Progress Property Co Ltd v Tradegro (UK) Ltd (2008)
An indemnity notice seeking reimbursement of sums payable following repairs to leasehold property had been valid where there had been no requirement that the schedule of repairs ought to have been subjected to critical analysis in order to reduce it to a final proper figure at the indemnity stage. However, it was not appropriate to determine summarily whether a counter-indemnity notice was also sufficient and therefore valid, and that matter would remain to be determined at trial.
The applicant company (T) applied for summary judgment on the claim made against it by the respondent company (P) and T's counterclaim or to strike out aspects of P's claim. P applied to amend its particulars of claim to include a related dispute. P was a property holding company. One of its property portfolios comprised the freeholds of shops occupied by a retail chain (X) which was associated with T. It had always been envisaged that the freeholds might be sold to third parties. T had agreed to indemnify X in part in respect of certain repairing obligations under certain leases of retail properties where P had disposed of the freeholds and P agreed to counter-indemnify T in respect of T's liability. In respect of a certain property, the landlord had served a notice of dilapidations on X. X instructed a surveyor, arranged for repairs to be done and called upon T under the indemnity to indemnify it in respect of what it maintained was the relevant part of its costs so incurred. T paid the sum requested to X and purported to give P notice pursuant to the counter-indemnity demanding recovery of that sum. P then purported to serve a counter-notice pursuant to the counter-indemnity. A dispute arose between the parties over the sum payable and the validity of the notices issued. P issued proceedings against T, and T counterclaimed. T contended that, on the true construction of the counter-indemnity, its notice was valid and effective and according to its terms, but that P's counter-notice had been invalid as it had in part admitted that some elements of the claim were valid but then disputed the whole of the quantum, estimating the indemnified amount at nil. T argued that the amount claimed was therefore payable and due. P submitted that T's notice was invalid, as T had failed to comply with a term to be implied into the agreement that T would act at all times as "reasonable indemnifiers" and thereby subject any claim by X to critical analysis. P complained that T had simply paid the sum claimed by X without entering into further negotiation. P argued further that, even if T's notice was valid, its counter-notice was also valid in that it had had to give its own estimate of the indemnified amount at nil because T had, despite requests, failed to provide the necessary information to enable P to reach its own figure. P therefore maintained that T was not entitled to judgment for the sum claimed. P also applied to amend its claim in relation to a separate dispute with T which raised a similar issue as to the validity of the indemnity notice.
There was no scope for finding in either the indemnity or counter-indemnity a requirement that T would subject X's schedule of repairs to critical analysis in order to reduce it to a final proper figure at the indemnity stage. The indemnity notice was, accordingly, valid and if the indemnified amount stated therein was too high it was incumbent upon P to contest it under the express provisions of the counter-indemnity. (2) The purpose of the counter-notice had not been to set the scene for negotiation but to ensure that a minimum liability was paid so as not to keep T out of the undisputed part pending determination of the dispute, 9 Cornwall Crescent London Ltd v Kensington and Chelsea RLBC (2005) EWCA Civ 324, (2006) 1 WLR 1186 distinguished. P had been required to provide proper grounds for its estimate in the counter-notice, which had therefore to be a genuine and considered one. Without the further information requested, albeit that it was in the hands of X rather than T, the only estimate P could have made was a nil one. It was not appropriate to rule, on a summary judgment application, that the counter-notice had been valid. That was a matter for trial if the parties wished to take the matter that far. (3) It was declared that T's indemnity notice was valid, and consequently P's application to amend its claim in the similar dispute had to fail.
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