TP ICAP Ltd (formerly known as TP ICAP Plc) v Nex Group Ltd
| Jurisdiction | England & Wales |
| Judge | Robin Knowles J |
| Judgment Date | 25 October 2022 |
| Neutral Citation | [2022] EWHC 2700 (Comm) |
| Docket Number | Case No: CL-2020-000598 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 2700 (Comm)
THE HON Mr Justice Robin Knowles CBE
Case No: CL-2020-000598
IN THE HIGH COURT OF JUSTICE
THE BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
(KING'S BENCH DIVISION)
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Richard Handyside KC and Alex Barden (instructed by Allen & Overy LLP) for the Claimant/Respondent
Joe Smouha KC and Ciaran Keller (instructed by Latham & Watkins (London) LLP) for the Defendant/Applicant
Hearing dates: 1 February 2022
Introduction
The Defendant (“the Seller”) and the Claimant (“the Purchaser”) are parties to a Share Purchase Agreement dated 11 November 2015 as amended, restated and novated (“the SPA”). The SPA was for the sale and purchase of the entire issued share capital of ICAP Global Broking Holdings Limited, whose business (“the Voice Group Business” of the “Voice Group Companies”) was in voice broking. Completion under the SPA was on 30 December 2016. The consideration exceeded £1 billion.
In this litigation the Purchaser advances claims against the Seller for alleged breach of warranties under the SPA. By the present application (“this Application”) the Seller applies to strike out or for summary judgment on parts of the claim of the Purchaser. This Application follows an earlier application (“the First Application”) decided by Calver J in May 2021 ( [2021] EWHC 1375).
The litigation as a whole is due to be tried in late 2024. After the hearing of this Application I gave case management directions in June 2022, which were agreed, for preparation towards trial to continue pending the preparation and handing down of this judgment.
This Application
As summarised by Mr Joe Smouha KC and Mr Ciaran Keller for the Seller, this Application concerns the question whether certain of the Purchaser's claims for breach of warranty were the subject of a valid contractual notification. For this Application Mr Smouha KC frames the issue in these terms:
“… whether the Seller's pleaded Seller Warranty claims for breach of Warranty 9.2 and 10.3 were validly notified by [two] Notification Letters in compliance with the requirements of Schedule 5 to the SPA”.
Seller Warranties were given by the Seller to the Purchaser by Clause 12.1 of the SPA. These warranted that, subject to exceptions, statements set out in Part 1 of Schedule 4 to the SPA were true at the date of the SPA and, so far as material, at Completion.
The warranted statement at paragraph 9.2 of Part 1 of Schedule 4 was as follows:
“9.2 No Voice Group Company, nor, so far as the Seller is aware, any director, officer or employee of any Voice Group Company nor (in relation to the Voice Group Business) any member of the Seller's Group or any director, officer or employee of any member of the Seller's Group, is or has in the preceding 18 months, been subject to any non-routine investigation, review or enquiry […] in each case by a Governmental Authority in relation to the Voice Group Business nor, so far as the Seller is aware, is any such investigation, review, enquiry, proceedings or process pending or threatened.”
By paragraph 1 of Schedule 23 to the SPA, when repeated on Completion the statement at paragraph 9.2 was deemed to have these words added:
“… that, in each case, has or would have a material adverse impact on the operation of the Voice Group Business (taken as a whole).”
The statement at paragraph 10.3 of Part 1 of Schedule 4 was in these terms:
“10.3 So far as the Seller is aware, there are no circumstances which would reasonably be expected to give rise to any litigation, arbitration or alternative dispute resolution proceedings by or against any Voice Group Company wherein the value of the claim in such proceedings exceeds £500,000.”
The expression “so far as the Seller is aware”, appearing in both paragraphs 9.2 and 10.3 was agreed to refer to the actual knowledge, having made reasonable enquiries, of 8 named individuals (see Paragraph 2 of Schedule 23 to the SPA).
The Seller Warranties (and any Seller Warranty Claim) were by Clause 12.3 subject to limitations and other provisions set out in Part 1 of Schedule 5. Paragraph 5.1 of Part 1 of Schedule 5 provided (so far as material to the Application):
“5.1 The Seller is not liable in respect of a Seller Warranty Claim unless the Purchaser has given the Seller written notice of the Seller Warranty Claim (stating in reasonable detail the nature of the Seller Warranty Claim and, if practicable, the amount claimed), …:
…
(b) on or before the second anniversary of Completion …”
By paragraph 5.2 it was provided that a Seller Warranty Claim notified in accordance with paragraph 5.1 was unenforceable against the Seller on the expiry of a particular period of time unless proceedings in respect of that Seller Warranty Claim had been properly issued and validly served on the Seller. The period of time provided by paragraph 5.2 was later extended by agreement to 18 September 2020, on which day the Claim Form was served.
The Law
There was no issue between the parties as to the approach to an application to strike out and for summary judgment, under CPR 3.4(2)(a) and CPR 24.2. The principles can be taken from Easyair Limited v Opal Telecom Limited [2009] EWHC 339 (Ch) at [15] per Lewison J (as he then was).
This Application involves questions of the interpretation of a commercial contract and documents, and here too both parties correctly took the applicable principles from the decision of the Supreme Court in Wood v Capita Insurance Service Limited [2017] AC 1173; [2017] UKSC 24 per Lord Hodge. There was a difference of view whether the notification clauses in the present case are to be construed contra proferentem against the Seller if ambiguous, and if so with what consequence, but I will not in the event have to decide that on this Application.
In the particular context of notification clauses in a commercial contract, Mr Smouha KC referred to additional authority, starting with Senate Electrical Wholesalers v Alacatel Submarine Networks Ltd [1999] 2 Lloyd's Rep 423; [1999] EWCA 3534 (but see Bottin (International) Investments plc v Veson Group [2004] EWCA Civ 1368 at [52]). It is sufficient for this Application to refer to two of these decisions at appellate level, but keeping in mind always that the decisions are in the context of the contract language, notification language, and context under consideration in the particular case, and which are different from case to case in ways that may be very material.
The first is Stobart Group Ltd v Stobart [2019] EWCA Civ 1376. At [25]–[29] and [36]–[38] Simon LJ said:
“The Court's approach to the construction of notices
25. The starting point for the construction of unilateral notices is the speech of Lord Steyn in Mannai Investment Co Ltd v. Eagle Star Life Assurance Co Ltd [1997] AC 749 (a case concerning a tenant's notice exercising a break clause in a lease) at 767G, in which he made clear a cardinal principle of construction:
“The question is not how the landlord understood the notices. The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene.”
26. At p.775E, Lord Hoffmann said this:
“When therefore, lawyers say that they are concerned, not with subjective meaning, but with the meaning of the language which the speaker has used, what they mean is that they are concerned with what he would objectively have been understood to mean.
27. In relation to what is admissible as the contextual scene or factual matrix, Lord Steyn added at 768B:
“The real question is what evidence of surrounding circumstances may ultimately be allowed to influence the question of interpretation. That depends on what meanings the language read against the objective contextual scene will let in.”
28. Lord Hodge's more recent synthesis of the proper approach to the construction of contracts in Wood v. Capita Insurance Services Ltd [2017] UKSC 24; [2017] AC 1173 at [10], with which the other members of the Supreme Court agreed, is to like effect:
“The court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement.”
29. The reference to ‘the parties’ in this passage highlights a difference between a contract and a unilateral notice: in the latter case the court is not construing agreed words, it is construing words used by one party. Nevertheless, the approach to ascertaining meaning is similar: the words used in the 24 March 2015 letter and the context in which it was written are both relevant.
…
36. The final principle which emerges from the cases is that, although every notification provision is likely to turn on its own wording, see for example Ipsos SA v. Dentsu Aegis Network Ltd [2015] EWHC 1171 (Comm) and the cases referred to at [16], the purpose of notification in this type of contract is to make clear in sufficiently formal terms that a claim is being made against the vendors, see also Senate Electrical Wholesalers Ltd v. Alcatel Submarine Networks Ltd (formerly STC Submarine Systems Ltd) [1999] 2 Lloyds L.R 423, at [90].
37. At [91] Stuart-Smith LJ went on to say:
“It does not stop there. Certainty is a crucial foundation for commercial activity. Certainty is only achieved when the vendor is left in no reasonable doubt not only that a claim may be brought but of the particulars of the ground upon which the claim is to be based. The clause contemplates that the notice will be couched in terms which are sufficiently clear and unambiguous as to leave no...
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2022 Half-year in review M&A legal and market developments
...the SPA to require notice of a claim to explain how an investigation had impacted the target business. (TP ICAP Ltd v NEX Group Ltd [2022] EWHC 2700 (Comm))Key lessons Impact of knowledge: The decision confirms that a seller’s knowledge may be taken into account in assessing compliance wi......