Co-operative Wholesale Society Ltd v National Westminster Bank plc: CA 1995

The court considered the proper construction of rent review clauses in several cases. The underlying result which the landlords sought in each case was the same.
Held: It was a most improbable commercial result. Where the result, though improbable, flowed from the unambiguous language of the clause, the landlords succeeded, whereas where it did not, they failed. The ordinary principles of construction applied to rent review clauses.
Hoffmann LJ discussed Lord Diplock’s admonition that in a commercial contract too much weight should not be given to ‘detailed semantic and syntactical analysis of words . . [if it] is going to lead to a conclusion that flouts business commonsense’ and said: ‘This robust declaration does not, however, mean that one can rewrite the language which the parties have used in order to make the contract conform to business commonsense. But language is a very flexible instrument and, if it is capable of more than one construction, one chooses that which seems most likely to give effect to the commercial purpose of the agreement.’
Simon Brown LJ said that, having regard to the improbable result for which the landlords contended, only the most unambiguous of such clauses could properly be found to bear the landlords construction and that in the case of only one of the leases did the clause ‘unambiguously . . achieve the improbable result for which the landlords contend’, though as to two fo the cases, ‘For my part, I would accept that the more obvious reading of both favours the landlord’s construction. I am persuaded, however, that they are capable of being, and therefore, for the reasons already given, should be, construed differently.’
Hoffmann, Leggatt and Simon Brown LJJ
[1995] 1 EGLR 97
England and Wales
CitedAntaios Compania Naviera SA v Salen Rederierna AB (‘the Antaios’) HL 1984
A ship charterer discovered that the bills of lading were incorrect, but delayed withdrawal from the charter for 13 days. They now sought leave to appeal the arbitration award against them.
Held: Though he deprecated extending the use of the . .

Cited by:
CitedOxonica Energy Ltd v Neuftec Ltd PatC 5-Sep-2008
The parties disputed the meaning of an patent and know how licence. The parties disputed whether the agreement referred to IP rights before formal patents had been granted despite the terms of the agreement.
Held: ‘The secret of drafting legal . .
CitedRainy Sky Sa and Others v Kookmin Bank SC 2-Nov-2011
Commercial Sense Used to Interpret Contract
The Court was asked as to the role of commercial good sense in the construction of a term in a contract which was open to alternative interpretations.
Held: The appeal succeeded. In such a case the court should adopt the more, rather than the . .
CitedKookmin Bank v Rainy Sky Sa and Others CA 27-May-2010
The defendant bank appealed against summary judgment given on a claim on its obligations under an advance payment bond given to support ship-building contracts.
Sir Simon Tuckey (dissenting) said: ‘There is no dispute about the principles of . .

These lists may be incomplete.
Updated: 02 June 2021; Ref: scu.273181