4 New Square Chambers’ Usman Roohani appears in the Supreme Court’s latest decision on contractual interpretation.
On 18 January 2023, the Supreme Court handed down its eagerly-awaited decision in Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] UKSC 2.
Usman Roohani appeared for the Appellant, Blacks, led by Brie Stevens-Hoare KC and Morayo Fagborun Bennett of Gatehouse Chambers and instructed by Gary Bird of Gateley LLP.
While the case concerned a conclusive certification provision within a commercial lease, both the parties and the Supreme Court proceeded on the basis that the lease stood to be interpreted as any commercial agreement, and so the decision is yet a further Supreme Court authority on the interpretation of commercial documents generally.
The appeal concerned a service charge regime which provided that a landlord’s certificate as to the amount of service charge payable “shall be conclusive”. On the landlord’s case, it was conclusive as to liability for all purposes, save as to certain limited (and irrelevant) defences, despite the fact that this made the landlord a ‘judge in his own cause’. On Blacks’ case, the conclusivity was more limited in nature, with central questions as to whether the certificated sums were properly due under the lease being left open for determination by the courts in the event of dispute.
By a majority of 4-1, the Supreme Court rejected both parties’ proposed interpretations. The majority fashioned a solution whereby the landlord’s certificate would be conclusive at the time that it was issued, but which left Blacks with the right to bring a claim on the basis that service charges levied were not properly due under the lease. The landlord’s objection that this was precluded by a ‘no set-off clause’ was rejected.
The majority rejected an overly textual construction (as adopted by the Court of Appeal below) and held that the correct iterative approach led to its own solution, which gave full meaning to the rival provisions in the lease.
Lord Briggs delivered a sole dissent, favouring a textual construction and criticising the majority’s “imaginative creation” which had not been proposed by either of the parties.
The decision illustrates how the context of a clause may override a narrow textual reading within the orthodox and now well-settled principles of contractual interpretation.
Black will now pursue its counterclaim in the High Court.
