Wimpole Theatre (a firm) v JJ Goodman Lte

The claimants in this action were Mr. Clive Hayley and Mr. Terence Drew, who carry on some sort of business under the style or title “Wimpole Theatre”, the firm name in which this action was commenced. In this judgment I shall refer to the partnership of Mr. Hayley and Mr. Drew carried on under the style or title “Wimpole Theatre” as “the Firm”. Exactly what was the business conducted by the Firm did not clearly emerge in the evidence led at the trial. At paragraph 1 of the Particulars of Claim it was alleged, laconically, that, “The Claimant is a partnership engaged in business in the theatre industry”.

In fact Mr. Hayley and Mr. Drew are solicitors. They practise as such, together with Mr. David Stancliffe, under the style or title “Southcombe & Hayley”, and in that capacity acted essentially on their own behalf in this action, instructing Mr. Mark Warwick to appear as Counsel. I shall refer in this judgment to the partnership which represented the Firm in this action as “the Solicitors”. The Solicitors practised at all times material to this action from premises at 5, Upper Wimpole Street, London W1. That address may have something to do with the name adopted for the Firm.

Mr. Drew, but not Mr. Hayley, was, until it was dissolved in March 2011, a director of a company called Brasrat Ltd. (“Brasrat”). Mr. Drew had a fellow director of Brasrat, Mr. Dominic Madden. On the face of the register of shareholders Mr. Drew and Mr. Madden each held 50% of the issued shares in Brasrat. However, I was told during the trial by Mr. Hayley that Mr. Drew held his shares in Brasrat beneficially for himself and Mr. Hayley in equal shares. Thus it appeared that the beneficial interests in Brasrat were, as to 50%, vested in Mr. Madden, and, as to 25% each, vested in Mr. Drew and Mr. Hayley.

The solicitors habitually engaged to act on behalf of Brasrat during its existence were the Solicitors.

One of the features of the documents generated by Mr. Hayley of which copies were adduced in evidence was that, in many instances, it was unclear whether he was writing as a partner in the Firm, a partner in the Solicitors, or on behalf of Brasrat. Sometimes it appeared that, in different parts of the same document, he was performing all three roles.

The Arts Theatre (“the Theatre”) comprises the basement, ground and part of the first floors at 6 – 7, Great Newport Street, London WC2. The freehold owner of the Theatre is, and was, at all times material to this action, Consolidated St Giles LLP (“CSG”).

Byalease(“the Brasrat Lease”) dated 4 November 2008 and made between CSG and Brasrat CSG demised the Theatre to Brasrat for a term commencing on 4 November 2008 and expiring on 3 November 2011. However, by clause 7.8 of the Brasrat Lease it was provided that:

“If the Landlord wishes to determine this Lease on or after 24 June 2009 and the Landlord gives to the Tenant not less than three months prior notice in writing to that effect (as to which time shall be of the essence) then this Lease shall determine and the Term shall end on the expiry of such written notice but without prejudice to the rights and remedies of the Landlord in respect of any antecedent breach non-observance or non-performance of any of the Tenant‟s covenants or conditions contained in this Lease.”

What was required to be done by Brasrat at the end of the term created by the Brasrat Lease was set out in clause 5.13 of the Brasrat Lease:

“At the end of the Term (however it may end) the Tenant shall:

5.13.1

give vacant possession of the Property to the Landlord in the condition required of the Tenant by this Lease‟

5.13.2

remove from the Property the Tenant‟s and any subtenant‟s fixtures and fittings and anything else belonging to the Tenant or a subtenant including any signs and advertisements and make good all damage caused to the Property by their removal;

5.13.3

without affecting its obligations under sub-clauses

5.13.1

and 5.13.2, be deemed to authorise the Landlord to sell, as agent for the Tenant, and to account to the Tenant for the net proceeds of sale of, anything which the Tenant fails to remove under those obligations, and the Tenant shall indemnify the Landlord against the costs of removal storage and sale and against any liability arising out of the sale;

5.13.4

procure the cancellation of any registration of this Lease if the Lease has been registered at HM Land Registry or has been noted against the Landlord‟s registered title and the Tenant shall keep the Landlord indemnified against the costs incurred by the Landlord in cancelling such registrations if the Tenant shall have failed to do so.”

The sole business of Brasrat was the operation of the Theatre. The modus operandi seems to have involved making the Theatre available to companies or organisations which wished to produce a show or event, in return for a payment. The calculation of the payments for making the Theatre available appear, generally, to have taken the form of a fixed element per day or per week, described as “rent” and a variable contribution to the overhead costs of Brasrat of providing the facilities necessary to enable a production to take place in the Theatre, called “contra”.

The facilities in fact necessary to enable the Theatre to be run included the provision of lighting equipment (“Lighting”) and the provision of ticketing machines and associated equipment (“Ticketing”). Lighting for the Theatre was provided, during the period of operation by Brasrat, by a company called White Light Ltd. (“White Light”). Ticketing was provided by a company called Groupline.

The day to day management of the Theatre was entrusted by Brasrat to a company called End of the Pier Productions Ltd. (“EOP”). The leading light in EOP was a lady called Bronia Buchanan. The general manager of EOP was Susannah Heath.

The defendant in this action, J.J. Goodman Ltd. (“Goodman”), was a company incorporated in October 2008 at the instance of Mr. John James Goodman. Mr. Goodman is, I think, by profession a bartender and maker of cocktails. He seems to enjoy a considerable reputation as such among connoisseurs of cocktails. Initially Goodman traded under the style or title “London Cocktail Club”. By an agreement (“the LCC Agreement”) dated 27 November 2008 and made between Brasrat and Goodman it was provided that Goodman would operate two bars in the Theatre for a period terminable on notice of three months, less three days, given by either party, but not to take effect before 20 June 2009.

In the first instance the sole director of Goodman was Mr. Goodman. He remained such from the date of incorporation of Goodman until 1 December 2011. Since 1 December 2011 the sole director of Goodman has been Mrs. Elizabeth Scott, who is Mr. Goodman’s mother. Mrs. Scott had a prominent role in the events relevant to the issues in this action. At all times material to this action there were four shareholders in Goodman: Mr. Goodman, Mrs. Scott, her husband, Mr. Michael Scott, and Mr. Lee Ottery. Mrs. Scott seems generally to be known as “Lizzie”.

On 31 May 2010 Goodman gave notice to terminate the LCC Agreement. However, it was subsequently agreed that Goodman would continue to operate the bars in the Theatre until, possibly, the end of November 2010. At all events rent in respect of the bars in the Theatre was paid in advance up to the end of November 2010.

One of the companies with which Brasrat entered into agreements for making the Theatre available for performances was Hartshorn-Hook Productions Ltd. (“HHP”). So far as is material to the issues in the present action, HHP presented, or wished to present, two productions in the Theatre. The first was called, by the time it appeared, “The Music of the Blues Brothers – A Tribute”. In the documents which are relevant to the issues in this action of which copies were adduced in evidence, and to which I shall come, this production was generally referred to simply as “Blues Brothers”. That show ran in the Theatre from 11 October 2010 until 7 November 2010. The second production was called “Woody Sez”. What was described as a “Deal Memo” in relation to a run of that production between 10 January 2011 and 3 April 2011, dated 25 May 2010, was signed on behalf of Brasrat on 17 June 2010, and on behalf of HHP on 22 June 2010. A more formal agreement dated 8 September 2010, which was intended to supersede the Deal Memo, was proposed to be entered into between Brasrat and (1) HHP and (2) Mary Cossette Productions (“Cossette”). Cossette seems, at least by the date of the more formal agreement, to have been a co-producer with HHP of “Woody Sez” and to have been based in Los Angeles, California, in the United States of America.

It appears that by about the end of August 2010 CSG was thinking of terminating the Brasrat Lease. Once Goodman appreciated that thinking, it entered into discussions with CSG to seek to persuade CSG to enter into a new lease of the Theatre with Goodman. Those efforts were sufficiently effective to result in Messrs Mishcon de Reya (“Mishcon”), solicitors acting on behalf of CSG, producing a draft agreement for a lease, a draft lease and a draft rent deposit deed, and sending them to Mrs. Scott on 3 September 2010. The agreement for a lease (“the Goodman Agreement”) was signed on behalf of both parties on 7 September 2010. It included the following provisions:

“2.1

The Landlord agrees to grant and the Tenant agrees to accept the Lease of the Property.

2.2

This agreement is conditional upon:

2.2.1

the Current [that is, Brasrat] Lease being validly determined;

2.2.2

The Landlord obtaining vacant possession of the Property from the Current Occupier; and

2.2.3

there being no proceedings then in being or threatened by the Current Occupier in relation thereto;

2.3

The Landlord shall forthwith serve notice on the Current Occupier to determine the Current Lease.

2.4

The Landlord shall use reasonable endeavours to obtain vacant possession from the Current Occupier at least three working days before the Target Completion Date [defined as 15 December 2010].

2.5

If the Conditions [in clause 2.2] have not been satisfied, either the Landlord or the Tenant may rescind this Agreement by giving written notice to the other at any time after the Long Stop Date [25 December 2010] (but not after the Conditions have been satisfied).

2.6

The Landlord shall notify the Tenant promptly after the Conditions are satisfied.”

Until very shortly before the commencement of the trial it was unknown to Brasrat or to Wimpole or to the Solicitors that the Goodman Agreement had been made. It seems that in the period between the making of the Goodman Agreement and about the end of October 2010 Mrs. Scott positively sought to mislead Brasrat, Wimpole and the Solicitors as to the true nature of dealings between CSG and Goodman by making comments calculated to suggest that no legally binding undertakings had been entered into between CSG and Goodman.

On 8 September 2010 Mishcon wrote, on behalf of CSG, a letter to Brasrat terminating the Brasrat Lease pursuant to the provisions of clause 7.8 on 13 December 2010.

In an e-mail dated 22 September 2010 to Mrs. Scott Susannah Heath explained what shows had been arranged in the Theatre in the period up to 13 November 2010, in particular mentioning “Blues Brothers” and a production called “A Guide to Sexual Misery”. She went on:

“Beyond this long-term – and obviously depending on what happens with the landlord – we also have programmed:

Puss in Boots due to run 18 November 2010 until January 2011

Woody Sez – a show about Woody Guthrie – due to run 13 January to 2 April

As ever, all info about the shows is on the Arts‟ website.”

In an e-mail dated 24 September 2010 to Mr. Brian Hook of HHP, copied, amongst others, to Mr. Louis Hartshorn of HHP and to Mr. Goodman, a lady called Delphine Reynaud wrote, so far as is presently material:

“Thank you for your email and offer to CVTF500 members – it is very kind of you and much appreciated. And indeed congratulations for such an achievement!

Re: the press night, I will leave you to deal with John who runs the venue but I also thought I should introduce you to JJ Goodman, copied here. JJ is a member of CVTF500, an amazing mixologist and the owner of the London Cocktail Club, the bar alongside the Arts Theatre. JJ is outside London setting up a restaurant with Raymond Blanc, as they won The Restaurant programme last year but I am sure he can direct you to his manager.

JJ – Please meet Brian and Louis, who have their production starting at the Arts Theatre very soon. I thought I should make intros as you may be interested getting involved and promote your venue…. I hope you are really well my dear and to see you around for London Cocktail Week.”

Following a meeting held on 8 October 2010 at the offices of CSG, it seems to have been appreciated on the part of Brasrat/Wimpole/the Solicitors that there was at least a good chance that, after the termination of the Brasrat Lease, CSG would enter into a lease of the Theatre with Goodman. Brasrat had already entered into commitments with producers in relation to events to be staged in the Theatre in the period up to 13 December 2010. So far as any commitments on the part of Brasrat in respect of making the Theatre available after 13 December 2010 were concerned, the only obligations which had been assumed were those in relation to the production “Woody Sez”. With the termination of the Brasrat Lease on 13 December 2010 Brasrat would not be able to perform its obligations under the Woody Sez Agreement. That potentially placed Brasrat in breach of the Woody Sez Agreement, but, at the same time, meant that, unless some agreement were reached with the incoming tenant of the Theatre, HHP would have no theatre in which to present “Woody Sez” in the period 10 January 2011 to 3 April 2011, unless it could find an alternative venue. It appears that Brasrat felt under some obligation to seek to assist HHP to conclude an appropriate agreement with the incoming tenant, whilst Goodman was interested in entering into an agreement to make the Theatre available to HHP in the period 10 January 2011 to 3 April 2011 as it considered that doing so would be profitable to Goodman.

So it was that following the meeting on 8 October 2010 Mr. Hayley produced the first draft (“the First Draft”) of a document which, in its final form, was dated and signed on 26 October 2010. The issues which arose in this action which are considered in this judgment all depended upon that document (“the Wimpole Agreement”). The Wimpole Agreement was in these terms:

“1.

This Agreement is made the 26^th October 2010 between Wimpole Theatre, a partnership between Clive Hayley and Terence Drew (Wimpole) (1) and JJ Goodman Ltd (JJG) (2)

2.

In consideration of Wimpole procuring the introduction of Woody Sez to JJG as soon as full documentation can be drafted and signed JJG agree that they will pay Wimpole the sum of thirty thousand pounds (30,000) on the 5^th April 2011 or as soon as the deposit for Woody Sez is released, whichever is the sooner.

3.

It is further agreed that Wimpole will use its reasonable endeavours to ensure a smooth transition of the following shows/events currently booked into the theatre:

a.

Blues Brothers to 7^th November 2010

b.

Day Hire for Giddy Ox 1^st November

c.

Day Hire for Convilles 8^th November

d.

Guide to Sexual Misery currently running every Friday and Saturday until 13^th November

4.

It is intended that the documentation required to fully document the above be prepared as soon as possible and no later than 31^st October.

5.

Subject to the agreement of all documentation, completion should take place on or before 31^st October.

6.

It is agreed that an apportionment of rent paid in advance by JJG (at the rate of £6,000 per month plus vat) to the end of November will be calculated to the date of completion of the surrender of the existing lease and that sum will be set off against the monies due to JJG under clause 2 above.”

Mr. Mig Kimpton was envisaged by Goodman as the general manager of the Theatre after it had taken over from Brasrat. He had been consulted by Mrs. Scott prior to the making of the Goodman Agreement. Following earlier exchanges with Mr. Bryan Raven, managing director of White Light, in an e-mail sent to Mr. Raven at 19:31 on 8 October 2010 Mr. Kimpton wrote:

“Yes subject confirmation of legals we „JJ Goodman Ltd.‟ take

over the Arts Theatre on Monday.

We would like to retain this deal and will furnish you with all billing details.

I would urge you to chase immediately for outstanding amounts from Brasrat.”

Goodman did not pay the sum of £30,000 for which clause 2 of the Wimpole Agreement provided. In this action Wimpole sought payment of that sum, less an allowance of £2,200 calculated in accordance with clause 6 of the Wimpole Agreement, but together with interest. The claim of Wimpole in this action was thus for £27,800 plus interest. In the Particulars of Claim the justification for the claim of £30,000 pursuant to clause 2 of the Wimpole Agreement was pleaded in this way:

“7.

Pursuant to the Agreement, the Claimant procured the introduction of the theatrical production „Woody Sez‟, which subsequently ran at the Theatre in 2011 while the Theatre was under the Defendant‟s management.

8.

The documentation concerning the theatrical production „Woody Sez‟ was completed and signed in December 2010 between Hartshorn-Hook Productions Ltd and the Defendant and was held by Southcombe & Hayley solicitors before being released to the parties at their agreement on 11 February 2011.”

On the face of clause 2 of the Wimpole Agreement what Wimpole had to do in order to be entitled to payment of the sum of £30,000 was to “procur[e] the introduction of Woody Sez to JJG”. It was not alleged in terms in the Particulars of Claim in what that obligation in fact consisted. However, from the terms of paragraphs 7 and 8 of the Particulars of Claim it seemed that the case for the Firm was that, in order to be entitled to payment, it had to procure an agreement between HHP and Goodman under which HHP undertook to present the production “Woody Sez” at the Theatre.

I do not think that it was in dispute that HHP and Goodman did in fact enter into an agreement under which HHP presented the production “Woody Sez” at the Theatre in the period January to April 2011. It was also not in dispute that, if the Firm was in fact entitled in principle to payment of the sum of £30,000 under clause 2 of the Wimpole Agreement, Goodman was entitled to set off against that sum an amount due to it under clause 6, and that the appropriate amount was £2,200. However, at paragraph 13 of the Amended Defence and Counterclaim it was pleaded on behalf of Goodman, ignoring underlining in the original, that:

“…. No amount is due from the Defendant to the Claimant under the Agreement because:

(1)

The Claimant did not procure the introduction of Woody Sez to the Defendant and so did not on its own case earn the £30,000 provided for at clause 2 of the Agreement (see paragraph 9 above); and in any event because:

(2)

The Defendant is entitled to and does set off its claim for breach of the Agreement against the principal sum and interest claimed so as to extinguish the claim entirely (see below); alternatively

(3)

The Agreement is void (see below).”

Paragraph 9 of the Amended Defence and Counterclaim was in these terms:

“Paragraph 7 is denied. The introduction to the Defendant of Hartshorn-Hook Productions Ltd. (“HHP”), the producer of Woody Sez – occurred in September 2010, not as a result of any efforts or actions on the part of the Claimant, but by reason of the Defendant‟s and HHP‟s membership of the Courvoisier Future 500 network. HHP indicated to the Defendant at an early stage (and prior to the making of the Agreement) that, were the Defendant to take over the management of the Theatre, HHP would be happy for the Defendant to present the scheduled run of Woody Sez.”

In response to a Request for Further Information made under Civil Procedure Rules Part 18 Goodman elaborated on its case that Wimpole was not entitled to the sum of £30,000 under clause 2 of the Wimpole Agreement in this way:

“The Defendant contends that paragraph 2 of the Agreement is not to be construed in isolation. Construing the Agreement as a whole, the Defendant contends that the Claimant‟s consideration provided for under the Agreement, and the parties‟ understanding of the same, was:

i.

The Handover Provision; and

ii.

The Claimant‟s agreement to:

•

procure the introduction to the Defendant of Woody Sez; and

•

to use its reasonable endeavours to ensure a smooth transition to the Defendant of the 4 shows referred to at paragraph 3 of the Agreement.”

The expression “the Handover Provision” was defined for the purposes of the Amended Defence and Counterclaim at paragraph 4(2) of that statement of case:

“Clause 5 [of the Wimpole Agreement], which provides that, subject to agreement of the relevant documentation, “completion should take place on or before 31^st October”. The Claimant thus undertook to procure that Brasrat would deliver to the Defendant vacant possession of the Theatre, with all the facilities and equipment required for the shows and events then booked, on or before 31 October 2010 (“the Handover Provision”). This is the true construction of clause 5 because:

(a)

This was in substance a transaction for the transfer of property and in any such transaction the date fixed for “completion” of the transaction is the date on which the transferee will be given vacant possession of the property.

(b)

Such a construction is consistent and consistent only with what the parties expressly contemplate at clause 3 (as to which see paragraph 4(1) above).

(c)

The Agreement was made upon the assumption, expressly shared between the parties, that Brasrat was to leave the Theatre as soon as possible but in any event on or before 31^st October 2010 (see below).”

In this judgment I shall use the expression “the Handover Provision” in the sense defined in paragraph 4(2) of the Amended Defence and Counterclaim.

The answers on behalf of Goodman to the claim of the Firm were thus that the Firm did not provide the performance necessary to be provided in order to be entitled to the payment of £30,000 under clause 2 of the Wimpole Agreement: first, because it did not introduce Goodman to HHP; and/or, second, because, in order to be entitled to the payment the Firm had also to comply with the Handover Provision and with the obligation in paragraph 3 of the Wimpole Agreement, and it had not.

In the result the effective issues in relation to the claim of the Firm in this action were: what, on proper construction of the Wimpole Agreement, did the Firm have to do to be entitled to payment of £30,000 by Goodman; had the Firm done whatever that thing was, or those things were; and was the Wimpole Agreement in any event void and unenforceable. I shall explain how the latter point was put on behalf of Goodman in a moment.

The Counterclaim of Goodman was based upon the alleged failure of the Firm to comply with the Handover Provision and the alleged failure of the Firm to perform its obligations under clause 3 of the Wimpole Agreement. Quite a lot of attention was given in the Amended Defence and Counterclaim to the Handover Provision. It was sought to support the contention that the Wimpole Agreement contained the Handover Provision in no fewer than five alternative ways. The contention that the Wimpole Agreement was void was put as a default provision, if each of those five different ways of seeking to substantiate the Handover Provision failed. The paragraphs of the Amended Defence and Counterclaim in which these various alternatives were explained were these, ignoring underlining:

“5.

If, contrary to the Defendant‟s primary case, the Handover Provision is not an express provision in the Agreement, then it must be implied in order to give effect to the presumed but unexpressed intentions of the parties and/or to give the Agreement business efficacy. As explained above, the Claimant could only use reasonable endeavours to ensure the smooth transition of Giddy Ox, at least, if the Defendant was in possession of the Theatre before 1 November 2010.

…

16.

If, contrary to the Defendant‟s primary and secondary

cases, the Agreement does not contain the Handover Provision as (i) an express term or (ii) an implied term, the Defendant will claim that:

(1)

There was a binding oral agreement made between the Claimant and the Defendant in precisely the same terms as the Handover Provision at the meeting at which the Agreement was signed.

(2)

Alternatively, the Agreement should be rectified to give effect to the oral agreement on that basis that, by a mistake common to both parties, it did not record what the parties intended.

(3)

Alternatively, if there was no such common mistake, the Defendant signed the Agreement mistakenly believing it to contain the Handover Provision. The Claimant was aware that the Defendant had made such a mistake but, in order to benefit itself, it failed to draw the mistake to the Defendant‟s attention. The Agreement should therefore be rectified to include the Handover Provision on that basis.

…

45A. This part of the counterclaim is made in the alternative to the five cases summarised in order at paragraph 16 above and will only be pursued if the last of those cases (the case for unilateral mistake rectification, as summarised at paragraph 16(3) above) fails.

45B. If, contrary to what is asserted at paragraphs 16(3), 39 and 40(2)(b) above, the Claimant did not actually know that the Defendant signed the Agreement mistakenly believing it contain the Handover Provision, the Claimant ought reasonably to have known that the Defendant signed the Agreement in that mistaken belief. All the negotiations had been conducted on the basis that the Claimant would deliver the Theatre no later than 31^st October 2010 and that such was an essential requirement for the Defendant. No reasonable person could have understood the Defendant to have waived that requirement in signing the Agreement.

45C If that is what the court finds, the Agreement will be void as the parties will have made no binding agreement and the Defendant will seek a declaration to that effect: see OT Africa v. Vickers [1996] I Lloyds Rep 700.”

Although it was originally intended that the trial of all matters arising in this action would take place at the same time, as the commencement date of the trial approached Counsel on both sides had concerns as to whether it would be possible, within the time period estimated as necessary for the hearing of all issues, to deal with everything which might arise. They agreed between themselves in principle that I should be invited to make an order limiting the scope of the trial before me. I decided that it was appropriate for me, on the first day of the trial, to make the order which I was invited to make, in these terms:

“(1)

The Judge will determine:

(i)

All issues arising on the Claim

(ii)

All issues arising on the Counterclaim concerned with the written agreement made on 26 October 2010, namely:

(a)

Its construction

(b)

Whether there was also an oral collateral agreement

(c)

Whether it should be rectified

(d)

Whether it was void.

(2)

The Judge will not determine any issues arising on the Counterclaim concerned with:

(i)

Breach of the agreement

(ii)

Any damages payable to the Defendant, if there has been a breach of the agreement.”

Before considering, to the extent that it is necessary or appropriate to do so, the evidence as to the circumstances surrounding the making of the Wimpole Agreement and any discussions preceding the signature of the Wimpole Agreement, it is appropriate to remind oneself of well-known principles of law in a number of areas.

The proper approach to the construction of a written document

In Investors Compensation Scheme Ltd. v. West Bromwich Building Society [1998] 1 WLR 896 Lord Hoffmann expounded, at pages 912H – 913E, the principles to be applied to the construction of a written document.

“The principles may be summarised as follows.

(1)

Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2)

The background was famously referred to by Lord Wilberforce as the “matrix of fact”, but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3)

The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

(4)

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] AC 749.

(5)

The “rule” that words should be given their “natural and ordinary meaning” reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera SA v. Salen Rederierna AB [1985] AC 191, 201:

“if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion which flouts business commonsense, it must be made to yield to business commonsense.”

The House of Lords revisited the question whether it was appropriate to permit evidence of pre-contractual negotiations to be adduced as aids to the construction of a document in Chartbrook Ltd. v. Persimmon Homes Ltd. [2009] 1 AC 1101. Again the leading speech was that of Lord Hoffmann, with whose opinions the other members of the House agreed. After a thorough consideration of all of the relevant authorities, Lord Hoffmann expressed his conclusions at page 1120G – 1121D:

“41.

The conclusion I would reach is that there is no clearly established case for departing from the exclusionary rule. The rule may well mean, as Lord Nicholls has argued, that parties are sometimes held bound by a contract in terms which, upon a full investigation of the course of negotiations, a reasonable observer would not have taken them to have intended. But a system which sometimes allows this to happen may be justified in the more general interest of economy and predictability in obtaining advice and adjudicating disputes. It is, after all, usually possible to avoid surprises by carefully reading the documents before signing them and there are the safety nets of rectification and estoppel by convention. Your Lordships do not have the material on which to form a view. It is possible that empirical study (for example, by the Law Commission) may show that the alleged disadvantages of admissibility are not in practice very significant or that they are outweighed by the advantages of doing more precise justice in exceptional cases or falling into line with international conventions. But the determination of where the balance of advantage lies is not in my opinion suitable for judicial decision. Your Lordships are being asked to depart from a rule which has been in existence for many years and several times affirmed by the House. There is power to do so under the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234. But that power was intended, as Lord Reid said in R v. National Insurance Comrs, Ex p Hudson [1972] AC 944, 966, to be applied only in a small number of cases in which previous decisions of the House were “thought to be impeding the proper development of the law or to have led to results which were unjust or contrary to public policy”. I do not think that anyone can be confident that this is true of the exclusionary rule.

42.

The rule excludes evidence of what was said or done during the course of negotiating the agreement for the purpose of drawing inferences about what the contract meant. It does not exclude the use of such evidence for other purposes: for example, to establish that a fact which may be relevant as background was known to the parties, or to support a claim for rectification or estoppel. These are not exceptions to the rule. They operate outside it. ”

An aspect of the materials appropriate to be considered in the context of the ascertainment of the proper construction of a written document with which Lord Hoffmann did not in terms deal in the guidance which he gave in Investors Compensation Scheme Ltd. v. West Bromwich Building Society, supra, is the relevance, or not of the subsequent conduct of the parties. That is probably because the matter had been made clear beyond argument by a passage in the speech of Lord Reid in James Miller & Partners Ltd. v. Whitworth Street Estates (Manchester) Ltd. [1970] AC 583 at page 603C – E, echoed, in that case, by the opinions of Lord Hodson, Viscount Dilhorne and Lord Wilberforce:

“But with regard to actings of the parties between the date of the original contract and the date of Mr. Underwood‟s appointment I did not understand it to be argued that they were sufficient to establish any new contract, and I think they clearly were not. As I understood him, counsel sought to use those actings to show that there was an agreement when the original contract was made that the proper law of that contract was to be the law of England. I must say that I had thought that it is now well settled that it is not legitimate to use as an aid in the construction of the contract anything which the parties said or did after it was made. Otherwise one might have the result that a contract meant one thing the day it was signed, but by reason of subsequent events meant something different a month or a year later.”

The guidance given by Lord Hoffmann in Investors Compensation Scheme Ltd. v. West Bromwich Building Society, supra, which I have quoted has recently been reaffirmed in the Supreme Court in Rainy Sky SA v. Kookmin Bank [2011] 1 WLR 2900. The issue which arose in that case which is material in this one was to what extent, if at all, the court could disregard the unambiguous words used by the parties in a written document on the grounds that the consequences of the unambiguous words were so extreme as to indicate that they were not what the parties intended. The judgment of the Supreme Court was that of Lord Clarke of Stone-cum-Ebony JSC. He explained the issue and the conclusions of the Supreme Court at paragraphs 21 to 23 of the judgment, on pages 2908E – 2909C:

“21.

The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.

22.

This conclusion appears to me to be supported by Lord Reid‟s approach in Wickman Machine Tool Sales Ltd. v. L. Schuler AG [1974] AC 235 quoted by Sir Simon Tuckey and set out above. I am of course aware that, in considering statements of general principle in a particular case, the court must have regard to the fact that the precise formulation of the proposition may be affected by the facts of the case. Nevertheless, there is a consistent body of opinion, largely collated by the buyers in an appendix to their case, which supports the approach of the judge and Sir Simon Tuckey.

23.

Where the parties have used unambiguous language, the court must apply it. This can be seen from the decision of the Court of Appeal in Co-operative Wholesale Society Ltd. v. National Westminster Bank plc [1995] 1 EGLR 97. The court was considering the true construction of rent review clauses in a number of different cases. The underlying result which the landlords sought in each case was the same. The court regarded it as a most improbable commercial result. Where the result, though improbable, flowed from the unambiguous language of the clause, the landlords succeeded, whereas where it did not, they failed. The court held that ordinary principles of construction applied to rent review clauses and applied the principles in Antaios Cia Naviera SA v. Salen Rederierna AB (The Antaios) [1985] AC 191. After quoting the passage from the speech of Lord Diplock cited above, Hoffmann LJ said, at p. 99:

“This robust declaration does not, however, mean that one can rewrite the language which the parties have used in order to make the contract conform to business common sense. But language is a very flexible instrument and, if it is capable of more than one construction, one chooses that which seems most likely to give effect to the commercial purpose of the agreement.””

Broadly speaking, therefore, a written document is to be construed with a view to ascertaining what the document, or the relevant part of it, would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties to the document in the situation in which they were at the time the document was produced. However, save insofar as such might be a fact relevant as background known to the parties, evidence of pre-contract negotiations is inadmissible, as is evidence of post-contract statements or behaviour. Moreover, construction being a process of ascertaining what the language used in the written document would convey to a reasonable person having all the background knowledge, the subjective understanding of a party as to what the document meant, or declarations of subjective intent, are also inadmissible. If the relevant words are only susceptible of one meaning, then effect must be given to that meaning, no matter how improbable it may be that the effect produced by those unambiguous words was what the parties intended.

The implication of terms into a contract

One of the earlier cases in which consideration was given to the circumstances in which it was appropriate to imply a term into an agreement in which it was not expressed was The Moorcock (1889) LR 14 PD 64. At page 68 of that report Bowen LJ said:

“Now, an implied warranty, or, as it is called, a covenant in law, as distinguished from an express contract or express warranty, really is in all cases founded upon the presumed intention of the parties, and upon reason. The implication which the law draws from what must obviously have been the intention of the parties, the law draws with the object of giving efficacy to the transaction and preventing such a failure of consideration as cannot have been within the contemplation of either side; and I believe if one were to take all the cases, and there are many, of implied warranties or covenants in law, it will be found that in all of them the law is raising an implication from the presumed intention of the parties with the object of giving to the transaction such efficacy as both parties must have been intended that at all events it should have.”

The principles elaborated in that passage have been followed in countless cases over the ensuing 123 years. There have been a number of attempts in authoritative decisions to explain the essence of that which justifies the implication of a term. One such was that of Lord Pearson in Trollope & Colls Ltd. v. North West Metropolitan Regional Hospital Board [1973] 1 WLR 601 at page 609A – D:

“Faced with the conflict of judicial opinion in this case, I prefer the views of Donaldson J and Cairns LJ as being the more orthodox and in conformity with the basic principle that the court does not make a contract for the parties. The court will not even improve the contract which the parties have made for themselves, however desirable the improvement might be. The court‟s function is to interpret and apply the contract which the parties have made for themselves. If the express terms are perfectly clear and free from ambiguity, there is no choice to be made between different possible meanings: the clear terms must be applied even if the court thinks some other terms would have been more suitable. An unexpressed term can be implied if and only if the court finds that the parties must have intended that term to form part of their contract: it is not enough for the court to find that such a term would have been adopted by the parties as reasonable men if it had been suggested to them: it must have been a term that went without saying, a term necessary to give business efficacy to the contract, a term which, though tacit, formed part of the contract which the parties made for themselves.”

The greater part of the passage which I have cited from the speech of Lord Pearson was quoted by Lord Hoffmann, giving the advice of the Privy Council, in AttorneyGeneral of Belize v. Belize Telecom Ltd. [2009] 1 WLR 1988 in paragraph 19 on page 1993. Lord Hoffmann went on to comment, at page 1994B – G:

“21.

It follows that in every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express terms what the instrument, read against the relevant background, would reasonably be understood to mean. It will be noticed from Lord Pearson‟s speech that this question can be reformulated in various ways which a court may find helpful in providing an answer – the implied term must “go without saying”, it must be “necessary to give business efficacy to the contract” and so on – but these are not in the Board‟s opinion to be treated as different or additional tests. There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?

22.

There are dangers in treating these alternative formulations of the question as if they had a life of their own. Take, for example, the question of whether the implied term is “necessary to give business efficacy” to the contract. That formulation serves to underline two important points. The first, conveyed by the use of the word “business”, is that in considering what the instrument would have meant to a reasonable person who had knowledge of the relevant background, one assumes the notional reader will take into account the practical consequences of deciding that it means one thing or the other. In the case of an instrument such as a commercial contract, he will consider whether a different construction would frustrate the apparent business purpose of the parties. That was the basis upon which Equitable Life Assurance Society v. Hyman [2002] 1 AC 408 was decided.

The second, conveyed by the use of the word “necessary”, is that it is not enough for a court to consider that the implied term expresses what it would have been reasonable for the parties to agree to. It must be satisfied that it is what the contract actually means.

23.

The danger lies, however, in detaching the phrase “necessary to give business efficacy” from the basic process of construction of the instrument. It is frequently the case that a contract may work perfectly well in the sense that both parties can perform their express obligations, but the consequences would contradict what a reasonable person would understand the contract to mean. Lord Steyn made this point in the Equitable Life case, at p. 459, when he said that in that case an implication was necessary “to give effect to the reasonable expectations of the parties”.”

The barrier to the implication of an unexpressed term into a written agreement is high. It is not enough that the term sought to be implied would have been a reasonable one to have been agreed. It is not enough that the implication of the term would improve the existing contract. The term must be one which was so obviously part of the agreement that it did not need to be expressed at all because it can be identified as part of the proper construction of the agreement. If, on proper construction of a contract, it does not contain a particular term, for the reasons explained by Lord Hoffmann in Attorney-General of Belize v. Belize Telecom Ltd., there is no scope to seek to insert it as an implied term.

The approach to be adopted to alleged collateral contracts

In the last analysis the question whether parties who have entered into a written agreement have, on the same occasion, entered into an oral agreement modifying or qualifying the written agreement is a question of fact. However, the court was warned by Lord Moulton in Heilbut, Symons & Co. v. Buckleton [1913] AC 30 at page 47 to approach alleged collateral contracts with caution:

“It is evident, both on principle and on authority, that there may be a contract the consideration for which is the making of some other contract. “If you will make such and such a contract I will give you one hundred pounds,” is in every sense of the word a complete legal contract. It is collateral to the main contract, but each has an independent existence, and they do not differ in respect of their possessing to the full the character and status of a contract. But such collateral contracts must from their very nature be rare. The effect of a collateral contract such as that which I have instanced would be to increase the consideration of the main contract by 100l., and the more natural and usual way of carrying this out would be by so modifying the main contract and not by executing a concurrent and collateral contract. Such collateral contracts, the sole effect of which is to vary or add to the terms of the principal contract, are therefore viewed with suspicion by the law. They must be proved strictly. Not only the terms of such contracts but the existence of an animus contrahendi on the part of all the parties to them must be clearly shown. Any laxity on these points would enable parties to escape from the full performance of the obligations of contracts unquestionably entered into by them and more especially would have the effect of lessening the authority of written contracts by making it possible to vary them by suggesting the existence of verbal collateral agreements relating to the same subject-matter.”

My use of the word “caution” to describe the effect of the passage from Lord Moulton’s speech which I have set out is derived from the observation of Sir Andrew Morritt C, delivering the judgment of the Court of Appeal in Business Environment Bow Lane Ltd. v. Deanwater Estates Ltd. [2007] L&TR 26. At paragraph 42 of the judgment Sir Andrew said:

“The law relating to collateral contracts is well-established but in connection with sales or leases of land needs to be applied with caution if not the suspicion to which Lord Moulton referred in Heilbut Symons v. Buckleton [1913] AC 30 at 47.”

Thus it may be overstating the position to suggest that the court should be suspicious in a case in which a collateral contract is alleged which modifies or qualifies a written agreement, but the court should certainly proceed with caution because the type of arrangement contended for is not what one would ordinarily expect to encounter.

Rectification

What needs to be demonstrated in order to make a case for rectification of a written contract in circumstances in which it is contended that the parties have made a mistake common to each has been considered by the courts on numerous occasions. One of those considerations was that of Simonds J in Crane v. Hegeman-Harris Co. Inc. [1939] 1 All ER 662. At pages 664C – 665B of the judgment the learned judge said this:

“Before I consider the facts and come to a conclusion whether the defendants are right in their contention, it is necessary to say a few words upon the principles which must guide me in this matter. I am clear that I must follow the decision of Clauson J, as he then was, in Shipley Urban District Council v. Bradford Corpn, the point of which is that, in order that this court may exercise its jurisdiction to rectify a written instrument, it is not necessary to find a concluded and binding contract between the parties antecedent to the agreement which it is sought to rectify. The judge held, and I respectfully concur with his reasoning and his conclusion, that it is sufficient to find a common continuing intention in regard to a particular provision or aspect of the agreement. If one finds that, in regard to a particular point, the parties were in agreement up to the moment when they executed their formal instrument, and the formal instrument does not conform with that common agreement, then this court has jurisdiction to rectify, although it may be that there was, until the formal instrument was executed, no concluded and binding contract between the parties. That is what the judge decided, and, as I say, with his reasoning I wholly concur, and I can add nothing to his authority in the matter, except that I would say that, if it were not so, it would be a strange thing, for the result would be that two parties binding themselves by mistake to which each had equally contributed, by an instrument which did not express their real intention, would yet be bound by it. That is a state of affairs which I hold is not the law, and, until a higher court tells me that it is the law, I shall continue to exercise the jurisdiction which Clauson J, as I think rightly, held might be entertained by this court.

Secondly, I want to say this upon the principle of the jurisdiction. It is a jurisdiction which is to be exercised only upon convincing proof that the concluded instrument does not represent the common intention of the parties. That is particularly the case where one finds prolonged negotiations between the parties eventually assuming the shape of a formal instrument in which they have been advised by their respective skilled legal advisers. The assumption is very strong in such a case that the instrument does represent their real intention, and it must be only upon proof which Lord Eldon, I think, in a somewhat picturesque phrase described as “irrefragable” that the court can act. I would rather, I think, say that the court can only act if it is satisfied beyond all reasonable doubt that the instrument does not represent their common intention, and is further satisfied as to what their common intention was. For let it be clear that it is not sufficient to show that the written instrument does not represent their common intention unless positively also one can show what their common intention was. It is in the light of those principles that I must examine the facts of this somewhat complicated case. ”

That passage was considered by the Court of Appeal in Joscelyne v. Nissen [1970] 2 QB 86. The judgment of the court was delivered by Russell LJ. Having cited the passage from the judgment of Simonds J which I have set out, he said, at page 98C – E:

“In our judgment the law is as expounded by Simonds J in Crane’s case with the qualification that some outward expression of accord is required. We do not wish to attempt to state in any different phrases that with which we entirely agree, except to say that it is in our view better to use only the phrase “convincing proof” without echoing an old-fashioned word such as “irrefragable” and without importing from the criminal law the phrase “beyond all reasonable doubt”.

Remembering always the strong burden of proof that lies on the shoulders of those seeking rectification, and that the requisite accord and continuance of accord of intention may be the more difficult to establish if a complete antecedent contract be not shown, it would be a sorry state of affairs if when that burden is discharged a party to a written contract could, on discovery that the written language chosen for the document did not on its true construction reflect the accord of the parties on a particular point, take advantage of the fact.”

The comments of Russell LJ concerning the burden of proof in a case of rectification need to be considered in the light of the observations of Lord Nicholls of Birkenhead in In re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 at page 586D – H:

“The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event is more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury. A step-father is usually less likely to have repeatedly raped and had non-consensual oral sex with his under age stepdaughter than on some occasion to have lost his temper and slapped her. Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.

Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established. Ungoed-Thomas J expressed this neatly in In re Dellow’s Will Trusts [1964] 1 WLR 451, 455: “The more serious the allegation the more cogent is the evidence required to overcome the unlikelihood of what is alleged and thus to prove it”.”

The consequence is that, in a case of rectification, it is the civil standard of proof, on the balance of probabilities, which is that which has to be met, but, in assessing the probabilities, the court has to take into account that it is more probable that a written document produced by the parties as their contract accurately reflects what they have agreed than that it does not.

In the course of his speech in Chartbrook Ltd. v. Persimmon Homes Ltd., supra, Lord Hoffmann approved, at paragraph 48 on page 1123, this summary of the law in relation to rectification where it is contended that the parties have each made the same mistake as to the effect of their written contract:

Lord Hoffmann did not there consider the matters necessary to be demonstrated in order to justify rectification in a case in which only one of the parties to an agreement was mistaken as to the effect of what had been set out in the written document supposed to embody the agreement. However, Lawrence Collins LJ did address that issue in the course of his judgment in the Court of Appeal in Chartbrook Ltd. v. Persimmon Homes Ltd. [2008] EWCA Civ 183, at paragraph 137:

“Where only one party is mistaken, a species of equitable estoppel precludes a person who knows of the other party‟s mistake from resisting rectification: Snell, Equity, 31^st ed 2005, para 14-15(2). Slade LJ described it as a “drastic remedy” in The Nai Genova [1984] Lloyd‟s Rep 353 at 365. In George Wimpey UK Ltd. v. VIC Construction Ltd. [2005] EWCA Civ 77, [2005] BLR 135 Peter Gibson LJ referred to the “exceptional jurisdiction to rectify for unilateral mistake” (para 51). The requisite knowledge is actual, including for that purpose “blind eye” knowledge: Commissioner for the New Towns v. Cooper (Great Britain) Ltd. [1995] Ch 259; George Wimpey UK Ltd. v. VIC Construction Ltd. [2005] BLR 135, per Blackburne J at [79] (close to dishonesty).”

In my judgment, to justify concluding that a written contract should be rectified on the grounds of a mistake made by only one of the parties to it, it is necessary for the court to be satisfied: (1) that the party alleged to have entered into the written contract by mistake did actually have, at the moment of entering into the contract, a specific intention that the contract should contain a provision which it does not in fact contain, or should not contain a provision which it does contain; (2) that the other party actually knew of that specific intention, or turned a blind eye to such knowledge; (3) that the evidence of both of these elements is demonstrated on the material put before the court on the balance of probabilities, but with a high degree of assurance.

Absence of agreement leading to a contract not having been concluded

The remaining matter of law to notice before continuing my consideration of the circumstances of the present case is the final alternative for which Mr. Jonathan Allcock, who appeared on behalf of Goodman, contended, if all else failed. This was, in effect, whether, and if so in what circumstances, a party is permitted to contend that it did not in truth agree to be bound by what appears to be a binding written contract. The position was explained by Mance J in O.T. Africa Line Ltd. v. Vickers Plc [1996] 1 Lloyd’s Rep 700 at page 703:

“There may of course be cases where the surrounding circumstances enable a party to say that words cannot be taken at what might otherwise be their face value, and that they bear, objectively, some other meaning. In the light of the dicta in the Centrovincial case and The Antclizo, I would further proceed on the basis that Vickers would not be bound if they could show that OTAL, or those acting for OTAL, either knew or ought reasonably to have known that there had been a mistake by Vickers or those acting for Vickers. I put the onus that way round, as it appears so in the authorities, but it would not make any difference in this case if it were the other way round. The authorities contain no support for any more widely expressed principle qualifying the binding nature of an apparent agreement. Raffles v. Wichelhaus (1864) 2 H & C 906 to which Miss Heilbron referred as a suggested analogy in support of a wider principle deals with a situation where, objectively, there is no contract at all – because the offer and acceptance, although verbally identical, could objectively refer to different ships of the same name. Here there is objectively agreement on a particular sum. The question is what is capable of displacing that apparent agreement. The answer on the authorities is a mistake by one party of which the other knew or ought reasonably to have known. I accept that this is capable of including circumstances in which a person refrains from or simply fails to make enquiries for which the situation reasonably calls and which would have led to the discovery of the mistake. But there would have, at least, to be some real reason to suppose the existence of a mistake before it could be incumbent on one party or solicitor in the course of negotiations to question whether another party or solicitor meant what he or she said.”

Essentially, therefore, the scope of the enquiry is whether one party to a written agreement ought reasonably to have known that the other party was not intending to agree to that to which, objectively, it did agree. If so, then the first party is not able to rely upon the apparent agreement, with the result that no legally binding agreement came into existence. Although not a feature of the consideration of the issue by Mance J, I think that it must be the case that, in order to reach such a conclusion, the court must be satisfied on the balance of probability, but with a high degree of assurance, both that the first party was acting under a mistake in agreeing to be bound by that to which, objectively, he agreed, and that the other party ought reasonably to have been aware of that. It is an improbable scenario. Mance J did not find it proved on the facts of the case before him.

It is convenient, next, to consider the question of the proper construction of clause 2 of the Wimpole Agreement. What was it that Wimpole had to do to be entitled to payment of £30,000 from Goodman under that clause?

Clause 2 of the Wimpole Agreement is not a masterpiece of the draftsman’s art. Simply as a matter of English the concept of “procuring the introduction of Woody Sez to JJG” is rather challenging. One would not ordinarily expect that an inanimate object could be introduced in any meaningful sense to a company carrying on a business. In my judgment the task of the court in construing clause 2 is not so much to analyse the meaning of the words used, as to seek to ascertain what the clause conveyed to a reasonable person having all the background knowledge which was reasonably available to the Firm and to Goodman.

The contention on behalf of Goodman that the Firm had to procure the introduction to it of HHP cannot, I think, be correct. HHP was not mentioned in clause 2, or, indeed, anywhere in the Wimpole Agreement.

Again, it does not seem to me that the parties objectively intended that “procuring the introduction of Woody Sez to JJG” meant simply the Firm telling Goodman that the production “Woody Sez” existed, or that it possessed any particular features. Goodman was aware of the existence of a production called “Woody Sez” from Susannah Heath’s e-mail of 22 September 2010 and from the fact that the name of the production appeared in clause 2 of the Wimpole Agreement itself. Thus it must be that what was intended to be meant by the words, “procuring the introduction of Woody Sez to JJG” was something to be done after the making of the Wimpole Agreement.

The key to what the critical words meant, as it seems to me, is to be found in the involvement, to the knowledge of both parties, of Mr. Hayley in negotiating an agreement between Goodman, on the one hand, and HHP and Cossette, on the other, under which HHP and Cossette were to be permitted to stage the production “Woody Sez” at the Theatre in the period January to April 2011 at a point at which it was anticipated that Goodman would have entered into a lease of the Theatre with CSG.

In an e-mail dated 21 October 2010 to Mrs. Scott Mr. Hayley wrote, so far as is presently material:

“I attach agreements for Woody Sez, Blues Brothers and a deal memo setting out the terms for Guide to Sexual Misery (full document not to hand) as requested.

Sorry for the delay since yesterday, but I had taken it upon myself to apply some pressure on the Woody people to improve the deposit position they had suggested. It has paid off in that they have now said that if the deposit is reduced from £71,000 (all in escrow) to £50,000 they would agree that none of it is held in escrow but could be released immediately upon your signing a new agreement with them to replace the one we have. That would mean your liability to us would be dealt with immediately and you would receive £20,000 immediately, instead of waiting until next year.

I have incorporated this in the revised draft contract attached, so if you are happy with that we can proceed.”

The evidence of Mrs. Scott, at paragraph 73 of her witness statement dated 7 May 2012, which was not in dispute on this point, was that:

“They [Mr. Hayley and Mr. Drew] also gave us the “Woody Sez” agreement to sign. Mr. Hayley suggested that I put my signature on each page, to be sure that nothing could be changed at a later date, which I found a reassuring comment. I did this, and then signed the Draft Memorandum in its amended, final form (“the Agreement”, page 140) [which was the Wimpole Agreement]. We left the offices with the very clear understanding that we were getting the theatre at the end of the week.”

The position thus is that Mrs. Scott had signed on behalf of Goodman a form of agreement (“the HHP Agreement”) between Goodman and (1) HHP and (2) Cossette under which HHP and Cossette were to be permitted to stage the production “Woody Sez” at the Theatre between 11 January 2011 and 3 April 2011, immediately before signing the Wimpole Agreement. The HHP Agreement was, at that point, unsigned on behalf of HHP or Cossette. Signatures on behalf of HHP were sent to Mr. Hayley by facsimile transmission on 17 November 2010. A signature on behalf of Cossette was sent to Wimpole by facsimile transmission on 23 November 2010.

In the circumstances it seems to me to be plain that what, by committing itself to “procuring the introduction of Woody Sez to JJG”, Wimpole was actually agreeing to do was to procure signatures on behalf of HHP and Cossette to the HHP Agreement: in other words the making of an agreement in the terms of the HHP Agreement between Goodman, HHP and Cossette.

At one point in his closing submissions Mr. Allcock formulated that which was required to be done by the Firm under clause 2 of the Wimpole Agreement as “taking the necessary steps to procure that Woody Sez ran at the Theatre in 2011 under Goodman‟s management and for the benefit of Goodman”. That formulation was not, it seemed to me, in practical terms different from the view which I have expressed in the preceding paragraph. However, since it appeared that the Firm had complied with its obligation, as the HHP Agreement was concluded and the production “Woody Sez” was staged at the Theatre in 2011 under the management, and for the benefit, of Goodman, it was apparent that there were problems in maintaining the defence to the claim of the Firm. Mr. Allcock then contended that in fact more than performance of the obligation which he originally formulated was required of the Firm. In particular, he submitted that it was necessary, in order to be entitled to the sum of £30,000, that the Firm be the effective cause of the conclusion of the HHP Agreement, and/or that the Firm should not hinder or obstruct the carrying into effect of the HHP Agreement. The first of these submissions was not, I considered, justified on proper construction of clause 2 of the Wimpole Agreement. Given that, by the time the Wimpole Agreement was signed, a draft of the HHP Agreement had been prepared and signed by Mrs. Scott, the concept of effective cause was not material. The Firm would either procure necessary signatures on behalf of HHP and Cossette or not be entitled to the payment of £30,000. Again, it was difficult to see any scope for construing the obligation of the Firm in clause 2 in terms of not hindering or preventing the conclusion of the HHP Agreement. If the Firm hindered the conclusion of the HHP Agreement effectively, or prevented its conclusion, it was not entitled to be paid.

Although it was submitted on behalf of Goodman that, in effect, the Firm had to comply with all of the obligations accepted by it under the Wimpole Agreement – and, in particular, the Handover Provision and the obligations in clause 3 – in order to be entitled to payment of the £30,000, in fact it was perfectly clear, in my judgment, that what the Firm had to do in order to be entitled to the sum of £30,000 specified in clause 2 was simply to do that for which clause 2 provided. Breach of other obligations assumed on the part of the Firm in the Wimpole Agreement would expose it to liability to pay damages to Goodman, but not deprive it of entitlement to be paid £30,000.

In the result, subject to the possibility that the Firm was in breach of some obligation assumed under the Wimpole Agreement and thus liable in damages to Goodman, which liability could be set off against the liability of Goodman to pay the Firm £27,800, together with interest, the claim in this action succeeds.

The case that, as a matter of construction, the Handover Provision was a term of the Wimpole Agreement depended upon the proper interpretation of clause 5. The words used were simply completely inconsistent with the construction contended for.

There were two aspects to the problem. One was the nature of the obligations sought to have been imposed upon the Firm by the Handover Provision. The other was the effect of the words, “Subject to the agreement of all documentation”.

By the Handover Provision as defined in paragraph 4(2) of the Amended Defence and Counterclaim it was contended that the Firm: (1) agreed to deliver up to Goodman vacant possession of the Theatre; (2) agreed to deliver up to Goodman all the facilities and equipment required for the shows and events then booked at the Theatre. It cannot possibly be the case that the Firm assumed these obligations. The Wimpole Agreement made no express reference to either, and actually, as at least Mrs. Scott of Goodman understood perfectly well, the Firm could not, simply of its own volition, comply with either. In cross-examination Mrs. Scott accepted that she understood: first, that Brasrat, as outgoing tenant of the Theatre, could not, as a matter of law, give vacant possession of the Theatre to Goodman, and that only CSG could do that, after the tenancy of Brasrat had come to an end; and, second, that the Lighting in the Theatre and the Ticketing there were each hired, and that, to take over that equipment, it would be necessary for Goodman to enter into appropriate contracts with the owners of the equipment. As I have already noted, at least in relation to White Light appropriate contact had been made as early as 8 October 2010. Mr. Allcock in his closing submissions recognised these realities, but contended that it was still open to the Firm to have agreed to procure the relevant third parties – CSG, White Light and Groupline – to do what was necessary in order to ensure that Goodman obtained vacant possession of the Theatre and the right to use equipment belonging to third parties. Theoretically, of course, that is so. However, in the context of construction of clause 5 of the Wimpole Agreement the real question is whether it is remotely likely that the Firm intended to assume such obligations. The answer is obviously in the negative.

As a refinement of his submissions, Mr. Allcock sought to focus on one of the essential prerequisites to Goodman obtaining vacant possession of the Theatre, Brasrat giving up occupation. Clearly whether or not it did that, and the timing of departure, were plainly in the control of Brasrat. However, merely giving up occupation was of no value to Goodman. In order for there to be a possibility in law of Goodman being entitled to possession of the Theatre it was necessary for the Brasrat Lease to come to an end. If it was desired that that should happen earlier than 13 December 2010, when the notice to terminate took effect, the only mechanism was by surrender. That, however, required the agreement both of Brasrat as tenant and of CSG as landlord. Mr. Allcock submitted that what the Handover Provision really boiled down to was an obligation on the Firm to procure that Brasrat procured that CSG accepted a surrender of the Brasrat Lease.

However precisely formulated, each permutation of the obligations of the Firm in respect of enabling Goodman and CSG to be in a position to enter into a lease of the Theatre for which Mr. Allcock contended focused on the dates 31 October stated in clauses 4 and 5 of the Wimpole Agreement and what was said to be implicit in the wording of clause 3. What was the point of clause 3, it was said, listing, for example, the day hire for “Giddy Ox” on 1 November 2010, unless the intention was that before that date Goodman would be in possession of the Theatre? Superficially, perhaps, there was some attraction in the point. However, one of the things which was agreed by clause 3 was that:

“Wimpole will use its reasonable endeavours to ensure a smooth transition of the following shows/events currently booked into the theatre:

a.

Blues Brothers to 7^th November 2010”

Once it is appreciated that clause 3 was concerned with a possible smooth transition of a production, “Blues Brothers”, which was actually being presented on the day of the signature of the Wimpole Agreement, it becomes apparent that in fact clause 3 could not have been intended to impose an obligation on the Firm immediately to do anything. The need to do anything in the way of ensuring a smooth transition could not arise unless and until there was to be a transition. Whether, and when, there was to be a transition, depended upon other provisions of the Wimpole Agreement. In my judgment the effect of clause 3 of the Wimpole Agreement, on proper construction, was that the Firm would use its reasonable endeavours to ensure a smooth transition of whichever of the listed productions was to be transferred by Brasrat to Goodman as matters turned out, not to oblige Brasrat to transfer all of them to Goodman, which is what the construction for which Mr. Allcock contended seemed to involve.

In my judgment, on proper construction clause 5 of the Wimpole Agreement meant what it said: that completion should take place on or before 31^st October, “Subject to the agreement of all documentation”. If all documentation had not been completed by 31 October 2010, there was no obligation to complete. The relevant words, as it seemed to me, were unambiguous.

For the reasons which I have explained, it is now clear that the question whether a term should be implied into a contract is not separate from the issue of the proper construction of the contract. It is, however, separate from the proper construction of particular terms of the contract. The fact that I have rejected the suggestion that, on proper construction of clause 5 of the Wimpole Agreement, the Handover Provision was contained in it, does not mean, that on proper construction of the Wimpole Agreement as a whole the Handover Provision was not a term of it. However, by this stage of the enquiry one has reached the stage where there is no express provision in the Wimpole Agreement in the terms of the alleged implied provision, and none of the express terms, on proper construction, has the effect which is sought to be achieved by the alleged implied term. Thus, unless the alleged implied term is so clearly implicit in the contract that it did not need to be mentioned at all, there seems to be no scope for implying any term. Certainly in my judgment there is no scope for implying the Handover Provision into the Wimpole Agreement.

I come then, to the alleged collateral oral contract. If it was made, it was made, on the face of paragraph 16(1) of the Amended Defence and Counterclaim, at the meeting on 26 October 2010 at which the Wimpole Agreement was signed. Without knowing any more, the alleged collateral oral agreement seems improbable. Either the alleged agreement was made before the signature of the Wimpole Agreement, in which case one might have expected its provisions to have been incorporated into, and thereby to have been superseded by, the Wimpole Agreement, or it was made after the signature of the Wimpole Agreement, in which event one might have expected the signed Wimpole Agreement to have been revised to take account of the new matters, and a new revised agreement then to supersede the Wimpole Agreement. What seems most unlikely is that the Wimpole Agreement was modified by the agreement of something important without that something also being recorded in writing. Technically, of course, to be a proper collateral agreement, the alleged agreement had to have been made in consideration of the making of the Wimpole Agreement – and thus immediately before the signature of the Wimpole Agreement. An agreement made after the Wimpole Agreement and by which the Wimpole Agreement was varied would not have been an agreement collateral to the making of the Wimpole Agreement.

The evidence of Mrs. Scott concerning what happened at the meeting on 26 October 2010 was set out in her witness statement dated 7 May 2012 starting at paragraph 65 and concluding at paragraph 73, which I have already quoted and will not repeat:

“65.

The meeting at S&H‟s offices began at about 16.00. In attendance were me, my husband Mike, JJ [Mr. Goodman], Mr. Drew and Mr. Hayley.

66.

The conversation was friendly, although Mr. Drew did not say much. Mr. Hayley asked JJ lots of questions about his new business venture with Raymond Blanc and wished him well. We had tea and eventually got down to business.

67.

I asked Mr. Hayley for the answers to my questions in the email I had sent him that morning. He apologised for not having all of the documentation with him, but he assured me that, if I contacted Susie Heath of EOP, she would send it over to me the next day. He said that Susie was aware that we would be taking over that weekend and had been told to help all she could. We were concerned that Ms Buchanan was going to cause problems, but Mr. Hayley and Mr. Drew assured us that they were the ones in control and to “leave Bronia to them” (or words to that effect).

68.

When it came to the agreed hand-over date, Mr. Hayley assured us that they would be out of the Theatre by that Friday, 29 October, and that there would be absolutely no difficulty in them doing so – all they would be taking was a few computers. It would be a smooth transition, and we would take over the control of the Theatre without fuss or disruption. We said that we had contacted Groupline and White Light, and that both companies were happy to start invoicing us from Monday 1 November.

69.

Mr. Drew, however, tried to persuade us again to delay the hand-over for 2 weeks – so that they would have the benefit of the final week of the “Blues Brothers” run and the remaining “Guide to Sexual Misery” shows (the last of which was scheduled for 13 November). He said that it would make it “cleaner” in terms of apportioning box office monies between Brasrat and JJG.

70.

However, we pointed out that, since we were going to be extending the “Blues Brothers” run, there would not be a “clean” box office break, even if the hand-over took place in mid-November. We made it quite clear that we were not prepared to delay the hand-over, and that we had to have the last week of the scheduled “Blues Brothers” run (and the “Guide to Sexual Misery” dates). Mr. Drew went quiet again and was clearly not happy, but he can have been in no doubt whatsoever as to what our position was.

71.

The 15 October Draft was produced, and Mr. Hayley and/or Mr. Drew proposed some changes to some of the wording. I cannot now recall precisely what changes were proposed, but there was no suggestion that any of the proposed changes was intended to have the effect of altering the agreed hand-over date. Had there been any such suggestion, I would – as Mr. Hayley and Mr. Drew knew full well – have refused outright.

72.

Mr. Hayley and/or Mr. Drew left the room, in order to have a clean copy of the Draft Memorandum produced for signature. When they returned, they told us that they had decided to take out the reference to Brasrat (in clause 2), and to replace it with a reference to “Woody Sez”. This was not one of the changes which they had proposed previously. Mr. Hayley said that it made more sense to refer to “Woody Sez”, as the monies would be coming from the “Woody Sez” deposit, and that Brasrat‟s future was uncertain. I had no reason to question what they had done. Mr. Hayley and I had always had a good relationship over the previous 2 years, and I trusted him – not least because he was a solicitor.”

It is, I think, impossible to detect in Mrs. Scott’s witness statement any evidence of the making of a collateral oral agreement. She simply did not say that there was any discussion along the lines that she would not sign the Wimpole Agreement unless the Firm promised something – in particular to give vacant possession of the Theatre to Goodman no later than 31 October 2010. To show a collateral agreement what needed to be demonstrated was an offer, an acceptance and consideration for whatever offer had been accepted. Mrs. Scott’s evidence in her witness statement seemed to go no further than that, during the course of negotiations preceding the signing of the Wimpole Agreement, Mr. Hayley said that Brasrat would be out of the Theatre by 29 October 2010. The reference in paragraph 68 of Mrs. Scott’s witness statement to discussions between Goodman and Groupline and White Light was completely inconsistent with the Handover Provision as pleaded.

The evidence of the other two persons who attended the meeting on behalf of Goodman, Mr. Goodman himself and his step-father, was actually flatly contrary to any collateral oral agreement having been made.

In his witness statement dated 7 May 2012 Mr. Goodman said this about the meeting;

“14.

The purpose of the meeting was to finalise the arrangements which would see Brasrat vacate the Theatre, and to sign off the paperwork. By this time, the deal was both clear and straightforward – we had, albeit reluctantly, agreed to give up £30,000 of the “Woody Sez” rent, provided we were in the Theatre by the end of that week (31 October), with a smooth transition of the shows which were already booked in and/or running.

15.

At the meeting, Mr. Hayley did most of the talking. He was at pains to assure us that they would have no difficulty vacating, and that the transition would be perfectly smooth. We talked a bit about how difficult Bronia Buchanan (the owner of End of Pier, who were doing the day-to-day management of the Theatre) could be. Mr. Drew was defensive about this – which was unsurprising, given that Bronia was his fiancée – but we were assured by Mr. Hayley that Bronia and EOP would cooperate fully in the hand-over.

16.

I remember Mr. Hayley telling us that we would be able to take over the existing website, and that the transfer to us of the contract with Groupline (which was providing ticket sales services) meant that we would be benefiting from commercial rates which would not otherwise be available to us.

17.

I remember Mr. Drew tried to persuade us again to delay the hand-over by a couple of weeks, until the end of the “Blues Brothers” run, but we made it clear that we were not prepared to move on the point. He clearly wasn‟t happy about this.

18.

The very short, one-page, draft agreement which had been passing backwards and forwards by email between Mr. Hayley and my mother was amended by Mr. Hayley and Mr. Drew a couple of times, and was eventually presented to us for signature. During the meeting, there had not been any change to the basic deal – we were prepared to give up £30,000 in “Woody Sez” rent, provided we got the Theatre by the end of that week – and I do not believe that Mr. Hayley and Mr. Drew can possibly have understood our position to have changed during the meeting. It is his basic deal which we understood Mr. Hayley and Drew to have recorded in the document they gave us to sign. On this basis, we signed it….

19.

I understand that Mr. Hayley and Mr. Drew allege that they were not committing to be out of the Theatre by the end of the week, and that we knew this – that the end of the week was just what was “expected”. This is simply not true. We were only prepared to give up the £30,000 in “Woody Sez” rent provided we were in by the end of the week (and were therefore taking the benefit of the shows from that point), and Mr. Hayley and Mr. Drew knew full well that this was our position – not least because they had tried to change our minds on the point and we had refused.”

So, far from contending that the terms of the Handover Provision had been agreed in consideration of the signature on behalf of Goodman of the Wimpole Agreement, Mr. Goodman’s evidence was that there had been no discussion about it at all because those on the Goodman side knew that giving vacant possession by 31 October 2010 had already been agreed. His step-father’s evidence, in a witness statement dated 7 May 2012, was to the same effect:

“4.

Present at the meeting were Clive Hayley and Terence Drew of Southcombe & Hayley. My understand [sic] at the time was that the 2 of them were also, in effect, Brasrat Limited (“Brasrat”), the company which was then the leaseholder of the Theatre. As for “Wimpole Theatre”, I had no real understanding of what this was, save that it was some other business interest of Mr. Hayley and Mr. Drew, and one which had some kind of interest in or involvement with the Theatre.

5.

Present at the meeting on our side were me, Lizzie, and Lizzie‟s son (my step-son), John Goodman, who was at the time the sole director of JJG.

6.

By the time the meeting took place, I was aware that a deal had already been agreed in principle between Lizzie and Mr. Hayley. Provided that Brasrat was out of the Theatre by the end of that week (31 October), and there was a smooth transfer of the Theatre and its existing bookings to JJG, JJG would give up £30,000 of the rent which it would otherwise have stood to receive from a show called “Woody Sez”, which was booked to run at the Theatre in early 2011. I was aware that Southcombe & Hayley was holding a deposit against this rent, and the £30,000 was going to come out of that deposit.

7.

Mr. Hayley knew that our figures for agreeing to lose £30,000 in “Woody Sez” rent were based on us getting the Theatre, and its existing shows, from 31 October. He also knew that our calculations were based on an intention to extend the run of “Blues Brothers” which was due to come to an end shortly and that, in order to be able to do that, the hand-over had to happen very soon.

8.

The deal did not change during the course of the meeting, and Mr. Hayley and Mr. Drew cannot have believed that it did. Indeed, Mr. Drew tried to persuade us to change the hand-over date, to move it back until the scheduled “Blues Brothers” run came to an end, but we refused.

9.

Mr. Hayley and Mr. Drew produced an amended version of the one-page agreement and presented it to us for signature. It still referred to the right date (31 October), it referred to there being a “smooth transition” and, at our request, the figure of £6,000 had been inserted into the clause dealing with the repayment of rent. We trusted Mr. Hayley and Mr. Drew to have presented us with a document which properly reflected what had been agreed, and it was on that basis that Lizzie proceeded to sign it.”

The e-mail referred to at paragraph 67 of Mrs. Scott’s witness statement was in these terms:

“I look forward to meeting with you at your office at 4.00pm today.

Before we meet is it possible to arrange the following.

1.

Revised Memorandum of Agreement.

2.

Please confirm the following

a)

contracts drawn by you for The Arts showing after 31^st October can be transferred to JJG

b)

£6,000 + VAT is returned to JJG for rent paid for November before 1^st November

c)

£20,000 + VAT is paid to JJG for the payment you received from Woody Sez production on completion of contract.

d)

details of suppliers for utilities, telephones, insurance, web page, all hired equipment fire, lighting, technical, box office

e)

Aid in transfer of licences.

f)

Ensure coop-oration [sic] and as little disruption as possible to the theatre during hand over.

g)

Vacant Possession 31^st October, 2010.”

In cross-examination Mrs. Scott told me that she did not have a problem with the terms of the Wimpole Agreement – she had signed it. The bits which had been added to it, as compared with the predecessor version, she was happy with. Clause 2 did not seem to her at the time to be a problem. The draft Wimpole Agreement had answered the questions she had asked in her e-mail. She asked for the previous wording at clause 5 to be removed and asked for vacant possession on 31 October. Mr. Hayley said that it was not their job to give vacant possession, which Mrs. Scott recognised was correct. She was asking for vacant possession to be included in clause 5 as at 31 October, and that was why the date had changed from the previous draft, where the date specified was 30 October. However, Mr. Hayley said that he could not put in vacant possession, he altered clause 5 to the wording which appeared in the signed version and asked her whether that was OK. She said that it was fine. A little later in her cross-examination she said that she was confident that it would be possible to sort out a surrender by Brasrat of the Brasrat Lease by 31 October and that that belief on her part meant that it was appropriate for her to sign the Wimpole Agreement.

While there was fairly clear evidence that Mrs. Scott’s memory of events was sometimes faulty, I accept the evidence that she gave in cross-examination which I have summarised in the preceding paragraph. However, that evidence is fatal to the case that there had been an oral collateral contract made on 26 October 2010. The true position, I find, is that Mrs. Scott, and probably through her others on the Goodman side, specifically her son, her husband, and Mr. Kimpton, concluded that, as a result of discussions with Mr. Hayley in advance of the meeting on 26 October 2010, Brasrat was somehow bound to give up vacant possession (whether to CSG, to enable it to enter into a lease with Goodman, or directly to Goodman probably does not matter very much on this point) by the end of October 2010. They were quite simply wrong about it, as a matter of law. However, having that erroneous belief, far from seeking to enter into any sort of collateral agreement, they simply pressed on in their unhappy state of misplaced confidence. The alleged collateral oral agreement case fails.

Next in line of the contentions deployed on behalf of Goodman was the assertion that the Wimpole Agreement should be rectified on the grounds of a mutual mistake that the Wimpole Agreement contained the Handover Provision, when it did not. Again, this was clearly an adventurous case. It involved the proposition that Mr. Hayley, who drafted the predecessors of the Wimpole Agreement and who amended the immediately previous draft during the meeting on 26 October 2010, intended that the Wimpole Agreement should include the Handover Provision, but that his drafting skills were so deficient that not only did he not achieve his aim, but he failed to notice that he had failed to achieve his aim.

Following the meeting on 8 October 2010 to which I have referred Mr. Hayley produced the First Draft, a draft agreement between the Firm and a company then named as the London Cocktail Club Ltd. This was the opening of the negotiations concerning what eventually became the Wimpole Agreement. The First Draft was in these terms:

“1.

This Agreement is made the 8^th October 2010 between Wimpole Theatre, a partnership between Clive Hayley and Terence Drew (Wimpole) (1) and the London Cocktail Club Ltd (LCCL) (2)

2.

In consideration of Wimpole procuring the surrender of

Brasrat‟s lease of the Arts Theatre as soon as full

documentation can be drafted and signed LCCL agree that they will pay Wimpole the sum of thirty thousand pounds (30,000) on or before the 5^th April 2011.

3.

It is further agreed that an escrow agreement relating to the Woodie Sez deposit shall be entered into between LCCL and Southcombe & Hayley solicitors to facilitate the assignment of the contract for Woodie Sez that is due to go into the Arts from 17^th January to 4 ^th April 2011.

4.

It is further agreed that Wimpole will use its reasonable endeavours to ensure a smooth transition of the following shows/events currently booked into the theatre:

a.

Blues Brothers 11 ^th October to 7November 2010

b.

Day Hire for Giddy Ox 1 ^st November

c.

Day Hire for Convilles 8 ^th November

d.

Guide to Sexual Misery currently running every Friday and 13 ^th November

e.

Woodie Sez 17 ^th January to 4 ^th April

5.

It is intended that the documentation required to fully document the above be prepared as soon as possible and no later than the end of the week commencing Monday 11 ^th

6.

Subject to the agreement of all documentation, completion should take place as soon as possible thereafter and no later than the 30^th October.”

Clause 3 of the First Draft did not make it into the Wimpole Agreement. A new clause concerning the refund of an apportioned part of rent paid in advance in respect of the bars in the Theatre was added by the time the Wimpole Agreement was signed. Apart from those features, the principal changes between the First Draft and the Wimpole Agreement were the change in the identification of that which needed to be procured in clause 2 to entitle the Firm to payment of £30,000, and changes in some dates, for example that in clause 5 of the First Draft.

Mrs. Scott told me that she read the First Draft on receipt. She responded with a revised draft (“the Second Draft”) sent as an attachment to an e-mail dated 9 October 2010. The Second Draft differed from the First Draft only in substituting the details of Goodman for those of London Cocktail Club Ltd. and in adding a new clause 7:

“Brasrat Ltd. will repay Rent paid to them by JJGL from completion date to 31^st [sic] November 2010.”

Mr. Hayley then revised the Second Draft to produce a further draft (“the Third Draft”). The Third Draft did not involve a change in the date in clause 1, which remained 8 October 2010. It did involve adding words at the end of clause 2, “or as soon as the deposit for Woody Sez is released, whichever is the sooner”. The date in clause 5, “Monday 11^th” was not altered. A revised clause 7 was produced, in these terms:

“It is agreed that an apportionment of rent paid in advance by JJG to the end of November will be calculated to the date of completion of the surrender of the existing lease and that sum will be set off against the monies due to JJG under clause 2 above.”

It was common ground that the negotiations concerning the terms of the Wimpole Agreement took the form of the production and exchange between the parties of the First Draft, the Second Draft and the Third Draft, the sending by Mrs. Scott of the e-mail on 26 October 2010 which I have already quoted, and what was said at the meeting on 26 October 2010 itself, the evidence of which, on the Goodman side, I have already set out. Any common intention as to what should be included in the Wimpole Agreement must therefore be found in those negotiations. Against that background I come to consider the matters needing to be demonstrated in order to justify rectification on the ground of mutual, or common, mistake, conveniently summarised by Peter Gibson LJ in Swainland Builders Ltd. v. Freehold Properties Ltd. [2002] 2 EGLR 71 at paragraph 33 on page 74, approved by Lord Hoffmann in Chartbrook Ltd. v. Persimmon Homes Ltd., supra.

Did Goodman and the Firm have a continuing common intention that the Wimpole Agreement should contain the Handover Provision? No. On the evidence neither party ever intended that. Mrs. Scott did, however, believe that the effect of what was stated in the Wimpole Agreement was that the Firm had to procure that Brasrat gave up vacant possession of the Theatre to Goodman at the end of October 2010 – until 26 October 2010 the anticipated date was 30 October, rather than 31 October. The date 31 October 2010 did not emerge earlier than the e-mail which Mrs. Scott sent to Mr. Hayley on 26 October 2010. Thus it cannot be that anyone on the Goodman side thought any earlier than the making of the Wimpole Agreement that 31 October 2010 was a critical date. The position of Mr. Hayley and Mr. Drew, in their evidence, was that the dates specified in clauses 4 and 5 of the Wimpole Agreement, and in the predecessors of those clauses in the First Draft, the Second Draft and the Third Draft, were simply target dates. Although, when the dates in what became clauses 4 and 5 of the Wimpole Agreement were expressed, respectively, in the First Draft, the Second Draft and the Third Draft, it was anticipated that such dates could be met, there was no obligation on the part of the Firm or Brasrat to do so. That evidence corresponded with what clauses 4 and 5 of the Wimpole Agreement and their respective predecessors actually said as a matter of English. There was no justification on the evidence for supposing that Mr. Hayley and Mr. Drew either knew or intended that Mrs. Scott should interpret the Wimpole Agreement in the way in which she apparently did. Thus there was no common intention that the Handover Provision should be incorporated in the Wimpole Agreement.

Was there an outward expression of accord to that effect? No. There cannot have been as there was no common intention.

Did the intention continue at the time of the signature of the Wimpole Agreement? No. As there was no common intention it could not have continued

Did the Wimpole Agreement, by mistake, fail to incorporate the Handover Provision? No, incorporation of the Handover Provision in the Wimpole Agreement was never intended by both parties, whatever Mrs. Scott may have thought was the effect of the provisions in fact included.

In the circumstances of the present case the proposition that Goodman mistakenly thought that the Wimpole Agreement included the Handover Provision when it did not, but the Firm knew that such was the mistaken view of Goodman, but did not draw that to its attention, amounts to the contention that Mr. Hayley, the draftsman of the Wimpole Agreement and its predecessors, dishonestly misled Goodman into thinking that the Wimpole Agreement contained the Handover Provision. That is an extremely serious allegation. There was not a scrap of evidence to support it. Although clauses 2 and 3 of the Wimpole Agreement were not expressed as clearly as they might have been, the remaining provisions of the Wimpole Agreement were plainly expressed and none was susceptible of the interpretation which Mrs. Scott, and/or Mr. Goodman, and/or Mr. Scott seems to have placed upon them. The Wimpole Agreement was short. Each of Mrs. Scott, Mr. Goodman and Mr. Scott told me in cross-examination that she or he had read the Wimpole Agreement before Mrs. Scott signed it on behalf of Goodman. Mrs. Scott told me that she was content with the language in which the Wimpole Agreement had been expressed. For what it is worth, when 31 October 2010 passed without Brasrat leaving occupation of the Theatre, no complaint was made on behalf of Goodman that failure to leave was in some way a breach of the terms of the Wimpole Agreement. That contention was not advanced until put forward by Messrs. Clintons, solicitors acting on behalf of Goodman, in a letter dated 11 March 2011 to the Solicitors.

While, conceptually, the possibility that the Wimpole Agreement was void, because Goodman had been labouring under a mistake, namely that the Wimpole Agreement included the Handover Provision, in entering into it, and the Firm ought reasonably to have realised that that was the belief of Goodman, is separate from the assertion that the Wimpole Agreement should be rectified for unilateral mistake, the point actually depended upon a proposition so wildly improbable that it did not merit extended consideration. That improbable proposition was that, not intending that the Wimpole Agreement should include the Handover Provision, and not knowing that Goodman in fact believed that it did, the Firm ought nonetheless to have appreciated that that was the belief of Goodman. There were simply no grounds upon which such a conclusion could conceivably have been justified.

In the result I find that the Handover Provision was not a term of the Wimpole Agreement, whether by construction of clause 5, implication, or rectification. Moreover I find that there was no oral agreement collateral to the Wimpole Agreement in the terms of the Handover Provision, and that there were no grounds for holding that the Wimpole Agreement was not binding upon Goodman.

I have already expressed my view that the Firm has made out its claim.

What remains undetermined by this judgment, because it was not investigated at the trial, is whether the Firm was in breach of its obligations under clause 3 of the Wimpole Agreement. The allegations of breach pleaded at paragraph 43 of the Amended Defence and Counterclaim appear unpromising. What is pleaded is:

“The Claimant also failed to use any or any reasonable endeavours to ensure the smooth transition of any of the shows and events referred to at clause 3 of the Agreement. The Claimant made no attempt to ensure that the Defendant was in possession of the Theatre such as to take the benefit of any of these shows or events and its interference with equipment and other facilities at the Theatre would have made any “smooth transition” of the shows and events impossible in any case.”

I have already indicated my view of the proper construction of clause 3, and on that construction the Firm was not bound to deliver, or to procure the delivery, to Goodman of any of the productions listed in clause 3. Mere failure to deliver or to procure delivery, therefore, was not, in my opinion, a breach. Again, in my assessment the Firm was not bound, by clause 3 or any other provision of the Wimpole Agreement, to procure that some third party, such as White Light or Groupline, entered into any agreement with Goodman, either at all or on any particular terms. The particulars of alleged loss pleaded at paragraph 44(6) of the Amended Defence and Counterclaim suggest that Goodman possibly wishes to raise as alleged breaches of clause 3 matters such as removing furniture or health and safety manuals. However, as it seems to me, if it wants to pursue any of these matters, it will be necessary to amend the Amended Defence and Counterclaim further to particularise the respects in which it is said that the Firm was in breach of clause 3. The amounts pleaded at paragraph 44(6) indicate that the appropriate venue for any further trial in this action would be the appropriate county court, not this court.