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High Court enforces negotiations lock-out clause – David Lascelles for successful Claimant

David
Lascelles
acted for the successful Claimant in Mercer Land Limited v
Preem Limited
[2016] EWHC 923 (QB). The claim arose out of heads
of terms for a joint venture to develop and sell a multi-million pound site in
East London owned by the Defendant.

The
agreement specified that certain clauses were to be legally binding whilst
others were to form the basis for discussion leading to comprehensive
contractual documentation to be entered into by the parties in due course.

One of the
clauses expressly stated to be binding was clause 10. It provided
an exclusivity period in the Claimant’s favour, preventing the Defendant from
engaging in discussions or negotiations with anyone other than the Claimant for
1 year from the date of the agreement. It obliged the Defendant to
notify the Claimant if it did so engage. Clause 10 also contained an
acknowledgement by the Defendant that the Claimant would incur significant
costs, fees and expenses by relying on clause 10.

Clause 10
further provided that if the Defendant breached its obligations thereunder it
would be obliged to indemnify the Claimant in relation to all the latter’s
costs, fees, disbursements and expenses in connection with the development and
sale of the site.

The
Claimant incurred substantial legal, financing and project management costs in
connection with the development and sale of the site.

However the
Defendant entered into discussions with a third party regarding the purchase of
the site. This was with a view to the Defendant and the third party
progressing the sale and development of the site to the exclusion of the
Claimant. The Defendant did not, however, inform the Claimant of
such matters.

The
Claimant then discovered the Defendant’s wrongful conduct. It brought
proceedings in order to recover the sums it had expended.

The
Defendant sought to defend on numerous bases. These included that the
agreement was unenforceable as a mere agreement to agree. In the
alternative the Defendant alleged that there had been an oral variation to the
agreement by which the Claimant agreed that the Defendant would not have to
indemnify the Claimant.

In behalf
of the Claimant, David argued for the
enforceability of the lock-out agreement and further that the Defendant had no
real prospect of successfully demonstrating that the oral variations were
made.

Pursuant to
a judgment dated 22 April 2016, the High Court acceded to David’s submissions
and dismissed the Defendant’s defences. Judgment was
entered in the Claimant’s favour for the full amount of the costs incurred on
the transaction, interest and the costs of the proceedings. A charging
order was also granted over the site so as to provide security for the sums
owing from to David’s client.

A copy of
the judgment is available HERE.

David was
instructed for the Claimant by Thrings LLP.

David
Lascelles is recommended by Chambers & Partners for commercial litigation
and contentious company law. He is also recommended as a leading
barrister handling corporate disputes. He frequently acts in commission
and related claims relating to the sale of properties, shares and businesses.

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