NO: HC 0001148
BAILII Citation Number: [2000] EWHC 459 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand
London WC2
Monday 17th April 2000

B e f o r e:
MR JUSTICE PUMFREY
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LONDON BAGGAGE COMPANY
Claimant

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RAILTRACK PLC
Defendant
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Tape Transcript of Smith Bernal Reporting Limited,
180 Fleet Street, London EC4A 2HG
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MR LORD appeared on behalf of the Claimant
MR COLE appeared on behalf of the Defendant
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JUDGMENT
MR JUSTICE PUMFREY:  In this action the claimant, the London     Baggage Company, Charing Cross Limited (London Baggage),     seeks a declaration that it occupies Unit 26 on the     station concourse at Charing Cross station pursuant to a     periodic tenancy, to which Part II of the Landlord and     Tenant Act 1954 applies.  It also seeks an injunction to     restrain the defendant, Railtrack Plc (Railtrack) from     entering the premises or seeking to evict London Baggage     from them.

          As its name may suggest, London Baggage runs the     left luggage office at Charing Cross.  It entered into a     lease with Railtrack on 15th July 1996, which is     expressed to have commenced on 30th October 1994.  The     tenancy was a periodic tenancy and the minimum yearly     rent payable was £18,000 with an additional rent     computed on the basis of the annual cross receipts of     the business carried on at the premises.           The minimum yearly rent was payable in advance on     the usual quarter days.  The additional rent was payable     annually in arrears but with a prepayment on the usual     quarter days and estimated additional rent, if any, in     advance.

          On 23rd February 1998 Railtrack served a notice     under section 25 of the Landlord and Tenant Act 1954     specifying ground (f) under section 30 as the ground     upon which the landlord would oppose the grant of any     new tenancy.

          Ground (f) is 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 works of construction on the holding or part     thereof and that he could not reasonably do so without     obtaining possession of the holding.

          The original tenancy terminated on 29th September     1998.  The last date for the tenant's notice to the     landlord had been 22nd April 1998.  No such notice was     given.  Accordingly, in June, the landlord's agent CB     Hillier Parker made an entry on its computer system     intended to ensure that no rent paid to Hillier Parker     would be transferred to Railtrack without the latter's     express consent.  I call this the stop notice.

          After the termination of the tenancy in September     rent was tendered to Hillier Parker on five occasions:     on 14th January 1999, by CHAPS transfer; 26th March     1999, by CHAPS; on 28th June by CHAPS and on 25th     October by CHAPS.  There was one final tender on 25th     January 2000 by cheque.

          None of the payments was transferred by CB Hillier     Parker to Railtrack.  One only, that of 26th March 1999     was returned to London Baggage.  The remaining payments     were retained by Hillier Parker.  London Baggage     continued in occupation at Unit 26.  Threatened with a     notice to quit in February 2000, London Baggage started     these proceedings on 14th March 2000.  On 21st March     2000, Lightman J made an order by consent for an     expedited trial which took place before me on 13th April     2000.

          It will be apparent that London Baggage now     asserts that it now holds Unit 26 on a periodic     tenancy.  It relies, principally, upon the payment and     acceptance of rent.  Railtrack assert that London     Baggage is a tenant at will, holding over after the     determination of its existing periodic tenancy.  It     being said that in all the circumstances it is not     possible to infer a periodic tenancy.

          Before me, Mr Locksley, the managing Director of     London Baggage, gave evidence on the latter's behalf.     He was a frank witness. He was obviously annoyed and     upset at the way in which he felt that he had been     treated by Railtrack, but I do not think this coloured     his evidence.  Mr Quinn, Miss Holder, Mr Ames and Miss     Choudly respectively and an Associate Director of CB     Hillier Parker, the retail portfolio manager of     Railtrack, the commercial manager, Major Stations of     Railtrack, and a credit controller of CB Hillier Parker     gave evidence for Railtrack.  The reliability of their     evidence was not challenged.

          The history of the relationship between the     parties is as follows:  when Mr Locksley entered into     the lease on behalf of London Baggage in July 1996,     Railtrack already had in mind to redevelop the concourse     in such a way that Unit 26 would not continue to be     suitable for the use as a left luggage office.  London     Baggage had gone into occupation 2 years previously, but     it was not suggested that Mr Locksley was aware of any     redevelopment proposals which would affect Unit 26 until     February 1998.

          By 23rd February 1999, the date of the notice     under section 25, Railtrack had worked out a proposal     for the development of the concourse, which would     involve removing the left luggage office to a position     halfway down platforms 5 and 6 and extending the     neighbouring branch of W H Smith into Unit 26.

          This proposal was not communicated to or discussed     directly with Mr Locksley.  About 1 month before the     section 21 notice, surveyors had visited Unit 26,     informing the staff that the office was to be closed and     moved onto the platform.  Another surveyor, this time     from W H Smith, presented himself to the left luggage     office, wanting to measure up the day before the section     25 notice was received.

          This resulted in the first of a number of protests     from Mr Locksley to Railtrack.  It is plain from the     documents that Railtrack were themselves unhappy at the     fact that a section 25 notice had been given.  It does     not appear that any finalised plan was available until     July 1998 for any redevelopment, when the first proposal     was sent out to the train operating companies and     various consultative bodies for approval.

          On 5th August 1998 it was clear to all parties     that a redevelopment would take place and Mr Locksley     was invited to tender for the new left luggage office on     platforms 5 and 6.  Mr Locksley tendered on 19th August     1998.  By this date, however, it was already beginning     to become clear that there were substantial objections     to siting the left luggage office on the platforms and     in a part of the station where the possession of a     ticket was obligatory.

          Mr Locksley was not told of this.  A revised     scheme proposal, in which the left luggage office would     come in two parts, was produced by 17th December but by     this date Mr Locksley had been told that his tender for     the first scheme had been successful.

          Approval for the first scheme was refused by the     office of the Rail Regulator on 2nd November 1998.  Mr     Locksley told me, and I accept, that after he had been     told he was successful in his tender, he expected to     remain in occupation of Unit 26 until the new premises     on platforms 5 and 6 were ready.  Notwithstanding the     refusal by the office of the Rail Regulator to approve     the first scheme, Mr Locksley was sent heads of terms in     relation to the first scheme on 1st December 1998.

    These heads of terms specified a lease for 6 years which     would be contracted out of the Landlord and Tenant Act     1954 and would include a 6 months landlords break clause     for estate redevelopment.

          Up to this stage it had been CB Hillier Parker's     practice to send rent demands to London Baggage and on     17th December Mr Locksley telephoned Miss Choudly asking     why he had not received a rent demand.  It is not clear     whether this call, which was logged by Miss Choudly on a     telephone log sheet relating to London Baggage, related     to Unit 26 or another left luggage business which Mr     Locksley had at Waterloo.  An additional note which     reads "also send stop details again", is unexplained.     It may or may not relate to Unit 26 at Charing Cross.

          On 15th January 1999 London Baggage transferred a     sum equal to one quarter's rent at Charing Cross by     CHAPS to Hillier Parker. Hillier Parker knew the money     should not be transferred to Railtrack and accordingly     did not transfer.  Miss Choudly's telephone log     contained a note dated 15th January 1999 which suggest     that she left a telephone message for Mr Locksley to     tell him that Hillier Parker "cannot cash the money as     lease negotiations still in progress." Miss Choudly says     Mr Locksley returned this call, although his reply is     not recorded on the telephone log.  This was not put to     Mr Locksley and I have felt uncertain whether this     message ever reached him.  Certainly the money never     did.

          I do not think that this mattered to Mr Locksley.     His evidence was that he knew he would have to pay in     respect of his occupation of Unit 26, sooner or later,     and that he would not be able pay it all at once.  I     accept that he paid the minimum rent in arrears in     January 1998, in respect of his occupation of Unit 26     while waiting for his new lease.  Unfortunately for Mr     Locksley, the new lease would not be forthcoming.     Having known of the refusal of the office of the Rail     Regulator to grant consent for the first scheme in     November, Railtrack got round to telling Mr Locksley     about it at a meeting which took place between him and     Miss Holder on 6th February 1999, when Miss Holder     informed Mr Locksley that he would have to re tender.

          As I understand Miss Holder's evidence, the     principal reason for the re tender was that a new     contractor had come on the scene, a contractor which     Miss Holder considered might be preferable to London     Baggage.  Relying upon the fact that the acceptance of     Mr Locksley's tender for the first scheme had been     subject to contract Miss Holder was, of course, entitled     to ask him to tender again.  The second scheme was     finally approved after all consultations on 7th July     1999, and on 4th August Mr Locksley was invited to     tender for the second scheme.

          While he acknowledged receipt of this invitation     to tender, Mr Locksley never tendered on behalf of     London Baggage.  The closing date for tenders was 1st     September 1999.  Mr Locksley wrote on 16th September to     the chief executive of Railtrack complaining again about     the treatment he had received.  The letter contains the     following passage:

          "I have still not officially (letter)           received any correspondence from anyone           regarding the situation at Charing Cross           since December 1998.  At the moment I do           not feel inclined to waste of lot of money           and time helping to justify a process that           I feel has been handled on Railtrack's           behalf by staff of their own agenda to           pursue.

          I have already won the tender, August 1998,           and until anyone at Railtrack has the           courtesy to write and justify to me why I           must reapply shall carry on.

          At Waterloo my lease was terminated on 28th           May 1999; today 16th September 1999 we are           still operating.  What minimal contact my           company had with Railtrack or Hillier           Parker has disappeared behind the safety of           annual leave.

          We are in despite with Railtrack over           several issues including compensation but           still we have had no contact apart from           Railtrack's solicitors."

    He told me that he knew that the writing was on the wall     for him from February.  In reply to his letter of 16th,     in a letter drafted by a Mr Middleton, who is the     Commercial Director of Railtrack wrote, so far as     relevant to Mr Locksley as follows:

          "The decision to re tender Charing Cross           arose from a change in location of the new           Unit.  London Baggage were awarded a           contract extension on the original site           which is significantly inferior to the site           now proposed.  I note that London Baggage           have declined to re tender on this site.           At Waterloo the left luggage office has           been re tendered following its move to its           new location in the centre of the station.           Unfortunately London Baggage was not           successful on this occasion, as the           financial terms design and overall customer           service benefits were considered inferior           to those of the successful tender Excess           Baggage."

    Mr Locksley replied as follows:

          "The comments regarding Charing Cross I           must disagree with the reports you have           been given.  The location has not changed           significantly and we have not been given a           contract extension on the original site, as           I complained about in my original letter.           We have had no contract officially with any           member of your staff or staff from Hillier           Parker since the heads of agreement sent by           Hillier Parker in December 1998."

    Plainly, Mr Middleton and Mr Locksley were at cross     purposes on what the original site was.  But Mr Locksley     acknowledged under cross-examination that he did not     consider that he had received any extension in respect     of Unit 26.

          On 3rd November 1999, in a letter to Deborah     Richards, head of major stations of Railtrack, Mr     Locksley asserted, for the first time, that he     considered that London Baggage had a periodic tenancy in     respect of Unit 26.

          Against this background London Baggage must show     that in all the circumstances, important among which is     the tender and acceptance of rent by the landlord's     agents, that London Baggage endure a periodic tenancy.     The legal considerations may be summarized as follows:

    (i) There is no rule that in a case in which the tenant     holds over after the previous tenancy has been     determined, tender and acceptance of rent will raise the     presumption of a periodic tenancy.

    (ii) In deciding whether a periodic tenancy has come     into existence, the court will look at the intention of     the parties and all the surrounding circumstances (see     Javad v Aquil [1991] 1 All ER 243.

    (iii) It is not settled whether the intention of the     parties, to which regard must be had, include their     subjective and uncommunicated intentions.  In Land v     Sykes [1992] 1 EGLR 1, at page 4 Lord Justice Scott said     this:

          "The learned deputy judge held that an           implied grant of a tenancy had not been           established, but he appears to have taken           into account subjective evidence on the           lack of Mrs Land's part of any intention to           grant the alleged tenancy. He referred to a           number of authorities, and concluded that           evidence was subjective and intention was           admissible.

          One of Mr Morgan's grounds of appeal is           that the judge was in error in this respect           and the test to be applied to the conduct           relied on in order to determine whether or           not an intention to grant the tenancy, or           for that matter licence, should be implied           therefrom was an objective one.

          My instinctive reaction is that Mr Morgan           must be right.  I do not see any reason why           the approached formation of contract.  In           landlord and tenant cases should be any           different from the approach of formation of           contracts generally."

    The judge cited an observation of Lord Mansfield in Doed     Cherry v Batton [1775] 1 Cowper, 243 at 245 that:

          "The question therefore is quo animo the           rent was received and what the real           intention of both parties was.  This           observation does not deal with the manner           in which the intention is to be ascertained           and, for my part, I think it should be           ascertained as an objective approach to           what has been said and done."

    With this judgment Farquharson LJ and Parker LJ agreed.           There is authority of the Court of Appeal to the     contrary.  In Longrigg Burrough Troumson v Smith [1979]     2 EGLR 42, at page 43, Lord Scarman, sitting in the     Court of Appeal, with whom Ormerod LJ and Tatton LJ     agreed, plainly considered that subjective evidence of     intention was admissible, although the point appears not     to have been argued. He said that this:

          "I think it is significant that for a very           long time in the law the element of           statutory protection under the Rent Act has           been considered relevant in determining           whether or not the acceptance of rent was a           factor from which a new tenancy could be           created.  It was certainly recognised as           such an element by Russell LJ in the Lewis           case and by Denning LJ in the Marcroft           Wagon case.  It goes back much further than           that. We were referred to what is now a           very old case, Pavies v Bristow.

          In that case, which was a Divisional Court           of appeal from a County Court, both Nash J           and Shearman J attached importance to the           fact that the claim for statutory           protection was a matter to be borne in mind           when deciding whether or not the influence           of the creation of a new tenancy could be           sustained.  In that case they reached a           conclusion they could not.

          Indeed, one would have thought that today,           where tenants having in one respect or           another the protection of law for           possession of premises to which they would           have had common-law no contractual           entitlement, the courts would not be as           quick to infer the new tenancy in the old           days. They would have been, where there was           nothing to explain the presence of a           defendant upon the premises or upon the           land other than a trespass or a contract.

          I have come to the conclusion that the           judge did not pay sufficient attention to           the correspondence to which I have           referred, nor would it appear that he paid           any attention to the evidence of a           perfectly respectful Mr Transon, a partner           in the plaintiff firm solicitors who, when           he was giving evidence, was asked why the           rent had been accepted and said that he had           thought that it was being accepted as being           profits.  Only a straw in the wind but a           piece of evidence coming from a perfectly           respectable and credible witness."

          It is plain that the evidence from Mr Transon, the     solicitor, weighed heavily with Lord Scarman in that     case. Edmund Davies LJ said much the same thing in     Sector Properties v Mear [1974] Estates Gazette 1097, at     page 1103.  Having set out the evidence of the intention     of the agents when they send out a rent demand Edmund     Davies LJ continues:

          "The learned County Court judge added,           'I accept this evidence being evidence           which was elicited from these witnesses in           cross-examination.  Yet if Mr Barnes was           correct and the court ought not to have           been concerned to enquire into the real           intention of the parties such           cross-examination was wholly relevant.'.           On the contrary, however, he [his Lordship]           was of the opinion that Mr Barnes'           submission was unsound.  He was significant           as that as he frankly said he could cite no           authority for it and indeed it appeared           irreconcilable with such cases as Clark and           Grant.  Circumstances of the kind the court           was always concerned to enquire into the           intention of the parties.  What the           landlord agent's had in mind was to posed           to as accepted by Judge Richards, and           Mr Barnes conceded that he could not go           behind his finding.

          What the tenant, on the other hand, had in           mind in paying the rent demanded was left           to be speculated upon.  No evidence being           called on his behalf.  It was by no means           clear that he necessary thought he was           paying under a new tenancy, for it was at           least equally open to conjecture that he           regarded himself as still paying under the           old tenancy which if, indeed, it had not           been effectively determined by a valid           section 26 request, would still be           subsisting by virtue of section 24(1).  Be           that as it might, the intention of both           parties being relevant, and that of the           landlords being conclusive founding,           consistent with any intention to create a           new tenancy, no such result followed from           the demand and acceptance of further rent           after April 21st 1971."

    It is to be observed Edmund Davies LJ refers to Clark v     Grant [1950] 1 KB, 104, where Goddard LJ says this:

          "Where the finding of the County Court was           as follows:           The agent stated in evidence which was not           challenged that he received that sum in the           belief that it was for rent which had           accrued due that was for rent in arrear of           the previous month.  In fact the rent had           always been paid in advance.  Therefore the           agent was mistakenly accepting as rent paid           for the month that it had expired, the sum           which the tenant was paying as rent in           advance."

    Lord Goddard said this:

          "It is impossible to find that the parties           here intended that there should be new           tenancy. The landlord was all the time           desiring to have possession of the premises           that is why he had given the notice to           quit.  The mere mistake of his agent in           accepting as rent which had already           accrued, rent which was in fact payable, if           it was payable at all in advance, cannot be           used to establish that the landlord was           agreeing to a new tenancy."

    Again evidence of subjective intention was admitted, but     there was no challenge to admissibility.

          Finally, in Dreamgate Properties Limited v John     Walter Francis Arnott, for which I refer to the Court of     Appeal transcript of 18th July 1997, Hirst LJ expressly     left open the point, in the light of another judgment in     the Court of Appeal consisting of Waite LJ and Sir Ralph      Gibson, who had refused to consider subjective     impressions or reservations, preferring to deal with the     case on objective evidence of intention only.

          It seems to me that I am confronted with a     straight conflict between decisions of the Court of     Appeal on this point, in two at least of which the     matter has been expressly considered.  As Scott LJ     observed in Land v Sykes it is difficult to see why the     rules as to the relevance of subjective intention should     be any different in the case of the formation of a lease     from the principles applicable to the formation of any     other contract.

          The question is very apt to be confused if refuge     is taken in the tag from Lord Mansfield which is quoted     by Scott LJ and is frequently quoted elsewhere.  One     only has to ask whether the animus referred to is merely     the objectively ascertained animus contrahendi or the     subjective intention.  It is best to leave the latin on     one side.

          The principles in relation to necessary intention     to form a contract are, in my judgment, the same in the     case of a lease as they are in the case of any other     contractual relationship and may be taken to be     correctly stated in Chitt on Contracts, paragraphs 2.147     and 2.148.

    (iv) Where a contractual relationship is said to arise     from conduct, the onus is on the party relying on the     contract. This is clear from Javad v Aquil above.

    (v) The holding over during the negotiation for a new     tenancy is a classic instance of a case in which the     only relationship which it is necessary to imply is a     tenancy at will: See Javad v Aquil.

          Applying these principles to the facts of the     present case, I think it is clear that London Baggage's     case is exceptionally difficult to establish,     notwithstanding the very attractive argument that was     advanced by Mr Lord.  It is quite clear that Mr Locksley     knew, from at least the date of his first tender, that     redevelopment was planned and that Unit 26 would not     survive as a left luggage facility for much longer.  It     was not suggested that Railtrack ever did anything that     might suggest that this intention had changed.  The     acceptance of the rent down to September 1999, which is     the last date of the new tender, is equivocal because     during this period London Baggage was still potentially     a tenant of the new left luggage office, on terms     including a profit rent and contracting out of the     Landlord and Tenant Act.  Thereafter the correspondence     which I have quoted makes it clear that Railtrack will     put in a new tenant of the left luggage office and Mr     Locksley very fairly accepted that he could not     reasonably have expected that there would be two left     luggage offices at Charing Cross.

          Thus, viewed objectively, I consider that the acts     of each party vis a vis the other are quite inconsistent     with any intention to create a new periodic tenancy of     Unit 26 and without a profit element to the rent.  Mr     Lord made a careful and well sustained attempt to show     that in fact any possibility of London Baggage becoming     a tenant was extinct by May as a matter of reality.  He     did this in order to rely upon rather more payments than     he could rely on if the correct date was September.  But     the evidence did not establish that the invitation to     retender was colourable or was given in bad faith.

          Having regard to Mr Ames' evidence concerning the     re tender, I think that while Railtrack's predominant     intention was certainly to give Excess Baggage, the     rival company, an opportunity to quote, the redesign of     the facility giving an useful opportunity, they would     have considered a competitive tender from London Baggage     seriously.  But, in any event, I consider that all the     indications from Railtrack were that London Baggage     would have to go eventually having failed to retender.

          I should add that if it is right to consider     subjective intention, none of the evidence which I heard     would have affected my view.  The most significant     matter is the retention of the rent by Hillier Parker     and its non payment to Railtrack, of which London     Baggage was of course wholly unaware.  It was clear on     the evidence that this money was retained because     Hillier Parker feared that it might be difficult to     recover mean profits from London Baggage at a later     date.  This is of course consistent with the objectively     assessed intention of Railtrack that no tenancy should     be created.

          But for the reasons I have given, an acceptance     without explanation should, I believe, be entitled to     weight when assessing the objectively manifested     intention of the party accepting the rent.  For all     these reasons the action fails.

MR COLE:  My Lord, I would invite your Lordship to dismiss     the claim, but there is a counterclaim which is really     the other side of the coin, where a relief is sought in     bundle A on page 229.

MR JUSTICE PUMFREY:  Would you give me one moment. Please     excuse me by the way if my voice now fails wholly.

MR COLE:  Page 229 in bundle A. It is underneath tab 14, and     the defendant counterclaims a declaration that the     claimant occupied the premises, which is Unit 26, as a     tenant at will, after 29th September 1998. A declaration     that the tenancy at will was terminated and the     defendant would be entitled to possession of the     premises no later than 8th May, and then damages to     produce an occupation for the rate pleaded.

MR JUSTICE PUMFREY:  Why on earth do you need damages, you     have been retaining the rent?

MR COLE:  Because there is a shortfall, it is about £13,000,     which Mr Quinn gave evidence about in his short second     statement, which was not challenged, and my learned     friend agrees the figures.  What Mr Quinn did there was     to set out the amounts which have been paid and to give     credit for them on the assumption that the cheque which     was tendered in January would be met on presentation and     the figure.

MR JUSTICE PUMFREY:  There was not a cheque in January, it     was CHAPS.

MR COLE:  January this year.

MR JUSTICE PUMFREY:  I am so sorry.

MR COLE:  The sum, I understand, is agreed as a figure of     13,124.80.

MR JUSTICE PUMFREY:  I am very reluctant to order an     enquiry, which is just further expense. On the face of     it, I cannot see what is wrong with the two declarations     that you are asking for.  Mr Lord, what is your position     on this?

MR LORD:  I cannot object to the two declarations, equally     figures are agreed.  13 unwanted, 484 will not all be     due until 8th May. It is accepted that the latter amount     would be due as at that date; some of it is due now.     So, my Lord, I think you can properly order that we pay     that sum on 8th May, subject to an application I will     make in a minute for a stay.

MR JUSTICE PUMFREY:  Look, there are two things here.  If     you are going to ask for a stay of execution, that is     one thing. If you are going to stay of the order for     damages, I would not normally stay a money judgment.

MR LORD:  My Lord, can I just explain why. It is slightly     unusual, because we would contend that we are entitled     to statutory compensation pursuant to section 37 on     footing on 8th May.  I believe that there may well be an     issue about that. But if we are entitled to statutory     compensation, we believe that that sum will probably be     in excess of £100,000.  Again, I am sure there will be     an issue about the quantum of it.  But, my Lord, looking     at the whole matter in the round, in my submission, it     is fair and right for the general accounting, at the end     of the day, to take place once all the matters have been     considered.  Whilst I am quite happy for there to be a     judgment, an order for payment of the £13,000 odd, I     would seek a stay of that, pending the determination of     whether or not we are entitled to statutory compensation     and, if so, how much.

MR JUSTICE PUMFREY:  You potentially quantify your statutory     compensation on what basis of the £100,000?

MR LORD:  My Lord, the confusion is:  what is the ratable     value of Unit 26?  As I understand the matter, there is     no actual assessment to rate because it is an exception,     being a railway. I am going to be a little bit vague at     this stage because I have not really quite got to the     bottom of it. One has to consider whether or not there     is a ratable value for the purposes of section 37 and,     if so, what it would be.

MR JUSTICE PUMFREY:  Okay.  But first two declarations are     all right.  But you want in fact you are asking for     account, are you not?

MR LORD:  My Lord, save that we do agree the figures.  It     seems a bit pointless for there to be any actual action     adding up exercise because we agree.

MR JUSTICE PUMFREY:  Mr Cole?

MR COLE:  My Lord, there is an issue about whether London     Baggage is entitled to compensation on quitting in     principle and also as to the amount.  The position is     that the whole of the railway station is rated, but not     this individual complex.

MR JUSTICE PUMFREY:  (inaudible). Have you never had one of     these before?

MR COLE:  We have.

MR JUSTICE PUMFREY:  It may be a good place to start.

MR COLE:  We have, but not at Charing Cross. We had them at     Waterloo.

MR JUSTICE PUMFREY:  What happened?

MR COLE:  And some sort of allocation... I understand it was     agreed between the parties. But if it is not agreed,     section 37 of the Landlord and Tenant Act 1954 makes     provision for determination by, I think, the district     valuer. I am speaking off the top of my head, but there     is provision in section 37.

MR JUSTICE PUMFREY:  I am just looking at it now.

MR COLE:  For that question to be resolved if it cannot be     agreed.

MR JUSTICE PUMFREY:  There can be various threshold     questions.

MR COLE:  Yes, there is an issue in principle which arises     out of the construction of the lease itself, which     contained a provision which disentitled the tenant from     compensation in so far as that was permitted by section     38 of the Act, which does permit contracting out of the     entitlement to compensation but in a slightly convoluted     way. The question I think is whether----

MR JUSTICE PUMFREY:  This is an X - 1 piece of drafting, is     it?  We pick on a section we do not understand, so you     say 'We will exclude ourselves to the extent which is     not prevented by an incomprehensible section in the     statute' and thereby making the whole thing even more     difficult to understand than it already would be.

MR COLE:  I think the principle is that you can contract out     where you have not occupied for 5 years.  Now, standing     here today, of course, London Baggage, has occupied for     5 years.

MR JUSTICE PUMFREY:  There is a point about the moment when     it...

MR COLE:  If you take 29th September 1998, it had not     occupied for 5 years.  So one can see arguments either     way.

MR JUSTICE PUMFREY:  Is there any doubt about the 14 years?

MR COLE:  No.

MR JUSTICE PUMFREY:  So section 37 will apply, subject to     the second section 38, to the extent which you are     effected?

MR COLE:  Yes.

MR JUSTICE PUMFREY:  I suppose we could deal with it now, or     try to. Is there any reason why not?

MR COLE:  I would invite your Lordship not to.  It is not an     issue to which I have addressed any thought because it     was not....

MR JUSTICE PUMFREY:  We will do it quicker then.

MR COLE:  I agreed with my learned friend earlier in the     week, last week, when we spoke about it, that that was     not going to be an issue, and there is some authority on     it.  So, I do not invite your Lordship not.

MR JUSTICE PUMFREY:  Who do you want to send it off to?  You     see we have got one point of law, and then the district     valuer.  This is horrific.  Do you want me to remit it     to the local County Court?  I cannot help feeling it     would have been in everybody's interest to, all things     being equal, this could have carried on any way, but     there it is.

MR COLE:  My Lord, I venture to suggest, if your Lordship     was willing, that we could come back next term for an     hour or 2 hours before your Lordship, just to decide the     point of law.

MR JUSTICE PUMFREY:  I see absolutely nothing wrong with     that, I mean if you are prepared to let me have it on     paper first, and then come back, I mean literally for     --  the position is that I am Patens Court next term. I     am going to have to find some point which is not full of     Patens to deal with you.  That probably means either     9.30 in the morning or 4 o'clock in the evening. If you     can face that, then we would do it as soon as may be     next term.  But I have to retain this because it is     ridiculous to send it off to anybody else.

MR COLE:  I suggest that perhaps we should between us work     out a mechanism.

MR JUSTICE PUMFREY:  Could you use the usual channels for     the clerk to the Paten's Court. Explain what the     position is and tell him it has got to come before me at     all convenient speed.

MR COLE:  It is not yet an issue on the pleadings but we     could exchange points of claim and points of reply and     something of that kind and clarify the issue and then     make submissions on it.

MR JUSTICE PUMFREY:  Do you need pleadings now?  I think you     probably do, do you not?

MR COLE:  Probably do.

MR JUSTICE PUMFREY:  Statement of case as to why it does;     statement of case as to why it does not, then we can     send it off to the district valuer.

MR COLE:  The point of law, I think, would not be one     which....

MR JUSTICE PUMFREY:  That is what I mean.  After we have     decided it, we can either send it off to the district     valuer or not as the case may be; if it is the district     valuer, is it?

MR COLE:  I am guessing there.

MR JUSTICE PUMFREY:  Yes, Commissioners of Inland Revenue,     here we are.  Yes, and a splendid appeal this time to     the Land'S Tribunal. Actually, oddly enough, one of the     things we can do is constitute ourselves as the Land's     Tribunal, we do that from time to time.

MR COLE:  It may be, and I am speculating that the amount     can be agreed I. I have never known a case in which it     has been a necessary to apply to.

MR JUSTICE PUMFREY:  I am not going to make a money judgment     if there is a rule point here, which has got to be gone     into.  That just is not sensible.  You have got     substantial security for your claim any way, because you     got four-fifths of it.

MR COLE:  I was not going to ask, in the circumstances,     where you going accept that there is a legitimate claim,     a claim which has to be investigated.  If the figure is     agreeable and there is a possibility of Railtrack having     to pay much more, then it would be plainly right to     say----

MR JUSTICE PUMFREY:  I am going to stay it over the question     of (a) whether London Baggage Charing Cross Limited are     entitled to compensation under section 37 and the     determination of that sum, if any. But I give judgment     stayed in that respect.

MR COLE:  I am grateful.

MR JUSTICE PUMFREY:  The two declarations, yes, you are     entitled to, and that leaves, does it, the question of     costs.

MR COLE:  It leaves the questions of costs.

MR JUSTICE PUMFREY:  I have had two schedules, I believe.

MR COLE:  Your Lordship will see that the defendant's total     is £17,252, so I can take your Lordship through the     constituent went parts of that, that the claimants     schedule was a bit more, totalling £24,482, so the     defendant's is about three-quarters. The constituent     element to the defendant's schedule involves one     (inaudible) whereas the claimant's involves two, which I     explains for part of the difference.

MR JUSTICE PUMFREY:  Could you just wait a moment. I have     presently mislaid the claimant's schedule.  I think it     may still be on my desk.

MR LORD:  I have got another copy.

MR COLE:  The claimants allow for two fees, a grade 1, £175     and grade 2, at £120, whereas the defendants allow for     one fee owner only.

MR JUSTICE PUMFREY:  This, I take it, goes right through the     entire proceedings because the order from Lightman J was     costs in cause and the witness statements that were used     for the interlocutory are to all intents and purposes     the witness statements you used in front of me. Is that     right.

MR COLE:  No, that is not right.  There were two witness     statements before Lightman J from the claimant and two     from the defendant and there were three more, I think,     from the defendant and two more from the claimant,     although only one of them was relied on in the end as to     what evidence was not relied on.  It does accumulate     everything including the time before their Lordship.

MR JUSTICE PUMFREY:  You will forgive me for observing that     disbursements are 50% of this bill.

MR COLE:  Yes.

MR JUSTICE PUMFREY:  Almost precisely as it happens.  Have     you got any observations?

MR LORD:  My Lord, can I just address you on the principle     as to whether or not we should pay the costs?

MR JUSTICE PUMFREY:  A day hearing, or so close, it does not
    matter?

MR LORD:  My Lord, one of the things which you are entitled     to take into account is the conduct of the parties, and     at least to some extent, in my submission, Railtrack     have bought all this on themselves simply because of     their failure to communicate to Mr Locksley what they     were doing.

MR JUSTICE PUMFREY:  Are you making an application for costs     in your favour?

MR LORD:  I am certainly not doing that.

MR JUSTICE PUMFREY:  As I understand it, if I were to start     making, I have got to decide which way costs go.  One     thing I cannot do on a summary assessment is to make an     allowance because I think it was all your fault.  Is     that not right? It has got to be part of the -- all of     their fault -- it has got to be part of the substantive     order as to costs, if I do that, does it not?

MR LORD:  My Lord, in my submission, it is one of the     matters that----

MR JUSTICE PUMFREY:  Is it one of things that I am told I     can take into account any way.

MR LORD:  My Lord, yes, it is page 567, page 544.  Rule 3     (4), in deciding what order, if any, to make about     costs, the court must have regard to all the     circumstances, including (a) the conduct of the parties     and then in sub-rule (5) conduct of the parties include     conduct before as well as during the proceedings.

MR JUSTICE PUMFREY:  You see I can understand the point that     is being taken that Railtrack were uncommunicative.  At     the same time, I do not think there was ever any case, I     do not it was ever anything but clear that London     Baggage, as I think I made clear in the judgment, that     London Baggage would either have to tender or go, tender     successfully or go.  That is really put on a (inaudible)     the judgment.

          The judgments speaks for itself, so far as the     course of proceedings are concerned and the failure to     communicate what was going on.  At the moment it is not     quite clear to me whether, on the footing that even with     a lack of communication this should not come as any     surprise.  Therefore, it was not a surprise, it was an     irritation.  It was not a surprise. At the same time it     was communicated in a clumsy, or not communicated, in a     clumsy way.  In other words, the main point which was:     was it objectively obvious that Railtrack would not, in     the business of granting a further periodic tenancy in     relation to these premises?  That must be clear     throughout.  It is just the way they dealt with it which     caused the problem. To a certain extent, as I indicated     during the trial, I think created a rod for their own     back.  But it does not seem to me, at that moment, that     ought affect an order for their. It cannot, I do not     believe, affect an assessment, it has got to affect the     nature of the order. In other words, I am going to have     to rely. You will be asking me to discount the costs, if     I say 80 or 280 or 70 or 60 or something of that     description.  Tomorrow I might disapprove of what had     gone before.  Is that not right?

MR LORD:  My Lord, yes.  In my submission, if Railtrack had     communicated properly, we would not have ever been     here.

MR JUSTICE PUMFREY:  That is so they would not have got one     very angry tenant.  But is that enough?

MR LORD:  My Lord, in my submission, if they had simply     written at an early stage and said 'We consider you are     holding over. We are putting this money in a suspense     account, on account of (inaudible) and we consider you     are occupying as a tenant at work'

MR JUSTICE PUMFREY:  But, of course, it might be argued,     though it was not argued at trial, that there was a very     good reason for non communication and that is that when     the notice under section 25 was given there was no     concluded plan.

          The last thing that they want to tell the tenant,     when there is no concluded plan, is that there is no     concluded plan.  Is that not right?

MR LORD:  The other thing last, two things last things that     they did not want to tell Mr Locksley, was that he was     merely a tenant at will because as he might have left.

MR JUSTICE PUMFREY:  But you see, might have I do not think     that is consistent with the judgment.

MR LORD:  My Lord, there we are, that is my submission.

MR JUSTICE PUMFREY:  I understand the point.  What do you     say about that?

MR COLE:  My submission is that we are in court today     because London Baggage company started these     proceedings. We were not the claimant in them.  There     was correspondence going on and the reason why the costs     that your Lordship is considering today are being     incurred is because the assertion, as it turned out     incorrect, by London Baggage company, that it was a     periodic tenant.

MR JUSTICE PUMFREY:  Can I have a look at the circumstances     surrounding the section 25 notice?

MR COLE:  In my submission not, because the question whether     Railtrack could have made out their intention is a     question which is determined not at the date when the     notice is served on the authorities but on the date when     that issue comes to be tried, so if -- on one would be     speculating -- an application had been made and Mr     Locksley was seeking a new tenancy and the court had to     decide whether the landlord had the requisite intention,     that question would have been decided probably some time     in early 1999 and the court would have then taken into     account the evidence it then stood about whether or not     the landlord had a fixed intention to execute within a     reasonable period after the termination of the lease, so     that under section 64 the lease continues after the     judgment for about 4 months, and so the court has to     decide at that date or within a reasonable time of it,     which might be in three or four month, the landlord made     out the necessary intention.  One is speculating a very     great deal, but one could not say that this was being     brought about by Railtrack service of a fraudulent     notice or.

MR JUSTICE PUMFREY:  No.  It is not suggested, it is a     fraudulent notice, it is just a bit previous.

MR COLE:  Yes, as events turned out, it was a bit previous     but, if the matter had gone to the hearing in the County     Court in ground F, my submission is that by the time we     got to a hearing, Railtrack's tackle would have been     sufficiently in order for London Baggage company to have     been denied a new tenancy.  That of course is utter     speculation, but not unrealistic speculation.  So coming     back to this case, the cost which have been incurred in     those proceedings have not incurred by any lack of     communication or candour on which your Lordship has     observed unfavourably but because of London Baggage     Company, the assertion it made last month that it did     not have to go because it was a periodic tenant and all     of these costs were incurred after that time, and relate     to that issue which London Baggage Company has been     unsuccessful on.  So I invite your Lordship not to.

MR JUSTICE PUMFREY:  The order for costs will be an order     for the claimant to pay the defendant's costs.  The only     thing now, I have heard Mr Cole in fact on quantum a bit     in anticipation. Do you have anything to say about the     quantum?

MR COLE:  I do not think I have any submission in particular     to make. Your Lordship has them, has the schedule.

MR JUSTICE PUMFREY:  The usual rule on these occasions is     that the claimant's cost are always rather greater than     the defendant's cost, particularly if there has been an     interlocutory application because the speed goes     rather.... At the moment I cannot see.  We have here two     outings, one in front of Lightman J, and one in front of     me, taking a day and a half, a day and a bit, and     preparation for an interlocutory.  Very well, I cannot     actually see any basis upon which I can reduce this, but     I tend to reduce them into a round sum.  Can we just     have a look at the time spent talking to the dockers?

MR COLE:  It is about the same in each case. In the     claimants's statement it is put at 1403 minutes, for the     second (inaudible) 549 for the first, which I totalled     at 1952 minutes which I make about 32 and     half-an-hours.  In the defendant's bill it is 34, so     they are very similar.

MR JUSTICE PUMFREY:  It is a remarkably long time to spend.     Of course it includes any discovery.

MR COLE:  Includes any discovery and compiling the witness     statements.

MR JUSTICE PUMFREY:  And the attendances on others, normally     I think.  Probably not in these.  Yes, all right.           The disbursement in each case are very similar.

MR LORD:  I think one other feature which distinguishes is     in Railtrack there is no VAT, whereas there is the     claimant's term.

MR JUSTICE PUMFREY:  A little worried about the one hour and     15 minutes travel and waiting.  You arrived from Chisel     Street.

MR LORD:  That was on 21st March.

MR JUSTICE PUMFREY:  Same for 13th April which was the     hearing in front of me.

          I cannot actually see any reason for reducing     these substantially at all, having regard to the     magnitude of both sides' bills. What I propose to do is     make an order for costs in the round of sum of £17,000     including VAT --  Hold on, these are in fact VAT free     costs.

MR COLE:  There is no VAT in the summary.

MR JUSTICE PUMFREY:  My order has to include VAT if VAT is     payable.  I take it Railtrack is not exempt from VAT, is     it?

MR COLE:  So there is no VAT on these sums. VAT is payable     on counsels' fees whatever the status of the....

MR JUSTICE PUMFREY:  I see that counsels' fees have come in     free of VAT. Is that right?  Looking at the sums in     question.

MR COLE:  They do not add VAT.

MR JUSTICE PUMFREY:  This is in VAT free bill, so it is     going to have to be £17,000 plus VAT.  How long do you     want?

MR COLE:  It is really the same point.

MR JUSTICE PUMFREY:  It is not actually the same point     because this is costs.  What you say is again -- to this     extent is the same point, if there is a counterclaim     which could extinguish

MR COLE:  In my submission it is better to have a totalling     up at the end of the day.

MR JUSTICE PUMFREY:  There has been payment already for 4     months mean profits. What do you say about?

MR COLE:  My Lord, if part of it is going to be stayed, it     makes sense the rest is going to be stayed. Absolute     instructions on what your....

MR JUSTICE PUMFREY:  You are quite right. I am going to stay     it on the same terms. Once we have got the question of     statutory compensation sorted out then I will lift the     stays.

          Have you got an application?

MR COLE:  My Lord, I have not.  Is that everything then?

MR COLE:  I think it is.

MR JUSTICE PUMFREY:  Thank you very much both indeed.