Seventh Earl of Malmesbury & Ors v Strutt & Parker (a Partnership), Court of Appeal - Queen's Bench Division, December 10, 2007, [2007] EWHC 2641 (QB)

Resolution Date:December 10, 2007
Issuing Organization:Queen's Bench Division
Actores:Seventh Earl of Malmesbury & Ors v Strutt & Parker (a Partnership)
 
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Neutral Citation Number: [2007] EWHC 2641 (QB)

Case No: HQ05X03299

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 10/12/2007

Before :

MR JUSTICE JACK

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Between :

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Anthony Speaight QC (instructed by Stockler Brunton) for the Claimants

Timothy Lamb QC & John Gallagher (instructed by Williams Holden Cooklin Gibbons LLP) for the Defendant

Hearing dates: 29 October - 1 November, 5 & 6 November 2007

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Judgment

4

Mr Justice Jack :

  1. This judgment relates to damages and it follows my judgment on liability delivered on 11 May 2007. In that judgment I set out the background to the action in some detail. I refer to it, and will do no more at the start of this judgment than is necessary to make it comprehensible.

  2. The Malmesbury Estate owns land adjacent to Bournemouth International Airport, which is used by the Airport for car parking. The revenue obtained by airports from parking charges, either while passengers are delivered to or collected from an airport - short stay, or until they return - long stay, is an important part of the airport's finances. The parking revenue may be very substantial. The importance of parking revenue is particularly great where the airlines using the airport are low cost airlines which negotiate low charges for the airport's use and so the airport has to find revenue from elsewhere. That is the case with Bournemouth. The relevant land belonging to the Estate is immediately across the Airport Road from the passenger terminal. The Airport including the Airport Road, a private road, is owned by Bournemouth International Airport Limited - `BIA', which is a subsidiary of Manchester Airport Group.

  3. The land in question originally consisted of three grass fields, which have been called A, B and C, and the car park on them is called `car park 1'. Fields A and B are let to BIA under a lease dated 14 August 2002. It runs for 24 years from that date, that is, to 13 August 2026. The rent in respect of Field A is £9,000 per annum with reviews at 5 yearly intervals linked to the percentage increase in BIA's seasonal ticket parking charges. In August 2002 the field was then being used for car parking under an earlier lease dated 20 January 2000 running until 8 July 2005, which was surrendered. The field was laid out as a car park with a gravel surface and no tarmac roadways or automated ticket system. BIA planned to, and early in 2003 did, spend a substantial sum putting in those improvements. Field B lay immediately to the north of A. At this time it was not yet in use for parking and was grass. The rent was to be £300 per annum until the field was used for parking, and was then be pro rata by acreage with that for Field A. BIA was obliged to bring it into use as a car park by 8 July 2005. Field C was also a grass field not yet in use for parking. It lies immediately to the east of A and B. It was first let to BIA under a lease dated 28 November 2003, which like the 2002 lease of Fields A and B terminates on 13 August 2026. The rent was £375 per annum until the land was developed as a car park, and then pro rata by acreage with Field A. Planning consent for the use of the area covered by Fields A and B for car parking had been granted on 12 August 1992. There was no permission in respect of Field C. It was a term of the lease for Field C that BIA would use all reasonable endeavours to obtain planning consent for use as a car park as soon as the appropriate needs case could be established. Consent was granted by Christchurch Borough Council on 31 August 2007. There is other land at the Airport, which land is owned by BIA and is used for car parking. In particular, there is a small car park next to the terminal, called `car park 3', which is a short stay car park. More important, there is an area to the north of Field B which is used for both long and short stay, called `car park 2'. It is about a quarter of the size of Fields A and B.

  4. The claimants include the Earl of Malmesbury, and are those who may properly represent the interests in the settled land which includes Fields A, B and C. I have referred to them as `the Estate'. The defendants are Strutt & Parker. The Estate was represented in the negotiation of the leases to which I have referred by Mr Richard Ashworth, a consultant of the firm. It was alleged by the Estate that Mr Ashworth had been negligent in representing and advising the Estate in respect of the three leases, primarily in that he had not negotiated for and obtained a turnover rent, that is to say, a rent which was a proportion of BIA's net car parking income from the land. I held that Mr Ashworth had been negligent in that respect in relation to the 2002 and 2003 leases, but not in relation to the 2000 lease. I had then to decide what turnover rent, by way of percentage, Mr Ashworth would most likely have obtained if he had pursued the issue as I had held he should. This task was made difficult by the positions taken by the parties and their failure to address arguments in respect of any realistic figure. The claimants contended that BIA would have agreed a rent of 80% of net turnover. I regarded that as wholly unrealistic given in particular BIA's need of the parking income to support its aviation business. Strutt & Parker's position was that BIA would not have agreed to a turnover rent at all, and that, in any event, the claim for 80 per cent had no credibility. I held that the appropriate figure was 10 per cent. So, in short, what the Estate lost by reason of the negligence was a right to 10 per cent of the net car parking income from the land in question over the period of the leases.

  5. I mention for completeness that there were originally two further defendants. In my judgment on liability I dismissed the Estate's claim against the solicitors who had advised the Estate. I later awarded them indemnity costs against Strutt & Parker, and against the Estate. Strutt & Parker had brought the firm into the action (together with the relevant partner) as Part 20 defendants. The Estate had later added the firm as a defendant to its claim, largely adopting the allegations made by Strutt & Parker.

  6. When the action came on for trial, beginning on 5 February 2007, it was intended to be a trial of all issues - both liability and damages. The Estate claimed by way of damages the sums which it asserted would have been paid to it each year by way of turnover rent, with interest in respect of past sums, and with discounts for early receipt in respect of future sums. It thus adopted the same approach as is taken with claims for loss of earnings in personal injury actions. This was not challenged on behalf of Strutt & Parker until the service of their counsel's written submissions shortly before the trial began. It was there asserted by Mr Timothy Lamb Q.C. that the proper measure of any loss was the loss in capital value of the interests in the land in question, valued at the dates of the causes of action accrued. That involved in essence a comparison of the capital values of the two actual leases with the capital values of two hypothetical leases with 10 per cent turnover provisions. This approach is sometimes called `the breach date rule'. I held that the correct measure of damage was that proposed by Strutt & Parker. The question is plainly difficult: I refer to the division in the House of Lords in Golden Strait Corporation v Nippon Yusen KubishkaKaisha [2007] UKHL, [2207] 2 WLR 691. I also held that there was no sufficient reason to choose any dates for the assessment other than the dates of the leases: paragraph 191 of the judgment.

  7. Because the question of assessing the damages on a valuation basis arose so late, the parties had prepared no evidence for the assessment of damages on that basis. They had prepared evidence in relation to a loss of income basis. It was however agreed between counsel during the course of the trial that I should determine some issues which were relevant to that but otherwise I should also leave the question of damages on that basis for future determination.

  8. Following the delivery of the judgment it was submitted on behalf of the Estate that when I came to assess damages I should assess them on both bases because any appeal court could then see what the differences were, and, if the Estate was successful on appeal, there would be no need to have a further hearing as to damages. This course was resisted on behalf of Strutt & Parker. In a ruling handed down on 15 May 2007 I held that that the better course was to assess the damages on both bases.

  9. Without the dramatic growth in passengers using the Airport since 2001 it is doubtful whether this litigation would have occurred. It certainly would not have been fought as it has. So it is as well to set out the figures at an early stage. They were set out from 1990 to 2002 in Mr West's report of 26 July 2007. I will omit 1991 to 1994, and will add the subsequent years:

    1990 137,000 passengers per annum

    1995 92,000

    1996 157,000

    1997 269,339

    1998 315,537

    1999 279,029

    2000 275,198

    2001 265,758

    2002 394,810

    2003 464,517

    2004 499,096

    2005 838,856

    2006 964,442

    The figures up to and including 2005 are set out in Ms Congdon's report of 23 November 2006. I have taken the 2006 figure from the revised Schedule 1 to Mr Taub's report of 8 October 2007.

    The capital value assessment

  10. Each party called four experts, namely a surveyor/valuer, an expert on discount and risk, an accountant, and a passenger and car park earnings forecaster. The values provided by Mr Robert Fourt of Gerald Eve & Co on behalf of the Estate for the hypothetical leases with 10 per cent turnover rents were these:

    2002 lease (Fields A and B) £3 million to 3.5 million

    2003 lease (Field C) £300,000 to...

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