BL-2020-CDF-000003 - [2025] EWHC 2226 (Ch)

This question, too, has little if any relevance. Such importance it might possibly have relates solely to the parties’ respective motivations and, in turn, to the bearing those might have on the inherent probabilities regarding what was agreed. In a nutshell, Mr Lloyd says that the Joint Venture was proposed by Mr Hayward as a device by which to enable him to invest £20,000 into the Site instead of giving it to the property agents, and Mr Hayward says that the proposal arose because when the time came for the lease to be executed Mr Lloyd said that he had financial difficulties and was unable to proceed. In my view, Mr Hayward’s account is more likely to be substantially correct, although there is probably a small element of truth in Mr Lloyd’s account.

It is instructive to consider the terms of the draft lease annexed to the Agreement for Lease. The draft lease did not actually specify a rent-free period at all. It provided for rent of £25,000 to be payable from the commencement date. This suggests that the six-month rent-free period related not to a period during the term of the lease but rather to the period between the making of the Agreement for Lease and the commencement of the term of the lease. As the Agreement for Lease was being signed in April 2010, it appears that the parties were looking to execute the lease in mid-October 2010. It is unnecessary to suppose that the discussion of the Joint Venture arose because Lambert Smith Hampton was seeking payment of its invoice at the beginning of October 2010 or that it had anything to do with the invoice. I do not think it likely that Mr Hayward had the idea of the Joint Venture in order to avoid paying the invoice, as he was a property developer who would be well used to paying agents’ fees in large amounts and, moreover, had good reason not to “try it on” (so to speak) with agents with whom he would probably wish to do future business. On the other hand, it is very plausible that he would use the substitution of the Joint Venture in place of the lease as an opportunity to invite the agents to forego their fee on this occasion, with the prospect of a mutually profitable relationship in the future; and, indeed, Mr Hayward more or less said as much in his oral evidence.

However, I find that the question of a joint venture arose, as Mr Hayward and Mr Athay say now and as they said in the recorded meeting with Mr Lloyd, because Mr Lloyd told them that he had run out of money. He had originally intended to proceed together with Mr Collings and Mr Craig, but they had pulled out, leaving him by himself. It is true that the documentation was in the name of a limited company, SA1 Ltd, and imposed no personal liability on him. But the company had no other apparent source of funds until units were sub-let, and as I have mentioned there was no further rent-free period once the lease was signed. Further, Mr Lloyd had probably by this time spent at least £25,000 and possibly a good bit more (he says £80,000) since March 2010; he would not wish to waste his investment. My conclusion is that, when the time came when the parties had anticipated executing the lease, Mr Lloyd said that he had run out of money and could not afford to pursue the business model he had planned. Mr Hayward thought of a joint venture as a way of addressing the difficulty while at the same time obtaining benefit from Mr Lloyd’s business model. An added benefit for Mr Hayward was that Sirocco could only require SA1 Ltd to execute the lease when it had completed certain Landlord’s Works set out in the Schedule to the Agreement for Lease; there is evidence that they had not been completed by October 2010, and indeed the requirement for them was not carried over into the Joint Venture. It is probable that Mr Hayward mentioned to Mr Lloyd that he would use the substitution of a joint venture as a way of persuading the agents to waive their fee, enabling the money that would have gone in payment of the fee to be used to invest in the Site. But that was not the reason for proposing a joint venture.