Tejani v Fitzroy Place Residential Ltd & Anor

This judgment concerns a short costs point, but lying behind it are more significant questions of practice as to the proper approach to pleading a statement of case and to applications to strike out.

By a contract dated 5 July 2012, Nazirali Sharif Tejani agreed to purchase the leasehold interest in apartment 801, Block 7, Fitzroy Place, London W1 for £2,595,000 from Fitzroy Place Residential Limited. The apartment was purchased off plan pursuant to a contract between Mr Tejani, Fitzroy Place and the developer, 2-10 Mortimer Street GP Limited Partnership.

The development was not completed until May 2016 when Mr Tejani entered into a lease with Fitzroy Place. By a claim issued on 1 May 2020 against both the freeholder and the developer, Mr Tejani complains that the apartment is blighted by an unexplained noise. He pleads that the noise can be heard throughout the apartment, that it is intermittent, variable in volume, that it happens both at day and at night, that it is loud enough to wake him and his wife when sleeping, that it cannot be suppressed or masked and that attempts to solve the problem have not been successful.

Mr Tejani pleads that the apartment is not fit for habitation and that the defendants are liable for breach of s.1 of the Defective Premises Act 1972. Further, he pleads a breach of clause 5.6 of the 2012 contract by which the developer agreed to take reasonable steps to procure that defects that were the responsibility of the building contractors would be remedied as soon as reasonably practicable, and a breach of clause 4.1 of the lease by which the freeholder covenanted to ensure that Mr Tejani would enjoy quiet possession of the apartment. In addition, he pleaded that the noise amounted to a nuisance and that the Defendants had caused or permitted such nuisance.

As to loss and damage, Mr Tejani pleaded at paragraph 31:

“Further as a result of the noise the Claimant was unable to rent out the Apartment. The Apartment was and is not habitable and accordingly the Claimant could not rent the property causing further loss and damage and lost rental income.”

Further, at paragraph 37, he pleaded:

“The matters complained of have caused annoyance, discomfort, distress and loss of amenity to the Claimant who has been unable to occupy the property as he intended when he purchased it and is unable to rent the property out to a tenant.”

After pleading the nuisance, he added, at paragraph 46:

“That breach is an ongoing breach causing the Claimant loss and damage.”

Under the heading “PARTICULARS OF LOSS & DAMAGE”, he then pleaded the following particulars at paragraphs 47-51:

“47.

The Claimant is entitled to a refund of the purchase price of the Apartment being the total sum paid on completion to the Defendants being £2,595,000.00 plus interest.

48.

In addition, the Claimant is entitled, for breach of the Sale and Purchase agreement, to claim the losses caused including;

a.

The costs ancillary to the purchase of the property namely solicitors, and agents costs together with other miscellaneous costs totalling £14,597.73 as set out in the Completion statement together with;

b.

Stamp duty paid to HMRC in the sum of £225,150.00;

c.

In addition, after completion, but before the Claimant was aware of the Noise defect, he improved the property and furnished it in the total sum of £49,269.20 for improvements and £63,961.27 for furnishings. The purpose of these works was in order to maximise his rental income for letting the Apartment. It was a reasonably foreseeable consequence of a purchaser buying a property of this nature that they would seek to rent the property and would furnish it and improve it to maximise its potential rental income;

d.

Furthermore, it was the Claimant’s intention to rent the property out to a tenant at the rate of per week £2,000. The property has to date stood empty for 205 weeks being the date of completion until 01 March 2020 giving a total loss of rental income of £400,000 accruing weekly at the rate of £2,000 per week.

49.

The total sum claimed excluding interest is £3,357,978.20.

50.

The Claimant also claims interest at the rate of 8% per annum in accordance with section 35A the Senior Courts 1981 (sic).

51.

Alternatively, the Claimant claims interest at such rates and for such periods as the court thinks fit.”

On 11 June 2020, the Defendants issued an application seeking to strike out parts of the Particulars of Claim pursuant to rr.3.4(2)(a) and (b) of the Civil Procedure Rules 1998. The draft order served with the application notice clarified that the target of the strike-out was paragraphs 47-51 of the Particulars of Claim that I have quoted above. In addition, the Defendants sought a number of orders consequential upon the strike-out:

The application was supported by the witness statement of Keith Conway of Clyde & Co. LLP, the solicitor acting for the Defendants. Mr Conway explained, at paragraph 1 of his statement, that it was made in support of the strike-out application, but continued:

“Further, the Defendants also put the Claimant on notice that it (sic) .will use this application hearing to apply for an order in relation to the Part 18 requests that are being served at the same time as this application. This is in the event that the Claimant fails to deal with the Part 18 requests adequately. Thirdly, the Defendants have been seeking to deal with the issue raised in this claim. The Claimant has in recent months refused the Defendants’ contractors access to his flat in order for remedial works to be carried out. The Defendants seek an order staying proceedings after the point that the Claimant has remedied his defective Particulars of Claim.”

Kay Puvanesan, the Claimant’s junior counsel who is also conducting this litigation on behalf of his client, filed a witness statement in response dated 8 July 2020. Subsequently, leading counsel on each side were able to discuss this application. As a result of those discussions, this application has been compromised subject only to the question of costs. The parties have agreed the following directions:

The recitals to the parties’ draft order also records Mr Tejani’s agreement to allow Fitzroy Place and its agents access to his apartment for the purposes of inspection, further diagnostic testing and any necessary remedial works.

The parties’ agreement is, however, silent as to what should happen to the Defendants’ application. Gary Blaker QC, leading counsel for the Defendants, argues that it should be adjourned generally with liberty to restore. Such course would, he submits, allow the Defendants to restore their application in the event that the Amended Particulars of Claim do not rectify the perceived defect, alternatively if there is some new problem with the statement of case. David Berkley QC, leading counsel for the Claimant, resists such order and submits that the application has effectively been compromised. Accordingly, it should, he submits be dismissed.

The strike-out application was listed for hearing today. Absent any order adjourning the hearing, it fell to the Defendants either to argue their application or withdraw it. The Defendants have taken neither course, but argue that in any event they have obtained the relief that they really sought by their application, namely the amendment of the allegedly defective Particulars of Claim. In those circumstances, I consider that the June application is now at an end. If the Defendants had wished to argue that paragraphs 47-51 should be struck out, their opportunity was this morning.

Of course, the agreed directions give Mr Tejani general permission to amend his Particulars of Claim in respect of issues of loss and damage. Given that agreed order, unusually he will not need to obtain the Defendants’ agreement to his proposed amendments or seek further permission of the court. As both counsel recognised, the Defendants’ remedy if Mr Tejani pleads some new case that either discloses no reasonable grounds for bringing the claim or is an abuse of the court’s process is to make an application pursuant to r.3.4(2). In so far as such application seeks to attack some new formulation of Mr Tejani’s case then it should be the subject of a fresh application and is not a proper basis for adjourning the current application.

I therefore dismiss the application.

Mr Blaker argues that the Defendants’ application has been conceded and that, since his clients were the successful parties, the general rule pursuant to r.44.2 is that they should recover their costs. Alternatively, he argues that the application was properly made and that the Particulars of Claim were very obviously defective. By his oral submissions, Mr Blaker focused on the following matters:

Further, by his written submissions, Mr Blaker contended that the Part 18 element of the application remained live until Mr Tejani’s belated agreement to provide further information by 2 August 2020, and that the claim was not supported by diary entries detailing the noise problems.

The application notice sought to strike out paragraphs 47-51 of the Particulars of Claim. The settlement does not involve any strike-out and imposes no obligation upon the Claimant to remove those passages from his Particulars of Claim. He simply has an unfettered right to amend his pleading generally as to loss and damage. I do not accept that the Claimant has conceded the application and that the Defendants have secured the relief sought.

I turn therefore to the merits of the underlying application. It was made pursuant to rules 3.4(2)(a) and (b) which provide:

“The court may strike out a statement of case if it appears to the court–

(a)

that the statement of case discloses no reasonable grounds for bringing or defending the claim;

(b)

that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; …”

The principles are not controversial:

In my judgment, the argument that paragraphs 47-51 of these Particulars of Claim should be struck out because they fail to plead the evidence relied upon is hopelessly misconceived. It entirely loses sight of the purpose of statements of case:

Equally, there is no merit in Mr Blaker’s submission that Mr Tejani should have pleaded the expert evidence that supported his claim. Not only do the Defendants again insist on evidence, but the parties cannot of course rely on expert evidence without the permission of the court: r.35.4. Exceptionally, paragraph 4.3 of Practice Direction 16 requires claimants in personal injury claims to serve a medical report with their Particulars of Claim. There is, however, no general rule requiring the service of expert evidence at the pleading stage.

Further, there is no merit in the complaint that Mr Tejani did not plead the steps that he had taken to mitigate his losses. On analysis, Mr Blaker was again seeking evidence, but in any event it is of course for the Defendants to plead and prove any alleged failure to mitigate loss. Mr Tejani was under no obligation to plead anything about the issue in his Particulars of Claim, unless he sought damages for additional losses incurred in a reasonable attempt to mitigate his loss.

More generally, I reject Mr Blaker’s overarching submission that his clients do not know the case that they have to meet. Whether it be a good case is a matter for trial, but the pleading makes clear the nature of the noise problem and that Mr Tejani claims that his apartment is as a result not fit for habitation, worthless and incapable of being let. One instinctively suspects that he overstates the position, but that is an issue for evidence and not a strike-out application under r.3.4. It is a perfectly intelligible case with which the Defendants can engage.

Mr Blaker is right to observe that the current formulation of Mr Tejani’s losses appears to involve double counting and that he probably cannot recover both the value of the property, consequential expenses and interest and his alleged rental loss. I suspect it is more likely that at trial Mr Tejani will argue his rental loss in the alternative in the event that he fails to succeed on his primary case. That is not, however, a reason to strike out either formulation and Mr Blaker can perfectly easily plead his objection that the claim appears to seek double recovery in his clients’ Defence.

Finally, there is no merit in the argument that Mr Tejani should pay costs because he has belatedly agreed to give further information. This was not an application for an order under Part 18. Indeed, it would have been premature to have sought an order for further information given that the Defendants only served their Part 18 request with their strike-out application.

For these reasons, this was therefore a bad application that, in my judgment, would have been dismissed had it not been compromised. Accordingly, I reject the Defendants’ argument that they should have their costs. While I did not call upon Mr Berkley to deal with the merits of the Defendants’ claim for an immediate costs order, he made plain that he did not resile from the Claimant’s pre-hearing position that the proper order was for the Defendants’ costs in case, although he did seek a different order in respect of the costs of today. I remarked during the course of argument as to the surprising lack of ambition in such position, but - upon the Claimant’s express concession - I award the Defendants their costs of the application (but not this hearing) in the case, and will now hear counsel as to the discrete costs of this hearing.