Davy's of London (Wine Merchants) Ltd v City of London Corporation & Anor, Court of Appeal - Chancery Division, October 06, 2004, [2004] EWHC 2224 (Ch)

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Davy's of London (Wine Merchants) Ltd v City of London Corporation & Anor, Court of Appeal - Chancery Division, October 06, 2004, [2004] EWHC 2224 (Ch)

Neutral Citation Number: [2004] EWHC 2224 (Ch)

Case No: CH/2003/PTA/0881

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 6th October 2004

Before :

THE HONOURABLE MR JUSTICE LEWISON

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Between :

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Mr Timothy Fancourt QC (instructed by Halliwells LLP) for the Claimant

Mr Joseph Harper QC (instructed by Nabarro Nathanson) for the Defendants

Hearing dates: 10th & 13th September 2004

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Judgment

MR JUSTICE LEWISON:

Background

1. Davy's of London (Wine Merchants) Ltd run a wine bar in the basement and part of the ground floor of 120 Fenchurch Street in the City of London. It is called the ``City Flogger''. They held under a lease granted on 31 March 1978 for a term of 25 years from 25 March 1977. On 31 August 2001 they served a request for a new tenancy under section 26 of the Landlord and Tenant Act 1954, specifying 30 August 2002 as the start date for the new tenancy. The competent landlord at the time was the City of London Corporation. It served no counter-notice, and consequently the claim for a new tenancy was unopposed. Davy's application came before HH Judge Cox in the Mayor's and City of London County Court in November 2003. It was common ground that the new tenancy should be a term of 14 years. The principal issues on the pleadings were:

i) Whether the new tenancy should include a redevelopment break clause and

ii) If so, when should it be exercisable and on what terms?

2. Put shortly, the position as found by the judge was as follows:

i) The building of which Davy's holding formed part was at least in need of extensive refurbishment. A major refurbishment could not take place with Davy's still in occupation. But refurbishment alone did not make economic sense. The best solution was a wholesale redevelopment. The judge found that redevelopment of the site, whether 120 Fenchurch Street alone, or on a wider scale was an obviously reasonable and sensible approach.

ii) The City Corporation did not wish to carry out the redevelopment itself. It had negotiated a sale of the building to a developer, Coronation Land (or more accurately one of its subsidiaries called Wingmast Ltd). However, by the date of the hearing contracts had not been exchanged. But the judge was told both by the City Corporation and by Coronation Land that the acquisition would go ahead at the agreed price irrespective of the outcome of the proceedings. The judge was satisfied that both the City Corporation and Coronation Land were committed to the transaction.

iii) Coronation Land had extensive plans for a comprehensive redevelopment of an island site. In addition to 120 Fenchurch Street itself, the island site consisted of 116, 117 and 118/119 Fenchurch Street, 4/5 Hogarth Court, Excess House, Fen Court and 14 Fenchurch Avenue. One of Coronation Land's subsidiaries had bought a 49 year leasehold interest in 118/119 Fenchurch Street. But apart from that, the site still had to be assembled. The judge said that the process of site assembly would be extremely complex and protracted. His judgment set out the details of the titles to each part of the island site. Mr Herring, a representative of Coronation Land, had said in his witness statement that the process of site development could take one to two years; but in his ...

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