John de Waal KC instructed by Sebastian Triay of Triay and Triay in Gibraltar has been successful in the Gibraltar Court of Appeal (Sir Maurice Kay, Sir Colin Rimer & Sir Nigel Davis JJA – all distinguished retired English Court of Appeal judges) in resisting an appeal from the judgment of Restano J handed down last year. Judgment was given on 7th November 2024 following a hearing in September. There is a link to the judgment here.
The appeal raised issues of interpretation of contractual arrangements concerning a fractional ownership scheme in the context of holiday villas. There had been a trial of preliminary issues on these matters.
A sister company to The Hideaways Club owned holiday homes which could be used by the appellant (whose case was a test or lead case for a number of members), the Club being the operating company. The appellant and others became dissatisfied with the service offered by the Club and decided to withhold their annual contribution payments, as a result of which their use of the holiday homes was suspended.
The principal question for the Court was whether on a proper construction of the contract between the parties, membership was renewable annual or 'perpetual', the Club operating a 'one in, one out' membership scheme. The decision of the Court below and the Court of Appeal was that unilateral resignation of one's membership was not an option open to the appellant.
The judgment is of interest to English lawyers since it contains some commentary on the role of 'commercial common sense' in the interpretation of contracts. At para [37], Sir Nigel Davis JA who gave the lead judgment said this:
"(1) Reliance placed in some cases on commercial common sense and surrounding circumstances should not be invoked to undervalue the importance of the language of the provision which is to be gleaned from the language used.
(2) Commercial common sense is not to be invoked retrospectively and the mere fact that a contractual arrangement, naturally interpreted, has worked out badly for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant as to how the position would reasonably have been perceived at the time the contract was made.
(3) The court cannot invent a lack of clarity in the provision to be construed as an excuse for departing from its natural meaning in the light of subsequent development."