Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd - [2020] UKSC 36

[2020] UKSC 36

On appeal from: [2018] NICA 7

Appellant Respondent

Michael Humphreys QC David Dunlop BL

Margaret Gray QC Alistair Fletcher BL

(Instructed by Pinsent (Instructed by A & L
Masons Belfast LLP) Goodbody (Belfast))
LORD WILSON: (with whom Lord Lloyd-Jones, Lady Arden and Lord
Kitchin agree)
Introduction
1. This is another appeal which concerns the doctrine against restraint of trade. If a covenant falls within what I will simply call the doctrine, it is unenforceable against the covenantor unless it is reasonable. Last year, in Egon Zehnder Ltd v Tillman [2019] UKSC 32, [2020] AC 154, the court was required to address aspects of the doctrine. In para 29 it considered what it called the outer reaches of the doctrine, by reference in particular to the decision of the House of Lords in Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269. But, as it explained in para 30, there was no need for any closer study of those outer reaches in the light of the facts of that case. The present appeal permits no such escape.
2. A developer of a shopping centre leases part of it to a well-known retailer. He covenants with the retailer that he will not allow any substantial shop to be built on the rest of the centre in competition with the retailer. In due course he assigns his interest in the centre to a company. The company considers that the centre is ailing and that the covenant is stunting its ability to revive it. In these proceedings brought against the retailer, the company seeks a declaration that the covenant by which it is currently bound engages the doctrine; that it is unreasonable; and that it is therefore unenforceable. To date the courts have addressed only the first question raised by the company’s claim: does the covenant engage the doctrine? Yes, ruled the Court of Appeal in Northern Ireland (Stephens LJ, who delivered the judgment of the court, Sir Ronald Weatherup and Sir Richard McLaughlin) on 9 February 2018, [2018] NICA 7, when proceeding to remit the case to the High Court to consider whether the covenant was reasonable. So it is the retailer which now appeals to this court against that ruling.
Facts
3. Mr Shortall is a property developer. In 1979, in his own name, he bought land in Springtown, Londonderry, which, for planning purposes, had been zoned for retail use. At that time Londonderry was, in his own words, an economic and political wasteland. The site comprised about five and a half acres, defined, for land registry purposes, as Folio 25992 County Londonderry. In 1980 he obtained planning permission to develop the site so as to yield 32,000 square feet of gross retail space.
4. Mr Shortall sought an “anchor tenant”, a substantial and prestigious retail company which would lease a significant part of the site and whose presence would persuade other retailers to lease other parts of it, thus making the proposed…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2020] UKSC 36
Decision Date

CaseChat Overview and Summary

Peninsula Securities Ltd sought to have a restrictive covenant declared unreasonable and therefore unenforceable. The covenant was contained in a lease which had been assigned to Peninsula Securities Ltd. The covenant prohibited Peninsula Securities Ltd from building on the rest of the land a shop unit of more than 3,000 square feet for the sale of textiles or groceries. The covenant had been entered into by the original lessor of the land, Mr Shortall, and the lessee, Dunnes Stores. The covenant was intended to protect Dunnes Stores from competition on the rest of the land by other retailers. Peninsula Securities Ltd contended that the covenant engaged the doctrine against restraint of trade and was unreasonable. The Court of Appeal held that the covenant engaged the doctrine, and Peninsula Securities Ltd appealed to the Supreme Court. The appeal was allowed and the covenant was held not to engage the doctrine. The court rejected the "pre-existing freedom" test in favour of the "trading society" test. The covenant did not engage the doctrine because it was of a type which had "passed into the accepted and normal currency of commercial or contractual or conveyancing relations" and had "assumed a form which satisfies the test of public policy". The court also noted the existence of an alternative remedy under the Property (Northern Ireland) Order 1978.

Orders