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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Towergate Financial (Group) Ltd & Ors v Hopkinson & Ors [2020] EWHC 984 (Comm) (24 April 2020) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2020/984.html Cite as: [2020] EWHC 984 (Comm) |
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OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
7 Rolls Building Fetter Lane London, EC4A 1NL |
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B e f o r e :
____________________
(1) TOWERGATE FINANCIAL (GROUP) LIMITED(2) TOWERGATE FINANCIAL (EAST) LIMITED(3) TOWERGATE FINANCIAL (EAST) HOLDINGS LIMITED(4) TOWERGATE FINANCIAL (EAST) INTERMEDIATE LIMITED |
Claimants |
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(1) MR MITCHEL HOPKINSON(2) MRS JOANNE HOPKINSON(3) MR MARK HOWARD(4) MRS TAMASIN HOWARD (5) MR MITCHEL HOPKINSON(As Trustee of: the Mark Howard Life Interest Settlement 2008; the Tamasin Howard Life Interest Settlement 2008; the Mitchel Hopkinson Life Interest Settlement 2008; the Joanne Hopkinson Life Interest Settlement 2008; the Ian Marshall Life Interest Settlement 2008; the Stanislow Bojarski Life Interest Settlement 2008 and the Gail Bojarski Life Interest Settlement 2008)(6) MR MARK HOWARD (As Trustee of: the Mark Howard Life Interest Settlement 2008; the Tamasin Howard Life Interest Settlement 2008; the Mitchel Hopkinson Life Interest Settlement 2008; the Joanne Hopkinson Life Interest Settlement 2008; the Ian Marshall Life Interest Settlement 2008; the Stanislow Bojarski Life Interest Settlement 2008 and the Gail Bojarski Life Interest Settlement 2008)(7) (18) Various Individuals |
Defendants |
____________________
Joanna Smith Q.C. and Matthew Hodson instructed by Lennons Solicitors for the First, Second and Fifth Defendants and Freeths LLP for the Third, Fourth and Sixth Defendants
Hearing dates: 6, 7, 8 April 2020
Draft Judgment sent to parties: 22 April 2020
____________________
VERSION
OF JUDGMENT APPROVED
Crown Copyright ©
Cockerill J:
Introduction
Towergate
Financial Group) on the one hand and the First, Second and Fifth Defendants ("the
Hopkinson
Defendants") and the Third, Fourth and Sixth Defendants ("the Howard Defendants") on the other. I will refer to the
Hopkinson
and Howard Defendants collectively as "the Defendants".
Hopkinson
(Mr
Hopkinson)
and Mr Mark Howard (Mr Howard), as trustees of certain trusts, sold the entire issued share capital of M2 Holdings Limited ("M2") to
Towergate
Financial (East) Holdings Limited ("
Towergate
East") who is the Third Claimant. M2 is now known as
Towergate
Financial (East) Intermediate Limited and is the Fourth Claimant.
The claims giving rise to the indemnity claim
i) All advice given byTowergate
Financial firms in relation to Enhanced Transfer
Value
("ETV") schemes, which resulted in retail clients transferring their benefits out of a defined benefit scheme during the period from 1 December 2001 to 29 January 2014 (the "ETV Review"). This includes a review of advice provided by M2 prior to the "Completion" of the SPA;
ii) The promotion and sales of Unregulated Collective Investment Schemes ("UCIS") and other unregulated schemes between 1 December 2001 and 31 December 2013, with the review taking into account the degree of customer detriment (the "UCIS Review"). Again, this includes a review of promotion and sales by M2 prior to the "Completion" of the SPA.
very
significant amounts of compensation for mis-selling to clients dating from the previous period of ownership. Further claims are still to be finalised. The first payment was made in January 2016.
The Notice
"Those reviews are currently underway and have already resulted in the discovery of a number of cases where advice given to customers was not suitable which is likely to [result] in a payment of redress being made to those customers.Towergate
Financial's position is that it is likely that further claims will be identified against
Towergate
Financial and that a number of those claims are likely to arise from business which was transacted by M2."
Towergate
Financial will therefore be entitled to bring a claim against the
Vendors
and their spouses for an indemnity in accordance with the terms of clause 5.9 of the Agreement."
The relevant clauses of the SPA
"In this Agreement the following words and expressions shall (except where the context otherwise requires) have the following meanings: …..
"Claim" means a Warranty Claim and/or a Tax Claim ...
"Completion Date" means the date hereof ….
"Share Warranties" means the warranties contained in or referred to in clause 5 and schedule 3 …
"Tax Claim" means a claim under the Tax Warranties ...
"Tax Warranties" means the warranties on the part of the Warrantors set out in part 2 of schedule 4 ….
"Warranty Claim" means a claim for breach of any of the Warranties
"Warranties" means the Share Warranties and the Tax Warranties
"Warrantors" means theVendors
and the Registered Holders…
1.2.16 Any references to "indemnify" and "indemnifying" any person against any circumstances shall include indemnifying in full and holding him harmless from against all actions, costs, claims, demands, expenses and other liabilities which he may from time to time incur or suffer in connection with or arising out of such circumstances (including all payments, legal and other costs and expenses reasonably and properly incurred as a consequence of or which would not have arisen but for such circumstance)."
Hopkinson
and Mr Howard as "
Vendors"
and "the Registered Holders"). The detailed warranties are set out in Schedule 3 (the Share Warranties) and in part 2 of Schedule 4 (the Tax Warranties). Schedule 4 also contains, in part 3, the "Tax Covenant", whereby the Warrantors covenant to pay to the purchaser amounts equal to
various
tax liabilities to which the company or others may become subject.
"TheVendors
and their respective spouses undertake to indemnify the Purchaser and/or the Group in full against all losses, liabilities, costs and expenses which the Group or the Purchaser Group may suffer as a result of or in connection with any claim or claims for professional negligence against the Group including but not limited to claims or complaints arising from mis-selling of mortgage endowment, pension transfer (contracting out), equity release and income drawdown products and policies which relate to actions by the Group at any time before Completion including for the avoidance of doubt all losses, liabilities, costs and expenses incurred in connection with compliance with the FSA under or in respect of the s.166 review conducted by the FSA in respect of the contract between the Group and Peugeot known as Project Picasso subject in all cases to the provisions of clause 5.10."
"Each of the persons giving the indemnity in clause 5.9 should be entitled to require the Purchaser or the Group at the expense of such person(s) to take all such steps or proceedings as such person(s) may consider necessary in order to avoid, dispute, resist, mitigate, compromise, defend or appeal against any relevant claim which will if successful give rise to liability under clause 5.9….To enable such person(s) to decide what steps or proceedings should be taken, the Purchaser shall disclose in writing to theVendors
and their respective spouses all relevant information and documents relating to any claim or prospective liability… and (if such person so request) delegate entirely to them the conduct of any proceedings…."
vendors
for Claims or for a claim under the Tax Covenant" and then sets out percentage shares. This appears to be a differently worded correlate, in relation to warranty claims and claims under the Tax Covenant, to Clause 5.10.
"The Purchaser shall not make any Claims against the Warrantors nor shall the Warrantors have any liability in respect of any matter or thing unless notice in writing of the relevant matter or thing (specifying the details and circumstances giving rise to the Claim or Claims and an estimate in good faith of the total amount of such Claim or Claims) is given to all the Warrantors as soon as possible and in any event prior to:
6.7.1 the seventh anniversary of the date of this Agreement in the case of any Claim solely in relation to the Taxation Covenant;
6.7.2 the date two years from the Completion Date in the case of any other Claim; and
6.7.3 in relation to a claim under the indemnity in clause 5.9 on or before the seventh anniversary of the date of this Agreement."
"The liability of the Warrantors in relation to any Claim shall absolutely terminate (if that Claim has not previously been withdrawn, satisfied or settled) if legal proceedings in respect of that Claim containing full particulars of the nature and extent of it shall not have been properly issued andvalidly
served on each such Warrantors within nine months of the date of service of any notice under clause 6.7 PROVIDED THAT where the Claim in question relates to a contingent Liability such Claim shall not be deemed to have been withdrawn hereunder until the second anniversary of such Liability ceasing to be a contingent Liability."
The Preliminary Issues and the litigation backdrop
i) On the proper construction of Clause 6.7 of the SPA, with respect to the provision of notice of claims made under the indemnity in Clause 5.9, is there a condition precedent as to the time by which such notice must be given?
ii) If, on its proper construction, Clause 6.7 of the SPA imposes a condition precedent as to the time by when such notice must be given, what is that time? In particular;
a) Is it "prior to…the seventh anniversary of the date of the SPA" or,
b) Is it "as soon as possible" and
c) If the latter, what is the circumstance, happening or event that triggers the commencement of the period encompassed by "as soon as possible" and how soon thereafter must notice be given?
iii) Did the Claimants comply with any condition precedent as to the time by when such notice must be given in accordance with the proper construction of Clause 6.7 of the SPA?
validly
be given if and when an actual claim is made against the purchaser by a third party; and, when the Indemnity Notice was given on 29 July 2015 in respect of the two Skilled Person Reviews, (as was common ground) no relevant such third-party claim had been made. Therefore, the primary argument was in effect the direct opposite of what is now argued, because the Defendants were saying that the claim was premature.
Towergate
Financial Group
v
Clark [2017] EWHC 2330 (Comm) and
Hopkinson
& Ors
v
Towergate
Financial (Group) Ltd & Ors [2018] EWCA Civ 2744; and because the specific portions of those judgments which were said to be relevant will be discussed in some detail below.
i) There was no requirement for a claim to have been made against the purchaser for notice to bevalidly
given;
ii) The words in parentheses in Clause 6.7 (which related to Claims with a capital C, as defined in Clause 1.1 SPA) did not apply to the giving of notice under Clause 6.7.3 in relation to indemnity claims.
view,
urged on him by the Claimants, that the matter would require further factual evidence, and the question did not resurface in the Court of Appeal.
view
on the issue of construction. It has rightly not been suggested that they are not entitled to do so.
i) The bracketed words in Clause 6.7 do not apply to a claim under the indemnity at Clause 5.9 (paragraph [41]);
ii) Clause 6.8 does not apply to an indemnity claim under 6.7.3 (paragraphs [31]-[42]);
iii) The words "any matter or thing" encompass circumstances that may arise, such as the 2014 Reviews, which "create the real possibility or probability of successful mis-selling or similar claims that will, if successful, lead to indemnity claims. Such circumstances naturally fall within the words 'any matter or thing' that may in its turn lead to a liability under the indemnity, but they may well occur at a stage when it would be impossible to provide the information required by the bracketed words" (paragraph [42]);
iv) The words "any matter or thing" are "wide enough to include matters or things which precede the making of a claim against the company" paragraph [50]; and include both prospective and contingent claims;
v)
The words "the Warrantors" in Clause 6.7 are properly construed as meaning in relation to the indemnity, "such of the Warrantors as have given the indemnity under Clause 5.9" (paragraph [17]).
"But the purposes of the two provisions are distinct. The provision of information under clause 5.12 is to enable the indemnifiers to take steps to avoid or mitigate the claim that, if successful, will give ride to an indemnity claim. By contrast, the purpose of clause 6.7.3 is to impose a time limitation on claims under the indemnity."
They say that I am bound by that finding.
The factual matrix evidence
Hopkinson
and one from Mr Howard. The statements set out the background to the SPA, their understanding as to its terms and their
views
on the July Letter. The Claimants elected not to cross-examine either witness but made submissions as to the relevance and admissibility of their evidence at the hearing.
views
of these gentlemen as to the meaning of the SPA and the conduct of the negotiations are inadmissible in construing the SPA and should not have formed part of those statements. However, it was submitted that some portions of their evidence provided useful, relevant and admissible context for the SPA.
i) First, that there was a real chance of claims being made under the proposed indemnity provisions in the SPA (not least because of the existing 2007 Review referred to above as Project Picasso). This is not in issue.
ii) Second, that it was appropriate and necessary to limit the potential for such claims given that they would be made against Mr and MrsHopkinson
and Mr and Mrs Howard personally; and
iii) Third, that it would be important for the Indemnitors to have proper notice of any claims so as to enable them, if desired, to seek to influence their outcome.
view
as to the construction of the relevant provisions.
Issue 2: the time by which notice is to be given and trigger
i) The reference to Warrantors and notice to all Warrantors, because "the Warrantors" meant theVendors
and the Registered Holders: the latter group would not be affected by third-party claims which might fall under the Clause 5.9 indemnity.
ii) A tautology in the language of Clause 6.7 and Clause 6.7.3: "and in any event prior to […] in relation to [a Clause 5.9 claim] on or before the seventh anniversary".
iii) Further, the Claimants contend that Clauses 6.7 and 6.7.3 do not set out a point from which "as soon as possible" should be counted for the purposes of an indemnity clause, and reading in such a starting point would amount to a rewriting which was impermissible in the context of a condition precedent / notice clause.
i) There was no commercial justification for "as soon as possible" being a condition precedent with regards to indemnity claims. This was because enabling the Indemnitors to take steps for their own protection in relation to third-party claims was the purpose of Clause 5.12, not Clause 5.9.
ii) It was not open to the Defendants to argue that Clause 6.7 and 6.7.3's purpose was to forewarn the Indemnitors of third-party claims, in light of the Court of Appeal Decision (at [39]), which concluded that protecting the Indemnitors was the purpose of Clause 5.12, and the purpose of Clause 6.7.3 was to provide a limitation period.
i) "The Purchaser shall not make any Claim against the Warrantors" is a reference to the warrantors in relation to Tax/Warranty Claims.
ii) "Nor shall the Warrantors have any liability in respect of any matter or thing" encompasses the Tax Warrantors and the other Warrantors, and the subset of those Warrantors who have given indemnities in relation to Clause 5.9 (in reliance on the Court of Appeal Decision at [17]).
iii) The words in brackets in Clause 6.7 only refer to Claims as defined in Clause 1.1 (so do not apply to claims under the Clause 5.9 indemnity). Therefore, "unless notice in writing is given of a relevant matter or thing is given to all the Warrantors" means that notice must be given to "those of the warrantors relevant for each subsection (Clause 6.7.1, 6.7.2 and 6.7.3)".
iv) "As soon as possible" is immediately after the final reference to "the Warrantors", so must explain when those Warrantors should be notified.
i) While Clauses 6.7.3 and 5.12 have distinct purposes (limitation of liability, and protection/forewarning of the Indemnitors, respectively), as determined by the Court of Appeal at [39], the Court of Appeal did not determine the purpose of the words "as soon as possible" in Clause 6.7.
ii) There is a confluence of purposes between Clause 5.12 and 6.7.3: this is supported by the Court of Appeal's acknowledgment that both may be fulfilled by a single notification.
iii) The fact that the parties incorporated early warning provisions into Clause 5.12 does not necessarily mean that they intended for Clause 6.7.3 to have no such function, pointing to similar provisions to Clause 5.12 which they contended existed in relation to Clause 6.7.1 (Tax Claims) and Clause 6.7.2 (Warranty Claims) (Clause 6.12 and 6.11).
v
Great Lakes Reinsurance UK Ltd [2017] EWHC 391 (Comm) and (rather more impressively) those of Clarke LJ in Zurich
v
Maccaferri [2016] EWCA Civ 1302, Briggs LJ in Nobahar-Cookson
v
Hut Group [2016] EWCA Civ 128 and Lord Hodge in Impact Funding
v
AIG [2017] AC 73.
v
Faraday [2007] Lloyd's Rep IR 267, in which Morison J found that a provision requiring notice to be given "as soon as is reasonably practicable and in any event within 30 days" imposed a condition precedent limit of 30 days, because "as soon as is reasonably practicable" would have been too unworkable, ambiguous and unfair on the notifying party. Further, the Claimants contend that there is another analogy with AIG Europe: one factor in that case was the uncertainty on the starting point of "as soon as possible" (which was "upon knowledge of any loss or losses which may give rise to a claim").
v
University Hospitals of Leicester NHS Trust [2018] EWCA Civ 436 a case which concerned construction of a CPR practice direction: that an obligation to inform "as soon as possible and in any event within seven days of entering into the funding arrangement" required the party to inform within seven days and as soon as possible, if that was earlier than seven days.
Discussion- Issue 2
Part A: one condition or two?
v
Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900; (ii) Arnold
v
Britton [2015] UKSC 36, [2015] AC 1619; and (iii) Wood
v
Capita Insurance Services Ltd [2017] UKSC 24, [2017] AC 1173. There was no issue between the parties as to the principles that those cases laid down.
"[9] … it is well settled that contractual limitation periods for the notification or bringing of claims are forms of exclusion clause. …
[16] Recent decisions about exclusion clauses have continued to affirm the utility of the principle that, if necessary to resolve ambiguity, they should be narrowly construed, including in relation to commercial contracts.
[18] … the parties are not lightly to be taken to have intended to cut down the remedies which the law provides for breach of important contractual obligations without using clear words having that effect…
[19] This approach to exclusion clauses is not now regarded as a presumption, still less as a special rule justifying the giving of a strained meaning to a provision merely because it is an exclusion clause… The court must still use all its tools of linguistic, contextual, purposive and common sense analysis to discern what the clause really means…
[21]… there remains a principle that an ambiguity in its meaning may have to be resolved by a preference for the narrower construction if linguistic, contextual and purposive analysis do not disclose and answer to the question with sufficient clarity."
i) Clarke LJ in Zurichv
Maccaferri [32-3]: "If Zurich wished to exclude liability it was for it to ensure that clear wording was used to secure that result … given the nature of the clause the ambiguity must be resolved in favour of Maccaferri. Clauses such as these must be clear if they are to have effect."
ii) Lord Toulson in Impact at [35]: "As a matter of general principle, it is well established that if one party, otherwise liable, wishes to exclude or limit his liability to the other party, he must do so in clear words".
iii) Lord Bingham in Dairy Containers Ltdv
Tasman Orient Line CV (The Tasman Discoverer) [2004] 2 Lloyd's Rep 647 at [12]: "The general rule should be applied that if a party, otherwise liable, is to exclude or limit his liability or to rely on an exemption, he must do so in clear words; unclear words do not suffice; any ambiguity or lack of clarity must be resolved against that party".
"The Purchaser shall not make any Claims against the Warrantorsnor shall the Warrantors have any liability in respect of any matter or thing unless notice in writing of the relevant matter or thing(specifying the details and circumstances giving rise to the Claim or Claims and an estimate in good faith of the total amount of such Claim or Claims)is given to all the Warrantors as soon as possible and in any event prior to:
6.7.1 the seventh anniversary of the date of this Agreement in the case of any Claim solely in relation to the Taxation Covenant;
6.7.2 the date two years from the Completion Date in the case of any other Claim; and
6.7.3 in relation to a claim under the indemnity in clause 5.9 on or before the seventh anniversary of the date of this Agreement."
"Mr Butcher QC: In other words, if what one is talking - and one must be talking - about a claim for an indemnity … all that 6.7 says is that there shan't be any liability unless notice in writing of the relevant matter or thing is given to all the warrantors as soon as possible in relation to a claim under the indemnity in Clause 5.9 on or before the seventh anniversary of the date of this Agreement.
… in relation to "as soon as possible," that just means that you have got to notify whatever the matter or thing is in relation to the claim under indemnity as soon as possible. …'
Leggatt J: How does it operate in some sort of practical way where you can have some means of telling whether you have done it as soon as possible or when the obligation kicks in?
Mr Butcher: Well, it is going to be difficult, in my submission, to say that there isn't some sort of non-compliance with that."
"The Purchaser shall not make any Claims against the Warrantorsnor shall the Warrantors have any liability in respect of any matter or thing unless notice in writing of the relevant matter or thing(specifying the details and circumstances giving rise to the Claim or Claims and an estimate in good faith of the total amount of such Claim or Claims)is givento all the Warrantors as soon as possible and in any event prior to:
6.7.1 the seventh anniversary of the date of this Agreement in the case of any Claim solely in relation to the Taxation Covenant;
6.7.2 the date two years from the Completion Date in the case of any other Claim; and
6.7.3 in relation to a claim under the indemnity in clause 5.9 on or before the seventh anniversary of the date of this Agreement."
very
odd result
vis
a
vis
the other parts of the clause. I asked Mr Kealey in argument whether he accepted that "as soon as possible" applied to 6.7.1 and 6.7.2. Initially he did so accept. However, that is plainly a strained construction, in part because of the "and" at the end of 6.7.2 which indicates that the three subclauses are following on an equal footing, and in part because there seems no reason based in the nature of the claims why "as soon as possible" would be objectionable for one and not for the others – a point reinforced by contextual issues to which I will come below.
volte
face, arguing that "as soon as possible" was inapplicable to any of the sub-clauses; in other words that there was no condition precedent requiring notification "as soon as possible". This was premised on an argument that there was no commercial purpose for "as soon as possible and in any event" applying to Clause 6.7.1 or Clause 6.7.2 because the parties had explicitly or impliedly covered the circumstances in which notice was to be given to the Warrantors in relation to Claims in Clause 6.12 and 6.11, and the remedies for breaches of those notice obligations were also contained in Clauses 6.11 and 6.12. However (parking for a moment the substance of the commercial purpose argument, which is addressed below) that argument on its face does some striking
violence
to the wording of the clause. Essentially, all of the clause after the bracket has to be deleted as erroneous, for all the sub-clauses, in circumstances where there is no argument that it is surplusage.
very
much to be preferred to that put forward by the Claimants.
via
that clause. Firstly, there is no logical reason why the SPA should not provide for both remedies. One can perfectly well envisage circumstances where 5.12 would bite, but 6.7.3 did not; such as a failure to give full information or co-operation during the handling of a potential claim. Secondly, in other contexts it at least appears that both remedies were given by the SPA: Clauses 6.7.1 and 6.7.2 have their own similar provisions in Clauses 6.11 and 6.12.
violence
imported to the wording of the clause. And yet the contextual or commercial reason driving such a conclusion for all three clauses is lacking.
very
earliest stages of possible claims ("in order to avoid, dispute, resist, mitigate, compromise, defend or appeal against any relevant claim which will if successful give rise to liability under clause 5.9") the timing which is naturally suggested as being necessary is precisely "as soon as possible". Here it seems to me that the use of the word "avoid" in Clause 5.12 is not insignificant. Avoidance is likely to require
very
early notification indeed.
v
Faraday Capital Limited [2006] EWHC 2707 (Comm), where the Court rejected the argument that an apparently similar provision effectively created two conditions precedent (as soon as possible/30 days), each of which had to be fulfilled.
"64. The remaining argument raised by Mr Macdonald Eggers was, in myview,
hopeless. It goes like this. The requirement in subparagraph (a) of the Clause was to:
'advise the Reinsurers thereof as soon as is reasonably practicable and in any event within 30 days'.
65. There are two conditions precedent, each of which must be fulfilled: to advise as soon as is reasonably practicable and to advise within 30 days. Even if the court concluded, as it has, that the loss was notified within 30 days, that is not sufficient if the advice could reasonably practicably have been given sooner.
66. To which I think the answer is:
(1) If that had been the intention behind this draconian clause it should have been spelt out. On a natural reading of the clause a Reinsured would be forgiven for thinking that there was one condition only, namely the 30 day provision and that the other alleged condition was not a condition precedent because the extent of the obligation would be too uncertain to be workable. The words "and in any event" destroy the point being made.
(2) The clause would be ambiguous and unfair, if Mr MacDonald Eggers was right...I would adopt the further formulation in MacGillivray 9th Ed, 19-35: 'Such clauses should not be treated as a mere formality which is to be evaded at the cost of a false and unnatural construction of the words used in the policy, but should be construed fairly to give effect to the object for which they were inserted, but at the same time so as to protect the assured from being trapped by obscure or ambiguous phraseology'".
via
an obscure and ambiguous phraseology.
v
Europe it could (just) be said that there was scope for confusion arising from as soon as possible and 30 days occurring together in the clause. In essence, because 30 days in quite a short period, an unwary reader might be misled into thinking that it defined as soon as possible. This concern plainly operated on the judge's mind, though it did not form part of his reasoning: "On a natural reading of the clause a Reinsured would be forgiven for thinking that there was one condition only" ([66(1)]). It is true that 30 days might (
very
charitably) do duty for as soon as possible. In the present case, any such confusion is plainly absurd. In no way could 7 years be seen as defining "as soon as possible". Any literate reader must understand that there are on the face of the clause two quite distinct requirements: (i) as soon as possible and (ii) in any event within 7 years.
violence
to the wording of the clause, dealt with above.
v
B [2017] EWHC 3417 (Comm), relied on by the Claimants in oral argument, analogous; that case concerned construction of the new LCIA Rules against a background where the Arbitration Act and authorities on that and previous iterations of the LCIA Rules were relevant factual matrix. Thus the judgment takes in reviews sections 31 and 73 of the 1996 Act, the UNCITRAL Model Law, and (by reference) both the current and previous
versions
of the LCIA Rules (as well as some flavour of the regime under the 1950 Act, which was not one which referred to "as soon as possible", but to "steps in the proceedings").
view
that the approach in Springer is to be preferred as more intellectually robust. I would also add that even looking at the facts of AIG Europe, I would have difficulty in characterising the argument of Mr MacDonald Eggers as "hopeless" in the context of the modern authorities on construction.
Part B: Trigger
"It all depends how you interpret a relevant matter or thing and what is the standard of relevance. Is it something which may or something which might, which is the same? Something which is likely to, which is 50%, or something that is expected to, which is probably more than 50%, because expectation denotes a likelihood, at least in certain people's eyes.
But is it something, again, which may give rise to a claim even though thevendors,
the purchaser doesn't himself or herself appreciate that, itself appreciate that? What if the purchaser doesn't realise that it might? Is it objective/objective, is it objective/subjective? Is it subjective/subjective? Which would you like to choose?"
v
Outhwaite [1991] 2 WLR 1321; and like them, I remain unbeguiled. The time for "as soon as possible" starts to run at a time when there is an identifiable matter or thing in relation to which a claim under the Clause 5.9 indemnity may arise. Neither Leggatt J nor the Court of Appeal was troubled by this. The former said [40-41].
"However, whilst there may well be scope for argument about the exact point at which a notice may be given under clause 6.7, it seems to me that the clause can sensibly be interpreted as requiring notice as a precondition of making a claim once there is an identifiable matter or thing which may give rise to a claim under the indemnity provision. Once one accepts that the relevant matter or thing is not an actual claim under the indemnity, it seems to me that the best interpretation of the clause is that it is intended to denote a matter or thing which may give rise to such a claim."
v
Underwriter Insurance [2008] 1 All ER (Comm) 855, HLB Kidsons
v
Lloyd's Underwriters [2008] 1 All ER (Comm) 769 (FI), Aspen Insurance UK Ltd
v
Pectel Ltd [2009] Lloyd's Rep IR 440, HLB Kidsons
v
Lloyd's Underwriters [2008] Lloyd's Rep IR 237.
very
hard, tacitly (and realistically) acknowledging that I would almost inevitably read the clause as I have. It was not more than nominally his case that his was clearly the right construction. That was a sensible approach, because there was no way in which I could have been persuaded of that point. However, in effect he had to maintain his case as to a positive construction at least to some extent, because as a matter of logic, if he did not offer a credible alternative construction, his real (though technically his backstop) case, that the clause was insufficiently clear to be given effect as a condition precedent, must fail. The authorities turn on clarity
versus
ambiguity. A clause can be clear simply by default of alternative. Here the result is that the clause is actually clear on analysis, and is the more so because the alternative offered lacks the credibility which might indicate ambiguity.
Issue 3 – Was notice given as soon as possible?
i) There had been contact with the FCA from mid-2012 with regards to these categories of transactions, with the FSA seeking information. By early 2013, the FCA had flagged "a number of major issues" and failures of risk and compliance functions. Clear notice was given that notices were going to be served. The FCA also gave some granular examples of why they were concerned – of 14 files reviewed only one was deemed "suitable" (acceptable to the FCA);
ii) On 5 March 2013 an internal report was provided to insurers as part of the exercise of full and frank disclosure on making a submission for renewal of the insurance cover;
iii) By 27 March 2013 the Claimants had already started to identify potential claims. That action included a detailed spreadsheet which included not only a brief description of individual claims, but also a column for "Action Taken", which contains details of what the Claimants had done to manage the complaint this far. That is a column which has obvious resonance with Clause 5.12 – and also, to the extent the two march together, with the "as soon as possible" requirement of Clause 6.7.3. The document includes claims deriving from the former M2.
iv) By June 2013 the Claimants had identified 79 potential claims from M2. In July a report produced for the Claimants indicates that specialist consultants Hazell Carr were evaluating the issues and that PwC was also involved. Insurers were informed of the results of this investigation.
v)
By December of 2013 the FCA had formally confirmed that section 166 Notices would be served, and the Claimants were setting out in a spreadsheet of cases what was thus far thought to be owed from (and inferentially to be notified to) insurers – and to "
Vendors".
vi)
Shortly after the service of the first section 166 Notice, in February 2014, the internally estimated assessment of claims (across the board and not confined to ex-M2 business) was £19.6-22.6 million for UCIS and around £31 million ETV.
i) This clause, which features both the words "as soon as possible" and "any matter or thing" (unqualified by a requirement of likelihood);
ii) The background of Clause 5.12 and its contemplation of the Defendants' involvement from a stage when "avoiding" as well as contesting or mitigating claims was a possibility;
iii) They were entitled to wait for over 2 years after they had made insurers aware of the situation and 17 months after they had formally notified – and to delay to a time when payments had begun to be made and they had incurred millions of pounds of costs of investigation. The Claimants themselves, it should be noted, internally designated this phase the "execution/redress" phase, which followed on from the "design/initial assessment" phase.
very best attempts to re-dress the situation in a more attractive garb.
Conclusion