MWB Business Exchange Centres Ltd (Claimant/ Respondent) v Rock Advertising Ltd (Defendant/ Appellant)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Kitchin,Lord Justice McCombe,Lady Justice Arden
Judgment Date21 Jun 2016
Neutral Citation[2016] EWCA Civ 553
Docket NumberCase No: B2/2014/0904

[2016] EWCA Civ 553

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM CENTRAL LONDON COUNTY COURT

HHJ MOLONEY QC

2YK00170

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lady Justice Arden

Lord Justice Kitchin

and

Lord Justice McCombe

Case No: B2/2014/0904

Between:
MWB Business Exchange Centres Ltd
Claimant/Respondent
and
Rock Advertising Ltd
Defendant/Appellant

Clifford Darton (instructed by Edward Harte LLP) for the Respondent

Henry Hendron (instructed by Direct Access) for the Appellant

Hearing date: 9 March 2016

Judgment Approved by the court for handing down

(subject to editorial corrections)

Lord Justice Kitchin
1

This is an appeal by Rock Advertising Ltd ("Rock") from an order made by His Honour Judge Moloney in the Central London County Court entering judgment for MWB Business Exchange Centres Ltd ("MWB") on its claim against Rock for arrears of licence fees and other charges and dismissing Rock's counterclaim.

2

The facts are straightforward. MWB operated managed office space in central London. Rock provided marketing services. For some seven or eight years prior to the events giving rise to these proceedings, Rock occupied as licensee premises managed by MWB. Initially these premises consisted of a relatively small suite of offices which Rock could afford. But in August 2011 it decided to expand its business and so entered into an agreement in writing for larger premises at an increased fee for a term of 12 months commencing on 1 November 2011. The licence fee to which it agreed was £3,500 per month (excluding VAT) for the first three months and then, from February 2012, £4,433.34 per month (again excluding VAT).

3

Unfortunately Rock was unable to meet this financial commitment for its business did not develop as it had hoped and by late February 2012 it had incurred arrears of licence fees and other charges of over £12,000.

4

On 30 March 2012 MWB exercised its right under the licence agreement to lock Rock out of the premises and shortly afterwards it gave notice purporting to terminate the agreement with effect from 4 May 2012.

5

In these proceedings MWB claimed the arrears of licence fees and other charges and damages to compensate it for the other losses it claimed it had suffered. Rock disputed the claim and counterclaimed for loss and damage resulting from what it asserted to be its wrongful exclusion from the premises.

6

It was Rock's case that on 27 February 2012 an oral agreement was made between MWB, acting by its credit controller, Miss Evans, and Rock, acting by its managing director, Mr Idehen, to re-schedule the licence fee payments due under the agreement over the period from February to October 2012 in such a way that for the first few months Rock would pay less than the amount originally agreed but thereafter it would pay more with the result that, by the end of the year, the arrears would have been cleared. Moreover, on that same day it paid £3,500 to MWB, this being the first instalment due in accordance with the revised payment schedule. In the alternative, Rock argued that by reason of its payment and MWB's acceptance of the £3,500, MWB was estopped from disavowing the variation to which it had orally agreed.

7

MWB countered Rock's case in a number of ways. First, it flatly denied that Miss Evans and Mr Idehen had reached an agreement on 27 February 2012. In particular, Miss Evans accepted that she and Mr Idehen had oral discussions and exchanged e-mails on that day but maintained that no agreement was reached. Then, two days later, on 29 February 2012, she sent an e-mail to Mr Idehen in the following terms:

"Morning Christian, I had a debt review with my finance director last night. We have to have a minimum payment of £5,320 [this being the licence fee plus VAT] on account each month to cover the cost of the licence fee. He is not happy to allow you to accumulate anymore debt on the account and said £4,000 is not acceptable as you are not covering your contractual expectations. Please confirm that you will make payments for no less than £5,320.01 each calendar month. It is £1320 more in March as per your schedule and £320 more for April and May as per your proposed payment schedules. Please confirm by return as I have to update the finance director at 4.00pm today."

8

The judge heard evidence from Miss Evans and Mr Idehen. He concluded that Miss Evans did agree to accept the terms and schedule proposed by Mr Idehen. Moreover, she had at least ostensible authority to commit MWB to an agreement of this kind. However, the judge continued, she very soon realised that she had gone too far and instead treated Mr Idehen's schedule merely as a proposal. She took it to her superior and he rejected it. This led to the e-mail of 29 February to which I have referred.

9

MWB's second point was that the oral variation agreement was not enforceable because it lacked consideration. Again, the judge was not persuaded. He considered that Rock's agreement to pay in accordance with the revised schedule did amount to good consideration, as he explained at [14]:

"I also note that there is an element of possible commercial benefit to [MWB] in retaining an existing tenant, even if a questionable payer, in the hope of perhaps recovering its arrears rather than getting rid of them, probably saying goodbye to the arrears and allowing the property to stand empty for some time at further loss to themselves."

10

The judge returned to this issue a little later, at [20]:

"There is just enough practical benefit here to [MWB] to constitute adequate consideration passing in its direction, even though it is fair to say it is doing no more than accepting payments of monies that [Rock] was contractually obliged to pay in any event (whether as licence fees for the future or payment of arrears in the past). Still, there is some consideration in this situation in the benefits of having some of one's debtors' obligations honoured and some hope of having them all honoured rather than abandon hope entirely."

11

Third, MWB turned to the express terms of the original written agreement. Clause 7.6 provided:

"This licence sets out all of the terms as agreed between MWB and the licensee. No other representations or terms shall apply or form part of this licence. All variations to this licence must be agreed, set out in writing and signed on behalf of both parties before they take effect."

12

The judge held that this was a clear clause which precluded an oral re-negotiation of a core term of the agreement, namely the licence fees payable on particular dates over the course of 2012.

13

Finally, the judge dealt with the estoppel argument. He considered that the payment of the £3,500 by Rock on 27 February 2012 could not be described as a relevant detriment when it was merely a sum which Rock was already obliged to pay. The argument therefore failed.

14

It followed that MWB was entitled to judgment on its claim. Rock now appeals with the permission of Moore-Bick LJ granted by order dated 12 February 2015 on two grounds. It contends first, the judge was wrong to hold that clause 7.6 precluded any variation of the contract other than one in writing in accordance with its terms. It says that it was open to the parties to vary the contract as a whole, including clause 7.6, orally or in any other way they chose and that the judge was wrong to hold that the oral agreement which he had held was made was not binding on MWB.

15

Rock's second ground of appeal is that the judge was wrong to dismiss the estoppel argument. It argues that it did suffer detriment in paying the £3,500 to MWB on 27 February 2012 and the judge ought to have held it was unconscionable for MWB now to seek to enforce the terms of the original agreement.

16

MWB responds that the judge was right to dismiss the claim for the reasons he gave but argues that he fell into error in finding that Rock's payment of the £3,500 and its agreement to comply with the other terms of the revised payment schedule amounted to good consideration for the oral variation. It contends that a promise to pay an existing debt by instalments and to meet future liabilities as they fall due does not amount to consideration and the judge ought so to have held.

17

This appeal therefore gives rise to three issues, namely

i) whether clause 7.6 precluded any variation of the agreement other than one in writing in accordance with its terms;

ii) whether Rock provided any good consideration for the oral variation; and

iii) whether the judge ought to have held that MWB was estopped from enforcing its rights under the original agreement.

18

It came to our attention shortly before this appeal came on for hearing that the point of law underlying the first issue had been raised in another appeal heard by another constitution of this court upon which judgment had been reserved, namely Globe Motors Inc and ors. v TRW Lucas VarityElectric Steering Ltd and anor. Accordingly, we so notified the parties and at the close of the hearing indicated that we would reserve our judgment until after the court had given its decision in Globe Motors and the parties had had an opportunity to file further short submissions in writing. The decision in Globe Motors was handed down on 20 April 2016 ( [2016] EWCA Civ 396) and we received further submissions on 26 April 2016.

Clause 7.6 and oral variation

19

There has for some time been a considerable degree of uncertainty in this country as to whether an agreement in writing which contains an anti-oral variation clause such as clause 7.6 can be varied other than in accordance with the terms of that clause. That...

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