it is only following that termination that the obligations in schedule 4 to the 2000 Lease are "subsisting" for the purposes of paragraph 15.1 of schedule 2 to the 2005 Lease. I will proceed on the basis that the assumption is correct. That gives rise to the questions: has the Car Park Licence already terminated and, if not, when will it terminate?
- It was not contended that the Car Park Licence had already come to an end. All parties before me proceeded on the basis that the Car Park Licence is still in existence and is continuing. It was not said that it had been abandoned by BA. It was common ground that BA continues to have the benefit of the Car Park Licence and that BA was entitled to authorise Gate Gourmet to enjoy that benefit and that Gate Gourmet has done so. It was not contended that the Car Park Licence had been novated to Gate Gourmet. However, the parties did not agree as to when the Car Park Licence would come to an end.
- The Claimants and HAL contended that the Car Park Licence would come to an end, at the latest, on 22 October 2016. Although they said that the 22 October 2016 was the latest date on which the Car Park Licence would end, they did not in fact identify any circumstances before that date which were likely to arise and which would cause the Car Park Licence to come to an end. Their case was that the Car Park Licence would end on that date because the licence was meant to continue in effect up until the time when a lease of the car park would be granted under the 1990 Agreement and any such lease would end on 22 October 2016. It was therefore submitted that it must have been intended that maximum period for which the Car Park Licence would last would also end on 22 October 2016.
- AP16 submitted that the Car Park Licence would continue past 22 October 2016. It submitted that it was an implied term of the 1990 Agreement that, for so long as the car park was not built pursuant to clause 29, the Car Park Licence would continue until BA or its successors to the 1994 Lease of the Catering Base, granted pursuant to clause 29 of the 1990 Agreement, ceased to hold a lease (including any renewal of the 1994 Lease) of the Catering Base.
- AP16 submitted that the case for the Claimants and for HAL also involved the implication of a term as to the circumstances of the termination of the Car Park Licence so that the question for the court was: which term should be implied? In support of its implied term, AP16 further submitted:
(1) the purpose of the Car Park Licence was to provide the required parking for the operation of the Catering Base at all times until a car park was constructed on the Site;
(2) BA would have in mind that its interest under the lease of the Catering Base, when granted, would be subject to Part II of the Landlord and Tenant Act 1954 and so would potentially be continued under section 24 of the 1954 Act;
(3) during the period of statutory continuation under section 24 of the 1954 Act, the provisions of the 1954 Act would not operate to continue the Car Park Licence; the licence must have been intended to continue during that period and the only way to achieve that result was by virtue of a term to be implied into the 1990 Agreement;
(4) in the event that the court ordered the grant of a new lease of the Catering Base under the 1954 Act, the right to continue to park in a HAL operated car park, which was not an easement, could not be included in the new lease under section 32(2) of the 1954 Act; although the court would have a discretion to include such a right under section 35 of the 1954 Act, BA would have no certainty that court would exercise its discretion in favour of BA; the intention of BA and HAL must have been that if a new lease were granted under the 1954 Act, then the right to park in a HAL operated car park would continue pursuant to a term to be implied into the 1990 Agreement;
(5) as to the operation of the implied term, there should be no distinction between a new tenancy of the Catering Base granted pursuant to an order of the court and a new tenancy entered into by agreement between the landlord and the tenant within section 28 of the 1954 Act.
- AP16 then submitted that on the facts of this case, Gate Gourmet had renewed the 1994 Lease of the Catering Base and now enjoyed a new lease thereof which would continue until, at least, 22 October 2025. Accordingly, the Car Park Licence would continue until, at least, 22 October 2025. Therefore, AP16's obligation under clause 15.1 of the 2005 Lease, referring to schedule 4 to the 2000 Lease, would not arise until, at the earliest, 22 October 2025.
- As to AP16's submissions in relation to the 1954 Act, HAL submitted that if BA had remained the lessee under the 1994 Lease and had obtained a renewal of that lease under the 1954 Act, then the court would have had a discretion under section 35 of the 1954 Act to include a right for BA to continue to enjoy the rights conferred by the Car Park Licence. The Claimants submitted (at least initially) that, in that event, the court would not have had that discretionary power.
- This issue turns upon the construction of the 1990 Agreement and on the question whether a term is to be implied into that agreement, as suggested by AP16. The resolution of that issue does not in any way depend upon the terms of the subsequent 2000 Lease or the 2005 Lease. The answer to the question which now arises will be the answer which would have been given at the date of the 1990 Agreement if the question had then been identified and asked.
- The primary focus of clause 29 of the 1990 Agreement is on the construction of a car park and the grant of a lease of that car park. Clause 29 proceeds on the basis that the car park will be constructed and that a lease will be granted of it. The various permutations addressed in clause 29 arose from the fact that it was not possible to predict whether the work to construct the car park would be held up by the Heathrow Express Railway Bill/Act and whether the lease of the catering base would be entered into before the lease of the car park. It was in any event recognised that there could be a period of time from the date of practical completion of the works on the Catering Base (when BA was entitled to enter upon the Catering Base as licensee or lessee) when it would be appropriate for BA to enjoy the right to park in an alternative car park. It was envisaged that when the car park was constructed and became the subject of a lease, either the same lease as demised the Catering Base or a further lease, then the Car Park Licence would end. At that point BA would cease to have the right to use an alternative car park and would be the lessee of the newly constructed car park.
- The position as described in the last paragraph is clearly spelt out in clauses 12.2 and 29 of the 1990 Agreement. Clause 12.2 refers to the Car Park Licence continuing "until terminated pursuant to the provisions of clause 29". Clauses 29.3.2.2, 29.3.3.2 and 29.6 all tie the time when the Car Park Licence comes to an end to the time when HAL grants to BA a lease of the car park with vacant possession. The intended lease to BA was to be for a term of 25 years from a date which was, in most circumstances, to be based upon the date of practical completion of the Catering Base. As envisaged by the 1990 Agreement, and in the events which have happened that term was 25 years from and including the 23 October 1991 and that term of 25 years ends on 22 October 2016.
- Although there was uncertainty as to the date when HAL would be able to take possession of the car park site from Heathrow Express Railway and therefore there was uncertainty as to when the construction of the car park would be completed and the lease of the car park granted, the parties to the 1990 Agreement almost certainly did not envisage that these events would not occur before the end of the 25 year term. Therefore, they almost certainly did not envisage that they would arrive at 22 October 2016 with no car park constructed and no lease of such a car park granted to BA. They would have envisaged that HAL would become obliged, one way or the other, to create a car park long before 22 October 2016. They would have expected HAL to perform that obligation and, if relevant, they would have expected that HAL could be ordered to perform its obligation if for some reason it delayed in doing so.
- On this basis, it is not necessary to imply the term suggested by AP16 in order to give business efficacy to the 1990 Agreement. That agreement works perfectly well without the implied term. Although, in the events which have happened, a car park is most unlikely to be built on the Site before 22 October 2016, that is not because the provisions of the 1990 Agreement have proved to be defective. Instead, that state of affairs has arisen because for many years, BA has shown no interest in the performance of the 1990 Agreement and has not called on HAL to perform its obligations under it. Later in this judgment, I will consider what has happened in that respect and why it happened.
- I will next consider whether the suggested implied term is so obvious that it went without saying. The 1990 Agreement provides that the Car Park Licence is to have effect until the lease of the completed car park is granted. Such a lease would be for a term expiring on 22 October 2016. Therefore, the 1990 Agreement indicates that the Car Park Licence is an interim arrangement to have effect before the permanent arrangement takes effect. Leaving aside the possible application of the 1954 Act, the terms of the 1990 Agreement powerfully suggest that when the parties reach the last possible date for the permanent arrangement to take effect, then the interim arrangement necessarily will come to an end. It could be said that one could not have an interim arrangement lasting for longer than the intended permanent arrangement. Thus, if one were considering the matter at common law without regard to the possible operation of the 1954 Act, I would hold that the interim arrangement under the Car Park Licence was intended to terminate, at the latest, on 22 October 2016. Conversely, if instead of a fixed term of 25 years expiring on 22 October 2016, the lease of the completed car park was to be a term of years expiring on that date but followed by a periodic tenancy, then I would be inclined to hold that the Car Park Licence could last until the circumstances would be such that that periodic tenancy (if it had been granted) could be brought to an end.
- I will now attempt to address the possibility, which would have been known to the parties at the date of the 1990 Agreement, that the term of the 1994 Lease might be subject to the 1954 Act, if the tenancy were a tenancy to which Part II of the 1954 Act applied at the end of the lease. If it were, then the tenancy would continue under section 24 of the 1954 Act from the term date and the tenant under that lease would be entitled to apply for a renewal of the tenancy.
- The first matter to consider is whether, if BA had remained the tenant under the 1994 Lease and if the car park had not been constructed and a lease of it had not been granted, the Car Park Licence would have continued for the period during which the 1994 Lease would have continued under section 24. The 1994 Lease (in the form of the draft attached to the 1990 Agreement) provided that the term of that lease was a term of 25 years from and including the 23 October 1991 "together with any continuation arising by reason of statute". I consider that the effect of that wording was that the Car Park Licence would continue past 22 October 2016 for so long as the term of the 1994 Lease continued under section 24 of the 1954 Act. I doubt if this involves the implication of a term into the 1990 Agreement. I consider that this is the application of the express terms of the 1990 Agreement.
- In the events which have happened, the term of the 1994 Lease was assigned to Gate Gourmet and it renewed that lease on 30 October 2010 for a term of 9 years from 22 October 2016. That renewal is an agreement within section 28 of the 1954 Act with the result that the tenancy created by the 1994 Lease will not continue under section 24 past 22 October 2016.
- The next matter to consider is, if BA had remained the tenant under the 1994 Lease and if the car park had not been constructed and a lease of it had not been granted, and BA had applied for a new lease of the Catering Base under the 1954 Act, what the court's powers would have been in relation to the continuation of the Car Park Licence during the term of any such new lease. The parties referred to sections 32(3) and 35 of the 1954 Act. No one has contended that BA's rights under the Car Park Licence would have come within section 32(3) on a renewal by BA of the tenancy of the Catering Base. I am content to proceed on the basis that that is correct. It was contended by both HAL and AP16 that those rights would be relevant for the purposes of section 35, so that the court would have power to order that a new tenancy of the Catering Base should include a term giving to BA a right to use car parking spaces in a HAL operated car park. For this submission, HAL and AP16 relied on Re: No. 1 Albermarle Street [1959] 1 Ch 531. I consider that section 35 would give the court power to repeat the rights conferred by the Car Park Licence in a new tenancy of the Catering Base ordered to be granted to BA. AP16 point out that the court's power conferred by section 35 is discretionary so that the court might decide, in all the circumstances of the case, not to repeat those rights in the new tenancy. However, if the parties in 1990 had thought about that event occurring, I think it highly improbable that the parties would then have agreed that the solution would be to confer upon BA a contractual right to the continuation of the car parking rights which would therefore take from the court its ability to decline to order the continuation of those rights. In these circumstances, I consider that if the parties in 1990 had thought about how the 1954 Act might impact upon the continuation and renewal of the rights under the Car Parking Licence, they would have been more likely to regard the position under the 1954 Act as making it inappropriate for there to be a term providing for those car parking rights to continue as a matter of contract rather than be dealt with in the way I have described under the 1954 Act.
- There is the further consideration that the implied term contended for by AP16 is not confined to the case where BA has the benefit of a continuation tenancy or a renewed tenancy under the 1954 Act. The implied term contended for by AP16 would result in the continuation of the licence to BA, as a personal licence, for so long as the Catering Base is the subject of a lease (either the 1994 Lease or any subsequent renewal of it) to anyone. It would undoubtedly be a very odd arrangement for BA to continue to enjoy a personal licence for car parking in connection with a lease to a third party with whom BA has no longer any real connection. AP16 contended that that has already happened in the period since 1997, during which time Gate Gourmet has been the lessee under the 1994 Lease, and BA has had the benefit of the Car Parking Licence as a personal licence. That may be so but I consider that this is not a sufficient justification for holding that the parties must have intended that state of affairs to continue past the term of the 1994 Lease, possibly for a lengthy period.
- There is also the difficulty that the Car Parking Licence was intended to be an interim arrangement until the car park was built and leased to BA. Although it might be possible to extend the car parking rights into a new tenancy granted under the 1954 Act to BA, it is much less clear that HAL would continue to be under an obligation to build and to grant such a lease. If it did not build the car park and lease it to BA, then on AP16's case, the right to car parking would simply continue indefinitely. Conversely, if HAL did build the car park and grant a lease to BA (possibly compelling BA to take the lease against its wishes) BA would not be under any obligation to make the car park available to the lessee of the Catering Base.
- I therefore do not accept that the implied term suggested by AP 16 is a term which was so obvious that it went without saying. Accordingly, and because the suggested implied term was not necessary to give business efficacy to the 1990 Agreement, there is no basis in this case on which the court could imply the suggested term: see Marks & Spencer plc v BNP Paribas Securities Services Trust Co [2015] 3 WLR 1843.
- In these circumstances, at the latest, the Car Park Licence will terminate on 22 October 2016. Accordingly, pursuant to paragraph 5 of schedule 3 to the 2000 Lease, following that date, HAL will be obliged to provide or procure the provision of 280 car parking spaces and that obligation will be "subsisting" for the purposes of paragraph 15.1 of the second schedule to the 2005 Lease and will therefore be an obligation to be performed by AP16.
- The next point is whether AP16 is obliged to provide all of the 280 spaces referred to in paragraph 1 of schedule 4 to the 2000 Lease or only some of those spaces. HAL submitted that AP16 was obliged to provide 280 spaces. It argued that AP16's obligation imposed by paragraph 15.1 of schedule 2 to the 2015 Lease required AP16 to comply with the obligations in schedule 4 to the 2000 Lease. Paragraph 1 of schedule 4 to the 2000 Lease requires the provision of 280 spaces. Further, the 280 spaces were to be provided on the Retained Land or some part of it. The Retained Land was the Site. The land demised to AP16 by the 2005 Lease was the Site excluding the Stub and was therefore part of the Retained Land. On this argument, it was irrelevant that the land demised to AP16 by the 2005 Lease did not comprise all of the Retained Land.
- AP16 argued that it was only liable to provide a smaller number of spaces. It submitted that its obligation in paragraph 15.1 of schedule 2 to the 2005 Lease was to comply with the obligations in paragraph 1 of schedule 4 to the 2000 Lease so far as that obligation affected the premises demised by the 2005 Lease. The obligation in paragraph 1 of schedule 4 to the 2000 Lease to provide 280 spaces affected the Site whereas the property demised by the 2005 Lease consisted of the Site excluding the Stub. The figure of 280 had therefore to be apportioned between the Stub and the Site excluding the Stub. The experts agreed that if one were to apportion 280 spaces in that way one would allocate 15 spaces to the Stub and 265 to the remainder of the Site. Therefore, AP16 contended that the correct number of spaces for it to provide was 265.
- AP16 also argued that its obligation under clause 15.2 of schedule 2 to the 2005 Lease, which referred to clause 29 of the 1990 Agreement, did not oblige it to construct a surface car park with 280 spaces on the Site excluding the Stub. The obligation in clause 29 of the 1990 Agreement referred to a layout plan for a surface car park and the layout plan showed car spaces on the Stub and spaces on the remainder of the Site. On my earlier findings, the layout plan showed approximately 15 spaces on the Stub. Therefore, AP16 argued that it did not have to provide those spaces on land which was not let to it. It was only obliged to comply with the layout plan in so far as the Site excluding the Stub was concerned. That meant that AP16 had to provide only some 265 spaces. I accept that submission.
- AP16 then proceeded to argue that if it had complied with clause 29 of the 1990 Agreement and had laid out a surface car park with 265 spaces on the Site excluding the Stub, that surface car park would then have been made available to BA or Gate Gourmet pursuant to clause 29 of the 1990 Agreement. It cannot have been envisaged that either on the grant of a lease to BA (resulting in the termination of the Car Park Licence) or on 22 October 2016, AP16 would then have been obliged to develop the Site excluding the Stub a second time pursuant to paragraph 1 of schedule 4 to the 2000 Lease and, on this occasion, create 280 spaces which would require AP16 to build a car park with a ramp and a deck which would not be a surface car park. It was also not clear that AP16 would be in a position to take possession of the Site excluding the Stub from BA or Gate Gourmet for the purpose of creating this second car park.
- Having considered the arguments, I agree with HAL that AP16 is obliged under paragraph 15.1 of Schedule 2 to the 2005 Lease to provide 280 spaces on the Site excluding the Stub. The obligation in paragraph 1 of schedule 4 to the 2000 Lease to provide 280 spaces applied to the Retained Land (i.e. the Site) or to any part of it. The Site excluding the Stub was a part of the Retained Land. The land demised by the 2005 Lease (the Site excluding the Stub) was affected by the whole of the obligation in paragraph 1 of schedule 4 to the 2000 Lease. As to AP16's argument based on what the position would have been if it had previously created a surface car park with 265 spaces, I agree that, in such an event, there would be a term implied into its obligation to provide 280 spaces on the Site excluding the Stub which relieved it of its obligation to provide 280 spaces by means of a non-surface car park. However, that implied term would be a reaction to the fact that AP16 had earlier performed an inconsistent prior obligation. It is not necessary to imply such a term in a case where AP16 has not performed an inconsistent prior obligation.
- The next question is how to design a car park on the Site excluding the Stub so as to provide 280 spaces. If the obligation being enforced was the obligation on HAL under paragraph 1 of schedule 4 to the 2000 Lease, then HAL would have a choice as to how to perform its obligation. That obligation describes the result which HAL must achieve but leaves it to HAL as to how to achieve that result. Thus HAL could, in principle, exercise its choice as to the manner of performance.
- However, the obligation which HAL seeks to enforce is the obligation on AP16. Again, the obligation on AP16 describes the result which AP16 is to achieve but does not prescribe how that result is to be achieved. Accordingly, on the face of it, it is in principle open to AP16 to exercise its choice as to the manner of performance. Is the position different because AP16 has contracted to perform an obligation which, if HAL was performing it, would leave the choice of manner of performance to HAL? I do not think so. HAL is electing to require AP16 to perform the obligation on AP16. I consider that the ordinary contractual rules apply so that AP16 has the choice as to how to perform the obligation on it. The choice is not wholly unfettered. AP16 must achieve the described contractual result. I consider that the result which AP16 produces must be fit for its intended purpose, that the necessary works are carried out in a good and workmanlike manner and that fit and proper materials are used.
- The next question is whether AP16 was, and is, under a contractual obligation to take steps before 22 October 2016, to ensure that 280 car parking spaces are provided on the Site excluding the Stub on 22 October 2016. The physical condition of the Site excluding the Stub is not at present suitable for use for car parking in connection with the Catering Base. Works need to be carried out. If work were carried out to make the surface of that land suitable for car parking, there is probably not enough space for 280 cars on the Site excluding the Stub; it would probably be necessary to create an upper level of parking, with suitable access to that level. To create a car park with 280 spaces which would be available to be used on 22 October 2016, it will be necessary to start to carry out works well before 22 October 2016. At present there may not be even a planning permission which would allow that land to be used for car parking. There is certainly no planning permission for the works necessary to create a car park. In order for there to be a suitable planning permission in existence on 22 October 2016, it will be necessary to make an appropriate planning application well in advance of that date.
- It is submitted on behalf of the Claimants (but not HAL) that AP16 was and is under a contractual obligation to take all necessary steps in good time before 22 October 2016 to produce the result that on 22 October 2016 there will exist 280 car parking spaces on the Site excluding the Stub. Conversely, AP16 argues that it is not at present under a contractual obligation to do anything but if 280 car parking spaces do not exist on the Site excluding the Stub on 22 October 2016, then on that date AP16 will commit a breach of contract by failing to provide 280 spaces on and after that date. On this argument, the fact that AP16 has not already taken any, or any sufficient, steps to bring about the result that 280 spaces will exist on the Site excluding the Stub on 22 October 2016 might amount to an anticipatory breach of contract but not a present breach of an existing obligation.
- This point as to AP16 being under an obligation to take preparatory steps before 22 October 2016 was not examined in any depth in the course of argument. If the Claimants' argument were right, then similar arguments would seem to be available in many cases which in the past have been analysed as cases of anticipatory breach, rather than actual breach, of contract. I would not wish to rule on this point unless and until I felt that the matter had been examined in greater depth and after considering whether the cases on anticipatory breach of contract offered any assistance. As it happens, I do not consider that a decision on this point is essential to my decision and I will therefore leave the point open.
- Before considering what remedy I should grant to HAL in relation to its primary claim against AP16, I will consider the points arising in relation to HAL's secondary claim against AP16.
HAL's secondary claim against AP16
- In the alternative to its claim to enforce the obligation in paragraph 1 of schedule 4 to the 2000 Lease, HAL claims to enforce against AP16 its obligation to comply with clause 29 of the 1990 Agreement so far as that obligation subsists and affects the land demised by the 2005 Lease (the Site excluding the Stub).
- The first question is whether HAL has ceased to require to utilise the Heathrow Express Site for the purposes authorised by the Heathrow Express Railway Act 1991. I have referred above to the purposes authorised by the 1991 Act and I have made findings as to the past and present use of the Stub in connection with the Heathrow Express Railway. The use being made by HAL of the Stub does not comprise or include purposes authorised by the 1991 Act. HAL is using the Stub for certain purposes because it is the owner of the land, those purposes are helpful to the company running the Heathrow Express Railway and that company is an associated company of HAL. It should be remembered that the reference to HAL ceasing to use the land for the purposes authorised by the 1991 Act is in an obligation undertaken by HAL in favour of BA and it falls to be construed accordingly. If BA wished HAL to perform its obligations under clause 29 of the 1990 Agreement, it would not be open to HAL to contend that its obligation had not yet arisen because it continues to use the Stub albeit for a purpose which is not authorised by the 1991 Act. Accordingly, I conclude that HAL has long since ceased to require any part of the Heathrow Express Site for the purposes authorised by the 1991 Act.
- The next question is whether the obligation in clause 29 of the 1990 Agreement still subsists within the meaning of those words in paragraph 15.2 of schedule 2 to the 2005 Lease. AP16 submits that the obligation does not still subsist. AP16 adopted an argument which was first put forward by HAL by way of defence of the claim by the Claimants against HAL based on paragraph 4 of schedule 3 to the 2000 Lease. The argument is that the obligation created by clause 29 of the 1990 Agreement is not still subsisting because the benefit of the obligation has been abandoned by BA. What needs to be shown before a court could find that a contract has been abandoned is discussed in Chitty on Contracts, 32nd ed., Vol. 1 at 22-027. Even in the absence of clauses 27.1 and 27.3 of the 1990 Agreement, I doubt if I would have held that BA had abandoned the benefit of clause 29 of the 1990 Agreement. It seems to be accepted that the Car Park Licence had not been abandoned by BA as it was accepted that the Car Park Licence was still in force and was the explanation for HAL providing parking spaces on P5 to Gate Gourmet. Nonetheless, HAL argues that BA is to be held to have abandoned clause 29 of the 1990 Agreement because it has done nothing since it assigned the 1994 Lease to Gate Gourmet in 1997 and there is now not enough time before 22 October 2016 within which HAL could construct a surface car park on the Site. It is true that BA has not done anything but inactivity is usually not enough from which to infer abandonment. In any case, the other party to the contract, HAL, has acted on the basis that it is Gate Gourmet, rather than BA, which is the relevant party with whom to discuss the performance of its obligation under clause 29. As I will describe later in this judgment, Mr Scarlett of HAL asked Gate Gourmet, rather than BA, what it wanted in this respect. Gate Gourmet did not do or say anything which amounted to an abandonment of the benefit of clause 29 although I will consider below whether, for a time, they indicated that they did not require HAL to perform clause 29. In any event, I consider that the express terms of clauses 27.1 and 27.3 of the 1990 Agreement preclude an inference from BA's inactivity that there has been an agreement to abandon the benefit of clause 29.
- The next question is as to what work is required under clause 29. HAL must build in accordance with the layout plan and this includes spaces on the Stub. For the reasons given earlier, AP16 is obliged to comply with the layout plan in relation to the land demised by the 2005 Lease (the Site excluding the Stub) and so is only obliged to create a surface car park with a smaller number of spaces which, on the evidence is of the order of 265.
The Claimants' claims against HAL
- The Claimants' rights against HAL arise under the 2000 Lease.
- The first claim by the Claimants which I will consider is the claim under schedule 4 to the 2000 Lease. This provision will impose an obligation on HAL following termination of the Car Park Licence, which will be not later than 22 October 2016. At that point, HAL will be obliged to provide or procure the provision of 280 spaces. If AP16 had created that number of spaces on the Site excluding the Stub prior to that date then, no doubt, HAL would make those spaces available to the Claimants under schedule 4 to the 2000 Lease. However, it is already clear that AP16 will not make those spaces available by that date so that HAL will have to provide 280 spaces somewhere else. The obvious place for HAL to provide such spaces is on P5 where it has provided 350 spaces for Gate Gourmet for many years. The Claimants have indicated that they will accept that 280 spaces on P5 will amount to performance by HAL of its obligation under schedule 4 to the 2000 Lease.
- If HAL wished to provide 280 spaces somewhere other than P5 then there could be an issue as to whether the Claimants would be prepared to agree to that. Paragraph 2 of schedule 4 to the 2000 Lease refers to "or such other Landlord operated car park as the Tenants may agree in its discretion". At the trial, the Claimants and HAL put forward different interpretations of that phrase although the differences between them were not examined in any detail. As I understand it, the Claimants would wish to contend that these words mean that the car spaces can only be provided on land other than the Site if the Claimants agree to that and the Claimants' agreement is an absolute pre-condition. In other words, the Claimants have an absolute veto on any suggested alternative to the Site. HAL would wish to argue that the Claimants' veto is not absolute but must be subject to some limitations. What those limitations might be was not really explored. One possible limitation which occurs to me is to the effect that the Claimants may not act capriciously or arbitrarily in refusing to agree. An implied limitation of that kind is not unusual in relation to contractual terms which give a discretion to one party to a contract. The many cases on that point are summarised in Lewison on The Interpretation of Contracts, 5th ed. and Supplement, at paragraph 14-11, to which I would add British Telecommunications plc v Telefonica O2 Uk Ltd [2014] 4 All ER 907 at [37]. On the evidence before me, it seems unlikely that HAL would be able to put forward a second alternative to the Site apart from P5 but I am not in a position to decide that point. As there is no present dispute to be resolved and as such a dispute might never arise, I will not further discuss the possible differences of approach.
- The second claim by the Claimants against HAL relies upon paragraph 4 of schedule 3 to the 2000 Lease which obliges HAL to comply with the terms of the 1990 Agreement for so long as the same are still subsisting and are capable of being enforced, unless and to the extent that Gate Gourmet has waived and continued to waive compliance by HAL.
- I have already considered whether HAL's obligation under clause 29 of the 1990 Agreement was still subsisting when I considered the claim which HAL made against AP16 under paragraph 15.2 of schedule 2 to the 2005 Lease. In that context, I held that HAL's obligation under clause 29 of the 1990 Agreement was still subsisting and that finding applies also in the context of the Claimants' claim against HAL under paragraph 4 of schedule 3 to the 2000 Lease.
- The next question is whether the obligation in clause 29 of the 1990 Agreement is still capable of being enforced within the meaning of those words in paragraph 4 of schedule 3 to the 2000 Lease. It is not said that HAL has a limitation defence to a claim by BA for specific performance of clause 29 of the 1990 Agreement. HAL argued that it could defend a claim for specific performance brought by BA on the ground of laches. However, I do not think that HAL was able to point to prejudice caused by delay in BA enforcing its rights. As I will explain when considering the question of waiver by Gate Gourmet, HAL positively wanted to delay creating a surface car park because it considered that the delay would be beneficial to it. It later managed to sell the Site excluding the Stub by granting a long lease of it for a premium of £500,000 and whereby it imposed on AP16 the obligation arising under clause 29 of the 1990 Agreement.
- The next question is whether Gate Gourmet has waived and continues to waive compliance by HAL with this obligation. As I have explained, it was common ground at the trial that the benefit of the 1990 Agreement, and clause 29 of it in particular, was personal to BA and that Gate Gourmet did not, in law, have the benefit of the 1990 Agreement. The position was that, in practice, BA who had the benefit of the Car Park Licence was authorising Gate Gourmet to enjoy the parking provided under that licence. It may be that the draftsman of paragraph 4 of schedule 3 to the 2000 Lease proceeded on the mistaken basis that Gate Gourmet as the assignee from BA of the Catering Base also had the benefit of the 1990 Agreement and it was therefore relevant to refer to the possibility of Gate Gourmet waiving compliance by HAL with the 1990 Agreement. If that had been the position, it might have been possible to argue that paragraph 4 of schedule 3 to the 2000 Lease was drafted on a mistaken basis and that the wording which referred to Gate Gourmet waiving compliance with the 1990 Agreement could simply be ignored. However, that argument was not put forward. It seemed to be common ground at the trial that I should construe the relevant provision against the known background that Gate Gourmet did not have the benefit of the 1990 Agreement and that I should seek to give effect to the wording of the provision rather than regard it as a dead letter. Accordingly, I will proceed on that agreed basis.
- On that basis, the reference to Gate Gourmet waiving compliance by HAL with the 1990 Agreement must mean something different from the ordinary concept of waiver of the benefit of a contract. Construed against the background that Gate Gourmet did not have contractual rights against HAL, but BA did, and BA was authorising Gate Gourmet to enjoy the car parking spaces provided under the Car Park Licence, it would seem that the reference to Gate Gourmet waiving compliance with the 1990 Agreement ought to be construed as referring to circumstances in which Gate Gourmet indicated that it was content to continue to enjoy the benefit of spaces under the Car Park Licence and did not wish to see a situation where the Car Park Licence was brought to an end and replaced with the grant to BA of a lease of surface car parking constructed on the Site.
- I make the following findings as to Gate Gourmet's attitude to the question of HAL creating a surface car park on the Site and providing parking there in place of spaces being provided under the Car Park Licence. These findings are based on the evidence given by Mr Scarlett who was an employee of HAL from 1992 to 2006. The Heathrow Express Railway works, so far as they affected the Site (excluding the Stub) were completed by late 1998 or early 1999. The Site excluding the Stub was left as a clear site. The surface consisted of loose gravel and hardcore and was relatively flat. It would not have been possible to mark out car spaces on that surface. At that time, HAL was aware of its obligations in relation to the Site pursuant to the 1990 Agreement. Mr Scarlett was dealing with that matter on behalf of HAL. HAL had not budgeted for the works which would be needed to create a surface car park in accordance with the 1990 Agreement. Mr Scarlett arranged a meeting with a representative of Gate Gourmet to discuss its attitude to the provision of a surface car park in place of car parking under the Car Park Licence. Mr Scarlett proceeded on the basis that Gate Gourmet had the benefit of the 1990 Agreement and the Car Park Licence. Mr Scarlett did not remember whom exactly he met on behalf of Gate Gourmet. It might have been the general manager of the Catering Base but I could not confidently find who it was that spoke to Mr Scarlett. The representative of Gate Gourmet expressed the view at that meeting that Gate Gourmet was happy with the then current arrangements under the Car Park Licence. Under that licence, it was using 350 spaces free of charge, whereas a surface car park on the Site would only provide 280 spaces. Although the spaces at P5 were slightly further from the Catering Base than would be spaces on the Site, this did not lead Gate Gourmet to prefer to have spaces on the Site. After this meeting, HAL decided that it would not, at that time, create a surface car park in accordance with the 1990 Agreement but would allow matters to continue as they had been.
- I also heard evidence from Mr Fountain on behalf of Gate Gourmet to the effect that Gate Gourmet had no written record of the meeting which Mr Scarlett had with a representative of Gate Gourmet. Mr Fountain suggests that it might have been the case that Gate Gourmet was happy for the then current arrangements to continue but it did not give up permanently any of its property rights. Apart from the point that Gate Gourmet did not have any relevant property rights in relation to car parking, based on Mr Scarlett's evidence, I consider that Gate Gourmet did not commit itself to a permanent giving up of anything but simply expressed a preference for the then current arrangements to continue at least until further notice.
- Having made those findings of fact, the next question is whether Gate Gourmet waived compliance by HAL with the 1990 Agreement in relation to the creation of a surface car park on the Site for the purposes of paragraph 4 of schedule 3 to the 2000 Lease. Although the Claimants relied upon clauses 27.1 and 27.3 of the 1990 Agreement in relation to arguments that BA had abandoned the benefit of the 1990 Agreement or had waived its rights under it, the Claimants did not contend that those clauses were material to the question whether Gate Gourmet had waived compliance with the 1990 Agreement for the purposes of paragraph 4 of schedule 3 to the 2000 Lease. I consider that Gate Gourmet did waive compliance by HAL in that way. Both HAL and Gate Gourmet were proceeding on the basis that Gate Gourmet had relevant rights under the 1990 Agreement. If that had been the case, then my findings would produce the result that Gate Gourmet could not complain to HAL about its delay in performing clause 29 of the 1990 Agreement because Gate Gourmet had a preference, and expressed that preference to HAL, for the continuance of its supposed rights under the Car Park Licence over its supposed rights under clause 29 of the 1990 Agreement. It was argued that the representative of Gate Gourmet (whoever he was) present at the meeting with Mr Scarlett would not have had authority to waive any such rights. I accept that I am unable to make findings as to the precise level of authority of that representative. However, I do not think that the outcome requires me to make such findings. This was a case where Gate Gourmet did not at any time call on HAL to create a surface car park and where it is plainly to be inferred from its conduct that it preferred to carry on using car spaces provided under the Car Park Licence. Further, when HAL arranged a meeting with a representative of Gate Gourmet to ask for its preferences as to parking, that representative felt able to say what those preferences were and what he said obviously accorded with the preferences which I would infer Gate Gourmet had. The waiver which needs to be shown in this case can be informal and need not have any permanent consequences. Assessed in that light, I find that Gate Gourmet did waive compliance with clause 29 of the 1990 Agreement within the meaning of paragraph 4 of schedule 3 to the 2000 Lease.
- The next question is whether Gate Gourmet brought its waiver to an end at some point. The Claimants assert that Gate Gourmet did bring its waiver to an end in late 2010 when, it is submitted, it was made clear in correspondence to HAL's solicitors that Gate Gourmet wished HAL to perform its obligations under clause 29 of the 1990 Agreement.
- By way of background to the correspondence on which the Claimants rely, I need to refer to the agreement dated 30 March 2010 between Heathrow Site No. 5 (CI) Ltd and Heathrow Site No. 5B (CI) Ltd (described as "the Landlord") and Gate Gourmet. This agreement recited that the Landlord had the benefit of a covenant in paragraph 4 of schedule 3 to the 2000 Lease obliging HAL to construct a car park on the Site and further recited that Gate Gourmet might have the benefit of a claim against HAL to construct the same car park under clause 29.4 of the 1990 Agreement. It was then recited that the Landlord and Gate Gourmet had agreed upon the terms of the agreement of 30 March 2010 to endeavour to work together to try to enforce these claims against HAL. The agreement defined the Construction Claim as the claim pursuant to schedule 4 to the 2000 Lease; it seems likely that this was intended to be a reference to paragraph 4 of schedule 3 to the 2000 Lease. It was then agreed that Gate Gourmet could request in writing that the Landlord pursue the Construction Claim whereupon the Landlord was obliged to take various steps. There was no evidence that Gate Gourmet ever made such a request in writing.
- In 2010, the solicitors then acting for the Claimants wrote to the solicitors for HAL asserting that HAL was obliged to create a surface car park on the Site. On 28 September 2010, those solicitors wrote to HAL's solicitors stating that the Claimants and Gate Gourmet required this car park to be constructed as soon as reasonably practicable. The letter stated that the Claimants' solicitors were not instructed formally to represent Gate Gourmet but they confirmed that they had the agreement of Gate Gourmet to advance this claim jointly on behalf of the Claimants and Gate Gourmet. On 15 December 2010, the Claimants' solicitors wrote again to HAL's solicitors and confirmed that they were instructed to pursue the claim for Gate Gourmet as well as for the Claimants. They referred to an argument that Gate Gourmet had waived compliance by HAL with clause 29 of the 1990 Agreement and stated that the current correspondence made it plain that any waiver was now at an end.
- The letters of 28 September 2010 and 15 December 2010 will have brought the previous waiver by Gate Gourmet to an end provided that the statements in the letters were made with the authority of Gate Gourmet. There was no direct evidence as to when and how Gate Gourmet gave authority for these statements to be made on their behalf. Further, there are other pointers to Gate Gourmet continuing to be content to enjoy the benefit of parking in P5, the spaces provided under the Car Park Licence. I refer to correspondence in 2012 when HAL required Gate Gourmet to park in an alternative car park as P5 was used in connection with the London Olympics. In that correspondence, which came from Gate Gourmet direct, it invoked its supposed rights under the Car Park Licence but did not appear to invoke its rights under clause 29 of the 1990 Agreement.
- The correspondence placed before the court included a letter dated 13 November 2012 from Gate Gourmet to representatives of the Claimants. That letter stated that Gate Gourmet was happy to continue to support the Claimants' legal action against HAL and it stated that over a period of four years Gate Gourmet had incurred substantial legal fees of its own in reviewing its position and assisting the Claimants in building the case against HAL. The period of four years would cover the period in which the letters in late 2010 were written.
- I consider that I can act upon the statements made by the Claimants' solicitors in their letters of late 2010 to HAL's solicitors especially when taken together with Gate Gourmet's own letter of 13 November 2012 to make a finding on the balance of probabilities that the statements made by the Claimants' solicitors which, in point of form sufficed to end Gate Gourmet's previous waiver, were indeed made with Gate Gourmet's authority, as they were expressed to be. Accordingly, Gate Gourmet ceased to waive compliance by HAL with clause 29 of the 1990 Agreement by the letters of 28 September 2010 and 15 December 2010.
- Accordingly, for the purposes of HAL's obligation to the Claimants under paragraph 4 of schedule 3 to the 2000 Lease, clause 29 of the 1990 Agreement is still subsisting and capable of being enforced and the waiver by Gate Gourmet ended in late 2010. On this basis, HAL ought to have constructed a surface car park on the Site within a reasonable time after late 2010. It made no attempt to do so and accordingly was in breach of paragraph 4 of schedule 3 to the 2000 Lease.
- HAL argued that the Claimants were not able to claim against it for this breach of paragraph 4 of schedule 3 to the 2000 Lease. The argument was that the Claimants acquired the term of the lease on 7 October 2013. By that date, HAL's breach of its obligation was in the past. It was stressed that a breach of an obligation to carry out building works is a once and for all breach and not a continuing breach: see First Penthouse Ltd v Channel Hotels and Properties (UK) Ltd [2004] L&TR 27. Although HAL accepted that the benefit of the landlord covenants in the 2000 Lease passed to the Claimants under section 3(2)(b) of the Landlord and Tenant (Covenants) Act 1995, HAL argued that the operation of that provision was qualified by section 23(1) of the 1995 Act. Section 23(1) provides that an assignee of the term does not have any rights under the relevant landlord covenant "in relation to any time falling before the assignment". Thus, by reason of section 23(1), the Claimants could not sue for any damages for delay in relation to the period before 7 October 2013. However, what the Claimants wish to do is to seek a remedy for HAL's continuing non-performance of paragraph 4 of schedule 3 to the 2000 Lease on and after 7 October 2013. If before 7 October 2013, the assignor to the Claimants could have sought specific performance of HAL's obligation, then I do not see why the Claimants could also not seek specific performance of it after 7 October 2013. It is nothing to the point that the failure to construct a surface car park within a reasonable period following late 2010 is a once and for all breach. Accordingly, HAL is not able to avoid the Claimants' claim for specific performance of the obligation in paragraph 4 of schedule 3 to the 2000 Lease by reliance on section 23(1) of the 1995 Act.
- In any case, section 23(2) allows rights under covenants to be expressly assigned. When BAA Partnership Ltd sold to the First Claimant all of the beneficial interest in the 2000 Lease on 18 December 2000, the benefit of the lessor's covenants in the 2000 Lease were held on trust for the First Claimant. The First Claimant is entitled in equity to the benefit of the covenant in paragraph 4 of schedule 3 to the 2000 Lease. In the present case, assuming (contrary to my decision as to the operation of the 1995 Act) that, at law, the benefit of the covenants in relation to breaches prior to 7 October 2013 remained vested in the original lessees under the 2000 Lease, it is not necessary for the First Claimant to join the original lessees to these proceedings in circumstances where the original lessees have been dissolved and so have ceased to exist. I understand that, in the course of argument, HAL accepted that this was the position.
- In these circumstances, I do not need to consider whether the benefit of the covenant in paragraph 4 of schedule 3 to the 2000 Lease was impliedly assigned to the Claimants by reason of their agreement with the transferors in the transfer of 7 October 2013 that the Claimants would pursue a claim against HAL under that covenant.
Remedies
- The primary remedy sought by HAL against AP16 is specific performance of its obligation in paragraph 15.1 of schedule 2 to the 2005 Lease to comply with schedule 4 to the 2000 Lease. The primary remedy sought by the Claimants against HAL is specific performance of its obligation in schedule 4 to the 2000 Lease. I will first consider the claim by HAL against AP16.
HAL's claim for specific performance
- HAL seeks an order that AP16 specifically perform its obligation to provide 280 car parking spaces on the Site excluding the Stub on and after 22 October 2016. If an order for specific performance were otherwise appropriate, it is accepted by AP16 that HAL is entitled to commence proceedings before 22 October 2016 seeking an order for specific performance, that is to say, it is not necessary for HAL to wait until 22 October 2016 before it is able to bring a claim for specific performance. So much is established by the decision of the Privy Council in Hasham v Zenab [1960] AC 316.
- However, there is a separate question as to whether the court is able, before 22 October 2016, to make an order for specific performance of the contract which order requires AP16 to take action before that date. Plainly the order cannot compel AP16 to provide 280 spaces before 22 October 2016 but is it possible for the court to order steps to be taken before that date with a view to bringing about the result that 280 spaces are provided as soon as reasonably possible after that date?
- I was not shown any authority directly in point. I have considered Hasham v Zenab [1960] AC 316 and an earlier case (Marks v Lilley [1959] 1 WLR 749) as well as a later case (Oakacre Ltd v Claire Cleaners (Holdings) Ltd [1982] Ch 197) but none specifically deals with the present point. In Marks v Lilley, the writ for specific performance was in fact issued after the contractual date for completion but before time was made of the essence for completion and the contract was completed without an order for specific performance needing to be made. In Hasham v Zenab, the claim for specific performance was brought before the contractual completion date and an order for specific performance was made after the completion date. In Oakacre Ltd v Claire Cleaners (Holdings) Ltd, the writ for specific performance was issued before the contractual completion date, there was delay in completion after the contractual completion date but completion then took place and the issue was whether the court could award damages for delay pursuant to a claim in the writ (issued before the delay occurred) for damages in addition to specific performance.
- Nonetheless, some of the discussion in Hasham v Zenab is potentially helpful. Counsel for the party claiming specific performance in that case submitted that the court could make an order for specific performance before the date for completion. Such an order would provide that the contract ought to be specifically performed and carried into execution and when the time for performance arrived, each party could apply for directions: see at page 325. That submission was accepted by the Privy Council (see at page 330) and it was further stated that the court could give relief from any order in the event of an intervening circumstance frustrating the contract.
- I consider that I am able before 22 October 2016 to state that AP16's contractual obligation should be specifically performed and carried into effect. If I do so order, then I also consider that I am able to give directions as to the steps which AP16 need to take in order to bring about performance of its obligation on or, more realistically, as soon as possible after the contractual date for performance, 22 October 2016. In that way, I consider that I am able to direct AP16 to take steps before 22 October 2016 for that purpose. Although my finding may go beyond what has been expressly held in an earlier case, counsel for AP16 did not put forward any argument to the contrary.
- The obligation upon AP16 which I am asked to make the subject of an order for specific performance is an obligation to provide 280 car parking spaces on a defined area of land. The relevant contractual provision does not define how AP16 is to go about performing its obligation. Instead, the contract identifies the result which AP16 must achieve. Accordingly, AP16 had some element of choice as to how it might perform its obligation. However, its scope for choosing the optimum manner of performance from its point of view is considerably cut down by the fact that it did not make its choice and implement its choice in good time to provide 280 car parking spaces not later than 22 October 2016. Some schemes for creating such spaces will take longer than others. In theory, a possible scheme would be to develop the Site excluding the Stub by the erection of a building which incorporates 280 or more spaces. Another scheme might be one which involves the minimum amount of work to create 280 spaces. An example of such a scheme has been designed by the Claimants and consists of a number of spaces on the surface of the land with a ramp and a deck providing further spaces to make up the number of 280 spaces. If AP16 had made its choice some years ago, giving itself adequate time to implement its choice and so as to provide 280 spaces by 22 October 2016, it would have been possible for it to carry out a scheme which would have been more valuable to it than the Claimants' minimum scheme. However, if AP16 were now to embark on a more extensive scheme, it is very likely that it would not get to the point of providing 280 spaces on the Site excluding the Stub until much later than the date when they could be provided if AP16 pursued the Claimants' scheme.
- AP16's obligation is expressed as an obligation to produce a certain result rather than an obligation to carry out specific building works. Nonetheless, it is helpful to refer to the principles which apply to a claim to specific performance where the court has to consider whether to order a party to carry out building works. There have been many such cases over the years as can be seen from the cases cited on the point in Tito v Waddell (No. 2) [1977] Ch 106, see at pages 321-323. At one time, it was suggested that an order would only be made if the work to be done was defined in the contract but as explained in Tito v Waddell (No. 2) at 322B, the real question was whether the work to be done could be sufficiently defined in the court's order. The matter was considered again in Rainbow Estates Ltd v Tokenhold Ltd [1999] Ch 64 from which I derive the following propositions relating to a claim to specific performance of a contract to build:
(1) the remedy should be made available where it is the appropriate remedy and, in particular, where damages are not an adequate remedy;
(2) it will be relevant that the person with the benefit of the contract cannot enter upon the relevant land and carry out, or procure the carrying out of, the work;
(3) in the case of an obligation to build contained in a lease, it will be relevant to consider whether the landlord with a right to forfeit the lease should be left to pursue that remedy, to recover possession of the premises and then to have the ability to carry out the building works;
(4) the court's order should contain sufficient definition of what is to be done.
- The same authority also repeats, in this context, general remarks made by Lord Hoffmann in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 at pages 13-14 to the effect there is a difference between an order which requires the achievement of a result and an order to carry out specified works; with the former order, the court may be asked to examine the finished work to see whether it achieves the result required by the order.
- In the present case, HAL does not have a right under the 2005 Lease to enter on the Site excluding the Stub to carry out works to provide 280 spaces on that land. Further, although the 2005 Lease does contain a forfeiture clause providing for HAL to be able to forfeit the lease in certain limited circumstances, those circumstances do not allow HAL to forfeit the 2005 Lease by reason of AP16's breach of paragraphs 15.1 or 15.2 of schedule 2 to the 2005 Lease.
- On the all important question as to whether damages are an adequate remedy for HAL in respect of AP16's anticipated breach of the 2005 Lease, it is notable that AP16 does not contend that damages would be an adequate remedy. AP16 accepts that this is a case where the court will, in general terms, make an order designed to produce the result that there will be 280 spaces on the Site excluding the Stub which AP16 will be obliged to make available (via HAL and the Claimants) to Gate Gourmet.
- Up until the last day of the trial, it seemed that there might be little or no argument as to what work should be carried out by AP16 pursuant to an order for specific performance. AP16's case was that it was not contractually liable to provide 280 spaces on and after 22 October 2016 because the Car Park Licence would continue after that date. It did not initially address the question of what order I should make if I found against it on that point. The Claimants and HAL had identified a scheme whereby the Site excluding the Stub could be developed as a surface car park together with a ramp giving access to a deck which could provide further spaces. However, there was evidence that AP16 had applied to the local planning authority for a multi-storey car park to provide 2077 spaces and if AP16 constructed that car park then it would be able to make 280 of those spaces available for Gate Gourmet. AP16 would obviously be far better off if it were able to erect a large multi-storey car park on the site as compared with being restricted to using the site as a surface car park with a small deck. In the former case, AP16 would have a source of income from the Site excluding the Stub. In the latter case, AP16 would have to bear the expense of providing the surface car park plus deck, would have the responsibility of being in possession of the car park and would derive no income from it. Effectively, AP16 would be significantly out of pocket and would not be able to make any beneficial use of its land for the term of 999 years.
- This suggested to me that it might emerge during the trial that there was a real difference of approach as to the order I should make against AP16. Belatedly, that difference did indeed emerge. In its closing submissions, which were presented after the Claimants and HAL had made their closing submissions, AP16 submitted that I should not order it to provide the surface car park plus deck contended for by the Claimants and HAL but I should allow it to continue its endeavours to secure planning permission for a multi-storey car park which it would then construct. This suggestion immediately gave rise to certain questions. How much extra time would AP16 take to obtain planning permission for a multi-storey car park and then to construct it, as compared with the process involved in obtaining planning for and constructing a surface car park plus a deck? Where would Gate Gourmet park in the meantime? If HAL was obliged to continue to provide car spaces for Gate Gourmet on P5, would AP16 compensate HAL and was AP16 good for the money?
- AP16 put forward certain possible answers to these questions. HAL and the Claimants then made submissions in reply to AP16's proposal. HAL indicated that it could not make detailed comments at the hearing because the proposal was a new one. There was discussion as to whether I should permit AP16 to make a formal written proposal after the hearing which I could consider in my reserved judgment. In their submissions in reply, the Claimants protested at the lateness of AP16's proposal and submitted that I should not entertain its proposal made at such a late stage.
- When I reserved my judgment, I indicated that I would be prepared to consider AP16's proposal if AP16 explained it in correspondence and I would also consider the response of HAL and the Claimants to that proposal. I set a time table for these exchanges to take place. I did not envisage that the exchanges would be very elaborate and I did not envisage that it would be necessary to convene a further hearing in relation to them.
- Following the hearing, the parties agreed a form of order which went beyond my directions at the end of the trial. They agreed that AP16 should not only make its proposals but should also serve all supporting documents and written submissions. The parties agreed that the Claimants and HAL could then make their responses to the proposals. The parties also agreed that this material would be considered by me on paper or at a hearing. I was then asked to hold a further hearing which was duly fixed to take place on 15 December 2015.
- As a result of further communications from the parties, I asked the parties to agree directions as to what was to happen at the hearing on 15 December 2015 whereupon I was told that the parties no longer wanted a further hearing. I was invited to consider the material submitted by the parties and come to my conclusion. I then set about considering that material.
- The material provided by the parties following the hearing is very considerable. I now have written submissions from AP16 together with a witness statement; I have written submissions from HAL together with two witness statements; I have written submissions from the Claimants with one witness statement which exhibits a number of other statements from witnesses; then I have AP16's three witness statements in response; and finally I have a reply witness statement from each of HAL and the Claimants. I add that this evidence includes hearsay evidence as to the position of Gate Gourmet and opinion evidence from an engineer, an accountant, a planning consultant and a transport consultant and a copy of an opinion from planning counsel. It is obvious that this material goes very far beyond what I permitted at the end of the trial. The parties (in particular the Claimants) also seem to want to rely on a considerable amount of expert evidence without seeking a direction from the court to permit them to do so.
- The first decision I must make is how to respond to all this material. Should I shut it all out? Should I direct a further hearing with a time estimate of 3 to 5 days? Should I decide every disputed issue without the benefit of the witnesses being called at a hearing? Should I see if there is a way in which I could discard some of the material as not affecting the ultimate conclusion and possibly combine that approach with a decision on matters of principle leaving it to the parties to agree the implementation of those principles?
- As to these options:
(1) it would not be right to shut out all of this material; at the end of the trial, AP16 raised a point of importance which deserves to be considered; I still consider that I was right to allow AP16 to identify its proposal and to allow the other parties to identify their positions in response;
(2) it is obvious that the parties wish to avoid a further hearing, particularly one lasting 3 to 5 days;
(3) it would be almost impossible to decide all of the disputed issues by considering the written material alone;
(4) by default, I consider that the most useful thing for me to do is to see if there is a way in which I could discard some of the material as not affecting the ultimate conclusion and possibly combine that approach with a decision on matters of principle leaving it to the parties to agree the implementation of those principles.
- I will attempt to summarise the many points which have been raised in the material provided by the parties.
- AP16 says:
(1) it should be given a period of two years from 22 October 2016 in order to bring to fruition a development scheme on its land excluding the Stub;
(2) this period of two years should be considered in the context of it being under a positive covenant to provide parking spaces for 999 years;
(3) AP16 has identified three possible schemes;
(4) the first scheme is the multi-storey car park, the subject of its application for planning permission; that application will be considered by the local planning authority on 5 January 2016;
(5) the second scheme involves the use of one half of its land, to provide between 400 and 600 spaces in addition to the 280 it is contractually obliged to provide; the other half of its land would remain available to AP16 for future development;
(6) the third scheme involves the use of one quarter of the site to provide 280 spaces over seven levels of parking, leaving the remainder of its land available to AP16 for future development;
(7) in the meantime, HAL is under an obligation to the Claimants to provide 280 spaces and these can be provided on P5;
(8) AP16 will compensate HAL in damages (payable quarterly in advance) for having to provide 280 spaces on P5 or elsewhere as a result of AP16's breach of contract on and after 22 October 2016;
(9) AP16 has funding for its proposed development;
(10) AP16 also has funding for its liability in damages to HAL;
(11) AP16 will pay one year's worth of damages into an escrow account.
- HAL says:
(1) AP16's proposals, in particular in relation to the second and third schemes, are not fully thought through and there can be no assurance that any of them will be progressed;
(2) AP16 has not offered to pay a year's damages into an escrow account before 22 October 2016;
(3) the court should refuse to give AP16 extra time to perform its obligations;
(4) if the court gives AP16 extra time, the court should give it the shortest time reasonably needed to allow AP16 to build a car park in a way which is viable for AP16;
(5) AP16 should only be allowed to pursue one of the cheaper alternative schemes, which will take much less time;
(6) there is a major planning difficulty in the path of AP16 securing planning permission for its first or second scheme; the planning difficulty relates to the car park cap imposed by a planning condition on the grant of planning permission for Heathrow Airport Terminal 5; (this planning difficulty had been explained to me in the course of the trial); accordingly, AP16 should be allowed to progress the third scheme only;
(7) in order to ensure that AP16 proceeds with the third scheme without delay, the court should specify conditions (subject to time limits) as to:
a) the conduct of the planning process; and
b) entering into a building contract to carry out the development.
(8) one year's damages should be paid into an escrow account within 14 days of judgment;
(9) the damages should be calculated at £596.70 per parking pass, at the rate of 3 passes per space, giving an annual sum for 280 spaces of £501,228;
(10) if HAL has to draw on the escrow fund, then AP16 should be obliged to top up the fund.
- The Claimants say:
(1) The Claimants' attitude will turn to a material extent on the court's resolution of two other matters, namely:
a) whether the 280 spaces to be provided by HAL until 280 spaces are provided by AP16 are on a car park of the Claimants' choosing or on a car park of HAL's choosing; and
b) whether the court will make an order for specific performance in favour of the Claimants against HAL;
(2) if those two matters were resolved in favour of the Claimants, and HAL continued to provide 280 spaces on P5, then the Claimants would accept that neither they nor Gate Gourmet would suffer any great hardship if the present position continued for a little longer;
(3) the court should consider how the present problem has come about; the blame lies first of all with AP16; it took an assignment of the 2005 Lease in 2008; it had plenty of time to choose how to perform its contractual obligations to HAL and at the same time to maximise the development potential of its land; at every stage, AP16 took a commercial gamble that it could get away with not performing its contractual obligations to HAL; it gambled with its own fortunes and it also gambled with everyone else's; AP16 now wishes for its position to be allowed by the court to prevail over the position of the Claimants (an entirely innocent party) and HAL; AP16 has not been open with the other parties but is a slippery customer;
(4) the delay which is sought by AP16 will not be welcome to the Claimants and Gate Gourmet, particularly if there is any question at all of Gate Gourmet being required to move from P5 to P4 or somewhere else;
(5) there is a very real doubt about AP16's ability to obtain planning permission for its schemes;
(6) AP16 has given very little thought to the viability and deliverability of the second and third schemes;
(7) AP16's timescales are unrealistic;
(8) AP16 is a "man of straw"; the details of the suggested funding are not impressive; and the financial position of the alleged funders is open to question;
(9) AP16's offer to pay damages to HAL is inadequate;
(10) a surface car park would be much more straightforward in operational terms.
- In addition to the above, there were further witness statements which I need not summarise save to say that AP16 has offered to pay one year's damages into an escrow account within 28 days after judgment.
- Having assessed the material provided by the parties, I consider that the following matters emerge:
(1) it is accepted that it would not be appropriate to refuse to order specific performance altogether and to award damages instead, in other words, damages would not be an adequate remedy justifying a total refusal of an order for specific performance;
(2) during any period of delay after 22 October 2016, caused by AP16's failure to provide 280 spaces on and after that date, the Claimants (and Gate Gourmet) will have the benefit of HAL continuing to provide 280 spaces;
(3) HAL's 280 spaces will be on P5 or (possibly but unlikely) on an alternative site which the Claimants agree in their discretion;
(4) during any such period of delay, the Claimants (and Gate Gourmet) will not suffer any significant prejudice;
(5) during any such period of delay, HAL will suffer loss represented by a loss of income from the 280 spaces which it will be providing free of charge to Gate Gourmet;
(6) for such period of delay, damages can in principle be an adequate remedy for HAL;
(7) HAL's loss of income should be capable of being agreed between HAL and AP16 or, in default of agreement, determined by the court;
(8) if the court made an order for specific performance against AP16 which gave it the period of delay which it seeks, it would be appropriate to order AP16 to pay damages to HAL quarterly in advance during the period of delay;
(9) in that event, it would also be appropriate to order AP16, within 28 days of this judgment, to set up an escrow fund comprising a sum equivalent to one year's damages and to keep that fund topped up; if the amount of such damages is not agreed or determined within that 28 day period, it would be appropriate to order AP16 to pay £502,000 into that escrow fund;
(10) when considering whether to give AP16 the benefit of a period of delay in the context of an order for specific performance in favour of HAL, it is relevant to take account of the Claimants' position but it is of no real materiality whether the court makes an order for specific performance in favour of the Claimants against HAL;
(11) the court would be prepared to make an order which obliged AP16 to construct a surface car park with a ramp and deck and which prevented AP16 from making any profitable use of its land if that were necessary to protect HAL and the Claimants from serious harm to their legitimate interests;
(12) an order which obliged AP16 to construct a surface car park with a ramp and deck and which prevented AP16 from making any profitable use of its land would deprive AP16 of the opportunity to make a profitable use of its land;
(13) the present difficulty in which AP16 finds itself is its own fault; it could have avoided this present difficulty by taking steps to perform its contractual obligations while at the same time seeking to obtain some value from its land;
(14) AP16's fault does not necessarily mean that it should be denied the period of delay which it seeks; the court should consider the proportionality of the adverse consequences for AP16, of an order that it construct a surface car park with a ramp and deck, to the degree of fault on the part of AP16;
(15) the court is not in a position to predict the outcome of the dispute as to the correct interpretation of the condition as to the car park cap and the significance of that outcome on an application by AP16 for planning permission for one or other of its schemes;
(16) in relation to funding for one or other of AP16's schemes, there are a number of uncertainties; it is likely that AP16 could obtain funding if it wanted to carry out one of those schemes; it is not completely certain that AP16 will in the end want to carry out one of those schemes;
(17) the time which AP16 will reasonably need to bring about one or other of its schemes is difficult to predict; it may turn out that the two year period from October 2016 to October 2018 will not be adequate;
(18) AP16 has asked for a period of delay to October 2018; the court should not of its own motion give AP16 a longer period; if that period is allowed to AP16, it cannot expect that it can come back and ask for an extension of it; if it turns out that it is going to be inadequate for it to achieve its optimum solution, then it must adapt its plans to fit the time available;
(19) it is inappropriate for AP16 simply to be given a period of time to use as it pleases; the court's order should seek to specify milestones to be achieved with provision for a default position (referred to below) to apply if AP16 does not achieve a milestone;
(20) the default position should be that if AP16 does not achieve a milestone, then it will be obliged to abandon its then current plans and proceed to build a surface car park with a ramp and deck as contended for by the Claimants and HAL at the trial.
- There is a further consideration. If I make an order against AP16 requiring it to proceed to seek planning permission for a surface car park plus a ramp and a deck and also order AP16, following the grant of planning permission, to construct such a car park, I have grave doubts whether it will build such a car park. The cost of complying with the order will exceed £1 million. A surface car park will produce no income for AP16. A surface car park will prevent AP16 deriving any benefit from its land. AP16 is a single purpose vehicle and its only asset is the 2005 Lease. If AP16 is subject to such an order for specific performance, it is difficult to see how that lease would have any value. There must be a high degree of likelihood that the effect of the court's order will be to render AP16 insolvent. It is likely that it will go into liquidation. It is likely that a liquidator would disclaim the 2005 Lease. HAL would then have possession of the Site (including the Stub). It is likely that HAL would not wish to construct a surface car park with a ramp and a deck but it would wish to explore the sort of scheme that AP16 is now suggesting. The Claimants could not prevent that happening provided that HAL continued to provide 280 spaces on P5 or, conceivably somewhere else, in the meantime.
- Having identified the above considerations, I can now reach my conclusions. There should be an order for specific performance in favour of HAL against AP16; the court should hold that AP16's performance of its obligation in paragraph 15.1 of schedule 2 to the 2005 Lease should be under the supervision of the court. The court should not shut AP16 out from attempting, during a period of delay up to October 2018, to make a use of its land which would be more valuable to it that its development as a surface car park plus ramp and deck. Damages will be an adequate remedy for HAL, and indeed the Claimants, during this period of delay. It would be disproportionate to punish AP16 for its fault by taking from it any prospect of it being able to make some profitable use of its land.
- In view of the fact that HAL will obtain an order for specific performance in relation to its primary claim pursuant to paragraph 15.1 of schedule 2 to the 2005 Lease, it is not appropriate to consider whether it would have been appropriate to make an order for specific performance in relation to its alternative claim under paragraph 15.2 of the second schedule to that lease.
- The order for specific performance which I consider is appropriate will require detailed drafting. On the hand down of this judgment, I will give the parties a period within which to prepare a draft order and in default of their agreement and/or the approval of the court, I will settle the form of order following a hearing or on written submissions, as appropriate.
The Claimants' claim for specific performance
- Having decided the issues arising between the Claimants and HAL, there will be a declaration as to HAL's contractual liabilities to the Claimants. However, the Claimants wish to have further relief against HAL in the form of an order for specific performance against HAL. The Claimants' case is put forward pursuant to schedule 4 to the 2000 Lease, alternatively, pursuant to paragraph 4 of schedule 3 to the 2000 Lease.
- Under schedule 4 to the 2000 Lease, HAL is obliged to provide 280 car parking spaces on such area of land as HAL shall make available on the Site or on such other HAL operated car park as the Claimants may agree in their discretion. In view of the reference to an alternative option for HAL, this obligation does not require HAL to construct a car park on the Site. Nor does it require HAL to require AP16 to construct a car park on the Site excluding the Stub. In the past, HAL has provided car spaces on P5. HAL has stated that it will continue after 22 October 2016 and until further notice to provide 280 spaces on P5. That will amount to performance of HAL's obligation under schedule 4 to the 2000 Lease. HAL does not threaten a breach of its obligation so as to make it appropriate for the court to make an order for specific performance against HAL. If at some point in the future HAL wishes to cease providing spaces on P5 and offers an alternative location with which the Claimants do not agree and if there is a dispute as to the legal principles to be applied as to the operation of schedule 4 to the 2000 Lease, that dispute will have to be resolved then.
- The Claimants have put forward a draft order which includes a determination that HAL is liable to provide or procure the provision of 280 spaces on the Site excluding the Stub. In view of the alternative possibility in schedule 4 to the 2000 Lease that spaces might be provided elsewhere, I do not so determine. Even if HAL were to withdraw its consent with effect from 22 October 2016 to the provision of spaces on P5 and even if it were held that it was legally able to do so, I would not go on to make the further orders sought by the Claimants to the effect that I order HAL to take all steps necessary to ensure that AP16 complies fully and timeously with its obligations to construct a car park on the Site excluding the Stub. First of all, I am not conferring on HAL the benefit of such an order against AP16. Secondly, I do not think that such an order against HAL adds anything very much to a declaration as to HAL's contractual obligations. What it does is to add some non-particularised wording as to how HAL should go about making AP16 perform its obligations to HAL resulting in HAL performing its obligations to the Claimants. Such an order is not to be equated with an order that a contracting party itself carry out building works. The Claimants would not be entitled to such an order against HAL because it is not in possession of the Site excluding the Stub.
- In relation to the Claimants' claim for an order for specific performance against HAL in relation to HAL's obligation under paragraph 4 of schedule 3 to the 2000 Lease, given that I am not ordering AP16 to construct a surface car park in accordance with clause 29 of the 1990 Agreement, there is no basis on which I would order HAL to supervise AP16's progress in relation to such work.
- The Claimants also seek an order that in the event of AP16 becoming insolvent and then ceasing to construct a car park on the Site excluding the Stub that HAL should take over the obligations imposed on AP16 by any order the court might make in favour of HAL and against AP16. Once again, that is not the contractual obligation of HAL under schedule 4 to the 2000 Lease. Even if it were the obligation of HAL, I would not at the present time make an order which is contingent on a future event which might not come about. The right time to consider making such an order would be as and when that contingency did come about and the matter would be considered by reference to the circumstances then existing.
- The Claimants and HAL disagreed on one other matter. HAL submitted that if I made an order in its favour against AP16 and if AP16 failed to comply with that order and if HAL chose not to apply to the court for relief in that event, then it would be open to the Claimants (who did not directly have the benefit of the order against AP16) to apply to the court under CPR 70.2A for an order that the steps to be taken under the order could be taken instead by HAL or by the Claimants. The Claimants submitted that they would not be able to make such an application. I do not see that this point arises for decision at this stage. The point might never arise. If it does arise, it can be considered at that point by reference to the circumstances then existing.
The next steps
- The parties should attempt to agree a minute of order containing declarations to give effect to this judgment and containing an order for specific performance in favour of HAL against AP16 to give effect to the detailed matters to which I have referred.
