Seafood Shack Ltd v Alan Darlow  EWHC 1567 (Ch)
A lease of restaurant premises was granted to a company that did not exist; there was no legal basis for correcting the lease, and the similarly-named company claiming rights was held to have none.
The lease was granted to ‘Seafood Shack UK Ltd’ (SSUKL) – which did not exist. Seafood Shack Ltd (SSL) argued this had been simply a mistake and that it had been the intended tenant. SSL’s wholly-owned subsidiary (Seafood Shack Cardiff Ltd - SSCL) had traded from the premises until SSCL’s liquidation. SSCL’s liquidators disclaimed any interest SSCL had held in the premises. The landlord regained possession of the premises, and granted a lease to a new tenant.
SSL claimed that it had been intended to be the tenant from the outset, and that the court should either interpret the lease to correct the mistake, or grant rectification of the lease, and find that the landlord had regained possession unlawfully.
However, on the face of the lease, it could not be said which of the two existing companies was intended to the tenant in place of SSUKL: contractual interpretation principles did not assist. Further, there had been no different mutual understanding of the identity of the tenant - indeed the landlord had not even known of the existence of SSL or SSCL: rectification was not available. SSCL had probably gained rights (e.g. a tenancy at will) during its trading at the premises, but any such rights ended on disclaimer. The landlord had lawfully regained possession, and the existing companies had no rights.
- it is vital that identities of companies are verified by a Companies House search before documents are formalised
- similar checks and verification of identity should be undertaken for non-company parties
- rectification of legal documents (which involves correcting a mistake) is rarely available, and generally requires clear evidence of a mutual understanding which has not been reflected in the document
- ‘construction’ (legal interpretation) of legal documents by a court involves the application of narrow tests, in which the starting point is the words of the document itself