Oakrock Ltd v Travelodge Hotels Ltd & Ors

On an application for summary judgment, the court must determine whether the claim has a realistic prospect of success without conducting a mini-trial. A short point of law or construction may be decided summarily where the evidence is sufficient and the answer is clear. Contractual compromise provisions in a company voluntary arrangement may bar claims for rent lost during the concession period, but do not necessarily bar a distinct claim arising after the lease is surrendered. Where construction depends on presumed intention or disputed factual evidence, the issue should ordinarily proceed to trial.

Oakrock sought damages from Travelodge for allegedly defective and excessive refurbishment work carried out under a business sale agreement and related lease. Travelodge applied for summary judgment, relying principally on the terms of its company voluntary arrangement, which reduced rent payable for the claimant’s hotel by 25 per cent for three years. Oakrock advanced claims for lost rent, including losses said to arise from exercising an option to vacate and relet the hotel, and a separate claim concerning furniture and equipment allegedly not required after refurbishment.

The central questions were whether the CVA compromised or released the claims and whether the inventory clause gave rise to a claim that was bound to fail.

1. Summary judgment principles. The court applied the approach summarised in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch). A realistic claim is more than merely arguable, but the court must avoid a mini-trial. A short question of law or construction may be decided if the necessary evidence is before the court and the answer is sufficiently clear.
2. Rent concession claim. The claim for the 25 per cent rent shortfall during the CVA’s rent concession period was a liability arising under the Category 2 lease. Clause 9.4 therefore accepted that liability in full and final satisfaction, and that head of claim was excluded.
3. Notice to vacate. A claim based on giving notice to vacate and then obtaining a higher rent from an alternative tenant was different. Once the lease had ended, the claim was not in respect of an obligation arising under or in relation to the lease during the concession period. It was therefore not excluded by clause 9.4 or clause 9.11.
4. Construction and evidence. The court declined to determine summarily the “floor” argument, because it depended on presumed intention and the possibility that further evidence would affect the construction. The inventory claim was reasonably arguable. Clause 13.8 could plausibly concern items not required in the refurbished hotel, rather than items not required immediately after completion.
5. Disposition. The application for summary judgment on the whole claim was dismissed. The claims identified at paragraph 14, insofar as excluded by clause 9.4, were to be struck out. Questions concerning the form of relief and costs were reserved for submissions.

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