Ghost Of MWB Business Exchange Appears In UK Supreme Court

Published on June 4, 2018 - By Guest Contributor

• MWB Business Exchange disappeared from view after it was acquired by Regus in 2013. 
• However, an ongoing lawsuit involving MWB has finally come to a conclusion, propelling the former brand back into the news.
• The decision by the Supreme Court will have lasting ramifications for workspace operators

By Jonathan Price, pioneer in the field of business centre investment. He was a co-founder of the world’s first public fund for the industry, and shares over 25 years of financial expertise and knowledge as a consultant and a lecturer at the London School of Business & Finance. Jonathan can be reached at [email protected]

The UK’s second largest business centre chain, MWB Business Exchange was acquired by Regus in 2013, following the bankruptcy of the parent company, MWB plc, in November 2012. Regus’ initial bid of 60p per share for MWBEX was outbid at 100p per share by Hong Kong billionaire Anson Chan’s Pyrrho Investments, the largest minority shareholder in MWB plc. Regus however put in a final bid at 101.5p to seal the deal and the MWBEX name disappeared from public view. Until last month that is.

MWBEX left behind itself a piece of unfinished business in the form of a lawsuit against a former client, Rock Advertising Limited, which had got into arrears with its payments back in 2011. The case involved a tricky point of contract law and since 2013 has worked its way through the British court system ending up in the Supreme Court, which handed down its judgment late last month.

The point of law may be of interest to other serviced office operators and so I will summarise it briefly.

The license agreement between MWBEX and Rock Advertising contained a ‘No Oral Modification’ or NOM clause, which said that any variation or amendment to the license agreement was not valid unless in writing and signed by the parties. This was important because, after Rock Advertising got into financial difficulty one of its directors negotiated with the financial controller of MWBEX and agreed with him a revised schedule of payments to cover the arrears. This agreement was never written down as required by the NOM clause and the question was whether MWBEX was bound by the revised schedule despite the NOM clause.

At the initial trial of the case the High Court judge held that the revised schedule was not binding because of the NOM clause, but that decision was appealed by Rock Advertising and in the Court of Appeal, the decision went the other way, holding the parties to an agreement that they can agree to vary any part of it, in any way they choose.

What did the Supreme Court decide?

After an extensive review of all the relevant authorities, going back well over one hundred years and including important cases from the USA, Canada and Australia as well as from the UK, Lord Sumption giving the leading judgment of the Supreme Court, upheld the NOM clause, saying that there were a number of good business reasons for allowing the parties to require certain formal steps to be undertaken, such as putting contract variations in writing, if that is what they had originally agreed to.

In reaching their judgment the members of the Court were influenced by the terms of the Uniform Commercial Code of the US and by the Convention for the International Sale of Goods, as well as by the many previous court judgments that were argued before them.

The upshot is that having a NOM clause in your licence agreement is a good idea and there are now no doubts about its validity.

I imagine that this is the very last occasion on which the MWBEX name will make the news – at least outside of the law courts and universities, as MWB Business Exchange Ltd v Rock Advertising Ltd 2018 UKSC 25 will be studied by law students and cited by barristers for many decades to come – and so the ghost of MWBEX can finally be laid to rest.