Novoship (UK) Ltd & Ors v Mikhaylyuk & Ors

On a renewed application for permission to appeal, the relevant question was whether the proposed appeal was arguable. Serious reservations about the construction of a settlement agreement did not require refusal where the court could not conclude that the case was unarguable. The merits of whether unpaid instalments made the full sum immediately payable, and whether later payment performed the agreement, remained for the appeal.

Andrew Smith J had construed a settlement agreement between Novoship (UK) Ltd & Ors and the Ruperti defendants. He held that failure to pay instalments did not make the full sum immediately due and payable, and that later payment or an offer to pay the outstanding sums could perform the agreement.

Novoship renewed its application for permission to appeal. It argued that the construction was internally inconsistent with the stated purpose of incentivising payment and that words equivalent to “when due” should be inserted into the release clause. The central issue was whether the proposed challenge was arguable.

1. Disposition. Lord Justice Longmore granted the renewed application for permission to appeal. The Court of Appeal did not determine the merits of the contractual construction.
2. Issue raised. The release clause provided that, upon receipt of the specified amounts, payment would constitute full and final satisfaction of the claims. Novoship argued that the lower court’s construction failed to give effect to the purpose of incentivising payment because the defendants could remain in default and wait until funds became available. It also argued that the agreement should be read as requiring payment when due.
3. Permission threshold. Longmore LJ identified difficulties in Novoship’s argument, including the apparent election to decide whether to enforce after non-payment and the consequences for the release. He nevertheless remained unable to say that the case was not arguable. Permission therefore followed.

• Court of Appeal (Civil Division) — On 16 February 2016, Lord Justice Longmore granted a renewed application for permission to appeal. The respondent was not present or represented.
• High Court of Justice, Queen’s Bench Division, Commercial Court — Andrew Smith J held that the settlement agreement did not make the full sum due and payable upon instalment default, and that later payment or an offer to pay could perform the agreement.