Eaton Mansions (Westminster) Ltd v. Stinger Compania de Inversion SA  EWCA Civ 607Note: What follows on this and other pages constitutes information on the firm as it existed immediately prior to 21st August 2012.
We are acting for the Claimant, Eaton Mansions (Westminster) Ltd (“EMWL”), in connection with its claim for damages for trespass against Stinger Compania de Inversion SA (“Stinger”).
Eaton Mansions is a block of flats in Cliveden Place, London SW1. EMWL is the head lessor from the freehold owner, the Grosvenor Estate. At the material times, Stinger was the owner of underleases of Flats 8 and 10, Eaton Mansions. Stinger is a Panamanian company and owned by a Cayman Island trust. It was incorporated specifically to acquire the underleases in Flats 8 and 10.
The headlease granted by Grosvenor to Eaton Mansions contained a number of covenants, including one that no alteration was to be made in the building. The underleases to Flats 8 and 10 did not give the leaseholder any rights in respect of the roof of the building, other than of shelter and protection. The covenants in the underleases included a normal obligation not to make alterations without prior written consent. Stinger therefore had no right to place anything on the roof of the building.
However, in about 1980, Stinger placed three air conditioning units on the flat roof of the building, allegedly with EMWL’s consent. Later, in or about the mid 1980s and during the 1990s, Stinger placed further such units on the roof, with associated pipework, wires, ducts and other apparatus. This was all done without seeking or obtaining EMWL’s consent. All these units were removed over time. However, new units were placed on the roof in 2007 and December 2008 with pipework from the roof via the chimneystack and flues to the flat. Stinger broke through the chimney stack to achieve this. The litigation concerns condensers from June 2007 and units which were installed in December 2008 and the associated pipework etc. Again, none of the work undertaken in 2007 and 2008 had the consent of EMWL, nor that of the Grosvenor Estate.
Accordingly, EMWL contended that these works constituted acts of trespass. We issued proceedings against Stinger in the Chancery Division in April 2009. At this time, the primary relief sought was an injunction to compel Stinger to remove the units and associated apparatus and to make good. There was also a claim for damages.
Stinger asserted that by virtue of various correspondence and other dealings it and its agents had had with EMWL’s managing agents , EMWL had represented that it did not and would not object to leaseholders maintaining on the block a reasonable amount of air conditioning apparatus and that the grant of consent to this would not be unreasonably withheld or delayed in respect of air conditioning apparatus of reasonable quality and size in a reasonable position. This was the case advanced by Stinger in its amended defence. It did, as above.
In late December 2009, we discovered that Stinger was on the point of selling the flats, and as the flats were believed to be the only assets belonging to Stinger here and Stinger had refused to state its intentions as to the application of the proceeds of sale, one of our Solicitor-Advocates, Geoffrey Brunton, obtained a freezing injunction against Stinger on 21 December 2009. Stinger sought to have the injunction discharged in mid-January 2010. The grounds relied on by Stinger included alleged material non-disclosure. Stinger were represented by Counsel, while Geoffrey Brunton appeared for EMWL. Stinger’s challenge to the injunction failed and a costs order was made in EMWL’s favour. Once protection was in place for EMWL as a result of the injunction, the sales of the flats were permitted to proceed. From this point on, the primary remedy sought by EMWL was damages, as Stinger no longer had any interest in the building and an injunction would not have been appropriate.
We issued a further application for summary judgment in June 2010, which was heard on 7 July 2010. Stinger argued that EMWL had so conducted itself that it could not simply rely on the fact that it had not given its consent to the 2007 and 2008 installations, and that it was not entitled to withhold or delay consent unreasonably to a request from Stinger to be allowed to place air conditioning apparatus on the roof if it was of reasonable quality and size and in a reasonable position. Stinger argued that it had sought EMWL’s consent on 3 December 2008 and that EMWL had unreasonably refused such consent by issuing these proceedings. EMWL argued that it was entitled to refuse consent, amongst other reasons because what Stinger wanted to do (and then did) namely to install further units, a matter of days after the 3 December 2008 request was made (i.e. without waiting for a response) would or might place EMWL in breach of the covenant in the head lease and that the Grosvenor Estate had not and would not agree to it.
By this stage, there were a number of interlocutory applications before the Court, which were all due to be heard with the summary judgment application. Amongst these was one for security for costs launched by Stinger. The evidence in support showed that Stinger had incurred the staggering sum of £614,000 in legal costs on the case. Stinger’s lawyers, Clifford Chance further stated in evidence that Stinger’s costs to trial could very easily exceed £800,000 and perhaps even £1 million.
The matter came before the Court on 7 July 2010, and judgment was given on 9 July 2010. The Judge gave judgment for EMWL on the claim for damages to be assessed and dismissed Stinger’s counterclaim for declaratory relief. Stinger’s security for costs application fell away on the basis of this decision. In the course of the judgment, Mr Justice Wyn Williams:
Rejected Stinger’s defence that EMWL had unreasonably withheld or delayed consent to the June 2007 and December 2008 installations.
Found that there was no realistic possibility that Stinger could show that EMWL had unreasonably refused consent for the retention of the air conditioning apparatus.
Decided that the evidence demonstrated that Stinger had behaved in a high-handed manner and had resorted to trespass when it had been unable to achieve its aims lawfully. Stinger had sought to erect a smokescreen of unreasonable conduct on the part of EMWL which was just not sustainable.
Decided that there were features of Stinger’s conduct both before and during the proceedings that made it proper to categorise it as unreasonable and outside the norm of the conduct of normal litigants in litigation of this type. Accordingly, EMWL’s costs to the date of judgment were to be paid by Stinger on the indemnity basis.
Stinger appealed to the Court of Appeal both against summary judgment on the claim and counterclaim, and also on the award of indemnity costs to EMWL. Stinger’s appeal failed on both counts. The Court of Appeal held among other matters as follows:
The Judge was well entitled to proceed to the conclusion that there was no realistic possibility that Stinger could show that EMWL had unreasonably refused its consent for the retention of the apparatus.
The Court could see why Stinger’s conduct in carrying out the December 2008 installations contributed to the Judge forming the view that Stinger had behaved in a high-handed manner and had resorted to trespass when it had been unable to achieve its aims lawfully.
Stinger could not challenge what the Judge had said as to the high-handed and unreasonable nature of the way Stinger had behaved before the litigation.
Stinger’s presentation of the case showed a notable lack of proportion and if a litigant appeared to be conducting litigation entirely without regard to any sense of proportion as regards the costs incurred that could be relevant to the issue of the basis of the assessment of costs.
The award of indemnity costs against Stinger was justified and that there were two legitimate matters which the Judge had taken into account in awarding costs on that basis (namely Stinger’s high-handed conduct before the proceedings and its unusually unreasonable behaviour in the conduct of the litigation).
The case is now proceeding to the assessment of damages. EMWL is claiming substantial damages against Stinger, including aggravated and exemplary damages.
Link to the judgment of the Court of Appeal dated 18 May 2011:
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