Eaton Mansions (Westminster) Ltd v Stinger Compania De Inversion S.A.

I have before me an application for summary judgment. The application was made by an application notice dated 17 June 2010 in proceedings which have been ongoing since 22 April 2009. This is the second application for summary judgment which the Claimant has made. The first application was determined by Deputy Master Mark on 11 November 2009. The Deputy Master declined to give summary judgment; rather he permitted the Defendant to amend its defence and counterclaim. This application is said to be made on evidence which was not considered by Deputy Master Mark and which has been adduced to demonstrate that the Defendant’s amended pleading is doomed to fail.

The relevant background circumstances are as follows. The Claimant is the head lessee under a lease made 23 June 1978 of the premises known as Eaton Mansions, Cliveden Place London (hereinafter referred to as “the building”). The building consists of a number of flats. The Claimant is a management company formed so as to manage the building on behalf of the owners of the flats. Throughout the hearing before me the freeholder was called “the Grosvenor Estates” or “Grosvenor.” In this judgment I shall call the freeholder “Grosvenor.”

On the same date as it became the head lessee, the Claimant created subleases in respect of at least two of the flats. Those were numbers 8 and 10. The subleases were for a term which was identical to the term of the head lease less 5 days. It is common ground that the subleases do not include the roof of the building, the external chimney stacks of the building at roof level or the chimney flues in the building, save insofar as they served exclusively the flat demised.

The Defendant is a Panamanian company which is owned by a Cayman Island Trust. The Defendant was incorporated on 8 June 1979. It was incorporated, specifically so as to acquire the underlease in flats 8 and 10. The sub leases were acquired shortly after incorporation.

I take the next part of the relevant factual background from the amended defence and counterclaim in these proceedings. In or around 1980 the Defendant installed 3 air conditioning units and 3 associated condenser units on the flat roof of the building. Those units were installed together with their associated pipe work, wires, ducts and other apparatus. All those works were carried out, so it is said, with the consent of the Claimant. In or around the mid 1980s the Defendant installed a fourth air conditioning unit and associated condenser unit on the flat roof of the building – again with associated pipe work, wires, ducts and other apparatus. In 1995 a fifth air conditioning unit was installed on the flat roof of the building; yet again there was an associated condenser unit and associated pipe work, wires, ducts and other apparatus. Finally, in or around 1997 or 1998 the Defendant installed a sixth air conditioning unit, an associated condenser unit on the outside wall of the building outside flats 8 and 10 and associated pipe work, wires, ducts and other apparatus.

The Defendant accepts that the work undertaken in the mid 1980s, 1995 and 1997/1998 was carried out without any licence or consent from the Claimant.

Smith Waters is a firm of managing agents retained by the Claimant. By letter dated 14 February 1996 Smith Waters notified the Defendant that the lessee of flat 12 had complained of noise levels emanating from the air conditioning apparatus then existing; a request was made to the Defendant to consider a major overhaul or removal of the units. By letters dated 4 November 1996 and 21 August 1997 Smith Waters requested the Defendant to replace the existing units with lighter and quieter modern units.

On 17 August 2006 Smith Waters either required or asked the Defendant to relocate and re-commission the air conditioning units then existing so as to facilitate external repairs and decoration to the building.

The Defendant asserts that by virtue of these facts (and others which I need not detail) the Claimant impliedly represented to the Defendant that it did not and would not object to underlessees within the building maintaining on the building a reasonable amount of air conditioning apparatus and associated pipe work, wires, ducts and other apparatus of reasonable quality and size and in reasonable positions and that the grant of consent for such apparatus would not be unreasonably withheld or delayed in respect of air conditioning apparatus which was of a reasonable quality and size and located in a reasonable position (see paragraphs 15 and 16 of the amended defence and counterclaim).

In 2006 the Defendant commenced works of refurbishment to flats 8 and 10 with the consent of the Claimant. It decided that it would remove and replace the air conditioning apparatus with modern quieter and more efficient units rather than refurbish the existing apparatus. In or around June 2007 the Defendant attached 2 air conditioning condensers to the chimney stack of the building, installed 2 air conditioning units on the roof of the building, broke through the chimney stack at roof level and inserted air conditioning pipe work leading from the roof of the building to flats 8 and 10 through the chimney stack. It is common ground that the Claimant did not give its consent for that work.

In February 2008 the Defendant removed the 2 air conditioning units which had been installed on the roof. However, on or about 6 December 2008 the Defendant installed 2 different air conditioning units on the roof of the building. It then connected those units and the units attached to the chimney stack to the pipe work inside the chimney stack. Again, it is common ground that the Claimant did not give consent for this work.

In these proceedings the Claimant alleges that the Defendant committed the tort of trespass by installing air conditioning units on the roof of the premises, attaching units to the chimney stack and breaking through the chimney stack and installing pipe work so as to permit the use of the units within flats 8 and 10. At the time the proceedings were issued the primary relief sought was an injunction compelling the Defendant to remove the air conditioning units and all associated apparatus; further the Claimant sought an order compelling the Defendant to carry out necessary works of restoration.

It appears to be common ground now that injunctive relief is no longer appropriate, if the Claimant succeeds in its claim. That is because the Defendant has sold its interest in the underleases. Accordingly the relief now sought by the Claimant is an order for damages. If the application for summary judgment succeeds the Claimant seeks an order that there should be judgment for the Claimant with damages to be assessed.

As I have said already, the Defendant alleges that the Claimant has made an implied representation to the Defendant which now precludes the Claimant from unreasonably withholding consent to the provision of air conditioning apparatus on the roof of the building which is of a reasonable quality and size and which is located in a reasonable position. For the purposes of this application, the Claimant is content to proceed on the basis that it is arguable that such a representation has been made and that this gives rise to an estoppel which precludes the Claimant from unreasonably withholding (or for that matter delaying) its consent to any request by the Defendant that the Defendant should be permitted to install air conditioning apparatus on the roof of the building which is of a reasonable quality and size and which is in a reasonable position. In summary, however, the Claimant contends that whichever way one looks at the relevant facts it is impossible to conclude that the Claimant has, even arguably, unreasonably refused to consent to the works undertaken by the Defendant or has unreasonably delayed in giving such consent.

If the Claimant is correct in that contention, it is entitled to summary judgment. In a moment I will turn to consider the evidence which is adduced and which bears upon this issue. It is necessary first, however, to point out that a crucial aspect of the position adopted by the Claimant is that it was never in a position to authorise the Defendant’s works or give consent for the apparatus positioned on the roof to remain because Grosvenor has never given its consent. Grosvenor’s stance is said to be important because of a covenant which exists in the head lease between Grosvenor and the Claimant. The covenant is in the following terms:-

“No alterations shall …..be made in the construction, height, elevation, external or internal architectural appearance or internal arrangements of the demised premises or any part thereof or in the chimney stacks or chimney pots thereof….…..”

As a matter of interpretation and adopting the interpretation which is most favourable to the Defendant this clause prohibits alterations which have the effect of altering the external architectural appearance of the building; it also prohibits alterations to the chimney stacks or chimney pots. Obviously, Grosvenor may relax the rigour of this covenant by giving consent to what would otherwise be prohibited alterations; equally clearly it may refuse to consent to such alterations and its consent need not be reasonable.

I turn first to correspondence which came into existence in 2006. On 17 March 2006 Omniway Properties Ltd (an agent which was clearly acting on behalf of the Defendant) wrote to Smith Waters enclosing plans for planned building works at flats 8 and 10. One of the plans enclosed was described as “M & E-flat 8 and 10” which, as its title suggests, dealt with the mechanical and engineering aspects of the proposed building works. The letter ended by informing Smith Waters that Omniway Properties Ltd would be responsible for paying all professional and consultants’ fees including any fees which were incurred by Grosvenor. Further, Omniway Properties Ltd specifically requested Smith Waters to forward a set of the plans to Mr John Dunkin “at GE” – obviously a reference to Grosvenor. On 18 April 2006 Mr Waters complied with the request which had been made of him. He sent a letter of that date to Mr Dunkin and under cover of the letter he attached the relevant drawings. On 11 May 2006 Mr Dunkin responded to Smith Waters indicating that he had passed the relevant documentation to a company known as Murray Birrell Ltd who would deal with “your application for consent to carry out alterations under the terms of the head lease on our behalf.” Murray Birrell Ltd was and still is a company which provides services of chartered surveyors and property and building consultants to Grosvenor.

On 18 May 2006 Mr Hall, of Murray Birrell Ltd, wrote to Omniway Properties Ltd. The letter is important and the relevant extracts are as follows:-

“We act for Grosvenor in connection with your recent application.

John Dunkin at Grosvenor has kindly provided us with details, drawings and all correspondence to date. We will be dealing with this matter from this moment onwards up to completion of any works deemed appropriate.

Before we consider matters further, I would like to carry out an inspection of the property at a mutually convenient time. Please contact me, or my secretary so that we can arrange this.

In the meantime I would be grateful if you would confirm the following. These are:

1)

Cost of works up to builder’s finish.

2)

Progress of statutory applications.

3)

Time scales for construction.

4)

Outline description of works (limited to one sheet of A4)

In the event we require you to amend the proposed works, a further 3 sets of the drawings will be required before a formal approval letter is issued.

Please note that no works are to be commenced on site until the relevant plans have been considered by Grosvenor or their agents and all Conditions Precedent complied with.”

This letter was copied to Mr Dunkin at Grosvenor and Mr Waters of Smith Waters.

There must have been a letter from Omniway Properties Ltd to Mr Dunkin dated 18 May 2006. I say that because on 23 May 2006 Mr Dunkin wrote to Omniway Properties Ltd in the following terms:-

“Thank you for your letter dated 18 May 2006.

The attached drawings have been passed on to our consultants, Murray Birrell Ltd, as most appear different from those previously sent to this office.

With regard to the proposed AC plant I would advise not to assume approval will be automatically given as the plant of this nature often has to be located outside the demise of the property it serves and it can cause annoyance to neighbours by way of vibration, noise and heat. I would advise information on this aspect of the proposal be sent as soon as possible for consideration.”

This letter was copied to Mr Waters. AC was a reference to air conditioning.

Some months went by. Thereafter on 8 September 2006 Mr Hall notified the Claimant that Grosvenor would consent to certain works at the building. The letter described those works but made it clear that the works had to be undertaken in accordance with approved drawings and that there were “Conditions Precedent” which had to be met before work commenced. The letter also notified the Claimant that it was necessary for the Claimant to comply with certain “works conditions”. The works conditions were enclosed. Two are of significance to this case. They are:-

“5.

Grosvenor’s approval to these works does not give consent for the use of any external roof surface as a roof terrace, sitting out space, roof garden or for any purpose not specifically agreed in writing. Access to such roofs is restricted to maintenance and repair purposes only.

16.

Please note the following:

(i)

…..

(ii)

This approval does not include for the installation of comfort cooling/air conditioning.”

As of 8 September 2006 the position could not be clearer. The Defendant had sought consent for works of alteration relating to flats 8 and 10. The Claimant had sought the consent of Grosvenor for the carrying out of the alterations requested by the Defendant. No doubt it did so because of the alteration covenant set out above. By its letter of 8 September 2006 Murray Birrell Ltd on behalf of the freeholder gave its consent to the carrying out of works of alterations but, specifically, did not consent to the use of the roof of the building for any purpose not specifically agreed in writing and specifically excluded from the consent installation of air conditioning.

I was not referred, specifically, to evidence which demonstrated unequivocally that the letter of 8 September 2006 and the enclosures with that letter were copied to the Defendant. It is inconceivable, however, that such a step was not taken.

It follows that the work which the Defendant undertook on the roof in June 2007 was in flagrant disregard of the terms of the letter of 8 September 2006. It has not been suggested that the Defendant sought the consent either of the Claimant or Grosvenor for the installation of the apparatus installed on the roof in June 2007 nor for the breaking into the chimney.

An important meeting took place in April 2008. By that date the Defendant had removed two of the units installed in June 2007. I have available to me photographs which show what existed on the roof of the building as of April 2008. The only direct evidence as to what occurred at the meeting is the witness statement of Mr Peter Teesdale. Mr Teesdale is an employee of an organisation known as Crescent Petroleum; from time to time he works for Mr Hamid Jafar, the Protector of the Cayman Island Trust which owns the Defendant. Mr Teesdale was responsible for the day-to-day management of the flats between about September 2007 and March 2010 when the Defendant sold its underleases in respect of flats 8 and 10. In his witness statement of 29 June 2010 Mr Teesdale describes how notwithstanding the removal of two of the units installed in 2007 relations between the Claimant and Defendant were deteriorating. He, Mr Teesdale, was apparently keen to resolve this deteriorating situation. He accordingly arranged for a meeting to take place to view the roof and what existed upon the roof.

The site visit took place on 22 April 2008. It was apparently attended by Mr Hall of Murray Birrell Ltd, Mr Coverdale and Mr Jan of Omniway Properties Ltd and Mr Teesdale. Mr Teesdale’s account of what occurred is set out in paragraphs 4.4 and 4.5 of his witness statement. I quote:-

“We met on the ground floor of the property and accessed the roof, collectively, via the main roof staircase in the centre of the roof. We walked over to the two remaining small June 2007 units, and examined the surrounding area, including the side of the chimney stack through which the pipe work passed. Specifically, we walked between the narrow passageway between the chimney recess, against which the larger June 2007 units had been positioned, and the chimney stack, to which the remaining small June 2007 units were affixed and through which the unconnected pipe work was suspended. I recall that the chimney stack was reviewed from both the unit and the pipe work sides. I attach at page 19 a plan of the roof illustrating the position of the chimney recess and chimney stack. I believe we spent approximately 10 minutes on the roof. Given the sole purpose of the site visit was for Grosvenor to view the June 2007 units and pipe work and to discuss the re-installation or replacement of the two larger June 2007 units in the chimney recess, I believe it is inconceivable that Mr Hall would not have been aware of the, plainly visible, pipe work emerging from the chimney stack. Mr Hall, however, raised no objections whatsoever to the pipe work or collection which I do not recall even being mentioned. Mr Hall simply advised that he had no objections in principle to the air conditioning units or proposal to install two further units in the chimney recess, provided that [the Claimant] was happy and that planning permission was obtained. This recollection is supported by the email correspondence which followed the meeting between Mohammed Jan and Mr Hall….in which no reference to the drilling works or pipe works is made.

4.5

I was not surprise that the drilling works and pipe work had not been raised by Mr Hall because I believe that this had never been a cause of concern for [the Claimant] or Grosvenor. I refer in this respect to the letter of [the Claimant’s] agents Smith Waters to OPL on 19 July 2007….written following the drilling works, which states “the Directors were impressed with the use of the chimney flue to conceal pipe work and to limit the amount of cabling which criss-crosses the roof. The solution for the building might continue this approach.”

Mr Teesdale goes on to say that it was a consequence of this meeting and the apparent approval of Mr Hall for what existed and what was proposed that he made arrangements for the installation of units in December 2008.

The emails referred to by Mr Teesdale are before me. An email in advance of the meeting sent by Mr Jan to Mr Hall describes the purpose of the meeting as being “for Omniway Properties Ltd to make sure that you are satisfied with the new AC condenser units location.” Also in advance of the meeting Mr Hall made it clear in an email that the Defendant would need the consent of the Claimant before it could obtain any consent from Grosvenor. Following the meeting Mr Jan emailed Mr Hall in the following terms:-

“My understanding from our meeting is that Grosvenor Estate will approve the AC condenser location based on the following. 1) Smith Waters consent, to be passed to Grosvenor Estate.

Once the above consent is passed on, the following Grosvenor Estate criteria needs to be taken into consideration, under which you would approve the location and the size of the condenser units.

a.

The units should not be visible from street level or ground and first floor neighbours.

b.

The structural loading on the roof.

c.

Acoustic survey, for a seven day period.

d.

Consideration, to the other neighbours future potential request to add their own AC units (enough space for other parties).

Trust that this is as discussed however if I miss something kindly advise”

Mr Hall replied:-

“Thanks for the note following our brief meeting. The over-riding factor here is the fact that you need to follow the correct procedure. That is to apply up the chain via Smith Waters. I am unable to consider the matter formally until they approach Grosvenor having initially agreed matters with you.

In the meantime, I have the following additional comments to make having read your numbered points below:

1.

You need planning consent.

2.

Any approval will be subject to irrevocable licence.

3.

I do not have a copy of the drawings so I have nothing to review on paper.

4.

I recall a lot of condensers, somewhere in the region of 6 no for the two flats. I have asked you to review this because I feel this is excessive. You will appreciate I'm obliged to forward a copy of this email to Richard Waters.”

I was not taken to any evidence relating to the period between April 2008 and December 2008. There is no suggestion on behalf of the Defendant, however, that the Defendant sought the consent of the Claimant for the retention of the apparatus which had, by now, been upon the roof since June 2007 before a letter which was sent by the Defendant to the Claimant on 3 December 2008.

On the basis of the history and documentation described above I am quite unable to see how it could be said that the Claimant had unreasonably withheld its consent for the work undertaken by the Defendant and/or for the retention of the apparatus up to and including 3 December 2008. To be fair to Mr Hanham he did not suggest that it had. As I understood his final position his contention was that the Claimant unreasonably refused to consent to the retention of the apparatus following a request which was made for such consent by the Defendant on 3 December 2008.

The letter dated 3 December 2008 is a long and detailed letter. It is unnecessary to set out its terms in detail because I am quite satisfied that for the purposes of this application I should regard it as at least arguable that it constituted a request for consent for retention for what then existed and for the installation of two further units.

What followed from that request? As a matter of fact what occurred was that on 6 December 2008 the Defendant installed two further units on the roof and in April 2009 after the exchange of detailed correspondence between solicitors these proceedings were commenced.

The Defendant cannot say that it afforded the Claimant a proper opportunity to consider the installation of further units on the roof. The installation of the further units took place within a few days of the letter of 3 December 2008.

Can it be said, nonetheless, that it is at least arguable that the Defendant can demonstrate that the Claimant unreasonably refused to permit the retention of the apparatus? That it did refuse cannot be in doubt. In April 2009 these proceedings were issued and they are consistent only with the Claimant's refusal to authorise the retention of the apparatus on the roof.

Mr Arkush submits that the Defendant has no prospect of establishing that the Claimant has refused consent unreasonably since it has always taken the view that the giving of its consent before knowing whether Grosvenor would consent would place it, at least potentially, in breach of the alteration covenant.

I am conscious that there is no direct evidence from an employee of the Claimant or a director of the Claimant or even from Smith Waters which explains why it was that the Claimant thought it appropriate to commence these proceedings as opposed to making a formal application to Grosvenor for the necessary consent as it did in 2006. If matters rested there, there would be a lacuna in the evidence which might make it unjustifiable for the Claimant to succeed on its claim for summary judgment. However, matters do not rest there. That is because there are important letters which came into existence in late 2009 which throw light on Grosvenor’s view of whether or not consent should be given for the apparatus which is currently on the roof of the building.

Mr Hanham told me that on 5 October 2009 the Defendant made a further request for consent to the retention of the apparatus on the roof. I have no reason to doubt what he says. Smith Waters became involved in dealing with the application and it appears that discussions took place between Mr Waters and Mr Hall of Murray Birrell Ltd. The substance of those discussions is contained in an email dated 26 November 2009 from Mr Waters to the Claimant's solicitor. The salient passage is as follows:-

“I have spoken to Andy Hall of Murray Birrell asking for Grosvenor about the existing possible future air conditioning units. His view confirms my own. He thinks it would be difficult to install and screen sufficient units for all flats (although some flats will not want them) and also think that the two large air conditioning units from flats 8 and 10 are too visible and too big and notwithstanding the issue of planning consent he is likely to recommend to Grosvenor that they be refused consent from Grosvenor even if Eaton Mansions approve them.

Andy might be prepared to consider a long-term overall plan for the roof of Eaton Mansions, if put forward by Eaton Mansions (Westminster) Ltd, and if suitable Grosvenor might give a licence for Eaton Mansions to allow a set number of units in pre-agreed locations without further reference to them. This would be subject to planning consent(s).”

The substance of that conversation was relayed by the Claimant's solicitor to the Defendant's solicitor by letter dated 27 November 2009. No evidence has been adduced to cast any doubt upon the accuracy of Mr Hall’s position on behalf of Grosvenor.

On the basis of this evidence it seems to me to be clear that Mr Hall would not recommend to Grosvenor that it should consent to the retention of the apparatus on the roof; there is no reasonable basis for concluding that his recommendation would have been any different if it had been sought in the early part of 2009 before these proceedings were issued. Further there is no reason to suppose that Grosvenor would not act upon the advice of Mr. Hall.

In the light of all this evidence what emerges? First, in my judgment, neither Grosvenor nor the Claimant has ever given consent to the erection or retention of the apparatus which exists on the roof of the building. Second, Grosvenor has provided reasons which cannot be categorised as unreasonable for its view that consent to retention should not be given. Third, in my judgment, it would be very difficult for a refusal of consent on the part of the Claimant to be regarded as unreasonable in the face of Grosvenor’s opposition but, in any event, it is unarguable to suggest that the refusal of consent in the face of Grosvenor’s opposition and in the light of terms of the covenant which exists in the head lease is unreasonable. I have no doubt that the existence of the apparatus on the roof is a breach of the covenant, at least potentially. A breach is conceded insofar as it relates to the breaking into the chimney but the point is made with some force that the breaking into the chimney is not, apparently, a particular concern of Grosvenor. However, I am also clear in my mind that the erection of the apparatus as a whole and its retention on the roof constitutes at least a potential breach of that part of the covenant which prohibits alterations to the external architectural appearance of the building. In my judgment the Claimant is certainly entitled to conclude that that is so and, consequently, it cannot be said that it is acting unreasonably in withholding consent for the retention of the apparatus.

In all the circumstances I have reached the clear conclusion that there is no realistic possibility that the Defendant can show that the Claimant has unreasonably refused its consent for the retention of the apparatus. On the contrary, it seems to me that the evidence demonstrates that the Defendant has behaved in a high-handed manner and has resorted to trespass when it has been unable to achieve its aims lawfully. It now seeks to erect a smokescreen of unreasonable conduct on the part of the Claimant which is just not sustainable. The plain fact is that since 2006 Grosvenor has taken a reasonably consistent position on the issue of the apparatus on the roof and in the light of that position the Claimant has not acted unreasonably. On the facts as explained by me the issue of whether the Claimant has delayed giving its consent does not arise. Put shortly, the Claimant refused its consent for retention at the latest when it commenced these proceedings and it has, in effect, reaffirmed that decision by the terms of its solicitor’s letter to the Defendant's solicitors in late November 2009.

During part of his oral submissions Mr Hanham seemed to be suggesting that it was open to the Defendant to establish that the Claimant's refusal to give consent for the retention of the apparatus could be regarded as unreasonable notwithstanding the stance taken by Grosvenor. In my judgment that submission fails to take account of the fact that all the evidence shown to me demonstrates clearly an acceptance on the part of the Defendant and its advisors that the consent of Grosvenor was as crucial as the consent of the Claimant if proper authorisation of work or proper authorisation of retention of apparatus was to be achieved. That is a continuous thread.

I am satisfied that the Claimant has demonstrated that the Defendant has no real prospect of successfully defending this claim. There is no other compelling reason why the case should be disposed of at trial. Quite the contrary, the costs generated by this claim are already very substantially disproportionate to what is at stake. In these circumstances it is my duty to give summary judgment for the Claimant and I propose to direct there should be judgment for the Claimant with damages to be assessed.