Rebellion Interactive Ltd v Square Enix (2009) Ltd

Summary judgment is appropriate for a short point of law or construction only where the court has the evidence necessary for proper determination and there is no real prospect that fuller investigation at trial would affect the outcome. Contractual meaning is determined from the language used in its documentary, factual and commercial context. A party seeking to establish that an agreement extinguished accrued payment rights must identify clear wording producing that consequence. A letter rescheduling delivery dates will not necessarily retrospectively invalidate earlier deliveries, invoices or accrued rights, particularly where its context concerns additional or revised work.

Rebellion Interactive Ltd claimed payment and other relief under an agreement with Square Enix (2009) Ltd for development of a video game. The defendant had terminated the agreement and applied under CPR Part 24.2 for summary judgment dismissing claims relating to milestones 7, 8 and 9, contending that a letter dated 4 February 2010 rescheduled milestone 6 and engaged the agreement’s enhanced termination provisions.

The claimant maintained that milestone 6 had already been delivered before the letter, that later work concerned a requested refocus of the product, and that the letter did not extinguish accrued rights. The central questions were the proper construction and effect of the letter and whether those issues could fairly be determined summarily.

The defendant’s application was dismissed. The court held that the claims concerning milestones 6, 7, 8 and 9 had a real prospect of success.

1. Summary judgment. Under CPR Part 24.2, the applicant must show that the respondent has no real prospect of succeeding on the relevant issue and that there is no other compelling reason for a trial. The procedure is not a summary trial. The court should hesitate where fuller investigation of the facts might add to or alter the evidence. It should decide a short legal or construction point summarily only where the evidence is sufficient and the parties have had an adequate opportunity to address it.
2. Construction. Applying Arnold v Britton [2015] AC 1609, the letter had to be construed by reference to what a reasonable person with the available background knowledge would understand its language to mean, including its documentary, factual and commercial context. The court must not rewrite the contract to assist an unwise party or penalise an astute one.
3. Effect of the letter. The evidence indicated that the original milestone 6 deliverables had been delivered in November 2009. The contemporaneous documents suggested that the later discussions concerned additional refocus work described as milestones 6.1 and 6.2. The letter did not clearly state that earlier deliveries, invoices or accrued payment rights were abandoned or rendered ineffective. Such a draconian consequence would require clear wording.
4. The letter was therefore far from clear in the factual context and could not, on a summary judgment application, be given the effect contended for by the defendant. The disputed issues, including the significance of the milestone deliveries and the parties’ communications, required determination at trial.