Developers Dominion Corporate Trustees and Dominion Trust have beaten Debenhams in a legal row over a failed deal to take one of four new units at Hampshire’s
Mr Justice Kitchin has ruled that Debenhams was not entitled to terminate the agreement despite the fact that Dominion had failed to pay it a £425,000 inducement on time.
In February 2007, Dominion, who has invested a total of £10m to rejuvenate the scheme, agreed that Desire by Debenhams would take a 20,000 sq ft store over two levels for a term of 15 years at an initial annual rent of £320,000 together with a turnover enhancement.
Under the agreement Dominion promised to pay Debenhams £425,000 within 10 working days of informing Debenhams that fitting out could begin and a further £425,000 within 10 working days of the store opening.
On 16 February 2009 Dominion informed Debenhams that it could fit out but on 2 March, the day for the £425,000 payment, Dominion failed to pay and Debenhams served notice that it was terminating the agreement.
Dominion sought to persuade Debenhams to accept late payment on 4 March but it refused and maintained that the agreement was at an end.
Accordingly, Dominion sued for damages for breach of the agreement.
Following a trial on liability Kitchen J ruled that on the facts of the case Debenhams interpretation of the agreement “flouts business commonsense” and it was not entitled to terminate the contract for the late payment because “time was not of the essence”.
“A failure to perform punctually would not deprive Debenhams of substantially the whole benefit of the Agreement or render it incapable of performing its own obligations,” he ruled.
Dominion Corporate Trustees Ltd and others v Debenhams Properties Ltd Chancery Division (Kitchin J) 27 May 2010.
Stephen Jourdan QC (instructed by Balfour Manson LLP) appeared for the claimants; Michael Barnes QC (instructed by Walker Morris (
