Over Optimism Not Grounds for Claim

The developer of the M20 services in Kent was recently successful in court in resisting a claim for damages from the tenants of the service area, who were dissatisfied because representations made to them regarding visitor numbers and the facilities of the site were not realised, causing them commercial losses.

The main cause of the tenants’ dissatisfaction was that visitor numbers, estimated in an independent report commissioned by the developer to be between 11,000 and 12,000 a day on average, were in reality only about a tenth of the number anticipated.

In addition, the developer’s sales literature had envisaged having screens showing Channel Tunnel and port departure information. Lastly, the tenants claimed that the signage from the motorway was not of the expected standard. The former was later found to be impractical for technical reasons (despite being an idea which had attracted the support of the Port of Dover and Eurotunnel) and the latter was not under the control of the developer. The developer could not therefore be held to account for either of these issues.

When the lease documentation was examined, the court found that the developer had restricted its liability to any representation made by its solicitors in reply to questions.

The decision as to whether the shortfall in visitor numbers could lead to a claim therefore turned on whether the representations were made fraudulently to induce the tenants into executing their leases. The court sympathised with the tenants, but there was no ground for believing that they were: indeed, the developer had also suffered a large loss because of its reliance on the over-optimistic forecasts.

If you intend to lease premises where footfall is crucial, it makes sense to negotiate an appropriate clause in the lease agreement, so that the rental paid will be less if expectations are not met. 

We can assist you in negotiating a lease which protects your position if things do not turn out as expected. Contact Clare Magill for more advice.