Donington Park Leisure Ltd v Wheatcroft & Son Ltd

Where parties have concluded a binding agreement but left matters unresolved, the court may imply terms only where the stringent requirements for implication are satisfied. A term must be reasonable and equitable, necessary to give the agreement business efficacy, obvious, capable of clear expression, and consistent with its express terms. Reasonableness alone is insufficient. The court may, however, supply machinery necessary to make the parties’ common intention to be bound effective. A grantor must not derogate from a grant by substantially frustrating the purpose for which it was made. These principles apply to commercial licences as well as leases and easements.

Donington Park Leisure Ltd applied for directions under a Tomlin Order compromising earlier proceedings concerning an oral agreement with Wheatcroft & Son Ltd. The agreement required the defendant to provide the claimant with car-parking facilities on the Sunday Market Site for three days each year during the premier motorsports event at Donington Park.

The parties had agreed most of the implementing documentation but disputed the meaning and extent of the agreement, including permitted use, access, notice, assignment, protection against redevelopment, substitution of the site, termination and exclusivity. The central issues were which terms could be construed from the agreement and which additional terms could properly be implied.

1. The court held that the agreement was binding and that the necessary SMS licence had to reflect the agreement as properly construed and supplemented by permissible implied terms.

2. The implication of terms was governed by the stringent principles stated in Liverpool City Council v Irwin [1977] AC 239, B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1978) 52 A.L.J.R. 20, Phillips Electronique Grand Public S.A. v British Sky Broadcasting Ltd [1995] E.M.L.R. 472, Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1 W.L.R. 601 and Equitable Life Assurance Society v Hyman [2002] 1 A.C. 408. A term had to be reasonable and equitable, necessary for business efficacy, obvious, capable of clear expression and consistent with the express terms. It was insufficient that the term would be reasonable or improve the agreement.

3. The court also recognised a limited power to supply machinery where the parties clearly intended to be bound but their agreement lacked a mechanism needed to operate effectively. That approach was illustrated by Mamidoil-Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery [2001] EWCA 406 (Comm).

4. “Car parking” included motorcycle parking, but did not extend, without contextual support, to the additional vehicles, equipment and facilities sought by the claimant. Reasonableness was not a sufficient basis for implying those rights.

5. The agreement permitted use of the available vehicular and pedestrian gates appropriate to their physical characteristics. Restricting access would derogate from the grant. Vehicular access remained limited to vehicles used for the permitted purposes.

6. Terms were implied requiring reasonable notice of the nominated days, with the three days being consecutive. The licence was prima facie assignable, but assignment was restricted consistently with the lease. A restriction on the defendant’s title was necessary to protect the promised availability of the site.

7. The substitution provision was construed as a break or option rather than an unenforceable agreement to agree. An arbitration mechanism was implied to resolve disputes about the need for redevelopment and the suitability of replacement land.

8. The court declined to imply the claimant’s additional licensor obligations, any forfeiture clause, or wider terms of exclusivity. The licence would expire automatically with the lease.

First-instance decision. No appellate history is stated in the judgment.