PM Law Ltd v Motorplus Ltd

In construing a commercial agreement, the court must identify objective meaning from the words read as a whole and in their documentary, factual and commercial context. Business common sense assists only where genuine ambiguity or rival meanings exist; it cannot rewrite clear language or import uncertainty. Wording that one party “shall refer a quantity” of claims may express a present intention rather than a binding obligation, particularly where the agreement specifies no quantity, formula or minimum and fees are payable only for accepted referrals. Business efficacy does not require a guaranteed level of performance if the arrangement can operate as a calculated commercial risk. Ancillary non-solicitation, termination and confidentiality provisions do not necessarily imply a primary obligation to refer claims.

PM Law Ltd, a solicitors’ firm, appealed from the Commercial Court decision of Sir Richard Field sitting as Deputy High Court Judge, reported at [2017] EWHC 1352 (Comm). The judge dismissed PML’s claim for damages for alleged breach of a 2007 referral agreement, holding that Motorplus Ltd’s promise to refer “a quantity” of claims expressed a present intention, not an obligation to refer any minimum quantity or any claims. Permission was granted only on whether clause 1 imposed an obligation to make referrals. The appeal therefore concerned the proper construction of clause 1 in its contractual, factual and regulatory context.

Lady Justice Asplin delivered the leading judgment. Sir Geoffrey Vos C and Lord Justice Simon agreed. The appeal was unanimously dismissed.

1. The court’s task was to ascertain the objective meaning of the contractual words, read in the agreement as a whole and in the relevant documentary, factual and commercial context, excluding subjective evidence. Where genuine ambiguity or rival meanings exist, business common sense may assist. Clear language must be applied rather than rewritten: Arnold v Britton & Ors [2015] AC 1619 and Wood v Capita Insurance Services Limited [2017] AC 1173; [2017] UKSC 24.
2. Read in context, clause 1’s statement that Motorplus “shall refer a quantity” of claims expressed only a present intention and described the intended relationship if claims were referred. It imposed no obligation to refer any claims. The absence of a specified quantity, ascertainment formula or minimum was significant.
3. The word “quantity” was unambiguous. The court could not import a reasonable quantity by reference to subjective intention. Business efficacy did not require a guaranteed referral level, since the arrangement could make commercial sense as a calculated risk. Fees payable for each accepted referral supported the characterisation of the arrangement as unilateral.
4. Durham Tees Valley Airport Ltd v BMI Baby Ltd & Anr [2011] 1 All ER Comm 731; [2010] EWCA Civ 485 was distinguished. That case concerned the extent of an existing operating obligation, enforceability without a minimum-performance clause and assessment of damages. This appeal concerned whether the words created any referral obligation at all.
5. Clauses 6, 10 and 11, and the claim-handling provisions, were consistent with an intended referral relationship without a promise to refer. The regulatory provisions reflecting the Solicitors’ Code of Conduct 2007 formed part of the relevant context. It was unnecessary to decide estoppel by convention or waiver. The appeal was dismissed.

1. Court of Appeal (Civil Division: The court unanimously dismissed PML’s appeal.
2. High Court of Justice, Queen’s Bench Division, Commercial Court: Sir Richard Field, sitting as a Deputy High Court Judge, dismissed PML’s claim and construed clause 1 as expressing a present intention rather than imposing an obligation to refer claims: [2017] EWHC 1352 (Comm).