The Court of Appeal has considered the test for implied terms in Irish Bank Resolution Corp Ltd (in special liquidation) v Camden Market Holdings Corp & 7 Ors (2017)

Background

The Court of Appeal has reiterated that the starting point for the court when considering the existence of an implied term is to give effect to the parties’ intentions in relation to express terms of the contract. The court has reaffirmed that any pleaded implied term must not contradict any express terms of the contract.

Irish Bank Resolution Corporation Ltd (“IBRD”) provided banking facilities to Camden Market Holdings Corp for the purpose of it purchasing and developing properties at Camden Market. The facilities agreement empowered IBRD to disclose information about the Camden Market Group and the finance documents to any potential assignee or transferee, subject to a confidentiality undertaking.

Camden Market Group brought a claim against IBRD for breach of contract, alleging that there was an implied term of the facility agreement restraining IBRD from doing anything that might hinder Camden Market Group’s marketing of the properties. Camden Market Group alleged that, by marketing the facilities agreement as part of a package which contained distressed debt, the liquidator of IBRD would create the impression that its loan was distressed and therefore be unappealing to potential purchasers.

IBRD applied for summary judgment or to strike out the claim. At first instance, HHJ Raeside QC refused IBRD’s application, stating that it was arguable that the implied term existed and that the matter should go to trial.

The Appeal

IBRD appealed this decision, with its main ground of appeal being that the implied term would be inconsistent with the express terms of the contract. IBRD relied on Reda, the leading authority that no term should be implied if such a term would contradict any express term of the contract.

The Decision

The Court of Appeal allowed the appeal and entered summary judgment against Camden Market Holdings. The Court of Appeal held that Camden Market Holding’s case was bad in law and that it had no real prospect of succeeding.

In delivering the Court of Appeal’s ruling, Beatson LJ confirmed that it is settled law that, when determining disputes about an implied term, it is necessary to first interpret the express terms. He also cited Marks & Spencer, stating that it was a “cardinal rule” that an implied term must not contradict any express term of the contract. Beatson LJ concluded the judgment by saying that it was difficult to construe the implied term and contract in a “coherent way” and found that the pleaded implied term was substantively inconsistent with the express terms.

Comment

This decision highlights that, in considering whether terms can be implied into written contracts, the court will focus on whether the pleaded implied term is substantively inconsistent with any of the express terms. Where an express term confers an express power on a party, such a power cannot be limited or altered by any implied term.