Talisman Property Co (UK) Ltd v Norton Rose (A Firm)

At the summary judgment and strike-out stage, a claim should proceed where the claimant has a real, rather than fanciful, prospect of success or a reasonable ground for bringing it. Questions involving incomplete evidence, intentions, estoppel and loss of a chance generally require trial unless they are purely legal or factually uncontentious.

Statutory compensation under Part II of the Landlord and Tenant Act 1954 may become payable when the statutory conditions are met, without proof of an overall loss or a causal link between the landlord’s assertion of ground (f) and the tenant’s quitting. A loss of the opportunity to negotiate away such liability may itself be a legally significant loss.

Talisman acquired business premises subject to the Landlord and Tenant Act 1954. Uncertainty existed as to whether Lewis DMR Ltd or Wyko Industrial Services Ltd was the tenant. Talisman’s solicitors served a landlord’s notice on Wyko opposing a new tenancy on ground (f), although an unopposing notice was intended.

Wyko was subsequently declared to have been the tenant. It vacated the premises and received statutory compensation of approximately £179,000, set off against its dilapidations liability. Talisman sued Norton Rose in contract and negligence. Norton Rose accepted carelessness but argued that the compensation liability would have arisen in any event from earlier notices served in relation to Lewis.

Norton Rose applied for summary judgment or strike-out, alternatively seeking to confine the contractual claim to nominal damages. The central issue was whether any pleaded route gave Talisman a real prospect of establishing recoverable loss.

Application dismissed. The claim was neither struck out nor summarily determined in favour of Norton Rose.

1. For summary judgment, Talisman had to show a real, rather than fanciful, prospect of success. For strike-out, it had to show a reasonable ground for bringing the claim. At this interlocutory stage, factual allegations were generally taken as true. Although written evidence had been placed before the court, disclosure was incomplete and the evidence untested.
2. The court applied the approach in Lloyds Bank v City of London [1983] 1 Ch 192. Where ground (f) had been asserted in the relevant statutory notice and the tenant quit, compensation under section 37 could be payable without proof of overall loss or a causal link between the assertion and the quitting. The parties accepted that a section 25 notice asserting ground (f) was indistinguishable in this respect from the counter-notice considered in that authority.
3. Talisman’s pleaded case that it had lost the opportunity to avoid compensation by serving an unopposing notice on Wyko was sufficiently wide to include a loss of negotiating opportunity. On the evidence, there was a real possibility that Wyko would have continued negotiations or left without compensation if properly notified. The court could not conclude at this stage that the alleged loss lacked substance or was merely speculative.
4. The amended estoppel case also disclosed reasonable grounds and a real prospect of success. The pleaded facts could support representations, reliance and detriment arising from the landlord’s repeated demands for and acceptance of rent and insurance payments from Wyko, its treatment of Wyko as tenant, and the parties’ course of dealing.
5. Section 42(2) of the Landlord and Tenant Act 1954 did not automatically bar consideration of those matters merely because Lewis and Wyko were group companies. Its apparent purpose was to address the application of Part II where a group member occupied premises or carried on the business, not to exclude an estoppel founded on additional facts.

The court therefore dismissed Norton Rose’s application and left the issues of fact and the applicable law for determination at trial.