Mocha-Mamas, implied terms and entire agreement clauses
06 April 2018
In Hipwell v Szurek, the Court of Appeal considered an entire agreement clause and implied a term into a lease making the landlord responsible for the installation and maintenance of electric wiring.
Ms Szurek rented premises from Mr Hipwell, which she ran as a café called Mocha-Mamas. One year into the lease, Ms Szurek began to experience problems with the premises which led her to close the business.
Ms Szurek claimed against her landlord for breach of an implied term in her lease that the landlord "would keep the electrical installation safe".
The lease contained an entire agreement clause and a clause specifying that the tenant was not relying on any statement or representation made by the landlord outside the lease. The effectiveness of these provisions played an important role in the judgment.
At first instance, the Judge held that the parties had intended that the landlord should be responsible for electrical installations and maintenance. A term should be implied into the lease to reflect this, and this implication should not be prevented by the entire agreement provisions.
On appeal, however, the court was concerned that the Judge's reference to the parties' true understanding was more akin to a collateral warranty or contract than to implying a term. The parol evidence rule did not allow evidence of the parties’ true intentions to vary the terms of the lease, and this rule was reinforced by the entire agreement provisions.
Nonetheless, the entire agreement provisions did not prevent the implication of a term on the grounds of business efficacy. The absence of express obligations in relation to the electrical installation and supply was a ‘plain and obvious gap’, which the court was comfortable plugging with an implied term. This was a covenant on the part of the landlord to ensure that the electrical fittings were safely installed and covered by any requisite safety certificates.