The defendants purchased long leases of residential properties in a development constructed around a marina basin. In order to acquire their properties the defendants were required to enter into mooring licensing agreements with the claimant. The licences, which were in standard form, provided in clause 4 that the licensee agreed to pay an annual licence fee whether or not a boat was moored at the mooring. The claimant brought claims against the defendants for non-payment of the fee. The defendants defended the claims on the basis that certain terms, including clause 4, were unfair for the purposes of the Unfair Terms in Consumer Contract Regulations 1999. The judge held that clause 4 related to the main subject matter of the contract and therefore by regulation 6(2) of the 1999 Regulations was excluded from the assessment of fairness. The defendants appealed on the ground that since by regulation 6(1) the unfairness of a term in a contract had to be assessed by referring to the terms of any other contract on which it was dependent, the judge should have held that the licence and the lease in each case were part of a single contract for the purpose of the Regulations. On that analysis clause 4 was not a core term of the contract but ancillary to the terms of the lease.
On the defendants’ appeal—
Held, appeal dismissed. There were no words in regulation 6(1) or (2) of the Unfair Terms in Consumer Contract Regulations 1999 which permitted the court to consider the main subject matter of the contract by reference to another contract on which it was dependent. Such an approach would lead to uncertainty in the application of the exemption. As a matter of both literal and purposive interpretation the core terms exemption in the present case had to be considered by reference to the terms of the licence alone. In doing so the court had to adopt a restrictive interpretation of what was core and what was ancillary for the purposes of both limbs of regulation 6(2). The judge had been entitled to find that the obligation to pay the licence fee in clause 4 was an excluded term (paras 98–101, 113).
Kerry Bretherton KC (instructed by Naylor Solicitors LLP) for the defendants.
Michael Booth KC and Jeff Hardman (instructed by Schillings International LLP) for the claimant.