Westfield is facing a multi-million pound legal battle with a major US entertainment group that claims it was forced to pull out of a deal at the £1.7 billion White City development because the cinema complex was not built to agreed specifications.
Cinema operator National Amusements had signed a deal to run a 14-screen Cinema De Luxe at the London retail complex, but alleges the Australian retail developer made too many unapproved variations during construction.
It has filed a writ demanding more than £1.6 million from Westfield’s White City (Shepherd’s Bush) Limited Partnership and its capital investment partner Commerz Real-Investmentgesellschaft.
The action was originally lodged at the Chancery Court, but has been transferred to the Technology and Construction Court, which is better equipped to deal with the complex case.
Westfield and National Amusements entered into an agreement for lease on 5 October 2006, which stated the multi-screen cinema would be built as part of the White City development.
The deal was that the cinema venue would be built to the shell and core stage by Westfield, then released to National Amusements to carry out the fit-out works.
High Court judge Mr Justice Akenhead, who ruled on the decision to hear the case in the TCC, said the agreement was that Westfield would complete the “developer’s works” in accordance with the “plans [and] critical dimensions”.
He said: “The defendants were not to ‘make any cinema variation without the consent of [the claimants], such consent not to be unreasonably withheld or delayed provided that no variation shall be made which will result in the critical dimensions not being achieved’.”
The £1.7bn White City complex opened in October last year
Design works on the cinema began in 2006 and work began on site the following year.
But by October 2007, National Amusements said there were 20 discrepancies or non-compliances with the critical dimensions.
Mr Justice Akenhead added: “They assert that further non-compliances with the plans occurred or emerged thereafter.”
Westfieldargued it had agreed numerous changes with the cinema operator, and carried out its works to reflect those changes. Last April, National Amusements withdrew from the agreement because of Westfield’s alleged failure to keep to the original drawings. But Westfield claimed the move was a repudiation of the contract.
The 139-page defence and counterclaim alleges that although the works departed from the critical dimensions “in a number of respects”, these were sought or approved by National Amusements.
But National Amusements claimed many of the assertions made by Westfield in its defence “were wrong or give rise to different interpretations or inferences”.
Westfieldand National Amusements declined to comment. The case will now be listed for trial at the TCC.