Summary

There was no clear wording in an option agreement restricting a company from marketing and selling its interest in five car parks either individually or collectively.

Facts

The appellant (H) appealed against a decision concerning the proper interpretation of an option agreement made between H and the respondents (Q).

Q owned interests in five airport car parks. H and Q entered into an option agreement under which H was granted a 20 year option to acquire Q's interests in the car parks. If Q's interest in a car park came to an end the option continued in relation to Q's continuing interests in the other car parks. The option agreement contained restrictions on disposal in clauses 3.1 and 3.2. Q later marketed the car parks for sale individually and collectively as a portfolio. H considered that was not permitted under the option agreement. Q issued proceedings seeking declatory relief as to the construction of the disposal restriction clauses. The judge found that there was no clear wording restricting Q in its dealings with the car parks and that it could sell them individually to different purchasers, that the word "seller" in clauses 3.1 and 3.2 was used flexibly to refer to either individual sellers or to collective sellers and that it would have needed clear words to tie up the car parks as a collective unit for 20 years, and there were no such words to be found in the option agreement.

H submitted that the judge failed to give effect to the ordinary meaning of the option agreement; that he wrongly ignored a document written by Q (the Q-Park document) which signified why Q were seeking to sell the car parks and that in consequence he failed to take into account the reason why H wished the car parks to be retained and sold as a package, namely that this would enable it to leverage scale, realise synergies and derive greater value from the combined entities.

Held

The term seller in clause 3.2 referred to each of the respondents individually. This was the natural meaning of the language and the alternative interpretation would lead to the unreasonable result that Q's ability to raise finance would be severely restricted because they could not charge an individual car park without H's consent for a period of 20 years. Although the option was limited to the car parks collectively, that did not mean that Q had agreed not to dispose of the car parks individually for 20 years and on a natural reading of clause 3 they had not. There was no doubt that the parties contemplated that Q's interest in a particular car park might be disposed of or come to an end in circumstances other than where the management agreement in respect of a particular car park was terminated by Q for breach or where a leasehold interest in a car park came to an end. The Q-Park document was admissible but only went so far as to show that both parties were aware of the fact that there were opportunities to derive greater benefits from the whole portfolio than the sum of its parts might suggest. H had the opportunity to exercise an option over the whole portfolio and it retained that option over such of it as remained. Q could not dispose of any part of the portfolio without giving H notice, at which point H had what was in effect a right of pre-emption. By contrast, H's interpretation of the option agreement would mean that Q had agreed not to dispose of or charge individual car parks within their portfolio for a period of 20 years. If they were to market the whole portfolio but receive an offer for only part of it then, on H's interpretation of the agreement, the offer could not be accepted. A party would require a good commercial reason to tie its hands in this way and none had been suggested.

Appeal dismissed