SILKS WEEK, DAY 2

JOHN RANDALL QC

LANCE ASHWORTH QC

NOVEMBER 2011

TERMINATION OF CONTRACTS

THE INTERACTION OF EXPRESS TERMINATION CLAUSES AND

COMMON LAW RIGHTS

_____________________________________

John Randall QC

St Philips Chambers

Termination at Common Law : some ‘revision’

1. Conventional (post Hong Kong Fir) tri-partite categorisation of contractual terms

1.1 ‘Conditions’ in the strict sense

As Treitel1 puts it (at §18-041):

“If a contractual term relates to ‘a substantial ingredient in the identity of the thing sold’, it will be classified as a condition, and its breach will entitle the victim to terminate, on the basis that it would be unjust to require him to accept and pay for something which differed in an important way from that for which he contracted.”

theoretically possible re minor matters:

o Bettini v Gye (1876) 1 QBD 183 per Blackburn J at 187:

“Parties may think some matter, apparently of very little importance, essential; and if they sufficiently express an intention to make the literal fulfillment of such a thing a condition precedent, it will be one” o Gumland Property Holdings v Duffy Brothers [2008] HCA 10 at [53] & [58]:

“very clear words” are required, but “under [general] contractual principles it is possible by express provision in the contract to make a term a condition, even if it would not be so in the absence of such a provision – not only in order to support a power to terminate the contract … but also to support a power to recover loss of bargain damages”

o Lombard North Central v Butterworth [1987] QB 527 per Mustill LJ at 535-6 (by making time essential) – discussed by Furmston2 at §7.43, and Opeskin (1990) 106 LQR 293 at 300-2

Judicial reluctance so to construe a contractual provision:

o Wickman v Schuler [1974] AC 235

1 Treitel, The Law of Contract, 12th edn (2007) 2 The Law of Contract, ed Furmston, 4th edn (2010)

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1.2 ‘Mere warranties’

1.3 ‘Innominate’ or ‘intermediate’ terms (Hong Kong Fir v Kawasaki [1962] 2 QB 26)

General judicial preference (but not always: cf Bunge v Tradax [1981] 1 WLR 711 at

715E Lord Wilberforce)

Wide variety of verbal formulations of test for whether a breach is sufficiently serious to

justify termination, often by reference to doctrine of repudiation (Furmston op cit,

§7.15 at fn7) because repudation often implied from actual breach(es)

o Substantially the whole benefit (older cases)

o Going to the root of the contract

o “To constitute repudiation, the threatened breach must be such as to deprive the

injured party of a substantial part of the benefit to which he is entitled under the

contract” Decro-Wall International v Practitioners in Marketing [1971] 1 WLR

361 at 380A per Buckley LJ

o A substantial part of the totality (Rice v Great Yarmouth BC [2001] 3 LGLR 4

(p41) CA at [38])

Treitel (op cit at §18-026) well summarises the position with regard to the law’s

judgment as to when a failure to perform / a breach is ‘substantial’:

“The question when a failure in performance ‘substantially’ deprives a party of what he has bargained for, or (as it is sometimes put) ‘frustrates’ his purpose in making the contract gives rise to very great difficulty. The frequent references in the cases to breaches which ‘substantially’ deprive a party of what he bargained for or ‘go to the root’ of a contract are not particularly helpful in analysing the law or in predicting the course of future decisions. … the courts … generally classify a failure in performance with an eye on the consequences … If, on balancing [the need to protect the injured party and the prejudice caused to the other by termination] ... they conclude that the injured party should be allowed to terminate, they will classify the failure in performance as ‘substantial’ in order to produce the desired result …”

o The learned author goes on (at §§18-026 to 18-036) to identify the various factors

which will influence the Court’s crucial judgment on this question in any given case.

These include adequacy of damages as a remedy for the innocent party, the ratio

of failure to the performance undertaken, uncertainty as to future performance, and

ulterior motives on the part of the terminating party (generally, seeking to get a

better bargain following movements in the market).

1.4 In addition to actual breaches, ‘anticipatory breach’

It will be recalled that either an unequivocal and communicated refusal (or assertion of

inability) of performance when due in the future (a.k.a. a renunciation), or a clearly

established inability to perform (a.k.a. impossibility), entitle (but do not oblige) the innocent

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party to terminate, without waiting for the date on which actual performance is due to arrive.

However, as was famously observed by Asquith LJ in Howard v Pickford Tool Co Ltd

[1951] 1 KB 417 at 421:

“an unaccepted repudiation is a thing writ in water and of no value to anybody: it confers no legal rights of any sort or kind (emphasis added). It follows that unless and until the anticipatory breach is ‘accepted’ by the innocent party, it is the other party’s ‘right’ (as it may be expressed) to change his attitude and become willing to perform or (as the case may be) remedy his inability to perform when the due time arrive”

(Though it may result in an estoppel: viz Peter Turnbull v Mundus Trading [1954] HCA 25, 90 CLR 235).

1.5 A different 3 part analysis (to similar ultimate effect): see Rice v Great Yarmouth BC

supra at [35]-[36] per Hale LJ:

1.5.1 (1) Term breached is equivalent to a strict Condition

1.5.2 (2) Renunciation – However (though not mentioned in Rice supra):

1.5.2.1 Clearly goes beyond “simply walking away” (Rice [35]);

1.5.2.2 Furmston op cit at §7.20 refers to “an intimation that [the promisor] will perform the contract

in a manner which is substantially different from that required” as amounting to a

renunciation;

1.5.2.3 Lord Wright in Ross T Smyth v Bailey [1940] 3 All ER 60 at 72B:

“the party alleged to have repudiated … may intend in fact to fulfil [the contract], but may be determined to do so only in a manner substantially inconsistent with his obligations, and not in any other way”

1.5.2.4 Fullagar J in Carr v JA Berriman Pty Ltd [1953] HCA 31, 89 CLR 327 said, with reference

to the facts of that case (at 351):

"A reasonable man could hardly draw any other inference than that the [other party] does not intend to take the contract seriously, that he is prepared to carry out his part of the contract only if and when it suits him”

1.5.2.5 In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23, 166 CLR

623 Mason CJ said (of [22]):

“There is a difference between evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so. In the first case the party intends not to carry out the contract at all in the event that it does not suit him. In the second case the party intends to carry out the contract, but only to carry it out as and when it suits him. It is much easier to say of the first than of the second case that the party has evinced an intention no longer to be bound by the contract or to fulfill it only in a manner substantially inconsistent with his obligations and not in any other way. But the outcome in the second case will depend upon its particular circumstances, including the terms of the contract. In some situations the intention to carry out the contract as and when it suits the party maybe taken to such lengths that it amounts to an intention to fulfill the contract only in a manner substantially inconsistent with the party's obligations and not in any other way.”

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1.5.2.6 In assessing whether a party’s words and conduct are such as to found an inference of

repudiation, the (objectively inferred3) risk of repetition of breaches in the future is an

important consideration (Chitty on Contracts, 30th ed (2008) at §24-044 citing Maple Flock

v Universal Furniture [1934] 1 KB 148; and see also Rice v Great Yarmouth BC supra at

[38]);

1.5.3 (3) Cumulative breaches: “the test … is severe…” (Rice v Great Yarmouth BC supra at

[36]).

1.6 Provided the termination is communicated clearly and unequivocally, no particular form of

communication is required:

1.6.1 Normally will be express, or by clear implication;

1.6.2 Exceptionally, silence (really conduct/absence thereof): Vitol SA v Norelf Ltd (The Samta

Clara) [1996] AC 800 at 810-114 per Lord Steyn (cited in Shell Egypt v Dana Gas [2010]

EWHC 465 (Comm) at [31(i)]; summarised in Furmston op cit at §7.29).

Express termination clauses (ETCs)

2.1 Purpose for inclusion The purposes for which ETCs may be included in a contract are

many and various. However an important one to which Treitel op cit draws attention (at

§18-061) is “to prevent disputes from arising as to the often difficult question whether the

failure in performance is sufficiently serious to justify termination; and they take effect even

though there is no substantial failure”. The event entitling a party to terminate may not even

constitute a breach at all, although generally it will. ‘Certainty’ is served by making

consideration of Treitel’s question “of very great difficulty” unnecessary, at least for the initial

purpose of deciding whether or not there is a right lawfully to terminate the contract.

However, as is discussed below

this certainty may come at a price to the terminating party, and

the difficult question may still have to be addressed subsequently.

2.2 Wording of the termination clause:

2.2.1 Judicial reluctance to construe an ETC as entitling termination for a minor breach (similar to

reluctance to construe an express term as rendering a minor obligation a strict Condition –

see §1.1.1 above, citing Wickman v Schuler):

3 See Furmston op cit at §7-20 4 More specifically on the fact of Vitol, the failure of Norelf to take any further step to perform the contract which was apparent to Vitol, and from which Vitol knew that Norelf was treating the contract as at an end

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Antaios Cia Naviera SA v Salen Rederierna AB [1985] AC 191 - In “failing

punctual and regular payment of the hire … or on any breach …” – the words

underlined (by me) were construed as meaning ‘or on any repudiatory breach’

Rice v Great Yarmouth BC supra, where “If the Contractor .. commits a breach

of any of its obligations under the Contract” (giving rise to a contractual right to

terminate) was held to mean “... commits a repudiatory breach of …”

Similarly Dominion Corporate Trustees Ltd v Debenhams Properties [2010]

EWHC 1193 (Ch), Kitchin J – a literal construction of a clause in an agreement

for lease whereby any breach of the agreement entitled the innocent party to

terminate was rejected as ‘flouting business common sense’

See discussion in Furmston op cit at §7.7

2.2.3 The exact wording of the clause must be satisfied before an ETC will be held to have

become operable. In MMP v Antal [2011] EWHC 1120 (Comm), the contract provided that

MMP should not “at any time, do anything to affect adversely [Antal’s] name, Trade Marks or

other Intellectual property”. An ETC gave Antal a right of immediate termination for breach

of this clause. Flaux J held (at [77]) that conduct giving rise to a (reasonable) fear that

Antal’s name or intellectual property would be damaged was not sufficient, and that only

proof of actual damage would suffice.

2.3 Effect of termination under an ETC:

2.3.1 Chitty5 rightly doubts the decision in Laing Management v Aegon Insurance (1998) 86

BLR 70 insofar as HHJ Lloyd QC held that after a termination pursuant to an ETC which did

not also amount to acceptance of a repudiatory breach the contract remained alive for the

benefit of both parties.6 Surely the true position is that :

“in both cases [the party terminating] is electing to terminate the contract for the future

(i.e. to bring to an end the primary obligations of the parties remaining unperformed) …

‘Termination’ is capable of meaning both a termination pursuant to [an ETC] and the

acceptance of a repudiation” (Dalkia Utitlites v Celtech [2006] EWHC 63 (Comm),

[2006] 1 Lloyd’s Rep 599 at [143] per Christopher Clarke J), but

5 Op cit at §22-049 6 See at 110H-I. In Stocznia v Gearbulk supra, dicta apparently to like effect in the earlier case of UDT v Ennis [1968] 1 QB 54 (CA) was dismissed by Moore-Bick LJ at [28]-[35] as “not altogether easy to understand … particularly in the light of more recent expositions of the principles governing the law on repudiation and the doctrine of election …It should be borne in mind that these were ex tempore judgments delivered at a time when the principles of discharge by breach had not received the detailed analysis and exposition provided in the more recent authorities”

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Some non-primary clauses (e.g. classically arbitration clauses7) are (or are

conventionally construed as) intended to survive the termination (in the sense

described in the previous bullet point) of the contract which contains them

2.3.2 A sounder approach is that of Moore-Bick LJ in Stocznia v Gearbulk [2009] EWCA Civ 75,

[2010] QB 27, at [34]:

“it is impossible for a party to terminate a contract, in the sense of discharging both parties from further performance, whether by invoking a term which entitles him to do so or by exercising his rights under the general law, and at the same time treat it as continuing, since the two are inconsistent. Either the primary obligations remain for performance, or they do not.”

2.3.3 However an earlier dictum in the same judgment (at [20]) is less clear:

“In my view it is wrong to treat the right to terminate in accordance with the terms of the contract as different in substance from the right to treat the contract as discharged by reason of repudiation at common law. In those cases where the contract gives a right of termination they are in effect one and the same.”

The intended scope of this dictum is open to debate, and Edwin Peel writing in the Law

Quarterly Review8 questions whether this can be said of cases where (unlike Stocznia v

Gearbulk itself) the breach giving rise to a right to terminate under an ETC is not sufficiently

serious to give rise to a right to terminate at common law. Issues which arise are

considered further below, under ‘Changing Horses’ and ‘Consequences’.

2.4 Strict compliance necessary?

2.4.1 Chitty op cit suggests that (contrary to some well-known older cases9, and the position

adopted by Treitel10) “Strict or precise compliance with the termination clause may no

longer be a necessary pre-requisite to a valid termination”11

Consistent with modern approach to notices in context of leases: Mannai Investment

v Eagle Star [1997] AC 749

Ellis Tylin v Co-operative Retail Services [1999] BLR 205 per HHJ Bowsher QC at

217-20

See also Furmston op cit at §7.29: substance of the notice is what matters

2.4.2 However, so far as time provisions are concerned, the right to give notice of termination

under an ETC must not be anticipated, and such a notice given even slightly prematurely is

7 Heyman v Darwins [1942], AC 356 8 Affirmation by Termination, (2009) 125 LQR 378 at 380-81 9 Including The Mihalis Angelos infra; Madorf Peach & Co v Attica Sea Carriers [1977] AC 850 10 Op cit at §18-062 11 §22-049; also §22-051 at fn 227. See to similar effect Carter, ‘Termination Clauses’ (1990) 3 JCL 90 at 101, and the (Australian) authorities there cited.

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of no effect: The Mihalis Angelos [1971] 1 QB 164 (CA); Afovos Shipping v Pagnan

[1983] 1 WLR 195 (HL); Chitty op cit at §24-031; Furmston op cit at §7.7

2.4.3 Moreover, under many ETCs a notice giving the contract breaker the opportunity to remedy

the default12 within a specified period is required prior to a notice of termination, in which

case the prescribed procedure must be strictly followed.13 In particular:

The principle at §2.4.2 above is of particular significance

The opportunity to remedy must be clearly stated: Western Bulk Carriers v Li Hai

Maritime [2005] EWHC 735 (Comm), [2005] 2 Lloyd’s Rep 389 per Jonathan Hirst QC

as a DHCJ at 406-7, and

By parity of reasoning with that in Afovos Shipping v Pagnan supra, the full

contractual period for remedy must be allowed before any termination in reliance on it

will be valid

2.5 Acting reasonably or in good faith necessary? Unlike in some other legal systems,

under English law it is not necessary for a party exercising an ETC to do so reasonably or in

good faith: Anson’s Law of Contract, 29th edn (2010) at 470; Carter op cit at 103.

Changing horses

3 The general rule “is that a promisee may rely on any available ground for termination

whether or not known at [the] time of the election to terminate. Thus, the promisee is not

usually required to justify an election to terminate on any ground given at the time of the

election” (Furmston, op cit, at §7.28)14. See British & Beningtons Ltd v North Western

Cachar Tea [1923] AC 48 at 71-72 per Lord Sumner,15 cited by Lord Denning MR in The

Mihalis Angelos supra at 193B, and in the High Court of Australia by Dixon J in Shepherd

v Felt and Textiles of Australia [1931] HCA 21, 45 CLR 359. The relevant part of the latter

case was approved and succinctly summarised by Latham CJ near the end of his judgment

in the leading Australian case of Tramways Advertising v Luna Park [1938] HCA 66, 61

CLR 286 thus: “the defendant can justify the repudiation of the contract upon any ground

which in fact existed whether or not such a ground was previously relied upon by him”. 12 For a valuable discussion as to what amounts to remedying a default in the context of a commercial contract, see Wickman v Schuler [1974] AC 235 13 Furmston op cit §7.29 at fn 12. See further the discussion of Lockland Builders v Rickwood at §4.2 below, in particular at the text to fn 23 14 Contrast cases where the recipient of a termination notice has sought to argue that the notice must be treated as an election to operate a provision of the contract markedly disadvantageous to the notice giver, although the notice giver neither said nor intended as much: Bridge v Campbell Discount [1962] AC 600; Walkinshaw v Diniz [2001] 1 Lloyd’s Rep 632 15 Also Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 at 352, 364; Glencore BV v Lebanese [1997] 1 All ER 514 (CA) at 526f; Stocznia v Latco (No 2) [2002] EWCA Civ 889, [2002] 2 Lloyd’s Rep 436 at [32], cited with approval in Stocznia v Gearbulk supra at [44]

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3.1 Facts known or unknown As has recently been pointed out by Lloyd LJ, although this

principle is often used in relation to facts of which the terminating party was unaware until

later, there is “no reason why it should not be used in relation to facts which were known to

that party at the time”.16

3.2 Exception (1) – where an ‘election’ is involved

3.2.1 A recent example of the exceptional position where a party which has served notice of

termination under an ETC is thereby treated as bound by an election not to terminate at

common law for repudiatory breach is afforded by Shell Egypt v Dana Gas [2010] EWHC

465 (Comm), Tomlinson J. He applied passages from a similar 2006 case, Dalkia Utilities

v Celtech supra, where Christopher Clarke J, having recognised that prima facie an

innocent party can rely on both a contractual right to terminate and a common law

entitlement to accept a repudiatory breach, went on to state that if a notice

“makes explicit reference to a particular contractual clause, and nothing else, that may, in context, show that the giver of the notice was not intending to accept the repudiation and was only relying on the contractual clause; for instance if the claim made under the notice of termination is inconsistent with, and not simply less than, that which arises on acceptance of a repudiation … In the present case markedly different consequences would arise according to whether or not there was a termination under [the ETC] or an acceptance of a repudiation… The same notice cannot operate to produce two … diametrically opposing consequences. In those circumstances it should take effect in, and only in accordance with its express terms, namely as a determination under [the ETC]” (at [143]-[144]);

3.2.2 Again, the judgment of Moore-Bick LJ in Stocznia v Gearbulk supra (in which no such

inconsistency was found, leaving the general rule applicable – see at [39]-[42]) succinctly

summarises the position. He continued:

“If the contract and the general law provide the injured party with alternative rights which have different consequences … he will necessarily have to elect between them and the precise terms in which he informs the other party of his decision will be significant, but where the contract provides a right to terminate which corresponds to a right under the general law (because the breach goes to the root of the contract or the parties have agreed that it should be treated as doing so) no election is necessary. In such cases it is sufficient for the injured party simply to make it clear that he is treating the contract as discharged… If he gives a bad reason for doing so, his action is nonetheless effective if the circumstances support it” (at [44], my underlining).

3.3 Exception (2) - estoppel/waiver

3.3.1 In principle, the ordinary doctrines of estoppel/waiver are available, if on the facts it can be

shown (unusually) that the terminating party has made an unequivocal representation

(whether by words or conduct) on which the other party has acted to its detriment: Glencore

BV v Lebanese [1997] 1 All ER 514 (CA) at 527h-j, 530j. In this context at least, the

16 Reinwood v L Brown & Sons [2008] EWCA Civ 1090, [2009] BLR 37, at [51]

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doctrines come to much the same thing, given that waiver can only apply to qualify the

general principle “in cases of, in effect, estoppel” (per Lloyd LJ in Reinwood v L Brown &

Sons [2008] EWCA Civ 1090, [2009] BLR 37, at [51]);

3.3.2 Despite earlier authority apparently to the contrary,17 there is no wider doctrine whereby

termination notices may be held invalid on the ground that reliance on them would be unfair

or unjust: Glencore BV v Lebanese supra at 529a-531c.

Consequences of ETCs (1) – Loss of common law rights?

4 “In general, contractual rights of termination are treated as additional rights, not given in

substitution for common law rights” (Furmston18). Examples of cases applying or

recognising this principle abound, and include Union Transport Finance v British Car

Auctions [1978] 2 All ER 385 (CA),19 Afovos Shipping v Pagnan [1983] 1 WLR 195

(HL),20 and Lombard North Central v Butterworth [1987] QB 527 (CA).21

4.1 Exceptionally, however, express provision in a contract can expressly or impliedly exclude a

common law right to terminate in respect of a breach falling within the scope of that

provision:

“Whether the procedure laid down for termination in the contract excludes, expressly or impliedly, the common law right to terminate further performance of the contract in respect of a breach which falls within the scope of the clause is a question of construction of the contract. When interpreting [such a termination clause] the court will have regard to the commercial purpose which is served by the termination clause and interpret it in the light of that purpose.”22

4.2 Three examples where implied exclusion of the common law right in respect of actual

breaches was, exceptionally, found:

Lockland Builders v Rickwood (1996) 77 BLR 38 (CA), the example cited in Chitty

op cit §22-049 at fn 210, from which the following points may be noted:

o The building owner’s reliance on the common law right was, in effect, an attempt

to avoid the opportunity given to the builder by the ETC to rectify its breaches

within a specified period of a notice before a termination notice could be served23

o The ETC was not expressed to be without prejudice to the owner’s rights at

common law

17 Panchaud Frères v Etablissements General [1970] 1 Lloyd’s Rep 53 (CA) 18 Op cit at §7.7 (and repeated at §7.29) 19 See at 392a-b per Bridge LJ 20 See at 201 per Lord Hailsham LC 21 See at 543C-545F per Nicholls LJ 22 Chitty op cit at §22-049 23 As to which note BSkyB v HP Enterprise [2010] EWHC 86 (TCC), Ramsey J at [1366], final sentence

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o The ETC was not construed as excluding all rights to terminate at common law,

but only rights to terminate in respect of a breach falling within the scope of the

ETC

o Both Russell and Hirst LJJ noted that the clause would not have been construed

as having impliedly excluded the right to terminate if the contract breaker had

evinced a clear intention not to be bound by the terms of the contract,24 in other

words a repudation by renunciation rather than simply actual breaches (as to

which see the discussion at §1.3.2 above)

Crane and Co v Wittenborg (CA, unreported, 21 December 1999), where it was held

that a provision in a charterparty which expressly dealt with what the parties were

entitled to do in the event of any “substantial breach” – terminate immediately by notice

in the case of a non-remediable “substantial” breach and give notice triggering a period

for remedy where the breach was remediable – did provide a complete code for the

parties rights in the event of a repudiatory breach. This was because (per Mance LJ at

[21]) the Court found doubted “whether there is any distinction to be drawn between a

“substantial” breach required by the clause and a breach of condition or repudiatory

breach.”

The majority decision on this point in the Federal Court of Australia in Amman

Aviation v Commonwealth [1990] FCA 5525 per Davies J at [11]-[15] & Sheppard J at

[2]-[15].

4.3 An ETC may also operate so as, in effect, to set a minimum level of seriousness required

before a breach of an innominate or intermediate term may be relied on as justifying

termination at common law:

“… circumstances otherwise within the scope of the [ETC] but falling short of the

precise terms would in my judgment not give rise to the right to terminate at common

law … to justify termination at common law something ‘worse’ or not addressed by

those provisions would be required” per Langley J in Amoco v British American

(unreported, 16 November 2001)

“…if a breach of a term had to reach a degree of seriousness before [an ETC] could be

applied, it is unlikely that a breach which was less serious would, by itself, amount to a

repudiatory breach” per Ramsey J in BSkyB v HP Enterprise [2010] EWHC 86

(TCC), at [1366]. 24 See at 46 and 50 respectively 25 A case better known for the subsequent appeal to the High Court of Australia on issues relating to damages and remedies [1991] HCA 54, 174 CLR 64

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4.4 The general presumption, however, is, reflecting the opening paragraph 4 above, that an

ETC does not exclude the parties’ common law right to accept a repudiatory breach of

contract unless there are clear words to that effect: Dalkia Utilities v Celtech supra at [21],

and compare e.g. South Oxon DC v SITA [2007] Env LR 13 at [174]-[178] per David Steel J

(insufficient indication that the ETCs in that case contained a complete code for termination

in the relevant area).

Consequences of ETCs (2) – Need the termination be immediate?

5 Hitherto,26 the conventional view of the position at common law has been that termination by

acceptance of a repudiation has to be with immediate effect upon communication of that

acceptance, even though in some circumstances this may seriously detract from the

commercial value of the right for the innocent party. In some contracts (e.g. for the long-

term provision of a service, which the promisee itself owes a legal obligation to others to

provide that same service) it is not practically possible to give notice of acceptance of a

repudiatory breach so that the contract terminates immediately. The taking of preparatory

steps for the service to be provided by another in advance of an acceptance (with immediate

effect) of the repudiatory breach would involve the innocent party itself running the risk of

being accused of repudiating the contract, and losing its potentially important right to loss of

bargain damages. In contrast, an ETC may well provide for the right to terminate being

exercisable or taking effect upon the expiration of a specified period of notice or at a

specified future date: Anson op cit at 471-72; compare e.g. the ETC in Walkinshaw v Diniz

[2001] 1 Lloyd’s Rep 635, which the driver Mr Diniz sought to exercise.27

5.1 Unlike an ‘anticipatory breach’ (as to which see §1.2 above), an actual breach does have

immediate legal effects, if only to give rise to a cause of action for damages. If the breach is

serious enough, or of a Condition, it may also give rise to a right to terminate at common

law. In this situation, although it has been said that there is no ‘via media’ for the innocent

party, who must elect between affirmation and termination, the law does give the innocent

party a reasonable time before he has to make up his mind between these inconsistent

courses. As Rix LJ put it in Stocznia v Latco No 2) [2002] EWCA Civ 889, [2002] 2 Lloyds

Rep 436 at [87]:

26 But see now at §5.7 below 27 See headnote at 632 for clauses 7.1, 9.2(b) and 9.4, and the judgment of Tomlinson J at [46] for the exercise of the ETC, and at [106] for the judge’s conclusion (decision upheld on appeal (without these points being challenged) at [2002] EWCA Civ 180, [2002] 2 Lloyd's Rep 165). See further at §5.5 below.

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“… there is of course a middle ground between acceptance of repudiation and affirmation of the contract, and that is the period when the innocent party is making up his mind what to do. If he does nothing for too long, there may come a time when the law will treat him as having affirmed. If he maintains the contract in being for the moment, while reserving his right to treat it as repudiated if his contract partner persists in his repudiation he has not yet elected.” 28

5.2 In the case of an actual breach of contract, it is the proper construction of the

communication (here, an express written communication) that determines whether the

innocent party has clearly and unequivocally communicated its intention either to treat the

contract as at an end or, as the case may be, to affirm. In Yukong Line v Rendsburg

Investments [1996] 2 Lloyd’s Rep 604 at 608 Moore-Bick J took the view that

“the Court should not adopt an unduly technical approach to deciding whether the injured party has affirmed the contract and should not be willing to hold that the contract has been affirmed without very clear evidence that the injured party has chosen to go on with the contract notwithstanding the other party’s breach.”

5.3 In order to amount to an affirmation, the communication in question must have been an

unequivocal representation to the effect that the innocent party was unreservedly electing to

continue with the contract, made either expressly or by implication from actions, or

statements of an intention to act in a manner, inconsistent with accepting the breach as

discharging it from further performance – see Yukong Line v Rendsburg Investments

supra at 608 and Cobec Brazilian Trading & Warehousing Corpn v Alfred C Toepfer

[1983] 2 Lloyd’s Rep 386, 393 (CA).

5.4 In Harrison v Norwest Holst Group Administration Ltd [1985] ICR 668 CA an employee

complained of unfair dismissal based upon an anticipatory repudiation in the form of a

demotion to take effect from a specified future date, communicated to him by his employer.

The Court of Appeal decided that although the employer had been in anticipatory

repudiatory breach, the employee had not (in the letter he relied on) unequivocally accepted

such repudiation before the breach had been remedied by the employer withdrawing the

demotion (which it did before the specified future date had arrived). The letter was regarded

as having been a step in negotiations between them, and the Court was heavily influenced

by the fact that it had been headed “without prejudice”. That was the basis of the decision of

all three members of the Court of Appeal. However Sir Denys Buckley added at 683, obiter:

28 Here again, the law’s flexibility produces uncertainty for the resolution of any given case (cp the citation from Treitel at §1.1.3 above). As the Law Commission has recently put it in the context of Sale of Goods, “The flexibility of the factual approach to a ‘reasonable period’ allows a great number of factors to influence the court, helping it to achieve a fair result in the individual case. However, this flexibility means that it is often not possible to predict whether the reasonable period has expired in a given case” (Consultation Paper No 188 (October 2008), Consumer Remedies for Faulty Goods, Part 3, The Right to ‘Reject’ in UK Law, at §3.2)

12

“The effect of an acceptance of an anticipatory repudiation must, in my view, be the immediate termination of the contract. By accepting a repudiation, the innocent party elects to treat the contract as abrogated at the moment when he exercises his election. He cannot, in my judgment, affirm the contract for a limited time down to some future date and treat it as abrogated only from that future date.”.

5.5 This dictum was applied by Tomlinson J in Walkinshaw v Diniz supra at [51]. This was

another case concerning an employment contract, this time between a Formula 1 racing

driver, Mr Diniz, and (in effect) the Arrows team. The employer unsuccessfully argued that

the driver’s (allegedly ineffective) notice to terminate under an ETC at the end of the

calendar year was itself a repudiatory breach, which the employer had accepted as

terminating the contract not immediately but after the last race of the F1 season. One of the

grounds on which this argument was rejected was that, in accordance with the above dictum

of Sir Denys Buckley, an acceptance postponed so as to take effect on a future date was

not possible in law.

5.6 An argument that the law’s requirement that an acceptance must be with immediate effect is

limited to cases of anticipatory breach has been rejected in South Oxon DC v SITA supra

at [168], David Steel J holding that there was no relevant distinction in this regard between

actual breaches and anticipatory breach.

5.7 ETCs therefore have a distinct advantage over the common law right for the injured party in

such cases. However there are early signs that there may be a judicial willingness to

develop the common law in this regard. In Shell Egypt v Dana Gas supra Tomlinson J

(now LJ), having acknowledged that he himself had applied the principle formulated by Sir

Deny Buckley in Harrison v Norwest Holst (set out in §5.4 above) in Walkinshaw v Diniz

supra, intriguingly continued (at [27]):

“There must I think be limits to that principle, which did not need to be explored in either of those two cases. It would perhaps be surprising if there were an inflexible rule that an acceptance of a repudiation can only be effective if it purports to bring about immediate termination in circumstances where the contract calls for no performance from either party in the interval before termination is expressed to take effect. In such circumstances there would surely be no affirmation.”

Consequences of ETCs (3): Can the right to terminate be exercised in advance of the time

when the relevant performance becomes due?

6 By contrast, in this respect the common law affords greater flexibility to the innocent party.

13

6.1 In the case of an ‘anticipatory breach’ (of either type mentioned at §1.2 above), there is a

common law right to terminate with immediate effect, and without waiting for the time when

actual performance is due to arrive;

6.2 By contrast, the wording of most ETCs links the right to terminate to actual breaches, and,

as explained at §2.4.2 above, the right to give notice of termination under an ETC must not

be anticipated, and such a notice given even slightly prematurely is of no effect.

Consequences of ETCs (4) – Measure of damages

7 By ‘loss of bargain damages’, I mean compensation for the loss of the benefit of the other

party’s future performance.

7.1 Are loss of bargain damages only recoverable on a termination at common law?

7.1.1 Where a contract is terminated by acceptance of a repudiation of the contract, the innocent

party can ordinarily recover loss of bargain damages. That may well apply even where

other remedies are also available to, and claimed by, the innocent party (for example, an

express right to recover an instalment already paid, as in Stocznia v Gearbulk, supra),

provided its recovery is not inherently inconsistent with a claim for loss of bargain damages

(for example, a claim for the recovery of wasted expenditure)

7.1.2 As to the position where the termination takes place pursuant to an ETC on grounds which

do not also amount to a common law repudiation, Chitty puts it thus: “[W]here a contracting

party terminates further performance of the contract pursuant to a term of the contract, and

the breach which it has caused it to exercise that power is not a repudiatory breach, the

party exercising the right to terminate may only be entitled to recover damages in respect of

the loss which it has suffered at the date of termination and not for loss of bargain

damages”29 (emphasis added). I would suggest (in agreement with the Australian case of

Shevill v Builders Licensing Board infra30) that the position is more clear cut, and that in

the absence of an express contractual provision for the recovery of loss of bargain damages

accompanying the ETC, there is no principled basis for an award of the same

7.1.3 As Chitty notes,31 the highest appellate courts in Commonwealth jurisdictions have taken

different views on the point

29 Op cit, at §22-049 30 Which appears entirely consistent with Financings v Baldock [1963] QB 104 (CA) (see per Lord Denning MR at 111-13, Upjohn LJ at 114-15 and Diplock LJ at 120-21 in this respect) 31 Op cit, at §22-049, esp fn 215

14

In giving the judgment of the Supreme Court of Canada in Keneric Tractor Sales v

Langille (1987) 43 DLR (4th) 171, Wilson J opined (at paragraph [25]):

“damages should be assessed in the same way in both cases. Repudiation may be triggered by either the inability or the unwillingness of a party to perform his contractual obligations. The same is true of a breach of contract that gives rise to a right to terminate; it may be the result of inability or unwillingness to perform. The breach and the repudiation are merely subdivisions within a general category of conduct, i.e., conduct which gives the innocent party the right to treat the contract as terminated. Thus, there is no conceptual difference between a breach of contract that gives the innocent party the right to terminate and the repudiation of a contract so as to justify a different assessment of damages when termination flows from the former rather than the latter. General contract principles should be applied in both instances.”

By contrast, in Shevill v Builders Licensing Board [1992] HCA 47, 149 CLR 620 the

High Court of Australia held that where a contract is terminated pursuant to an ETC on

grounds which do not also amount to a common law repudiation, prima facie loss of

bargain damages are not recoverable. As Gibbs CJ observed at [8], “it does not follow

from the fact that the contract gave the [innocent party] the right to terminate the

contract that it conferred on it the further right to recover damages as compensation for

the loss it will sustain as a result of the failure of the [other party’s performance] for the

rest of the [contractual] term”

7.1.4 Of course, the contract may include alongside an ETC an express provision entitling the

party terminating under the ETC also to recover damages for loss of the other party’s future

performance. In principle such a clause is effective, unless it is invalid under the common

law rule against penalties. Provided the recovery expressly provided for is not extravagant,

and follows the sort of recovery which the common law would allow, it is unlikely to be

caught by that rule: see e.g. Esanda Finance v Plessnig [1989] HCA 7, 166 CLR 131, and

Dalkia Utilities v Celtech supra at [122] (clauses not penal); contrast Financings v

Baldock [1963] 2 QB 104 (CA), AMEV-UDC Finance v Austin [1986] HCA 63, 162 CLR

170, and Dalkia Utilities v Celtech supra at [123] (clauses penal)

7.1.5 It should be remembered that, consistently with the rule that the terminating party may rely

on any available ground for termination which was in fact available at the time of

termination, whether or not known, and whether or not previously relied upon by him (see §3

& 3.1 above), if a party who served a notice of termination relying (only) on an ETC was in

fact also entitled to terminate at common law for a repudiation, then:

he may subsequently rely on the latter right, and accordingly recover loss of bargain

damages in the usual way: see Progressive Mailing House v Tabali [1985] HCA 14,

15

at least where the grounds for termination under the ETC and the common law were

the same, any argument that the effective cause of his loss was not the other party’s

breach, but his own decision to exercise his rights under the ETC will be rejected, on

the grounds that such a contract proceeds on the footing that if the innocent party

chooses to exercise his rights under the ETC, the other party’s breach is to be viewed

as the effective cause of the contract’s termination (Stocznia v Gearbulk supra at

[36]; quaere the legitimate scope of the contrary views expressed by Opeskin in his

(earlier) article ‘Damages for breach of contract terminated under express terms’

(1990) 106 LQR 293 at 315 (text to fn 97, and accompanying citations).

7.1.6 A related issue may arise with regard to the terminating party’s so-called ‘duty to mitigate his

loss’. A breach of this duty (by failing to take reasonable action to avoid the loss) will be

taken to break the chain of causation between the breach and the loss.

In the case of The Solholt [1983] 1 Lloyd’s Rep 605 (CA) a buyer exercised a right

under an ETC to terminate its contract to purchase the eponymous vessel (or US$5M)

for (very slightly) late delivery, despite (i) the sellers having repeatedly sought a short

extension of time to enable the sale to go through (at the contract price), (ii) the buyers

still needing such a vessel, (iii) nothing being shown to be wrong with The Solholt, and

(iv) its market value having risen since the contract by 10%, to $5.5M. The buyer’s

actions were described by Sir John Donaldson MR as “something of a mystery”,

adding that it was “this combination of a rise in market value and cancellation which

has created an unusual situation and may have created unusual consequences in law”

(at 607)

The experienced trial judge (Staughton J) held that on the facts the buyers ought

reasonably to have negotiated a new contract of purchase with the sellers, and that if

they had done so they would have secured a new contract to buy at the original

contract price, and the Court of Appeal declined to interfere with this finding (at 609-

10). Accordingly, the buyers were not entitled to recover their $½M loss.

The Court’s judgment (at 608) emphasises the importance of not confusing the

unfettered right to terminate a contract under an ETC with a right necessarily to

recover all losses suffered in consequence of so acting (the latter right is not absolute,

and depends on proof of causation, which is negated by a failure to take reasonable

action to mitigate those losses).

16

Although the same result could follow a termination at common law, given that such a

termination would generally arise in the context of the other party having committed a

repudiatory breach, it is less likely that a court would nevertheless hold, as a matter of

fact, that the innocent party ought reasonably to have negotiated and entered into a

new contract with him.

7.2 Contract draftsman attempt to circumvent the rule mentioned at §7.1.2 above in a number of

ways:

7.2.1 By expressly providing for loss of bargain damages (or an equivalent sum) to be payable on

a termination under the ETC. As mentioned at §7.1.4 above, such a clause will be effective

provided it is not penal in nature or effect

7.2.2 By expressly providing that an (otherwise) minor breach shall be a breach of Condition in

the strict sense (see at §§1.1.1 and 1.3.1 above)

7.2.3 By expressly providing that the time for performance of the relevant obligation (late

performance of which would not otherwise be of sufficient seriousness to amount to a

repudiation) shall be ‘of the essence’: see Lombard North Central v Butterworth supra at

535-36 per Mustill LJ (as to which see at §1.1.1 above).

Consequences of ETCs (5): Relief from forfeiture of a proprietary or possessory interest?

8 Although parties may be deprived of benefits expected from future performance upon any

termination of a contract (whether at common law or pursuant to an ETC), in English law the

term ‘forfeiture’ is only applicable where the deprivation in question occurs by reason of the

operation of an express or implied term of the contract: Furmston op cit §7.35. Such

provisions, where included, are frequently attached to ETCs.

8.1 It is well established that equity will not grant relief from forfeiture in respect of mere

contractual rights: The Scraptrade [1983] 2 AC 694 (concerning a time charter, which

confers on the charterer only a contractual right to services from the owner32), and Sport

International v Inter-Footwear [1984] 1 WLR 776 (HL) (concerning a trade-mark licence).

8.2 Leaving aside statutory provisions,33 and the particular rules established in respect of sales

of land,34 relief from forfeiture under an express contractual provision may be granted where

the party seeking relief stands to lose either

32 Contrast a demise charter: see The Jotunheim [2004] EWHC 671 (Comm), [2005] 1 Lloyd’s Rep 181 (jurisdiction to grant relief in such a case found, though not exercised as a matter of discretion on the facts 33 e.g. s.146 Law of Property Act 1925, and ss.88, 89 Consumer Credit Act 1974

17

8.2.1 a proprietary interest (e.g. BICC v Bundy [1985] Ch 232 (CA), concerning a patent –

contrast Sport International v Inter-Footwear supra), or

8.2.2 in some cases, a possessory interest: contrast

On Demand Information v Michael Gerson (Finance) [2001] 1 WLR 155 (CA)35,

concerning a finance lease of video-making equipment, where at the end of the

primary term the lessee could retain the equipment for a nominal rent, or sell it and

retain 95% of the proceeds of sale (hence there was no expectation that the lessor

would get the equipment back, the consideration payable reflected that, and but for a

forfeiture the lessor was not intended to have a valuable reversionary interest), with

Celestial Aviation v Paramount Airways [2010] EWHC 185 (Comm), [2011] 1

Lloyd's Rep 9, concerning 8 year leases of 3 aircraft for only part of their economic life

(at least 20 years), with no right to purchase the same or otherwise retain them at the

end of the lease (hence the lessor was intended to have a valuable reversionary

interest)

8.3 Accordingly:

8.3.1 A forfeiture provision is most likely to be encountered alongside and operable in conjunction

with an ETC.

8.3.2 Where the other (i.e. non-terminating) party stands to lose either a proprietary interest or a

possessory interest where the terminating party was not (absent a termination and

forfeiture) intended to have a valuable reversionary interest, there is jurisdiction in equity to

grant relief from forfeiture

8.3.3 In practice, in commercial cases the courts will be sparing in the exercise of their discretion

to grant such relief, and only do so in strong cases.

Consequences of ETCs (6) – Reliance on exclusion clauses

9 As is now well established, whether a clause apparently exempting a contract breaker from

liability to pay damages (or limiting that liability) is effective to do so in the particular factual

circumstances which have arisen depends on the true construction of the contract, and is

not determined by reference to any rule of law of general applicability: Photo Production v

Securicor [1980] 1 AC 827. Such clauses, though they ordinarily operate for the benefit of

only one party, will generally be taken as intended to survive a termination: ibid; Furmston,

op cit at §7-40.

34 As to which see Union Eagle v Golden Achievement [1997] AC 514 (PC), and compare Tanwar Enterprises v Cauchi [2003] HCA 57, 217 CLR 315 35 This aspect of the decision was not challenged on the subsequent appeal to the House of Lords ([2002] UKHL 13, [2003] 1 AC 368)

18

9.1 That said, one of the circumstances in which the courts are still very reluctant to construe an

exemption clause as applicable is where the defendant has committed a deliberate

repudiatory breach. In Internet Broadcasting v MAR LLC [2009] EWHC 844 (Ch), [2009]

2 Lloyds Rep 295, which was such a case, the deputy judge summarized the applicable

principles thus:

“(1) There is no rule of law applicable and the question is one of construction.

(2) There is a presumption, which appears to be a strong presumption, against the exemption clause being construed so as to cover deliberate, repudiatory breach.

(3) The words needed to cover a deliberate, repudiatory breach need to be very “clear” in the sense of using “strong” language such as “under no circumstances…”.

(4) There is a particular need to use “clear”, in the sense of “strong”, language where the exemption clause is intended to cover deliberate wrongdoing by a party in respect of a breach which cannot, or is unlikely to be, covered by insurance. Language such as “including deliberate repudiatory acts by [the parties to the contract] themselves…” would need to be used in such a case.

(5) Words which, in a literal sense, cover a deliberate repudiatory breach will not be construed so as to do so if that would defeat the “main object” of the contract.

(6) The proper function between commercial parties at arm's length and with equal bargaining power of an exemption clause is to allocate insurable risk, so that an exemption clause should not normally be construed in such cases so as to cover an uninsurable risk or one very unlikely to be capable of being insured, in particular deliberate wrongdoing by a party to the contract itself (as opposed to vicarious liability for others).

(7) Words which in a literal sense cover a deliberate repudiatory breach cannot be relied upon if they are “repugnant” - I have not dealt with this in detail because it is not relevant to this case.”

9.2 Accordingly, where a party is minded to terminate a contract in such cases, it would seem

desirable that it do so by way of a common law termination rather than by invoking an ETC.

The ‘changing horses’ principle mentioned at §3 above may still be available after an initial

termination under an ETC, but Treitel op cit36 suggests that it may then be too late to accept

any repudiatory breach in support of a claim for common law (loss of bargain) damages.

9.3 Conversely, a party seeking to rely on an exemption clause may find it easier to persuade a

court to construe the clause as applicable to circumstances giving rise to an express right to

terminate, than to do so as applicable to circumstances constituting a repudiatory breach,

and in particular a deliberate one (see §9.1 above).

36 Albeit in text pre-dating the decision in Stocznia v Gearbulk supra. The next (13th) edition is due out in late 2011

19

9.4 A contract breaker who seeks to hold the other party to a termination under an ETC, and

resists a subsequent attempt by the other to rely on an alleged concurrent right to terminate

at common law, will generally be doing so in order to avoid liability for loss of bargain

damages, and/or to retain the advantage of an exclusion (or limitation) of liability clause.

See e.g. Dalkia Utilities v Celtech supra and Stocznia v Gearbulk supra.

Consequences of ETCs (7): Reducing the risk of an ‘own goal’ by attempted termination

10 A further consequence of Treitel’s question of very great difficulty is that an ‘innocent’ party,

faced with a breach of contract by the other party, may conclude that the breach was

sufficiently substantial to entitle him to terminate at common law37 and serve a notice

‘accepting’ the breach as terminating the contract, only to find out some time later that a

judge (or even an appeal court) takes a different view. In the meantime, an astutely advised

contract breaker may have leaped at the opportunity itself to terminate the contract, by

treating the ‘innocent’ party’s termination notice as itself a repudiation of the contract, and

‘accepting’ that repudiation as terminating the contract (if only thereby to avoid potential

liability for loss of bargain damages). The presence of an ETC may assist in saving the

‘innocent party’ from his actions backfiring.

10.1 Under ordinary contract principles a party may assert a genuinely held view of the effect of,

or position under, a contract (e.g. that it has been validly terminated under an ETC),

because he is mistaken in good faith as to the true contractual position, and in those

circumstances he will not, without more, be taken to have repudiated the contract, at least

where (a) he makes it clear by his words and actions that he is ready and willing to abide by

his true contractual obligations as determined by the court, and (b) his actions do not have

the immediate effect of depriving the other party of a substantial part of what he is entitled

under the contract:

Woodar v Wimpey [1980] 1 WLR 277 (HL), in particular at 283A-B per Lord

Wilberforce38 and 295A-H per Lord Keith of Kinkel,39, as reconciled with The Nanfri

[1979] AC 75740 in Dalkia Utilities v Celtech supra per Christopher Clarke J at [148]

37 Or that the term breached constitutes a strict Condition of the contract 38 Citing James Shaffer Ltd v Findley Durham & Brodie [1953] 1 WLR 106 (CA) and Sweet & Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699 (CA) 39 Also citing Ross T Smyth and Co Ltd v T D Bailey and Son & Co (1940) 164 LT 102 at 107 per Lord Wright 40 A case of “cynical and manipulative conduct [on the part] of the ship owners” per Etherton LJ in Eminence Property Developments v Heaney infra at [62].

20

41; Vaswani v Italian Motors [1996] 1 WLR 270 (PC); Eminence Property

Developments v Heaney [2010] EWCA Civ 1168, [2010] 3 EGLR 165, in particular

at [61]-[64] per Etherton LJ for an elegant summary of the courts’ approach to such

cases.

10.2 It is in practice a good deal easier to deploy such an argument where the basis for

termination relied on, albeit ultimately unsuccessfully, was an ETC present in the contract.

Lord Wilberforce drew attention to that aspect of the facts in Woodar v Wimpey supra:

“… it would be a regrettable development of the law of contract to hold that a party who bona fide relies upon an express stipulation in a contract in order to rescind or terminate a contract should, by that fact alone, be treated as having repudiated his contractual obligations if he turns out to be mistaken as to his rights.”42

As Carter has put it, it was the presence of an ETC in the contract underlying “which saved

Wimpey”.43

10.3 However, it should be emphasised that it is by no means always the position that an

attempted but ineffective termination in reliance on an ETC will not be held itself to have

constituted a repudiation provided that it was attempted in good faith. In Dalkia Utilities v

Celtech supra, the time for Dalkia’s performance of its primary obligations (which it

refused on the basis that its termination had been effective) had arrived, and there had

been no discussions between the parties about leaving the true position to be resolved by

the court, with Dalkia then to perform if it turned out to be wrong. Had the judge held

Dalkia’s termination to be ineffective (which in the event he did not), he would have held

the same to have amounted to a repudiation by Dalkia, which Celtech had validly accepted

as terminating their contract (at [149]-[151]). Legal advisers beware!

Some conclusions

11.1 The advantages of effecting a termination at common law include the following:

• Preserves a claim to loss of bargain damages

• Greater flexibility as to facts justifying termination (provided overall they are sufficient to

constitute a repudiation)

• If the entitlement to terminate has arisen, there is no obligation to offer the other party the

opportunity to remedy its breaches first

41 See also DTR Nominees v Mona Homes [1978] HCA 12, 138 CLR 423. The Court of Appeal has approved the application of this principle in the context of denial of title in Eastaugh v Crisp [2007] EWCA Civ 638 at [32]-[39] per Arden LJ. 42 [1980] 1 WLR 277 at 283D-E, emphasis added 43 Op cit at 93-94.

21

22

• Anticipatory termination may be possible, without first waiting for the due date for

performance to arrive

• Relief from forfeiture (if otherwise potentially available) is less likely to be granted to the

contract breaker

• It may be less easy for the other party successfully to rely on any exclusion clause, in

particular if its repudiatory breach was deliberate

• Any efficacious means of communication will be effective in law.

11.2 The advantages of effecting a termination under an ETC include the following:

• Greater certainty as to whether the right to terminate has arisen

(though the grounds for doing so are limited by the exact wording of the ETC)

• In principle, there is no need to establish a repudiatory breach as such

(though if the specified grounds under the ETC are minor/trivial, the ETC may be

construed so as to require a more serious breach)

• Termination taking effect on the expiry of a period of notice and/or at a specified future

date may well be possible

• It may be easier to run a Woodar v Wimpey defence, should you need to do so

• If there is no necessary inconsistency in the consequences, you may be able to rely on

common law repudiation later, should it become necessary or desirable.

© JOHN RANDALL QC

NOVEMBER 2011

ST PHILIPS CHAMBERS

55 TEMPLE ROW

BIRMINGHAM B2 5LS

jrandall@st-philips.com

CONTRACTUAL OBLIGATIONS

THE USE OF BEST AND REASONABLE ENDEAVOURS &

AGREEING TO NEGOTIATE IN GOOD FAITH

_____________________________________

Lance Ashworth QC

St Philips Chambers

SCOPE OF THIS PAPER

1. Parties are free to negotiate whatever contractual terms they like and it is not for the Courts to re-

write their bargains. Although to many cynics it might appear, following cases such as

Chartbrook Ltd. v. Persimmon Homes Ltd. [2009] 1 AC 1101, that the Courts are prepared to

re-write bargains which on their face are particularly bad for one of the parties to the contract,

even when there is no question of re-writing the bargain, the Courts have to interpret the

obligations which commercial contracts contain.

2. In this paper, I intend to look at 2 areas which are frequently included in commercial contracts,

namely:

(a) provisions that one or both parties shall use “reasonable endeavours” or “all reasonable

endeavours” or “best endeavours” to achieve a particular outcome;

(b) agreements to negotiate in good faith;

and to attempt to distil the Courts’ current thinking of what such clauses mean.

Endeavours Clauses

3. Despite a lack of clarity as to what such clauses mean, they have been used for many years.

Frequently, they appear to be used where an issue as to what might happen in a particular set of

circumstances is too difficult for the parties to work out at the time of drafting. They also tend to

appear in contracts where there is an obligation to achieve something which is dependent on the

actions of a third party, for example the obtaining of an unconditional planning permission.

 23

4. The reason why they are capable of creating such uncertainty is evident from the judgment of

HHJ Mackie QC in Jet2.Com Ltd v. Blackpool Airport Limited [2011] EWHC 1529 in which he

said that “The meaning of the expression remains a question of construction not of extrapolation

form other cases ... the expression will not always mean the same thing”.

Best Endeavours

5. In Sheffield District Railway Coy v. Great Central Railway Coy (1911) 27 TLR 451 the Court

had to consider the case of an agreement which required the Great Central Railway Coy to use

their best endeavours to develop the through and local traffic of the Sheffield Railway, which it

was alleged they had failed to do. A. T. Lawrence J, sitting in the Railway and Canal

Commission, said:

"We think 'best endeavours' means what the words say; they do not mean second-best

endeavours. We quite agree with the argument of Mr. Balfour Browne that they cannot be

construed to mean that the Great Central must give half or any specific proportion of its trade

to the Sheffield District. They do not mean that the Great Central must so conduct its

business as to offend its traders and drive them to competing routes. They do not mean that

the limits of reason must be overstepped with regard to the cost of the service: but short of

these qualifications the words mean that the Great Central Company must, broadly speaking,

leave no stone unturned to develop traffic on the Sheffield District line”.

6. In Terrell v. Mabie Todd & Coy Ltd. [1952] 69 RPC 234, the Court had to consider an obligation

entered into 2 contracts in 1948 by the defendant to use their “best endeavours” to promote the

sales of fountain pens and ink bottles invented and designed by the plaintiff. The defendants had

their own fountain pens, under the name of “Swan” and “Blackbird” which together with their own

inks had apparently been widely known over many years and were at the forefront of this trade.

In January, 1952, a controlling interest in the defendant was obtained by Biro Pens Ltd. One of its

employees took command of the defendant and announced it would no longer fall within the

commercial policy of the defendant to include the plaintiff’s fountain pen as one of the defendant’s

future models and that the defendant was unwilling to market either of the plaintiff’s inventions.

Not surprisingly, the trial judge, Sellers J, had little difficulty in finding that the defendant had

repudiated both contracts. However, in order to assess the damages, he had to determine the

extent of the obligations on the defendant and what was meant by “best endeavours”. He said

that:

“contractual obligations to use ... best endeavours to promote sales under such contracts as

these would not require the directors to carry on the manufacture and attempted sale to the

certain ruin of the Company or to the utter disregard of the interests of the shareholders; but

before that extreme position could be reached ... there would arise questions, some of which

have arisen here, as to the amount of money to be expended on the production and on

 24

advertisement and vending of the goods and how far money was to be borrowed for the

purpose, if it could be and was not already available.

“... [the defendant’s] obligation was to do what they reasonably could do in the circumstances.

The standard of reasonableness is that of a reasonable and prudent Board of Directors acting

properly in the interests of the company and applying their minds to their contractual

obligations to exploit the inventions”

7. This latter quote might appear to impose a relatively low obligation. However, it must be read in

the light of the first quote which makes it clear that although the person obliged to use “best

endeavours” is not obliged to disregard utterly his own interests, he cannot disregard the interests

of the other party.

8. In IBM United Kingdom Ltd. v. Rockware Glass Ltd. [1980] FSR 335, there was a contract

under which Rockware agreed to sell a piece of land to IBM. However, the contract was

conditional on the obtaining of planning permission. The contract provided for the purchaser,

IBM, to “make an application for planning permission and use its best endeavours to obtain the

same ... and not withdraw the said application without [Rockware’s] written consent.” There was

the usual longstop date by which, if the planning permission had not been obtained, the vendor,

Rockware, was entitled to serve notice to rescind the contract. Planning permission was sought

and refused. No appeal was made by IBM to the Secretary of State. 2 questions arose, namely

(1) what was it that the purchaser was obliged to use its best endeavours to do? and (2) what was

the extent of the purchaser's undertaking to use its best endeavours? IBM contended that it only

had to use its best endeavours to obtain planning permission from the local authority and no

more. Rockware contended that best endeavours included an obligation to appeal to the

Secretary of State in the event of the application to the local authority being unsuccessful, such

appeal having some prospects of success. The Court of Appeal accepted Rockware’s contention,

concluding that the test for “best endeavours” is answered by asking the question “what would an

owner of the property with which we are concerned in this case, who was anxious to obtain

planning permission, do to achieve that end?” That would oblige the purchaser to take all those

reasonable steps which a prudent and determined man, acting in his own interests and anxious to

obtain planning permission, would have taken.

9. The use of the words “reasonable steps” must, it is suggested, import a limit of the sort envisaged

by Sellers J in the Terrell v. Mabie Todd case (supra) that such a prudent and determined man

would not be taking reasonable steps if he were to act to his own certain ruin or show utter

disregard for his own interests.

 25

10. However, even the obligation to use “best endeavours” cannot override an obligation owed by a

director to give good advice to the company shareholders, or by a financial adviser to give good

advice to its clients. In Rackham v. Peek Food [1990] BCLC 895, a decision of Templeman J

(which was given in 1977 but not reported until 13 years later), there was an agreement by the

plaintiff vendors to sell the issued share capital in Roeday Ltd. to the defendant purchasers,

Consolidated Commercial Co Ltd (“Consolidated”) and Edward Bates & Sons Ltd (“Bates”), their

financial advisers. The sale was conditional on the approval of the shareholders of Consolidated

to the transaction. Consolidated and Bates were to “use their best endeavours to procure the

fulfilment” of this condition. In fact Bates and the directors of Consolidated advised the

shareholders of Consolidated against the acquisition of Roeday. In the 7 weeks between the date

of the contract and date of the meeting of the Consolidated shareholders to consider giving their

approval, the government announced measures which were designed to restrain lending to

property companies and to increase the tax burden on property transactions. Both Consolidated

and Bates argued that following the government announcement, the transaction ceased to be in

the interests of Consolidated and therefore they were each under a duty to advise and procure the

shareholders of Consolidated not to vote in favour of the acquisition of Roeday. The plaintiff

argued that by so advising and procuring, Consolidated and Bates breached the best endeavours

obligation, even if the transaction was no longer in the interests of the shareholders. Templeman

J held that there was no breach of the “best endeavours” clause where Bates and the directors of

Consolidated both genuinely and reasonably believed that the purchase was not in the interests of

the shareholders of Consolidated. The “best endeavours” clause did not oblige the advisers or

the directors to give advice which they genuinely believed to be bad advice.

Reasonable Endeavours

11. This imposes the lowest of the 3 obligations. In UBH (Mechanical Services) Ltd v Standard

Life Assurance Co (The Times 13th November, 1986), landlords had entered into a contract with

the heating suppliers to use “reasonable endeavours” to ensure that all tenants utilised the

heating system installed. Disputes by a series of tenants over the service charges and refusals of

payment led to major disputes, and when certain units became vacant, ingoing tenants refused to

adopt the system. Rougier J held that the landlords were not in breach of their obligation to use

reasonable endeavours in the circumstances. He said that “reasonable endeavours” has a lesser

meaning than “best endeavours” and entitles the relevant person to weigh on the one side the

duty and on the other side all relevant commercial considerations such as relationships with

tenants, local reputation, ability to re-let premises, cost and uncertainties of litigation, and expense

and practicability of compliance with the covenant. The likelihood of success of the reasonable

endeavours in bringing about the desired objective is of prime importance.

 26

12. In P&O Property Holdings Ltd v. Norwich Union Life Assurance (1994) 68 P&CR 261 the

House of Lords had to consider some highly complicated contractual arrangements between a

developer, a local authority and an insurance company which had funded the development of a

shopping centre, the “St Nicholas Centre”. Under clause 9(i) of a development agreement, the

developers and the insurance company were to use their reasonable endeavours to obtain a

letting of each lettable part of the development. Also, an agreement to grant an underlease was

to be made as soon as reasonably possible after the terms of the said letting had been agreed

between the insurance company, the developers, the tenant and the council. The shopping centre

was completed but many units remained unlet. The insurance company, which had met the

development costs up to the stated figure, argued that the developers, in using their “reasonable

endeavours to obtain” lettings under clause 9 were bound to agree to the payment of a reverse

premium to a tenant if a hypothetical reasonable landlord would regard such premiums as good

estate management in current conditions. The House of Lords disagreed, holding that the

developer was not obliged to ignore who was to bear the cost of such premium, namely the

developer. Accordingly, a “reasonable endeavours” clause does not require the party bound to

use reasonable endeavours to sacrifice its commercial interests.

13. In Philips Petroleum Co UK Ltd v. Enron Europe Ltd. [1997] CLC 329 the Court of Appeal had

to determine the meaning of a “reasonable endeavours” clause in a gas sales agreement under

which the seller sold and the buyer purchased the entire entitlement of each respondent to natural

gas extracted from certain continental shelf blocks in the UK sector of the North Sea during a

period expiring in 2011. The relevant clause provided that the parties were to “use reasonable

endeavours to agree, as much in advance as possible but in any case not less than thirty (30)

days in advance, the date on which the Seller (and the other Sellers) will commence deliveries of

Natural Gas to the Buyer” among other things. A majority of the Court of Appeal held that it was

impossible to say that the requirement to use reasonable endeavours imposed on the buyer a

contractual obligation to disregard the financial effect on him, and indeed everything else other

than technical or operational practicality, when deciding how to discharge his obligation to use

reasonable endeavours to agree to a commissioning date prior to a specific date. If the obligation

were to be strait-jacketed in that way, that is something which would have been expressly stated.

14. In Rhodia International Holdings Ltd v. Huntsman International LLC [2007] 2 Lloyd’s Rep

325, Julian Flaux QC (as he then was) considered a clause in a sale and purchase agreement of

a European chemical surfactants business. These are compounds that lower the surface tension

of a liquid, the interfacial tension between two liquids, or that between a liquid and a solid.

Surfactants may act as detergents, wetting agents, emulsifiers, foaming agents, and dispersants.

The SPA contained in clause 15 detailed provisions relating to the obtaining of consent to

 27

All Reasonable Endeavours

15. As a matter of logic, it might be thought that “all reasonable endeavours” fell somewhere between

“reasonable endeavours” and “best endeavours”. That appeared to be the traditional view as

stated in the UBH (Mechanical Services) case (supra), but was not the view taken in the Rhodia

International case.

16. Yewbelle Ltd. v. London Green Developments Ltd. [2008] 1 P&CR 17 was another property

case, this time in relation to a tower block standing on a piece of land in South London, said to be

one of the ugliest buildings in London. The purchase contract was subject to a suitable

agreement under section 106 of the Town and Country Planning Act 1990 being entered into.

The vendor was under an obligation to use all reasonable endeavours to secure a completed s

106 agreement, substantially in the form of the draft then in existence. The s 106 was not entered

into and the question for the court was whether the vendor remained bound by the contract. At

first instance, Lewison J had held that it did remain bound, because it has not used all reasonable

endeavours to secure the completed s 106 agreement. The Court of Appeal accepted Lewison

J’s analysis of what was involved in “all reasonable endeavours”, namely that in using its

reasonable endeavours, the vendor was not required to sacrifice its own commercial interests, but

that the obligation required the party to go on using reasonable endeavours until the point had

been reached when all reasonable endeavours have been exhausted, and to go on would be

mere repetition, though account had to be taken of events as they occurred, including

extraordinary events.

17. Lewison J’s decision in Yewbelle had been expressly referred to and agreed with by the judge in

Rhodia. The Court of Appeal’s decision in Yewbelle post-dated Rhodia. Although the Court of

Appeal in Yewbelle did not refer to Rhodia it seems to have reached the same position that “all

reasonable endeavours” is to be treated as synonymous with “best endeavours”.

 28

18. There was a variation on the theme in CPC Group Ltd v Qatari Diar Real Estate Investment

Company [2010] EWHC 1535 (Ch). CPC Group Ltd (“CPC”) sought a declaration that Qatari

Diar Real Estate Investment Company (“Qatari”) had acted in breach of a sale and purchase

agreement between the parties. CPC and Qatari had entered into a joint venture to acquire the

Chelsea Barracks in the City of Westminster with a view to its redevelopment. A planning

application was submitted which was supported by designs prepared by a well-known firm of

architects. By the sale and purchase agreement, CPC sold its interest in the joint venture

company to Qatari for an initial consideration of £37,917,806 and a deferred consideration

totalling a maximum of £81 million. Qatari owed CPC various obligations, including one to use "all

reasonable but commercially prudent endeavours" to enable the achievement of the thresholds

for the payment of the deferred consideration, and both parties owed each other an express duty

to act in utmost good faith. There was provision in the agreement that the planning application

could not be withdrawn unless, among other things, the Mayor of London had indicated that he

intended to exercise his power to direct the city council to refuse the planning application and the

relevant planning consultant recommended that a revised planning application stood a better

chance of delivering a planning permission than the pursuit of an appeal in respect of the previous

planning application. Strong opposition by the Prince of Wales and the Mayor to the designs for

the redevelopment prompted Qatari to promote a new outline proposal and later to withdraw the

planning application. Vos J considered the meaning of “all reasonable endeavours”. Following

Rhodia International Holdings Ltd v Huntsman International LLC [2007] 1 CLC 59 he

accepted that, prima facie, “reasonable endeavours” is a less onerous obligation than “best

endeavours” but that “all reasonable endeavours” can be equated with “best endeavours”. He

stated that an obligation to use “all reasonable endeavours” did not always require the obligor to

sacrifice his commercial interests. In any event, the wording of the obligation in this case (using

“all reasonable but commercially prudent endeavours”) meant that the requirement to sacrifice its

own financial interests could not be said to have applied to Qatari.

19. In the recent case of Jet2.Com Ltd. v. Blackpool Airport Ltd. [2011] EWHC 1529 (Comm) tried

by HHJ Mackie QC, it was common ground between the parties that all reasonable endeavours

means the same as best endeavours. The operative clause in that case was that “Jet2.com and

BAL will co-operate together and use their best endeavours to promote Jet2.com’s low cost

services from [Blackpool Airport] and BAL will use all reasonable endeavours to provide a cost

base that will facilitate Jet2.com’s low cost pricing.” For years Jet2, with the support of BAL,

operated some flights outside the airport’s normal operating hours, even though the cost of

opening the airport to service a single flight greatly exceeded the revenue from the operation.

Following a change of ownership, however, BAL advised Jet2 that it would no longer accept

flights outside its normal operating hours. The judge accepted that when applied, for example, to

 29

20. With respect to HHJ Mackie QC, it is difficult to see the rationale for this distinction. It could be

said that in almost every case the ability to fulfil a duty to use all reasonable endeavours or best

endeavours is within a party’s own control. Ultimately, money talks. A difficulty in obtaining a

local authority’s agreement to a section 106 agreement can often be overcome by throwing

money at the local authority. Why is that, which is clearly contrary to a party’s own commercial

interests, not required, but opening an airport outside of normal hours, which is also contrary to a

party’s own commercial interest, is required? He did not expressly consider to what extent a

party’s own commercial interests had to be sacrificed, in particular how close to the certain ruin of

one’s own company does one have to get. What has to be drawn from the Jet2.Com case is that

the answer will always depend on the particular facts of the case before the Court.

Conclusions on Endeavours Clauses

21. The following seems to flow from a review of the above cases:

(a) each case depends on its own facts, so the use of precedent is not helpful (although every

case in which this has been said has reviewed a substantial number of previous authorities);

(b) “reasonable endeavours” is less than “best endeavours”;

(c) “best endeavours” equates in almost all cases to “all reasonable endeavours”;

(d) “reasonable endeavours” entitles the relevant person to weigh on the one side the duty and on

the other side all relevant commercial considerations, the likelihood of success of the

reasonable endeavours in bringing about the desired objective being of prime importance. It

only requires a party to take one reasonable course;

(e) “best endeavours” requires a party to take all those reasonable steps which a prudent and

determined man, acting in his own interests and anxious to obtain the desired outcome, would

have taken. It probably requires a party to take all the reasonable courses he can to achieve

the aim. It does not require a party to commit himself to a course which will lead to his ruin or

to disregard utterly his own interests or sacrifice his own commercial interests where the

ability to achieve the outcome is not within its own control. It may require a party to sacrifice

its own commercial interests where the ability to achieve the outcome is within its own control.

 30

AGREEMENTS TO NEGOTIATE IN GOOD FAITH

22. Clauses which impose on parties to a commercial contract an obligation to “negotiate in good

faith” have become more common in recent years. An example of such a clause would be

something along the lines of “the parties shall negotiate in good faith in order to agree the terms of

a mutually satisfactory provision to be substituted for any provision found to be void or

unenforceable”. Obligations to negotiate documents in good faith are also common in financing

transactions, most notably in the context of signed commitment letters attaching agreed term

sheets. The term sheet then forms the basis of negotiations on the details of the finance

documents. The commitment letters often contain an obligation to negotiate the finance

documents in good faith.

23. Such clauses amount to an agreement to agree and therefore are, on the traditional view,

unenforceable. This is said to be for 2 main reasons. First, an obligation to negotiate in good

faith is fundamentally incompatible with the principle that each party must be free to advance its

own interests in negotiations and secondly, it would be too difficult to assess damage for a breach

of the obligation where the outcome of the negotiations cannot be foreseen – see the decision of

the House of Lords Walford v Miles [1992] 2 AC 128 approving the decision of Lord Denning MR

in Courtney & Fairbairn Ltd. v. Tolaini Brothers (Hotels) Ltd [1975] 1 W.L.R. 297. In Walford

the principal (sale) agreement was not enforceable having been made ‘subject to contract’. The

parties had agreed a collateral ‘lock-out’ agreement, but this lacked certainty as it did not specify

the time during which the vendors were not to negotiate with third parties and the House of Lords

rejected the argument that a term should be implied requiring the vendors to negotiate in good

faith. Lord Ackner expressed the opinion that while accepting that an agreement to agree is not

an enforceable contract, the Court of Appeal appeared to have proceeded on the basis that an

agreement to negotiate in good faith is synonymous with an agreement to use best endeavours

and as the latter is enforceable, so is the former. This, he said, was an unsustainable proposition.

“The reason why an agreement to negotiate, like an agreement to agree, is unenforceable, is

simply because it lacks the necessary certainty. The same does not apply to an agreement to use

best endeavours.”

24. Parties and their lawyers had had no difficulty understanding this as a matter of practice. If the

agreement was an agreement to negotiate in good faith, it was unenforceable. However, doubt

was thrown on this in Petromec Inc v. Petroleo Brasileiro SA Petrobras (No 3) [2005] EWCA

Civ 891. The relevant clause provided that “Brasoil agrees to negotiate in good faith with

Petromec the extra costs referred to in clause 12.1 and 12.2 above and the extra time referred to

in clause 12.2 above.” It is not necessary to set out those clauses, but suffice it to say that they

were detailed and complicated. Longmore LJ’s views were obiter. He identified the traditional

 31

25. Longmore LJ distinguished Walford v. Miles on the on the basis that it concerned a “bare

agreement to negotiate” and the case before him did not. He said (at para 121):

“It is not irrelevant that it is an express obligation which is part of a complex agreement drafted

by City of London solicitors and issued under the imprint of Linklater & Paines…It would be a

strong thing to declare unenforceable a clause into which the parties have deliberately and

expressly entered. I have already observed that it is of comparatively narrow scope. To decide

that it has “no legal content” to use Lord Ackner’s phrase would be for the law deliberately to

defeat the reasonable expectations of honest men, to adapt slightly the title of Lord Steyn’s

Sultan Azlan Shah lecture…At page 439 Lord Steyn hoped that the House of Lords might

reconsider Walford v Miles with the benefit of fuller argument. That is not an option open to

this court. I would only say that I do not consider that Walford v Miles binds us to hold that the

express obligation to negotiate in clause 12.4…is completely without legal substance.”

26. This has led some to take the view that an obligation to negotiate in good faith may be

enforceable where (1) the obligation is part of a contractually binding agreement; (2) the obligation

is express rather than implied and (3) the matter to be negotiated is capable of objective

assessment by a third party. It was this last quoted passage, in particular, which potentially

offered a stepping-stone for other judges to depart from the conventional wisdom. If the clause

had been part of a complex agreement drafted by solicitors of renown deliberately and expressly

entered into, to decide it was of no legal content may be seen to defeating the reasonable

expectations of honest men.

 32

27. In Dhanani v. Crasnianski [2011] EWHC 926, Teare J had to consider the enforceability of a

letter and term sheet pursuant to which it was envisaged that the defendant would provide the

claimant with €50m which he would invest in a private equity fund to be managed by the claimant.

The claimant said that the signed letter and term sheet evidenced a binding agreement on each

party to do its part to set up such a fund. The object to which both parties were obliged to work

was the setting up of a fund with defined characteristics (as to its scale, investment profile, fund

manager, and anchor investor, management fees and profit distribution). There were outstanding

matters of detail but that they could either be agreed, or failing agreement, resolved by the

claimant during the soft launch. It was accepted that the letter and term sheet did not themselves

set up or create a fund. The defendant’s position was that the letter and term sheet did not

evidence a binding agreement, save as to the repayment of advances. There was no intent to

create legal relations and the agreement was too vague to be enforceable. It was no more than an

agreement to agree. There was no express or implied term that failing agreement the claimant

could resolve matters of detail. There was no express agreement to negotiate in good faith. The

Judge held that there had been an intention to create legal relations, but that the letter and term

sheet was in essence an agreement to agree upon the exact structure of the fund and the form

and location of its various entities together with the other necessary agreements, notwithstanding

that much of the structure and form had already been agreed and that a timetable for agreeing the

exact structure, form and location had been agreed. Accordingly, this was unenforceable.

28. The High Court recently examined an express obligation to negotiate in good faith in Barbudev v

Eurocom Cable Management Bulgaria [2011] EWHC 1560 (Comm). The claim arose out of the

acquisition of a Bulgarian television and internet business. The claimant, Mr Georgi Barbudev,

who founded the business, claimed that the group failed to honour a side letter which he said

promised him a ten percent share in the combined business formed by the acquisition. The

central issue in the case was whether the side letter created a binding contract. He said it did. The

defendants said that it was a non-binding agreement to agree. The side letter is lengthy, but

included that the defendants would offer the claimant “the opportunity to invest in the Purchaser

on the terms to be agreed between us which shall be set out in the Investment Agreement and we

agree to negotiate the Investment Agreement in good faith with you” and then stipulated some

terms which had to be included. Blair J referred in passing to the Petromec case, but held that

the side letter was an agreement to negotiate in good faith and therefore was unenforceable. He

relied in particular on a passage from Edwin Peel in Contract Formation and Parties (ed Burrows

and Peel, OUP 2010) at p.50:

“an agreement to negotiate in good faith is unenforceable and is no more enforceable when it

is couched in terms of an agreement to use best or reasonable endeavours to agree. When

the parties have entered into an agreement which is otherwise enforceable, it will not become

 33

 34

unenforceable simply because the parties have agreed to negotiate any outstanding terms, but

the agreement to negotiate is not itself enforceable. Such an agreement may be ‘enforceable’

where the parties have set out objective criteria, or machinery for resolving any disagreement,

but the reality is that the agreement to negotiate is then irrelevant and the court simply

completes the agreement by reference to such objective criteria or the machinery stipulated. In

sum, for all the emphasis in some cases that Walford v Miles … only involved a ‘bare’

agreement to negotiate, the fact remains that no agreement to negotiate in good faith is

enforceable as a matter of English law.”

Conclusions on Agreements to Negotiate in Good Faith

29. These recent decisions are an indication that at least courts at first instance are not willing to use

the decision of Longmore LJ in Petromec to depart from the conventional wisdom that an

agreement to negotiate in good faith is no more than an agreement to agree and as such is

unenforceable as a matter of law. Whether higher courts are willing to do so and hold an

agreement to negotiate in good faith to be enforceable, one can only wait and see. The safer

course, when advising clients, is to proceed on the basis that the courts will not enforce

agreements to negotiate in good faith.

© LANCE ASHWORTH QC

NOVEMBER 2011

ST PHILIPS CHAMBERS

55 TEMPLE ROW

BIRMINGHAM B2 5LS

lashworth@st-philips.com

 

John Randall QC jrandall@st-philips.com Call: 1978 Silk: 1985 Education: MA (Cantab) Judicial: Recorder (1995), Deputy High Court Judge (2000)

Introduction

John has a broad-based practice in chancery and commercial law, acting in a wide range of work including

contractual, property and professional negligence disputes, together with commercially related judicial review

claims.

The 2009 Chambers' UK Guide describes him as a “superlative silk [who] provides clear, sound, commercial

advice and has a proven ability to get to the crux of contractual disputes very quickly" and “a completely

outstanding practitioner due to his extreme versatility and brightness of mind”. John is a team player who

quickly establishes good working relationships with both professional and lay clients.

John was Head of Chambers from 2001-2004, and Chairman of the Midland Chancery and Commercial Bar

Association from 1996-1999. He is a Bencher of Lincoln's Inn, and a Visiting Fellow of the University of New

South Wales.

John is ranked by Chambers UK 2011 under Chancery and Commercial Dispute Resolution and is described

in being a “chancery mega star” and for providing “a first-class service from beginning to end.” John is

commended for his "excellent commercial judgement and a fantastic legal mind" and is "universally

recognised as the leading commercial silk in the Midlands".

Areas of expertise • Commercial • Property • Company and Insolvency • Professional Negligence • Construction • Administrative Law

• Regulatory

Memberships • Chancery Bar Association • COMBAR • Midland Chancery & Commercial Bar Association • International Bar Association. • Barrister of New South Wales (1979) • Barrister & Solicitor of Western

Australia (2001)

High value commercial litigation

John has acted in a substantial number of matters concerning very high value claims. His experience in-

cludes two lengthy trials involving the extensive use of computers, both in trial preparation and in court

during the hearing. John's cases in this category, not mentioned elsewhere include:

an ICC arbitration claim for a quoted bio-technology company arising out of the (alleged) breach and ter-

mination of a contract for the marketing of a new pharmaceutical product across a number of the largest

states in the EC (2004-2005, settled prior to final hearing);

Esprit Telecom v Fashion Gossip [2000] All ER (D) 1090 CA, concerning claims in mistake,

conspiracy, deceit and unjust enrichment, and to what extent exploitation of a valuable opportunity unin-

tentionally conferred under a contract is actionable (settled after successful appeal to the Court of Appeal

against summary judgment);

JJ Dent and ors v National Farmers Union and ors (judgment 17th June 1999), a group action brought by

129 farmers against their union and some independent solicitors, for negligent advice in relation to limita-

tion periods under European Law. Ten lead cases were tried before Evans-Lombe J in Birmingham over

seven weeks. Following his judgment the entire group litigation was settled.

Professional negligence

John has appeared in and advised on numerous professional negligence cases, predominantly against a

commercial or chancery background. He has represented both claimants and defendants. Claims in

which he has acted include claims against solicitors, barristers, accountants, surveyors and valuers.

Cases which have gone to trial include Moffat and ors v Burges Salmon [2002] EWHC 891, [2004] PNLR

13 CA (John represented a group of over 30 farmers in a claim against their former solicitors. They were

successful in interlocutory proceedings as to ‘loss of a chance’ and causation before Neuberger J and the

Court of Appeal. The claim settled towards the end of the trial) and Friends Provident v Hillier Parker and

others (John represented a major national firm of surveyors in this four-party multi-million pound

negligence claim, which settled five weeks into the trial in the Technology & Construction Court).

Company

John has undertaken a wide variety of company law matters, including shareholders' disputes (eg. the

extensive Ciro Citterio litigation, and Re A Company ex parte P [1997] 2 BCLC 1) and claims concerning

the legal consequences of directors' breaches of statutory and common law duties (e.g. Wrexham AFC v

Crucialmove [2007] BCC 139 CA - concerning breaches of directors duties, and actual/deemed knowl-

edge thereof by persons acquiring property from the company; Ciro Citterio Menswear plc v Thakrar

[2002] 1 WLR 2217 Ch D - concerning the legal consequences of an unlawful loan to a director, and

liability as a constructive trustee).

Insolvency

Under Restructuring/Insolvency, the 2009 Chambers UK Guide says of John that he is 'top of the class for

technical wizardry,' John Randall QC is in a league of his own,' according to market sources. He is

exceptionally bright, avoids impenetrable jargon and is completely committed to achieving success' for his

clients. 'The speed at which he gets comfortably acquainted with things is just remarkable,' and his

collaborative attitude makes him 'a pleasure to instruct'. He has a national presence, focusing on highly

complex corporate insolvency cases, one example of which can be seen in his recent work on a claim

against the directors of a company in the printing industry and their financial backers. Reported cases

include OBG v Allan [2008] 1 AC 1 HL, Re MDA Investment Management Ltd (Nos 1 & 2) [2005] BCC 783

Ch D, and Re Thirty-Eight Building Ltd (Nos 1 & 2) [1999] 1 BCLC 416 and [2000] 1 BCLC 201 Ch D.

Banking

John has acted in a substantial number of disputes concerning the validity and enforcement of bank

securities. Reported cases include Fairfax Gerrard Holdings Ltd v Capital Bank plc [2008] 1 Lloyd's Rep

297 CA (concerning the efficacy of a retention of title clause) and Re SSSL Realisations (2002) Ltd [2005]

1 BCLC 1 Ch D (concerning the operation of subordinated debt provisions within a multiple corporate

insolvency, and their inter-action with the statutory insolvency regime). He has also acted for a well-known

building society in very high value claims against its mortgage indemnity insurers arising from losses

incurred in relation to allegedly reckless lending.

Judicial review

John has acted in a number of applications for judicial review, the majority arising out of disputes with a

commercial background. His experience includes such claims against the Chief Executive of Skills Funding

(concerning legitimate expectations allegedly arising from a lengthy and expensive grant application

process – R (Grimsby Institute) v Chief Executive of Skills Funding [2010] 3 EGLR 125), against the

General Council of the Bar (in relation to the operation of its 'black-listing' policy for non-payment of

barristers' fees), against the British Coal Corporation (arising out of its decision to sell land to one

developer rather than another), against the Secretary of State's decision making on planning appeals

(including R v SSE ex parte Centre 21 Ltd - 4 cases, one of which resulted in a highly unusual mandatory

order against the Secretary of State) and against a Council for banning a (then) amateur sports club from

use of its training ground, in purported pursuance of the Council's anti-apartheid policies (Wheeler v

Leicester City Council [1985] AC 1054 HL).

Sports law

John has acted in a variety of sports law matters, including for the Leicester Tigers (Wheeler v Leicester

City Council [1985] AC 1054 HL - Rugby Union), the late Barry Sheene MBE (claim arising from serious

accident on test day at Silverstone - GP Motorcycling), a professional footballer (career ending injury

suffered during a match), and a number of amateur sportsmen (including an Olympic athlete, a boxer and

a moto-cross rider).

Reported Cases

Perrins v Holland [2011] Ch 270 (CA)

R (Grimsby Institute) v Chief Executive of Skills Funding [2010] 3 EGLR 125 (Admin)

Cobbetts LLP v Hodge [2010] 1 BCLC 30 (Ch D)

Salvage Wharf v G&S Brough [2010] Ch 11 (CA)

Ali v Kahn [2009] WTLR 187 (CA)

OBG v Allan and 2 other appeals [2008] 1 AC 1 (HL)

Fairfax Gerrard Holdings v Capital Bank plc [2008] 1 Lloyd’s Rep 297 (CA)

El-Farargy v El-Farargy [2007] 3 FCR 711 (CA)

Wrexham AFC v Crucialmove [2007] BCC 139 (CA)

Re MDA Investment Management Ltd (Nos 1 & 2) [2005] BCC 783 (Ch D)

Moffat v Burges Salmon [2004] PNLR 13 (CA)

Commission for the New Towns v JJ Gallagher [2003] 2 P&CR 24 (Ch D)

Thankrar v Ciro Citterio Menswear plc [2002] EWHC 1975 (Morritt V-C) and Ciro Citterio Menswear plc v Thakrar [2002] 1 WLR 2217 (Ch D)

Al-Naimi v Islamic Press Agency [2000] 1 Lloyds’s Rep 522 (CA)

Esprit Telecom v Fashion Gossip [2000] All ER (D) 1090 (CA)

Re Thirty-Eight Building Ltd (Nos 1 & 2) [1999] 1 BCLC 416 & [2000] 1 BCLC 201 (Ch D)

Re Ross (A Bankrupt) [1998] 1 BCLC 56 (CA)

Griffiths v Cave (1998) 78 P&CR 8 (CA)

Re A Company ex parte P [1997] 2 BCLC 1 (Ch D)

Daniel Reeds v Em Ess Chemists [1995] CLC 1405 (CA)

Wheeler v Leicester City Council [1985] AC 1054 (HL)

Publications

‘Rethinking the Economic Torts’ (with Prof Simon Deakin) (2009) 72 Modern Law Review 519

The Tort of Conversion (with Sarah Green), 2009 (Hart Publishing, Oxford)

‘Caparo v Dickman – Legal Celebrity or Jurisprudential Substance’, in Cases that Changed our

Lives (ed McDougall), 2010 (LexisNexis Butterworths, London)

‘Proprietary estoppel and the common intention constructive trust – Strange bedfellows or a match

in the making?’ (2010) 4 Journal of Equity 171

Interests Sport (especially rugby union and cricket), travel and music.

Practice Manager Details: Joe Wilson T: 0121 246 2136 F: 0121 246 7001 E: jwilson@st-philips.com

Lance Ashworth QC lashworth@st-philips.com Call: 1987 Silk: 2006 Education: Oundle School, Pembroke College Cambridge MA (Cantab)

Judicial Appointments: Recorder, Crown Court and County Court

Introduction

Lance is Head of the Commercial group at St Philips Chambers and undertakes the role of chairman of the Chambers Administration Committee (Board of Directors). Lance's practice is predominantly commercial litigation, insolvency, transactional advice and some high value personal injury work. The transactional advice is often at a late stage of negotiations when the parties hit difficulties preventing completion. Lance's advice in this arena is most frequently sought direct by corporate departments of solicitors' firms, who welcome the way in which Lance will make himself available at very short notice at any time of the day. Lance is ranked by Chambers UK 2011 under chancery, commercial dispute resolution, personal injury and restructuring/insolvency and is described as having “a fantastic reputation for his expertise in commercial and insolvency law. He is "extremely responsive, charming with clients and very sharp" and is noted for ”providing top-quality solutions to all manner of hard-hitting insolvency and commercial issues including share warranties, breaches of fiduciary and bribery allegations". Lance is further commended as being a "quick, clever lawyer with an outstanding reputation in the local market."

Banking Lance has undertaken claims for and against banks throughout his career at the Bar, including bank guarantee claims, claims arising out of a bank paying cheques into a wrong account, undue influence claims brought against wives and partners, invoice discounting claims and venture capital claims involving debt funding and mezzanine lending. Between 2003 to 2006 he was involved in litigation concerning the funding of investment into a chain of convenience stores by way of venture capital trusts (VCT) ranking behind debt funding and mezzanine lending, in which the VCTs had exercised swamping rights and effectively taken over the company.

Areas of Expertise

• Commercial

• Insolvency

• Company/Chancery

Memberships

• Midlands Chancery and Commercial Bar Association

• COMBAR • PIBA

He frequently advises in connection with bank security and funding obligations. During the turmoil in the banking sector, caused by the collapse of the Icelandic banking industry in October 2008, Lance advised a number of companies who had loan agreements and invoice discounting arrangements with Landesbanki as to their position vis-à-vis the bank.

Company/Chancery Lance has been recommended as a silk in Chambers and Partners UK Guide for a number of years, for chancery as a “tough advocate with a lot of flair”. He was recognised as being "highly regarded by peers and clients alike as an excellent advocate who is sensible, articulate and straight to the point”. Lance has acted in a number of minority shareholders’ petitions under section 459 of the Companies Act 1985 for both the minority and the majority shareholders in companies operating in the high street retail market, the brewing business, the accountancy business, the transport business and a property holding business. A number of these have also involved derivative actions brought against delinquent directors using companies as their own. He has acted for and against directors accused of breaches of the Companies Act 1985. Lance also undertakes significant amounts of litigation arising from warranty claims following the sale of companies including most recently sales in the aerospace and scrap metal industries, claims totalling in excess of £100 million. Lance is frequently asked to advise by major law firms on highly complex transactional work, in particular very close to completion of deals. He understands the importance of being able to undertake such work at very short notice and out of hours.

High value commercial litigation

Recommended for years as a junior and in the silk category in Chambers and Partners UK Guide for commercial litigation having a “calm and easy manner and understanding the nature of the pressure solicitors are under” and hailed as “exceptionally able, user-friendly and commercial advocate, who displays great attention to detail and extremely high-quality legal analysis.” Key cases of interest over the last few years have involved many multi-million pound actions including: • the sale of the scrap metal empire of Easco to SITA • bribery of a senior employee of a household name, who had taken millions of pound from suppliers

over a number of years • a claim brought by directors of a family owned company against the former Finance Director for

repayment of monies paid for his shares • claims arising out of the construction of a new paint shop facility for LDV vans • the business swap transaction between George Wimpey and Tarmac • the exercise of options for the acquisition of development land by Laing Homes Ltd • the exercise of options for the acquisition of development land by Wimpey • group litigation for 129 farmers against the National Farmers Union • minority shareholders petitions in relation to Ciro Citterio Menswear plc • Aston Manor Breweries Ltd, the exercise of swamping rights by venture capitalists in relation to a

chain of over 100 convenience stores, as well as asset tracing claims for BVI based companies. In addition, Lance acted for one of the shareholders in Druckers in a claim which led to the eventual sale of the company.

Insolvency

Recommended for years as a junior and silk in Chambers and Partners UK Guide for insolvency/corporate recovery: including comments such as “Interviewees favourite” Lance Ashworth QC “has a calm and easy manner and understands the nature of the pressure solicitors are under.” He “moulds into a team easily and is able to take the weight off his clients.” and as having "considerable experience in the insolvency arena and is the barrister of choice if you need a punchy, robust advocate for heavily contested issues.” He is praised as “thorough, yet pragmatic and commercially minded,” and clients appreciate that “he doesn’t sit on the fence when offering advice.” Sources further commend his “intelligence and positive outlook.” He has “almost unparalleled understanding of complex technical matters and piercing cross-examination skills.” Sources note the excellent work he does on behalf of insolvency practitioners, covering a broad range of contested and non-contested work. Interviewees are united in their admiration for his practice, with clients also highlighting his “excellent bedside manner.” In recent years Lance has acted:

• for and against directors of companies against whom proceedings have been brought for breaches of the rules against companies purchasing their own shares, including for the liquidator of M&S Tarpaulin against two directors and accountants for the unlawful breach of financial assistance rules and fiduciary duties

• for a liquidator of British Virgin Islands company seeking to set aside a 10 party compromise agreement as being a fraud on creditors.

• for insolvency practitioners bringing claims on insolvency bonds against previously appointed office holders accused of fraud

• for liquidators in challenges to their rulings on admissions of proofs of debt

• for a trustee in bankruptcy seeking to resist administrators’ claims to set aside payments made to a former director of the company

• for a creditor setting aside a pre-emptive costs order made in favour of administrators of a company

• for administrators facing personal costs orders

• for the liquidators of the Birmingham Mint. Lance is frequently consulted in the very early stages of insolvencies to provide quick advice which shapes the way the insolvency procedure is progressed. Additionally, Lance has written the precedents section for Mithani: Directors; Disqualification and has acted for and against the Secretary of State in Trade and Industry in Company Directors Disqualification Act proceedings.

Professional negligence Lance has acted for both claimants and defendants in professional indemnity cases. He acted for 129

farmers who sued the National Farmers Union in respect of negligent advice given not to bring claims

consequent upon the introduction of EEC regulations. Having succeeded in this action after a six week

trial, Lance then acted for 34 of the 129 farmers in suing Burges Salmon who had advised them not to sue

the NFU. This case concluded successfully after three weeks of the trial. Since taking silk five years ago,

Lance has acted against geo-environmental experts who failed to discover widespread asbestos

contamination on a development site and against auditors who were found liable after trial for having

negligently signed off a whitewash report under the financial assistance provisions of the Companies Act

1985.

Franchising Lance has acted in franchise litigation including for the franchisor relating to: • Kalamazoo plc (printing) • Rosemary Conley Diet & Fitness Clubs Limited (diet and fitness clubs) • Fastfix (emergency plumbing services) • Chipsaway (car body repairs) • Durham Pine (pine furniture) • Prontac plc (accountancy packages) • Autosmart Ltd (vehicle valeting) • Kall Kwik (printing) Many of these cases involved the obtaining of interim injunctions to prevent the setting up of competing businesses by franchisees. Lance has also advised or acted for the franchisee in respect of franchise agreements with: • Texas Homecare (DIY) • Action Unlimited (business advisory services) • Baby College • Zeald (website establishment)

Construction Lance has undertaken, among others, the following substantial construction disputes: • on behalf of the claimant sub-contracting boiler manufacturer in a claim against a Dutch contractor

arising out of the construction of Seabank power station in Bristol • for Taikisha Europe Ltd. in a mediation lasting 3 days over a weekend arising out of a £26 million

contract for the construction of a new paint shop at the LDV plant in Birmingham. Taikisha were seeking payment of £6 million and LDV raised a counterclaim for £20 million. The mediation succeeded in resolving all of the issues on the claim and counterclaim

• on behalf of a developing builder, facing a counterclaim for approximately £1 million. On Lance’s

advice the builder made a payment into Court of £12,500 in respect of the counterclaim. The case lasted 2 weeks in May, 2000 and judgment was given on the counterclaim for only £7,990, resulting in costs being awarded in the builder's favour.

Lance acted for Coventry City Council in their dispute with their designers of the Memorial Park water feature, following the outbreak of cryptosporidium. Lance also works for development companies in connection with land acquisition and has acted against a number of experts in geotechnical and geo-environmental matters, on the strength of whose advice, land has been acquired.

ADR

Lance has acted as an advocate within arbitrations and mediations, including a 3 day (and 3 night!) mediation in relation to the paint shop at LDV in a £26 million claim. All but one of the mediations in which he has been involved have led to a settlement. Lance believes that advocacy in mediations is key to settlement. While the parties may not be there to argue the finer points of law, it is of vital importance to all parties, including the mediator, to understand the respective strengths of the parties' positions. This can only effectively be done by use of a top quality advocate.

Intellectual property Lance has been involved in a number of cases involving "soft IP", including intellectual property rights arising out of franchise agreements. Frequent issues of IP rights arise within the insolvency work that he undertakes, particularly on the question of whether an insolvent company has achieved proper value for its intellectual property on a sale immediately prior to or out of administration. Lance has acted recently in connection with, and lectured on, database rights.

Clinical injury Lance has done a series of clinical negligence cases on behalf of claimants, including complaints in respect of eye, hand, kidney and hip operations, as well as claims against general practitioners for failures to refer and against dentists.

Personal injury Recommended as a silk in Chambers and Partners UK Guide 2011 for personal injury as a “well respected silk with a strong academic bent who is regarded as being totally reliable.” Lance has undertaken most types of personal injury work during his 23 years of practice. He acted for the claimant in the first case in which the BS 2000 Isostation “spinal lie detector” was used. He is well known for his ability to put together detailed but sustainable schedules or counter-schedules of loss. He also is acknowledged as an expert in matters arising under the compulsory insurance requirements of the Road Traffic Act and the Motor Insurers Bureau Agreements.

Catastrophic injury

Lance has acted for both sides in catastrophic injury claims. By their very nature these tend to settle without a trial. In recent years, he has acted for the claimant in cases arising out of road traffic and in particular cycling accidents, as well as in a baby shaker matter in front of the Criminal Injuries Compensation Board where the damages claimed exceed £3 million. He has also acted in a number of cases for defendants on the instructions of insurance companies where the damages claimed are in the millions. These include a claim by a Down’s syndrome child already in Local Authority care who was knocked down by a car as a result and acquired a brain injury. The damages claimed included the full cost of provision of residential accommodation, notwithstanding that the claimant had previously been in residential accommodation. Lance was able to negotiate a deal which did not include payment for this element of the claim, but paid some monies to buy off the risk of a finding adverse to the insurers.

Fatal accident claims Lance has acted for both claimants and defendants in these claims. He acted for the insurers of the aircraft in the proceedings following the Uttoxeter air crash. He has recently acted for a young widow with 2 young children, whose husband, a software systems architect, was killed while out mountain biking. Difficult issues arose as to the treatment of the widow's past and future earnings in light of her not having the support of her husband to develop her own business. The claim was settled on very favourable terms for the widow.

Cases • Dyson Ltd v Curtis [2010] EWHC 3289 (Ch) - bribery, knowing receipt, dishonest assistance • Gould & Hamblin v ITMO Advent Computer Training Ltd [2010] EWHC 459 (Ch) - service of Notice of

Appointment Electronically • Gould & Hamblin v ITMO Advent Computer Training Ltd [2010] EWHC 1042 (Ch) - preservation of

value in List of Creditors • Murray Vernon Holdings v Hassall [2010] EWHC 7—successfully defended claim for breach of

fiduciary duty and financial assistance rules • SITA UK Group v Surrys [2009] EWHC 869—disclosure to HMRC of information from and

documents disclosed in litigation • Re Krug International (UK) Ltd [2008] BPIR 1512 - service out of jurisdiction of a claim under section

423 Insolvency Act 1986 • Coyne v DRC Distribution Ltd [2008] BCC 612 - personal liability of Administrators for costs without

substantive hearing of application to remove. • Cook v Green, Re M&S Tarpaulins (2nd May, 2008, HHJ Pelling QC in Manchester) - liability of

directors and auditors for breaches of financial whitewash provisions in Companies Act 1985. • Hellard v Money [2008] BPIR 1487 - disclosure of metadata to a non-party bondsman insuring the

fraud of former office holders • Re HPJ UK Ltd (In Administration) [2007] BCC 284 - distribution to creditors by Administrator • Re City Truck Group Ltd [2008] BCC. 76; [2007] 2 BCLC 649 - disqualification of directors for

multi-million pound invoice discounting fraud • Re City Truck Group Ltd [2006] BCC 384 - indemnity costs on discontinuance • Carpenter v Lunnon [2004] EWHC 3079 - fatal accident claim • Lord (Liquidator of Rosshill Properties Ltd) v Sinai Securities Ltd [2004] BCC 986; [2005] 1 BCLC

295 - transactions at an undervalue in settling earlier proceedings • Thakrar v Ciro Citterio Menswear Plc (In Administration) [2002] EWHC 1975 - declaration as to effect

of agreement underlying Tomlin Order which Court of Appeal had refused to make • Moffat v Burges Salmon (A Firm) [2004] P.N.L.R. 13 - reliance on findings by earlier court in

professional negligence claim against subsequent legal advisers

Cases • Re Ciro Citterio Menswear Plc [2002] BPIR 903 - successful appeal against pre-emptive costs order

in favour of administrator • Ciro Citterio Menswear Plc v Thakrar [2002] 1 WLR 2217; [2002] 2 All ER 717 - constructive trusts

arising from unlawful loans by company to its directors • Dent v National Farmers Union (17th June, 1999 Evans Lombe J) - professional negligence claim for

damages arising out of loss of entitlement to milk quota • Mullan v Birmingham City Council [2000] C.P. Rep. 61 - submission of no case to answer • Re Red Label Fashions Ltd [1999] BCC 308 - "dutiful wife" not a de facto director of husband's

company • Secretary of State for Trade and Industry v Bannister [1996] 1 WLR 118; [1996] 1 All ER 993 -

jurisdiction to grant stay in directors' disqualification proceedings • Stinton v Stinton [1995] RTR 167 - notice provisions in Motor Insurers Bureau Agreement • Coventry City Council v Cole [1994] 1 WLR 398; [1994] 1 All ER 997 - recoverability of a "service

charge" under Right to Buy legislation.

St Philips Chambers 55 Temple Row Birmingham B2 5LS Tel: 0121 246 7000 Fax: 0121 246 7001www.st-philips.com

Interests Lance is the chairman of the Midlands Legal Support Trust and a founder trustee of the Medical Research Fund Coventry and Warwickshire. In his spare time, he plays cricket for Earlswood Cricket Club and tennis for Ilmington Tennis Club, and when not playing watches his children play all other sports.

Clerk: Joe Wilson T: 0121 246 2136 F: 0121 246 7001 E: jwilson@st-philips.com

Articles and Publications

Lance is the contributor of the precedents section of Mithani's Directors Disqualification.