Best Beat Ltd v Mourant & Co Trustees Ltd & Anor

In construing a commercial contract, the court must begin with the language used. Commercial purpose and background may justify an alternative construction only where the language or admissible background indicates that something has gone wrong. The court should not rewrite clear contractual dates to produce a commercially fairer outcome. Where a contract requires a release to be obtained by a longstop date, the requirement may call for unconditional execution and delivery of the release, rather than merely a promise to provide it on completion. On a summary judgment application, the claimant must establish that the defendant has no real defence. A seriously arguable construction issue is sufficient to defeat the application.

Best Beat Ltd, in liquidation, contracted to sell freehold premises to Mourant & Co Trustees Ltd and Mourant Property Trustees Ltd. The parties later varied the contract to allow time to resolve a third party’s alleged leasehold interest and required specified notices, a release, vacant possession and clear searches.

The claimant served a seller’s notice and sought specific performance. The defendants contended that the contract had ended under clause 2.6 because the required release had not been unconditionally obtained by the longstop date. They also argued that the seller’s notice was invalid because the contractual preconditions had not been satisfied when it was served. The central issue was whether the contractual dates and conditions could be construed so that completion remained possible after the stated longstop date.

1. Application dismissed. The claimant had not established that there was no real defence to the claim for specific performance.
2. The variation agreement defined a release as a written release executed in an approved form and confirming that the tenant had no proprietary interest. The court held that this required unconditional delivery of the appropriate deed. The deed had not been obtained by the longstop date of 2 November 2008.
3. The court rejected the proposed construction under which the longstop date would coincide with the latest possible completion date. The express dates had been deliberately amended. Giving effect to the claimant’s construction would require substantial alteration of the contractual language, for which there was no sufficient evidential basis.
4. Applying the approach in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, the court recognised that admissible background may support an alternative meaning, but began from the assumption that contractual language and grammar were not ordinarily mistakes. Commercial fairness could not justify rewriting the agreement.
5. The alternative argument concerning the validity of the seller’s notice raised a further seriously arguable defence. The court did not finally determine the defendants’ own Part 24 application or whether their conduct was reasonable. The claimant’s summary judgment application was therefore dismissed.