Lease of gift shop to serve visitors to London Aquarium – Landlord covenanting not to permit similar shops elsewhere in building – Landlord seeking to confine restriction to aquarium-related goods – Whether lease should be rectified on grounds of common or unilateral mistake – Rectification refused
The defendants (the landlords) participated in a Japanese enterprise that had taken a 900-year lease from the London Residuary Body of the Thames-side building then known as County Hall. The defendants’ European operations were directed by Mr Masakazu Okamoto (O), who possessed a good command of English and extensive experience as a dealer in European properties. One of O’s projects was the construction on the premises of the London Aquarium. In early 1997 O’s plans for an Easter opening of the aquarium received a setback when the person appointed to equip and manage the aquarium gift shop failed to come up to O’s expectations.
O was accordingly relieved when the claimant (Oceanic), which operated a number of gift shops in the south of England, agreed to take a 20-year lease of the gift shop on terms that it would be operational by Easter, that shop staff would wear the same uniform as worn by others working in the aquarium and that at least 20% of the goods on offer would be the London Aquarium’s original design products. Oceanic’s main concern was possible competition from future gift shops in the building. O was anxious to ensure that any hotel operating in the building would be free to provide a gift shop. At a meeting without their lawyers the parties agreed a draft clause 4.6, which declared: ‘The landlord shall not permit any other gift shop to be operated in the building provided that this restriction shall not apply to any hotel in the building.’ The lease was executed on the same day.
Towards the end of 1997 Oceanic began to use clause 4.6 as a bargaining tool to obtain gift-shop management rights from other lessees in the building. The landlords realised that if Oceanic’s reading of the lease was correct, then clause 4.6 had effectively transferred to Oceanic a significant part of the value of the landlords’ ownership of the building. In a counterclaim to proceedings brought by Oceanic, the landlords contended that the restriction was never intended to extend beyond the sale of articles having a connection with the London Aquarium, and sought to have clause 4.6 rectified accordingly. The counterclaim proceeded on the basis of common or, alternatively, unilateral mistake. In the course of his judgment, the judge found as a fact that Oceanic was clearly not labouring under a mistake. He further found that the landlords had failed to demonstrate that O was thinking solely in terms of aquarium-related goods when he agreed to the draft clause.
Held: Rectification was refused.
In the absence of convincing proof of the necessary prior accord, there could be no case based on common mistake.
Even if O had been genuinely mistaken, rectification could not be granted on the ground of unilateral mistake, as Oceanic could not be fairly said to have been aware of such a mistake: see the principles stated in Kemp v Neptune Concrete Ltd [1988] 2 EGLR 87 as recently summarised in Templiss Properties Ltd v Hyams [1999] EGCS 60; [1999] PLSCS 103 (brought to the notice of the court after the close of submissions). Nor was it normally the function of the court to rectify an agreement simply because one negotiating party had been tough and successful and the other had been unwise or had missed a point or had failed to appreciate the possible or likely effect of a particular provision: A Roberts & Co Ltd v Leicestershire County Council [1961] Ch 555 distinguished.
Jonathan Gaunt QC and David Lord (instructed by Goldsmiths) appeared for the claimant; David Holgate QC and Nicholas Taggart (instructed by Winward Fearon) appeared for the defendants
Alan Cooklin, barrister
