20-6 or 4-1: Council wins High Court battle over lease of stately home

A High Court judge has likened the result of a trial of a lease dispute involving Wigan Borough Council to the outcome of rugby league and soccer matches.

His Honour Judge Hodge QC, sitting as a judge of the High Court, heard the case over Haigh Hall hotel between the council and Scullindale Global, Craig Baker and Amir Madani.

Haigh Hall is a Grade II* listed 19th century stately home within Haigh Hall Country Park. The council owns the freeholds of both the park and the hall.

It in 2016 agreed a lease with Scullindale for 199 years at a premium of £400,000 plus VAT. Mr Baker and Mr Madani gave certain guarantees.

In Wigan Borough Council v Scullindale Global Ltd & Ors [2021] EWHC 779 (Ch) HHJ Hodge said: “The overarching issue in this case is whether Wigan has validly terminated the lease with effect from 22 November 2019 by validly giving a notice dated 16 September 2019 exercising a landlord's break clause which the council claims had become exercisable following Scullindale's asserted failure to achieve the second ‘milestone’ [under the lease] of completing the refurbishment and redevelopment of Haigh Hall appropriate to a 4-star boutique hotel prior to 23 May 2018.”

Scullindale has remained in occupation and claims to be entitled to do so, while Wigan claimed the company was a trespasser and liable for damages for trespass or mesne profits.

If the break notice was effective to terminate the lease, then the council is obliged to pay compensation to Scullindale under clause 9.3 of the lease which provided that the lessor will pay the lessee the lower of the premises open market value or the premium plus the value of any improvement.

HHJ Hodge said: “The council's case is straightforward. The lease contained a contingent condition…whereby, should the second ‘milestone’ not have been achieved by 23 May 2018, the council was entitled to terminate the lease and re-acquire Haigh Hall (essentially) at market value.

“This was not dependent on Scullindale being in breach of any of its lease covenants, breaches of which are not relevant to the council's primary relief sought by its claim.”

Scullindale argued the lease remained valid, no relevant default had occurred and that Haigh Hall had achieved a 4* rating from the AA in April 2018.

HHJ Hodge heard a complex set of disputes about whether anything had occurred to allow the council to break the lease and, even if it had, whether notice of that break had been correctly served.

The judge concluded the lease ended on 22 November 2019 and the council was entitled to close the leasehold title at the Land Registry and was not in any breach of the lease by its service of the break notice.

He found that Scullindale was in breach of the lease in failing to give up vacant possession of Haigh Hall on 22 November 2019 but dismissed the council's claim for mesne profits, damages for trespass, double value and interest.

HHJ Hodge also dismissed the council's claims against Mr Baker and Mr Madani, describing these as “a waste of the court’s time”.

Turning to sporting analogies, he said:”For followers of Wigan Warriors [rugby league club], I would adjudge the final score to be in the order of 20-6 to the council.

“For followers of the Latics (Wigan Athletic FC to the incognisant) the score is probably in the order of 4-1 to the council. That will have to be factored in to any award of costs.”

He went on: “Although the council has won, they are the paying party under clause 9.3 of the lease in a multi-million pound sum. Any costs, yearly value or mesne profits due to the council would always have fallen to be set-off against this termination payment.”

The judge invited the council and Scullindale “to consider whether the terms of this judgment may assist them in coming to some form of sensible accommodation over the future of Haigh Hall”.

This would be wise he said because “the Covid pandemic means that the council will have to pay Scullindale over a million pounds more than Haigh Hall is presently worth when it comes to vacate the property.

“Scullindale has delivered a first-class hotel and wedding and events venue in an appropriately, and splendidly, restored and refurbished Grade II* listed building.”

He said it was clear there were tensions between operating the hall successfully and maintaining unrestricted public access to its grounds.

“Even at this late hour, the council may feel that permitting Haigh Hall Hotel Limited to operate the hotel business and act as a buffer between itself and the public, but with more clearly defined, but restricted, rights of public access, may prove to be a sensible, and more cost-effective, way forward,” he suggested.

Mark Smulian