Claim No: IP-2022-000066 - [2024] EWHC 1369 (IPEC)

The leading case relied on by the Claimant on the interpretation of contractual provisions is Arnold v Britton [2015] A.C. 1619. At [14] – [23] Lord Neuberger of Abbotsbury PSC (with whom Lords Sumption and Hughes JJSC agreed) provided guidance based on previous authorities. The task for the court is to identify “the intention of the parties by reference to “… “what the reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean”, to quote Lord Hoffman in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101, para 14. And it does so by focussing on the meaning of the relevant words… in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the [agreement]; (iii) the overall purpose of the clause and the [agreement]; (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed; and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions.” (at [15]).

Lord Neuberger went on to emphasise a number of factors, including that commercial common sense should not be invoked to undervalue the importance of the language of the provision to be construed; it should not be invoked retrospectively; the less clear the centrally relevant words to be interpreted are, the more ready the court can properly be to depart from their natural meaning; and that the court must only take into account facts or circumstances which existed at the time that the contract was made and which were known or reasonably available to both parties.