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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Teoco UK Ltd v) Aircom Jersey 4 Ltd & Anor [2018] EWCA Civ 23 (18 January 2018) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2018/23.html Cite as: [2018] STI 361, [2018] STC 518, [2018] BCC 339, [2018] EWCA Civ 23

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Richard Millett QC (sitting as a Deputy High Court Judge)
HC-2015-003405

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/01/2018

Lord Justice Newey:

1. This appeal relates to a share purchase agreement dated 19 November 2013 ("the SPA") pursuant to which the respondents, Aircom Jersey 4 Limited and Aircom Global Operations Limited ("the Sellers"), sold to the appellant, Teoco UK Limited ("the Purchaser"), the issued shares in Aircom International Limited ("Aircom UK") and Aircom International (Austria) Holdings GmbH ("Aircom Austria") for £41 million (less certain deductions). On 14 August 2015, the Purchaser issued proceedings in which it claimed to be entitled to, among other things, damages for breach of warranty or an indemnity in relation to tax said to be owed by two subsidiaries of Aircom UK: Aircom International America Latina Ltda ("Aircom Brazil"), a Brazilian company, and Aircom International Inc ("Aircom Philippines"), a company incorporated in the Philippines. Expressed in sterling, the sums for which the Sellers were said to be liable were put at about £3.1 million in the case of Aircom Brazil ("the Brazil Claim") and some £366,000 as regards Aircom Philippines ("the Philippines Claim"). The latter figure was attributed in part to "Tax on Improperly Accumulated Earnings" ("IAET") and in part to withholding tax.
2. On 18 December 2015, the Sellers applied to strike out the Brazil and Philippines Claims on the basis that the Purchaser had not given them notice of the claims in accordance with schedule 4 to the SPA. The Sellers maintained, in particular, that letters that McGuireWoods London LLP ("McGuireWoods"), the Purchaser's solicitors, had sent on 19 February and 29 June 2015 did not suffice for this purpose.
3. On 28 April 2016, Mr Richard Millett QC, sitting as a Deputy High Court Judge, acceded to the Sellers' application, but the Purchaser now appeals against his decision. The Purchaser does not seek to revive the element of the Philippines Claim that related to withholding tax. That apart, however, it contends that the Judge was wrong to strike out the Brazil and the Philippines Claims.

The SPA

4. Under the SPA, each of the Sellers gave, among others, the warranties set out in schedule 3 to the SPA. These included warranties as to the tax position of Aircom Brazil and Aircom Philippines ("the Tax Warranties"). These read:

"20.1 Each Group Company [i.e. Aircom UK, Aircom Austria or a subsidiary] has since 11 February 2011 and, so far as the Sellers are aware, in the last 7 years submitted to all relevant Tax Authorities by the dates required by law all relevant Tax computations and returns required for the purpose of Tax and each such computation and return was true and accurate in all material respects and so far as the Sellers are aware, is not likely to be the subject of any dispute with any Tax Authority.

20.2 Each Group Company has since 11 February 2011 and, so far as the Sellers are aware, in the last 7 years paid all Tax due from any Group Company in connection with any Event occurring on or before the date of this agreement (to the extent such Tax has fallen due for payment) and there is no outstanding Tax liability of a Group Company in respect of which the date for payment has been postponed by agreement with the relevant Tax Authority.

20.3 Each Group Company has maintained and has in its possession or under its control all records and documentation that it is required by any Tax Statute to maintain and preserve.

20.4 Each Group Company is and has in the last 4 years been resident for Tax purposes only in the jurisdiction in which it is incorporated and does not have a permanent establishment in any other jurisdiction.

20.5 To the extent required by generally accepted accounting principles, provision or reserve was made in the Accounts in respect of every Tax liability for which any Group Company at the Accounts Date was liable or accountable."

5. The SPA also contained, in schedule 8, a "Tax Covenant". This provided for the Sellers to pay the Purchaser an amount equal to various liabilities for taxation of, among others, Aircom Brazil and Aircom Philippines, together with costs and expenses. The first two of the six sub-paragraphs, for example, referred to:

"(a) Liability for Taxation to the extent that it arises from or by reference to any Event occurring on or before Completion or in respect of any gross receipts, income, profits or gains earned, accrued or received by the Company [i.e. Aircom UK or Aircom Austria] or a Subsidiary on or before Completion whether or not such liability has been discharged on or before Completion;

(b) Liability for Taxation, including liability for payments in respect of Taxation, which arises solely as a result of the non-payment of Tax by the Sellers or by any person who has been treated prior to Completion as connected with either the Company or any Subsidiary (except a Group Company or a member of the Purchaser Tax Group) …."

6. Clause 10 of the SPA imposed limitations on the Sellers' potential liabilities. It stated:

"The liability of the Sellers under or in respect of any claim for breach of this agreement shall be limited by, and all claims for breach of this agreement shall be dealt with in accordance with, the provisions set out in schedule 4."

7. Schedule 4 to the SPA is of central importance to the present appeal. The key provisions of that schedule read as follows:

"4. Notice of Claims

No Seller shall be liable for any Claim unless the Purchaser has given notice to the Seller of such Claim setting out reasonable details of the Claim (including the grounds on which it is based and the Purchaser's good faith estimate of the amount of the Claim (detailing the Purchaser's calculation of the loss, liability or damage alleged to have been suffered or incurred)).

5. Time limits for Claims

5.1 No Seller shall be liable for any Claim unless the Purchaser has given notice of such Claim in accordance with paragraph 4, as soon as reasonably practicable after the Purchaser Group becomes aware that the Purchaser has such a Claim, and in any event on or before 31 July 2015.

5.2 No Seller shall be liable for any Claim (other than a Claim which has been previously satisfied or settled) unless legal proceedings in respect of such Claim have been commenced by being both properly issued and validly served on the Seller within six months of the date the Seller was first notified of such Claim. No new Claim may be made in respect of the matter or thing giving rise to a Claim.

…

10. No double recovery

Any payment made by or on behalf of a Seller in respect of any Claim shall satisfy and discharge any other Claim which is capable of being made against such Seller in respect of the same matter or thing, but only to the extent of the payment made. In respect of a Tax Claim the Purchaser shall be entitled to make a Claim under the Tax Warranties or Tax Covenant but not both.

…

12. Right to remedy

No Seller shall be liable in respect of any Claim to the extent that the matter or thing giving rise to such Claim is capable of remedy and is remedied within 60 days of the date on which notice of such Claim is given in accordance with paragraph 4. The Purchaser shall procure that such Seller is given the opportunity within that 60 day period to remedy the relevant matter or thing and shall provide, and shall procure that each relevant Group Company provides, all reasonable assistance to a Seller (at the cost of such Seller) to remedy the relevant matter or thing.

13. Claims handling: information and access

The Purchaser shall, as soon as reasonably practicable, give notice to a Seller containing reasonable details of any matter or thing of which the Purchaser Group becomes aware that indicates that:

13.1.1 the Purchaser has or is likely to have a Claim;

…

Such notice shall not be a condition precedent to the liability of a Seller in relation to any Claim, provided that such Claim is notified in accordance with paragraph 5.1."

8. The term "Claim", which featured in schedule 4, was defined in clause 1.1 of the SPA to mean "any Title Claim, General Warranty Claim or Tax Claim". "General Warranty Claim" was in turn defined as "any claim, whether in contract or otherwise, in relation to or for breach of the General Warranties", and "General Warranties" was stated to refer to "the warranties given by the Sellers in paragraphs 1 to 25 (inclusive) of schedule 3". As for "Tax Claim", that meant "any claim, whether in contract or otherwise, in relation to or for any breach of the Tax Warranties or under the Tax Covenant". The SPA also used the term "Warranty Claim", which was defined as "any claim, whether in contract or otherwise, in relation to or for any breach of the Warranties".
9. It is to be noted, too, that, subject to immaterial exceptions, the aggregate liability of the Sellers in respect of claims for breach of the SPA (including claims under the Tax Covenant) was not to exceed £4.1 million (paragraph 1.1 of schedule 4).
10. Schedule 6 to the SPA is also of some relevance. In broad terms, the Purchaser was entitled to withhold £4.1 million of the purchase price (i.e. the same amount as the maximum aggregate liability of the Sellers) until the end of June 2015, at which stage it was to use the money to pay an amount equal to the estimated value of any disputed claims into an escrow account. Paragraph 2.1 of the schedule stated that, in the case of a claim estimated to be worth £250,000 or more, the Purchaser was to:

"obtain a written opinion, from a commercial barrister …, that … the Purchaser has a more than likely chance of success and … provide a copy of such opinion to the Sellers together with the Purchaser's estimate."

The letters

11. On 19 February 2015, McGuireWoods wrote a letter to the Sellers on the Purchaser's behalf ("the February Letter") in which they explained that they were referring to "the Tax Covenant, the Tax Warranties and the General Warranties". The letter was stated to constitute "notification in accordance with clause 24 and schedule 4 of the SPA of the existence of Claims, being either Warranty Claims or Tax Claims, as further detailed below". It continued:

"1. Claim relating to Aircom International America Latina Ltda ('Aircom Brazil')

In the course of a review by PricewaterhouseCoopers ('PwC') relating to the tax affairs of Aircom Brazil, it has come to our clients' attention that tax exposures may exist arising from, inter alia, intercompany arrangements between Aircom Brazil and [Aircom UK], deriving from management services and recharges. The basis of these potential Brazilian tax liabilities and an initial estimate of their possible quantum are set out in the preliminary report prepared by PwC, a copy of which is enclosed herewith. It is our understanding that these liabilities were not disclosed, or deemed to have been disclosed, to our clients, or to PwC, during either preliminary discussions, or specifically against the Tax Warranties or General Warranties given by the Seller in the SPA and are therefore Warranty Claims; as to which particular head of Claim it would fall under, our clients' position is reserved. Subject to further investigation by PwC and dependent upon the outcome of any discussions with the Brazilian Tax Authorities, the quantum of this particular Claim would appear to be in excess of GBP 3,600,000.

2. Claim relating to Austrian Loans

An advance … has, as a result of the SPA, become repayable. The advance was not disclosed to our clients during the course of discussions between the Purchaser, Purchaser Guarantor and the Sellers, and their respective professional advisors, nor specifically against the General Warranties. Accordingly this also amounts, without limiting the generality of such Claim, to a Claim under paragraph 21.1 (absence of third party borrowings) of schedule 3 of the SPA. At this time the quantum of this particular Claim would appear to be of the order of EUR 350,000.

3. Claim relating to Aircom International Inc. ('Aircom Philippines')

In the course of a review by BDO relating to the tax affairs of Aircom Philippines, it has come to our clients' attention that tax exposures may exist arising from, inter alia, withholding tax payments on invoices due from Aircom Philippines to Aircom UK. It is our understanding that these liabilities were not disclosed, or deemed to have been disclosed, to our clients, or to BDO, during either preliminary discussions or specifically against the Tax Warranties or General Warranties given by the Seller in the SPA and are therefore Warranty Claims; as to which particular head of Claim it would fall under, our clients' position is reserved. Subject to further investigation by BDO and dependent upon the outcome of any discussions with the Philippines Tax Authorities, the quantum of this particular Claim would appear to be in excess of GBP 200,000.

…

In respect of all matters relating to the Claims set out above our clients rights remain entirely reserved."

12. There was enclosed with the February Letter a draft report from PricewaterhouseCoopers ("PwC") setting out comments "from a Brazilian tax standpoint" on "possible main implications of certain intercompany transactions in which AirCom Brazil … is involved".
13. In a further letter to the Sellers dated 29 June 2015 ("the June Letter"), McGuireWoods said:

"This letter constitutes further notification in accordance with Schedule 4 to the SPA, providing further details of the Purchaser's Claims as outlined in [the February Letter]. …

1. Claim relating to Aircom Brazil

The [February Letter] outlines the possible existence of tax exposures in relation to Aircom Brazil amounting to Claims under the Tax Warranties and the Tax Covenants of the SPA.

Calculation of the liability is contained in an excel spreadsheet entitled 'Brazil - Intercompany transactions - Tax Liability 06-01-15 (Summary of Contingency)' (a copy of which is enclosed), showing that the potential liability could be as much as R$16,819,106.50 which, as at 31 May 2015 (at a rate of R$0.2067 to £1.00), is approximately £3,476,509.32. Please see the 'Summary of Brazil Tax Issue (26.06.2015)' enclosed for further details. Both of these documents have been prepared by Samantha Stoddard, TEOCO's Finance Director - Americas.

…

3. Claim relating to Aircom Philippines

Further to the details provided under this item in the 19 February 2015 Letter, we are instructed that Aircom Philippines is subject to two tax exposures as follows:

A. Management & Consultancy Fees

The tax exposure in this respect is $358,179.

Please see enclosed 'Summary of Philippines tax issue' (the 'Summary') prepared by David Usher, TEOCO's Finance Director - Asia Pacific and Middle East & North Africa, for further details. You should note that the references to 'BIR' in the Summary are to the Bureau of Internal Revenue of the Philippines.

B. Tax exposure on Improperly Accumulated Earnings (IAET)

The total IAET exposure is $192,665 comprised of:

(i) $188,673 (see the enclosed file entitled 'Aircom Tax exposure June 16 (David) v3' prepared by David Usher for further details); and

(ii) $3,992 in respect of a fine for SEC (see the enclosed file entitled 'SEC scale of fines excess RE (Noemi Jun 15)' prepared by BDO Philippines for further details.

C. Conclusion

The total Philippines tax exposure is therefore estimated to be $550,884.

…

Conclusion

Further to the prior correspondence, … this letter provides both proper notification and reasonable details of the Purchaser's Disputed Deferred Payment Claims pursuant to Schedule 4 of the SPA.

…

In accordance with Schedule 6, paragraph 2.1 of the SPA, the Purchaser will be notifying you of its Disputed Payment Claims Estimate in addition to providing a written opinion of Mr Richard Perkoff of Counsel (as agreed) in respect of its Disputed Deferred Payment Claims, on 30 June 2015. You will appreciate that apart from [an immaterial exception] our clients will be seeking recovery of all costs incurred by them in relation to these Claims including, without limiting the generality of the foregoing, all legal fees (including those of counsel) and all accountancy fees, all of which continue to accrue, together with interest…."

The judgment

14. The Judge summarised his reasons for concluding that the Sellers were not liable for the Brazilian Claim in these terms (at paragraph 53 of his judgment):

"That is, in summary, either because the February and June letters were not notices under paragraph 4 [of schedule 4 to the SPA] at all, or else failed to comply with the requirements of paragraph 4, or else, and in any event, because the Purchaser has failed to bring proceedings in respect of such Claims as were notified in the February and June letters, either in time or at all, which is a condition of the Sellers' liability under paragraph 5.2."

15. So far as the Philippines Claim is concerned, the Judge held that the February and June Letters did not constitute due notification of the claim and that the Purchaser had failed to comply with paragraph 5.1 of schedule 4 to the SPA.
16. More specifically, the Judge considered that:

i) A reasonable recipient of the February and June Letters would not have understood them to be giving notice of the Brazil and Philippines Claims under paragraph 4 of schedule 4 to the SPA rather than notifying their existence (or potential existence) under paragraph 13 of that schedule (see paragraphs 42-44 of the judgment);

ii) Even supposing that the February and June Letters would have been taken as intended to give notice of the Brazil and Philippines Claims under paragraph 4 of schedule 4, they did not satisfy the requirements of that paragraph as regards either claim, since they did not set out "reasonable details of the Claim (including the grounds on which it is based…)". "[T]he grounds of a claim must", the Judge said, "include identification of the Warranties said to be breached (or the basis of the trigger of the Tax Indemnity)" (paragraph 35(iii) of the judgment). With regard to the Brazil Claim, the Judge expressed the view that it was "fatal that the February letter did not identify the Warranties said by the Purchaser to have been breached", the "omnibus reference to Warranty Claims or Tax Claims" being "not nearly sufficient to inform the Sellers, as the reasonable recipients, of what they had done wrong and what consequences flow" (see paragraph 46). Again, there was "still no reference to particular Warranties" in the June Letter and it "retained the omnibus reference to claims under the Tax Warranties and the Tax Covenant, between which the Purchaser was required to choose (and had not chosen)" (paragraph 50). Turning to the Philippines Claim, the Judge said (in paragraph 56) that "the June letter, like the February letter, still failed to identify the Warranties said to have been breached and still failed to elect between breach of Warranty and a claim under the Tax Indemnity";

iii) In any event, the proceedings as brought were not, as regards the Brazil Claim, "in respect of" the Claim as intimated in the February and June Letters (see paragraphs 49 and 52 of the judgment). With regard, for example, to the February Letter, the Judge said (in paragraph 47):

"even if it were possible to read the February letter as making a contingent Claim in respect of the Brazilian Tax Claims, that is not the Claim that was made in the proceedings once they were commenced"; and

iv) The Purchaser failed to comply with paragraph 5.2 of schedule 4 as regards the Philippines Claim. In the Judge's opinion, "the Purchaser was well aware that it had the [Philippines] Claim from September or November 2014 and failed to notify it as soon as reasonably practicable thereafter in compliance with paragraph 5.1 to Schedule 4" (paragraph 68 of the judgment).

17. I can concentrate, I think, on the second of these points: in other words, whether the February and June Letters set out as regards the Brazil and Philippines Claims "reasonable details of the Claim (including the grounds on which it is based…)".

Setting out details of the claims and their grounds

18. Mr John Jarvis QC, who appeared with Mr George McPherson for the Purchaser, argued that the Judge was wrong to conclude that the grounds on which the Brazil and Philippines Claims were based were not adequately identified in the February and June Letters. Mr Jarvis submitted that, contrary to the Judge's view, there is no general principle that particular warranties must be identified where (as here) a notification clause in an SPA provides for details to be given of a claim. In the present case, paragraph 4 of schedule 4 to the SPA did not in terms impose an obligation to specify individual warranties and schedule 6 made such a requirement unnecessary since (a) the parties had thereby put in place a scheme which ensured that the Sellers did not need to make separate financial provision for claims and (b) the barrister's opinion that was to be obtained would naturally include details of the legal grounds of the claims. There was, accordingly, no need to specify warranties in the February and June Letters. In any case, a reasonable recipient of each letter would (Mr Jarvis argued) have understood how the Tax Warranties were or might be engaged and that the Purchaser was also notifying claims under the Tax Covenant.
19. In contrast, Mr Michael Fealy QC, who appeared for the Sellers, supported the Judge's conclusions. Paragraph 4 of schedule 4 to the SPA, he said, expressly required that the grounds of a claim be set out, and not merely that it should be possible to infer them. Moreover, "the grounds on which [a claim] is based" necessarily, he maintained, include the basis in law as well as fact, the more so given the contrast with references elsewhere in schedule 4 to "the matter or thing giving rise" to a claim (see e.g. paragraphs 5.2, 12 and 13.1). Further, paragraph 12 of schedule 4, by making provision for an opportunity to remedy the "matter or thing" giving rise to a claim, suggests that the information to be provided in compliance with paragraph 4 "must at least identify the particular Warranty breached so that the consequences which flow from it can be put right" (as the Judge said in paragraph 37 of his judgment). It was thus incumbent on the Purchaser, if it wished to make a claim, to identify the warranties on which it was based or, if appropriate, the provisions of the Tax Covenant. The February and June Letters failed, however, to supply the requisite information. The reader was left to speculate as to which of the many warranties and which parts of the Tax Covenant were to be relied on. The position was aggravated, Mr Fealy suggested, by the specific reservation of rights in the February Letter. With regard to schedule 6 to the SPA, Mr Fealy submitted that it was no part of the function of the opinion for which it made provision to supply the Sellers with the sort of information to which they were entitled under paragraph 4.
20. In support of his submissions, Mr Fealy referred to a witness statement made by Mr Robert Rakison of McGuireWoods. Mr Rakison explained that, when the February Letter was prepared, the Purchaser considered that there was a possibility that various "General Warranties" might have been breached in relation to the Brazil Claim. In this connection, he cited paragraphs 5.4, 6.5, 6.7, 18.7, 18.9 and 24.1 of schedule 3 to the SPA. This, Mr Fealy argued, belies any suggestion that a reasonable recipient of the February Letter should have taken its reference to warranties to be limited to the Tax Warranties.
21. As was recognised on both sides, "Every notification clause turns on its own individual wording" (per Gloster J in RWE Nukem Ltd v AEA Technology plc [2005] EWHC 78 (Comm), at paragraph 10, endorsed by the Court of Appeal in Forrest v Glasser [2006] EWCA Civ 1086, [2006] 2 Lloyd's Rep 392, at paragraph 24). Reference to previous decisions can still, however, be of some assistance. In the present case, the authorities to which we were taken included Senate Electrical Wholesalers Ltd v Alcatel Submarine Networks Ltd [1999] 2 Lloyd's Rep 423 and Nobahar-Cookson v The Hut Group Ltd [2016] EWCA Civ 128, as well as the RWE Nukem case.
22. Senate Electrical Wholesalers Ltd v Alcatel Submarine Networks Ltd concerned a provision requiring the purchaser of a business to give notice in writing of a claim to the vendor "setting out such particulars of the grounds on which such claim is based as are then known to the Purchaser promptly". Stuart-Smith LJ, giving the judgment of the Court of Appeal, said (at paragraph 84) that it was "plain that the clause requires that the grounds known to the purchaser shall themselves be set out in writing". Later in the judgment, he drew attention to the importance of certainty. He said (at paragraph 91):

"Certainty is only achieved when the vendor is left in no reasonable doubt not only that a claim may be brought but of the particulars of the ground upon which the claim is to be based. The clause contemplates that the notice will be couched in terms which are sufficiently clear and unambiguous as to leave no such doubt and to leave no room for argument about the particulars of the complaint. Notice in writing is required in order to constitute the record which dispels the need for further argument and creates the certainty. Thus there is merit in certainty and accordingly, in our judgment the point taken by the [vendor] is not a matter of mere technicality and is not without merit."

23. In the RWE Nukem case, a clause stipulated that the vendor of a business would be under no liability in respect of a claim "unless written particulars of such Claim (giving details of the specific matter as are available to the Purchaser in respect of which such Claim is made)" had been given to the vendor within a specified period. Having noted that the particulars required were "of those claims themselves", Gloster J said (in paragraph 11 of her judgment):

"In my judgment what has to be notified in relation to any particular claim in the present case will largely depend on the nature of the Claim, the facts known to the vendor at the date of the notice, and whether it is realistic to put any monetary quantification on the amount claimed. I do not think one can lay down too rigid a formula for ascertaining what precise particulars or details have to be notified; the answer is that it will all depend. However, consistent with [counsel for the vendor's] submissions, I would expect that a compliant notice would identify the particular warranty that was alleged to have been breached; I would expect that, at least in general terms, the notice would explain why it had been breached, with at least some sort of particularisation of the facts upon which such an allegation was based, and would give at least some sort of indication of what loss had been suffered as a result of the breach of warranty, or, in other words, in the language of paragraph 1 of Schedule 9, some sort of description of the 'liability for breach of the Warranties' that it was alleged that [the defendant] had incurred."

24. On the facts, Gloster J concluded that some claims had not been properly notified. As regards certain other claims, however, she considered them to have been adequately notified even though the material letter had not referred to all the relevant warranties. She said (in paragraph 30):

"The absence of a reference to paragraphs 15.1 and 16.1 of Schedule 6 to the Agreement is not in my view fatal. The nature of the claim is, in my judgment, adequately summarised in paragraph 17 of the September Letter, although, it is fair to say, not in an entirely satisfactory fashion."

25. We were referred to Nobahar-Cookson v The Hut Group Ltd for what was said in that case about construing exclusion clauses contra proferentem. Briggs LJ explained (at paragraph 21) that he approached an issue relating to the construction of a provision in a share purchase agreement comparable to paragraph 4 of schedule 4 to the SPA:

"upon the basis that there remains a principle that an ambiguity in its meaning may have to be resolved by a preference for the narrower construction, if linguistic, contextual and purposive analysis do not disclose an answer to the question with sufficient clarity".

26. A little earlier in his judgment (at paragraph 18), Briggs LJ had said:

"Ambiguity in an exclusion clause may have to be resolved by a narrow construction because an exclusion clause cuts down or detracts from the ambit of some important obligation in a contract, or a remedy conferred by the general law such as (in the present case) an obligation to give effect to a contractual warranty by paying compensation for breach of it. The parties are not lightly to be taken to have intended to cut down the remedies which the law provides for breach of important contractual obligations without using clear words having that effect: see Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 per Lord Diplock at 717H, applied in Seadrill Management Services Ltd v OAO Gazprom [2010] EWCA Civ 691, by Moore-Bick LJ at para 29."

Briggs LJ also, however, observed (at paragraph 19):

"The court must still use all its tools of linguistic, contextual, purposive and common-sense analysis to discern what the clause really means."

27. Coming back to the case before us, on balance I agree with the Judge that the February and June Letters failed to satisfy the requirements of paragraph 4 of schedule 4 to the SPA because they did not identify the particular warranties and provisions of the Tax Covenant on which the Brazil and Philippines Claims were based. I accept Mr Fealy's submission that the "setting out" of the "grounds" of a claim that paragraph 4 called for meant that the legal basis of the claim had to be identified. It is not inconceivable that, exceptionally, that could have been achieved without mentioning a warranty or other provision in terms (if, say, recitation of the relevant facts had unequivocally indicated a specific warranty). Having regard to the decision of the House of Lords in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, it is also possible to imagine circumstances in which reference to the wrong warranty would not have invalidated a notice (if a reasonable recipient would not have been misled by the error and would have understood which warranty the Purchaser was intending to rely on). In general, however, it seems to me that "setting out" the "grounds" of a claim required explicit reference to particular warranties or other provisions. Moreover, the present case was not one in which either the Purchaser erroneously referred to the wrong warranty or the facts unequivocally pointed to a specific warranty. To the contrary, there was real scope for doubt, as is borne out by Mr Rakison's evidence, about which provisions were thought by the Purchaser to be relevant. It was doubtless to keep the Purchaser's options open that the February and June Letters were framed in the wide way they were, but the result is that they cannot be said to have identified particular warranties and other provision or, hence, the "grounds" on which the Brazil and Philippines Claims were based. As the Judge said, the "omnibus reference to Warranty Claims or Tax Claims" was not good enough. The phrase will have included the relevant warranties and other provisions, but, since it also encompassed a multitude of other possibilities, it did not serve to identify the "grounds" of the claims.
28. These conclusions are consistent with the importance of certainty which the Court of Appeal recognised in the Senate Electrical case (see paragraph 22 above) and with Gloster J's expectation in the RWE Nukem case that, in the context of the clause at issue before her, a "compliant notice would identify the particular warranty that was alleged to have been breached" (see paragraph 23 above). Further, I do not think that either the contra proferentem principle or schedule 6 to the SPA lends any real support to Mr Jarvis' contentions. With regard to the former, it appears to me that the "tools of linguistic, contextual, purposive and common-sense analysis" lead to the conclusion that, in general at least, it was incumbent on the Purchaser to specify the material warranties or other provisions, and the mere fact that an opinion subsequently obtained from a barrister might include reference to warranties or other provisions does not strike me as significant.
29. In short, it seems to me that, by failing to identify the particular warranties and other provisions on which the Brazil and Philippines Claims were based, the February and June Letters did not comply with the requirements of paragraph 4 of schedule 4 to the SPA. It follows that the Judge's order was correct.
30. In the circumstances, I do not need to address the other grounds on which the Judge decided in favour of the Sellers.

Conclusion

31. I would dismiss the appeal.

Lord Justice Lindblom:

32. I agree.

The Senior President of Tribunals:

33. I also agree.