Goodwill SIP Ltd & Ors v London Borough of Newham

Where parties continue a commercial contractual relationship after an earlier agreement expires, the court determines objectively which existing terms were carried forward, subject to any express variations. A term may continue even though the parties did not expressly renegotiate it, particularly where their conduct and pleadings show a shared intention to preserve the previous arrangements. A party’s temporary departure from a contractual term does not waive its later reliance on that term where the contract contains an effective non-waiver provision. Business efficacy is relevant only where implication is necessary; it does not displace terms adopted by agreement. A claim for payment arising from accommodation occupied after cancellation therefore fails where the contract places responsibility for removal on the provider and ends the authority’s payment obligation.

The claimant companies supplied temporary accommodation to the defendant local housing authority for applicants who might be homeless. Under earlier block-booking agreements, the authority paid for rooms whether occupied or vacant. Clause 5(a) required the provider to remove an applicant after the authority ended responsibility for the accommodation and excluded payment for any unauthorised extension.

After the block-booking agreements ended, the parties continued under interim spot-booking arrangements at agreed rates. The claimants sought payment for accommodation occupied by applicants who overstayed after their bookings were cancelled. The Council counterclaimed payments made for one applicant, Ms Michelle Grant, alleging that she had been evicted and later unlawfully re-entered. The issues were the terms governing the interim arrangements and whether Ms Grant had been evicted in March 2007.

1. Claim dismissed. The interim arrangements preserved the terms of the earlier agreements, except where incompatible with the expressly agreed changes from block booking to spot booking and to the BABIE rate.
2. The parties’ contractual intention was to be assessed objectively, by reference to what they said and did. The claimants’ pleaded admission, their conduct, the continued operation of the accommodation arrangements and their later reliance on the same contractual structure showed that the earlier terms continued. This included clause 5(a) and the non-waiver provision in clause 38.
3. The court rejected the submission that the earlier agreements had wholly lapsed and that the relevant terms had to be implied afresh into each spot booking. The necessity test associated with The Moorcock (1889) 14 PD 64 and referred to in Wettern Electric Ltd v Welsh Development Agency [1983] 1 QB 796 did not govern terms which the parties had objectively agreed to carry forward.
4. The Council’s assistance with the exceptional group of overstayers affected by Desnousse v London Borough of Newham & Others [2006] EWCA Civ 547; [2006] QB 831 was a one-off departure beyond its contractual obligations. Clause 38 prevented that assistance from waiving or compromising clause 5(a). The claimants therefore remained responsible for removing overstayers, and the Council was not liable for accommodation after cancellation of the booking.
5. Counterclaim dismissed. The Council bore the burden of proving that Ms Grant had been evicted on 28 March 2007. The uninterrupted accommodation registers, together with the evidence of Mr Bob Takhar and the absence of evidence of re-entry, showed that the Council had not established that eviction. Payment until her actual removal on 11 January 2009 was therefore properly made.
6. Judgment was given dismissing both the claim and the counterclaim.