Company Developments (Finance) Ltd v Coffee Club Restaurants Ltd & Ors [2011] EWCA Civ 766 (14 June 2011)

Company Developments (Finance) Ltd v Coffee Club Restaurants Ltd & Ors [2011] EWCA Civ 766 (14 June 2011)

The omission in the definition of 'Liability Period' was an obvious drafting error. The court was sufficiently certain that the intended meaning was that the Liability Period for the original guarantors was the period during which the original tenant was bound by the tenant's covenants. The limitation on liability was clearly set out in clause 6.1.1, and the guarantors' liability ceased only when the tenant had paid £210,000 in rent. The appeal was dismissed and the guarantors remained liable for the full amount ordered by the judge.

Citation
[2011] EWCA Civ 766
Parties
Claimant/respondent: Company Developments (Finance) Ltd; First Defendant: Coffee Club Restaurants Ltd; Second Defendant/appellant: Mr O'Connor; Third Defendant/appellant: Mr Prashad
Jurisdiction
England and Wales
Judgment Date
14 June 2011
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From Chancery Division
Outcome
Appeal dismissed
Legal Topics
Guarantee Liability, Construction of Contracts, Rectification, Commercial Leases
Landlord and Tenant Contract Law Guarantee Liability Construction of Contracts Rectification Commercial Leases

Case Brief

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Parties

Company Developments (Finance) Ltd

Claimant/respondent

Coffee Club Restaurants Ltd

First Defendant

Mr O'Connor

Second Defendant/appellant

Mr Prashad

Third Defendant/appellant

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From Chancery Division

Legal Issues

  1. 1 Whether the omission in the definition of 'Liability Period' in the lease precludes liability of the original guarantors
  2. 2 Whether the court can construe or imply the missing term into the lease
  3. 3 Whether the limitation on guarantor liability is determined by the payment of £210,000 rent by the tenant

Ratio Decidendi

The omission in the definition of 'Liability Period' was an obvious drafting error. The court was sufficiently certain that the intended meaning was that the Liability Period for the original guarantors was the period during which the original tenant was bound by the tenant's covenants. The limitation on liability was clearly set out in clause 6.1.1, and the guarantors' liability ceased only when the tenant had paid £210,000 in rent. The appeal was dismissed and the guarantors remained liable for the full amount ordered by the judge.

Court Disposition

Appeal dismissed

Orders

  • Judgment for the claimant against the second and third defendants for £158,682.09 plus interest of £15,089.58 and costs, with £25,000 payable on account of costs.