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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Snowville UK Ltd. v Holidaybreak Plc [2004] EWHC 1336 (Ch) (10 June 2004) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2004/1336.html Cite as: [2004] EWHC 1336 (Ch) |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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SNOWVILLE UK LIMITED |
Claimant |
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- and - |
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HOLIDAYBREAK PLC |
Defendant |
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Mr Paul Newman (instructed by Eversheds LLP) for the Defendant
Hearing date: 20th May 2004
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Crown Copyright ©
Mr Kevin Garnett QC:
The background facts
"I have prepared some calculations on the level of single premium payment that the Inland Revenue would permit to be paid to the Pension Fund on your behalf in the immediate future on the basis that you will be leaving the company's service within the next few weeks. I calculate this amount to be £688,000."
The actuary goes on to state that this figure was based on the remuneration which Mr Singh had received from the company between 1993 and 1995.
"The [Defendant] agrees to indemnify and keep the [Claimant] indemnified from and against all costs (including costs of enforcement), expenses, liabilities (including any tax liability), losses, damages, claims, demands, or legal costs (on a full indemnity basis) and judgments which the [Claimant] incurs or suffers as a consequence of any under-funding relating to Sarvindra Singh payable pursuant to the Pension Scheme in respect of all periods ending on the day of Completion. Clauses 4.6.5.2 and 4.8 apply so as to limit the [Defendant's] liability under this clause 7.1."
i) Because Baldwin did not pay £688,000 into the Fund, the Fund was under-funded in that sum in respect of its liabilities to Mr Singh.
ii) By reason of that fact and Mr Singh's service contract with Baldwin, Baldwin and the Claimant has a liability to Mr Singh in that sum.
iii) In breach of the Indemnity, the Defendant has failed and refused to provide the Claimant with an indemnity in respect of that liability or pay the Claimant £688,000.
iv) The Claimant has suffered loss and damage as a result, being its liability to the Scheme and/or Mr Singh for £688,000.
v) A claim is then made for damages.
Is there a liability under the Indemnity?
i) On a proper construction of the Indemnity, all that it does is to create an obligation between the Claimant and the Defendant in respect of the Claimant's liability for the under-funding of the Scheme. The Claimant, however, as distinct from Baldwin, had no liability in respect of any such under-funding. Mr Newman accepts that on this construction of the Indemnity, no liability could ever have arisen because the Claimant could never become liable for any under-funding of the Scheme. He says, however, that it makes perfectly good commercial sense for a party to give an indemnity under which no liability can arise in practice if that is the agreement put before it. He says, relying on Co-operative Wholesale Society Ltd v. National Westminster Bank plc [1995] 1 EGLR 97, that it is not the court's job to rewrite a bad agreement to make it conform to business common sense. Business common sense can only be used as an aid to construction where the language is ambiguous, which in this case it is not. He also points out that there is no claim to rectification.
ii) Even if on a true construction of the Indemnity the Defendant is under a liability to indemnify Baldwin, only Baldwin can claim an indemnity, not the Claimant.
iii) Even if the Indemnity in some way requires the Defendant to provide an indemnity in respect of Baldwin's failure to fund the Scheme, the Indemnity only relates to Baldwin's failure to make payments "pursuant to the Pension Scheme", and Baldwin had no such liability under the Scheme Rules. The only liability which Baldwin had was under Mr Singh's service agreement, not the Scheme.
"The [Defendant] agrees to indemnify and keep the [Claimant] and Baldwin indemnified from and against all costs (including costs of enforcement), expenses, liabilities (including any tax liability), losses, damages, claims, demands, or legal costs (on a full indemnity basis) and judgments which the [Claimant] or Baldwin incurs or suffers as a consequence of any under-funding relating to Sarvindra Singh payable pursuant to the Pension Scheme in respect of all periods ending on the day of Completion."
The time limit point
"… as it seems to me … clause 4.8 incorporates by reference the provisions of clause 4.6.4. I do not accept that one can regard the reference to clause 4.8 in clause 7.1 as not including the reference to clause 4.6.4. The provision is in no way repugnant to the rest of clause 4.8 and in my view can only have the effect of incorporating clause 4.6.4."
Closing remarks