‘Labyrinthine’ lease dispute

Posted: 28th January 2013

Office BuildingIn ruling that the conditions of an agreement to enter into a commercial lease have been duly satisfied, the High Court has commented adversely on the ‘labyrinthine’ drafting adopted by the parties. On a proper interpretation of the agreement, the prospective tenant had no arguable defence and was obliged to execute the lease.

The prospective tenant, a substantial retail chain, had agreed to lease a retail park unit which had yet to be built. The agreement to enter into the lease contained highly complicated provisions relating to the construction of the unit and the point at which the lease should be granted and rent become payable.

Lawyers representing the prospective tenant argued that the conditions required for execution of the lease had not been met in that it had been denied the opportunity to participate in inspections or to make representations during the construction of the unit. It was also submitted that planning difficulties in relation to an advertising sign at the entrance to the park – or ‘totem’ – meant that the obligation to complete the lease had not been triggered.

Ruling in favour of the prospective landlords and ordering specific performance of the agreement, the court ruled that the prospective tenant’s grounds of resistance were without merit. Its submissions in respect of the totem were ‘wholly lacking in anything other than purely technical merit’. The totem was not part of the premises to be demised and made ‘absolutely no difference’ to the tenant’s occupation of the premises.