Express Newspapers v Telegraph Group Ltd

In construing a defective commercial agreement, the provisions must be read as a whole, having regard to their language and commercial purpose. The parenthesis in clause 15.5 replaced, rather than supplemented, the acceptance machinery in Article 10(c). A deemed transfer notice was therefore an offer capable of acceptance, and the 42-day acceptance period expired on 3 January 2001. The contractual claim nevertheless failed because no acceptance occurred before expiry and the parties’ conduct objectively showed continuing interest as offeree, not a binding commitment. The estoppel claim also failed. The appeal against striking out the petition under the Companies Act 1985 succeeded because unfair prejudice was arguable.

Express Newspapers and Telegraph Group Ltd each owned half of West Ferry Printers Ltd, a newspaper-printing joint venture. Following a change of control of Express Newspapers, Telegraph served a default notice under the shareholders’ agreement and purported to exercise rights concerning Express’s shares, directors and associated sale assets.

Express brought a contractual claim alleging that Telegraph had accepted a deemed offer to purchase the shares and assets. It also presented a petition under section 459 of the Companies Act 1985. The Vice-Chancellor dismissed the contractual action and struck out the petition on 31 July 2001. The central issue was whether clause 15.5 imposed a fixed 42-day acceptance period or left the machinery in Article 10(c) operative, together with the consequences for acceptance, estoppel and the petition.

The court unanimously allowed the appeal against striking out the section 459 petition and dismissed the appeal in the main action.

1. Construction. Clause 15 was an imperfectly drafted commercial agreement and had to be construed as a whole. The court found no strong presumption that 42 days was too short for the offeree to decide, particularly since the valuation mechanism was intended to be largely mathematical. The parenthesis in clause 15.5 replaced, rather than supplemented, the machinery in Article 10(c). The deemed transfer notice arising on 22 November 2000 was therefore an offer capable of acceptance by Telegraph, and the offer lapsed on 3 January 2001. Clauses 15.6, 15.8 and 15.9 supported that construction.
2. Acceptance and estoppel. The Vice-Chancellor’s findings on the relevant conversation and correspondence were unassailable. No express acceptance of the offer occurred before it lapsed. Although Telegraph’s refusal to withdraw its notices, participation in the arbitration and exclusion of Express’s directors could amount to a representation, the 3 January letter showed objectively that Telegraph regarded itself as an offeree not yet contractually bound. Its conduct represented continuing interest, rather than acceptance. The estoppel claim therefore failed.
3. Unfair prejudice. On the proper construction, Express’s directors should have been reinstated after 3 January 2001. Their continuing exclusion made it arguable that Express had suffered unfair prejudice within section 459. The petition therefore had a reasonable prospect of success and could not properly be struck out. The court declined to prejudge its eventual merits.

There was no inquiry as to damages. Telegraph was ordered to pay Express’s costs of the petition application here and below, while Express was ordered to pay up to 50 per cent of Telegraph’s costs of the contractual action.

• Court of Appeal (Civil Division): On 15 March 2002, allowed the appeal against striking out the section 459 petition and dismissed the appeal in the main action: [2002] EWCA Civ 317.
• High Court of Justice, Chancery Division: The Vice-Chancellor dismissed the contractual action and struck out the petition on 31 July 2001.