CSG (Stratford) Ltd & Ors v London Borough Of Newham & Ors

Permission to amend a statement of case should be refused where the proposed pleading remains incoherent, vague or legally unsustainable after repeated attempts to formulate the claim. A commercial tenant cannot recover against a landlord for defects outside the landlord’s control where the lease allocates responsibility elsewhere. An implied term requiring a landlord to promote or avoid deterring the tenant’s business is not ordinarily supportable in a commercial lease.

Negligence claims for pure economic loss, without consequential physical damage, are generally unsustainable on the pleaded facts. A challenge to a planning or advertising decision should ordinarily be pursued through public law proceedings, rather than converted into a private law damages claim.

The claim arose from complaints by a restaurant operator about water ingress, external works, standing water, tree planting, signage restrictions and interference with the restaurant’s trade. The proceedings were initially brought by a dissolved company and its former directors. The proposed amended pleading substituted CSG (Stratford) Ltd as claimant and sought to join Thames Water Utilities Ltd.

A Master had struck out the claim against O.M. Property Management Ltd for failure to serve proper particulars. The case was then transferred to the Technology and Construction Court. The issues were whether the claimants should be permitted to amend, whether the earlier strike-out should be set aside, whether the claims against the first three defendants disclosed viable causes of action, and whether Thames should be joined.

1. Procedural threshold. The court applied CPR3.4(2)(a) and CPR24.2(a)(i). Claims may be struck out where they disclose no reasonable grounds or have no real prospect of success. The court should not conduct a mini-trial, but may rely on uncontroversial facts. Article 6 did not prevent strike-out where those criteria were satisfied.
2. Claims by the Marchés. The assignment was to CSG, not to Patrick and Valerie Marché. They were shareholders, directors and guarantors, but had no pleaded proprietary or occupational interest capable of supporting claims for damages. Their claims were struck out.
3. Newham. The leaking pipe was eight storeys above the restaurant, outside the premises demised to Newham and beyond its control. Responsibility lay with the superior landlord under the relevant lease structure. The repairing covenant’s exceptions did not transfer responsibility to Newham, and the sub-underlease was not transformed into a licence. The proposed implied terms requiring Newham to promote the restaurant’s business or refrain from deterring it were too broad and vague to be implied. The negligence, nuisance, forfeiture and excavation claims therefore had no reasonable prospects.
4. OM and ASB. OM was not the superior landlord, and the allegations against it were vague and unsupported by facts establishing a duty or private law wrong. The claims against ASB were claims for pure economic loss without pleaded physical damage; the nuisance and agency allegations were likewise inadequate.
5. Signage and amendment. The refusal of planning or advertising permission should have been challenged by public law proceedings. It could not found a private law damages claim. The amended pleading was the claimants’ fourth formulation and still lacked clarity and particularity. Permission to amend was refused, the claims against Newham and ASB were struck out, the application to reverse the Master’s order was refused, and the application to join Thames was refused. Judgment was entered for Newham and ASB.

The judgment records earlier procedural steps:

• High Court, Master McCloud: On 21 June 2013, the claim against O.M. Property Management Ltd was struck out of the court’s own motion for failure to serve complete particulars of claim.
• High Court, Ramsey J: On 31 July 2013, the action was transferred to the Technology and Construction Court and directions were given for applications concerning amendment and strike-out.
• High Court, Technology and Construction Court: The application to reverse the Master’s order was refused. Permission to amend was refused, the claims against Newham and ASB were struck out, and joinder of Thames Water Utilities Ltd was refused.