Edstaff Ltd v Anglo Overseas Group (Properties) Ltd

The applicant, Anglo Overseas Group (Properties) Limited (“Anglo”) applies for permission to appeal against an order made by His Honour Judge Mackay in the Liverpool County Court on 8 February 2007. On that day the judge dismissed Anglo’s appeal against orders made in proceedings brought against it by Edstaff Ltd (“Edstaff”) by District Judge Sykes on 6 September 2006. Although I believe that we have only one of the two orders then made by the district judge, it is clear that their effect was to uphold Edstaff’s claim against Anglo in the sum of £1355.61; to uphold a small counter-claim by Anglo against Edstaff in the sum of £125.68; and, overall, perhaps with some slight increase in the net sum payable to Edstaff referable to costs, to define the net effect of her orders as being that Anglo should pay Edstaff £1258.93. Although from a circuit judge other than Judge Mackay Anglo had secured permission to appeal against the district judge’s order referable to Edstaff’s claim, its appeal, as I have indicated, failed. It follows that any appeal to this court would be a second appeal, to which the stiffer criteria apply. Specifically, we cannot grant Anglo permission unless we consider the appeal would raise an important point of principle or practice or that there is some other compelling reason for us to hear it.

It was Chadwick L.J. who, on paper, provided for the application for permission to be considered at this hearing, on notice to Edstaff and on the basis that, were permission granted, the substantive appeal should be heard forthwith. While not granting permission at that stage, Chadwick LJ observed:

“It seems to me that it could be said that decisions of the two lower courts are so plainly wrong to make necessary, in the interest of justice, that the Court of Appeal should intervene. On that basis there would be a compelling reason for this court to hear the appeal.”

Anglo is the owner of premises at 44 Pilgrim Street in Liverpool. There is no doubt that it granted a licence to Edstaff to occupy a studio at that address. Pursuant to the licence Edstaff occupied it between 1 January 2005 and 31 March 2006. Edstaff had, however, paid a licence fee to secure its right to occupy it beyond 31 March 2006, namely to 30 June 2006. When in February 2006 Edstaff gave notice that it would be ceasing occupation on 31 March 2006, it claimed a refund of the licence fee payable for the three months from 1 April 2006 to 30 June 2006. Anglo disputed its entitlement to a refund. Edstaff’s claim against Anglo in the county court was for such a refund and both the district judge and on appeal the circuit judge upheld Edstaff’s entitlement to it. The small award to Anglo against Edstaff on its counter-claim related to Edstaff’s failure to pay an electricity bill referable to the premises which under the terms of the licence it had been its obligation to pay.

What then was the nature of the issue as to whether Edstaff was entitled to a refund for the three month period after it had ceased to occupy the premises?

Shortly before Edstaff took occupation of the premises, the two parties, by directors of their two companies, executed a written licence agreement. The licence fee was defined as £450 per month plus VAT. The licence period was defined as the period from 1 January 2005 “until determined by one month’s notice in writing given by one party to the other… and expiring at the end of any completed month of this licence”. Clause 6 of the licence provided similarly, namely that it “may be determined by either party upon giving one month’s notice in writing to the other expiring at the expiration of any completed month of the licence”. In fact, however, even for the period reflective of the first six months of Edstaff’s occupation of the premises, namely the period from 1 January 2005 until 30 June 2005, the parties had at some stage, perhaps even shortly prior to the execution of the licence, departed from its terms. They had certainly departed from it in relation to the amount of the licence fee. For it is common ground that, in return for Edstaff’s single payment at the outset not for one month’s occupation but for six months’ occupation, namely until 30 June 2005, Anglo would allow it to pay a slightly reduced licence fee, namely only £425 per month plus VAT. We need not trouble to consider whether, had Edstaff wished to cease to occupy the premises prior to 30 June 2005, it would have been entitled to a refund of any part of that payment: for that situation never arose.

Much more important is the fact that in February 2005 the parties entered into a discussion about a further prior payment by Edstaff to Anglo in order to cover the fee for occupation for one year beyond 30 June 2005, namely until 30 June 2006. As had recently been agreed referable to the period between January and June 2005, it was agreed in February 2005 that, were Edstaff at that time to make an advance payment of the licence fee referable to the year ending on 30 June 2006, they could again pay it on the same, reduced basis. There is no doubt that in February 2005 Edstaff did duly pay Anglo an agreed sum of £6,000 inclusive of VAT referable to occupation from 1 July 2005 to 30 June 2006; and that such an amount is, within a few pounds, equal to a fee of only £425 per month plus VAT.

When the parties entered into the arrangement in advance for the fee for the year to 30 June 2006, did they in any way alter the provisions of the written licence dated 18 November 2004 which provided for either party to give a month’s notice of determination of the licence to the other? In this respect the  judges in the county court had to study two documents dated 9 February 2005, first an email from Miss Long, being one of Edstaff’s directors, to Mr Billington, being one of Anglo’s directors, and, second, a letter from Mr Billington to Miss Long.

In the email, Miss Long said:

“I have just spoken to my solicitor, and from a security point of view for ourselves, he has recommended that for the interests of both parties we have an exchange of letters to clarify the benefits of advance payment of rent.

Therefore, could you therefore confirm that following points in writing --

•

The further advance payment is paid in consideration of the licence lasting for a further 12 months (till June 2006)

•

That within the period stated, 1^st January 2005-30th June 2006, the rent will remain static, and that we have therefore paid in full until June 2006.

•

That the provisions in the Licence concerning termination are suspended within the stated period 1^st January 2005 - 30^th June 2006.

Many thanks, I await your response.”

In the letter Mr Billington referred to a meeting which had taken place between him and Miss Long and he said that following it he was pleased to confirm certain matters which are collateral to the current dispute, namely in regard to Edstaff’s wish to have limited use of Anglo’s premises at 53 Rodney Street, which adjoins 44 Pilgrim Street. By way of a postscript to the only copy of the letter which has been in evidence in these proceedings, the words, in Mr Billington’s handwriting, were appended as follows:

“The provisions of the licence concerning termination are suspended within the stated period until 31 May 2006.”

It was Mr Billington’s evidence to the district judge that he had written those words on his letter to Miss Long in her presence and that he had then given the letter to her. In this respect, in a skeleton argument filed with this court yesterday, Edstaff makes a surprising assertion. The assertion is that, although Edstaff received Anglo’s letter dated 9 February about the collateral matters, it never received any such version or copy of it as included Mr Billington’s postscript, whether handwritten or typed up. The assertion is surprising because it does not feature in the judgment of the circuit judge or, in particular, of the district judge. On the contrary, having heard evidence from Miss Long, the district judge expressed herself in language which I will set out in [14] below and by which she clearly accepted that Edstaff had received the version of the letter inclusive of the handwritten postscript. This is, of course, a proposed appeal on a point of law. However, as is common with litigants in person, allegations of fact have been made to us today in particular by Miss Long, on behalf of Edstaff; and it would have been churlish for us not to listen carefully to what she said. She said, broadly in line with the skeleton argument so recently filed with this court on Edstaff’s behalf, that Mr Billington had not replied in writing to her email; that she had told the district judge of that fact; that there had been a discussion about these collateral matters referable to 53 Rodney Street; that he had given her a copy of the typed letter about the collateral matters dated 9 February 2005; that on his own copy of that letter, albeit in her presence, he had scribbled something on the bottom and told her that he would send her a typed-up version of it; but that he had never sent Edstaff a copy of this letter with this postscript, whether in the manuscript form or, as promised, typed up. In my view, in the light of the way in which the district judge surveyed the evidence which she had received including, in particular, from Miss Long, it is far to late for Edstaff to deny that it received a version of the letter with the manuscript postscript on it. In the end, however, it matters not: for as will have been observed, the wording adopted by Mr Billington in the now controversial postscript was in effect entirely the same as that which had been adopted by Miss Long in the third bullet point of her e-mail to him. Thus, irrespective of delivery to Edstaff of Mr Billington’s postscript, the crucial term was the term which had been introduced by Edstaff as the third bullet point in its e-mail, which it had requested Anglo to accept and which Anglo impliedly, even if not expressly, accepted. In response to a question by my Lord this afternoon Miss Long accepted that the term the construction of which is properly dispositive of the issue between the parties, was the term introduced by her and requested by her in the email to which I have referred.

This is a convenient moment to refer to the fact that, in the bundle filed by Anglo for use in the appeal to this court, was a purported copy of a second  letter ostensibly sent by Mr Billington to Miss Long, also dated 9 February 2005, which on the face of it would have been very helpful to Anglo’s appeal. Upon its recent receipt of its copy of Anglo’s bundle Edstaff at once protested to this court that it had never previously seen this letter, i.e. not only that it had never received the original but that this copy had never been produced by Anglo in the proceedings before the district and circuit judges. Certainly there is no reference to this second letter in either of the judgments. Nor can Mr Becker, who represented Anglo before both of the judges in Liverpool, recall whether the letter was before either or both of them or not. In those circumstances it seemed to us that it was quite impossible for Anglo to contend that what Edstaff said about this letter, namely that it had never been previously introduced, was untrue. In the light of its apparent significance, reference to it would have been inevitable if had been before either of the judges. At the outset of this hearing, we therefore ruled that it was too late for Anglo to rely on the letter, about which Edstaff says that it has profound suspicions. We also expressed our displeasure that Anglo should have sought to insinuate ostensibly significant fresh evidence into the bundle without making an application to adduce it, nor attempting either to make clear that it had not been put before the courts below or even to explain why it had not been put before them.

Pursuant to pro forma directions given by another district judge on 12 June 2006 statements of all witnesses on whose evidence the parties intended to rely at the hearing were required to be exchanged. In fact, although Mr Billington signed a witness statement, Miss Long did not do so; in the light of the issue about Mr Billington’s postscript to which I have referred, that may have been more than a little unfortunate. Nevertheless, at the hearing before the district judge, she was, as I have indicated, allowed to give evidence on behalf of Edstaff, just as Mr Billington gave oral evidence on behalf of Anglo. At that hearing Mr Becker, as I have said, appeared on behalf of Anglo, while Miss Long was allowed to represent Edstaff.

It is clear that Miss Long made a more favourable impression, as a witness, upon the district judge than did Mr Billington. It is clear that Miss Long explained that the confirmation which she had requested by her email was designed to give Edstaff the comfort of not being subject to eviction from the premises at the behest of Anglo prior to 30 June 2006. She seems, however, also to have stressed that it never crossed her mind that the arrangement was such as to preclude Edstaff, if so advised, from giving a month’s notice of termination with effect from a date prior to 30 June 2006 or that, if it were to do so, it would be precluded from obtaining a refund of the licence fee in respect of the period until 30 June 2006 for which it would no longer be in occupation.

In upholding Edstaff’s claim for a refund the district judge accepted Miss Long’s version of the arrangement reached in February 2005. The district judge said as follows:

“What she was concerned about was that if they paid another year’s licence fee, what if Mr Billington exercises his company’s rights under the licence agreement to give them a month’s notice, and yet they had paid a significant sum of money (even more significant for a fledgling company) in advance. So she was seeking to remedy that and to give them the security they sought in that email of 9th February.

There was then a meeting between the parties following that e-mail when they discussed everything, and as a result of that meeting there was a letter written on 9 February and that deals with matters such as the brass plate. There is an endorsement at the bottom, a manuscript endorsement which is in Mr Billington’s handwriting, and that endorsement, the Claimant says, incorporates what they agreed with him and which was the essential aspect they wanted concerning before they would pay another year in advance. That was that his company would waive the right to terminate on a month’s notice. There is no endorsement which says that they would waive the right to give a month’s notice.

I accept their evidence. I found it persuasive. They were paying now 18 months’ licence fee in advance. They were getting some discount for it. They were retaining, in my judgment, their right to give a month’s notice. There was no express agreement to waive it. On their evidence it was never discussed. There is nothing in the endorsement which suggests that the waiver extended to them.”

At the end of an exceedingly short judgment explaining his dismissal of the appeal the circuit judge said only:

“The learned District Judge preferred the tenant’s view. It was open to him to do so. I think that the learned District Judge was right in the view that he took. I do not think that it was necessary to give commercial effect to the agreement, that it had to cut both ways and that if the tenant left the tenant, as it were, lost the money that it had paid in advance. Therefore, this appeal is dismissed.”

In defence of the circuit judge one can at least say that, elementary though it might be considered to be, he had in an earlier paragraph of the judgment at least quoted the words of Miss Long’s e-mail (and for that matter of Mr Billington’s postscript). The district judge had not done so. As is clear from the passage of her judgment which I have read, she referred to Miss Long’s email and to Mr Billington’s postscript and, without quoting either of them, stated that the effect of the revised arrangement was that Anglo would waive its right to terminate on a month’s notice but that there was nothing which provided that Edstaff would waive its right to do so.

With respect both to the district judge and to the circuit judge, I cannot understand how they could have ascribed to the words of Miss Long’s email (or indeed of Mr Billington’s postscript) a construction that the suspension of the provision of the licence concerning termination was not other than a suspension which affected both parties mutually. Nor, as I have explained, can Mr Billington be accused of having given the requested assurance to Miss Long in his postscript in words different, or even subtly different, from those which she had requested. Miss Long’s terminology had been as neutral in this regard as was the terminology of Mr Billington's now controversial postscript. Objectively speaking, it is not just difficult but, to speak plainly, impossible to wring out of the term requested by Miss Long a meaning which preserved Edstaff’s right to terminate on one month’s notice with effect from a date prior to 30 June 2006. It was a provision which, on the face of it, had advantages and disadvantages for both parties. For Edstaff, it assured its right to occupy until 30 June 2006 but precluded earlier departure save on forfeiture of the licence fee paid for the remainder of the period. For Anglo, it assured to it the right to retain Edstaff’s licence fee for the period until 30 June 2006 but precluded eviction of Edstaff prior to that date even in circumstances in which Anglo might have wished to make other, more profitable, use of the premises during that period.

The view of Chadwick L.J. was necessarily provisional; and he did not have the benefit of any written argument (or, as I have said, even any written statement) by Miss Long, on behalf of Edstaff. Today we have Edstaff’s skeleton argument, to which I have referred, and we have received the submissions, including, largely submissions of fact, from Miss Long, helped by her co-director Miss Langshaw. But I have to say I am convinced that the provisional view of Chadwick L.J. was correct; and that the conclusion upon the claim reached both by the district judge and the circuit judge is based on a demonstrably untenable construction of the revised arrangements reached on 9 February 2005. To my mind, the errors in the courts below are so glaring that there is a compelling reason for this court to hear Anglo’s appeal.

So I propose that we should grant permission to Anglo to appeal and should allow its appeal against the circuit judge’s order, to the extent of substituting for his dismissal of the appeal to him an order which allowed that appeal and which, in lieu of the district judge’s entry of judgment for Edstaff on its claim, entered a dismissal of it.

I agree. The contention that the particular clause cuts only one way runs into enormous difficulties. Firstly, it is far from self-evident that that is what anybody would sensible agree to. Secondly, quite apart from that, what was to happen about the discount being given agreed and given? I read in the papers that the discount was offered back, but that was not the deal. The discount had been obtained for a longer period of licence and had been largely used up because there were only a few months to go.

The fact is that the clause was two-way in its inception and in its variation was similarly a two-way clause. I also think the point is so plain that it was appropriate for a second appeal, unfortunate though it is in a small claim of this sort. I too would give permission and allow the appeal.