BL-2024-000734 - [2025] EWHC 2166 (Ch)

The Claimants raise a number of points relating to the construction of the documents by which the chargee’s rights were created, and by which those rights were transferred to Niven. It is therefore helpful to begin by considering how such questions should be approached.

Cases on the interpretation of contracts are legion – it is conventional at this point to refer to Rainy Sky SA v Kookmin Bank [2011] UKSC 50, Arnold v Britton [2015] UKSC 36, and Wood v Capita Insurance [2017] AC 1173. In Witz Company v Edmund Truell [2023] EWHC 2877 (Comm) at [25]-[26] John Kimbell KC sitting as a judge of the High Court endorsed the summary of the law from The Ocean Neptune [2018] EWHC 163 (Comm) at [8] per Popplewell J (reproduced by in Chitty on Contracts (35th edition, 2023) at paragraph 16-053). Similarly, a clear statement of the role of unambiguous language and the need to apply it is found in JP Morgan v Werealize.Com Ltd [2025] EWCA Civ 57 per Lewison LJ at [20]-[21].

One point which may be relevant here is that, where an agreement is reached between two parties and then transferred to a third, the question of the original intentions of the parties may arise as between the obligor and the transferee. The general rule here is that background knowledge available to all parties is admissible evidence in construing a commercial contract. However, its role is very limited in circumstances where the document in question is assignable and publicly available (or where third parties will or may rely upon it): Cherry Tree Investments v Landmain [2013] Ch 305, per Lewison LJ at [128].

The arguments which the Claimants put forward as regards the contractual position between the parties involve an extremely literal approach to the words used. As regards arguments of this kind, the principles were set out by Lord Hodge in Wood. He said:

“Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation. Rather, the lawyer and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the particular agreement or agreements. Some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals. The correct interpretation of other contracts may be achieved by a greater emphasis on the factual matrix, for example because of their informality, brevity or the absence of skilled professional assistance. But negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement. There may often therefore be provisions in a detailed professionally drawn contract which lack clarity and the lawyer or judge in interpreting such provisions may be particularly helped by considering the factual matrix and the purpose of similar provisions in contracts of the same type. The iterative process, of which Lord Mance JSC spoke in Sigma Finance Corpn [2010] 1All ER 571, para 12, assists the lawyer or judge to ascertain the objective meaning of disputed provisions.” (at [13]).