Shirayama Shokusan Company Ltd & Ors v Danovo Ltd

At the interim stage, signage rights granted under a contractual licence may need to be construed alongside a related provision requiring consent not to be unreasonably withheld or delayed. Where the instruments concern the same subject matter and were made within days of each other, it may be arguable that the consent was given under the related provision. A contractual power to terminate consent may also arguably be exercisable only for good reason where that is necessary to give business efficacy to the arrangement. The court must then balance the parties’ competing interests and adopt the course causing the least injustice pending trial. An interim arrangement preserving the commercial purpose of the signage while reducing its apparent exclusivity may be appropriate.

The claim arose from a dispute between the owners of the former County Hall building and Danovo Ltd, the tenant operating the Saatchi Gallery. Danovo had two large signs at the Belvedere Road entrance under a letter of licence. A related deed granted Danovo a right, subject to the landlord’s prior written consent not unreasonably being withheld or delayed, to erect signage at that entrance.

The landlord served notice terminating the existing signage and proposed replacement signs identifying the entrance as the main entrance. Danovo applied for an injunction restraining removal of both existing signs pending trial. The central issues were whether Danovo had a good arguable case concerning the contractual effect of the notices and whether the balance of convenience favoured retaining the existing signage.

1. Good arguable case. Danovo had a good arguable case that the letter of licence could not be treated in isolation from clause 9.2 of the deed. The instruments were made within days of each other and concerned the same subject matter. The landlord’s evidence also indicated that the application for the existing signage had been approached as an application under clause 9.2.
2. It was arguable that the reference in clause 9.2 to signage not styling the entrance in preference to a third party operated as a basis for considering whether consent should reasonably be withheld, rather than as a limitation on the scope of any application. It was therefore arguable that the consent granted by the letter of licence was subject to the reasonableness requirement in clause 9.2.
3. It was further arguable that, having regard to clause 9.2 and the wording of the letter of licence, the landlord’s power to terminate the consent on 28 days’ notice was exercisable only for good reason. Otherwise, the landlord could terminate the consent without justification and immediately face an application for consent to continue the same signage, producing the same reasonableness issue by another route.
4. The first notice was difficult to maintain in light of the landlord’s subsequent letter and appeared to have been waived. The validity of the later notice was highly questionable because the proposed Main Entrance signage would not indicate that the Saatchi Gallery could be accessed from the entrance. The refusal of Danovo’s later application to retain the existing signs was similarly open to question.
5. Balance of convenience. Danovo acted unreasonably in rejecting the offer that one existing Saatchi Gallery sign should remain while a Main Entrance sign replaced the other. That arrangement would preserve an indication that the Gallery was accessible from the entrance while reducing the impression that the entrance was exclusive to it. The least unjust course was to authorise removal of one existing sign and direct that, absent agreement, the remaining sign remain until trial or further order.

First-instance interim application. No prior appellate decision is stated in the judgment.