Shirayama Shokusan Company Ltd & Ors v Danovo Ltd

This is another chapter in the dispute between the owners of the former County Hall (also now known as the Riverside building) on the south bank of the Thames opposite the Palace of Westminster and the tenant of a part of the first floor. The first five claimants, between whom it is not necessary to distinguish and to whom I shall refer collectively as Shirayama, are the owners of a 999-year lease (which commenced on 29 October 1993) of the building (as I shall refer to it), its immediate curtilage and a small part of the adjoining Jubilee Gardens. By an underlease dated 8 January 2002, Shirayama granted a 50-year lease to the sixth claimant (Cadogan) of a part of the first floor of the building. By a sub-underlease dated 6 February 2003, Cadogan granted the defendant (Danovo) a 20-year five-month term from 1 January 2003 of a part of its underleasehold interest in the building. Danovo runs the well-known Saatchi Gallery from the premises leased to it by Cadogan. It has done so since 17 April 2003.

There are a number of disputes between Shirayama and Cadogan on the one hand and Danovo on the other over the latter’s occupation of the building. These disputes have given rise to the present claim issued on 17 September 2003 and to a counterclaim by Danovo. The claimants complain of the continued use by Danovo of Room 157 on the first floor (outside Danovo’s demise), the display by it of signage on part of Shirayama’s interest outside the building and of works of art in parts of the building outside Danovo’s demise, and over the activities of security personnel employed by Danovo. The claimants between them seek injunctive relief, damages and possession of Room 157. There are also separate proceedings on foot by Cadogan claiming forfeiture of Danovo’s sub-underlease, Danovo resists all of the claimants’ claims and, in its turn, complains of the claimants” conduct in extending the opening hours to the public of certain lobby and ambulatory areas in the building, interfering with Danovo’s security personnel, purporting to terminate its use of Room 157, attempting to interfere with its exterior signage and the placing by it within the building (but outside its demise) of various works of art and its use of a particular corridor. It makes complaints, some against Cadogan and some against Shirayama and Cadogan collectively, concerning lighting in the lobby and ambulatory areas in the building, the testing of fire alarms and the denial of its continued use of a disabled lavatory (outside its demise). It also alleges various misrepresentations. It counterclaims for a variety of reliefs arising out of these matters; it also seeks rectification of its sub-underlease in connection with a dispute over the boundary of its demise.

An attempt to mediate these disputes came to nothing earlier in the year.

The particular dispute which has given rise to the present application concerns the presence of two large bronze “Saatchi Gallery” signs mounted on either side of one of the entrances to the building. This dispute lies between Shirayama and Danovo. It does not concern Cadogan whose interest in the building is unaffected by it.

The entrance in question is the main entrance to the building on the Belvedere Road side. It gives access to a lobby area and thence, via a flight of stairs, to an ambulatory area around what used to be the debating chamber of the former GLC. The ambulatory area leads to a further entrance, on the river side of the building, from which, by means of flights of steps down to what is known as the Members’ Terrace, it is possible, via further steps, to gain access to the Queen’s Walk, a broad pedestrian way along the embankment. The entrance to the Saatchi Gallery is from the ambulatory area around the former debating chamber.

In terms of visitor footfall the main point of access to the Saatchi Gallery from outside the building is via the riverside entrance. It is the quickest and most prominently displayed means of access for those approaching the gallery on foot up river from across Westminster Bridge or down river from across the Golden Jubilee footbridges flanking Hungerford Bridge and/or the pedestrian way along the embankment. However, the Belvedere Road entrance is also important since it and Forum Magnum Square on to which that entrance gives access across Belvedere Road form the main approach to the building from the direction of Waterloo station and the surrounding area.

The so-called ambulatory area provides, or has the potential to provide, access to other parts of the building. As Shirayama has yet to let or otherwise make use of the second to seventh floors of the building — and it will be appreciated by anyone who has seen it that the building is vast in size — there are currently very few, if any, occupants of the building apart from Danovo for whom the Belvedere Road entrance provides an important, let alone the main, means of access. Also occupying the first floor, but on the opposite side of the central debating chamber, is the Marriott Hotel. The principal access to that hotel is via a courtyard which lies roughly midway between the debating chamber and an outer wing of the building. Access to the courtyard is from Westminster Bridge Road by means of a covered roadway which penetrates that wing of the building. The hotel has what is effectively a rear entrance through doors opening on to the ambulatory area.

It is also possible to access other occupied parts of the building from the Belvedere Road and riverside entrances to the building by means of a network of corridors although it has not been suggested that either entrance provides the principal or an obvious means of access to those other parts. Someone familiar with the internal layout of the building might well find, depending on where he or she is coming from, that it is quicker to reach his or her destination within the building via the Belvedere Road entrance than by any other. The Belvedere Road entrance also provides a convenient shortcut for those who, for whatever reason, wish to get to the riverside entrance (or vice versa) without having to walk around the perimeter of the building.

Among other agreements entered into when Danovo took its sub-underlease was a deed (entitled “a deed of licence to underlet and grant of rights”) dated 6 February 2003. Shirayama, Cadogan and Danovo were parties to it. It contained Shirayama’s licence to Cadogan to grant the sub-underlease to Danovo and set out provisions ancillary to that. By clause 8 Shirayama granted Danovo the exclusive right to use various flagpoles in positions indicated on an annexed plan. By clause 9.1 Shirayama granted Danovo the right to the exclusive display of various signage on stipulated parts of the riverside entrance to the building from the Members’ Terrace. Clause 9.2, with which this application is concerned, together with the introductory words of clause 9, is in the following terms:

“The Landlord (with the intent to bind the Landlord’s successors in title) hereby grants to the Undertenant for the Term of the Underlease (unless sooner determined) the right:

…..

9.2

Subject to the prior written consent of the Landlord (such consent not to be unreasonably withheld or delayed) to erect a sign or signs on the entrance to the building from Belvedere Road (the Tenant hereby acknowledging that such rights are not exclusive to the Undertenant but in common with others and the Tenant shall not be entitled to style the said entrance in preference to any third party).”

References in that clause to “the Landlord” are to Shirayama and to “the Undertenant” to Danovo. Strictly, references to “the Tenant” ought to be to Cadogan but, the sense of clause 9.2 suggests, and argument has proceeded on the footing, that the intention is to refer likewise to Danovo.

The remainder of clause 9 and the rest of the deed go on to deal with other matters which are not germane to the present application.

On 10 February 2003, which was four days after the deed was entered into, Winward Fearon, solicitors acting on behalf of Shirayama, wrote the following letter to Nigel Hurst, a Danovo director. It was headed “Signage on Belvedere Road”.

“Further to our recent telephone conversations, I am pleased to confirm that my client ... Shirayama grant to Danovo Ltd., the right to display signage on the main entrance to the Riverside building from Belvedere Road in the positions shown on the plans attached hereto and in the style and size shown on the mock-up photograph attached hereto.

For the avoidance of doubt, the right granted by this letter of Licence shall be determinable by Shirayama on not less than 28 days’ notice in writing and shall determine automatically on the determination by effluxion of time or sooner determination of [Danovo’s sub-underlease].

This letter of Licence is further conditional upon an authorised officer of Danovo Ltd signing and dating this letter and returning it to Shirayama, c/o Winward Fearon.”

That same day, 10 February 2003, Mr Hurst signed and returned the letter.

Two identical signs, one on each side of the Belvedere Road entrance, were duly erected in accordance with the terms of the letter of licence. Each sign bears in prominent upper case lettering the words “Saatchi Gallery”.

On 10 November 2003, Winward Fearon wrote to Danovo giving 28 days’ notice (the period prescribed by the letter of licence) to determine Danovo’s right to display the two signs on the Belvedere Road entrance. Eight days later, following a meeting between Mr Hurst of Danovo and Mr Caselton of Shirayama, Mr Hurst wrote to say that Danovo accepted that if other tenants wanted signs on that entrance, one of the two Saatchi signs could be removed but that it was difficult to see what reasonable grounds Shirayama could have for the removal of both signs. He said that if there was no tenant wanting a sign he believed that English Heritage would want to retain the symmetry of one sign on each side of the entrance.

On 21 November 2003 Winward Fearon wrote the following letter (the 21 November letter) to Danovo’s then solicitors:

“It is, of course, fully accepted by Shirayama that in the Deed of Grant of Rights it granted certain rights to Danovo in respect of the Belvedere Road main entrance. However, clause 9.2 of the Deed of Grant of Rights clearly records that the rights of signage are not exclusive to Danovo but are in common with others and that Danovo should not be entitled to style the said entrance in preference to any third party.

It is clear from Nigel Hurst’s correspondence that he acknowledges that the signage may need to be reduced. The purpose of our client’s recent notice was not that no Saatchi signage would be permitted on the Belvedere Road main entrance, simply that the existing signage would have to be removed.

As your client is aware, there is now ongoing use of the debating chamber and the Belvedere Road main entrance will be used in connection with that use. The Belvedere Road main entrance will also be used as the primary entrance for a cinema club in premises in the south-eastern corner of the building. Furthermore, our clients are close to concluding a deal with London Eye to use a large part of the remaining space on the first floor North of the Riverside building abutting the Danovo premises. London Eye would use the Belvedere Road main entrance in conjunction with other entrances for access.

In due course, there will be other tenants of the Riverside building using the Belvedere Road main entrance.

With this in mind, our clients are working with RHWL Architects with a view to obtaining planning permission and listed building consent for a style of signage on the Belvedere Road main entrance that can be used by all tenants using that entrance. The arrangements will include signage for the Saatchi Gallery but you will appreciate that at this stage our clients cannot be certain of the precise style or size of the signage. In all likelihood, Saatchi’s signage will be one half of one side of the Belvedere Road main entrance but this might need to be reduced further as and when the Belvedere Road entrance is put to additional uses.

Given that consent to signage cannot be unreasonably withheld or delayed, we are instructed that Shirayama will permit the Saatchi Belvedere Road main entrance signage to remain in situ until planning consent and listed building consent are obtained for the new signage. Shirayama is further willing to instruct RHWL to have regard to any representation that your client may wish to make in relation to the style of the new signage.”

The next communication which Danovo received in the matter was a letter from Winward Fearon dated 6 April 2004 to its new solicitors. The letter stated as follows:

“Our clients have now obtained planning and listed building consent for new brass signage to be erected either side of the Belvedere Road main lobby entrance.

In the circumstances, your clients are required to remove the existing signage within 28 days in accordance with the terms of the Letter of Licence dated 10 February 2003 and countersigned by Nigel Hurst.

For the avoidance of doubt, Shirayama fully intends to abide by the spirit and letter of clause 9.2 of the Deed of Licence to Underlet and Grant of Rights dated 6 February 2003. Shirayama will not unreasonably withhold consent to any application for new alternative signage or nameplates to be erected by the Saatchi Gallery to be placed alongside the new ‘Main Entrance’ signage. Of course, your clients will need to obtain planning consent and listed building consent in respect of any such signage.”

Danovo was thus on notice that its right to maintain its signage at that entrance to the building would (if the notice was valid) expire 28 days later, on 4 May 2004.

Danovo’s response, in a letter dated 27 April from its present solicitors, Tarlo Lyons, was to express surprise at what was happening. The solicitors pointed out that Danovo had not received any copies of applications for any consents or indeed heard anything more in the matter since the 21 November letter. The solicitors then asked:

“Please assist us by answering the following questions:

1.

One of the reasons given for your client’s application for new brass signage was the use by other prospective tenants of the Belvedere Road main entrance. Please advise as soon as possible the present state of negotiations with other tenants. Does any other tenant present require signage at this entrance?

2.

When exactly do you anticipate those other tenants using the Belvedere Road main entrance? By use we mean commercial use rather than, for example, fitting out which has not, to date, started as far as our client is aware.

3.

If it is the case that no other tenant is going to place new signage at the Belvedere Road main lobby entrance on 4 May 2004, then we are bound to ask why there is an urgency in removing our client’s signage and interrupting our client’s commercial business.

4.

Is there any other compelling reason why the signage must be changed on 4 May 2004?

5.

Why is it the case that no attempt has been made by RHWL to liaise with our client in relation to the new signage and to advise our client of the application for planning and listed building consent?

We would very much hope that this matter can be resolved amicably. In all the circumstances, a sensible and reasonable resolution of this matter would be for there to be no interruptions to the signage of the Belvedere Entrance. This could be achieved by our client instructing your clients’ architects ... to obtain planning consent and listed building consent in respect of new signage (which in turn is satisfactory to your clients) and as soon as that consent has been given, for the new signage to be installed at the Belvedere Road entrance.”

The next day, Danovo established that Shirayama had applied the previous January for new signage and obtained planning approval for it on 19 March. It established that, so far from mentioning the Saatchi Gallery, let alone the names of any other tenants, as it had been given to understand by the 21 November letter would be the case (“... the arrangements will include signage for the Saatchi Gallery...” was how the letter had put it), the replacement signage for which the necessary approvals had been obtained merely contained the words “Main Entrance” in large block capitals on each of the two intended new signs.

Having ascertained what Shirayama was intending by way of new signage, Tarlo Lyons wrote on 29 April to point out that there was no apparent connection between the proposed “Main Entrance” signs and the other tenants. They asked for an explanation. They reiterated their view that the matter should be capable of amicable resolution. They suggested that once Winward Fearon had provided the information requested in Tarlo Lyons’ previous letter and the position concerning listed building consent had been clarified, Danovo would instruct architects to make the necessary applications for consents for new signage and would consult with Shirayama with a view to obtaining its consent. They went on to suggest that their respective clients should liaise so as to co-ordinate the removal of the existing signage and the placing of all new signage.

Winward Fearon’s reply, dated 30 April 2004, came as something of a surprise to Danovo and its solicitors. After pointing out that the existing signage was “in excess of the rights” granted by clause 9.2 of the deed and, accordingly, that consent had been given by way of a letter of licence determinable on not less than 28 days’ notice in writing and after asserting that no grounds were required (much less that they needed to be reasonable) when giving such notice, Winward Fearon said this:

“On 10 November 2003 your client was given 28 days’ notice of determination of the licence but our clients subsequently advised that the existing signage could remain pending the obtaining of the planning permission for the new signage. As and when such planning permission was obtained, the 28 days’ notice was renewed.

It follows that your client has had five or six months in which to consider an application under the terms of the Deed for alternative signage. It has not done so. It is accepted that your client is entitled pursuant to clause 9.2 of the Deed to signs on the entrance to Belvedere Road and any application would be treated on its merits.”

Mr Jonathan Gaunt QC, who has appeared with Mr David Lord for Danovo, described that paragraph as disingenuous. I rather agree. Apart from the apparent assurances given to it by the 21 November letter, Danovo can be forgiven for regarding as somewhat unreal the complaint that it had had five or six months in which to make an application under the terms of clause 9.2 when it had no idea which, if any, other tenants wished to have their names on a sign at the Belvedere Road entrance. The letter continued:

“Dealing with your numbered paragraphs:

1.

As your clients are fully aware, the Belvedere Road main entrance and the ambulatory areas have been opened up generally for public use. A-Frame signage has been erected in those areas giving directions to your client’s premises and to other parts of the Riverside building. Our clients anticipate increased use of the Debating Chamber and the letting of the remaining parts of the first floor to London Eye. Additional signage will be necessary for both uses.

2.

The terms of the letter of licence dated 10 February 2003 …

3.

… reflected that the permission for the existing signage …

4.

… went way beyond your client’s entitlement under the Deed. It is entirely reasonable for Shirayama to want to remove any suggestion or impression that the Belvedere Road main entrance is solely the entrance to the Saatchi Gallery when they have, as a matter of policy, decided to open up the building to maximise the flow of visitors around the Riverside building and from the Members’ Terrace to Belvedere Road. As presently configured, the general public would likely conclude that the Belvedere Road entrance is solely to the Saatchi Gallery, nothing more and nothing less.

5.

We are advised that RHWL advised all tenants and users of the Riverside building of the application for planning and listed building consent for the new signs ...

In all the circumstances, it is quite clear that Shirayama has and continues to act reasonably. Your client has known since November 2003 that it would be required to remove its existing signage. During that period, it has made no attempt whatsoever to discuss alternative signage or to submit proposals under clause 9.2 of the deed for such alternative signage. It is, therefore, entirely proper for Shirayama to require that the existing Saatchi signage be removed on or before 4 May 2004, to be placed by the new signage.”

In a postscript Winward Fearon enclosed a copy of a letter by RHWL addressed to Nigel Hurst dated 10 December 2003. The postscript then stated:

“Accordingly, our clients are puzzled that Saatchi suggests that they did not receive details of the application. It should have been apparent to your client from the description of the planning application that the new signs on the Belvedere Road main entrance would be limited to describing that entrance as “main entrance”. However, this is somewhat irrelevant since your client’s rights are determinable on 28 days notice and unrelated to other signage that might or might not be erected. ... We can but reiterate that your client is fully entitled under clause 9.2 of the Deed to apply for signage on the entrance. When they do so Shirayama will give reasonable consideration to the proposals.”

The letter of 10 December 2003 from RHWL had been addressed to Mr Hurst, Saatchi Gallery, 77 Eaton Square, London SW1. It merely stated that the architects had been instructed by Shirayama to apply for listed building consent for a sign with lettering saying “Main Entrance” and that if he had any queries he should contact the writer. I have no reason to think that that letter was not posted. Equally, I have no reason to doubt Danovo’s evidence that the letter was never received. It is a fact of life that letters do occasionally go astray. At all events, this is not an issue which can be resolved on this application.

With the 28-day notice for the removal of the existing signs about to expire (the expiry date being 4 May 2004), Danovo issued the application which is now before me. By its application, dated 4 May 2004, Danovo seeks an injunction to restrain Shirayama and, it would seem, Cadogan from removing its existing signage from the Belvedere Road entrance until judgment on its counterclaim in the action or further order in the meantime.

On 7 May 2004, three days after issuing its application, Danovo applied through Tarlo Lyons for consent pursuant to clause 9.2 of the deed (and without prejudice to its contention that the consent given by the letter of licence had not been validly withdrawn) to maintain the existing signage at the Belvedere Road entrance. The letter confirmed Danovo’s willingness to discuss alternative signage as and when any future tenant should also require signage at that entrance. Ten days later, on 17 May, Winward Fearon wrote to say that Shirayama declined Danovo’s request for consent. The reason given for doing so was “that the signage styles the Belvedere Road entrance in preference to other parties”.

Danovo’s application came on for hearing before me on 25 May. As a result of comments made by me in the course of argument, it was adjourned to see whether some solution could be found which would satisfy, first, Shirayama’s wish to have a sign indicating that the Belvedere Road entrance was the main entrance to the building and which did not suggest that it was exclusive to the Saatchi Gallery and, second, Danovo’s wish to have a sign indicating that entrance as a means of access to the Saatchi Gallery.

On 27 May, two days after the hearing, Tarlo Lyons wrote to Winward Fearon to suggest a meeting of the parties, together with Shirayama’ s architects, to discuss matters. They suggested that it would be useful if Shirayama could indicate what they were seeking to achieve by way of replacement signage and, in particular, the information that they wanted the signage to contain and how that might change in the future.

Winward Fearon replied on 3 June. In their letter they indicated, without prejudice to Shirayama’s contention that the permission for the existing Saatchi Gallery signage had been terminated and that Danovo was required to remove it, that it might be possible to devise a style of signage which was acceptable to English Heritage and was capable of incorporating the names of various tenants and users of the building. They indicated that, subject to English Heritage approval, Shirayama intended to apply for planning consent for signage of that kind. They said that Shirayama would give prompt and reasonable consideration to an application by Danovo under clause 9.2 for new “Saatchi signage” adding that the space allocated to Danovo could only be determined once the style and size of the new signs had been discussed with English Heritage. They indicated that Shirayama’s consideration of an application by Danovo under clause 9.2 would be “in the context of the size, location and prominence of the proposed Saatchi signage and the needs of other owners, tenants and occupiers, etc. of the Riverside building, the total floor area occupied by them and their means of access to the Riverside building”. In a section headed “consultation” they said this:

“Although RHWL [the architects] are instructed to keep Danovo informed where necessary about the planning process, Shirayama is not prepared to enter into detailed negotiation with Danovo as to what they seek to achieve by way of any replacement signage or what they want to appear on signage not used by Danovo. Shirayama has no wish to be unreasonable but your client has no interest in signage on the exterior of the Riverside building other than the limited rights to apply for signage granted by clause 9.2 of the Deed of Licence for which consent cannot be unreasonably withheld or delayed. In particular, Danovo has no right to dictate to Shirayama

(1)

what others may erect signage or

(2)

the style or wording of other signage either on the Belvedere Road entrance or any location around the Riverside building.”

In a further section headed “interim arrangements”, they invited Danovo to remove one of the two existing Saatchi Gallery signs from the Belvedere Road entrance, stating that if Danovo did so the one remaining Saatchi sign could be retained subject to 28 days’ notice. They stated that Shirayama would not give notice while consulting with English Heritage or pending the determination of any application for listed building consent unless it should withdraw from consultation with English Heritage, or decide not to apply for listed building consent, or withdraw any such application. They added that Shirayama would promptly supply Danovo with a copy of any such application and of any decision notice relating to it. They concluded by expressing the view that it would be unreasonable for Danovo to decline to remove one of their existing signs and that, if they should decline to do so, Shirayama would invite the court at the adjourned hearing to dismiss their application for injunctive relief.

Tarlo Lyons responded on 7 June by remarking on Shirayama’s change of position. They repeated their earlier request to be told of the information which Shirayama wanted to appear on the signage and how that might change in the future. They also asked to be supplied with drawings. They remarked on what they regarded as Shirayama’s unreasonable stance in seeking to deal with the matter unilaterally rather than by consultation. They added:

“It is clearly appropriate for the parties to discuss all replacement signage. This would enable one composite planning and listed building application to be made in relation to all signage at the Belvedere Road main entrance or, failing that, our client could make its own separate application at the same time as the landlord’s application. Either way the consultation process will ensure advance agreement for what is being sought and will also ensure continuity of signage …”

In a reference to the interim arrangement offer contained in Winward Fearon’s letter, they stated that the attempt to impose a further “28-day licence” took the matter no further and was likely to lead to a further court hearing.

Two days later, Winward Fearon replied to say that Danovo would be provided with copies of the drawings of the suggested new signage when they were submitted to English Heritage. They repeated their earlier view that “detailed negotiations” were not appropriate and that Shirayama did not wish to be dictated to by Danovo about the operation and management of the building. They made clear Shirayama’s view that Danovo’s consent for the existing signage had terminated and that its application for the existing signage to remain had been reasonably withheld. They stated Shirayama’s position in the following passage:

“The Belvedere Road entrance is clearly required by Shirayama and Cadogan for circulation of visitors around the Riverside building. The proposed new signage may include the names of many of the tenants and users of the Riverside including [various names are then set out]. It is entirely proper and reasonable that Shirayama should wish to avoid the Belvedere Road entrance appearing solely as the entrance to the Saatchi Gallery and that it clearly indicates what other tenants, users and attractions can be accessed through those doors.

As your client knows, the Belvedere Road entrance has been opened up since last autumn 2003 for the circulation of visitors around the Riverside building. It is now many weeks since your client was asked to remove the existing Saatchi signage. For as long as the existing Saatchi signage remains, your client, without permission, styles the main entrance to the Riverside building from Belvedere Road in a way that detracts from all other potential and actual users.”

On 12 July, Shirayama, acting by RHWL (its architects), applied to Lambeth for the necessary consents to enable new signage to be installed at the Belvedere Road entrance. The drawings show signage of approximately the same dimensions and in approximately the same position as the existing signage but with the words “Main Entrance County Hall” in upper case lettering, displayed vertically down one half of each sign and with the other half listing, horizontally and in small lettering and with one name above the other, the various occupants. Each sign has spaces for 10 such names. The only names shown on the drawings accompanying the plans are Saatchi Gallery (occupying the top position on each sign) and below that, London Aquarium and below that Four Regions (a restaurant) both of which have frontages to and are directly accessible from the riverside of the building.

That same day, 12 July, Winward Fearon wrote to Tarlo Lyons to explain the steps being taken to obtain permission for the new signage. They supplied them with copies of the drawings illustrating what was proposed. In order to enable Danovo to have continuity of signage, they suggested that Danovo apply under clause 9.2 for consent to incorporate “Saatchi Gallery” (or like words) on the proposed new multi-tenanted signs and promised that any such application would be treated promptly and reasonably. They also referred to the interim arrangement, which they had proposed in their letter of 3 June (namely that one, but only one, of the existing Saatchi Gallery signs be replaced by a Main Entrance sign) and stated:

“The suggested interim arrangement accommodates Danovo’s concern that if both the existing Saatchi signs were removed potential visitors to the Galley would not find the entrance to the Riverside building leading to the Gallery. At the same time, it goes a little way to assuaging Shirayama’s concern that the existing Saatchi signage styles the entrance as solely the entrance to the Saatchi Gallery. Even though the one remaining Saatchi sign would (in conjunction with a main entrance sign) still give disproportionate styling of the entrance to the Saatchi Galley, it dilutes the effect and is, therefore, less offensive than maintaining two Saatchi signs pending the outcome of an application to Lambeth for alternative signage on the Belvedere Road entrance. …”

Taro Lyons replied to that on 14 July observing that it would have been more constructive to have involved Danovo in the consultation process with English Heritage and Lambeth relating to the proposed new signage. They went on to say that their initial reaction to the suggested interim arrangement was that there was no good reason for not preserving the status quo (ie the two existing signs) pending the process of consultation with Danovo and English Heritage and obtaining all necessary applications for consent.

Winward Fearon’s reply, dated 16 July, took issue with Danovo’s complaint that it had had no opportunity to become involved in the design process for the new signs and repeated the interim arrangement offer. They emphasised that, in Shirayama’s view, that offer was and remained eminently reasonable and rejected as unacceptable to Shirayama the counter-suggestion by Danovo that the present signage remain in position until approval for the new signage had been obtained and the new signage had been made and was ready to be installed. They repeated Shirayama’s view that if the existing signage were to be retained in the meantime Shirayama “will be subjected to a further significant period when the Belvedere Road entrance is styled purely as the entrance to the Saatchi Gallery”.

By now, the resumed hearing (before myself) of Danovo’s application for interim injunctive relief, adjourned from ₂₅th May, was fast approaching. Shirayama’s proposed interim arrangement, if accepted, was designed to avoid the need for a further hearing.

Tarlo Lyons responded to the interim arrangement offer by asserting that they could see no justification for it. “In our view”, they said:

“the sensible course is to maintain the status quo and to avoid any further expense of replacing signage that has been in place for well over a year now with signage that, even you accept, would only be temporary. We would suggest that the most sensible course is to adjourn next week’s hearing until the beginning of next term on the same terms as previously agreed, namely that the existing signage remains in place. In the interim we would suggest (as we have done throughout) that the parties should consult about the future signage in the hope that it will not prove necessary to trouble the court further with this issue.”

The letter went on to point out that, in contrast to the tens of thousands of visitors to the Saatchi Gallery who used the Belvedere Road entrance, their information was that practically no visitors to other tenants in the building made use of that entrance.

With those as the positions taken up by each side to this dispute, the matter came back before me on 28 July.

Were it not for the fact that the parties are now and have for some months past been locked in dispute over a range of matters concerned with Danovo’s occupation of the building, it would seem surprising that their differences over the signage at the Belvedere Road entrance should have generated so much correspondence and have led to the application which is now before me. But so it is. This is the third substantive application that has come before me since last December in what, viewing the dispute overall, shows every sign of being lengthy and expensive litigation.

This being an application for interim injunctive relief, the questions which I am concerned with are (a) whether Danovo establishes a good arguable case for the relief which it seeks and (b) if it does, whether, as Danovo contends, the balance of convenience favours the maintenance of the status quo by allowing the existing Saatchi Gallery signage to remain at the Belvedere Road entrance pending trial or further order in the meantime, or whether, as Shirayama contends, the balance of convenience favours dismissal of the application on account of Danovo’s rejection of Shirayama’s interim arrangement offer. Or does the balance of convenience favour some other and if so what course?

When the application was before me in May, Shirayama had some reason for complaint that, until very shortly before that hearing, it was faced with a claim which, although the dispute over the signage had by then been continuing for many weeks, was not referred to in Danovo’s defence and counterclaim even though that pleading contained a variety of other complaints, some of which had been set out in some detail. The dispute over the entrance signage is now pleaded at some length in Danovo’s proposed (and further revised) amended defence and counterclaim. For present purposes, it is sufficient to mention the three ways in which, as developed in argument by Mr Gaunt, Danovo says that it claims the right, in the events that have happened, to retain the existing signage until trial of the action or further order in the meantime.

The first of those three ways, pleaded in paragraph 92 of the proposed amended defence and counterclaim, is concerned with the terms of clause 9.2 of the deed. The argument starts by pointing out that, by the letter of licence, Shirayama gave written consent to Danovo to erect the two signs at the Belvedere Road entrance and that Danovo exercised that right by erecting the present signage at that entrance. It asserts that the context for the letter of licence is the right granted to Danovo by clause 9.2 and therefore that the terms of the letter are to be understood in the context and with an appreciation of the terms of that clause. The contention is that, against that background, any notice given to terminate the right granted by the letter of licence (even if the notice is given in accordance with the terms of the letter of licence) would amount to the withdrawal of consent under clause 9.2 and would therefore have to satisfy the requirement of reasonableness laid down by that clause. In short, the expression “withheld” used in the clause falls to be construed as if it included the concept of withdrawal. The consequence of so approaching clause 9.2 is therefore to disable Shirayama from lawfully withdrawing the existing consent (whether by giving 28 days’ notice or otherwise) except if, in the circumstances, it is reasonable to do so.

The next stage in the argument is the contention, first, that no reasonable grounds have thus far been shown for withdrawing the consent (and therefore for terminating Danovo’s right under clause 9.2 to maintain the signage) and, second, that the only notices thus far given purporting to withdraw the consent, namely the notice given through Winward Fearon on 10 November 2003 and the further notice given through Winward Fearon on 6 April 2004 have, in the circumstances, been of no effect. In the case of the 10 November notice, this is because, apart from other considerations, it was withdrawn by the 21 November letter. In the case of the 6 April notice, this is because, according to Danovo’s proposed pleading, Shirayama’s purpose in giving the notice was to force Danovo to leave the building, alternatively to put Cadogan in a position to exercise its break option under the sub-underlease. Shirayama, it says, was not motivated by any concern that the Belvedere Road entrance, with its existing signs, enabled Danovo to “style” that entrance “in preference” to any other tenant of the building because Shirayama’s proposed new “main entrance” signs would have made no reference at all to any tenants using that entrance. In short, the grounds for giving the notice were not reasonable.

The second way in which Danovo says that it claims the right to retain the existing signage — this is pleaded in paragraphs 95 and 96 of the proposed amended defence and counterclaim — is founded on the 21 November letter. That letter, having stated that steps were being taken to obtain consent for signage at the Belvedere Road entrance which “will indicate signage for the Saatchi Gallery”, stated that Shirayama would permit “the Saatchi Belvedere Road main entrance signage to remain in situ until planning consent and listed building consent are obtained for the new signage” ie signage which would include mention of the Saatchi Gallery. That letter, the argument runs, represented a fresh consent to retain the existing signs (and thus a withdrawal, alternatively an acknowledgement of the ineffectiveness, of the notice given on 10 November) until a future event should occur, namely the obtaining of planning permission for signage which includes mention of the Saatchi Gallery. As that future event has not yet occurred, the fresh consent is still operative.

The third way in which the case is put — it is pleaded in paragraphs 101 and 102 of the proposed amended defence and counterclaim — is to the effect that, on 7 May 2004, Tarlo Lyons (on behalf of Danovo) wrote to Winward Fearon (on behalf of Shirayama) seeking consent pursuant to clause 9.2 (and without prejudice to Danovo’s claim that no further consent was needed in any event) to maintain the existing Belvedere Road entrance signage and that Shirayama’s refusal (in Winward Fearon’s letter dated 17 May) was on an unreasonable ground, namely that the existing signage “styles the Belvedere Road entrance in preference to other parties”. Such a ground was unreasonable because the signage which, at that stage, Shirayama was intending for that entrance, namely the “Main Entrance” signage, would have made no reference to any tenants and would therefore have denied to Danovo its right, under clause 9.2, to signage which mentioned the Saatchi Gallery. Shirayama’s ground for refusing consent being unreasonable and therefore wrongful, it follows, in accordance with well-established landlord and tenant jurisprudence, that Danovo was released from its obligation to obtain Shirayama’s consent to its application and, accordingly, has a right under clause 9.2 to have the continued use of the existing signage.

On behalf of Shirayama (and Cadogan) Mr Murray Rosen QC and Mr Nicholas Taggart contended that Danovo’s claim, as now proposed to be pleaded and as developed in argument, disclosed no triable issue. Fundamental to this contention was that Danovo’s right to retain the existing Belvedere Road entrance signage is governed exclusively by the terms of the letter of licence on the authority of which it was put up. One of those terms is an unqualified right in Shirayama on 28 days’ written notice to terminate the consent given by that letter. There was no scope, it was said, for subjecting that right to the requirement of reasonableness whether by reference to clause 9.2 or otherwise. If such had been intended, the letter could have said so. It did not. Relevant to this, it was said, is that the context was that of landlord and tenant, negotiating at arm’s length over the terms on which Danovo was to have the use of a part of the first floor of the building and any ancillary rights in and about the building. In such circumstances, it was said, it was not possible to imply any term of reasonableness into the giving of a 28-day notice and there was no basis for reading Shirayama’s obligation under clause 9.2 not unreasonably to withhold consent as if that obligation extended to the withdrawal of consent once given. That was not to say, Mr Rosen continued, that Danovo, having been served with a 28-day notice in accordance with the terms of the letter of licence, might not apply to Shirayama under clause 9.2 for consent to erect new signage. It was accepted that when such an application is made, Shirayama is not entitled unreasonably to withhold or delay consent. But, it was pointed out, the onus is on Danovo to make an application for such consent and, moreover, such an application must be one which is consonant with the terms of clause 9.2. That means that, to be within the clause, the application must be for signage which does not “style the … entrance in preference to any third party” ie the signage must not represent that the Belvedere Road entrance is exclusive to the Saatchi Gallery, That is not to say that, as happened when the letter of licence was granted, Shirayama cannot agree to signage, which appears to represent, as the existing signage does, that the entrance is exclusive to the Saatchi Gallery. It is simply that such a consent is not within the scope of clause 9.2.

It follows, said Mr Rosen, that there was no basis for the first of three ways in which Danovo put its claim.

As to the second way, based upon the 21 November letter, it was unreal, said Mr Rosen, to suggest that that letter, when read in context, could be understood either as a withdrawal of the earlier notice (given on 10 November) or as a fresh licence under clause 9.2, let alone that it was a fresh licence which disabled Shirayama from changing its position thereafter (as in December it did when it decided, subject to obtaining the necessary consents, that it wished to put up the “Main Entrance signage”). Not the least of the considerations weighing against treating the 21 November letter as a fresh consent under clause 9.2 is that it had not been preceded by any application by Danovo for consent under that clause.

As to the third way in which Danovo put its claim — based upon its application on 7 May for consent under clause 9.2 — the short answer to it, said Mr Rosen, is that, being for the continued use of the existing signage and therefore for signage which represents or appears to represent that the Belvedere Road entrance is exclusive to the Saatchi Gallery, the application was outwith clause 9.2 and questions of reasonableness on the part of Shirayama did not therefore arise. However, even if that was wrong and the application was within the scope of and therefore properly to be treated as made under clause 9.2, Shirayama’s reason for refusing consent, namely that the signage would appear to style the entrance as exclusive to the Saatchi Gallery, was reasonable. It was reasonable given Shirayama’s wish to avoid exclusivity of signage coupled with its wish to promote the Belvedere Entrance as the main entrance to the building, ie an entrance from which other parts of the building (and not just the Saatchi Gallery) may be accessed. In any event, it was not for Shirayama to justify its wish to erect the “Main Entrance” signage. Its obligation under clause 9.2. is merely to consider an application by Danovo and, if the application is within the clause, to act reasonably in considering whether to accept or reject it.

It follows, said Mr Rosen, that even if Danovo established any of its three ways of putting its claim as a basis for requiring Shirayama to act reasonably, Shirayama acted entirely reasonably in giving 28 days notice under the letter of licence and in refusing (by the letter of 17 May) to consent to an application by Danovo under clause 9.2 to maintain the existing signage.

The first of the three ways in which Danovo put its case — essentially whether it is open to Shirayama to terminate the consent given by the letter of licence except on reasonable grounds — raises two separate but connected points: (1) whether, as Mr Rosen argued, the letter of licence falls to be construed independently of and without regard to the terms of clause 9.2. or whether, as Mr Gaunt argued, the consent given by the letter was a consent for the purpose of clause 9.2 and therefore must be construed and understood in the light of that provision, and (2) whether, even if Mr Gaunt is right, it is correct to construe the letter of licence on the basis that the right of termination given by it is only exercisable on reasonable grounds.

As to the first of those two points, the letter of licence was provided a matter of days after the deed containing clause 9.2 was entered into. The letter and the clause are concerned with the same subject matter: what signage Danovo should be permitted to have at the Belvedere Road entrance indicating that entrance on a means of access to the Saatchi Gallery within the building. It is to be noted, moreover, that Mr Caselton of Shirayama stated, in paragraph 28 of his fifth witness statement, that he approached Danovo’s application for consent for the existing signage at the Belvedere Road entrance “as an application for consent under clause 9.2 ... even though [the deed] had not yet been granted ...”. Given these circumstances, it is unreal — or, at the very least, arguably unreal — to treat the letter of licence in isolation from, and unaffected by the terms of, clause 9.2. That leaves Mr Rosen’s further submission that, on account of the absence of any mention of other occupants of the building, the existing signage is “exclusive” to Danovo and therefore outside the scope of clause 9.2. This contention turns on the meaning and effect of what Mr Rosen termed “the acknowledgment” ie the parenthesised provision in the clause concerned with the non-preferential nature of the styling of any signage authorised under it. As to this, it is at least arguable that implicit in the applicability of the acknowledgement is that, at the time that application is made for consent under the clause, there are other occupants who wish to have their names on the signage and to whom Shirayama is willing to give the necessary consent. Danovo contended, to my mind with some force, that that was not the position at the time the letter of licence was entered into. That point aside, it appears to me somewhat unreal to treat “the acknowledgment” as delimiting the scope of an application which may properly be regarded as made under the clause rather than as a basis on which in appropriate circumstances Shirayama may properly withhold its consent.

In the result, I am persuaded on what I have heard that a good arguable case is made out for treating the consent given by the letter of licence as a consent for the purpose of clause 9.2.

That brings me to the second point. Since Danovo has a right to signage under clause 9.2. and Shirayama cannot withhold or delay its consent to such signage, except on reasonable grounds, it is perverse to suppose, unless this is clearly spelled out in the consent, that, when consent is given on terms reserving to Shirayama a right to withdraw it, Shirayama can exercise that right, by giving the required notice, without good reason. For the consequence of a termination notice where Shirayama has no good reason for giving it is that Danovo can immediately apply for consent to continue its use of the existing signage and Shirayama is then driven to produce a good reason for refusing its consent. In effect, the validity of a notice terminating the consent would turn on whether there were good reasons for giving it. To my mind, it is at least arguable that, having regard to the terms of clause 9.2 and to the wording of the letter of licence (it states neither that the right to terminate is exercisable in Shirayama’s absolute discretion nor that it can only be exercised for good reason), it is necessary, as a matter of business efficacy, to imply a term that the right of termination is only exercisable for good reason.

That brings me to whether in the events that have happened Shirayama has validly terminated the consent given by the letter of licence. It has purported to do so on two separate occasions. The first was by Winward Fearon’s letter of 10 November and the second was by the letter of 6 April.

In the light of the 21 November letter, it is difficult to see how Shirayama can maintain that the earlier notice was not waived. Winward Fearon’s letter of 30 April 2004 (quoted, so far as material, at paragraph 19 above) seems to bear this out.

Whether, over and above its waiver effect, the 21 November letter itself constituted a consent under clause 9.2 — which is the second way in which Danovo put its case — seems to me much more questionable. I am inclined to agree with Mr Rosen that, given the context in which that letter was written (a response to Tarlo Lyons’ protest at the giving of the earlier of the two 28-day notices), it seems scarcely likely that Shirayama was intending (or could reasonably be understood to have intended) to grant a fresh consent, not least when such further consent was not expressed to be terminable on notice. The subsequent correspondence does not suggest that the 21 November letter was understood to have constituted a fresh consent. Nor, interestingly, was this suggested to be its effect either in the skeleton argument of Mr Gaunt and Mr Lord when this application was before me on 25 May or in the draft amended defence and counterclaim as then proposed.

What then of the later notice given in Winward Fearon’s letter of 6 April? Insofar as Shirayama's purpose at that stage was to replace the existing signage with signage which indicated that the Belvedere Road entrance was the building’s main entrance (which was the only substitute signage that Shirayama then had in contemplation) it seems to me that it is highly arguable that the notice was invalid. Danovo’s prima facie right under clause 9.2 is to have signage indicating that entrance as a means of access to the Saatchi Gallery in the building. The “Main Entrance” signage would have denied Danovo that right. Shirayama's wish, articulated in Winward Fearon's letter of 30 April to move away from signage which appeared to suggest that the entrance was exclusive to the Saatchi Gallery (and thus to Danovo) is all very well and understandable but that wish has to take account of Danovo’s prima facie right under clause 9.2 to signage which indicates that entrance as a means of access to the Gallery. There would have been force in Shirayama’s exclusivity objection if at the time there were other occupants desirous of having their names on such signage and Shirayama’s purpose in giving its 28-day notice was to enable this to be achieved. But there was scant evidence of any other occupants having such a wish and, in any event, to the extent that there were any, it was not with a view to accommodating them that the 28-day notice was given.

In the circumstances, I therefore regard the validity of the 6 April notice as highly questionable.

Even if the 6 April notice was valid, there is Danovo’s third way of putting its case, namely, that consent to its application of 7 May for retaining the existing signage was unreasonably refused with the result that it was released from the need to obtain it. The validity of Shirayama’s ground for refusing consent contained in Winward Fearon’s letter of 17 May — that the signage styled the entrance “in preference to other parties” — is open to question, just as it is open to question as a sufficient reason for the attempt, by Winward Fearon’s letter of 6 April, to terminate the consent contained in the letter of licence. In effect the two stand or fall together.

That brings me to the question of the balance of convenience.

If I had had to determine at the hearing on 25 May whether Shirayama should be restrained from removing the existing signage from the Belvedere Road entrance, it is very likely that, on the evidence as it then stood, I would have acceded to Danovo’s application. At that stage, Shirayama was proposing to install the “Main Entrance” signage (for which they had obtained planning and listed building consent) in substitution for the existing signage; the “Main Entrance” signage would have failed to indicate that the Saatchi Gallery was in the building and could be accessed from that entrance; it was most unlikely that the planning authority would have allowed Danovo to erect any additional signage at that entrance. The effect of what Shirayama was then intending would have been to deny to Danovo, without so far as I can see any good reason, its right under clause 9.2 to signage indicating the presence, accessible from that entrance, of the Saatchi Gallery within the building.

However, the position has moved on since then. Shirayama’s action in applying (on 12 July) for “multi-tenanted” signage (as described at paragraph 28 above) may be thought to be an acknowledgment that simply to have “Main Entrance” signage, although doubtless achieving Shirayama’s purpose in signalling to visitors that the Belvedere Road entrance is the main entrance to the building (and not simply an entrance serving a particular tenant or tenants), would not, or arguably would not, provide an adequate reason for denying to Danovo its signage entitlement under clause 9.2.

Of immediate significance for present purposes, however, is Shirayama’s interim arrangement offer, first made on 3 June 2004 and subsequently renewed, to allow one of the two existing signs to remain, with a “Main Entrance” sign substituted for the other sign. Shirayama says that such an arrangement, although a temporary expedient pending the obtaining of planning consent for the proposed “multi-tenanted” signs, would sufficiently meet Danovo’s wish to have a sign at that entrance indicating the presence, accessible via that entrance, of the Saatchi Gallery, and would go some way towards achieving its (Shirayama’s) aim of avoiding a form of signage which appears to represent that entrance as exclusive to the Saatchi Gallery while signalling to visitors that the entrance serves as the main entrance to the building.

Danovo is unwilling to accept that offer. It says that Shirayama can only remove the existing signage if it can satisfy the court that it is acting reasonably and not in violation of Danovo’s rights under clause 9.2 to signage at that entrance; that there is no justification for taking down the existing signs until a permanent solution has been agreed; that, having a “Main Entrance” sign on one side of the entrance does not help achieve Shirayama’s objective, insofar as that objective is to have a form of signage which depicts who are the tenants within the building whose premises may be accessed via that entrance and who wish to have that fact indicated on some form of external signage; and that, in any event, the interim arrangement offer has as one of its terms that the arrangement may be terminated on 28 days’ notice. Relevant to the last point, it is said, is that even though Shirayama has stated that it is willing to undertake not to give such notice while it is consulting with English Heritage over the proposed new multi-tenanted signs or pending the determination of any application to the planning authority for such alternative signage, it is quite possible that, after such consultation has ended, and following determination of any application to the planning authority, Shirayama could give notice and therefore trigger a further period of uncertainty and, in the process, a violation of Danovo’s rights under clause 9.2.

In my view, Danovo is acting unreasonably in rejecting out of hand Shirayama’s interim arrangement offer. Although temporary in nature, the arrangement, if implemented, will ensure that the Belvedere Road entrance signage continues to indicate to visitors approaching the building from that side that the Saatchi Gallery may be accessed from that entrance. It is difficult to see what greater entitlement Danovo can establish under clause 9.2. I very much doubt whether it can insist on having the words “Saatchi Gallery” emblazoned on signs on both sides of the entrance (rather than on just one). Whether or not the erection of a “Main Entrance” sign on one side (while retaining one of the existing Saatchi Gallery signs on the other) sufficiently achieves Shirayama’s long-term signage objectives seems to me to be a matter for Shirayama and not for Danovo.

It follows that, in the circumstances, I am not willing to make an order, the effect of which would be to compel Shirayama to retain both existing signs until trial or further order in the meantime. But it does not follow that, having rejected Shirayama’s interim arrangement offer, I should simply dismiss Danovo’s application. The aim must be to achieve a modus vivendi until trial of this action or further order in the meantime, which will cause the least injustice to each side and will, so far as possible, maintain a form of signage which indicates that the Saatchi Gallery may be accessed from the Belvedere Road entrance, while avoiding the impression that that entrance is exclusive to the Gallery. It seems to me that, whatever the position was in February 2003, the wish to signal that entrance as the main entrance to the building and that it is not exclusive to any particular tenant is a perfectly legitimate aim for Shirayama, which is after all the effective owner of the building, to want to pursue. Provided Danovo’s rights under clause 9.2 are properly catered for, the fact that such signage may make no reference to any other tenant of the building is, to my mind, neither here nor there.

In my judgment, the least injustice to either side can best be achieved by authorising Shirayama to remove one of the two existing signs, leaving it free, if it wishes, to put up a “Main Entrance” sign in its place, and by directing that, failing agreement between the parties, the remaining Saatchi Gallery sign is to remain in place until trial or further order in the meantime. It will be noted that this will prevent Shirayama from seeking, simply by serving a further 28-day notice, to remove the remaining sign. Danovo’s wish for continuity of signage seems to me to be entirely reasonable.

In so ordering, I make no prediction as to what replacement signage ought ultimately to emerge. Nor is anything in this order intended to prevent either side from putting forward new proposals or applying to the court to vary or discharge this order and to seek other appropriate relief if there is a change of circumstances which makes it appropriate to do so. In particular I express no view as to whether the proposed “multi-tenanted” signage is signage to which Danovo can reasonably object. I would merely say that it is unfortunate that Danovo was not consulted over the format of that proposed signage before application was made to the planning authority for the necessary statutory approvals.

It was agreed between counsel that consideration of whether Danovo should have permission to make the various amendments to set out in its proposed amended defence and counterclaim should be deferred to another occasion.