Oral agreement for use of land — Proceedings settled by Tomlin order — Directions as to rights included in agreement — Extent of court power to fill lacunae in agreement
The claimant held a lease of a motor-racing circuit that was located on an estate owned by the defendant landlord. The defendant retained much of the land surrounding the circuit, and used part of it for Sunday markets and motorcycle racing. It periodically allowed the claimant to use the market site for additional parking for certain events. Ultimately, the parties reached an oral agreement that was intended to govern the claimant’s parking use of the market site.
The agreement gave rise to proceedings between the parties, which were settled by a Tomlin order in terms that the parties acknowledged the binding nature of the agreement and agreed to perform their obligations under it. They applied, pursuant to the order, for directions as to the documentation necessary to record and give effect to the agreement and as to what rights and obligations it should include. The parties produced a draft licence reflecting points of agreement, and identified the issues that remained in dispute, including the permitted use of the market site and the extent of the access rights granted to the claimant.
Held: Where parties to a dispute had sought to eliminate their differences by compromising an action on terms that incorporated lacunae, the court did not have carte blanche to plug them, even though it was in the interests of justice that the litigation should be brought to an end. The court was being asked, in effect, to rectify a contract by inserting terms. It could only do so if those terms were: (i) reasonable and equitable; (ii) necessary to give business efficacy to the contract; (iii) so obvious that they went without saying; (iv) capable of clear expression; and (v) did not contradict any express term. No term could be implied if the contract was effective without it: Liverpool City Council v Irwin [1976] 1 EGLR 53; (1976) 238 EG 879 and 963 and BP Refinery (Westernpoint) Pty Ltd v Shire of Hastings (1978) 52 AJLR 20 applied. The doctrine of non-derogation from grant was also relevant: if a grant was made for a particular purpose, the grantor was under an obligation not to do anything on its land that would render the land granted materially less fit for the purpose for which the grant was made. There was no juridical basis for confining the doctrine to easements, or for excluding its operation in the case of licences.
Applying that approach, the claimant was entitled to use the land for car and motorcycle parking only, and not for ancillary purposes such as access for emergency vehicles and the placing of ticket sales points and mobile toilets. The additional uses contended for by the claimant were not obvious, irrespective of whether they might be reasonable. Access for the permitted uses could be through all gates fit for vehicular access; any restriction would be an unwarranted derogation from grant.
Jonathan Brock QC and Martin Dray (instructed by Freeth Cartwright LLP, of Nootingham) appeared for the claimant; Keith Rowley QC and Katherine McQuail (instructed by Browne Jacobson LLP, of Nottingham) appeared for the defendant.
Sally Dobson, barrister
