Key Facts
- •Appeal against HHJ Williams' decision on preliminary issues in a breach of contract and harassment claim.
- •Option agreement between Mr Bal (former solicitor) and Mrs Attri (solicitor) for Mr Bal to acquire 80% of PKA Legal Limited for £1.
- •Clause 7.5 of the agreement required the parties to enter into a shareholders' agreement and new articles of association before exercising the option.
- •Mr Bal purported to exercise the option without a new shareholders' agreement.
- •The judge held that the failure to agree a new shareholders' agreement rendered the option invalid.
- •The appeal focused on whether clause 7.5 was a precondition to exercising the option.
Legal Principles
Contractual interpretation requires ascertaining the parties' objective intention in light of the factual background.
Lukoil Asia Pacific PTE Limited v Ocean Tankers (PTE) Limited [2018] EWHC 163
If parties intend an enforceable bargain, and the agreement can be determined by objective criteria, the court will enforce it.
BJ Aviation Ltd v Pool Aviation Ltd [2002] EWCA Civ 163
Implying a term to give business efficacy is only justified if it's necessary and not simply providing false reassurance.
This case's analysis of the facts
Where there is only one class of shares, an issue of shares is to be offered pro rata to the other shareholders.
Modern company law derived from statute
Outcomes
Appeal allowed.
Clause 7.5 was not a precondition to exercising the option. The court found the clause conferred a primary contractual protection to Mrs. Attri, and further mechanisms were unnecessary. The judge’s assumption that further mechanisms were necessary to make the protection effective was incorrect. The court concluded the option was validly exercised.
Case remitted for trial on remaining issues.
The judge only dealt with one of six issues and heard no evidence.