In Irish Bank Resolution Corp Ltd (In Special Liquidation) v Camden Market Holdings Corp(1) the Court of Appeal held that a term could not be implied into an agreement because, although it was linguistically consistent, it was substantively inconsistent with the express terms. In doing so, the court shed further light on the application of the "cardinal rule" that an implied term must not contradict any of the express terms of the contract.


Irish Bank Resolution Corporation Limited (IBRC) provided a loan of £195 million to the Camden Market Group which was used to purchase and develop properties at Camden Market in London. The terms of the loan were governed by a restated facilities agreement.

IBRC was expressly permitted, with the Camden Market Group's consent, to assign its rights under the restated facilities agreement to another financial institution or, alternatively, to offer sub-participations in the loan without consent. IBRC was also expressly permitted to disclose any information about the Camden Market Group and the finance documents to any actual or potential assignee or sub-participants, subject to them providing a confidentiality undertaking.

As the maturity date of the loan approached, the Camden Market Group informed IBRC that it would repay the loan by selling the properties rather than refinancing. However, as there were delays in obtaining planning permission – which would in turn delay the sale of the properties – the final maturity date of the loan was extended by 12 months under a supplemental deed. At the same time, IBRC provided a further loan facility of £10 million. The supplemental deed provided for an "exit strategy" under which the Camden Market Group agreed to apply for planning permission and market the properties for immediate sale by an IBRC-approved agent. The terms of the restated facilities agreement were expressly incorporated into the supplemental deed without qualification.

Having subsequently obtained planning permission, the Camden Market Group began preparing to market the properties and met prospective buyers. In the meantime, IBRC had gone into liquidation and, in an attempt to sell off its loan book, the liquidator had begun to market all of its loans, including the loan to the Camden Market Group. Some of the loans in the package were distressed, but the Camden Market Group's loan was not.

The Camden Market Group became concerned that potential buyers of the properties were under the misapprehension that its debt was distressed and that the Camden Market Group might not be fully compliant with the loan's terms and conditions. It claimed that buyers were therefore indicating that they would prefer to acquire the loan from IBRC rather than buy the properties themselves, apparently with the intention of contriving a basis for later enforcing the security and obtaining the properties for below market value (a strategy often associated with 'vulture' funds).

The Camden Market Group issued proceedings against IBRC for a declaration that any purported assignment of the loan without its consent would be a breach of the express terms and an implied term of the restated facilities agreement and the 2012 supplemental deed. Consequently, IBRC confirmed that its intention was to dispose of the loan by way of sub-participation only and undertook not to transfer the agreement by assignment or novation at all. Nonetheless, the Camden Market Group pursued a claim against IBRC for breach of an implied term that it would do nothing to hinder the marketing of the premises to achieve the best price in accordance with the exit strategy by marketing the "sale" of the Camden Market Group loan in competition. IBRC responded by applying for summary judgment or for the claim to be struck out.

The High Court rejected IBRC's application, so it appealed to the Court of Appeal on the grounds that, among other things, the implied term sought would be inconsistent with the express terms of the restated facilities agreement.


The Camden Market Group argued that it would have been obvious to both parties that parallel marketing of the loan could disrupt the marketing of the properties and therefore undermine the objective of achieving the best sale price. Accordingly, the implied term was, it claimed, the natural corollary of the fact that the clear business purpose of the "exit strategy" in the 2012 supplemental deed was to enable the Camden Market Group to achieve the best price.

The group relied on the Privy Council's decision in Attorney General of Belize v Belize Telecom Ltd,(2) in which it stated that the question for the court is whether the alleged implied term would spell out in express words what the contract, read against the relevant background, would reasonably be understood to mean.

However, the Court of Appeal decided that the starting point was the decision in Marks & Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd(3) (which had been handed down 19 months after the High Court's decision in this case). In Marks & Spencer the Supreme Court held that the opinion in Belize Telecom did not change English law; nor did it relax English law's approach to implying terms. The Supreme Court reaffirmed the traditional tests for implying terms into a contract – whether the term is necessary for the business efficacy of the contract and whether the parties would say "of course" to an officious bystander who asked whether the term was meant to be included.

The Supreme Court also said in Marks & Spencer that in most – and possibly all – disputes about whether to imply a term, it is first necessary to interpret the express terms and it is "a cardinal rule" that an implied term must not contradict any express term (although it may be appropriate to reconsider the interpretation of an express term once it has been decided whether to imply a term).

Interestingly, the Court of Appeal distinguished between direct linguistic inconsistency on the one hand and substantive inconsistency on the other. It also noted that – particularly where the contract is lengthy and carefully drafted – the courts will be reluctant to imply a further term even if it does not actually conflict with the express terms.

It held that the implied term was linguistically consistent with the express terms, as there could be circumstances in which the marketing of the loan by IBRC was not in competition with the marketing of the properties by the Camden Market Group, and that information could be disclosed in a manner so as not to hinder the latter in achieving the best price for the properties.

However, it also held that IBRC's express power to disclose information to potential counterparties, without needing to obtain the Camden Market Group's consent or even needing to inform it, was substantively inconsistent with the implied term sought. The implied term would significantly restrict IBRC's power to deal with its assets and "would cut across IBRC's entitlement to provide information and would do so in a way which is redolent of uncertainty".

It was also unclear whether the alleged implied term would prevent conduct which might have an adverse impact on the Camden Market Group's marketing or only conduct which IBRC knew or ought to know would have such an effect. In either case, the market perception outside the liquidator's control could trigger the term's operation.

The Court of Appeal also held that the High Court had erred in not reflecting the principle noted in Reda v Flag Ltd(4) that "an express and unrestricted power cannot in the ordinary way be circumscribed by an implied qualification".

Accordingly, it held that the Camden Market Group's case was bad in law and had no real prospect of success. It therefore allowed the appeal and entered summary judgment for IBRC.


This decision provides a reminder – if it was not already clear from Marks & Spencer – of the cardinal rule that implied terms must not contradict express terms, and that the traditional business efficacy and officious bystander tests are still the correct tests to apply. This was cast in some doubt in the wake of Belize Telecom, but successive English courts have shied away from the literal interpretation of the Privy Council's formulation of the test as "what the instrument, read as a whole against the relevant background, would reasonably be understood to mean".

However, this decision also appears to further clarify the application of the cardinal rule by virtue of the distinction that was drawn between whether the implied term sought was linguistically consistent and substantively consistent with the express terms. It appears that an implied term may be linguistically consistent with an express term if there could be circumstances in which both terms did not clash. However, if the implied term is nonetheless substantively inconsistent or, in other words, the implied term would circumscribe the express term, it is very unlikely to be implied, particularly where it would result in uncertainty.

For further information on this topic please contact Davina Given or Ed Holmes at RPC by telephone (+44 20 3060 6000) or email ([email protected] or [email protected]). The RPC website can be accessed at www.rpc.co.uk.


(1) [2017] EWCA Civ 7.

(2) [2009] UKPC, [2009] 1 WLR 1988.

(3) [2015] UKSC 72, [2016] AC 742.

(4) [2002] UKPC 38, [2002] IRLR 747.