19 February 2021

Commercial Lease: Courtesy Motors v. Endeavour Commercial

Accidentally emailing the wrong file to its landlord’s lawyer triggered legal argument over whether there was any agreement forcing Levin Ford dealer Courtesy Motors to continue its Oxford Street tenancy.

The High Court was told Courtesy Motors was part way through lease-renewal negotiations with landlord Endeavour Commercial Ltd when covid-19 lockdown restrictions forced a rethink.  The landlord had previously sent Courtesy’s Gordon Powley a draft lease renewal.  Mr Powley signed and initialled the draft before sending it to Courtesy’s lawyer to hold, pending legal clarification on any new special clauses.  Courtesy was nervous that the landlord might have used the renewal to sneak in clauses imposing extra liability on Courtesy as tenant in a building over thirty years old.

As part of the usual online document exchange between lawyers acting for landlord and tenant, Courtesy’s lawyer accidentally transmitted the pre-signed renewal, along with documents marked up with legal queries still to be discussed with Courtesy.  Landlord Endeavour Commercial pounced; the signed renewal was evidence of a binding contract.  Courtesy denied there was a binding contract; Courtesy’s lawyer demanded the files be returned, they were protected by lawyer/client legal privilege.

Clients seeking legal advice can claim legal professional privilege for communications between themselves and their lawyer. These communications cannot be disclosed without client approval.  This rule enables clients to be completely candid with their lawyer, putting their lawyer in the best position to offer appropriate advice.

In the High Court, Justice Cooke ruled the marked-up documents containing legal issues for client discussion were privileged; landlord’s lawyer was required to return this file.  But the file containing the pre-signed lease renewal was not privileged; this was not a document seeking legal advice.

There is still a legal dispute whether Mr Powley’s signature alone on the lease renewal was sufficient to have the renewal enforceable against his company: Courtesy Motors Ltd.

Courtesy Motors Ltd v. Endeavour Commercial Ltd – High Court (19.02.21)

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