Towergate Financial (Group) Ltd & Ors v Hopkinson & Ors

A contractual notice clause requiring notice “as soon as possible and in any event” by a specified longstop date creates cumulative conditions where the wording, read in context, clearly bears that meaning. A later specific date may operate as the longstop without displacing the earlier obligation of prompt notice.

For an indemnity concerning historic professional-negligence claims, time begins when there is an identifiable matter or thing which may give rise to an indemnity claim. The obligation does not await an actual third-party claim, a final assessment of liability, or a fully quantified loss. Failure to notify within the required period prevents liability under the indemnity.

The claimants acquired a financial-advice business under a share purchase agreement containing an indemnity for liabilities arising from historic professional negligence and mis-selling. The agreement also required notice of relevant matters or things “as soon as possible” and, for indemnity claims, on or before the seventh anniversary of the agreement.

Following regulatory reviews under section 166 of the Financial Services and Markets Act 2000, the claimants notified the former owners shortly before the seven-year deadline. The defendants contended that the notice was too late because it was not given as soon as possible. The preliminary issues concerned construction of the notice clause, the trigger for the prompt-notice obligation, and compliance with it.

1. Construction. Clause 6.7 imposed a dual condition precedent. Notice had to be given as soon as possible and, in any event, on or before the seventh anniversary of the agreement. The clause was imperfect but clear and workable when read as a whole. The specific seven-year provision operated as a longstop and did not remove the separate prompt-notice requirement ([69]-[77], [89]).
2. The prior Court of Appeal decision in the litigation did not preclude that construction. Its distinction between clause 5.12, concerned with early information enabling the indemnitors to participate in dealing with claims, and clause 6.7.3, concerned with limitation, did not address the separate function of “as soon as possible”. The two provisions could have overlapping purposes and could be satisfied by one notification ([91]-[98]).
3. The prompt-notice period began when there was an identifiable matter or thing in relation to which a claim under clause 5.9 might arise. The test did not require an actual claim, a final estimate, or fully developed information. The clause was not rendered uncertain by the absence of a more precise formulation of the trigger ([114]-[124]).
4. The claimants knew, by 2013 and at the latest when the regulatory notices and internal investigations produced substantial information, of matters which they knew or ought reasonably to have known might give rise to indemnity claims. Their notifications to insurers, internal identification of potential claims, and substantial review work demonstrated that knowledge. Waiting until July 2015, shortly before the longstop date, was not notification as soon as possible ([125]-[140]).
5. The preliminary issues were therefore determined against the claimants. The condition precedent was not satisfied and the indemnity claim failed ([141]-[142]).

The judgment records earlier decisions in the same litigation, but this was a first-instance trial of a further preliminary issue. The prior summary-judgment decision was dismissed at first instance in [2017] EWHC 2330 (Comm) and on appeal in [2018] EWCA Civ 2744. Those decisions were not the judgments under appeal in this case.