TfL subsidiary fails in bid to have council defence struck out in £6m railway arch rent dispute

The London Borough of Hackney has successfully resisted an attempt by part of Transport for London to strike out its defence in a complex £6m dispute over rent for a railway arch.

In Rail for London Ltd v London Borough of Hackney [2022] EWHC 1075 (Ch) Jonathan Hilliard QC, sitting as a deputy judge of the High Court, ruled that a novel point of law was involved which required determination at a trial and that he should not therefore strike it out.

Rail for London (RfL), which maintains the North London Line, sought to strike out Hackney’s defence relating to estoppel by convention.

It argued that Hackney’s defence disclosed no reasonable grounds for defending the claim and that the council was impermissibly seeking to use estoppel by convention as a sword rather than a shield, to create an enforceable right to receive rent where none previously existed.

Doing so would have the effect of varying the relevant lease between them without Hackney having provided any consideration, RfL argued.

A lease was signed for 99 years in 1994 for railway arches and buildings at Kingsland Viaduct between Hackney as landlord and RfL's predecessor.

Leases C and D were granted in 1996, and after a complex series of transactions and in November 2003, Lease D was surrendered for £7,788,500.

RfL became tenant under Lease C in 2009 and until September 2019 continued to pay rent.

In December 2019, RfL asserted that as a result of the lease surrender, no basic rent had been due after that and sought repayment of around £6m paid during the intervening period. Hackney disagreed and RfL issued proceedings. A trial is listed for four days in October 2022.

Mr Hilliard said: “In my judgment the relevant legal points on estoppel by convention are open to serious argument, so there are reasonable grounds to defend the claim.

“In my judgment, this is not close to a situation where the court can be confident that there is nothing in Hackney's argument, or that it is bound to fail.

“I also consider that it would be appropriate in an area of law that is uncertain and contains a number of decisions that are not straightforward to reconcile (such as the circumstances in which estoppel is impermissibly used as a sword), for the court to make its decision on the basis of the court's precise factual findings as to the alleged convention and other elements of the alleged estoppel by convention.”

He said a novel point of law was involved that should be determined on the basis of the facts found at trial.

Mark Smulian