Abdulrahman Bin Abdullah bin Ibrahim Al-Subaihi & Anor. v Mishal Maan Al-Sanea

Contractual obligations are determined objectively by reading the agreement as a whole, in its factual and commercial context. Clear language must be applied, although where two constructions are possible the court may prefer the one consistent with business common sense. A discounted settlement arrangement may give a party an opportunity, rather than an obligation, to pay. The effect of clauses dealing with non-payment depends on the agreement’s wording, purpose and background. The wrongdoer presumption is only an aid to construction. It is not an immutable rule of law and cannot replace the ordinary objective exercise of contractual interpretation.

Two Saudi lawyers claimed substantial fees under a Final Clearance Agreement signed by Mishal Maan Al-Sanea. The fees related to services provided to his father and connected companies. Following trial, the High Court rejected defences based on construction, duress, undue influence and fiduciary duty and entered judgment for the claimants under [2021] EWHC 2609 (Comm).

Mr Al-Sanea appealed on a number of grounds. The construction issue was heard first because it was dispositive. The central question was whether the Agreement imposed a binding personal obligation to pay the settlement instalments or merely gave Mr Al-Sanea the opportunity to obtain a substantial discount by paying within the agreed period.

1. Appeal allowed. The Court of Appeal determined only the construction issue. The remaining conditional grounds were unnecessary to decide.
2. Contractual construction is objective. The court asks what a reasonable person with the relevant background knowledge would understand the language to mean. It considers the natural and ordinary meaning, the agreement read as a whole, its purpose, the circumstances known to the parties and commercial common sense, while disregarding subjective intentions. Clear language must be applied. Where two constructions are possible, the court may prefer the commercially sensible construction: Rainy Sky SA v Kookmin Bank [2011] UKSC 50, Arnold v Britton [2015] UKSC 36 and Wood v Capita Insurance Services Ltd [2017] UKSC 24.
3. The Agreement was poorly drafted and had to be read as a whole, particularly clauses 4 and 6. Clause 4 was the central operative provision. It offered a discounted settlement if payment was made within the specified period, but provided that non-payment closed the opportunity for the discount and left the claimants free to pursue the full debt. Clause 6 supplied the timetable; it did not convert the opportunity into an outright personal obligation.
4. The factual matrix supported that construction. Mr Al-Sanea had no direct liability for the underlying fees, had never previously agreed to assume personal liability and might not have had the necessary funds. The words referring to a pledge, failure or settlement could not be treated as decisive in isolation, particularly given the drafting defects and translation issues.
5. The wrongdoer presumption did not need to be applied. The court nevertheless explained that it is an aid to construction, not a rule of law. It reflects a preference against interpretations producing unreasonable or absurd consequences, but the parties’ objective intention remains decisive. Comparisons with decisions concerning different contractual contexts provide limited assistance: Hawley v Luminar Leisure Ltd [2006] EWCA Civ 18.

1. Court of Appeal (Civil Division) allowed the appeal on the construction issue. The court held that the Final Clearance Agreement did not impose a binding obligation to pay under clause 6.
2. High Court of Justice, Commercial Court entered judgment for the claimants after rejecting the defences, including the construction defence, in [2021] EWHC 2609 (Comm).