Castle Trustee Ltd & Ors v Bombay Palace Restaurant Ltd

This was the Claimants’ application for summary judgment which the parties agreed should be heard at the PTR. At the conclusion of the hearing, I decided that (a) the Defendant should have permission to defend, conditional upon it having lodged and served an application for relief from sanctions by noon on 2^nd June 2017; and (b) the Defendant making a payment into Court in the sum of £148,000 by no later than 4.30pm on 9^th June 2017. Absent compliance with those conditions, there would be judgment for the Claimants in the sum of £1,258,530.04 and interest to be assessed. I also ordered that the Defendant should pay the Claimants’ costs of the application summarily assessed in the sum of £24,000 by no later than 4.30pm on 9^th June 2017.

Having regard to the hour at which the hearing concluded, I said that I would give my reasons in due course. These are those reasons.

The Defendant held a lease for a restaurant at 50 Connaught Street which occupies part of the ground floor of a large block of flats known as 2 Hyde Park Square, London, W2. It appears from paragraphs 3-8 and 9A of the Amended Particulars of Claim that there have been various assignments of the claims against the Defendant between the Claimants.

The background is that the Fourth Claimant wished to redevelop the block to create 36 new luxury apartments. In order to do so, it was necessary to modify certain extract and ventilation services that ran through the restaurant leased by the Defendant. It was necessary to modify the ceilings in the restaurant and the roof above the restaurant kitchen and carry out extensive external works including the construction of a new entrance for the restaurant. The development works could only be carried out with access to the restaurant. For that purpose, the restaurant would have to be closed. That required the consent of the Defendant. In order to procure that consent, Liberty agreed to carry out works to the restaurant for the benefit of the Defendant and also to pay closure compensation to the Defendant. Those arrangements were given effect to by a Contract dated 8^th April 2010 between the Fourth Claimant and the Third Claimant as to one part and the Defendant as to the second part.

The dispute between the parties concerns the extent of the closure compensation and claims for payment for alleged additional works carried out at the restaurant.

The Defendant referred its claim for closure compensation to adjudication in late 2012. That claim was disputed and Liberty also sought payment for additional works. The Adjudicator determined that the sum of £147,209 was due to the Defendant.

These proceedings were not begun until 19^th December 2014. There was an Early Neutral Evaluation in December 2015. Thereafter, the Claimants took no steps in the action until June 2016 when a Draft Amended Particulars of Claim was provided. A CMC took place on 18^th November 2016 at which directions were given for the exchange of Witness Statements, Experts’ Reports and a Trial Date of 17^th July 2017.

The Defendant’s solicitors, Glovers Solicitors LLP, came off the record on 16^th March 2017. The Defendant went into Creditors Voluntary Liquidation, and Joint Liquidators were appointed, on 31^st March 2017. On 17^th May 2017, the Claimants’ solicitors sent the Defendant’s Liquidators a Notice of an Application for Summary Judgment. On 19^th May 2017, Glovers came back on the record for the Liquidators.

Against that background, the Claimants are understandably concerned about investing money in litigation which might result in little recovery, even if successful. Hence, the application for summary judgment.

The claim is set out at paragraph 25.2 of the Witness Statement of Mr Harris dated 17^th May 2017 in support of the application for summary judgment. Mr Parker QC for the Claimants says that that evidence is unchallenged. Further, that there is no evidence to challenge quantum, that the time for service of evidence has passed and there is no application for relief from sanctions.

Mr Stansfield QC for the Defendant referred me to the disputes summarised at pages 90-140 of the Hearing Bundle, identifying that they include issues as to whether additional works were required because of other works that Liberty wished to carry out and issues regarding the extent of additional works and of their valuation.

The claim arises under Clause 7.7.2 of the Agreement dated 8^th April 2010. Relevantly that clause provides:

“BP will be obliged to cease trading from the First Property as a direct consequence of the carrying out of part of the Restaurant Works and the Building Programme anticipates such closure will be for a period of four weeks and Liberty shall pay to BP the sum of £40,000.00 for each week that BP is closed and so in proportion for a period of less than one week during which the First Property remains unopen for trading due directly to the carrying out of the Restaurant Works.”

Mr Parker reminds me of what was said by Coulson J on an earlier application in this case in a Judgment given on 31^st March 2017 [2017] EWHC *** (TCC) at paragraph 17:

“If a defendant orders works which delays a contract, then unless there is an extension of time provision which covers it – and here there is not – time is rendered at large and the sort of payment of a sum due as a delay, such as the £40,000, would not be due.”

Mr Parker says that there is no real prospect of the Defendant showing that no part of the period for which the restaurant was closed was for additional works which the Defendant had requested. He says that the Defendant has to show that no part of the closure was due to works which they had wanted.

Mr Stansfield QC told me that the Defendant’s case is that there was no work instructed by them to the entrance. Without the entrance, the restaurant could not open. He points out that the Defendant had no power to order extras. Therefore, they could not have done so. Further, because of that, there could have been no act of prevention.

It seemed to me, that on balance, the Defendant has an arguable defence to the claims. I was unable to conclude that, in the language of Part 24.2(a)(ii) the “Defendant has no real prospect of successfully defending the claim or issue”.

In my judgment, it would have been wrong to penalise the Defendant for its evidential difficulties when no application for relief from sanctions had yet been heard. I was told that in the Defence, the Defendant admitted that the sum of £148,244.78 is due to Liberty (see paragraph 45(3)). Thus, I gave permission to defend conditional upon that sum (rounded to £148,000) being brought into Court by 9^th June 2017 and the lodging and serving of an application for relief from sanctions by 2^nd June 2017. I also thought it appropriate that the Defendant should pay the Claimants’ costs of the application for summary judgment.