Cleon Catsambis succeeds in obtaining summary judgment to correct unilateral mistake in SPA by means of construction
Cleon Catsambis, instructed by Cathryn Williams and Robert Weekes of Crowell & Moring LLP, successfully obtained summary judgment on a claim to correct a unilateral mistake in the drafting of a Sale and Purchase Agreement: Ffrees Family Finance Limited v U Holdings Limited [2020] EWHC 1911 (Ch).
The SPA provided that, in the event on an onward sale of the business within a period of 2 years, the buyer would pay the seller a percentage of that sale price. The relevant clause provided that “In the event that a value of £50m is achieved from an Uplift Event […] the Buyer will pay 15% of the resulting net sum to the seller”. It further provided that the seller would be entitled to 10% in the event that a value between £50m – £100m is achieved and 5% in the event that a value over £100m is achieved.
There was in fact an onward sale of the business at a price under £50m and the Claimant sought payment of 15% of the sale price from the Defendant. The Defendant, relying on a literal reading of the SPA, denied that any uplift consideration was due. It was at that stage that the Claimant realised that the clause in the executed version of the SPA had omitted the crucial words “In the event that a value of UP TO £50m is achieved”.
Following an application by the Claimant and a remote hearing, Deputy Master Linwood entered summary judgment for the Claimant in respect of the declaratory relief sought both under construction and implication and further ordered the Defendant to make an interim payment in excess of £700,000.
The Master found that this was a “simple and obvious error” and that the literal construction was “wholly illogical and lacking in business common-sense”. The Master also addressed the effect of delay in bringing an application for summary judgment.
Permission to appeal was refused in January 2021.
This case is of interest for correcting a unilateral mistake in a contract at the summary stage via construction, as opposed to via rectification at full trial.
The full judgment can be found here.
