In any event, as the author rightly points out, this is the second contract judgment in a row (Chartbrook v Persimmon being the first), in which a Court of Appeal judgment based on a more literal construction of contractual wording has been overturned. He ends by asking whether there is a “chasm between the creative self-confidence of the top court and the more restrained approach of the lower courts” and saying that “if so, the lower courts should not try to cross that chasm to the other side”.

Of course, that is not always the case – for instance, earlier this year in NETTV v MARHedgeGabriel Moss QC, sitting as a DHCJ, held that a contract term excluding liability for loss of profit meant nothing of the sort given the nature of the subsequent breach.  That was a decision which looked ripe for appeal, although on current form, whilst the exclusion might have been reinstated by the Court of Appeal, the Supreme Court would have struck it out again.

Sigma Finance

The CDR website features an interesting article by Clifford Chance partner Simon James, who accuses the Supreme Court of overstepping the mark in Re Sigma Finance by giving effect to the presumed intentions of the parties as inferred from the entire contract, rather than the specific wording of the clause in issue.

The author comments that the drafter of the contract could not have anticipated that the members of the Supreme Court would “cling like limpets to thepari passu approach of English insolvency law even though insolvency law was not engaged”. This might seem a somewhat strange reaction, given that the Sigma SIV is massively insolvent, and the concept of parties contracting out of their pari passu entitlement is anathema to many insolvency lawyers. 

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