O'Brien & Anor v TTT Moneycorp Ltd

A contractual dispute-resolution procedure may make compliance with an earlier contractual obligation a condition precedent to referring a dispute to an independent expert. The question is one of classification, determined from the structure and purpose of the agreement as a whole. Where the procedure comprises sequential steps, each may be a necessary precondition to the next if the contractual language is sufficiently clear. An expert’s power to request information does not displace an obligation which must be performed before the expert’s jurisdiction arises. On a summary judgment application, factual disputes about whether the condition has been satisfied should proceed to trial. Pending that determination, the expert process may be halted, but a mandatory interim order requiring disputed documents should not ordinarily be granted where it would prejudge the final issue.

The claimants sold the entire issued share capital of First Rate FX Limited to TTT Moneycorp Ltd under a share purchase agreement. Part 1 of Schedule 9 established a staged completion-accounts procedure. Moneycorp had to provide access to relevant files and working papers, the vendors could dispute the draft accounts, and unresolved matters could then be referred to an independent accountant.

Moneycorp served an election notice referring matters to the independent accountant. The claimants contended that the notice was invalid because Moneycorp had not complied with paragraph 5 of Part 1 of Schedule 9. The parties made competing summary judgment applications, and the claimants also sought interim disclosure and an order restraining the expert process. The central issues were whether paragraph 5 was a condition precedent and whether it had been satisfied.

1. Condition precedent. Paragraph 5 of Part 1 of Schedule 9 was a condition precedent to a reference under paragraph 6. The procedure was intended to be unitary and sequential. Its structure showed that the parties had to define the dispute after the vendors had been given the information reasonably required to review the draft completion accounts.
2. The issue was properly one of classification rather than ordinary contractual interpretation. The condition was contingent and suspensory. Failure to comply did not terminate the agreement, but prevented the parties from moving to the next stage of the dispute-resolution procedure.
3. The independent accountant’s power to request assistance and documents did not cure the failure to comply with paragraph 5. That power operated only after a valid reference. Allowing the expert to decide what information was needed would put the cart before the horse, because the purpose of paragraph 5 was to enable the parties to define the dispute before referral.
4. The authorities concerning sufficiently certain preconditions to arbitration or expert determination supported that conclusion. Barclays Bank PLC v Nylon Capital LLP [2011] EWCA Civ 826 was the most relevant authority. Heritage Oil and Gas Ltd v Tullow Uganda Ltd [2014] EWCA Civ 1048 was distinguishable because its clause used the expression condition precedent in some places, the consequence there was deprivation of a valuable substantive right, and the present condition merely suspended progression to the next stage.
5. The court could not determine on summary judgment whether the paragraph 5 condition had been satisfied. There were factual disputes about the requests made, the information reasonably required, the adequacy of Moneycorp’s response, oral requests, and without-prejudice correspondence. Those issues were to be determined at trial.
6. Both summary judgment applications were therefore refused except that the claimants obtained a declaration that paragraph 5 was a condition precedent. The striking-out application was left for the trial judge. If necessary, the independent accountant’s process would be halted pending determination of compliance. A mandatory interim order requiring delivery of the disputed documents was refused because it would prejudge the issue and grant final relief at an interlocutory stage.