Sharon Bardsley & Anor v BH Hotels 3 Limited & Anor

On a summary judgment application concerning contractual construction, the court may determine a short point of law where the evidence is sufficient and a trial has no realistic prospect of producing a different result. Contractual language must be construed in its documentary and commercial context. Where wording is capable of more than one meaning, the court may consider the structure of related agreements and commercial common sense, while avoiding the rewriting of a professionally drafted bargain. A condition that options may be exercised only if no deferred consideration is payable may refer to whether the underlying obligation ever arose, rather than merely whether payment remains outstanding. The parties’ later settlement agreement cannot be used to interpret the earlier agreement where that would contradict its terms.

The claimants had sold a controlling interest in a hotel-owning company to the first defendant, while retaining minority shareholdings. The parties entered into a Shareholders’ Agreement containing options under which the first defendant could acquire those shares if no Deferred Consideration was payable under the related Share Purchase Agreement.

Planning permission was later granted, Deferred Consideration became payable and was eventually paid in full. The first defendant then purported to exercise the options. The claimants sought declarations and injunctive relief, contending that the options were unavailable once Deferred Consideration had become payable. Both sides applied for summary judgment. The central issue was the proper construction of the options condition.

1. Summary judgment. The court applied the approach in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), Mellor v Partridge [2013] EWCA Civ 477 and BBC Worldwide Ltd v Bee Load Ltd [2007] EWHC 134 (Comm). A short point of construction may be decided under Part 24 where the court has the necessary evidence and argument and a trial would have no realistic prospect of producing a different conclusion.
2. Construction principles. The court applied the principles summarised in Rainy Sky SA v Kookmin Bank [2011] UKSC 50, JP Morgan International Finance Ltd v Werealize.com Ltd [2025] EWCA Civ 57, Arnold v Britton [2015] UKSC 36, Wood v Capita Insurance Services Ltd [2017] UKSC 24, Palladian Partners LLP v The Republic of Argentina [2024] EWCA Civ 641, Re Sigma Finance Corp [2009] UKHL 2 and Barnardo's v Buckinghamshire [2018] UKSC 55. The language, the agreements as a whole, their interaction and relevant commercial context had to be considered together.
3. Meaning of the options condition. The words “being payable” could mean that Deferred Consideration remained outstanding, but could also mean that the obligation to pay had arisen, irrespective of whether it had subsequently been discharged. The language was therefore not unambiguous.
4. Context and commercial common sense. The cumulative factors favoured the claimants’ construction. The first defendant’s interpretation created an unlikely overlap between the options and the separate right to subscribe for additional shares after payment of Deferred Consideration. It also made the options’ expiry date inconsistent with the anticipated payment timetable and introduced an obscure incentive and security mechanism not clearly expressed in either agreement. The contractual structure was more coherently understood as permitting the options where planning permission was not obtained, but not where it was obtained and Deferred Consideration thereby became payable.
5. Settlement Agreement. The later Settlement Agreement could not assist in interpreting the earlier Shareholders’ Agreement. Its terms also did not establish contractual estoppel or waiver, particularly in light of the provision preserving rights under the Shareholders’ Agreement.
6. Disposition. Judgment was entered for the claimants on their summary judgment application. The first defendant’s application was dismissed.

The judgment was a first-instance decision on cross-applications for summary judgment. The claimants commenced proceedings on 17 December 2024. Their application was issued on 16 April 2025 and the first defendant’s application on 30 May 2025. Both applications were determined by the High Court (Commercial Court).