Q- Park Ltd. & Ors v HX Investments Ltd

In construing an option agreement, the court asks what a reasonable person with the relevant background knowledge would understand the contractual language to mean. A single option to acquire a portfolio does not, without equivalent clear wording, impose a corresponding prohibition on the owner disposing of individual assets. Where the agreement requires notice before disposal and gives the option-holder time to exercise the option, the owner may dispose of an individual asset if the option is not exercised in time. The option may then continue over the assets remaining, with contractual price adjustments where applicable. Commercial context may be admissible, but it cannot create a restriction unsupported by the agreement’s language.

Q-Park owned interests in five airport car parks and granted HXI an option to purchase them. The agreement also restricted disposal during the option period, requiring Q-Park to give notice and allowing HXI just over two months to exercise the option. Q-Park sought to market the car parks individually and as a portfolio. HXI contended that disposal had to be of the portfolio collectively.

HHJ Roger Kaye QC held that Q-Park could market and sell individual car parks, and HXI appealed against that construction under [2011] EWHC 2758 (Ch). The central issue was whether clauses 3.1 and 3.2 restricted Q-Park to collective disposal.

Appeal dismissed. Lord Justice Kitchin gave the judgment, with Lord Justices Stanley Burnton and Maurice Kay agreeing.

1. The proper approach to contractual interpretation was to ask what a reasonable person with all the background knowledge available to the parties would understand the contractual language to mean. Objective facts communicated during negotiations could form part of that background, as explained in Oceanbulk Shipping SA v TMT Asia Ltd [2010] UKSC 44, [2011] 1 AC 662 at [40].
2. Clause 2 granted HXI a single option to purchase the car parks collectively. Clauses 2.1, 2.2, 2.3, 2.4 and 2.14 established that construction, subject to the specific adjustments in clauses 2.8 and 2.13.
3. Clause 3 was not a mirror of clause 2. Clause 3.1 prohibited disposal of any interest without compliance with clause 3.2. In context, “Seller” referred to each respondent in respect of its own interest, so a notice could relate to an individual car park. The plural expression “Car Parks” did not require collective disposal.
4. If HXI did not serve an option notice and pay the deposit after receiving notice, Q-Park could sell the relevant interest during the permitted period free from the option. If the sale did not occur, the process could be repeated. If Q-Park’s interest in one car park ceased, the option continued over the remainder, with the price and deposit adjusted according to the book values where applicable.
5. The related management agreements, including their novation provisions, showed that the parties contemplated individual disposals. The Q-Park document was admissible as part of the factual matrix, but evidence of portfolio synergies did not justify implying a 20-year restriction. HXI’s construction would materially restrict Q-Park’s ability to charge or sell individual assets, and no sufficient commercial reason for that result had been shown.

• Court of Appeal (Civil Division): On 31 May 2012, the court dismissed HXI’s appeal and upheld the construction adopted below.
• High Court, Chancery Division, Leeds District Registry: HHJ Roger Kaye QC, sitting as a judge of the High Court, decided on 3 November 2011 that Q-Park could market and sell the car parks individually and collectively: [2011] EWHC 2758 (Ch).