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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Monella & Anor v Pizza Express (Restaurants) Ltd [2003] EWHC 2966 (Ch) (27 November 2003) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2003/2966.html Cite as: [2003] EWHC 2966 (Ch) |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
(Sir Andrew Morritt)
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(1) PAUL PAOLINO MONTALTO MONELLA (2) GRO MONTALTO MONELLA |
Claimants |
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- and - |
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PIZZA EXPRESS (RESTAURANTS) LIMITED |
Defendant |
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Midway House, 27/29 Cursitor Street, London EC4A 1LT.
Telephone No: 020 7405 5010. Fax No: 020 7405 5026
MISS J. BIGNELL (instructed by Messrs. Lewis Silkin) for the Defendant
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Crown Copyright ©
The Vice-Chancellor:
"(1) Where an arbitration agreement to refer future disputes to arbitration provides that a claim shall be barred, or the claimant's right extinguished, unless the claimant takes within a time fixed by the agreement some step –
(a) to begin arbitral proceedings, or
(b) to begin other dispute resolution procedures which must be exhausted before arbitral proceedings can be begun, the court may by order extend the time for taking that step.
(2) Any party to the arbitration agreement may apply for such an order (upon notice to the other parties), but only after a claim has arisen and after exhausting any available arbitral process for obtaining an extension of time.
(3) The court shall make an order only if satisfied –
(a) that the circumstances are such as were outside the reasonable contemplation of the parties when they agreed the provision in question, and that it would be just to extend the time, or
(b) that the conduct of one party makes it unjust to hold the other party to the strict terms of the provision in question."
"IT IS HEREBY FURTHER PROVIDED in relation to the Revised Rent as follows:-
"(A) (In the case of arbitration) the arbitration shall be conducted in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof for the time being in force."
"Whenever the Revised Rent in respect of a Review Period has not been agreed between the Landlord and the Tenant before the relevant Review Date and the Landlord has not made any application to the President for the time being of the Royal Institute of Chartered Surveyors as hereinbefore provided the Tenant may serve on the Landlord notice in writing containing a proposal as to the amount of such Revised Rent not being less than the rent payable immediately before the commencement of the relevant Review Period and the amount so proposed shall be deemed to have been agreed by the parties as the Revised Rent for the relevant Review Period and sub-clause (D)(i) hereof shall apply accordingly unless the Landlord shall make such application as aforesaid within one month after service of such notice by the Tenant."
"Held, allowing the appeal, (1) that the normal presumption in rent review cases that the time was not of the essence could be displaced if the contracting parties had shown clear contraindications in their wording of the rent review clauses in the lease; that where by way of a deeming provision the contract expressed a clear intention as to the consequence of a party's failure to comply with the stipulated timetable the court would not read such a deeming provision as mere administrative direction or conclude that time was not of essence, since such a construction would amount to a rewriting of the contract by which the parties had agreed to be bound; and that, accordingly, the tenant's counter-notice had not been validly served ...
(2) Where the ratio of an earlier decision of the Court of Appeal was directly applicable to the circumstances of a case before the Court of Appeal but that decision had been wrongly distinguished in a later decision of the Court of Appeal, in principle it was open to the Court of Appeal to apply the ratio of the earlier decision and to decline to follow the later decision".
"2.8 Prior to July 2001 time would not have been considered to be of the essence of the one month time limit containing clause 8.2(E) of the lease in the light of the Court of Appeal decision of Mecca Leisure Ltd v. Renown Investments Holdings Ltd (1984) 49 P&CR 12. However, in July 2001, the Court of Appeal in Starmark Enterprises Ltd v. CPL Distribution Ltd [2002] 2 WLR 1009, held that the earlier case was wrongly decided.
2.9 These circumstances are such as were outside the reasonable contemplation of the parties to the lease when they agreed the relevant contractual provision and it would be just to extend time.
2.10 There is no available arbitral process by which the claimants might obtain the extension of time sought."
"Accordingly, the approach to the construction of section 12 has, in my judgment, to start from the assumption that when the parties agreed the time bar, they must be taken to have contemplated that if there were any omission to comply with its provisions in not unusual circumstances arising in the ordinary course of business, the claim would be time-barred unless the conduct of the other party made it unjust that it should. In this connection, it would appear quite impossible to characterise a negligent omission to comply with the time bar, however little delay were involved, as, without more, outside their mutual contemplation. Narrowly overlooking a time bar due to an administrative oversight is far from being so uncommon as to be treated as beyond the parties' reasonable contemplation."
"'The circumstances in question must in each case include those which caused or at least significantly contributed to the claimant's failure to comply with the time bar'."
Both those passages were contained in the judgment of the judge below, Colman J, and Waller LJ at page 960 B said: "I agree with the above approach. I do not think it differs from the approach of Clarke J in Fox & Widley v. Guram [1998] 1 EGLR 91, Geoffrey Brice QC sitting as a deputy judge of the High Court in the Commercial Court in Cathiship S.A. V. Allansons Ltd [1998] 3 All ER 714, or Mance J in Grimaldi Compagnia di Navigazione v. Sekihyo Lines Ltd [1999] 1 W.L.R. 708. Nor do I myself think that it differs very much from the approach of Judge Raymond Jack QC sitting as a judge of the High Court in the Commercial Court in Vosnoc Ltd v. Transglobal Projects Ltd [1998] 1 W.L.R. 1001, albeit the judge obviously had some doubts about the actual decision."
"The actual mistake on further refinement can be said to be a failure to read the provisions which have been agreed. If one were to pose the question whether it would be contemplated by the parties that they would not even read the provision that they had agreed when contemplating operating the provision, the sensible answer would seem to be that one could not even reasonably contemplate that."
"The subsection is concerned with party autonomy. Its aim seems to me to be to allow the court to consider an extension in relation to circumstances where the parties would not reasonably have contemplated them as being ones where the time bar would apply, or to put it the other way round, the section is concerned not to allow the court to interfere with a contractual bargain unless the circumstances are such that if they had been drawn to the attention of the parties when they agreed the provision, the parties would at the very least have contemplated that the time bar might not apply -- it then being for the court finally to rule as to whether justice required an extension of time to be given."
"It is not possible to extract fully coherent principles from the cases on this topic. The nearest it is possible to get is that where the parties have not only required a step to be taken within a specified time, but have also provided the consequences in case of default, this provides an indication of greater or lesser strength that time is to be of the essence, but it is not necessarily decisive. Whether it is so or not must depend on all the circumstances of the case, including the context and wording of the provision, the degree of emphasis, the purpose and effect of the default clause and any other relevant consideration. In the end, the matter is one of impression to be derived from the consideration of the rent review clause as a whole together with any other relevant considerations, avoiding fine distinctions, but giving effect to every provision in the lease."
"Whatever the merits of these competing views, it seems that the decision of the majority in the Mecca Lesiure case is a binding precedent as to what was the true ratio of the Henry Smith case. Both cases were considered in detail by judges at first instance in Green Haven Securities v. Taylor Woodrow properties. A possible distinction between the two was suggested in the latter. Namely that in Henry Smith there were deeming provisions applying to both landlord and tenant, whereas in Mecca Lesiure, the deeming provision applied only to the tenant. The soundness of this distinction is doubtful."
"Where the parties have not only required a step to be taken within a specified time but have expressly provided for the consequences in case of default, this provides an indication of greater or less strength that time is to be of the essence, but it is not necessarily decisive. Whether it is so or not depends on all the circumstances of the case, including the context of wording of the provisions, the degree of emphasis, the purpose and effect of the default clause and any other relevant considerations. In the end, the matter is one of impression (see Power Securities Manchester Ltd v. Prudential Assurance Company Ltd [1987] 1 EGLR 121). As a result of these cases, it is clear that relatively small differences in the drafting of the rent review clause may have great practical consequences. In all cases it is suggested that the parties must consider whether or not to have strict time limits and ensure that that intention is clearly expressed."
"The parties would not when the lease was executed have contemplated that time would have been of the essence of clause 8.2(E) so that a notice given by the landlord ten days after the month had expired would be effective to refer the issue to arbitration."
The defendant, by contrast, contends that the relevant condition is, and I quote:
"The claimant would give such notice under clause 8.2(E) as at the time of the relevant review date was required properly to refer the issue to arbitration."