Century Projects Ltd v Almacantar (Centre Point) & Ors

In this application the claimant, Century Projects Ltd., the lessee under a lease of premises at the top of Centre Point Tower, seeks an interlocutory injunction restraining the defendants (three companies in the Almacantar Group between whom it is not necessary to distinguish for the purposes of this application), its landlords and owners of the tower, from carrying out external works to the concrete façade of the tower using scaffolding, on the ground that this will constitute a breach of the landlords’ covenant for quiet enjoyment and a breach of their obligation not to derogate from their grant.

The Centre Point complex is a well-known development on New Oxford Street in Central London, situated near the crossroads of Oxford Street and New Oxford Street with Tottenham Court Road and the Charing Cross Road. The complex was designed by Richard Seifert and the original structural engineers were Pell Frischmann. The most prominent building in the complex is Centre Point Tower, an iconic building which was completed in 1966 and given a Grade II listing in 1995, with the Royal Fine Art Commission praising the building as having an "elegance worthy of a Wren steeple". It has a distinctive shape with curved eastern and western sides and a honeycomb-like concrete façade made up of innovative H- shaped pre-cast concrete units. This "exoskeletal cladding", as it has been referred to, is load-bearing although I was told only secondarily to other structural elements. The tower is some 117m (385ft) high and accommodates thirty-three floors of commercial space.

The claimant's lease (“the Lease”) is dated 26th March, 2008. The then landlord, Targetfollow (Centre Point) Ltd., granted the Lease to the claimant for a term of thirty-six years from that date. The property demised was the whole of Floors 31 and 32 and a viewing gallery around the perimeter of Floor 33. This appears to be the highest lettable space in the Tower although there is a Floor 34 above. The roof is at Floor 35 level. The Permitted Use under the Lease is as follows: “(i) in respect of the 31st and 32nd floors a high class restaurant bar and/or private members' club; and (ii) in respect of the Viewing Gallery, the Delivery Spaces and the Prep Areas for such reasonable proper purposes as are ancillary to such use of the 31st and 32nd floors.” It is not necessary to deal with the Delivery Spaces and Prep area: the claimant has a supplemental lease of other parts of the Tower which it is not necessary to refer to any further.

The demised premises were set out in Schedule 1 to the Lease where there was an express exclusion of those parts of the Complex specified in para. 1 of Part 1 of Schedule 2, the Complex being defined as the landlord's development known as Centre Point, situated at 103 New Oxford Street, etc. Paragraph 1 of Part 1 of Schedule 2 refers, among other things, to the structural parts of the Complex and, in particular, to the main walls. It is therefore common ground that the concretefaçade is not part of the property demised and has been retained in the ownership of the landlord. Clause 5.1 of the Lease contains a landlord's covenant for quiet enjoyment in a fairly standard form which reads as follows:

Two other provisions of the Lease were relied on by Mr. Jonathan Seitler QC, who appeared for the defendants, namely Clause 3.1 which contains a declaration in these terms:

The second provision on which he relies is one of the exceptions and reservations found in para. 4 of Part 3 of Schedule 1 in these terms:

As appears from the Permitted Use, the purpose of the demise was to enable the premises to be used as a restaurant and/or club. Mr. Condou, the Executive Director of the claimant, explains in his witness statement that the claimant currently operates a business known as Paramount at the Summit of Centre Point, which consists of a bar and restaurant, and an events space. He was first invited to view the space in 2004 and was so taken by the stunning panorama of London from it that his decision to take the space was instantaneous. He caused the claimant to invest heavily in the premises, spending about £5 million on refurbishment. The claimant has operated there since 2008. He describes the position of Paramount at the top of Centre Point, with its spectacular views across the West End and City of London as a recognised and unique selling point. I was shown photographs of the views and they are certainly impressive.

The defendants, Almacantar, acquired Centre Point from Targetfollow's receivers in April 2011. Before doing so they commissioned a condition survey from Pell Frischmann who, as I have said, were the civil engineers responsible for the original construction of the complex in the 1960s. Pell Frischmann reported that the structure was fundamentally sound, but the façade required attention. A further report from Sandbeg (employed by Pell Frischmann) concluded that the future integrity of the concrete structure should continue provided it was adequately maintained. The defendants had these reports by February 2011 and so acquired Centre Point in the knowledge that the structure was fundamentally sound, but required some work.

The defendants’ plan on acquisition was to carry out the necessary repairs and refurbish the building. They hoped to be able to convert the Tower to residential use and, in 2012, applied for planning permission to change it to residential use. However, although the building is not fully occupied, there are a number of occupiers in place, including of course the claimant, whose lease does not expirefor another thirty years or so, and the defendants therefore recognised that they might well have to settle for refurbishment of the Tower for its existing use as offices.

There have been a number of disputes between the claimant and the defendants, some of which are the subject of separate proceedings. However, I am not concerned with those. It is apparent that there is a deep lack of trust on both sides. As Mr. Jonathan Gaunt QC, who appeared for the claimant, aptly put it, "One side (the claimant) regards the other (the defendants) as trying to force it out, while the defendants regard the claimant as trying to extort money from them". Although some of these matters are touched on in the evidence, sensibly neither counsel sought to rely on them before me and I say no more about them.

Reverting to the defendants’ plans, after acquisition the defendant commissioned Pell Frischmann to undertake a full external survey. Pell Frischmann issued a series of reports. This exercise was completed in July 2013 when Pell Frischmann issued their final report covering Floors 33 to 35. In the meantime, the defendants had instructed their principal contractor, Sir Robert McAlpine, to develop the right technical solution to the proposed façade works. These comprised the cleaning and repair of the concrete façade, and installing replacement windows. There were two main components of the works which Sir Robert McAlpine were asked to look at: (a) cleaning and repair techniques; and (b) method of access to the façade.

Mr. Nigel Taylor, Sir Robert McAlpine's project manager, has prepared a report for the purposes of this application, detailing the consideration which Sir Robert McAlpine gave to the second of these questions - namely, what method of access to use. He refers in this report to six possible methods of access of which one - abseiling - was unsurprisingly ruled out at an early stage. The remaining five were: (1) using the house cradle (an existing cradle used for window cleaning and inspections of the façade); (2) a method called 'mast climbers' where a mobile platform moves up and down a central mast; (3) cradles suspended from the roof or from projecting supports; (4) system scaffolding; and (5) traditional scaffolding. Traditional (or tube and fitting scaffolding) is made up of tubes and fittings which are fixed together. System scaffolding is similar, but relies on an interlocking kit of parts.

It is not necessary for me to recite all the investigations detailed in the report. Sir Robert McAlpine concluded that traditional scaffolding was the only viable option. The house cradle was ruled out at an early stage. So far as 'mast climbers' were concerned, a number of issues were identified and none of the three sub- contractors who were invited to tender were able adequately to answer these concerns. So far as cradles were concerned, six sub-contractors were consulted, of whom three were issued formal tenders in January 2013 and gave budget quotations in March. Mr. Taylor's report identifies nine main issues with cradleswhich were not addressed in the tender submissions. His conclusion was expressed in these words:

That left traditional scaffolding which had a number of specific advantages listed in Mr. Taylor's report. The traditional scaffold would be shrouded in Monarflex over its full perimeter. Monarflex is a sheet material which fixes to the outside face of a scaffold. Mr. Taylor refers to it giving added protection against things falling outside the line of the scaffold. I was also told by Mr. Seitler, on instructions, that other advantages of Monarflex are: (1) that it protects the workforce while working on the scaffold from wind and weather; and (2) that it similarly protects the work face.

Mr. Taylor's report also explains that the question of whether tube and fitting scaffolding was the most appropriate method for the high level repair works was reviewed after receipt of Pell Frischmann's July 2013 report which identified that the façade at the top of the building was most in need of attention and that some work was more urgent than had previously been realised. The conclusion, however, was that the critical criteria had not changed in any significant way when applied to the high level works in isolation, and that therefore the access solution,

One other aspect of Mr. Taylor's report should be noted. At para. 5 he lists the critical criteria which Sir Robert McAlpine had to take into consideration when considering the preferred access system. These are as follows:

As a result of Pell Frischmann's reports Workman LLP, the defendants’ managing agents, wrote to the claimant on 23rd August 2013 informing them that they proposed to carry out repairs to Floors 28 and above and that the proposed method was to anchor cantilever beams at Level 28 and erect scaffold to the roof level, all the scaffolding being fully sheeted in Monarflex for the duration of the works. The work was anticipated to commence in October 2013 and last for six months.

On 16th September 2013 Mr. Condou replied. He said that obstruction of the view would severely damage the claimant's business. He did not dispute that the work identified by Pell Frischmann needed to be done, but he requested that a method for carrying out the work be identified which would cause as little disruption and damage to the claimant's business as possible.

On 25th September 2013 Workman replied, saying:

In October the claimant provided a report from Mr. Boucher of Oculus Façade Consultancy Ltd. In his report Mr. Boucher explained why, in his view, the work could quite adequately be carried out using cradles suspended from the roof. His view was that using scaffolding was less safe and more expensive, and would make for a longer programme than using cradles. He pointed out that cradles would be much less detrimental to the claimant's business.

That led to the defendants instructing their own expert, Mr. King of Ove Arup, who are civil and structural engineers, to review the work undertaken by the defendantsin arriving at their decision to use scaffolding and to review the Oculus report. Mr. King's conclusion, in his report dated 22nd November 2013 was that,

There have been further successive rounds of expert reports as follows: Mr. Boucher provided a second Oculus report in response to Mr. King's report on 29th November. This sought in great detail to answer each of the many points made by Mr. King. Mr. King, of Ove Arup, replied with his second report on 9th December 2013. His summary, having considered both Oculus reports, was that they had not caused him to change his view that scaffold was a better access method than cradles. He said also:

Mr. Gaunt took me to some of the detail of this report and showed me, in particular, that under the heading of "Practicality of Work - Cradles" Mr. King had said:

In addition, on 6th December 2013 Mr. Hitchens of Pell Frischmann issued a report in answer to the second Oculus report. His summary was this:

Mr. Boucher then prepared a third report, dated 20th December, 2013, dealing with Mr. King's second report and Mr. Hitchens’ report.

I have not thought it necessary to refer to the details of these reports. Both sides agree that I cannot, on this application, resolve the many issues which are raised by the experts on both sides. What, however, is clear to me - and I accept - is that the consistent advice which the defendant has received from its advisers, i.e. from Sir Robert McAlpine, Mr. King of Ove Arup, and Mr. Hitchens of Pell Frischmann, is that in their professional view scaffolding is the appropriate method to use.

Those being the salient facts, Mr. Gaunt's argument for an injunction is as follows. First he referred me to Owen v. Gadd [1956] 2QB, 99 as an illustration of a case where the erection of scaffolding by a landlord was held to be a breach of a covenant for quiet enjoyment. In that case the demised premises were a lock-up shop on the ground floor. The landlords retained the first floor and shortly after the grant put up scaffolding which obstructed the shop windows and door. The Court of Appeal upheld the finding by the county court judge that there had been an interference with the access to the shop premises and a breach of the covenant for quiet enjoyment. That was a case where the landlord erected scaffolding for his own purposes.

However, in the next case, Goldmile v. Lechouritis [2003] EWCA Civ 49 (which I will call Goldmile), the Court of Appeal considered a case, like the present, where the landlord was carrying out repairs pursuant to a covenant in the lease. The claimant held the lease of the ground floor and basement of premises in Warrington, which he used as a restaurant. The landlord had covenanted to use reasonable endeavours to repair the structure of the building. The landlord erected scaffolding to carry out repairs. This quite seriously disrupted the tenant's business. However, the District Judge held that there had been no breach. He accepted that there was a measure of inconvenience, saying:

Mr. Gaunt says that this case is authority for the proposition that a landlord carrying out repairs in pursuance of a repairing covenant has to take into account the potential disruption to the tenant's business and take all reasonable precautions to minimise that disruption. He then builds on that to say that such being the law, there is a question of fact whether cradles are a viable alternative to scaffolding. If the use of cradles is equally quick, cheap and safe as scaffolding (which is Mr. Boucher's view), but less disruptive (which is undeniable), then the defendants, by pressing ahead with scaffolding, would not be taking all reasonable steps to minimise the disruption to the tenant and would be in breach of covenant. There is, therefore, he says, a serious issue to be tried and in accordance with the well- known principles laid down in American Cyanamid v. Ethicon [1975] AC 396, Ishould go on to consider the balance of convenience, which favours the preservation of the status quo pending trial.

Mr. Seitler's first answer to this application is to deny that there is a serious issue to be tried, relying for this purpose on the terms of the Lease in question in this case. He referred me to Southwark v. Mills [2001] 1 AC, 1. In the speech of Lord Hoffman, he referred me in particular to p.10 where Lord Hoffmann cites from the judgment of Pearson LJ in Kenny v. Preen [1963] 1 QB 499, as follows:

Mr. Seitler put before me two alternative submissions. Firstly, the terms of the Lease expressly permit the landlord to carry out these works and hence there is no breach of the covenant, nor of the implied obligation not to derogate from grant. Secondly, in any event, there is no proposed interference with what was demised, the subject matter of the grant.

As to the first argument he relied on Clause 3.1 and para. 4 of Part 3 of Schedule 1 to the Lease. I have already read both provisions. In Clause 3.1 he relies in particular on the words,

I will say at once that I do not accept this last submission. In American Cyanamid v. Ethicon Lord Diplock said at p.407:

Some questions of construction are really very straightforward and can be decided on an application like this after quite short argument. But other questions of construction can be notoriously elusive. In the present case, while one can readily understand the argument for the construction put forward by Mr. Seitler as falling within the literal meaning of the words on the page, there are undoubtedly arguments the other way. As Mr. Gaunt said, the clause is a fairly standard sort of clause introduced into leases to act as a consent under Section 3 of the Prescription Act 1832 and hence prevent the tenant acquiring the right to light over the adjoining land of his own landlord, which would prevent the landlord from developing such land. Hence the words refer in particular to the landlord erecting buildings notwithstanding any diminution in the light or air which might be enjoyed by the tenant. Its primary purpose is therefore nothing to do with the right of a landlord to develop or alter the very building that is demised, here CentrePoint Tower. Any clause such as this in a contract must be read not as a detached and literal exercise in semantics, but with a view to how it would be understood by the reasonable objective observer. It must be doubtful, given that its primary purpose is to permit development on adjoining land, if the reasonable objective observer would understand it as saying anything about the right of a landlord to carry out works to the exterior of the very building demised. As Mr. Gaunt pointed out, if construed in the way that Mr. Seitler invites me to, it would appear to permit the landlord to erect permanent hoardings outside the windows of the claimant's restaurant, for example for the purpose of advertisement or even simply out of spite or to drive the tenant out of business, without any requirement for the landlord to have acted reasonably.

In these circumstances I am very doubtful whether the intention behind Clause 3.1 was to permit the landlord to block the windows on Levels 31 to 33; and rather doubtful that this is its effect in law. This seems to me to be a point of construction of some difficulty that is unsuitable for determination after the short argument that is necessarily all that is available on an application such as this.

Mr. Seitler next relied on para. 4 of Part 3 of Schedule 1. Here the words relied on were these:

Here I think Mr. Seitler's argument is less promising. It is true that the external cladding is undeniably property belonging to the landlord and not demised by the Lease. But cleaning and repairing it, which is what is proposed to be done, is not obviously either using it or building on it, and although Mr. Seitler did submit that repair was altering it, I think it must be doubtful if this is so. Again, I reach no decided conclusion on the point, which will remain open to the parties to argue at any trial or subsequent occasion. But, I am far from persuaded that this argument by itself is a complete answer to the claimant's claim.

Mr. Seitler's next point was that there was in any event no breach of the covenant for quiet enjoyment or of the implied obligation not to derogate from grant in what was proposed. He referred me to the judgment of Younger LJ in Harmer v. Jumbil (Nigeria) Tin Areas Ltd. [1921] 1 Ch. 200 at p.225 where he said:

Here, Mr. Seitler said the grant was of demised premises for use as a restaurant and bar and/or members' club. The premises could still be used for these purposes. There would be no lunch-time or evening working and although he accepted, of course, that the view would be interfered with, there was no demise of a right of view or, for that matter, a right of light. Hence, he said, there was no interference with a thing demised; nor any taking away with one hand what had been granted with the other.

Again, I do not accept that this point is suitable for determination at the interlocutory stage. Mr. Seitler may well be right, having regard to what Lord Millett said in Southwark v. Mills, that there is no breach of a covenant for quiet enjoyment if the only interference is with a view and the demise does not include any right to a view. However, despite statements, including by Lord Millett himself, that there is little, if any, difference between the covenant for quiet enjoyment and the implied obligation not to derogate from the grant, it is not obvious to me that they are in fact in all cases the same.

In Chartered Trust v. Davies Henry LJ at p.401 referred to what Stirling J had said as long ago as 1894 in Aldin v. Latimer Clarke, Muirhead & Co. [1894] 2 Ch. 438 where he had said this:

Thus, in Harmer v. Jumbil itself, the question was whether the landlord, by building on his retained land, rendered it impossible for the tenant to use thedemised land as an explosives magazine, the purpose for which it had been expressly granted. Younger LJ said at p.226:

This language, whether that of “frustrating the purpose” for which, in the contemplation of both parties, the land was leased or “completely effective to stop” its continued use for the purpose for which it was let, does seem to me to contemplate a rather wider inquiry than the narrow question whether there has been an interference in what has been demised in the sense of property rights. In the present case, Mr. Condou's evidence is that the purpose of the letting was to enable the claimant to run a restaurant with a spectacular view and I would have thought it was distinctly arguable that for the landlord to frustrate that purpose by blocking the view would be capable of coming within the principle of non-derogation of grant, even if Mr. Seitler is right that this is not a breach of the covenant for quiet enjoyment.

However, I do not need to decide this point. All I need to, and do, decide is that there is a serious question to be tried as to whether the proposed acts of the landlords are, on the true construction of the Lease capable of either constituting a breach of the covenant for quiet enjoyment or of the implied obligation not to derogate from their grant. I therefore reject the submission that the terms of the Lease by themselves are a conclusive answer to this application on the basis that there is no serious issue to be tried.

The next question is whether, on the facts, there is a realistic prospect of the claimant establishing that the defendants would be in breach of their obligations inproceeding to carry out the repairs using scaffolding rather than cradles. Here, I consider that the defendants are on rather stronger ground. Considering the matter first as a question of principle, the position seems to me to be this:

This is what I regard Goldmile as establishing. In para. 8 Sedley LJ refers to the need to fit the two provisions together. In paras. 9 and 10 he, in effect, says that neither provision has primacy, a point which he picks up again at the end of para. 15 where, after referring to the speech of the Lord Loreburn LC in Lyttelton Times Company Ltd. v. Warners Ltd. [1907] AC 476, he says:

Mr. Gaunt naturally seizes on the words in para. 10 where Sedley LJ refers to a threshold for disturbance by repairs of 'all reasonable precautions'. But, there is a danger, as always, of taking words from a judgment and construing them like a statute without regard to the context. The context was that the District Judge had found on the facts that the landlord had taken all reasonable steps, as appears from para. 5, and there was no appeal from this finding on the facts, as appears from para. 18. It was therefore enough for the landlord in the Court of Appeal to persuade the court that the test was one of reasonableness rather than one of "all possible steps". In preferring the landlord's submission the Court of Appeal did not have to consider the precise formulation of the reasonableness test. They only had to choose between the two rival views put forward, namely whether the tenant's rights had priority ("all possible steps") or the rights had parity ("all reasonable steps"). They chose the latter and to that extent no doubt it is binding on me. However, I do not regard the words they used as mandating the outcome where what is in issue is not which right has primacy - which was the issue in that case - but precisely what, on the facts of a very different case, would amount to a failure by the landlord to take the reasonable and proper steps required.

I have summarised the facts, so far as they appear from the evidence filed for the purposes of this application. It was, of course, accepted by Mr. Seitler that I could not resolve, on this application, the question whether cradles are or are not a viable and practical method of access for the repairs, a view advanced with tenacity by Mr. Boucher and consistently rejected by Mr. King. But what I can conclude from the facts as they appear at this stage of the proceedings is that the defendants, as landlords, have thoroughly investigated the question of whether cradles are a suitable alternative to scaffolding and concluded with the benefit of professional advice that they are not. This has involved a lengthy, and apparently detailed, exercise by their principal contractors, Sir Robert McAlpine, in which cradles were considered along with all other possible methods of access; a review of the decision after receipt of Pell Frischmann's July 2013 report indicating that repairs to the upper storeys should be given priority; advice, after Mr. Boucher's report had been received, from the defendants’ civil engineers, Ove Arup (and from Mr. King,an apparently competent and experienced individual) which rejected the use of cradles as impractical; further advice from Ove Arup after receipt of Mr. Boucher's second report; advice from Pell Frischmann, who have probably more knowledge of the engineering of this building than anyone else, as to technical matters relating to the load-bearing capabilities of the building and casting doubt on Mr. Boucher's proposed solution; and, for what it is worth, the reported comments of Mr. King and Mr. Hitchens after receipt of Mr. Boucher's third report in which they unhesitatingly stand by their advice.

In these circumstances it seems to me that the claimant faces a very uphill task in establishing that the landlords, in following the consistent advice of their contractors, civil engineers and structural engineers, would be acting in breach of covenant. If the test is one of reasonableness I find it difficult to accept that the court at trial would find the landlords to have acted unreasonably in these circumstances, whether or not it finds that Mr. Boucher's proposal is in fact a viable one. It is the landlords who have to place the contracts and with the help, no doubt, of their professional advisers devise and supervise the necessary works. The notion that the landlords can be held to be in breach of covenant in placing the contracts as advised by their apparently competent and reputable professional advisers, is one that I find surprising.

Mr. Gaunt relied on the fact that Sir Robert McAlpine, and Mr. King in his first report, did not consider at all the impact upon the claimant's business, as I have referred to above. Although Mr. King in his second report did refer to it, Mr. Gaunt said that this was merely paying lip service to the notion. He said that this failure to take account of relevant considerations rendered the advice flawed. I do not regard this point as likely to assist the claimant significantly. It is not surprising that Mr. Taylor and Mr. King, whose respective expertise is not in the running of restaurants but in project management and civil engineering, have not sought to assess the impact on the claimant's business. They have assessed the means of access from a technical point of view. Mr. King, however, was well aware from receipt of Mr. Boucher's first report that it was being said that scaffolding and Monarflex would adversely impact the claimant's business. If he had thought cradles were a practical solution he would no doubt have said so, even if his own preference was for scaffolding. But his reports are unequivocal. He does not regard cradles as a practical solution. In these circumstances, failure to say any more about the impact on the tenant's business than he does does not, I think, undermine or invalidate his advice.

I am very conscious that I have not heard the evidence and should not try and resolve conflicts of evidence on the basis of witness statements prepared for an urgent application, especially where it involves matters of technical expertise. I therefore do not think I should, or could, conclude that there is on this ground no serious issue to be tried. But, I regard the difficulties which I see in the claimant'scase in this respect as highly relevant to the question of the appropriateness of relief. In my view, therefore, although the claimant does have an arguable case it is one which I regard, on the evidence before me, as facing significant difficulties.

Following the guidance given by Lord Diplock in American Cyanamid v. Ethicon the next question is whether the claimant would be adequately compensated by an award of damages if no injunction is granted and it turns out at trial that the defendants are in fact in breach of covenant. Mr. Condou's evidence is that the lack of a view will have a devastating effect on the claimant's business. Indeed, he goes so far as to say that it will "destroy Paramount's business within a matter of days". Mr. Seitler criticises this as hyperbole. I think one is entitled to be somewhat sceptical as to whether it will really have the effect of closing the business altogether and whether, even if there is a closure for what is now envisaged to be some four months of works, it will be impossible to re-open again. Mr. Condou's fears may therefore be over-stated. Nevertheless, Mr. Condou is an experienced restaurateur of around thirty years' experience of the restaurant industry in London and his views, untested as they must necessarily be, have to be taken as genuinely held. I accept, therefore, that there is, at the lowest, a significant risk of serious damage to the claimant's business which may even lead to its permanent closure.

Mr. Seitler says that even if it does, and even if the defendants are found to have been in breach of covenant, damages will adequately compensate the claimant. Although there is no formal evidence he told me on instructions that the defendants have assets valued at £189 million and debt of under £50 million. So, the defendants have net assets of well over £100 million. I accept on this basis that the defendants are able to pay any damages which might be awarded. I also accept that the claimant's business is ultimately one of making profits and that in one sense, therefore, the payment of damages to compensate the claimant for loss of profits, or for loss of its business in its entirety, would leave the claimant fully compensated according to law.

However, I do not think this is a complete answer. There are two aspects to this. First, the assessment of damages for loss of profits or loss of a business in its entirety although, as Mr. Seitler says, routinely undertaken is always a matter of some difficulty and runs the risk of under-compensation. Second, although the claimant is a limited company and its business is, as I have said, a vehicle for making profits, to regard it solely in that light is to ignore the reality which is that Mr. Condou has built up Paramount's business since 2008 and it is obviously a venture that is important to him personally. I accept, as Mr. Gaunt said, that money, whether in the form of damages or compensation, for example, for compulsory purchase, can often not fully compensate for the destruction of a business which has been built up from nothing and which inevitably represents to someone in Mr. Condou's position more than just a source of money.

I conclude, therefore, that although in principle the claimant's potential loss can be compensated by an award of damages, there will be a risk of some uncompensatable disadvantage to the claimant in the possible destruction of what is currently a flourishing enterprise.

The next question is whether, if an injunction is granted and the defendants were to succeed at trial in establishing their right to proceed to carry out the repairs using scaffolding, they would be adequately compensated by the claimant's cross- undertaking in damages. Here I think the position is rather simpler. The defendants’ only loss is financial. The claimant has volunteered a suitable undertaking. Therefore the only question is whether the claimant has the resources to meet any damages that the defendants might suffer. The parties are agreed that a trial would take about a week and if an injunction were granted, both would readily agree to expedition. In those circumstances a trial would, I think, take place about three months from now. I was told by Mr. Seitler that the start of the contract has already been delayed by this application being brought and if no injunction is granted, the defendants would proceed straightaway with about a fortnight or so's lead-in time before the work actually commenced. The practical effect of granting an injunction would therefore be to delay the start of the works by some three months or so.

The defendants’ evidence is that a three month delay would cause them losses estimated at some £3.75 million. By far the bulk of these costs - over £3.5 million - is attributable to the knock-on impact of a delayed start of the main refurbishment works to the Centre Point Tower. Mr. Gaunt says that there is really no evidence to support this or to explain why the refurbishment works could not proceed simultaneously with works to the façade. He points to a statement in Mr. Markanday's witness statement at para. 2.4 that:

However, as with Mr. Condou's evidence, although the defendants’ assertion that a delay in the façade works would cause a knock-on delay in the refurbishment works has not been tested, it seems to me that I must proceed on the basis that there is at least a significant risk that this may indeed be the case. Mr. Seitler in fact told me on instructions that although the defendants had indeed hoped to be able to carry out both the façade works and the refurbishment simultaneously, they were advised that this was not possible for certain technical reasons which I need not detail. That advice may, or may not, be correct, but I see no reason not to accept that that is the advice that the defendants have received, which explains why the defendants have resolved, as their loss schedule asserts, that the works must takeplace sequentially. I will therefore approach this on the basis there is, at the lowest, a substantial risk that the defendants’ losses may be of the order of £3.75 million.

Is the claimant able to meet such losses under its cross-undertaking? The evidence before me gives me no confidence that it can. I have before me management accounts for the years ending September 2008 to 2012 and the two months of October and November 2013 and audited accounts, as filed at Companies House, for the years ended September 2008 to September 2012. These reveal significant discrepancies between the two sets of accounts which, despite inquiry, have not been sufficiently or adequately explained. For example, the management accounts showed the earnings before income tax for the year to September 2011 to be some £180,000 whereas in the audited accounts the corresponding figure is some £84,000. More pertinently, however, the company is shown in the most recent management accounts to have current liabilities at November 2013 of over £200,000. It is true that the balance sheet also shows fixed assets of some £4.4 million, but the audited accounts for 2010 showed that by far the bulk of this - at that date over £4.3 million out of a total of £4.6 million - represented short leasehold property, with the balance being plant and machinery and fixtures, fittings and equipment. This accords with Mr. Condou's evidence that the claimant spent £5 million on refurbishing and, no doubt, fitting out its premises.

It is self-evident that the money spent on refurbishment is not an asset that can be realised save by selling the property. I think I can also take judicial notice that the mere fact that £5 million was spent in 2008 on refurbishing the restaurant premises does not mean that the Lease has a current value of that amount. In fact, I have no evidence at all that the claimant's Lease has any market value or, indeed, what value, if any, the claimant's business may have as a going concern. I certainly do not think I can, on this state of the evidence, be at all confident that the claimant would be able, if it lost a five-day trial and had to bear its own costs as well as those of the defendants, to meet £3.75 million or anything like it in addition by way of liability under the cross-undertaking in damages.

As I read American Cyanamid v. Ethicon, that does not preclude the court from nonetheless granting an interlocutory injunction. However, it does mean that I have to consider the balance of convenience - see the paragraph in Lord Diplock's speech at p.408E to F which reads as follows:

Here, in my judgment, the factors all point one way. Lord Diplock, at p.409A said,

For the reasons I have given I do not think the balance of uncompensatable disadvantage is, in fact, in this case one which does not differ widely. But, even if I had thought that, I would have concluded for the reasons I have sought to explain above, that the defendants appear on the evidence before me to have a disproportionately stronger case than the claimant.

Finally, Mr. Seitler relies on one other factor, which is the practical effect of granting the injunction in the form sought. The form of injunction sought is, in fact, twofold, namely as follows:

The second of these injunctions hands over to the claimant the right to dictate to the defendants what works are to be carried out. I accept Mr. Seitler's submission that it is a surprising submission that the tenant can tell the landlord how the landlord is to carry out works for which the landlord is responsible. This would cut across what I regard as the prima facie right of a landlord to choose for itself how to carry out works of repair.

The first form of injunction is, in form, simply negative but in effect it is positive as (1) there is no doubt that the landlords not only wish to, but are obliged, at least to the claimant, and no doubt to other tenants as well, to carry out these repairs, some of them as a matter of urgency; and (2) no-one is contending that the work can be carried out in any other way other than by using scaffolding or cradles. The practical effect, therefore, of granting an injunction in the first form is to force the landlord to carry out the work using cradles. In circumstances where their own contractors and professional advisers have consistently and strongly advised against this, I entertain very real doubts as to whether a court would force the landlords into this position. It is not the practice of the court to grant mandatory injunctions requiring work to be done in a particular way and although this would not be a mandatory injunction in form, its practical effect would not be far different. In my judgment therefore there is, at the lowest, a very real doubt whether even if the claimant made out its claim at trial, the court would grant the injunctions sought.

For all these reasons I find that the balance of convenience points inevitably to refusing an injunction and leaving the defendants to proceed with the contract as they have been advised to do. They will do so in the full knowledge that it is said by the claimant that they will thereby be committing a breach of covenant and that if this is so, they will be liable for damages. However, this is, in my judgment, a more appropriate place to strike the balance between the interests of these parties than either to require the landlords to put their plans on hold or to require them to proceed with works against the advice of their own professional advisers.

I will therefore dismiss this application.