Property contracts must be watertight, warns Siobhan Jones
Drafting a watertight contract which accurately reflects all the parties’ intentions can be a complicated business. Construing that contract where the parties are no longer in agreement as to its implementation or effect can be even less straightforward.
In Scottish Widows Fund and Life Assurance Society v BGC International [2012] EWCA Civ 607, [2012] All ER (D) 167 (May), the Court of Appeal highlighted the principles the courts will use in the construction of a contract (in this case a lease). The decision also highlights the court’s reluctance to correct or rectify a document which was prepared with the benefit of expert legal advice.
The facts
Scottish Widows (SW) was the tenant under an underlease of premises at One America Square. The underlease was over rented with a passing rent of £1,285,424 (the market rent was £752,765).
In 1996, SW entered into negotiations with BGC International (BGC) to sub-underlet the premises. SW agreed to subsidise the rent in order to incentivise BGC to take a sub-underlease at the rent passing under SW’s sublease. SW initially
