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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Malt Mill Developments Ltd & Anor v Davis [2002] EWCA Civ 440 (13 March 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/440.html Cite as: [2002] EWCA Civ 440

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
(His Honour Judge Butter QC)

		Royal Courts of Justice Strand London WC2 Wednesday, 13th March 2002

1. LORD JUSTICE PILL: This is an appeal against the judgment of His Honour Judge Butter QC sitting at the Central London County Court on 11th May 2001. It is not necessary for present purposes to set out the full terms of the order made. Its effect was to uphold the termination of an arrangement contained in a letter dated 16th May 1990 ("the side-letter") by which a service charge paid by Mr. Norman Harold Davis, the appellant, as tenant, with respect to premises at Anchor Brewhouse, now owned by Malt Mill Developments Limited, the first respondents, and managed by Anchor Brewhouse Management Company Limited, the second respondents, was to be calculated.
2. Anchor Brewhouse is situated on the south bank of the River Thames, close to Tower Bridge. It has been converted into residential flats with some offices. The appellant is a senior partner with a firm of accountants which occupies part of the second floor and the third floor of the premises. They were granted a 125 year lease in 1990, having paid a premium of £500,000. The current rent is £200 a year. As management company the second respondents have a lease of the common parts. Their obligation to provide services was set out in a schedule to the lease. The cost of providing services is collected through a service charge. The percentage of that charge payable by the appellant under the lease was 2.5 per cent. On 16th May 1990 the second respondents wrote the side-letter to the appellant. Insofar as is material, it was provided:

"We write to record the arrangements made between us whereby, whilst you remain the tenant of the Third Floor Offices in The Malt Mill, you will undertake certain functions of the Management Company and be responsible (inter alia) for the lighting, cleaning and planting of the Horsleydown Stairs area giving access to both the second floor and third floor offices and the health club.

These functions will be performed by you at your own cost. We will reimburse you by way of an allowance of 2% on the service charge due from you i.e. whilst this arrangement remains in force you will pay service charges equal to a net 0.5% of the costs incurred by us in performing the covenants set out in the sixth schedule to the lease.

You will liaise with us as to the performance of these functions with the intent that the overall appearance of The Anchor Brewhouse as a prestigous building be maintained at all times. We reserve the right to vary or cancel these arrangements if, in our reasonable opinion, we do not consider that you are properly performing such functions."

3. The management company had covenanted with the first respondents and the appellants, amongst other things, (Sixth Schedule, paragraph 12):

"To keep the lobbies halls stairs steps landings passages corridors entrances courtyards and other common areas forming part of the common parts properly decorated and maintained cleaned and in good order and to keep adequately heated lit furnished and carpeted all such parts thereof as are normally or should be heated lit furnished or carpeted respectively and to keep and maintain therein an adequate display of plants pictures sculptures and other items of a similar nature.

(13) To maintain and plant and keep properly planted the common roof terrace (if any) and any landscaped or horticulturally treated areas."

4. The arrangement operated for several years but by a solicitor's letter dated 25th November 1996 the second respondents purported to terminate it. The judge correctly stated that the issue that he had to decide was whether they were entitled to do so. But for the arrangement contained in the side-letter, the appellant would have paid a sum of about £3,000 in 1996. That would have represented 2.5 per cent of the total service charge for the building. The sum has been substantially higher in subsequent years.
5. The appellant was in dispute with the second respondents on other matters in relation to the lease. During the years 1995 to 1997 the health club mentioned in the side-letter was converted into a flat for Mr. Gay, who is now a director of both respondent companies, but was not a director of the second respondents in 1996. In that year the appellant commenced separate proceedings against the first respondents, seeking to prevent them from converting the health club into a flat. Proceedings were commenced on 29th August 1996. The area referred to in the side-letter was known as the Horsleydown Old Stairs area. It gave access from the public highway to the appellants' offices and to the health club. It was also a public right of way to the river bank. The bank was of shingle at this point. Access could be obtained when the tide was low. There was evidence that members of the public used the right of way to the river bank. On 14th October 1996 chartered surveyors acting for the respondents wrote to the appellant a letter, including this paragraph:

"Whilst writing we do wish to bring to your attention the unacceptable condition of the external areas of the entrance to your offices for which you are responsible and for which you do in fact receive the above service charge rebate. On a recent inspection there was widespread graffiti on the walls and the floors generally looked dirty. We would be grateful if you would deal with these matters as a matter of urgency."

6. The appellant replied on 25th October in these terms:

"The external areas to the entrance of our offices is in a disgusting condition and the reason for this is quite apparent, namely the mess made from time to time by the workers engaged in destroying the swimming pool complex. It was and still is our intention to make the area into a thing of beauty with flower boxes and the like but we cannot do this while builders are tramping through the place. Whilst writing on this subject, may we ask you to use your good offices to ensure that builders, skips and cars are not parked so near the steps that they inhibit entry to the office. This morning, Thursday, not only was there a skip and car blocking the entrance to the office but the builders had allowed sand to be delivered and plonked right in front of the steps. We are experiencing sufficient inconvenience due to the building work without having to suffer further to the lack of consideration of the builders. It is pointless cleaning up the area now while it is continually getting dirty. As soon as the building work is finished then we will pretty up the area to the office in the hope that Mr Gay and/or his companies will not then cause us further inconvenience. Meanwhile we reserve our rights in respect of all matters in connection with our offices and Mr Gay and/or his companies."

7. On 29th October solicitors acting for the respondents wrote to the appellant a letter unconnected with the side-letter but purporting to terminate a licence that he had been granted to install apparatus on the premises. As to the graffiti, Cluttons wrote again on 30th October, stating:

"With regard to the points you made about the freeholders builders, we would be grateful if you could deal with the graffiti which we think is not attributable to them and which was the main thrust of our previous complaint. Notwithstanding this we are sending a copy of your letter to the freeholders so that they may bring your complaints to the attention of their builders."

8. The appellant wrote two letters on 8th November, one dealing with the purported termination of the licence and another claiming a refund of service charges. The correspondence had become acrimonious. On the same day Cluttons wrote again with respect to the service charges, stating:

"We refer to our letter to you dated 30th October. We have had to report to the freeholders that the graffiti on the walls has not been removed. We do regard this as your responsibility under your service charge abatement for the walkways to your offices. Could we please ask you to clean this graffiti off the walls without delay?"

9. In a solicitor's letter on behalf of the second respondents dated 25th November 1996, it was stated:

"We refer to the side letter relating to a rebate of part of the service charge you pay. The side letter was expressed to be capable of cancellation if in the reasonable opinion of the management company you failed to perform the duties set out in the side letter. It has come to the attention of the management company that you have failed to perform your duties, in particular (but without limitation) you have failed to remove graffiti from Horsleydown Old Stairs despite requests to do so from Cluttons, the managing agents. Accordingly please treat this letter as cancellation of the arrangement set out in the side letter. We have instructed Cluttons not to make any further rebate on your service charge and in future you will be charged the full service charge."

10. The appellant responded on the following day:

"I note that you claim that the management company is looking at the state of the Horsleydown Old Stairs area. It complains about what is termed graffiti which can hardly be seen but makes no mention of the mess and general demoralising atmosphere within the Horsleydown Old Stairs area caused by the builders who are carrying out work for Mr Gay. As I have said previously, it would be futile to try and prettify the area while Mr Gay's workmen are engaged in making a mess of it. I do not accept the cancellation of the arrangement set out in the side letter. No doubt this matter will be aired in the proceedings I have instituted against Mr Gay who must be quite upset at the prospect of being found to have no title to the flat upon which he is currently lavishing so much money. Hopefully in due course he will have to lavish even more money in restoring the swimming pool complex to its original condition. Finally, I find it surprising that even on instructions a responsible firm of solicitors can write as you do. You must know that I will not accept what Mr Gay seeks to dictate to me and that there is no basis for the action he has instructed you to take."

11. The letter also makes a reference to alleged "infantilism" of Mr. Gay.
12. The judge rejected the respondents' complaint with respect to lighting and planting. He posed the question:Did the second respondents through their directors hold a reasonable opinion in 1999 that the appellant had not properly performed the functions referred in the side letter? The judge stated:

"Much of the case has focused on the issue of cleaning with particular reference to what the respondents call graffiti and what the appellants called chalk marks."

13. The judge stated:

"I return to the issue of cleaning, first in general and then specifically in relation to the so-called graffiti. The premises comprise many high class residential flats and the obligations of the second [respondents] to the tenants include keeping the various parts of the premises in a good state of cleanliness and in good order. The side letter itself refers to the overall appearance of the premises as a prestigous building."

14. Having referred to weaknesses in the respondents' case, the judge continued:

"In the course of closing submissions, counsel helpfully summarised and identified the evidence as to the graffiti or chalk marks and I do not propose to set this out in detail. Mr Gay, Mr Quinlan, Mr Smith and Mr Davis all gave descriptions of what they saw. There are differences in recollection and indeed it is quite possible that there were different graffiti or markings over a period of time. Upon the totality of the evidence I find that from or about the early part of October until the end of November 1996, and quite possibly for a longer time than this, there were marks which although not offensive could fairly be called graffiti on the left hand flank wall. They were initially at least brightly coloured. They were of moderate size, perhaps stretching for two to three metres in length. The evidence does not suggest that any attempt at all was made to get rid of them during this period of time."

15. The judge concluded:

"The failure by the defendant to cause or attempt to remove the graffiti, despite formal letters drawing his attention to such graffiti and calling upon him to deal with the matter, constituted material which in my judgment could give rise to the reasonable opinion that the defendant was not performing his functions as set out in the side letter. Suppose a tenant had alleged breach of covenant against the second claimants, would the latter have had a valid defence?I do not think so. In my view there was a clear continuing breach by the defendant."

16. The judge then stated the other main issue in the case. This gives rise to the final main question, namely whether the second claimants, through their directors, had in fact formed a reasonable opinion that the defendant was not properly performing his functions and authorised the letter of termination to be written? Having reviewed the evidence and the submissions of the parties, the judge concluded:

"I do not propose to attempt to review all the evidence or the arguments about this matter. I recognise that the extent of the consideration given to the matter by the directors is by no means clear. In the end, however, having directed myself to view the evidence on this issue with caution, I conclude on balance that the second claimants through their directors did form the reasonable opinion that the defendant was not properly performing the specified functions, and that they were entitled to and did authorise or instruct Mr Quinlan to send the letter of termination."

17. The judge's general conclusion was:

"In these circumstances I am only prepared to find that the claimants applied their minds to and can, for the reasons set out earlier in this judgment, rely upon the defendant's breach in respect of the graffiti."

18. As I have said, the allegations in relation to planting and cleaning in general were rejected.
19. For the appellant Mr. Bonney QC submits, first, that the arrangements in the side letter could be terminated only if the appellant was in breach in respect of all three of his obligations, lighting, cleaning and planting. It is submitted that in rejecting that submission the judge has wrongly read into the reference to "properly performing such functions" in the side letter the word "any" before the word "such". I reject that submission. The arrangement required the performance by the appellant of all three functions. The example of breach given by the judge, a persistent failure to light the area, was apt.
20. The second submission is that the judge has erred in failing to address the question whether any failure to clean which he found proved justified the termination of the arrangement in the side letter. Further, it is submitted that the evidence did not justify a finding that there was a breach at all or, alternatively, a breach which entitled the second respondents to terminate. The evidence did not justify an inference that the right to terminate arose. The appellant was the only tenant affected by the graffiti, the activities of the health centre having been terminated. Reliance is placed on evidence that the area was in an untidy condition by reason of the building work involved in converting the health club into a prestigous flat. Mr. Bonney has referred the court to evidence of the appellant at the trial, that the whole area was a mess and that it was pointless to try to do anything. The area was a virtual building site. It would have been difficult to get at the graffiti because of materials stacked against it. The graffiti quickly faded. The graffiti did not detract from the overall appearance of the area. The quality, as the breach found, was an important factor in any decision and, it is submitted, the judge did not spell out his reasons for finding the presence of the graffiti important. Nowhere did the judge consider the degree of failure necessary to found a reasonable opinion within the meaning of the side letter, it is submitted. It is also submitted that the true reason for the purported termination was not the graffiti but ill-will towards the appellant resulting from the other proceedings. As to that the judge stated:

"There is little doubt on the evidence before me that what lies behind much of this dispute is that in August 1996 the defendant issued entirely separate proceedings in the High Court against the present first claimant. The details are not material but the resentment which this action created is clearly relevant. Mr Quinlan accepted that he was 'taking the gloves off', and that he had considered whether there were grounds upon which the defendant could be said to be in breach of his obligations, and there were discussions to which I shall refer shortly which led to the letter of termination being given. If the defendant had not issued his action it is most unlikely in my view that such a letter would have been written. Although this motivation is relevant and some would say unattractive, it does not follow that the second claimants could not form the reasonable opinion that the defendant was failing to perform the specified functions."

21. Mr. Bonney submits that, having accepted that the respondents' motivation was relevant, it was not open to the judge to hold that the graffiti was the true reason for the termination or a sufficient reason for the termination. The judge heard several witnesses describe the Old Stairs area and the graffiti. It was for him to decide as a matter of fact the nature and extent of the graffiti and whether its continued presence created a situation, the existence of which permitted a reasonable opinion to be formed, in the language used in the side letter, that the cleaning function was not being properly performed.
22. The judge assessed the evidence and reached the conclusion already quoted. Evidence from the appellant about the difficulty of getting at the graffiti would probably have had greater force had the point been made in the correspondence in the autumn of 1996. Moreover, the presence of graffiti is capable of being regarded as a mischief separate and distinct from general untidiness and clutter in the area. A plain request to remove it was made and no action was taken. The judge was entitled to make the findings of fact he did and to hold that the extent of the breach of the cleaning obligations set out in the side letter was such as to be capable of justifying a termination of the arrangement.
23. The judge's conclusion was sufficiently reasoned. The side letter refers to "the overall appearance of the Anchor Brewhouse as a prestigous building" as noted by the judge. While the judge did not use the word "repudiation" as conduct entitling the other party to terminate, it is clear that he regarded the appellant's failure to remove the graffiti as capable of giving rise to "the reasonable opinion that the defendant was not performing his functions as set out in the side letter." The side letter provided an arrangement for cleaning the area. Graffiti was present and was not removed when requests to remove it were made. That was conduct capable of giving rise to a right to terminate the arrangement. The judge was correct to hold that if such a right arose it could be exercised, even if it would not have been exercised but for the more general dispute between the parties and the motivations arising from that dispute.
24. The judge prefaced his consideration of the second main question in this way:

"Thus I return to the question: did the second claimants, through their directors, hold the reasonable opinion in November 1996 that the defendant had not properly performed the functions referred to in the side letter. A number of points may be noted. It is common ground that a board resolution is not necessary. The existence of an opinion can be established in other ways. Such opinion must be reasonable although not necessarily one with which others, including the trial judge, would have agreed. The directors of the company would be entitled to rely upon information given to them if from an apparently reliable source. They would not have to have direct personal knowledge of the matters in question, but would need to have sufficient information to enable them to form their view."

25. That approach to the issue has not been challenged on the hearing of this appeal. It is not suggested that the evidence before the court was inadmissible. The judge highlighted the fact, understandably relied on by the appellant, that neither of the directors, Mr. Saxby or Mr Brummit, gave evidence, the first, it was claimed on behalf of the respondents, because he had fallen out with Mr. Gay, and the second because of ill-health. Mr Bonney draws attention to the fact that some of the material correspondence was not before the directors (that is the correspondence to which I have referred), and makes the general submission that they could not have formed that reasonable opinion necessary to terminate on such information as was shown to have been available to them. Mr. Gay accepted that he was not involved in the day to day management of the second respondent company. Moreover, the judge made a finding that Mr. Quinlan was given instructions to send the termination letter without first making the necessary finding that the directors had formed the necessary reasonable opinion, it is submitted. That expression appears only in the judge's general conclusion. It is further submitted that the judge should have been less willing to draw the inference that he did because the respondents had declined to disclose privileged correspondence with their solicitors.
26. The judge obviously considered the evidence carefully and had in mind the points properly made on behalf of the appellant. The judge stated that he regarded the explanation for not calling Mr. Saxby and Mr. Brummit as unsatisfactory, and added that he should:

"scrutinize with care the claimants' evidence relating to what I have called the final main question. Criticism is also made of the lack of documentation and what appears to be only partial disclosure. Again, I bear in mind the points made on behalf of the defendant."

27. There were no minutes recording directors' decisions. To the extent that he found that there were understandable gaps in Mr. Quinlan's memory of the relevant events, the judge expressed misgivings about the evidence of Mr. Quinlan.
28. In a trial which took six days the judge had a good opportunity to assess the witnesses and to decide what is likely to have passed between the directors who did not give evidence and the witnesses who did. The judge concluded that it was most unlikely that Mr Quinlan would have sent the termination letter unless given instructions to do so. Mr Saxby was not the sort of person to be informed of matters after the event, the judge held. The termination letter did in terms specify the failure to remove graffiti. There was evidence that Mr. Quinlan, who wrote the termination letter, had met Mr. Saxby the previous week. There was evidence from Mr. Gay that he gave instructions to the solicitor to write the termination letter. Mr. Gay also said that he had spoken with the two directors, and that it had been agreed that a notice should be given. The judge refers specifically to Mr. Gay's evidence at page 30 of the transcript for 26th March 2001:

"Mr. Gay, you said that you talked to Mr Saxby and Mr Brummitt, about the termination. What was their opinion as to the state of the Horsleydown Stairs?

A. They both felt that it should be cancelled.

Q. What did Mr Saxby say about the position?He was there did you tell us every day on site?

A. Yes.

Q. And what did he think about the position?

A. Mr Saxby said that he thought it should be terminated and it should have been terminated earlier.He thought we had been a little bit---

Q. Why did he think that?

A. Because of the graffiti and it had not been cleaned up and the general dirtiness and the grills, a combination of things.

Q. What about Mr Brummitt, you said he visited London when he was down with you?

A. Yes.

Q. What was his opinion as to the state of the stairs area?

A. I can't recall that but he certainly would not have -- it is highly likely he wouldn't have visited it just prior. I think he would know about it -- he did know about the graffiti.

Q. What did he think about the graffiti? A. He knew about the graffiti from me because he asked me. He wouldn't go all the way to London just to see the graffiti, and I gave him a description of what the graffiti was at the time.

Q. What did he say about that?

A. He said he thought -- he said we should go ahead and terminate."

29. The judge was on the evidence entitled to conclude that the directors had formed the necessary opinion. That was a proper inference from the evidence, notwithstanding the absence of evidence from the directors themselves. The judge was entitled to conclude that the directors thought that the arrangement should be terminated and that they gave instructions to terminate the arrangement because of the opinion that they held. The presence of the graffiti was a major factor in their decision. I am not able to accept the submission that, because for example in the passage of the transcript I have read, the witness did not state in terms that an opinion had been formed, that it was impossible to infer that an opinion had been formed or that the instructions, to which the judge referred, were the result of the opinion formed by the directors. The judge in his general conclusion was entitled to decide as he did. For the reasons I have given, I would dismiss the appeal on the question of liability.
30. There remains a ground of appeal that the costs order made by the judge was erroneously made. The judge ordered the appellant to pay the costs of the trial and to do so on an indemnity basis. On behalf of the appellant Mr. Bonney submits that the judge erred in principle in making an indemnity order. The judge had in mind letters from the first respondent's solicitors to the appellant on 9th July 1999 and 11th February 2000, in which, either, as the respondents puts it, offers of settlement were made, or, as the appellant puts it, suggestions were made. It is inevitable, in my judgment, to conclude that the letters were written at least with a view to a negotiation taking place. The trial was over a year after the second letter and began on 26th March. Mr. Bonney submits that the mere failure of a party to negotiate, believing as he does in the rightness of his case, does not justify the award of indemnity costs as distinct from standard costs against him if in fact he fails in the action. Moreover, Mr. Bonney submits that the judge made an error of principle in relying upon a clause in the lease, clause 3.39, which purported to provide that, whatever costs were incurred in disputes between the parties and whichever party was successful, would involve a payment of costs by the appellant to the respondents. That, submits Mr. Bonney, is contrary to public policy. Moreover, the language of the clause would not permit indemnity costs, as distinct from standard costs, in a case where the respondents have in the event succeeded.
31. As I said when dealing with the question of liability, this is a case in which the judge had every opportunity to assess the situation as a whole, in what has been an unfortunate piece of litigation. The trial lasted for six days. There were other issues between the parties as well as those involved in the present litigation. The judge was in a good position to consider the attitude of the parties to each other and to the court with respect to their conduct of this particular case. He had a discretion with which this court should interfere only if there has been an error of principle or if he was plainly wrong in his conclusions. The judge stated:

"In the end the complete failure to respond to the sensible letters which were written on behalf of the claimants in my view is a factor of real and genuine importance. It is probably unnecessary for me to stigmatise the conduct of the defendant specifically under 44(3), but I have to say that this is so pre-eminently a case that he should have been willing to enter into sensible negotiations that I am in the end unsympathetic towards the defendant. Taking all matters into account I reach the conclusion that the claimants are entitled to their costs. How that is expressed is a matter I can discuss with counsel but the effect is that it is to be on an indemnity basis."

32. The judge thus attached importance to the failure to negotiate throughout the proceedings and in particular following the offer or at least invitation to negotiate was made by the respondents. The effect of clause 3.39 was raised. While the judge did use the expression "taking all matters into account" in the passage I have quoted, he does not appear to me to have relied on clause 3.39. I would approach the case on the same basis as did the judge. Because of the discretion available to the judge and because of the obvious care with which, as revealed in his judgment, he has taken to assess the conduct of the parties and their litigation, I am not prepared to vary the decision that the judge made, that in this particular case the conduct of the appellant, in particular in declining to negotiate, created a situation in which costs should be awarded on an indemnity basis.
33. The further point is taken that the respondents should have been awarded only a proportion of their costs. It is submitted that the respondents lost on other issues, planting and the general cleaning issue, which took a good deal of time. Apportionment of time in a trial such as this is a difficult exercise. In the course of Mr. Bonney's reply on the question of costs, he intimated, on the basis of information from junior counsel who appeared at the trial, that a third of the time had been spent on issues on which the respondents had lost. Counsel for the respondents who appeared at the trial has not offered an estimate of that kind. Mr. Hodge QC, counsel for the respondents, makes the point that this was a case in which the extensive evidence and cross-examination on general issues would have been necessary, even if the issue had been confined to that on which the respondent was successful. The judge plainly had in mind the possibility of an apportionment by referring specifically to CPR 43(3).
34. As with the judge's decision on indemnity costs, I would not be prepared to upset the exercise of a discretion and his judgment that the respondents should have the whole of their costs. In my conclusion, on both grounds I have borne in mind the figure that we have been given on behalf of the respondents, and not challenged on behalf of the appellant, that seven-eights of the costs incurred have been incurred after the letter of February 2000 in which proposals were made to the appellant. For the reasons I have given I would dismiss this appeal.
35. LORD JUSTICE LONGMORE: I agree with my Lord's conclusion on all issues. I have been troubled by only two points in the course of Mr. Bonney QC's submissions. First, I was initially doubtful, as was Mance LJ in giving permission to appeal, whether his argument that, before the right of cancellation as set out in the side letter arose, there had to be a breach of contract of a sufficiently serious kind to justify termination of the contract, had been put before the judge. Mr Bonney has persuaded me that the argument was indeed raised, and I am now satisfied that the judge not merely dealt with that argument but indeed accepted it, and that his judgment must be construed as holding that the breach of the side letter, arising from the fact that the graffiti had not been cleaned, was of a sufficiently serious kind to justify termination. As the judge made clear, it was a continuing breach which was never rectified and the appellant had no plans to rectify it in future. It was also a breach which put the landlords in breach of their covenant with other tenants of the block, that the common areas should be kept clean in return for the payment of the service charge.
36. The question whether a particular breach of contract justifies termination is a matter of fact and degree. This court will not reverse the tribunal of primary fact unless that tribunal was plainly wrong. On this issue the judge was not plainly wrong. Mr. Bonney's argument must be rejected.
37. The other point which initially troubled me is whether the second claimant could be said to have proved that it formed the opinion, let alone the reasonable opinion, that the side letter arrangement should be terminated by reason of the defendant's failure properly to perform the function of cleaning. The second claimant is a company which had two directors at the relevant time, neither of whom were called to give evidence. One director was said to have fallen out with the current director of the first claimant who was responsible for these proceedings, Mr. Gay. The other director was said to be too ill to give evidence. The judge accepted Mr. Gay's evidence that he had discussed the matter with the two directors, and the judge concluded that the directors were of the relevant opinion. The judge was entitled to rely on Mr. Gay's evidence if he accepted that it was true. In these circumstances, it is impossible for Mr. Bonney to say that there was no evidence upon which the judge could have come to the conclusion that he did. The attack on this aspect of the judgment must fail.
38. We were told that the judgment in the present case was the last decision made by His Honour Judge Butter before he retired. For my part, I would pay tribute to the care that he took in his judgment in what could not have been an easy case to try, not least because a case with a two day estimate lasted six whole days.
39. SIR MARTIN NOURSE: I also agree that the appeal should be dismissed. On the first main question the prerequisite in the side letter to a variation or cancellation of the agreed arrangement by the second respondents was that they should be of the reasonable opinion that the appellant was not properly performing the functions of lighting, cleaning and planting. Accordingly, it being clear as a matter of construction that a failure properly to perform one of those functions would be enough, the terms in which Judge Butter expressed his conclusion in paragraph 19 of his judgment (which my Lord has read) demonstrates that he applied the correct test, the question being whether the second respondents could be of the reasonable opinion that the appellant's failure to remove the graffiti amounted in the circumstances to his not having properly performed the cleaning function. It is beside the point to ask whether the non-performance had to be the equivalent of a repudiatory or a non-repudiatory breach of contract. Provided that it was not de minimis it would be enough to satisfy the test. It is evident from the judge's reference to the insufficiency of a light bulb going out, or the presence of mud or dirt on a single occasion, that the judge was of the same opinion.
40. The judge's finding as to the duration, nature, colouring and size of the graffiti is set out in paragraph 13 of his judgment, which my Lord has read. On the basis of that finding and the appellant's failure to cause or attempt to remove the graffiti, despite the letters written to him, the judge was fully entitled to hold, as effectively he did in my judgment, that the non-performance was more than de minimis. In my judgment, the conclusion at which he arrived in paragraph 19 of his judgment is unimpeachable.
41. On the second main question, whether the second respondent in fact formed the opinion that the appellant had not properly performed the cleaning function and authorised the letter of termination to be written, I am satisfied, on a consideration of the evidence, in particular that elicited during that part of Miss Holland's re-examination of Mr. Gay, which my Lord has read, that there was sufficient material on which the judge could come to the conclusion that he did.
42. On the other points which have been raised, I do not wish to add anything to the reasoning of Pill LJ.
Order: Appeal dismissed.