TP ICAP Ltd v Nex Group Ltd (Rev1)

Contractual warranty notifications must be construed objectively and in accordance with their wording. Where a notice must state in reasonable detail the nature of the claim, it must identify the relevant warranty, describe the broad nature of the alleged contravention and make clear that a claim is being made. A notice that merely identifies an investigation which might later establish a breach is insufficient. Agreed notification and commencement periods cannot be avoided by pleading contingent claims that have not arisen. Tax warranties may extend to taxation affairs involving third parties where the wording is broad and contains no limiting words. An indemnity for an Actual Taxation Liability requires an actual liability to pay tax; premature and vague declaratory claims may be struck out.

TP ICAP Limited brought claims against Nex Group Limited under warranties in a share purchase agreement and under an accompanying Tax Deed. The claims concerned regulatory investigations, alleged German cum-ex trading, potential civil claims and related tax liabilities.

Nex applied under CPR 3.4(2)(a) and CPR 24.2 to strike out or obtain summary judgment on parts of the claim. TP ICAP applied to amend its Particulars of Claim. The principal issues were whether warranty claims had been notified within the contractual time limit, whether contingent breaches could be pleaded, how tax warranties were to be construed, and whether claims under the Tax Deed had accrued.

1. Summary judgment principles. The court applied the approach in Easyair Limited v Opal Telecom Limited [2009] EWHC 339 (Ch). The court considered whether the claims were realistic, avoided a mini-trial, and decided short points of construction where the necessary material was available.
2. Notification of warranty claims. A notification clause is a limitation provision. Its meaning depends on the particular wording, construed objectively. Under paragraph 5.1 of Part 1 of Schedule 5 to the SPA, a notice had to identify the relevant warranty, describe the broad nature of the alleged breach, including the relevant law or regulation, and make clear that a warranty claim was being made. A notice stating only that an investigation might later result in a breach was insufficient.
3. The Tax Investigation Notification notified claims under paragraphs 9.2 and 10.3, but not an existing claim under paragraph 9.1. It did not allege a contravention by a Voice Group Company or identify the required material adverse impact. The CFTC Notification was likewise insufficient under paragraph 9.1. The associated pleaded claims were struck out.
4. Contingent claims. The contractual time limits required the purchaser to notify and commence an actual claim within the agreed periods. The claimant could not preserve an unaccrued claim by notifying and pleading it contingently. Claims under paragraphs 53–54, 55 and 57 of the Particulars of Claim were struck out, with paragraph 55 conceded.
5. Tax warranties. Paragraphs 22.3 and 22.9 were not limited to the tax affairs of the Voice Group Companies themselves. Their broad wording covered involvement in tax investigations and schemes concerning third parties. The paragraph 22.3 claim was therefore not struck out. The issue under the first limb of paragraph 22.9 did not require determination because the contingent pleading had already failed.
6. Tax Deed. An Actual Taxation Liability required an actual liability to make a payment of tax. No such liability had yet arisen. The declaratory and costs claims under paragraphs 59–62 were premature, vague and inadequately particularised, and were struck out. They could be pleaded again if a liability later arose and could be properly particularised.
7. Permission to amend paragraphs 46A and 23 of the draft Amended Particulars of Claim was refused in their current form because the proposed pleading was confusing and failed to identify the precise claims relied upon.