Vivienne Westwood Ltd v Conduit Street Development Ltd

Vivienne Westwood Ltd v Conduit Street Development Ltd

The termination provision in the side letter is penal in nature because it imposes a substantial financial detriment for any non-trivial breach, regardless of seriousness or consequences, and is out of proportion to the landlord's legitimate interest. The rent review was not settled by agreement at £125,000 p.a.; the invoice and payment did not constitute an offer and acceptance for rent review purposes.

Parties
Claimant: Vivienne Westwood Limited; Defendant: Conduit Street Development Limited
Jurisdiction
England and Wales
Judgment Date
27 February 2017
Procedural Posture
Commercial Lease Dispute / Judgment
Outcome
Claimant succeeds; termination provision unenforceable as penalty; rent capped at £125,000 p.a. under side letter.
Legal Topics
Contractual Penalties, Rent Review, Severance of Contract Terms, Interpretation of Side Letters, Leasehold Obligations
Contract Law Landlord and Tenant Law Contractual Penalties Rent Review Severance of Contract Terms Interpretation of Side Letters Leasehold Obligations

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Parties

Vivienne Westwood Limited

Claimant

Conduit Street Development Limited

Defendant

Procedural Posture

Commercial Lease Dispute / Judgment

Legal Issues

  1. 1 Whether payment and acceptance of rent at an increased rate constituted an implied agreement on rent review
  2. 2 Whether the termination provision in the side letter is an unenforceable contractual penalty

Ratio Decidendi

The termination provision in the side letter is penal in nature because it imposes a substantial financial detriment for any non-trivial breach, regardless of seriousness or consequences, and is out of proportion to the landlord's legitimate interest. The rent review was not settled by agreement at £125,000 p.a.; the invoice and payment did not constitute an offer and acceptance for rent review purposes.

Court Disposition

Claimant succeeds; termination provision unenforceable as penalty; rent capped at £125,000 p.a. under side letter.

Orders

  • Claimant remains liable and entitled to pay rent at the capped rate of £125,000 for so long as it satisfies the conditions in the Side Letter.
  • Purported termination of the benefit of the Side Letter by Defendant's letter dated 17 July 2015 is unenforceable.