TP ICAP LIMITED v NEX GROUP LIMITED

A contractual notification clause requiring notice of a claim and reasonable detail of its nature does not necessarily require every constituent element of the cause of action to be stated. Whether detail is reasonable depends on the contractual wording, context and commercial purpose of the clause. Where the contract defines the relevant knowledge or awareness, a notification need not identify by name the individuals said to possess that knowledge unless the contract requires it or the context makes it necessary. A notification may identify the warranty claim and its factual nature without expressly reproducing every qualification in the warranty. The merits of the claim, including whether the required material adverse impact exists, ordinarily remain matters for trial.

The purchaser brought warranty claims under a share purchase agreement concerning the sale of a voice-broking business. The seller applied to strike out or obtain summary judgment on claims under warranties 9.2 and 10.3, contending that two notification letters failed to comply with Schedule 5, paragraph 5.1.

The seller argued that the letters should have identified the individuals whose contractual awareness was relied upon, stated the nine matters said to support the inference of awareness, and expressly stated that the relevant investigations had or would have a material adverse impact on the business. The purchaser argued that the letters sufficiently stated the nature of the claims in the circumstances. The central issue was whether the notifications were invalid as a matter of contractual compliance or whether the disputed matters were for trial.

1. Application refused. The purchaser’s case was neither unarguable nor without a real prospect of success. The claims were not struck out and summary judgment was not granted. Unless compromised, the case was to proceed to trial.
2. Schedule 5, paragraph 5.1 required written notice of the warranty claim, reasonable detail of its nature and, if practicable, the amount claimed. It did not expressly require identification of the individuals whose knowledge was relied upon. The seller’s proposed additional requirement could not be imposed without understanding a contextual basis for it, and the relevant factual matrix was more appropriately examined at trial.
3. The court distinguished between a contractual requirement that a fact exist and a requirement that the notification state that the fact exists. The notification letters identified warranty claims under paragraph 9.2 based on the CFTC and Frankfurt investigations and described their consequences. The omission of the names of allegedly knowledgeable individuals did not establish invalidity at the interlocutory stage.
4. The letters were not ineffective merely because they did not reproduce the material adverse impact qualification added to paragraph 9.2 at Completion. Repeating the contractual wording would not have advanced the commercial purposes of notification. Whether the investigations had the required material adverse impact, and whether the claims had merit, were matters for determination at trial.
5. The court was not persuaded that the letters had to distinguish expressly between claims arising at the date of the SPA and claims arising at Completion. If the letters permitted claims at both dates, the purchaser was entitled to advance them, subject to the merits of each claim.

The judgment describes the present application as following an earlier application decided by Calver J in May 2021, [2021] EWHC 1375. The present court declined to strike out or give summary judgment and directed that the claim proceed to trial.