Case Numbers: HC10C00971, HC10C00894, HC10C00970, HC10C00969
Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MR JUSTICE VOS
Between :
Humber Oil Terminals Trustee Limited | Claimant |
- and - | |
Associated British Ports | Defendant |
Mr Nicholas Dowding Q.C. and Mr Mark Sefton (instructed by DLA Piper UK LLP) for the Claimant
Mr Christopher Nugee Q.C. and David Holland Q.C. (instructed by Eversheds LLP) for the Defendant
Hearing dates: 18th-22nd July 2011
Judgment
Mr Justice Vos:
Introduction
This case concerns 4 leases of properties (the “Leases”) comprising important parts of the Immingham Oil Terminal in the Humber Estuary. I shall use the abbreviation “IOT” to refer to the entirety of the premises demised by the Leases. Each year, about 20 million tonnes of oil and related products passes through the IOT to and from the Lindsey Oil Refinery (“LOR”) and the Humber Oil Refinery (“HOR”) (together the “Refineries”), some 5 kilometres away from the IOT. Total UK Limited (“Total”) owns and operates the LOR, and ConocoPhillips UK Limited (“CoP”) owns and operates the HOR.
The tenant under each of the Leases is Humber Oil Terminals Trustee Limited (“HOTT”), which is a joint venture company operated by Total and CoP. Total and CoP also own a joint venture operating company, Associated Petroleum Terminals (Immingham) Limited (“APT”), established to operate the IOT, other jetties, and the Common Pumping Station (the “CPS”) for the Refineries.
The most important of the 4 leases relates to the Immingham Oil Jetty itself (the “Oil Jetty”) which protrudes about one kilometre into the Humber Estuary, and comprises a total of 7 berths. There are three seaward deep water berths, two of which are suitable for VLCCs, allowing partly loaded vessels of up to 290,000 deadweight tonnes to dock. The 4 remaining berths are suitable for barges and coasters and are located to the West of the Oil Jetty on a finger pier. Total uses the Oil Jetty for all its imports of crude oil, but CoP does not, using another facility, the Tetney Monobuoy, further down the Estuary instead. CoP does however utilise about 30% of the Oil Jetty’s capacity for import and export of finished product. Total uses the remaining 70% of the Oil Jetty capacity. It is common ground that, as things stand, the Oil Jetty is now operating at or very slightly below its full capacity.
The preliminary issue that is now before me was ordered by Morgan J on 28th June 2011 as follows:-
“… the issue of whether the Defendant intends to occupy the holdings for the purposes, or partly for the purposes, of a business to be carried on by it therein, within the meaning of Section 30(1)(g) of the Landlord and Tenant Act 1954, and if so when, and in what circumstances the Defendant so intends; but so that such issue shall not include any question as to the lawfulness of that intention as a matter of competition law”.
The objective behind this preliminary issue is that I should determine the question of ABP’s intention at this hearing. If ABP establishes the necessary intention, the continuation leases under the Landlord and Tenant Act 1954 (the “1954 Act”) will carry on until after the competition claims have been determined one way or another. There is an appeal pending against the Chancellor’s decision of 24th February 2011 striking out HOTT’s competition claims.
Section 30(1)(g) of the 1954 Act provides that “on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein ....”.
Paragraph 4 of ABP’s amended Defence pleads that ABP intends to “provide port facilities and services for the import and export of oil and other products with a view to (a) ensuring continuity of supply to Total and [CoP] (and their respective refineries) and (b) exploring and implementing the supply of oil and other products which are deemed appropriate over or through the premises to other third parties”.
In evaluating ABP’s intention in this case, I have had to consider the starkly divergent approaches of the parties. On the one hand, ABP wishes, as its pleading explains, to occupy and manage the IOT itself with a view both to the maintenance of supply to the Refineries, and to opening the Oil Jetty to third party users. On the other hand, HOTT wishes to renew the Leases and maintain the status quo, and points to the fact that, when the Leases terminate, it is entitled to remove its pipelines, equipment and infrastructure from the Oil Jetty, notwithstanding that it would cost some £10 million to do so, and would then cost at least £60 million and take about 2 years to replace what it had removed.
The history of the operation of the IOT
The British Transport Docks Board (“BTDB”), a publicly owned corporation, was reconstituted and renamed as ABP by section 5(1) of the Transport Act 1981. Section 5(2) made provision for ABP to become a subsidiary of a holding company. That holding company, Associated British Ports Holdings plc (“ABPH”), was incorporated on 31st December 1982. Section 7(1) provided for ABP to continue as a statutory corporation. ABP is now in private ownership. Section 9(1) imposed a statutory duty on ABP to: “provide port facilities at its harbours to such extent as it may think expedient”.
ABP owns and operates 21 UK ports and is the UK’s largest ports group, holding about 23% of the market share. Immingham is the busiest port in the UK (by volume) and handled over 55 million tonnes of goods in 2008.
BTDB constructed the Oil Jetty at IOT between 1967 and 1969 pursuant to the Immingham Dock Revision Order 1966. Thereafter, HOTT installed a complex system of pipes and loading and unloading equipment pursuant to an agreement of 27th January 1967. The first pipeline was installed in 1967, and the Oil Jetty became partially operational in April 1969. As contemplated by the original terms of the lease of the Oil Jetty, in 1993-1994, ABP constructed, at HOTT’s request, a third deep water berth.
Apart from the IOT, the Port of Immingham (the “Port”) covers an area of some 1,100 acres, and is made up of numerous facilities including the Immingham Gas Jetty (the “IGT”), which is a specialist liquid bulks terminal handling vessels up to 50,000 deadweight tonnes for a variety of customers, and the Eastern and Western jetties (respectively the “Eastern Jetty” and the “Western Jetty”), which are also specialist liquid bulk terminals handling vessels up to 30,000 deadweight tonnes, also serving a variety of customers. The other terminals generally handle dry bulk cargoes.
The statutory background is that section 33 of the Harbours, Docks and Piers Clauses Act 1847 encompasses what is known as the “open ports” obligation, providing: that “[u]pon payment of the rates made payable by this … Act … the harbour, dock and pier shall be open to all persons for the shipping and unshipping of goods …”. Section 26(2) of the Harbours Act 1964 allows a harbour authority such as ABP power to “demand, take and recover such ship, passenger and goods dues as they think fit”. Section 27A of the same Act allows ABP to levy ship and goods dues or equivalent dues, to make other charges, and to make a combined charge including both, except where the payer objects. Section 31 of the Harbours Act 1964 allows those paying dues and charges imposed by a harbour authority to appeal to the Secretary of State. The definition of “ship, passenger and goods dues” in section 57 provides that such dues include those for any ship entering using or leaving the harbour, and in respect of services rendered or facilities provided in respect of goods brought into or taken out of the harbour.
The Leases
I have set out the details of the Leases in a schedule to this judgment. In short the 4 Leases are of 4 different properties as follows.
The lease of the Oil Jetty (the “Oil Jetty Lease”) is the most important one. Clause 3(7) of the Oil Jetty Lease permits HOTT to remove “the Lessee’s works” at the end of the term. The Lessee’s works include the pipes and the loading and unloading equipment which HOTT installed. Clause 6(a) of the Oil Jetty Lease exempts HOTT from payment of ships and cargo dues. There was only one rent review after about 25 years.
The lease of 10 acres of land (the “Oil Depot”) which comprises APT’s offices and a tank farm (the “Oil Depot Lease”) was granted on different terms to the Oil Jetty Lease. It contained three rent reviews, and a provision in clause 3(9) requiring HOTT to remove all buildings and erections on the Oil Depot if ABP requires it to do so at termination.
The lease of a further 10 acres of land (the “10 Acres”) to the East of the Oil Depot (the “10 Acre Lease”) was broadly on the same terms as the Oil Depot Lease.
The lease of a further 1.97 acres (the “1.97 Acres”) to the North of the Oil Depot was also granted broadly on the same terms as the Oil Depot Lease.
Chronological Background
In the course of the trial, it was realised by the parties that some of the documents placed in the chronological bundle formed part of a lengthy series of “without prejudice” negotiations between the parties in the run up to and in the course of these proceedings. Though some of these documents had already been opened to me, it was eventually agreed to redact the financial offers passing between the parties, but to leave un-redacted the fact that discussions had taken place and the comments on those discussions in board minutes and other documents. This seemed a sensible compromise to me, since it was part of HOTT’s case that ABP’s intention to re-occupy the IOT was not firm and settled, so that what ABP was saying about its contacts with HOTT was plainly relevant to that issue.
On 11th April 2007, Mr Kevin Francis, ABP’s regional property manager (“Mr Francis”), sent a memorandum to Mr Nick Palmer, then Port Director, summarising the advice received from Mr Kirk Reynolds QC. Apart from recording Mr Reynolds’s opinion on some of the issues before the court, the memorandum recorded that: “[q]uite simply at … ([HOTT’s] offer) it is not economic to renew and ABP will be pushed into the scenario of taking it back. By so doing maximising the potential of its operational asset. We [APB] are willing to accept a return based on rent or dues or any hybrid but the level must be economic to ABP and stand comparability itself. Whilst we would take on stevedoring and maintenance the potential would be there for third party traffic and HOTT would lose exclusivity”. Mr Nicholas Dowding Q.C., counsel for HOTT, relied on this memorandum as revealing ABP’s agenda, namely that it was, in truth, only interested in the financial return it could obtain.
In April 2008, Mr Francis wrote a manuscript memorandum to Mr John Fitzgerald, who had by that time taken over as Port Director (“Mr Fitzgerald”), concerning the rental approach to the renewal of HOTT’s lease. Mr Francis started by saying that “it is eagerly anticipated that we will have a significant increase [in rent]”. He continued by saying that “[a] rental approach to jetties valuations tends to be pretty low and we identified early on that if we were to achieve our significant aspiration we would have to focus on ships dues and cargo dues”. Mr Francis then said that ABP was not keen to put its differential tariff dues up for scrutiny, and that: “[i]n order to circumvent the L&T onerous condition [the exclusion of ships dues and cargo dues in clause 6(a) of the Oil Jetty Lease] at renewal it was suggested we could take it back – resist renewal – and operate it as our jetty as part of our infrastructure like any other”.
On 21st May 2008, Mr Fitzgerald presented a PowerPoint demonstration to the ABPH board. Mr Francis’s manuscript notes on a similar PowerPoint presentation he made slightly earlier said “[w]ithout any particular science we have suggested an all in composite rate for rent, ships dues and cargo dues of 80p per [tonne] at 20 million [tonnes] this equates to £16m pa. If we got it we would probably accept that any tonnage over 20m [tonnes] they could handle for free”. On the conclusion page, Mr Francis wrote: “[t]rying to establish a proper dialogue to discuss the rent – but Conoco/Total big companies not easily bullied”. The APBH board minutes recorded that: “[i]t was ABP’s growing conviction that the best strategic option for [the Port] would be for ABP to seek repossession of the [IOT] to increase and diversify throughput, and, potentially, to improve capacity”.
On 14th July 2008, the minutes of an ABP board meeting recorded that: “Mr Fitzgerald reported that negotiations had commenced with an initial offer … [from HOTT]. Mr Fitzgerald had responded indicating the Board’s preference to take operational control of the facility, noting that a continuing exclusivity arrangement for HOTT would be unappealing unless it generated a value in the region of £20m per annum”.
On 16th July 2008, the minutes of an APBH board meeting recorded that: “[a]t a meeting on 8 July, HOTT had [made an increased offer] …, but a long way short of the amount required. ABP’s preferred outcome remains to resume control of the asset and Halcrow [Halcrow Group Limited] have been appointed to undertake a review, including looking at options to upgrade the terminal to improve capacity …”.
On 23rd September 2008 the minutes of an ABP board meeting recorded that Mr Fitzgerald had reported that ABP’s intention to take control of the IOT from 2010 had been restated to HOTT and that a further meeting was due to take place in October 2008 when a revised offer was expected.
According to ABP’s property director’s report dated 15th December 2008, at a meeting with HOTT on 24th October 2008, ABP reiterated that if an acceptable basis for lease renewal could not be agreed, ABP would take action under the 1954 Act to take possession of the IOT.
On 2nd January 2009, ABP served its first section 25 notice terminating the Oil Jetty Lease on 31st December 2009, and indicating an intention to oppose any application for the grant of new tenancies under section 30(1)(g).
Some time after January 2009, Mr Fitzgerald and Mr Francis wrote a recommendation following the service of a section 25 notice in respect of the Oil Jetty Lease suggesting:-
Service of a section 25 notice in respect of the Oil Depot Lease not resisting renewal.
Service of a section 25 notice in respect of the 1.97 Acre Lease not resisting renewal.
Service of a section 25 notice in respect of the 10 Acre Lease resisting renewal under section 30(1)(g) “in the first instance but being prepared to lease that part of the site occupied by HOTT when quantified”.
In relation to the Oil Jetty Lease, “[i]t is important that HOTT understands that it is ABP’s fixed intention to take over control of the jetty and to rationalise activities”.
On 13th February 2009, Mr Fitzgerald wrote to Mr Wayne Bajjada, Business Development Manager and chief negotiator for CoP (“Mr Bajjada”), and Mr Pierre Corriol, chief negotiator for Total (“Mr Corriol”), concerning the “planning of the hand back of the facility”. Mr Fitzgerald suggested that a working party was formed to discuss HOTT’s outstanding maintenance liabilities, potential transfer of staff (from APT), operational service level requirements going forward, possible relocation of HOTT equipment, and third party sub-contract arrangements. Mr Fitzgerald also enclosed a list of questions/information that ABP required to allow it accurately to cost a quotation for charges at IOT post 1st January 2010. The enclosed questionnaire was wide-ranging including questions on the services HOTT required at the Oil Jetty, vessel sizes, priority vessel booking, existing staff, and maintenance and other costs. The questionnaire was never answered by HOTT. Mr Paul Robson, Total’s Manager of Planning and Oil Movements at the LOR (“Mr Robson”) told me that Total “were unwilling to negotiate specifically on the takeover of our business by ABP because we believed that would be not sustainable long term for the refineries”.
On 18th June 2009, the minutes of the ABPH board meeting recorded the following:-
It noted latest and prospective offers from HOTT.
It ratified the ABP board’s firm and consistent view that the proposals and terms offered to date by HOTT significantly undervalued the market worth of the IOT jetty, did not represent the best use of a very valuable strategic facility and would prevent ABP maximising its optimum potential use.
It noted that, as agreed by the ABP Board in December 2008, ABP intended to take operational control of the IOT Jetty and any associated land on expiry of the Lease and open it up to third party traffic, whilst continuing to meet Total and CoP’s requirements.
It was resolved that ABP should take over occupation and control of the IOT Jetty and any associated land at the earliest possible opportunity and should serve further section 25 notices necessary in this regard.
On 23rd June 2009, Mr Peter Jones, ABP’s Chief Executive (“Mr Jones”), wrote a memorandum for the ABP board setting out the history of the Leases and saying that:-
In order to succeed under section 30(1)(g), ABP had to demonstrate a settled and genuine intention to occupy the IOT holding and a reasonable prospect of bringing about this occupation.
In the past offers of new traffic introduced by ABP had been met with little interest from APT.
It was anticipated that direct operational involvement with HOTT’s 20 million tonnes of traffic would deliver at least £20 million EBITDA on the terminal operation.
There were three possible ways forward namely (a) accepting or opposing new leases if HOTT applied to court (b) ABP applying to court to terminate HOTT’s Leases (c) renewing the Leases on an agreed basis “though a determination of a mutually acceptable rental value would represent a significant challenge”.
The ABPH board was asked to consider the business case supporting the proposal by ABP to continue opposing renewal of the IOT Leases.
Also on 23rd June 2009, the minutes of the ABP board meeting recorded decisions in almost identical terms to those reached by the ABPH board meeting on 18th June 2009.
On 24th June 2009, ABP served section 25 notices terminating the Oil Depot Lease, the 10 Acre Lease and the 1.97 acres Lease on 31st December 2009.
On 16th July 2009, Halcrow prepared a preliminary draft of a report for ABP entitled “Opportunities at [IOT] Study of possible increased use”. The preliminary draft contained references to a number of downsides and potential problems associated with upgrading the IOT’s facilities that were either given less prominence or removed in the final version dated 21st June 2010.
On 31st July 2009, ABP’s commercial department prepared a lengthy draft report referring to the fact that “if satisfactory renewal terms cannot be agreed between the parties, it is ABP’s intention to seek occupation of the IOT jetty and berths in order that the facility may be operated by ABP and marketed to a wide range of possible users including Conoco Philips and Total. As the operator of the UK’s largest port by tonnage, ABP is fully aware of the strategic importance of the Humber estuary for serving the UK’s economy and, in particular, the role of IOT as an important facility serving the UK’s oil and petroleum businesses”.
On 24th August 2009, Dr Andrew Roberts (“Dr Roberts”), Head of Downstream Oil Infrastructure and Supply at the Department of Energy and Climate Change “DECC”) wrote to Mr Fitzgerald and Mr Nigel Tranter, Chairman of HOTT (“Mr Tranter”), saying that: “the two refineries together account for around 25% of UK production capacity and are the main source of supply for a large geographical area extending from Humberside and South Yorkshire to Nottinghamshire and Lincolnshire and beyond. Accordingly, the Government has assessed both of the refineries and [IOT] as essential to security of supply for this region. The Government therefore encourages the parties to reach an early conclusion to their commercial negotiations, whether these concern renewal of the lease or any alternative arrangements that may be possible to ensure the continuing operation of the [IOT] and refineries with no risk of supply disruption. Should they fail to conclude these negotiations in the required timescale, the Government will need to consider what steps may be open to it to ensure continuity of supply”.
On 26th August 2009, Mr Fitzgerald replied to Dr Roberts as follows:
“Throughout the discussions that have taken place with the Humber Oil Terminals Trustees Limited (HOTT) over the past two years and more, we have repeatedly emphasised ABP’s desire to continue to service [CoP] and TOTAL’s requirements through IOT. ABP’s clear preference is to operate the facility directly following expiration/termination of the HOTT tenancy. This will allow us to ensure that other prospective users are also able, from time to time, to make use of this strategic asset and we firmly believe that this can be achieved without jeopardising the security of supply for [CoP] and TOTAL. Accordingly, for the past several months, we have sought to engage with HOTT to discuss transitional arrangements and the future operation of the facility. …
As you might imagine, in the event that agreement is not reached between the parties, there is a process of litigation that will determine future control of the facility and, if the judgment favoured renewal of HOTT’s lease, the rental arrangements to apply. HOTT understand this position clearly and any advice from them that there could be interruption to supply after 31 December is rather mischievous. I would also note that, on several occasions in the course of discussions with HOTT, both myself and the Chief Executive of ABP, Peter Jones, have stressed that our first priority as the future operator of IOT will be to ensure that the import/export requirements of [CoP] and TOTAL are effectively serviced.
I am sure that DECC has no wish to become embroiled in commercial negotiations between HOTT and ABP, and I trust that the information detailed above will provide comfort that such intervention is unnecessary …”.
On 26th August 2009, Mr Fitzgerald wrote to Mr Bajjada and Mr Robert Ratcliffe of Total (“Mr Ratcliffe”), concerning the agenda for a meeting fixed for 8th September 2009, and saying that it was critical that the meeting gave full and proper consideration to HOTT’s operational requirements, and to the transitional arrangements to transfer the Oil Jetty seamlessly from HOTT to ABP. He again requested the information sought on 13th February 2009.
On 28th August 2009, Messrs Bajjada and Ratcliffe responded to Mr Fitzgerald saying that the transfer of operations of the Oil Jetty and associated facilities from HOTT to ABP was not the key issue, and indicated that HOTT believed that lease renewal was the only way to address the important UK supply security issue outlined in the letter from DECC to HOTT and ABP dated 26th August 2009.
On 3rd September 2009, Mr Fitzgerald responded to Messrs Bajjada and Ratcliffe, reiterating ABP’s position. In effect, by this stage, an impasse had already been reached, with ABP seeking negotiations on a transfer of IOT operations to ABP, and HOTT seeking negotiations on the terms for renewal of the Leases.
On 8th September 2009, an open meeting to discuss the Leases was held. Little progress seems to have been made. It was followed by HOTT making an on-the-record position statement on 15th September 2009. That statement recorded that “without prejudice” discussions had taken place over several years, until the latter part of 2008, when ABP “moved away from the concept of agreeing another lease with HOTT and stated instead that their preferred option was to take the facilities back and operate them themselves and open up access of the facilities to 3rd parties”. HOTT also recorded that it believed that, at the very least, the current long term leases affording control of the Oil Jetty and IOT landside facilities was the minimum way that security of supply to the Refineries could be satisfied, and that HOTT was not agreeable to providing details of its current business operations of the IOT to ABP, nor to forming a working party.
On 29th September 2009, ABP responded point-by-point to HOTT’s statement of position, confirming in particular that its business purposes in taking back the IOT included the continued provision of loading and unloading services to the Refineries “on a priority basis”, and saying that ABP could only guarantee continuity of supply if HOTT did not remove its equipment from the IOT at the end of the Leases as it was entitled to do.
On 20th October 2009, the minutes of the ABP board meeting recorded the results of a “without prejudice” meeting at which the parties had restated their respective competing positions.
On 30th October 2009, Simon Storage Limited (“Simon Storage”), which already operates the East and West Jetties, wrote to ABP enclosing its proposal for the management of the IOT, and saying that it would like to become an equity stake holder in the project, but would work as a contracted operator. Simon Storage said that they had the capability and expertise to take over the current IOT operations so as to make it a smooth and seamless transition from the present structure. Its proposal included a suggestion for the transfer of all APT staff to Simon Storage contracts.
On 30th October 2009, Briggs Marine Contractors (“Briggs Marine”) sent a memorandum to ABP with its proposals to take over the management of the IOT on behalf of ABP. Its proposal also included the suggestion to transfer all APT staff to Briggs Marine.
On 30th November 2009, Mr Fitzgerald wrote to Messrs Bajjada and Ratcliffe suggesting that ABP second one of its managers to APT with immediate effect and at no cost to APT or HOTT: “in order to enable ABP to gain a better understanding of the day-to-day operational issues of the facility in preparation for any handover of day-to-day control of the IOT facility from HOTT to ABP”. Mr Fitzgerald repeated ABP’s commitment to ensure that the interests of the Refineries were fully safeguarded and advanced by the future operating regime at IOT, and that there was no interruption in supplies to the Refineries. Once again, Mr Fitzgerald enclosed a list of indicative information that ABP required from Total and CoP in relation to the Oil Jetty and IOT operations.
On 1st December 2009, HOTT wrote to ABP indicating that HOTT was willing to discuss the incorporation of a clause in future leasing terms to enable ABP to access spare capacity at the IOT.
On 21st December 2009, HOTT issued these 4 claims in the Great Grimsby County Court. On 16th March 2010, District Judge Richardson transferred these proceedings to the Chancery Division.
On 22nd March 2010, ABP sent HOTT a draft Memorandum of Understanding (the “MoU”) to govern their future relationship. It had the stated intention of ensuring security of supply to the Refineries, and the promotion of the development of the IOT to maximise throughput. It offered HOTT a 12 month period of exclusivity, with an option for a further 12 month’s exclusivity if an agreed development plan could not be concluded. It provided for the transfer of staff, and allowed for combined ships dues and goods dues at £1.25 per tonne, and cargo handling fees at £0.75 per tonne (totalling £2 per tonne).
On 6th April 2010, a second on-the-record meeting took place between HOTT and ABP at which ABP wanted to discuss the MoU. ABP acknowledged that the £0.75 per tonne for cargo handling charges was only an estimate due to lack of information from HOTT, and offered to agree “open-book” arrangements (meaning that HOTT would pay to ABP what it actually cost ABP to provide the handling services) if HOTT chose to engage with ABP. The meeting concluded with HOTT saying that the MoU did not satisfy HOTT’s concerns as to security of supply.
On 4th August 2010, Deputy Master Lloyd gave HOTT permission to amend its claims to claim that ABP had been guilty of abusive behaviour and had acted anti-competitively.
On 15th December 2010, Mr Fitzgerald wrote to Mr John Davidson of CoP and Mr Ratcliffe of Total reiterating ABP’s desire to negotiate on the basis of the MoU and offering independent third party determination in relation to the fixing of ships and cargo dues.
On 23rd December 2010, the Marine Management Organisation (“MMO”), on behalf of the Secretary of State for Transport, rejected HOTT’s application for a Harbour Revision Order under section 14 of the Harbours Act 1964 to constitute HOTT as the Harbour Authority for the IOT in place of ABP. HOTT’s application for judicial review of this decision will be heard on the 6th and 7th October 2011.
On 24th February 2011, the Chancellor struck out HOTT’s competition claims, and refused permission to appeal.
On 25th May 2011, the minutes of the ABPH board meeting record that the board resolved that:-
HOTT’s pleaded Replies (served on 30th March 2011) saying that ABP could not prove its required intention under section 30(1)(g), had not altered ABP’s intention to take back the IOT;
If HOTT removed the equipment it had installed on the Oil Jetty, ABP was willing to commit the necessary capital expenditure to replace it; and
If HOTT or its shareholders refused to co-operate in agreeing new commercial terms and vacated the IOT entirely, it would not alter ABP’s intention to take back the IOT and run a business on the Oil Jetty without them.
On 17th June 2011, Patten LJ granted HOTT permission to appeal the Chancellor’s decision striking out its competition claims.
On 21st June 2011, the minutes of the ABP board meeting (which were only approved and disclosed in the middle of the trial) recorded that the board had resolved that HOTT’s evidence in these proceedings had not altered ABP’s intention to take back the IOT, and that “ABP had the desire and the capital to upgrade the existing cargo equipment, install additional pipework, upgrade the finger pier, increase tank storage, and invest in another berth, as identified in the evidence of [Mr Jens Korsgaard’s] report, to improve the efficiency and capacity of the IOT”, and “it was not ABP’s intention to disrupt services to the [Refineries]. ABP considered it would increase efficiency and capacity of the IOT and would enhance the current system to the benefit of the [Refineries] and also allow ABP to open up the jetty to third-party business”.
On 28th June 2011, Morgan J (a) modified the preliminary issue that was to be heard in July 2011 to cater for the fact that the competition claims would not be finally disposed of until some time after the preliminary issue trial (now before me), and (b) adjourned the interim rent application to come on with a 5 day estimate after 17th October 2011. That application is likely to come on in October 2012, but ABP has applied to me to bring the date forward. It has been agreed that I should deal with that application after this judgment has been delivered. As the Schedule of Leases demonstrates, ABP proposes that the rent for the four new leases should increase from £4.2 million to £23.7 million, and HOTT proposes that the rent should decrease to £3.03 million. ABP contends that the appropriate figure for interim rent is £27.8 million per annum. By far the bulk of the proposed rents in each case is attributable to the Oil Jetty Lease.
In July 2011, HOTT applied to the MMO for a Harbour Empowerment Order in relation to the IOT under section 16 of the Harbours Act 1964.
ABP’s witnesses
Mr Fitzgerald was ABP’s first and only factual witness. He has been employed by ABP since April 1997, and has been the Port Director for Grimsby and Immingham since February 2008. He has worked in one capacity or another at the Port since January 2002. He is a director of ABP, but not of ABPH.
In his witness statements, Mr Fitzgerald explained that HOTT’s arrangement at the IOT whereby the terminal is reserved for HOTT’s exclusive use is the only such arrangement within the Port, and is anomalous. Moreover, the IOT comprises the most advantageously located facility for deepwater access for VLCCs. The berths are self-scouring, thereby saving the high costs of dredging. In the last 10 years, ABP has invested some £200 million in capital infrastructure investments designed to grow the business of the Port, and improve competition in the cargo sector and in various bulk markets. Mr Fitzgerald explained how the UK Government’s traffic forecasts predict that, as North Sea Oil production declines, crude oil imports into the UK are expected to grow by 27% or more in the next 20 years. The IOT is not presently operating efficiently, and to deal with increased throughputs, it will require improved handling equipment and storage capacity. In addition, Mr Fitzgerald explained how the rent for the Oil Jetty Lease was calculated in 1970 by reference to the capital cost of investment in the IOT together with a management fee, but without any ship’s or cargo dues, and how that rent was only raised once in that 40 year period. Mr Fitzgerald estimates that this advantage to HOTT is worth some £40 million per annum at a rate of £2 per tonne for a throughput of 20 million tonnes. Mr Fitzgerald’s statements also spoke of ABP’s intention to take over the management and control of the facilities at the IOT.
In oral evidence, Mr Fitzgerald was first confronted with ABP’s and ABPH’s board minutes, memoranda and reports that implied that, at least in the early stages of the dispute, ABP would take back possession of the IOT from HOTT if, but only if, an acceptable new rent could not be agreed with HOTT. Mr Fitzgerald’s response was somewhat nervous and even, at times, evasive. He was keen to repeat the mantra that ABP did not wish to renew HOTT’s lease, and that ABP was only discussing a new lease with HOTT out of respect for ABP’s customer. Mr Fitzgerald repeated that it was ABP’s view that renewal of the Leases would not be the best use of the Port’s resources, and that ABP’s plan was to provide port services to a wider range of customers.
When I put the point squarely to Mr Fitzgerald at the end of his evidence, he made the following points:-
He said that ABP looked at the matter in two ways: first that value was important to ABP in terms of the value of the facility, the importance of the facility, the services that it can provide, and the fact that it has been significantly undervalued for 40 years. Secondly that open access was important to ABP, and it was looking to change the IOT from an exclusive arrangement that only two customers can benefit from to one that anybody who is prepared to pay a fair price can use.
He also pointed out that ABP’s strategy over the last 15 years in the Port had been to become much more involved in cargo operations. It had made all its investments, apart from one, on the basis of ABP taking on operational control and managing the business.
His conclusion was as follows: “So I think from our point of view it's not a question of just wanting more rental, it's a question of actually better utilisation of that facility, and we believe that maximising the utilisation of that facility and the value of that facility is best in ABP's hands”.
Mr Fitzgerald was asked about the 21st June 2011 board minute concerning ABP’s proposed capital investment (referred to above). He made clear that ABP would want to have agreements in place with customers before it incurred the capital costs necessary to upgrade the existing equipment. That evidence applied as much to replacement of HOTT’s equipment on the Oil Jetty as it did to new equipment. Mr Fitzgerald said that was why ABP wanted to negotiate a commercial agreement with the Refineries. When Mr Dowding suggested that ABP had not the faintest idea of the cost of the intended upgrade, Mr Fitzgerald accepted that ABP had no detailed proposal, but said that its focus was on providing the right service to the Refineries, and had even agreed exclusivity for 12 or possibly 24 months.
A number of points were put to Mr Fitzgerald about how APT’s trusted relationship with the Refineries could never be duplicated by an ABP operation, and about how, since the IOT operations were dictated by the Refineries’ business, it would simply not be possible to replicate the efficiency of operation if the Refineries did not have the exclusivity that renewed Leases would provide. It was also suggested that transfer of the operations to ABP would be impossible because APT staff might not go across, and the information technology and operational manuals were not available to ABP. In my view, Mr Fitzgerald provided a satisfactory response to this line of questioning. In essence, he said that ABP very much hoped and expected to be able to provide a good service to its two main existing customers and to provide a seamless transition without any supply disruption, but that this was dependent on a negotiation taking place, in which HOTT had so far simply refused to engage. He fully expected that the Refineries would want to co-operate in their own interests and that all the employee transfers, IT and other issues could be negotiated. Mr Fitzgerald entirely accepted that ABP would need the facilities that APT now had to achieve its stated aims. It was as a result of HOTT’s failure to engage that ABP had offered an “open-book” cost arrangement whereby it would, at first, charge users of the IOT for its services on a cost plus basis. Mr Fitzgerald also accepted that ABP’s negotiations with Simon Storage and Briggs Marine had not got very far, mainly, I think, because he hoped that ultimately HOTT would, again in its own interests, agree to co-operate with ABP’s desired transition.
Mr Dowding put the hypothesis that, in a future negotiation, HOTT might offer more in return for new leases, by way of ships and cargo dues, than it would offer under a commercial agreement of the kind that ABP sought. Mr Fitzgerald gave a measured answer. He said he would have to take HOTT’s proposals back to the board. ABP had always been prepared to talk to HOTT, but he accepted that it would be very material if the package was better for new leases than under a commercial arrangement. When it was suggested that ABP’s fundamental concern was that the Oil Jetty Lease had excluded ships and cargo dues, Mr Fitzgerald repeated that he had said all along that the facility was undervalued, but equally ABP thought that the deep water facility and UK market access that it offers should be open to others. The ‘others’, in question included a major oil trader called Mabanaft, with whom ABP had held discussions.
Mr Dowding did not go so far as suggesting to Mr Fitzgerald that these proceedings were being used for an ulterior purpose, namely to negotiate a bigger rent with HOTT for the renewal of their Leases. Even if he had, that would not have answered the question that I have to decide, namely whether ABP intends to occupy the IOT for the purposes, or partly for the purposes, of a business.
Ultimately, two of the main questions that arise from Mr Fitzgerald’s evidence are what the prospect would be, if ABP were to succeed in these proceedings, of ABP actually occupying the IOT itself to offer port services to oil companies generally, or whether in fact all ABP would do would be to use its success (and perhaps an appeal if it were to lose before me) to agree a larger rent for the new leases. I will return to that question.
HOTT’s witnesses
Mr Robson is, as I have said, the Manager of Planning and Oil Movements at the LOR, and a director of HOTT and APT. He was an entirely open and straightforward witness.
At the start of his cross-examination, Mr Robson accepted much of the background put to him by Mr Christopher Nugee Q.C., counsel for ABP. He said there were only 9 refineries in the UK now (although there had apparently been 19 some 25 years ago). The LOR was up for sale and had been so for some time, but Total was no longer close to completing a sale. Total and other companies are concentrating on the more profitable upstream side of their business, namely oil exploration and production. The trend to divest themselves of the struggling downstream businesses in refining and petrochemicals, is replicated across the industry. There is over-capacity in the downstream business.
The LOR has recently invested in a desulphurisation plant so that it can refine more sour (high sulphur) crude from the Middle East and Russia as the supply of sweet (low sulphur) crude from the North Sea declines. Total has proposed investing in dredging the deep sunk dredge channel in the Humber Estuary in 2009, since it predominantly (rather than CoP) brings crude oil up to the IOT (because CoP uses the Tetney Monobuoy further downstream, except in the most severe weather). Mr Robson made clear that Total would not dredge the channel unless it had rights over the jetty.
Mr Robson explained that Total generally imports cargoes of 80,000 tonnes of North Sea crude oil, and about 130,000 tonnes of other crude oils shipped in VLCCs or 290,000 deadweight tankers. The Oil Jetty would not, anyway, be strong enough to accommodate a fully laden VLCC tanker. On the product side, the Total parcel sizes vary between 12,000 and 30,000 tonnes for both import and export, although there are occasional 50,000 or 60,000 parcels, but Mr Robson said that both CoP and Total find difficulty loading such large vessels with finished product due to lack of storage tanks.
Mr Robson later explained that the IGT, which is also owned by ABP and for which it charges standard tariff ship and cargo dues, stands empty for about a third of the time, even though it can take all the parcel sizes that are common for finished product. He said that Total had reduced its usage of the IGT by some 500,000 tonnes per annum, because it was just too expensive, since ABP started charging ships and cargo dues.
Importantly, Mr Robson said that he found it amazing that there had been no third party traffic on the IGT, despite the fact ABP now had the right to put third party traffic on it. He said that there is no queue of very large ships in the Humber. There is still capacity at the IGT, and on the East Jetty, which is also owned by ABP. He said that, if there were strong demand, the third party traffic would have arrived already.
In relation to the removal of HOTT’s equipment from the Oil Jetty at the end of the Leases, Mr Robson drew an important distinction between the removal of pipework and the removal of other equipment. Mr Robson indicated that he thought that the replacement cost of HOTT’s equipment totalled some £100 million (compared to ABP’s figure of £60 million). He acknowledged that it would be uneconomic to remove and re-use the pipe work, which is readily obtainable new, with the possible exception of the 36 inch crude line. But he made it clear that it might well be economic for Total to remove and re-use the loading rigs and other such equipment that is hard to source and has very long (for example 12 months) lead times.
At that point in Mr Robson’s cross-examination, Mr Nugee put to him that it would be economic madness to remove the equipment from the Oil Jetty. This sparked a lengthy explanation from Mr Robson, which had not previously featured in his witness statement. In essence, he said that he had always known he would have to explain in these proceedings whether HOTT would remove the equipment, and had given a great deal of thought to the problem. The way he saw it, it was by no means clear that it would be madness for HOTT to remove its equipment from the IOT. It depended on which of three options, HOTT, and the senior management of Total and CoP (who would ultimately take such decisions) decided to follow. Mr Robson explained his economic thinking only in broad terms, because he was concerned at disclosing financial material to a competitor, CoP, on competition grounds.
Mr Robson started by explaining the present position or ‘base case’ from the Refineries’ point of view as follows. Broadly, a refinery such as the LOR operates on the basis of a gross margin of £250 million per annum, that is the margin of income over variable costs (i.e. gas, electricity etc) in reasonable economic conditions. The fixed costs (staff etc) of running a refinery are about £180 million per annum, leaving £70 million of gross profit. The present rent under the Leases is £4 million per annum, and APT’s operating costs are £6 million per annum. Total owns two thirds of HOTT, so a typical refinery pays £7 million per annum in jetty costs. That is 10% of gross profit.
Mr Robson then explained his three options broadly as follows:-
The first option was to agree to ABP’s demands, and to pay what he called ‘heavy fees’ as are paid for the IGT and the East Jetty. For a 20 million tonne throughput at the IOT, the published tariff rates would be £86 million per annum, which is more than the net profit on one refinery. ABP is seeking to charge £2 per tonne or £40 million per annum, which is a 60% discount on tariff rates, but is still 57% of net profit on one refinery. Since ABP will be less efficient in running the IOT and that third party traffic will delay some of HOTT’s shipments, HOTT believes that £10 million less gross profit will be made from one refinery, and demurrage charges will go up by £10 million. Thus, the gross profit on one refinery will be reduced from some £63 million to £23 million, made up of £70m less two thirds of £40 million (ships and cargo dues) less £10 million (lack of efficiency), less £10 million (additional demurrage). I should interpose that I have undertaken this latter calculation myself taking the figures from Mr Robson’s evidence. Mr Robson concluded (perhaps slightly exaggerating) that option 1 amounted to paying 80% of each refinery’s net profit to ABP to keep the Oil Jetty going.
Option 2 was to remove HOTT’s equipment and men from the IOT, and to seek alternative jetty facilities on the Humber. This option would require a 2-year shut-down of the Refineries whilst these facilities were sourced and installed. And it was put to Mr Robson, I thought persuasively, that it was quite likely to take much longer than 2 years. A credit of £50 million worth of equipment (not pipes) was the starting point for this option. The penalties were that the refinery would have to close for 2 years with the loss of £500 million of gross margin, but since we are in the middle of a deep recession and refineries are making a loss at the moment, this could be reduced to £300 million (at £150 million per annum). On the basis that ABLE UK is developing a large jetty facility on land owned by Total (the Marine Energy Park or “MEP”) to construct offshore wind turbines, and ABLE UK is keen to consider including oil jetty facilities, option 2 could be attractive as creating more oil jetty facilities in the Humber and more competition, and therefore lower rates long term. It would have the benefit for the Refineries of restoring normal profit margins for the longer term. Mr Robson, when questioned about environmental problems in building another oil jetty, said that he thought the project was “very doable”.
Option 3 is to close the LOR and make 1,000 men redundant and pay £500 million in decommissioning costs, or at least to close the crude oil refining facilities and incur £200 million in decommissioning costs. This was an option that Mr Robson did not personally favour, and he thought there was only a small likelihood of it happening, and Total had invested a lot of money to become a long term big player, and the LOR’s long term viability looks good compared to other refineries in Europe.
Mr Robson said that ABP’s proposal would not work economically for the Refineries in the long term. He said that they had always been prepared to pay fair market value for the Leases, and were happy for a Judge to decide what that value was. Mr Robson pointed out that HOTT would not be happy with a determination of a fair market value for ships and cargo dues as ABP had suggested, because: “[t]he port's costs are so opaque and shrouded in mist that we have a strong desire to explore them much more fully in the competition case to come, because I don't know what is behind”, and “[b]ecause it is such an opaque industry, the port's ships and goods dues, nobody understands it apart from probably John Fitzgerald. So if we enter into a binding process on which we have no information from our side, it would be like John Fitzgerald coming to me to buy a cargo of crude oil without any industry experts on his side to tell him how much it would cost”.
He said that he personally doubted whether Total’s CEO would choose to continue to use an expensive operating agreement with ABP, but he accepted that if HOTT chose option 1, and wanted to continue to use the IOT, it would ask APT’s employees to transfer across to ABP (though he said that because ABP is not a popular employer in the area, they may not go across). But if option 1 were chosen, HOTT would attempt to make it work with men, kit, computer systems, laboratory testing, and fire services etc.
Mr Albert Ingrid Jozef Peeters (“Mr Peeters”) is the manager of APT. Mr Peeters explained the operation of APT and expressed the view that “for me the IOT is an extension of the Refineries”. He said he was pleased to know that it was agreed that the IOT was “congested to say the least”. Ultimately, however, the thrust of Mr Peeters’s evidence was not much contested. It was that, if ABP took over from APT, there might be bigger problems with day-to-day co-ordination of pipe line logistics, because the more parties you have the more difficult the operation. Since it was accepted by Mr Robson that ABP needed APT’s staff, operating manuals, IT, and other facilities, Mr Peeters’s detailed evidence as to these matters was not cross-examined.
The experts
Mr Jens Korsgaard (“Mr Korsgaard”) was ABP’s expert. The thrust of his evidence was that there was no practical problem with ABP’s intention to take back the operation of the IOT, and that if ABP did so, it would be able to implement changes to the system to provide an enhanced service to the Refineries and provide an independent service to third party customers. When cross-examined, Mr Korsgaard accepted that complete co-operation of both parties was required for a seamless transition, but said that a competent third party operator could take over smoothly if it worked alongside APT. He accepted also that the efficient operation of the IOT required a high level of trust, but thought that a third party could gain such trust. He agreed that it was desirable to have a single operating entity for the IOT and the CPS and all the way through, but thought it would be no worse with a third party in place of APT.
Mr Charles Lawrence Daly (“Mr Daly”) was HOTT’s expert. His view was that the operation of the two Refineries and their two planning units and the CPS and the IOT needs to be co-ordinated and that they are, in effect, inextricably inter-related, making it very difficult for a third party body (including ABP) to operate the IOT efficiently. The process is, Mr Daly said, “one whole and indivisible system”, and “the [Oil Jetty], control room, and tank farm cannot be decoupled from the IOT without materially destabilising the balanced operation that currently serves the [Refineries]. This is particularly valid if ABP, as they have suggested they will in their “Immingham Master Plan”, expand their operation of [the] IOT jetty to allow for third party oils business”.
In his second report, Mr Daly concluded that a third party oil storage facility at the IOT could not be operated in a commercially viable way (i.e. it could not cover its costs and be priced competitively vis-à-vis alternative facilities), and therefore that he found it inconceivable that ABP seriously intended to undertake the development of the IOT that it proposes. Though these conclusions were not directly challenged, it seems to me that I do not need to decide between the competing views of the experts on this point, because the authorities make it clear that it is not appropriate for the court to examine the financial wisdom of a landlord’s genuinely held plans. There was simply insufficient evidence for me to make findings of fact as to the likely market for third party oil throughput at the IOT and the financial viability of the expansion of its capacity.
I was, however, able to conclude that both experts expressed genuinely held, if conflicting opinions, as to the economic and practical viability of either ABP or a third party successfully operating the IOT, and as to ABP being able to expand capacity at the IOT and successfully to introduce competitive business there. Ultimately, I do not think the conflict matters, since I have to decide only whether ABP intends to occupy the IOT for its business, not whether that business will be successful or whether it will run less efficiently under ABP’s management than it has hitherto under APT’s management.
The statutory framework
Mr Dowding has relied heavily in his submissions on the policy of the 1954 Act. In the circumstances, it is important that I set out rather more of the relevant legislation than would otherwise be necessary. All section numbers to which I refer in this part of the judgment are from the 1954 Act.
Section 23(1) defines the tenancies to which it applies as follows: “[s]ubject to the provisions of this Act, this Part of this Act applies to any tenancy where the property comprised in the tenancy is or includes premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes”.
“Business” is defined by section 23(2) as including “a trade, profession or employment and includes any activity carried on by a body of persons, whether corporate or unincorporated”.
Section 23(2) introduces the concept of a “ holding ”, separate from the demised premises, providing: “ In the following provisions of this Part of this Act the expression “the holding”, in relation to a tenancy to which this Part of this Act applies, means the property comprised in the tenancy, there being excluded any part thereof which is occupied neither by the tenant nor by a person employed by the tenant and so employed for the purposes of a business by reason of which the tenancy is one to which this Part of this Act applies ”.
Section 24(1) provides for continuation tenancies as follows: “ A tenancy to which this Part of this Act applies shall not come to an end unless terminated in accordance with the provisions of this Part of this Act; and, subject to the following provisions of this Act either the tenant or the landlord under such a tenancy may apply to the court for an order for the grant of a new tenancy— (a) if the landlord has given notice under [section 25 of this Act] to terminate the tenancy, or (b) if the tenant has made a request for a new tenancy in accordance with section twenty-six of this Act ”.
Section 25 deals with termination by a landlord’s notice as follows:-
Section 25(1) allows the landlord to terminate a tenancy in the following terms: “The landlord may terminate a tenancy to which this Part of this Act applies by a notice given to the tenant in the prescribed form specifying the date at which the tenancy is to come to an end (hereinafter referred to as “the date of termination”): Provided that this subsection has effect subject to the provisions of section 29B(4) of this Act and the provisions of Part IV of this Act as to the interim continuation of tenancies pending the disposal of applications to the court”.
Section 25(2) provides that: “Subject to the provisions of the next following subsection, a notice under this section shall not have effect unless it is given not more than twelve nor less than six months before the date of termination specified therein”.
Section 25(4) provides that: “In the case of any other tenancy [i.e. a tenancy which apart from this Act could have been brought to an end by notice to quit given by the landlord], a notice under this section shall not specify a date of termination earlier than the date on which apart from this Part of this Act the tenancy would have come to an end by effluxion of time”.
Section 25(6) provides that: “[a] notice under this section shall not have effect unless it states whether the landlord is opposed to the grant of a new tenancy to the tenant”.
Section 25(7) provides that: “A notice under this section which states that the landlord is opposed to the grant of a new tenancy to the tenant shall not have effect unless it also specifies one or more of the grounds specified in section 30(1) of this Act as the ground or grounds for his opposition”.
Section 29 deals with court orders for the grant of new tenancies or the termination of tenancies as follows:
Section 29(1) provides that: “[s]ubject to the provisions of this Act, on an application under section 24(1) of this Act, the court shall make an order for the grant of a new tenancy and accordingly for the termination of the current tenancy immediately before the commencement of the new tenancy”.
Section 29(2) provides that: “[s]ubject to the following provisions of this Act, a landlord may apply to the court for an order for the termination of a tenancy to which this Part of this Act applies without the grant of a new tenancy—(a) if he has given notice under section 25 of this Act that he is opposed to the grant of a new tenancy to the tenant; or …”.
Section 29(4) provides that: “[s]ubject to the provisions of this Act, where the landlord makes an application under subsection (2) above — (a) if he establishes, to the satisfaction of the court, any of the grounds on which he is entitled to make the application in accordance with section 30 of this Act, the court shall make an order for the termination of the current tenancy in accordance with section 64 of this Act without the grant of a new tenancy; and (b) if not, it shall make an order for the grant of a new tenancy and accordingly for the termination of the current tenancy immediately before the commencement of the new tenancy”.
Section 30 sets out the grounds for opposition by the landlord to an application for a new tenancy in the following terms:-
Section 30(1) provides that: “[t]he grounds on which a landlord may oppose an application under section 24(1) of this Act, or make an application under section 29(2) of this Act, are such of the following grounds as may be stated in the landlord's notice under section twenty-five of this Act … that is to say: —(a) where under the current tenancy the tenant has any obligations as respects the repair and maintenance of the holding, that the tenant ought not to be granted a new tenancy in view of the state of repair of the holding, being a state resulting from the tenant's failure to comply with the said obligations; (b) that the tenant ought not to be granted a new tenancy in view of his persistent delay in paying rent which has become due;
(c) that the tenant ought not to be granted a new tenancy in view of other substantial breaches by him of his obligations under the current tenancy, or for any other reason connected with the tenant's use or management of the holding;
(d) that the landlord has offered and is willing to provide or secure the provision of alternative accommodation for the tenant, that the terms on which the alternative accommodation is available are reasonable having regard to the terms of the current tenancy and to all other relevant circumstances, and that the accommodation and the time at which it will be available are suitable for the tenant's requirements (including the requirement to preserve goodwill) having regard to the nature and class of his business and to the situation and extent of, and facilities afforded by, the holding;
(e) where the current tenancy was created by the sub-letting of part only of the property comprised in a superior tenancy and the landlord is the owner of an interest in reversion expectant on the termination of that superior tenancy, that the aggregate of the rents reasonably obtainable on separate lettings of the holding and the remainder of that property would be substantially less than the rent reasonably obtainable on a letting of that property as a whole, that on the termination of the current tenancy the landlord requires possession of the holding for the purpose of letting or otherwise disposing of the said property as a whole, and that in view thereof the tenant ought not to be granted a new tenancy;
(f) that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding;
(g) subject as hereinafter provided, that on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein, or as his residence ”.
Section 30(2) provides that: “[t]he landlord shall not be entitled to oppose an application under section 24(1) of this Act, or make an application under section 29(2) of this Act, on the ground specified in paragraph (g) of the last foregoing subsection if the interest of the landlord, or an interest which has merged in that interest and but for the merger would be the interest of the landlord, was purchased or created after the beginning of the period of five years which ends with the termination of the current tenancy, and at all times since the purchase or creation thereof the holding has been comprised in a tenancy or successive tenancies of the description specified in subsection (1) of section twenty-three of this Act”.
Section 31 deals with the landlord’s successful opposition to a new tenancy as follows:
Section 31(1) provides that: “[i]f the landlord opposes an application under subsection (1) of section twenty-four of this Act on grounds on which he is entitled to oppose it in accordance with the last foregoing section and establishes any of those grounds to the satisfaction of the court, the court shall not make an order for the grant of a new tenancy”.
Section 31(2) provides that: “[w]here the landlord opposes an application under section 24(1) of this Act, or makes an application under section 29(2) of this Act, on one or more of the grounds specified in section 30(1)(d) to (f) of this Act but establishes none of those grounds, and none of the other grounds specified in section 30(1) of this Act, to the satisfaction of the court, then if the court would have been satisfied on any of the grounds specified in section 30(1)(d) to (f) of this Act] if the date of termination specified in the landlord's notice or, as the case may be, the date specified in the tenant's request for a new tenancy as the date from which the new tenancy is to begin, had been such later date as the court may determine, being a date not more than one year later than the date so specified, — (a) the court shall make a declaration to that effect, stating of which of the said grounds the court would have been satisfied as aforesaid and specifying the date determined by the court as aforesaid, but shall not make an order for the grant of a new tenancy; (b) if, within fourteen days after the making of the declaration, the tenant so requires the court shall make an order substituting the said date for the date specified in the said landlord's notice or tenant's request, and thereupon that notice or request shall have effect accordingly”.
Sections 32-35 deal with the terms of the new tenancy as follows:-
Section 32(1) provides for the property to be comprised in new tenancy as follows: “[s]ubject to the following provisions of this section, an order under section twenty-nine of this Act for the grant of a new tenancy shall be an order for the grant of a new tenancy of the holding; and in the absence of agreement between the landlord and the tenant as to the property which constitutes the holding the court shall in the order designate that property by reference to the circumstances existing at the date of the order”.
Section 33 provides for the duration of new tenancy as follows: “[w]here on an application under this Part of this Act the court makes an order for the grant of a new tenancy, the new tenancy shall be such tenancy as may be agreed between the landlord and the tenant, or, in default of such an agreement, shall be such a tenancy as may be determined by the court to be reasonable in all the circumstances, being, if it is a tenancy for a term of years certain, a tenancy for a term not exceeding fifteen years, and shall begin on the coming to an end of the current tenancy”.
Section 34 provides for the rent under the new tenancy as follows:-
Section 34(1) provides that: “[t]he rent payable under a tenancy granted by order of the court under this Part of this Act shall be such as may be agreed between the landlord and the tenant or as, in default of such agreement, may be determined by the court to be that at which, having regard to the terms of the tenancy (other than those relating to rent), the holding might reasonably be expected to be let in the open market by a willing lessor, there being disregarded — (a) any effect on rent of the fact that the tenant has or his predecessors in title have been in occupation of the holding, (b) any goodwill attached to the holding by reason of the carrying on thereat of the business of the tenant (whether by him or by a predecessor of his in that business), (c) any effect on rent of an improvement to which this paragraph applies, (d) in the case of a holding comprising licensed premises, any addition to its value attributable to the licence, if it appears to the court that having regard to the terms of the current tenancy and any other relevant circumstances the benefit of the licence belongs to the tenant”.
Section 34(2) provides that: “[p]aragraph (c) of the foregoing subsection applies to any improvement carried out by a person who at the time it was carried out was the tenant, but only if it was carried out otherwise than in pursuance of an obligation to his immediate landlord, and either it was carried out during the current tenancy or the following conditions are satisfied, that is to say, — (a) that it was completed not more than twenty-one years before the application [to the court] was made; and (b) that the holding or any part of it affected by the improvement has at all times since the completion of the improvement been comprised in tenancies of the description specified in section 23(1) of this Act; and (c) that at the termination of each of those tenancies the tenant did not quit”.
Section 34(3) provides that: “[w]here the rent is determined by the court the court may, if it thinks fit, further determine that the terms of the tenancy shall include such provision for varying the rent as may be specified in the determination”.
Section 35(1) provides as follows in relation to the other terms of the new tenancy: “ [t]he terms of a tenancy granted by order of the court under this Part of this Act (other than terms as to the duration thereof and as to the rent payable thereunder), including, where different persons own interests which fulfil the conditions specified in section 44(1) of this Act in different parts of it, terms as to the apportionment of the rent, shall be such as may be agreed between the landlord and the tenant or as, in default of such agreement, may be determined by the court; and in determining those terms the court shall have regard to the terms of the current tenancy and to all relevant circumstances ”.
Section 64 provides as follows in relation to the interim continuation of tenancies pending determination by a court:-
Section 64(1) provides that: “[i]n any case where — (a) a notice to terminate a tenancy has been given under Part I or Part II of this Act or a request for a new tenancy has been made under Part II thereof, and (b) an application to the court has been made under the said Part I or [under section 24(1) or 29(2) of this Act], as the case may be, and (c) apart from this section the effect of the notice or request would be to terminate the tenancy before the expiration of the period of three months beginning with the date on which the application is finally disposed of, the effect of the notice or request shall be to terminate the tenancy at the expiration of the said period of three months and not at any other time”.
Section 64(2) provides that: “[t]he reference in paragraph (c) of subsection (1) of this section to the date on which an application is finally disposed of shall be construed as a reference to the earliest date by which the proceedings on the application (including any proceedings on or in consequence of an appeal) have been determined and any time for appealing or further appealing has expired, except that if the application is withdrawn or any appeal is abandoned the reference shall be construed as a reference to the date of the withdrawal or abandonment”.
The authorities relevant to the meaning of “intention” in section 30(1)(g)
“Intention” is a common English word, which all the authorities agree should, when construing section 30(1)(g), be given its ordinary and natural meaning. However many authorities have been referred to by the parties, this important foundation should not be forgotten. I shall deal with the main authorities that have been cited in chronological order.
The starting point is the well-known judgment of Asquith LJ, some 4 years before the 1954 Act, in Cunliffe v. Goodman [1950] 2 K.B. 237 at pages 253ff, where he said the following as to the meaning of “intention”:-
“The question to be answered is whether the defendant (on whom the onus lies) has proved that the plaintiff, on November 30, 1945 "intended" to pull down the premises on this site. This question is in my view one of fact. If the plaintiff did no more than entertain the idea of this demolition, if she got no further than to contemplate it as a (perhaps attractive) possibility, then one would have to say (and it matters not which way it is put) either that there was no evidence of a positive "intention," or that the word "intention" was incapable as a matter of construction of applying to anything so tentative, and so indefinite. An "intention" to my mind connotes a state of affairs which the party "intending" - I will call him X - does more than merely contemplate: it connotes a state of affairs which, on the contrary, he decides, so far as in him lies, to bring about, and which, in point of possibility, he has a reasonable prospect of being able to bring about, by his own act of volition.
X cannot, with any due regard to the English language, be said to "intend" a result which is wholly beyond the control of his will. He cannot "intend" that it shall be a fine day tomorrow: at most he can hope or desire or pray that it will. Nor, short of this, can X be said to "intend" a particular result if its occurrence, though it may be not wholly uninfluenced by X's will, is dependent on so many other influences, accidents and cross-currents of circumstance that, not merely is it quite likely not to be achieved at all, but, if it is achieved, X.'s volition will have been no more than a minor agency collaborating with, or not thwarted by, the factors which predominately determine its occurrence. If there is a sufficiently formidable succession of fences to be surmounted before the result at which X aims can be achieved, it may well be unmeaning to say that X "intended" that result.
Here there were a number of such fences. The approval of the London County Council, as the town-planning authority for London, had to be obtained, and was refused in respect of the first rebuilding plan. A building licence had to be obtained from Hammersmith Borough Council. The first plan never reached the stage at which such a licence could usefully be applied for. As to either plan, a licence, if forth-coming, might have been granted on terms, and those terms might have deprived the project of all commercial attraction - deprived it of the character of a "business proposition." Such licences are often granted conditionally on a maximum selling price for the structure as rebuilt, or - if it be not sold, but let - conditionally on a maximum rent: and in respect of the second scheme a maximum rent of an unattractive level was in fact proposed by the local authority.
This leads me to the second point bearing on the existence in this case of "intention" as opposed to mere contemplation. Not merely is the term "intention" unsatisfied if the person professing it has too many hurdles to overcome, or too little control of events: it is equally inappropriate if at the material date that person is in effect not deciding to proceed but feeling his way and reserving his decision until he shall be in possession of financial data sufficient to enable him to determine whether the project will be commercially worthwhile.
A purpose so qualified and suspended does not in my view amount to an "intention" or "decision" within the principle. It is mere contemplation until the materials necessary to a decision on the commercial merits are available and have resulted in such a decision. In the present case it seems to me that (assuming that the plaintiff was, both before and after November 30, 1945, disposed to demolish and rebuild if she could do so on remunerative terms) she never reached, in respect of the first scheme, a stage at which she could decide on its commercial merits; nor, in respect of the second scheme, the stage of actually deciding that that scheme was commercially eligible - unless indeed she must be taken not merely to have repudiated her architect's authority but to have decided that it was commercially ineligible. In the case of neither scheme did she form a settled intention to proceed. Neither project moved out of the zone of contemplation - out of the sphere of the tentative, the provisional and the exploratory - into the valley of decision”.
Mr Dowding placed great reliance in his closing submissions on the ex tempore Court of Appeal decision In Reohorn v. Barry Corporation [1956] 1 W.L.R. 845, where the Corporation failed to establish an intention to redevelop under section 30(1)(f), because it had not sufficiently advanced the proposed building scheme that it intended to undertake to redevelop the car park of which the claimant had a lease. Lord Denning MR said this at page 849-850:
“In Fisher v Taylors Furnishing Stores Ltd (ante, p 78), I pointed out (ibid, at p 80) that the intention must be "... a firm and settled intention, not likely to be changed ... It must be remembered that, if the landlord, having got possession, honestly changes his mind and does not do any work of reconstruction, the tenant has no remedy." In considering whether the court should be satisfied of the landlord's intention, I think that it may readily be satisfied when the premises are old and worn out or are ripe for development, the proposed work is obviously desirable, plans and arrangements are well in hand, and the landlord has the present means and ability to carry out the work. Such was the position in Fisher v. Taylors Furnishing Stores Ltd, and in several other cases which have come before this court. But the court will not be so readily satisfied when the premises are comparatively new or the desirability of the project is open to doubt, when there are many difficulties still to be surmounted, such as the preparation and approval of plans or the obtaining of finance, or when the landlord has in the past fluctuated in his mind as to what to do with the premises. In those circumstances, even though he should assert at the hearing that he has a firm and settled intention, the court is not bound to accept it because of the likelihood that he may change his mind once he obtains possession. Such was the position in Herbert v. Blakey (Bradford) Ltd (under s 30(1)(g)).
In the present case, the premises are ripe for development and the proposed work is obviously desirable: the difficulty is to be satisfied that the landlords have the present means and ability to carry out the work. "Intention" connotes an ability to carry it into effect. A man cannot properly be said to "intend" to do a work of reconstruction when he has not the means to carry it out. He may hope to do so: he will not have the intention to do so. In this case the landlords contemplate turning this land into a splendid estate by the sea. They are exploring the possibilities of it; they are discussing the ways and means, in the shape of a building lease; but that is as far as they have got. Their ability to do the work, or to cause it to be done, is, I think, open to question. …
It would not be right that the tenant should be turned out by the landlords on such an uncertain and unsettled intention. It seems to me that, to apply the words of Asquith LJ in Cunliffe v Goodman ([1950] 1 All ER 720 at p 725) the matter is still in the sphere of the tentative, the provisional and the exploratory and has not yet reached the valley of decision”.
In their concurring judgments in Reohorn, Birkett LJ applied Asquith LJ’s judgment in Cunliffe referring in particular to the need to carry the statement of intention much further as to the quality of the intention (page 853), and Parker LJ referred to the need to prove that the landlord and the developer had agreed at least to the essential terms of the building lease (page 856).
In Betty’s Café v. Phillips [1957] 1 Ch 67 (CA), [1959] AC 20, which was another case under section 30(1)(f), Lord Evershed MR said at page 99 that the adoption of Asquith LJ’s language in cases like Reohorn could not “be treated as having (in effect) substituted for the word “intends in paragraph (f) (as in paragraph (g)) of the section the words “is ready and able” so as to impose upon the landlord the onus of proving that, at whatever be the proper date, he has not only finally determined upon the course proposed but has also taken all necessary steps for the satisfaction of any requisite conditions to which the course proposed is subject. The relevant word is "intends," a simple English word of well-understood meaning. The question whether the intention is at the relevant date proved has, in my judgment, to be answered by the ordinary standards of common sense”. In the House of Lords, Viscount Simonds, at pages 33-34, approved Asquith LJ’s decision, and at page 37, did not dissent from Lord Evershed’s elaboration of it.
Mr Dowding referred to the leading case of O’May v. City of London Real Property Co. Ltd. [1983] 2 A.C. 726 in support of his submissions as to the underlying purpose of the 1954 Act. He pointed to Lord Hailsham’s description of the general purpose of the 1954 Act at page 740 as being “to protect the business interests of the tenant so far as they are affected by the approaching termination of the current lease, in particular as regards his security of tenure”, and to Lord Wilberforce’s description of the general purpose and policy as being “to provide security of tenure for those tenants who had established themselves in business in leasehold premises so that they could continue to carry on their business there”.
In Westminster City Council v. British Waterways Board [1985] 1 A.C. 677 (the “Westminster case”), the House of Lords held that the test of whether the landlord had established its intention to occupy the demised premises under section 30(1)(g) was an objective one, namely whether a reasonable man on the evidence before him would believe that there was a reasonable prospect that the landlord would obtain the necessary planning permission, and that the test had to be applied on the assumption that the landlord was in occupation. In that case, Walton J had held that the landlord Board had not proved it had a reasonable prospect of obtaining planning permission to turn the tenant Council’s street cleaning depot into a marina, because the Council had itself said that it, as the local planning authority, would refuse planning permission for the change of use, because the depot was so vital to its street cleaning activities. Lord Bridge (with whom the remainder of the House agreed) approved the objective test referred to by Diplock LJ in Gregson v. Cyril Lord Ltd [1963] 1 W.L.R. 41 at page 48, and then said the following at page 680, a passage upon which he elaborated at pages 680-682:-
“Before turning to the planning issues on which this appeal ultimately depends, it is necessary to dispose first of a question arising upon the construction of section 30(1)(g) of the Act of 1954. Since there has been no actual planning application by the respondents for permission to change the use of the premises and since we know that any such application would be refused by the appellants as local planning authority, what are the circumstances, necessarily hypothetical, in which the respondents' prospects of success in an appeal to the Secretary of State must be considered? More particularly, are the respondents' prospects of success in such an appeal to be considered on the assumption that, when the Secretary of State has to decide the appeal, the respondents are entitled to possession of the premises and the appellants' occupation has ceased? My Lords, it seems to me that an affirmative answer to that question is inescapable. A landlord opposing the grant of a new tenancy under section 30(1)(f) or (g) seeks to establish what he intends to do "on the termination of the current tenancy." If the only obstacle to his implementing an admittedly genuine intention is a suggested difficulty in obtaining a necessary planning permission, the plain language of the Act of 1954 requires that his prospect of success in overcoming that difficulty should be assessed on the footing that he is entitled to possession”.
In Cornwall Coast Country Club v. Cardgrange Limited [1987] 1 EGLR 146 (the “Cardgrange case”), Scott J determined certain questions of law on appeal from rent review arbitration proceedings. The tenant was Crockfords, and rent fell to be reviewed on the footing that the premises were vacant. Crockfords argued that, if the premises were vacant, Crockfords would have gone elsewhere and used one of the strictly limited available gaming licences in those other premises, thus leading to a lower rental for the subject premises. Scott J rejected that approach, holding that the hypotheses required by the rent review provisions were to be strictly adhered to, but, subject to those assumptions, the real circumstances of the case were to be taken into account. Mr Dowding relied on the Cardgrange case to demonstrate that it was impermissible in this case to embark upon an inquiry as to what HOTT might do in a hypothetical world, when in reality it was clear that HOTT was not prepared to enter into any commercial relationship with ABP in the absence of a renewed Lease. All that should be assumed in this case, on the principle of the Westminster case, was that ABP was in occupation of the demised premises and no more. I shall return to this argument in due course.
Mr Nugee relied on the next case of Dolgellau Golf Club v. Hett (1998) 76 P&CR 526, where the Court of Appeal held that a landlord had established his intention to re-occupy a remote golf course in Wales, notwithstanding that the project might lack financial viability. Auld LJ applied the observations of O’Connor LJ in Cox v. Binfield [1989] 1 EGLR 97 to the effect that objectively the judge must be able to say that the intention was one which is capable of being carried out in the reasonable future in the circumstances which will prevail when possession is achieved by the landlord. Auld LJ said at pages 534-5 that the test was one of intention and reasonable practicability: “not of the probability of achieving its start or its likely success once established. It is not an incident of the statutory formula, nor of the present judicial gloss on it, that a landlord, in seeking to satisfy the court of the reality of his intention, should be subjected to minute examination of his finances with a view to determining the financial viability and durability of the business he intends to establish. The court is not there to police a landlord's entitlement to recover possession of his own property by examining the financial wisdom of his genuinely held plans for it. Nor will it always be appropriate to test the reasonable practicability of a landlord’s intention to establish a business by reference to the presence or absence of detailed building plans, planning and licensing consents or indications and the like …”.
In Edwards v. Thompson [1990] 2 EGLR 72, the Court of Appeal rejected the suggestion that a landlords’ settled intention to redevelop under section 30(1)(f) was vitiated by evidence that they had accepted a previous offer from a third party to purchase the whole of the property, and that they were continuing to consider such offers. Nourse LJ, with whom Butler-Sloss LJ agreed, said this at page 73: “I think that the position at trial was that [the landlords’] previous experience had satisfied them that they were unlikely to receive a satisfactory offer for the whole and that they must proceed with their own development. At the same time, when they were asked what they would do if they received an offer for the whole, candour, not to say common sense, required them to answer the question as they did. I should add that the acceptance of any such hypothetical offer would not have been solely a question of money. It would have depended in large part on the important but unresolved question whether Mr and Mrs Thompson wished to live in the converted barn and smithy themselves”. The fatal objection that ultimately stood in the landlords’ way in that case was not the prospect of a sale of the whole property, but the very real possibility that an acceptable price for the remainder of the property would not be achieved in time to enable them to fund their intended redevelopment of the barn and the smithy. Mr Dowding relied on this dictum, but, as it seems to me, it really went some way to support Mr Nugee’s submission that the fact that a landlord might accept a good commercial offer, thus preventing the carrying out of its intention, was not sufficient in itself to vitiate the existence of such an intention. Again, I will return to this argument in due course.
In Zarvos v. Pradhan [2003] 2 P&CR 9, the Court of Appeal considered the linkage between the two limbs of the intention test. Ward LJ said this at paragraph 21:
“ … it is useful to clarify whether one must start with the first limb – genuine not colourable commitment to carry on business at the premises – or whether it is sufficient to first to examine the real possibility of the landlord’s doing so. There was some discussion as to whether the first and second limbs have to be dealt with sequentially. In my judgment there is nothing in principle or practice which demands such sequential treatment. Ultimately there is a single question for the judge to decide, namely the question posed by s. 30(1)(g) itself: does the landlord on the termination of the current tenancy intend to occupy the holding for the purposes of a business to be carried on by him therein? The judicial gloss put on those ordinary words arises out of Asquith L.J.'s explanation of the connotation of the word “intends”. Hence the first element of the subjective intention, the genuine settled commitment to the project, and the second, a check on reality which is demonstrated by showing, objectively, that there is the real possibility of carrying it into fruition. Pie in the sky will not be enough for this restaurateur's business plans”.
The issues
It is common ground that the question of intention must be determined at the date of the hearing. It has not been suggested that the holdings under the Leases are different from the demised premises. In other words, it is common ground that HOTT occupies the entirety of the demised premises for its business under each of the Leases within the definition in section 23(3) of the 1954 Act.
Against that background, the central questions that I have to answer are those provided for determination by Morgan J namely:-
Whether ABP intends to occupy the IOT for the purposes, or partly for the purposes, of a business to be carried on by it therein?
If so, when, and in what circumstances does ABP intend to occupy the IOT for those purposes?
Strictly these questions have to be answered in relation, not to the IOT as a whole, but in relation to each of the demises under each of the Leases. But since neither side has argued for any different result if this split were made, I propose to consider all 4 Leases and all 4 demised premises comprising the IOT together.
I have considered whether the 2 issues can be broken down, bearing in mind the authorities I have referred to. It is common ground that there are aspects to the “intention” test, namely (1) whether ABP has the necessary firm and settled intention to occupy the IOT for the purpose of its business, and (2) whether there is reasonable prospect that it will actually be able to do so? In the course of argument, however, it seemed to me that in this case the two questions are inescapably interlinked. The main question of what is likely to happen at the termination of the Leases turns, at least in part, on what HOTT and any third party customers decide to do. Likewise, the question of whether ABP can, in practice, occupy the IOT for the purposes of its business turns, at least in part on the same question. I think, therefore, that I should not sub-divide the main issues, save insofar as I shall need to deal with the submissions made by counsel and to make findings of fact in order to enable me to reach my conclusions.
First issue: Whether ABP intends to occupy the IOT for the purposes, or partly for the purposes, of a business to be carried on by it therein?
Mr Dowding divided his final submission into 6 sections submitting in the broadest outline as follows:-
That ABP had never made a fixed, settled or unconditional decision to occupy the IOT for the purposes of its business.
That ABP’s case is circular in that, in order to show that it will effect a seamless transition without interrupting supply to the Refineries, it assumes what it sets out to prove namely that HOTT will co-operate with ABP to allow that to happen once ABP has won under section 30(1)(g).
That, because so many hurdles remain for ABP to cross, most of which are outside their control, there is no reasonable prospect that ABP can implement its decision to occupy the IOT.
That even if ABP did implement its plan, the operator of the IOT would, in all probability remain APT, so that ABP would not anyway be in occupation of the IOT, but APT would.
Also, if ABP implemented its plan, the business would not be a business “carried on by” ABP within section 30(1)(g), because it would simply be expropriating the existing business carried on by HOTT and APT.
ABP does not anyway intend to occupy, as section 30(1)(g) requires “on the termination of the current tenancy”, but at a much later stage when it has made all the necessary arrangements to enable it to occupy without disrupting the continuity of supply to the Refineries.
As part of his second point, Mr Dowding argued, as I have already mentioned in connection with the Cardgrange case, that it was not open to the court to embark upon an inquiry as to what HOTT might do in a hypothetical world, when in reality it was clear that HOTT was not prepared to enter into any commercial relationship with ABP in the absence of renewed Leases. He submitted that all that should be assumed here, as established by the Westminster case, was that ABP was in occupation of the demised premises. I will deal with this argument first as it has a bearing on the proper approach to the other submissions. I asked Mr Dowding to identify a juridical basis for this submission, since it seemed to me that it was just a rather convenient factual point posing as a point of law. His response was as follows:
The statutory hypothesis that one obtains from section 30(1)(g) itself is that the lease has ended. On its proper construction, that is concerned simply with the notional removal of the existing impediment to the landlord implementing his intention, namely the property interest of the tenant, and nothing more.
Section 30(1)(g) is not, therefore, to be interpreted as allowing the landlord to rely as part of his case on what the tenant would or might be compelled to do at the termination of the tenancy. Allowing the landlord to rely on what the tenant would or might do is circular because it allows the landlord to rely on what will happen if the landlord is successful to decide whether the landlord should be successful.
This was exactly the circularity that was rejected in the Westminster case, though the circularity was the other way round.
It is also contrary to the policy of the 1954 Act as it enables the landlord to acquire a tenant’s business or business assets, which the tenant would be otherwise unwilling to hand over.
Intention must, therefore, be established independently of the bargaining position that winning under section 30(1)(g) will bring about.
I cannot accept Mr Dowding’s submissions on this point for a number of reasons. First, it does not seem to me that the Cardgrange case is of any real assistance, since Scott J’s holding was in the context of rent review arrangements, in which there is a very specific regime for the treatment of disregards. The principle on which Scott J was acting was that the hypotheses required by the rent review provisions were to be strictly adhered to, but, subject to those assumptions, the real circumstances of the case were to be taken into account. There is no such hypothesis under section 30(1)(g). Moreover, the Westminster case goes nowhere near as far as Mr Dowding submits. All Lord Bridge was pointing out was that section 30(1)(g) required the court to look at the position at the termination of the current tenancy, when, obviously, the landlord would be entitled to resume possession. It was, therefore, ridiculous to allow the tenant to rely on its own occupation of the depot to argue that the landlord could not obtain planning permission for its desired usage when it took possession. Lord Bridge said nothing, and cannot be taken as having meant to say anything, about what findings of fact the court seized of a section 30(1)(g) case should or should not make. I accept that the court has to be careful when speculating about what may happen in the future on certain hypothetical bases. But section 30(1)(g) itself requires a measure of such speculation by requiring proof of what the landlord intends to do – necessarily in the future - at the termination of the current tenancy. That termination will, by definition, not have happened at the date of the hearing, because of the existence of the statutory continuation tenancy under section 24(1).
For these reasons, therefore, I do not think that Mr Dowding was right to submit that the court is prevented, as a matter of law, from making findings of fact as to what will happen at the termination of the current tenancy.
Having dealt with that legal submission, and before turning to Mr Dowding’s other submissions, it seems to me that I have to reach a conclusion based on the evidence as to what would be likely to happen at the termination of the Leases in the event that ABP is successful under section 30(1)(g). I shall assume for this purpose that ABP’s priority was, as Mr Fitzgerald said it was, to maintain the continuity of supply to the Refineries. One thing was clear from ABP’s evidence. That was that it wanted to negotiate a satisfactory arrangement for the future with HOTT, and that it regarded HOTT as an important customer. ABP simply wanted to put its relationship with HOTT on the kind of commercial footing that it operates at its other terminals at Immingham and elsewhere. Under section 9(1) of the Transport Act 1981, ABP is in the business of providing port facilities and services to its customers at its harbours. Even if ABP provides no cargo handling facilities, it would still be providing port services as part of its business. This point is important and explains why ABP proposed a two part fee to HOTT, namely £1.25 per tonne by way of ships and cargo dues and 75 pence per tonne by way of cargo handling fees. It also explains why ABP was less concerned about the cargo handling fees, which it was prepared to “open-book” as I have explained above. ABP’s main business is, in short, providing places where ships can tie up for the purposes of loading and unloading their cargoes. For this service, ABP charges ships and cargo dues as it is entitled to do under the statutory regime, as I have explained briefly above.
Once ABP has won under section 30(1)(g) and the Leases have terminated, it stands to reason that it cannot sensibly be assumed that ABP would be offering HOTT new leases of the IOT. Otherwise, why would they have gone through years of legal conflict? Thus, it seems to me that Mr Fitzgerald’s evidence must be taken at face value in this situation. ABP would be wanting to negotiate a commercial arrangement whereby HOTT could continue to use the IOT to feed the Refineries.
But what of HOTT? Before considering the evidence as to what HOTT would be likely to do, it is important to distinguish between the two Refineries. Total uses the IOT for the bulk of its crude oil supplies, whereas CoP does not. CoP, as I understand it, primarily uses the Tetney Monobuoy and is therefore less dependent than Total on the IOT. That is presumably why the main evidence for HOTT (which is in effect 70% Total) was given by Mr Robson who is a Total man. Whilst Mr Robson was careful not to give evidence as to what CoP might do or think, I can, it seems to me, assume that Total’s decisions as to the future of the IOT are likely to be the most important ones for the court to concern itself with.
I found Mr Robson’s evidence impressive as I have already said. But in the vital passages I have summarised above, he was really doing no more than speculating as to what possible options would be available to Total at the termination of the Leases, if that came about. He was not saying what Total’s CEO would be likely to decide, and indeed he could not possibly have said what Total’s CEO would decide since they are so many variables between now and the time when such a decision will have to be made.
Total’s two most important options at the termination of the Leases will be to negotiate a commercial arrangement of the kind ABP want, or to move its business elsewhere and either close down the LOR temporarily (or permanently if it cannot find any suitable alternative port capacity). Whilst Mr Robson said that he personally doubted whether Total would accept option 1 (a new commercial arrangement with ABP), I think he accepted that it was a real possibility that it might. I think Mr Robson was influenced by the fact that he felt that ABP had Total “over a barrel” to use the unfortunate pun that Mr Dowding suggested. He, therefore, wanted to make it very clear that option 2 was also a real possibility, despite ABP not apparently really believing it. I accept his evidence on that, but ultimately I think that economic considerations will decide Total’s course of action. It will not remove its equipment from the Oil Jetty just to spite ABP, nor will it decide to close down the LOR just because it is annoyed at the way that ABP has treated it. Total, like any other hard nosed international commercial enterprise, will be guided only by economics and commercial reality. The same goes for ABP. Thus, once all the posturing is over, I am drawn to the very firm conclusion that it is not only possible but, so far as the present evidence enables me to take a clear decision on the matter, really quite probable that Total will ultimately accept option 1 as the least undesirable solution. I do not need to decide what will happen, only on a balance of probabilities what is the most likely outcome. I am left in little doubt that the economics make it most likely that, at the termination of the Leases, Total and HOTT will agree a commercial arrangement to enable them to continue using the IOT to service the Refineries. I reach this conclusion despite the evidence that HOTT has never once yet engaged in any discussion aimed at reaching a commercial arrangement, and that HOTT has set its face, thus far, against such an arrangement. I also reach this conclusion in the face of the formidable evidence of Messrs Robson, Peeters and Daly as to the logistical difficulties that would be faced if ABP rather than APT were to manage the IOT. As it seems to me, I do not need to make specific findings on these difficulties in the light of Mr Robson’s important acceptance that, if his bosses decided to enter into a commercial arrangement with ABP, he would, of course, do his best to achieve the necessary level of co-operation to make it work. I would have expected nothing less, but this express admission was an example of Mr Robson’s refreshing and impressive candour in his evidence.
I should say, by way of postscript to this part of the judgment, that I have not discounted Mr Robson’s back of the envelope calculation as to the economics of closing down the LOR, temporarily or permanently. But I am certain that Total and indeed CoP would want to try to reach an acceptable deal with ABP before either of them took steps which would radically reduce the UK’s refining capacity. I was by no means satisfied that Total had a realistic chance of procuring alternative jetty facilities at Immingham within the 2-year time frame that Mr Robson suggested. I think it far more likely that it would take much longer than that, bearing in mind the embryonic nature of the existing discussions with ABLE UK, and the likely environmental lobbying that would take place if a new oil terminal were proposed when a perfectly good existing terminal was already in place and unavailable (on the hypothesis that I am considering) only because of the breakdown in commercial negotiations between a large port authority and two large oil companies.
With this introduction, then, I can move to consider each of Mr Dowding’s 6 submissions.
HOTT’s first submission that ABP had never made a fixed, settled or unconditional decision to occupy the IOT for the purposes of its business
This is really the central submission in the case. ABP says that its board minutes deciding to re-occupy the IOT should be given the respect they deserve, and that there is no real evidence to contradict ABP’s position that it has decided to take back the IOT and operate it for the purpose of ensuring continuity of supply to the Refineries and, in due course, for third party traffic. Mr Fitzgerald mentioned in his evidence that interest has already been shown by a third party oil trader, Mabanaft.
In the circumstances of this case, I do not think it is meaningful to separate completely this question so as to decide whether ABP’s intention is adequately firm and settled on the one hand, and adequately unconditional on the other hand. The two issues require a consideration of very much the same evidence, even though they are slightly different questions. For example, if as HOTT contended, ABP was likely to accept a higher offer for a new lease, rather than a lower offer for a commercial arrangement, that would have a potential bearing on both whether ABP’s decision was (a) truly firm and settled and (b) really unconditional.
I shall deal then with that question first. Mr Fitzgerald accepted that any offer from HOTT would have to be considered by ABP’s board and possibly also ABPH’s board. That much is obvious. It would be a breach of fiduciary duty for ABP’s directors to reject out of hand any offer for new leases without proper commercial consideration. But it did not seem to me that, in that or indeed any part of his evidence, Mr Fitzgerald was acknowledging the conditionality or the uncertainty of ABP’s decision to resume occupation of the IOT. What he was saying was that ABP was motivated by two main factors in reaching that decision namely the need to obtain value for its port facilities, and the need to expand competition in the port and to attract third party customers beyond the two existing users of the IOT. That seemed to me to be very plausible and realistic evidence. I did not take from it that the board of ABP was wavering in its determination to end the Leases and to bring about a more advantageous commercial arrangement as it has done in other parts of the port including at the IGT and on the East and West Jetties.
At one stage in hearing Mr Fitzgerald give evidence, I thought that ABP’s approach was indeed wholly conditioned by obtaining the most money for the IOT by whatever means that could be achieved. And indeed some of the early board minutes and memoranda do suggest this as ABP’s primary motivation, with the termination of the Leases and the intention to bring in third party business as secondary means to the primary end of obtaining the most money from HOTT and the Refineries for their usage of the IOT. In the end, however, I do not think that is the true position. I accept the genuineness of ABP’s decision to run the IOT itself, to terminate the Leases, to maintain the supply to the Refineries (if they want it) and to improve and enhance the efficiency and the facilities at the IOT in any event, but obviously more quickly if Total or CoP will not agree terms to allow them to continue to use the IOT.
As I have said, it is not for me to decide whether ABP’s approach is a prudent business decision, provided it has a reasonable prospect of being fulfilled (an issue to which I shall return in dealing with Mr Dowding’s third submission). But I have no doubt that this is the business decision that ABP has now made. It may initially have been motivated entirely by the desire to obtain increased value from the IOT, but it is now clear that, for some 3 years, ABP has stuck by its decision to take back the IOT and operate it itself.
In conclusion, therefore, I have no doubt that ABP’s intention to re-occupy the IOT at the termination of the Leases is genuine, firm and settled, and also that it is unconditional. There was much debate in argument as to whether the fact that a landlord may later accept an offer which means that its intention is not fulfilled vitiates that intention. I can see that it could do so in some cases. Mr Dowding submitted that the fact that “every man has his price” is not enough to vitiate an intention to re-occupy, but it would be if there was actual evidence that an offer would be made and that such an offer was likely to be accepted. He said that that was this case. But in fact, no such offer has ever been made by HOTT, and indeed Mr Nugee, possibly tongue in cheek, suggested that HOTT might like to make such an offer during the trial, but it did not do so. It seems to me that I have to consider the facts of this case. They are that HOTT is quite likely, even after losing under section 30(1)(g) (if it does), to try to negotiate a new lease with exclusivity, rather than agreeing to the commercial arrangement that ABP wants. But there is no evidence that such an offer will be accepted. If it were hugely more than an equivalent offer for a commercial arrangement, ABP would obviously consider it properly. That does not vitiate ABP’s present intention at the time of the trial before me to re-occupy the IOT. The fact that unexpected offers and events may in the future occur does not, in the circumstances of this case, make ABP’s decision uncertain or unconditional. The dictum of Nourse LJ in Edwards v. Thompson lends some support to the view I have taken.
My conclusion, therefore on the evidence is that, even though there will undoubtedly be difficulties for ABP at the termination of the Leases in achieving its objectives of maintaining continuity of supply to the Refineries, and widening access to the IOT, that is what ABP intends to do. It intends to manage the IOT at the end of the Leases either itself or though a third party, perhaps APT, Simon Storage or Briggs Marine. I will return to the relevance of that part of ABP’s intention in dealing with Mr Dowding’s 4th and 5th submissions.
HOTT’s second submission that ABP’s case is circular in that, in order to show that it will effect a seamless transition without interrupting supply to the Refineries, it assumes what it sets out to prove namely that HOTT will co-operate with ABP to allow that to happen once ABP has won under section 30(1)(g)
This is really a variation or extension on the theme of Mr Dowding’s contention that I have already rejected that it is not open to the court to make findings as to what HOTT may do if ABP resumes occupation. I have already also determined that the most likely option is that HOTT will negotiate a commercial arrangement with ABP if it succeeds under section 30(1)(g). Mr Dowding also submitted that there was no evidence that HOTT had ever made an offer to accept a commercial arrangement, so that I could not or should not conclude that it would change its stance once the Leases terminated. That seems to me to be an impossible submission, since the situation will have changed dramatically at that stage, and however much HOTT is against a commercial arrangement, once it becomes its only option if it is to continue supplying the Refineries, its commercial options will look rather different. As I have already said, I do not think that Total or CoP or HOTT will act on a whim or out of revenge. They will act to protect their legitimate commercial interest in whatever situation faces them, as Mr Robson’s evidence, in effect, pragmatically confirmed.
To conclude, therefore, I do not accept that ABP’s position is circular or assuming what it sets out to prove. It is assuming just one thing, as the Westminster case demands, and that is that the Leases have terminated. At that point, I can and do determine that Total and CoP are likely to co-operate with ABP in reaching a commercial arrangement. It is not certain that they will do so, but then nothing is certain. I am only determining whether ABP has the necessary intention now, bearing in mind its view of the future.
HOTT’s third submission that, because so many hurdles remain for ABP to cross, most of which are outside their control, there is no reasonable prospect that ABP can implement its decision to occupy the IOT.
As I indicated at the outset, this submission and the first submission are intimately inter-related on the particular facts of this case. I can, therefore, now explain quite shortly why I have reached the clear conclusion on the evidence that there is indeed a reasonable prospect that ABP will be able to implement its decision to re-occupy the IOT. First and foremost, of course, is my finding that HOTT are indeed likely to negotiate a commercial arrangement if ABP are successful under section 30(1)(g). If that happens, then ABP will, in practice, be able to achieve their stated intention.
HOTT suggests that there are simply too many hurdles to cross to allow ABP a realistic prospect of doing what it wants. It points to the lack of a detailed plan, and the failure to agree any terms with an operator like APT, Simon Storage or Briggs Marine. But none of that can, in my judgment be fatal to ABP’s intention, when HOTT’s evidence was that, if commercially it decided to enter into a commercial arrangement, Total and HOTT would make it work. As I have said before, I would have expected nothing less. Evidence to the contrary would have been implausible.
Moreover, the fact that HOTT may, even after losing under section 30(1)(g), make a significantly more attractive offer for new leases over a commercial arrangement, does not mean that ABP has failed to show a reasonable prospect that it will achieve its objective. ABP has been resolute in its determination to take back control of the Oil Jetty, as it does elsewhere in the Port. I am very far from convinced that it will capitulate when and if the oil companies try to use their commercial might to force new leases upon ABP. Indeed, my overall impression of the evidence is that the boot is rather more likely to be on the other foot. ABP is more likely to stick by its guns, and effectively tell HOTT to do its worst and remove its equipment if it wishes, if it will not negotiate a commercial arrangement for the use of the Oil Jetty.
That brings me to the question of what would happen if HOTT did walk away from negotiations. In that event, would HOTT remove its equipment? And would ABP have a reasonable prospect of operating the Oil Jetty with new third party customers. The answer to this is, in my judgment, nowhere near as complicated as it appeared at some stages in the argument. I have no doubt that it is possible that in this eventuality, HOTT might (but not would) remove its equipment. It is common ground between the parties that at the termination of the Leases, HOTT would be allowed a reasonable time to do so if it could not physically achieve the removal within the 3 months and 21 day period allowed by the legislation from the final decision. If HOTT did remove its equipment, ABP would not be able immediately to offer cargo handling services, though it might have the pipework left so as to allow it to handle some finished product. Whilst Mr Fitzgerald candidly accepted that ABP would not invest large sums in the Oil Jetty without agreements with customers to back such an investment up, there was no evidence that such an investment was necessary for ABP to make any use of the Oil Jetty. It is not to be forgotten that the finger pier accommodates coasters and barges of relatively small tonnage. I have little doubt that Mr Fitzgerald would, if HOTT walked away, want very quickly to start the process of offering port services to third parties, even if ABP would only do so at the beginning on a small scale on the finger pier whilst it tried to secure major contracts with oil traders to justify it in ordering and installing replacement equipment of the kind that HOTT had removed. It must be remembered that ABP is running a port. It is in the business of operating port facilities. The Oil Jetty is a valuable and important port facility. It is simply inconceivable that ABP would allow it to lie fallow for any length of time at all. I cannot speculate as to what level of investment ABP might make over what period, but I am entirely satisfied that, if HOTT took its equipment away, ABP would do whatever was necessary to prepare to use the Oil Jetty in some form (even if only initially by using the finger pier) as speedily as it could. ABP did not seem to me to be the kind of company that was likely to stand by and do nothing, even if the commercial opportunities available required to be obtained and developed.
In any event, this latter finding is not determinative of the question of whether there is a reasonable prospect that ABP would be able to re-occupy the IOT for its business. The likelihood that HOTT would negotiate a commercial arrangement is sufficient. But even if it were not, I have, as I say, no doubt that ABP would offer port services on the Oil Jetty and make use of the Oil Depot and the other leased premises for its own business. Mr Dowding accepted, as he had to, that some element of lead time in preparing to embark on ABP’s own business at the IOT was not sufficient to defeat a reasonable prospect of that taking place. Even in the worst case scenario for ABP, namely HOTT removing all its equipment, I doubt that the lead time would be very great before small coasters and barges were tying up at the Oil Jetty to discharge finished product for distribution by road or other means. The Humber’s central and strategic geographical position should not be forgotten in this regard.
The suggestion that ABP’s plans are merely aspirational or embryonic might be relevant in a case where the landlord was impecunious or insubstantial. But where, as here, ABP is a major port operator with substantial financial backing and a large port estate, there can be no realistic doubt that, once the Leases terminate, whatever HOTT decides to do, ABP will be able to carry out its stated objective, namely to offer its port facilities to third party oil companies and traders. I do not have to decide how successful, or even economically viable, that business will be. It is sufficient that ABP has decided to do it, and it has a reasonable prospect of achieving it.
HOTT’s fourth submission that even if ABP did implement its plan, the operator of the IOT would, in all probability remain APT, so that ABP would not anyway be in occupation of the IOT, but APT would.
This submission proceeds on the assumption that a commercial arrangement would be agreed with HOTT at the termination of the Leases, but that ABP would simply agree that APT should continue to operate the IOT as it does at present. The fallacy in the argument is that, in such a situation, APT would not be operating the IOT for HOTT, but would be operating the IOT for ABP. Necessarily, ABP would have to enter into a management agreement or a commercial arrangement of some kind with APT for this to occur. At that point, ABP would indeed be offering port services at the IOT. It would also probably (though it does not need to do so) be offering cargo handling facilities through its contractor or agent, APT. The reality would be that ABP would have re-occupied the IOT for the purpose of its core business laid down by section 9(1) of the Transport Act 1981: i.e. providing port facilities and services to its customers at the Port.
In my judgment, it does not matter in the least whether ABP chooses to use sub-contractors to operate the technical pipeline, loading and off-loading facilities. It would be in possession of its land and Oil Jetty at the IOT contracting with customers on its own behalf, if it carries out its stated intention. It might be mentioned in passing here that the whole rationale for ABP’s intended re-occupation of the IOT is to enable it to offer port services to more customers. It would be absurd to regard the means by which the physical services were provided as preventing it doing so.
I have no doubt that, if ABP re-occupies the IOT, it will do so on its own account, whether or not it uses the services of APT.
HOTT’s fifth submission that, if ABP implemented its plan, the business would not be a business “ carried on by ” ABP within section 30(1)(g), because it would simply be expropriating the existing business carried on by HOTT and APT
The point here is very similar to the previous one. But here Mr Dowding brings the policy of the 1954 Act into play, submitting that the legislation cannot have been intended to allow a landlord to expropriate a tenant’s business and assets. This is a pejorative way of putting the point. The 1954 Act was indeed enacted, as Lord Hailsham put it, to “protect the business interests of the tenant … in particular as regards his security of tenure”, but section 30(1)(g) provides a significant exception to that protection. Tenants are to be allowed security of tenure if they have established themselves in business in leasehold premises so that they can continue to carry on their business there (to adapt Lord Wilberforce’s words in O’May). But they are not allowed such protection at the termination of their lease if the landlord is able to establish his intention to re-occupy the holding for the purposes of his business. This exception is not a charter for expropriation. It is a function of another aspect of the policy of the legislation, to the effect that landlords should be entitled to their land back, notwithstanding the tenant’s security of tenure, if they genuinely wish to use that land for their own business purposes (section 30(1)(g)) or for redevelopment (section 30(1)(f)). There is no objection to a supermarket chain buying up freehold interests in other supermarkets’ shop premises (provided they do so more than 5 years before the termination of the lease – see section 30(2)), just because they wish to oppose the grant of a new tenancy so they can take over their competitor’s site. I am sure that worldly-wise supermarkets are alive to this possibility, but if it were to happen, I cannot see how the target supermarket could cry foul, when the predator took over its building and operation and simply changed the name above the door.
HOTT’s sixth submission that ABP does not anyway intend to occupy, as section 30(1)(g) requires “ on the termination of the current tenancy ”, but at a much later stage when it has made all the necessary arrangements to enable it to occupy without disrupting the continuity of supply to the Refineries
On the basis of the findings I have already made, this is an unrealistic point. ABP very much intends, in my judgment, to re-occupy the IOT on the termination of the current tenancy, whenever that may come. The most likely scenario is, as I have said, that HOTT will, in the event, negotiate a commercial deal with ABP. It may take some time for that to happen. Indeed it may take longer than the 3 months and 21 days after the final decision, but that does not mean that ABP’s intention cannot be implemented. The time limits will undoubtedly place both HOTT and ABP under intense pressure. It cannot, however, be assumed that ABP will allow the end of the Leases to come and go without taking any steps to re-occupy. It is perhaps quite likely that an interim arrangement will be made in time for the date of termination with the finer details being worked out later, so as to ensure continuity of supply to the Refineries. But of one thing I am sure. And that is that ABP will make absolutely sure in such a situation that it is clearly agreed that HOTT is no longer in occupation as a tenant, and that ABP is the entity providing port services to HOTT or the oil companies from the termination date of the Leases. It would not be in ABP’s interests to do anything else. HOTT will need to decide its position before the termination date of the Leases, if only because, if it has not begun to remove its equipment by that stage, whatever period of reasonable time is allowed for the removal process, it will very quickly lose the right to do so. If it does not start removing its equipment and it loses the right to do so, its negotiating position in relation to any new commercial arrangement will be jeopardised. Thus, whilst I accept that the timing of the termination of the Leases will be crucial to the eventual outcome, I do not think it can be said that ABP’s intention cannot or even is unlikely to be implemented because it may take time to finalise the arrangements for ABP’s business at the IOT. The same applies in relation to third party business, for the reasons I have already given. If HOTT walks away, I would expect ABP to be offering some limited port services at the IOT from day one or very shortly thereafter.
Second issue: If so, when, and in what circumstances ABP so intends?
In the result, the answer to this issue is necessarily consequential on the findings I have already made. ABP intends, in my judgment to re-occupy the IOT at the termination of the Leases, whenever that may eventually occur. The circumstances of its re-occupation are most likely to be by an arrangement with HOTT whereby it pays ship and cargo dues and ABP takes over APT together with its staff, equipment, IT and operating procedures. I cannot say precisely what commercial arrangement will be reached, but as I have just said, I have no doubt that ABP will ensure that it is clearly re-occupying the IOT for the purpose of providing port services whenever the termination of the Leases occurs. The same applies, for the reasons I have given, if HOTT walks away and removes its equipment from the Oil Jetty.
Conclusion
In my judgment, therefore, the answers that I should give to the issues identified by Morgan J are as follows:-
ABP intends to occupy the IOT for the purposes, or partly for the purposes, of a business to be carried on by it at the IOT.
ABP intends to occupy the IOT for the purposes, or partly for the purposes, of a business to be carried on by it at the IOT at the termination of the Leases, whenever that occurs. The most likely circumstances of that occupation involve ABP entering into a commercial arrangement with HOTT, whereby HOTT pays ship and cargo dues and APT operates for ABP the cargo facilities at the IOT. But even if that does not occur, it is likely that ABP will occupy the IOT from the termination of the Leases for the purposes of providing port facilities to third party oil companies or traders.
I will hear counsel on the precise form of order, on costs and on the question of the date for the hearing to fix the interim rent.
HOTT v. ABP
SCHEDULE OF LEASES
Date/ref. | Demised premises | Term | Section 25 notices | Rent payable | HOTT’s proposed terms for new lease | ABP’s proposed terms for new lease |
29th August 1970 | The Oil Jetty | 40 years expiring on 31st December 2009 | 1st notice dated 2nd January 2009 terminating the tenancy on 31st December 2009 2nd notice dated 8th October 2009 terminating the tenancy on 11th April 2010 | £1,180,334 per annum (pure rent) according to HOTT £4,045,244 per annum according to ABP | Rent: £2,850,000 per annum Term: 15 years | Rent: £23,000,000 per annum Term: 15 years |
29th August 1970 | The Oil Depot (the land on which a tank farm and offices have been constructed) | 1st December 1966 to 1st January 2010 | 1st notice dated 24th June 2009 terminating the tenancy on 31st December 2009 2nd notice dated 21st July 2009 terminating the tenancy on 24th January 2010 | £81,000 per annum according to HOTT £123,000 per annum (£81,000 plus £42,000 additional rent for pipelines) according to ABP | Rent: £81,000 per annum Term: 15 years | Rent: £636,000 per annum Term: 15 years |
6th August 1980 | The 10 Acres of land to the East of the Oil Depot | 19th March 1980 to 1st January 2010 | 1st notice dated 24th June 2009 terminating the tenancy on 31st December 2009 2nd notice dated 21st July 2009 terminating the tenancy on 24th January 2010 | £81,000 per annum | Rent: £81,000 per annum Term: 15 years | Rent: £130,000 per annum Term: 15 years |
16th November 1988 | The 1.97 Acres of land to the North of the Oil Depot | 18th August 1988 to 31st December 2009 | Notice dated 24th June 2009 terminating the tenancy on 31st December 2009 | £16,745 per annum | Rent: £16,745 per annum Term: 15 years | Rent: £29,550 per annum Term: 15 years |