Regus (UK) Ltd v Epcot Solutions Ltd, Court of Appeal - Commercial Court, May 04, 2007, [2007] EWHC 938 (Comm)

Issuing Organization:Commercial Court
Actores:Regus (UK) Ltd v Epcot Solutions Ltd
Resolution Date:May 04, 2007

2006-FOLIO 856

Neutral Citation Number: [2007] EWHC 938 (Comm)




Date: 4th May 2007


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Mr Thomas Braithwaite( instructed by Barlow Robbins) appeared for the Claimant.

Mr Richard Colbey (instructed by Direct Access) appeared for the Defendant

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This is a claim for unpaid fees for the use of serviced office accommodation and a very large counter-claim for mis-representation and breach of contract over allegedly defective air conditioning. The dispute is one of fact but also raises questions about the Claimant's standard terms of business and the effect upon them of the Unfair Contract Terms Act 1977.


The Claimant (``Regus'') is a UK company, part of a large group which supplies serviced office accommodation in some 400 locations in 50 countries. The Defendant (``Epcot'') is a small company providing professional IT training with ambitions to develop a franchise in that field. Epcot is controlled by its Chief Executive Officer, Mr Charanjit Randhawa. After some years in the computer business, principally at IBM, Mr Randhawa developed what he calls ``Epcot Solutions unique 5 hour training concept providing a full day's IT training within the highest quality training environment in an extended half day''. The concept also involved a base in world class serviced offices which companies like Regus and its competitors are able to provide. He had bold ambitions for Epcot and, as he puts it, he left his previous company in November 2000 ``following the finalisation of the project plan and securing the finance and team to set-up the worlds finest commercial IT training environment by April 2001. The vision was to build a global organisation offering clients with the highest quality IT training for free or at cost effective prices to create life long learning; the company would radically change the global IT training and reseller markets''. Mr Randhawa decided that the right starting point would be Regus' Heathrow location, first because travel related industries were based close by, and, secondly, because potential franchise partners could readily visit Epcot after landing at Heathrow.

Mr Randhawa met Mr Deegan of Regus in January 2001 and agreed to take accommodation on a day to day basis from the end of March. On 21 August Epcot entered into an agreement with Regus for 12 months. In August 2002 Epcot renewed the agreement for 12 months, but on 5 November 2002 were informed that the Heathrow location was due to close from 28 February 2003. Regus's terms and conditions committed it to try to find alternative accommodation for customers. Epcot was offered alternative accommodation at Stockley Park, a business centre about 3 miles away. Mr Cannon of Regus offered to ensure that the transition was seamless and to provide the necessary support for moving office equipment, informing clients of the impending move and maintaining the same prices for the remainder of the outstanding term. Although there had been some complaints about air conditioning in the summer of 2001 the occupation at Heathrow was otherwise uneventful. .

Epcot moved to Stockley Park and on 14 March 2003 entered into a new agreement for three and a half months which was in the then current standard form known as ``Regus Business Centre Service Agreement''. Epcot was to pay £50 per day, in effect £1,500 per month, plus VAT, plus what was, in effect, a deposit of £3,000. Epcot was to occupy Office 118 which in time became Meeting Room 3 on the First Floor of the Stockley Park Business Centre.

Stockley Park Agreement- Standard Terms

It is common ground that these terms govern the contract between the parties and in view of their significance I set out below in full the most relevant clauses:

2. Furnished Office Accommodation

We are to provide the number of serviced and fully furnished rooms for which you have agreed to pay in the business centre stated in your agreement. Your agreement lists the rooms we have initially allocated for your use. Occasionally we may need to allocate different rooms, but these will be of equivalent size and we will try to agree these with you in advance.

23. Our Liability

We are not liable for any loss as a result of our failure to provide a service as a result of mechanical breakdown, strike, delay, failure of staff, termination of our interest in the building containing the business centre or otherwise unless we do so deliberately or are negligent. We are also not liable for any failure until you have told us about it and given us a reasonable time to put it right.

You agree (a) that we will not have any liability for any loss, damage or claim which arises as a result of, or in connection with, your agreement and/or your use of the services except to the extent that such loss, damage, expense or claim is directly attributable to our deliberate act or our negligence (our liability); and (b) that our liability will be subject to the limits set out in the next paragraph.

We will not in any circumstances have any liability for loss of business, loss of profits, loss of anticipated savings, loss of or damage to data, third party claims or any consequential loss. We strongly advise you to insure against all such potential loss, damage expense or liability.

We will be liable:

without limit for personal injury or death;

up to a maximum of £1 million (for any one event or series of connected events) for damage to your personal property;

up to a maximum equal to 125% of the total fees paid under your agreement up to the date on which the claim in question arises or £50,000 (whichever is the higher), in respect of all other losses, damages expenses or claims.

24. The nature of your agreement

Your agreement is the commercial equivalent of an agreement for accommodation in a hotel. The whole of the business centre remains our property and in our possession and control ....

25. Duration

Your agreement lasts for the period stated in it and will then automatically be renewed for successive periods of six months until brought to an end by you or us. All periods shall run to the last day of the month in which they would otherwise expire. The fees on any renewal will be the market price notified by us to you at the time of renewal. In all other respects your agreement will renew on the same terms and conditions.

26. Bringing your agreement to an end

Either of us can terminate your agreement at the end date stated in it, or at the end of any six month renewal period, by giving at least three months' notice to the other.

However, if your agreement is for three months or less and one of us wishes to terminate it, the notice period is two months or (if shorter) one week less than the period stated in your agreement.

27. Ending your agreement immediately

We may put an end to your agreement immediately by giving you notice if:

you become insolvent, go into liquidation or become unable to pay your debts as they fall due,

you are in breach of one of your obligations which cannot be put right or which we have given you notice to put right and which you have failed to put right within fourteen days of that notice, or

your conduct, of that of someone at the business centre with your permission or at your invitation, is incompatible with ordinary office use.

If we put an end to the agreement for any of these reasons it does not put an end to any then outstanding obligations you may have and you must:

pay for additional services you have used

pay the standard fee for the remainder of the period for which your agreement would have lasted had we not ended it, or (if longer) for a further period of three months, and

indemnify us against all costs and losses we incur as a result of the termination.

28. If the business centre is not available

In the unlikely event that we are no longer able to provide the services and accommodation at the business centre stated in your agreement then your agreement will end and you will only have to pay standard fees up to the date it ends and for the additional services you have used. We will try to find suitable alternative accommodation for you at another Regus business centre.

35. English law applies

English law applies to your agreement. We both accept the non-exclusive jurisdiction of the English Courts.

39. Late payment

If you do not pay fees when due, we may charge interest at the rate of 2% per month on the amounts outstanding. If you dispute any part of an invoice you must pay the amount not in dispute by the due date. We also reserve the right to withhold services (including for the avoidance of doubt, denying you access to your accommodation) while there are any outstanding fees and interest or you are in breach of your agreement.

Epcot's Stay at Stockley Park - points agreed or not much in dispute

I set out the picture that emerges from the correspondence before turning to the disputed evidence about Epcot's stay in Meeting Room 3.

On 26 March 2003 there is first mention of air conditioning when Mr Randhawa, in an e-mail, informs Regus that this needs adjusting because in the afternoon the room temperature exceeds the safe server temperature range. He asks for the temperature in the room to be reduced. Around this time Mr Randhawa was also urging Mr David Johnson, Managing Director of Regus to become involved in the Epcot franchise operation. He urges Mr Johnson not to miss the opportunity presented which, if not grasped, might lead to Regus losing some £7 million sales each year from Mr Randhawa's franchise partners. On 3 June Epcot renewed its agreement for a further 6 months and Regus suggests that this is consistent with the company being reasonably satisfied with the service it was receiving. Epcot has produced a copy letter dated 4 June 2003,(the original is not on Regus' files), which refers to numerous...

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