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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Performance Retail (General Partner) Ltd v Wagamama Ltd [2021] EWHC 3866 (Ch) (10 February 2021) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2021/3866.html Cite as: [2021] EWHC 3866 (Ch) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
Fetter Lane London, EC4A 1NL Wednesday, 10 February 2021 |
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B e f o r e :
(Sitting as a Judge of the High Court)
____________________
PERFORMANCE RETAIL (GENERAL PARTNER) LIMITED | ||
THE GENERAL PARTNER FOR PERFORMANCE RETAIL LIMITED PARTNERSHIP AND PERFORMANCE RETAIL (NOMINEE) LTD | Claimant | |
- and - | ||
WAGAMAMA LIMITED | Defendant |
____________________
MR C. HEATHER QC (instructed by Charles Russell Speechlys) appeared on behalf of the Defendant.
____________________
Crown Copyright ©
JUDGE KRAMER:
The ADL
"The provisions of this agreement (other than those contained in clauses 1 (Definitions) this clause 2 (Agreement for Lease) 16 (Variations to the Lease Form) 18 (Alienation) 19 (Disputes) 20 (VAT) 21 (Termination on Tenant's Default) 22 (Notices) 23 (Variations to this Agreement) 24 (Non-Merger) 25 (Law and Jurisdiction) 26 (Legal Costs) 27 (Contracts) 28 (Confidentiality) and Schedules 2 to 6 (inclusive)) are entirely conditional upon the Satisfaction Date occurring."
"If the Satisfaction Date has not occurred by the Conditions Long Stop Date then either the Landlord or the Tenant shall be entitled to determine this agreement by serving written notice to that effect upon the other at any time after the Conditions Long Stop Date (but not once the Satisfaction Date has occurred) and on service of such notice this agreement (save for clause 2.4) shall absolutely determine and shall be of no further effect and be at an end without any party having any liability whatsoever to the other(s)."
"2.2 The Landlord and the Tenant will observe and perform the conditions and their respective obligations set out in Schedules 2 to 7 (inclusive) with regard to (amongst other things) satisfaction of the Conditions.
2.4 If this agreement is determined pursuant to clause 2.3 the Tenant shall at its own expense forthwith remove any notice or Land Charge entry registered in respect of this agreement.
2.5 The Landlord shall keep the Tenant regularly updated as to the satisfaction of the Conditions (save the Licencing Condition) and respond promptly and (save as regards any financial or commercially sensitive or commercial details) comprehensively to any request in writing from the Tenant as to the current position on the satisfaction of any Condition.
2.6 The Tenant shall keep the Landlord regularly updated as to the satisfaction of the Licencing Condition and respond promptly and (save as regards any financial or commercially sensitive or commercial details) comprehensively to any request in writing from the Landlord as to the current position on the satisfaction of the Licencing Condition.
2.7 Following the Satisfaction Date the Landlord will forthwith notify the Tenant that this agreement is now unconditional and the remaining provisions of this Agreement will apply.
2.8 Subject to the provisions of this clause 2 and the other provisions of this agreement the Landlord will grant and the Tenant shall accept the Lease 3."
"1. The Site Assembly Condition shall be satisfied on the later of the date when the Landlord notifies the Tenant that:
1.1 it owns has acquired or has the benefit of unconditional agreements to acquire all Third Party Interests or
1.2 if earlier the date on which the Landlord indirectly or directly has the benefit of a Satisfactory CPO necessary in order to procure the acquisition of all Third Party Interests and the Landlord shall use its reasonable endeavours to satisfy the Site Assembly Condition but the Landlord shall not be obliged or required to do or omit to do anything that in the Landlord's reasonable opinion …"
There follows a list of influences which the landlord may take into account, such as it being against the commercial interests of the landlord or would adversely affect the timescale or costs of carrying out and completing the development. I do not need to read from all of those. Satisfactory CPO is again a defined term and that means a compulsory purchase order which is satisfactory to the landlord.
"Subject to paragraph 3 of this schedule the Highways and RCO Condition shall be satisfied upon either:
2.1 completion of all required S278 Agreements in forms satisfactory to the Landlord (acting reasonably) and which do not contain any Landlord's Onerous Condition and
2.2 all RCOs required by the Landlord in respect of the Relevant Highways in forms satisfactory to the Landlord (acting reasonably) having been obtained or
2.3 notification by the Landlord to the Tenant that it waives the Highways and RCO Condition."
"The Landlord shall use its reasonable endeavours to satisfy the Highways and RCO Condition but the Landlord shall not be obliged or required to do or omit to do anything that in the Landlord's reasonable opinion…"
Thereafter there is a list of various conditions which the landlord can take into account in forming its opinion.
22 At paragraph 5 it is stated
"The Landlord shall keep the Tenant reasonably informed of the progress of satisfying the Highway and RCO Condition."
"1 In this schedule 4 the "Anchor Stores" means the Cinema [that is Cine-UK], MSU1 [which is the unit where there is an ADL in relation to Next] and MSU4 [which is the H&M ADL].
2. Preletting Condition is in the case of each of the Anchor Stores either:
2.1 the grant of a lease to a tenant for a term of not less than 10 years or
2.2 [it becomes more complicated] the exchange of an agreement with a tenant to grant such lease which is either unconditional or conditional only upon this agreement with the Tenant becoming unconditional or
2.3 a conditional agreement with a tenant to grant such lease becoming unconditional or conditional only upon this agreement with the Tenant becoming unconditional
3. The Preletting Condition shall be satisfied when:
3.1 the Landlord notifies the Tenant that leases of the Anchor Stores have been completed or agreements for lease have been exchanged and are or become unconditional or conditional only upon this agreement with the Tenant becoming unconditional to satisfy the Preletting Condition.
3.2 The Landlord notifies the Tenant that it waives the Preletting Condition.
4. The Landlord shall keep the Tenant reasonably informed of the progress of satisfying the Preletting Condition."
"1 The Finance Condition shall be satisfied when either:
1.1 the Landlord notifies the Tenant it has fully sufficient funding from established sources in the market (whether by (in whole or in part(s)) debt, equity or otherwise) on terms which are commercially acceptable to the Landlord to enable the whole Development to be undertaken and completed in accordance with the provisions of this agreement; and
1.2 the Landlord notifies the Tenant that it waives the Finance Condition."
I should say that the "and" must be an "or". It must be a typographical error, because clearly the landlord would not be both notifying the tenant that it has got the funding and also stating at the same time that it is waiving the condition.
"2. The Landlord shall use its reasonable endeavours to satisfy the Finance Condition but the Landlord shall not be obliged or required to do or omit to do anything that in the Landlord's reasonable opinion…"
Again there is a list of factors which the landlord may take into account such as whether something it is required to do or omit is against its commercial interests.
"1. The Possession Condition shall be satisfied when either:
1.1 the Landlord notifies the Tenant it has achieved vacant possession of the Phase Two Zone [the Phase Two Zone is where the units in which the defendant, Next and H&M were taking units]; or
1.2 the Landlord notifies the Tenant that it waives this condition.
2. The Landlord shall use its reasonable endeavours to satisfy the Possession Condition but the Landlord shall not be obliged or required to do or omit to do anything that in the Landlord's reasonable opinion …"
The list of factors which may be taken into account under 2 is the same as those relating to the Finance Condition.
"Any notice to be served on or communication to be sent to any party to this Agreement shall be in writing and shall be regarded as properly served or sent if served or sent to the persons and the addresses specified in clause 22.4 by either:
22.1.1 personal delivery, or
22.1.2 pre-paid registered or special delivery mail."
"Notices and communications shall be deemed to have been served or received as follows:
22.2.1 in the case of personal delivery on the date of delivery;
22.2.2 in the case of pre-paid registered or special delivery mail, on the second working day after the notice of communication is posted."
"If the Access date has not occurred by the Construction Long Stop Date either party can terminate the agreement by written notice, providing the access date has not passed before provision of the notice."
The undisputed history
"We act for Performance Retail (General Partner) Limited the General Partner for Performance Retail Limited Partnership and Performance Retail (Nominee) Limited ('our Client'), the Landlord of the Premises under the terms of the Agreement for Lease.
We hereby give you notice, on behalf of our Client, that the Conditions as defined in the Agreement for Lease, were satisfied on 19 December 2016 (the 'Satisfaction Date'). In accordance with clause 2.7 of the Agreement for Lease we give you notice, on behalf of our Client, that the Agreement for Lease is now unconditional and the remaining provisions of the Agreement for Lease will apply.
Please acknowledge receipt of this Notice by signing, dating and returning to us the enclosed copy of the Notice in the prepaid self-addressed envelope provided."
The parties' cases
The parties' arguments as to construction
"The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene. The approach in Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989, which deals with the construction of commercial contracts, is by analogy of assistance in respect of unilateral notices such as those under consideration in the present case. Relying on the reasoning in Lord Wilberforce's speech in Reardon Smith, at 996D to 997D, three propositions can be formulated. First, in respect of contracts and contractual notices the contextual scene is always relevant. Secondly, what is admissible as a matter of the rules of evidence under this heading is what is arguably relevant. But admissibility is not the decisive matter. The real question is what evidence of surrounding circumstances may ultimately be allowed to influence the question of interpretation. That depends on what meanings the language read against the objective contextual scene will let in. Thirdly, the enquiry is objective: the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind. It follows that one cannot ignore that a reasonable recipient of the notices would have had in the forefront of his mind the terms of the leases…
(3) It is important not to lose sight of the purpose of a notice under the break clause. It serves one purpose only: to inform the landlord that the tenant has decided to determine the lease in accordance with the right reserved. That purpose must be relevant to the construction and validity of the notice…
(4) There is no justification for placing notices under a break clause in leases in a unique category. Making due allowance for contextual differences, such notices belong to the general class of unilateral notices served under contractual rights reserved, e.g. notices to quit, notices to determine licences and notices to complete… Even if such notices under contractual rights reserved contain errors they may be valid if they are 'sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt as to how and when they are intended to operate'…That test postulates that the reasonable recipient is left in no doubt that the right reserved is being exercised. It acknowledges the importance of such notices. The application of that test is principled and cannot cause any injustice to a recipient…"
"It is well established that where a contract is concerned, the terms of the contract are to be ascertained by an objective assessment of the meaning of the language, oral or written, used by the parties. The unexpressed and uncommunicated intentions of the parties cannot, even where by chance they coincide, alter the terms, objectively ascertained, of the contract they have made... But this well-established principle does not, in my view, apply to a notice. A notice is intended to give information. If a document has succeeded in imparting the requisite information to the recipient and was intended by its author to do so, it seems to me that it can properly be described as a notice in writing giving that information. That is the position in this case.."
"A notice is intended to pass information. It is intended to be a communication. If the terms of a written document are capable, fairly read, of communicating the requisite information, are intended to communicate the requisite information and do in fact communicate the requisite information, it seems to me an extraordinary proposition that an equivocation in the language in which the notice is couched can entitle either party to deny the efficacy of the notice."
"The tenant within 28 days after receipt of the rent notice may serve on the landlord a counternotice specifying the rent which the tenant is willing to pay from the relevant review date and calling upon the landlord to negotiate with the tenants the amount of rent to be paid."
The lease went on to say that if the tenant served a counternotice, the landlord and tenant were to consult together to reach agreement as to the amount of rent to be paid and in the absence of agreement, the rent was to be determined by an arbitrator.
"We shall very shortly be placed in funds for the extension of the option for a further five years upon payment of £20,000 by Westbury [that is the intended purchaser] (clause 9.1 of the option agreement refers)."
It went on to ask the solicitors for their bank account details so as to organise a CHAPS transfer.
"…during the last year of the Option Period. Failure to comply with either of those conditions would have been fatal, because the notice would not have been a notice of the type stipulated by clause 9.1. But the provision that Westbury should by the notice 'require [the option] period to be extended by 5 years' is a stipulation of a different nature. It simply describes what it is that the notice must convey to the recipient, without prescribing any particular form of words or any particular details that must be included."
That is what was said by Henderson J as it appears in paragraph 8 of the judgment of the court of appeal.
"In my view, Lord Steyn's first proposition cannot sensibly be pressed into service as contended by Mr Reynolds [counsel for the vendor]. A typical case of an indispensable condition is where the contract states that the relevant notice shall be in writing and shall contain particular information. Some clauses may expressly say that the notice 'shall only be valid if…' Where express language of this kind does not appear in the clause, it will be a question of construction whether it is an indispensable condition for validity that the notice satisfies the requirements of the clause."
"The correct approach to the validity of the contractual notice is not now in doubt. It is that the notice should be in terms that are sufficiently clear to bring home to the reasonable recipient that the person giving the notice is exercising the relevant contractual rights."
"…a tenant ordinarily is not to be expected to enquire into, or think about, a landlord's reasons for serving an otherwise unambiguous notice in connection with a lease.
This serves to counter the argument that the reasonable recipient, given the background, namely the service of a notice seeking possession, could not have thought that the notice could have been intended to convert the shorthold tenancy into an assured tenancy.
"In short, the court's task is to ascertain the objective meaning of the relevant contractual language. This requires the court to consider the ordinary meaning of the words used, in the context of the contract as a whole and any relevant factual background. Where there are rival interpretations, the court should also consider their commercial consequences and which interpretation is more consistent with business common sense. The relative weight to be given to these various factors depends on the circumstances. As a general rule, it may be appropriate to place more emphasis on textual analysis when interpreting a detailed and professionally drafted contract such as we are concerned with in this case, and to pay more regard to context where the contract is brief, informal and drafted without skilled professional assistance. But even in the case of a detailed and professionally drafted contract, the parties may not for a variety of reasons achieve a clear and coherent text and considerations of context and commercial common sense may assume more importance."
"The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean."
The parties' submissions
Discussion and conclusion