CA-2024-002472 - [2025] EWCA Civ 1407

NHG has permission to appeal against the judge’s decision on three grounds, but is not entitled to challenge the judge’s findings of fact as to Mr Ensor’s knowledge or understanding. These are as follows:

Developing ground 1(a) in writing and orally, Mr Jamie Riley KC accepted that an election to affirm requires knowledge by the electing party that it has a right to elect, but explained that NHG’s case is that a contracting party must be deemed, as a matter of law, to have knowledge of the express terms of a contract to which it has agreed. On this basis he submitted that the decision of this court in Peyman v Lanjani should be distinguished. He submitted, relying on L’Estrange v F. Graucob Ltd [1934] 2 KB 394, that it is a basic principle that a party cannot contend that it did not know or understand the contract terms to which it had agreed, and that any other conclusion would be contrary to the fundamental importance of certainty and predictability in commercial transactions of which Lord Bingham spoke in his dissenting judgment in The Golden Victory [2007] UKHL 12, [2007] 2 AC 353, para 23. This has been repeatedly emphasised by the Supreme Court, most recently by Lord Hamblen and Lord Burrows in MUR Shipping BV v RTI Ltd [2024] UKSC 18, [2025] AC 675:

‘47. As was recently observed by Lord Hamblen, giving the sole judgment of this court, in JTI Polska sp z oo v Jakubowski [2023] UKSC 19, [2023] 3 WLR 50, at para 39: “Certainty and predictability are of particular importance in the context of English commercial law, all the more so given the frequent choice of English law as the governing law in international commercial transactions”. There have been many other authoritative statements to the same effect. For example, in Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 UKHL 12, [2007] 2 AC 353, Lord Bingham of Cornhill said as follows at para 23:

“The importance of certainty and predictability in commercial transactions has been a constant theme of English commercial law at any rate since the judgment of Lord Mansfield CJ in Vallejo v Wheeler (1774) 1 Cowp 143, 153, and has been strongly asserted in recent years in cases such as Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] QB 529, 540–541, [1983] 2 AC 694, 703–704; Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715, 738; Jindal Iron and Steel Co Ltd v Islamic Solidarity Shipping Co Jordan Inc (The Jordan II) [2005] 1 WLR 1363, 1370”.’

In response Mr Hugh Sims KC for URE objected that this way of putting the case is not open to URE on the pleadings and was not the way in which NHG argued its case in the court below. It should not, therefore, be open to NHG on appeal, but in any event is wrong because the decision in Peyman v Lanjani that an election to affirm requires knowledge of the right in question was of general application and cannot be distinguished in the case of contractual termination rights. He submitted that the judge’s finding that URE did not in fact know that it had a right to terminate was fatal to all the ways in which NHG sought to put its liability case on appeal.

Mr Sims submitted also, by way of a Respondent’s Notice, that the judge was wrong to conclude that if, contrary to her primary findings, URE had been aware of its right to terminate the contract, its conduct following the amalgamation would have been sufficiently clear and unequivocal, on an objective basis, to amount to a waiver.