HARPER V INTERCHANGE GROUP LTD

[2007] EWHC 1834 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice Aikens, 27 June 2007

Asset sale agreement – Entitlement of claimant to commission – Proper construction of agreement – Whether claimant precluded from recovering by reason of failure to implement dispute resolution mechanism – Whether claimant precluded from recovering by reason of estoppel by convention – Rectification

In April 1996 the parties entered into an Asset Sale Agreement under which the claimant and others sold assets the defendant for a total £300,000. Clause 3.3 of the ASA provided for certain payments to be made to the claimant by way of commission on earnings to be made on various contracts. In the present proceedings the claimant asserted that he had not been paid the sums which were due to him by way of commission. The defendant disputed this, and further alleged that even if the sums were owing to him, then: the claimant had failed to operate the contractual machinery for dealing with payment; the claimant was precluded from making a claim by reason of estoppel; and clause 3.3 should be rectified. Aikens J held as follows: (1) clause 3.3 did not entitle the claimant to additional sums, and the court was not permitted to look at the negotiations between the parties to determine whether the words used in the clause were to be given a special meaning (following Chartbrook Ltd v Persimmon Homes Ltd [2007] 1 All ER (Comm) 1083); (2) in any event, the dispute resolution clause, under which disputes were to be referred to an independent chartered accountant, was not invoked, so the claimant was precluded from recovering; (3) although the point did not arise, there was an estoppel by convention which precluded an action by the claimant, in that the contract had been operated on the basis that there was no additional entitlement to commission; (4) had clause 3.3 been construed in favour of the claimant, the defendant would not have been entitled to rectification.