Altonwood Ltd. v Crystal Palace F.C. (2000) Ltd.

A ground-sharing licence may remain contractually in force while ceasing to qualify as a ground-sharing agreement for rent purposes if its essential right of use has been removed. A landlord may reasonably withhold consent to a variation that removes that essential character, but damages require proved loss or unjust enrichment. Clear wording excluding deduction or set-off is effective. A contractual credit for overpaid turnover rent covers overpayments generally, including legal errors, but does not discharge basic rent unless the lease so provides. Rent remains capped at the higher of basic rent and turnover rent. Unless the lease adopts an accruals basis, season-ticket receipts are included when received.

The claimant landlord let Selhurst Park Stadium to the defendant football club under a ten-year lease. The lease provided for basic rent and turnover rent, reduced during the subsistence of a ground-sharing licence with Wimbledon Football Club.

The parties disputed the effect of a later operation agreement under which Wimbledon ceased using the stadium, the defendant’s liability for varying the licence without consent, the rent due on a Football League play-off match, the treatment of erroneous turnover-rent payments, and the accounting basis for season-ticket receipts. The court determined the construction of the lease and the associated contractual documents.

1. Ground-sharing licence. The side letters assigned to the landlord the right to receive licence fees as a chose in action, following Re Kent and Sussex Sawmills [1947] Ch 177. The licence therefore remained contractually in force. However, the operation agreement removed Wimbledon’s right to use the stadium. For the purposes of the lease, the licence consequently ceased to subsist as a ground-sharing agreement under clause 5.13.1, so the reduced turnover-rent percentage under clause 4.3.3 no longer applied.
2. Variation and damages. The defendant admitted varying the licence without the landlord’s consent, contrary to clause 5.13.4. The landlord could reasonably object because the variation removed the licence’s essential character. Nevertheless, the evidence showed neither loss to the landlord nor enrichment of the defendant. No inquiry as to damages was therefore ordered. The payment of £100,000 related to operating and maintenance costs, not licence fees, and was not recoverable under clause 5.13.6.
3. Play-off match. The Sunderland match was a League Match because it was a first-team competitive match played under Football League authorisation. It was not a Cup Match because the competition rules awarded promotion rather than a cup or comparable trophy. The landlord was entitled to 10 per cent of the gross gate receipts, notwithstanding the Football League’s arrangements for pooling and redistributing receipts.
4. Deduction and credit. The words “without any deduction or set-off” excluded equitable deduction and set-off. The principles in Federal Commerce & Navigation Company Limited v Molena Alpha Inc [1978] QB 927 and British Anzani v International Marine Management (UK) Limited [1980] QB 137 were applied, with the approach to set-off noted in SL Sethia Liners Ltd v Naviagro Maritime Corporation [1981] 1 Lloyds Rep 18. Clause 5.1.2 required credit for any previous overpayment of turnover rent, including an overpayment caused by an error of law. That credit could not be applied against future basic rent. The lease limited the tenant’s obligation to the higher of basic rent and turnover rent, so basic-rent instalments were not payable to the extent that the rent had already been paid through turnover rent.
5. Season tickets. The lease required turnover rent to be calculated on a receipts basis. Its references to receipts taken, including receipts for matches to be played, did not support spreading season-ticket income over the relevant seasons. SB Property Co Ltd v Chelsea Football & Athletic Co Ltd was distinguished because that lease contained materially different provisions, including auditor certification and wording supporting time apportionment.

The judgment records that summary judgment sought by the claimant was dismissed by Lewison J on 1 October 2003. Master Bowles subsequently ordered the trial of seven preliminary issues. Three issues had fallen away by the February 2005 trial, including the claim concerning complimentary tickets.