Donington Park Leisure Ltd v Wheatcroft & Son Ltd

Donington Park Leisure Ltd v Wheatcroft & Son Ltd [2006] EWHC 904

CONTRACT LAW – LICENSES – IMPLIED TERMS – NON-DEROGATION FROM GRANT

Facts

The tenant of a lease over a racing-circuit persuaded its landlord to allow it to use additional land for parking during a large event.  The parties later disagreed as to what terms had been agreed: what vehicles were permitted, what access points could be used, whether notice had to be given and whether the contract was assignable.

Issues

The issue was the extent to which the court could ‘fill in the gaps’ left by parties in contractual agreements.

Decision/Outcome

The Hight Court held that the court can only imply terms into an agreement in limited circumstances. It cannot do so merely because the contract is unfair or unclear: the implication much be necessary to give business-efficacy to the contract, in circumstances where an ordinary person would think it obvious that the parties intended the implied term to be part of the agreement or would have agreed to it.

In this case, the contract was construed to exclude certain types of vehicles such as sewerage tankers.

It was held that the tenant could make use of all access points even though this meant accessing even more of the landlord’s land: the principle of non-derogation of grant means that a party cannot grant a right and then render the exercise of that right impossible using technicalities.

The court thought that a term allowing for reasonable notice to be given could also be implied into the contract.

However, there was no indication as to what the parties intended in terms of whether the contract could be assigned, so the court refused to imply into the contract a non-assignability term.