“Promises are said to be independent when the obligation of one party is absolute and not conditional upon the performance by the other on his part of the bargain. They are said to be dependent when the obligation of one party depends on the performance, or the readiness and willingness to perform, of the other.”
“If an instrument grants rights and also imposes obligations, the court must ascertain whether upon the true construction of the instrument it has granted merely qualified or conditional rights, the qualification or condition being the due observance of the obligations, or whether it has granted unqualified rights and imposed independent obligations. In construing the instrument, the more closely the obligations are linked to the rights, the easier it will be to construe the instrument as granting merely qualified rights. The question always must be one of the intention of the parties as gathered from the instrument as a whole.”
“(A) KM and JS agreed to collaborate in the development of a luxury care home business. The ‘Auriens’ brand was established and used for this purpose.” (B) In very broad terms: KM provided finance for the venture and her focus was in developing the branding and the care business itself; JS also provided finance for the venture and his and DM’s focus was on sourcing suitable sites for the development of care home facilities. (C) The broad agreement between KM and JS was that, as ‘founders’ of the venture, they were to have equal financial interests in it, equal equity stakes in the relevant corporate entities through which it was to be run, and to draw equal financial benefit from it. This broad agreement and further detail was captured in a series of agreements and draft agreements between the parties and their Related Parties and the Leopard companies (including shareholder agreements) (the Agreements) (D) A dispute has arisen as to whether in fact KM has received the equal treatment agreed and regarding certain other specific matters, including regarding certain payments made to JS and companies connected to him (without equivalent payments having been made to KM) and as to whether certain projects should have been conducted within the Auriens corporate umbrella or not (the Dispute). (E) The parties have agreed to settle the Dispute without admitting any fault or liability on the part of any Party, and on terms set out in this Deed.”
“JS will pay to KM the sum of£1,250,000 (the Settlement Sum) by no later than31 January 2019 (without any set-off, deduction, counterclaim, reduction or diminution of any kind or nature).”
“4.5 For the avoidance of doubt, the release and waiver of the KM Released Claims contained in Clause 4.1.1 above and the agreement not to pursue such claims contained in Clause 4.2 are conditional upon KM’s receipt of the entire Settlement Sum. In the event JS fails to make payment of the entire Settlement Sum in accordance with Clause 2.1, the release and waiver of the KM Released Claims provided for at Clause 4.1.1 shall not come into effect, and KM (and her Related Parties) shall be at liberty to pursue the KM Released Claims.”
“[31] The only question is whether Mr Doherty’s obligation to pay the£2m purchase money and FHL’s obligation to transfer the shares to him in exchange were dependent or independent obligations. If they were dependent obligations, FHL is not entitled to the payment of the price except against its transfer of the shares. If they were independent obligations, I would agree that Mr Doherty’s failure to pay the£2m on1 July 2015 exposed him to an immediately enforceable claim in debt for£2m . [32] The Registrar held that they were dependent obligations, although he did not use that term in describing their nature. The judge preferred the view that they were independent obligations, although he too did not so describe them. What counted in his view was that the agreement showed that Mr Doherty had to pay the£2m before FHL had to transfer the shares. It follows from the judge’s view that, had it chosen to do so, FHL could have sued Mr Doherty to judgment for£2m and then sought to enforce the judgment. If the maximum to which it was able to enforce it was less than£2m (say only£1m ), FHL would presumably claim to be entitled to keep both the£1m and the shares. Many might view such an outcome as surprising. [33] I consider, with respect, that the judge was wrong to regard the parties’ obligations as independent. I regard it as clear from the terms of the agreement that their respective obligations of payment and delivery were intended to be dependent. Their intention was that completion of the sale and purchase of the Tranche E shares was to take place on the same day and at the same time; and that the making by Mr Doherty of his payment was dependent upon his receiving the transfer documents in exchange, just as the performance of FHL’s obligation to transfer the documents was dependent upon receiving the price. That, in my judgment, is how the reasonable person would interpret the parties’ obligations under the agreement.”
“[43] It follows that, whilst Mr Doherty breached the contract by failing to make the£2m payment of the price, he did not thereupon become a debtor for the price. FHL could sue him for specific performance or damages …What, however, it could not do was to sue him for the price or serve a statutory demand.”
“… has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intention.”
“In deciding which interpretative tools will best assist in ascertaining the meaning of an instrument, and the weight to be given to each of the relevant interpretative tools, the court must have regard to the nature and circumstances of the particular instrument.”
“JS will pay to KM the sum of£1,250,000 (the Settlement Sum) by no later than31 January 2019 (without any set-off, deduction, counterclaim, reduction or diminution of any kind or nature).”
“I regard as irresistible the inference that the intention of clause 5.1 is that there is to be an immediate delivery of such documents upon receipt of the price and that the parties' objective was to achieve what would in practice be a simultaneous exchange… No purchaser of the shares is going to part with£2m to the vendor except against the receipt of the share transfer documents, any more than the vendor is going to part with the documents except against the receipt of the£2m .”