 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
England and Wales High Court (Commercial Court) Decisions |
||
|
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Babcock International Ltd. v Mitsui Babcock Energy Ltd. [2002] EWHC 2728 (Comm) (19 December 2002) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2002/2728.html Cite as: [2002] EWHC 2728 (Comm) |
||
[New search] [Printable RTF version] [Help]
QUEENS BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL | ||
B e f o r e :
____________________
| Babcock International Limited | Claimant | |
| - and - | ||
| Mitsui Babcock Energy Limited | Defendant |
____________________
Mr Gavin Kealey QC & Mr Pushpinder Saini(instructed by Allen & Overy) for the Defendant and Part 20 Claimants
Hearing dates : 16 – 19 September 2002
____________________
Crown Copyright ©
Mr Justice Gross :
INTRODUCTION
THE FACTS
"(a) To manage that part of the business of [B&W] entrusted to it
(b) To act as the agent of B&W in relation thereto."
"The parties have agreed for the sale and purchase of the whole of the undertaking, assets, business, goodwill and liabilities of the boiler-making undertaking of the Vendor ("the Business")…
By clause 1 of the TA, BIL agreed to sell and B&WO agreed to purchase the undertaking of BIL's boiler-making business ("the Business"), which was defined as to include all:-
… other assets and liabilities whatsoever and wheresoever of the Vendor whether now held in the name of the Vendor or the Purchaser to the intent that … all the liabilities, obligations, debts and duties of the Vendor shall (subject as aforesaid) become liabilities of the Purchaser."
Clause 2 of the TA provided that:-
"As part of the consideration for the said sale the Purchaser shall undertaking [sic] to pay, satisfy, discharge, perform and fulfil all the debts, liabilities, contracts, engagements and obligations of the business whatsoever subsisting at the effective date thereof and shall indemnify the Vendor against all actions, proceedings, claims, costs and demands in respect thereof."
"To acquire and take over as a going concern the boiler-making undertaking and business now and heretofore carried on [BIL] and all the assets, liabilities and goodwill of such undertaking and business." (cl3(A))
"1. INTERPRETATION
"Company" means Babcock Energy Limited …
"Group Company" means each of the Company, the Subsidiary Undertakings and the Associated Undertakings;
"Relevant Claim" means a claim by the Buyer involving or relating to breach of a Warranty …
"Seller's Retained Group" means the Sellers Guarantor and any subsidiary or holding company for the time being of the Seller's Guarantor, excluding any Group Company;
4. COMPLETION
4.2 At Completion the Seller shall deliver to the Buyer each item specified in schedule 2 …
4.8 Neither the Buyer nor the Seller is obliged to complete this Agreement unless:
4.8.1 the other complies with all its obligations under this clause 4 …
8 WARRANTIES
8.2 The Seller acknowledges that the Buyer is entering into this Agreement in reliance on the Warranties.
8.3 The Warranties are qualified by matters fairly disclosed or expressly referred to in the Disclosure Letter. The Buyer undertakes that, based on the information which it has received at the date of this Agreement, it does not believe that it has cause to bring a material Relevant Claim in respect of breach of any of the Warranties.
10. LIMITATIONS ON THE SELLER'S LIABILITY
10.3 The Seller is not liable for a Relevant Claim … unless the Buyer has given the Seller notice of the Relevant Claim …
10.3.2 … on or before 30 September 1997.
22. GENERAL
22.2 The failure to exercise or delay in exercising a right or remedy provided by this Agreement or by law does not constitute a waiver of the right or remedy or a waiver of other rights or remedies.
22.5 This Agreement (together with the documents referred to in it) constitutes the whole agreement between the parties relating to the sale and purchase of the Shares (neither party having relied upon any representation made by the other party which is not a term of this Agreement or, to the extent that it has done, it has (in the absence of fraud or wilful misrepresentation or wilful concealment) no rights or remedies in respect thereof) …
SCHEDULE 2
ITEMS FOR DELIVERY BY THE SELLER AT COMPLETION
13. A duly executed release and discharge of each guarantee, indemnity and charge given by each Group Company [which included MBEL] … relating directly or indirectly to any liability of any member of the Seller's Retained Group [which included BIL]
SCHEDULE 4
WARRANTIES
1. CAPACITY AND AUTHORITY
1.2 Right, power, authority and action
1.2.1 The Seller has the right, power and authority and has taken all action necessary to execute and deliver this Agreement and each document to be executed at or before Completion. The Seller and Seller's Guarantor have obtained all consents required by each of them to effect the sale and purchase contemplated by this Agreement.
9 INSURANCE
9.1 Policies
The Disclosure Letter contains a list of each current insurance and indemnity policy in respect of which each Group Company has an interest (…the "Policies")
9.2 Status of Policies
To the best of the Seller's knowledge, information and belief, each of the Policies is valid and enforceable and is not void or voidable … no Group Company has done anything or omitted to do anything which might make any of the Policies void or voidable.
9.3 Claims
No claim is outstanding under any of the Policies and to the best of the Seller's knowledge, information and belief, no matter exists which is likely to give rise to a claim under any of the Policies.
LIABILITIES
15.2 Guarantees and indemnities
15.2.1 No Group Company has any liability (including, without limitation, contingently) under a guarantee, indemnity or other agreement to secure or incur a financial or other obligation with respect to another person's obligation other than that of a Group Company
20 LITIGATION AND COMPLIANCE WITH LAW
20.1 Litigation
20.1.1 … To the best of the Seller's knowledge, information and belief save in relation to any contract (a "Material Contract") between a Group Company and a customer, supplier or subcontractor relating to a Major Project … no civil, criminal, arbitration, administrative or other proceeding in any jurisdiction is pending or threatened by or against a Group Company …
20.1.2 To the best of the Seller's knowledge, information and belief, save in relation to a Material Contract, no matter exists which is likely to give rise to a material, civil, criminal, arbitration, administrative or other proceeding in any jurisdiction involving a Group Company …
21 INSIDER AGREEMENTS
There is no agreement between a Group Company on the one hand and a member of the Seller's Retained Group on the other hand, under which there is any outstanding liability."
"1. For the purposes of this letter:
1.2 … all disclosures made shall be deemed to be made generally in respect of the Agreement and to qualify Warranties given by the Seller in the Agreement;
3. …we make the following general disclosure:-
3.10 the Memorandum and Articles of Association of the Company and the Group Companies and any matter which might be revealed by searches of the Company and the Group Companies at Companies House …
4. We now refer to Schedule 4 of the [SPA] and the paragraph numbering in this paragraph 4 follows that in Schedule 4.
…
9 INSURANCE
9.1 A summary of current insurance policies in force in relation to the Energy Division … is attached …
9.3 Please see section 3.3 of file 14 which contains details of all recent claims for the Energy Division …"
THE ISSUES
(I) As a matter of the true construction of the TA and the SPA, to what extent, if at all, was MBEL relieved by clause 4.2 and paragraph 13 of Schedule 2 of the SPA of such liabilities and obligations as were imposed on it by the TA? ("Issue (I): Construction");
(II) If MBEL/MESCO are wrong on construction, whether BML, BIG and BIL are estopped from contending that para. 13 of Schedule 2 to the SPA does not have the meaning attributed to it by MBEL/MESCO? ("Issue (II): Estoppel");
(III) If MBEL/MESCO are right on construction, or being wrong on construction, are right on estoppel, to what relief, if any, are they entitled? ("Issue (III): Equity"); sub-issues which arise are conveniently dealt with under the following headings: (A) Release in equity; (B) Specific Performance – as a matter of principle; (C) Waiver by election; (D) Time bar by analogy; (E) Laches;
(IV) If MBEL/MESCO are denied relief (for whatever reason); (A) what was the scope of business transferred under the TA? (B) (depending on the answer to (A)) which, if any, claims in Schedules 1-3 of the Particulars of Claim can the Court determine at this stage arise from that business (ie. the business determined by (A))? ("Issue (IV): Scope of Business").
(1) Issue (I): Construction: MBEL accepted (Transcript 19th September, p.79) that it would be right for this Issue to be determined, provided the Court was satisfied that there was no further significant material evidence which could be of assistance in relation to the 1978 TA; it was not suggested that there was or might be any such evidence in relation to the 1995 SPA.
(2) Issue (III): Equity: As to this Issue, should it arise:
(i) MBEL's and MESCO's responsive application for summary judgment, related only to this Issue.
(ii) It will already have been observed that this Issue contains a considerable number of sub-issues; on all those, BIL pressed for summary judgment. Those sub-issues do not, however, exhaust BIL's resistance to MBEL's/MESCO's claim for equitable relief – there being still further issues such as estoppel which remain outstanding and which were accepted by BIL as being inappropriate for a summary judgment application.
(iii) In the circumstances, it seems plain that the most that MBEL/MESCO could achieve by way of their summary judgment application, is resolution of the "live" sub-issues under Issue (III) in their favour. Given the outstanding issues not the subject of this hearing, MBEL/MESCO could not (even at best) dispose of the entirety of Issue (III) in their favour.
THE TEST FOR SUMMARY JUDGMENT
"The Court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if – (a) it considers that –
(i) that claimant has no real prospect of succeeding on the claim of issue; or
(ii) that defendant has no real prospect of successfully defending the claim or issue; and
(b) there is no other compelling reason why the case or issue should be disposed of at a trial."
(1) Ordinarily, disputes are to be resolved at trial, on the evidence and after completion of disclosure and other pre-trial procedures; in that sense, Part 24 confers on the court an exceptional power.
(2) Properly used, the Court's power under Part 24 is a salutary power; it is there, ultimately in the interests of all concerned, to dispose of cases (or issues) that are not fit for trial at all.
(3) The test of whether a case (or issue) is fit for trial, is whether there is a real prospect of the claim or defence, as the case may be, succeeding; "real" is equivalent to "realistic" and is to be contrasted with "fanciful".
(4) It is not appropriate to utilise Part 24 for the purpose of conducting a mini-trial on the documents without disclosure and without oral evidence; the more complex or time-consuming the case (or issue), the greater is the need for caution to avoid an application for summary judgment turning into a mini-trial. In such cases it is incumbent on the Court to consider carefully whether or not to entertain the application and frequently it may be inappropriate to do so. Where, however, there is a realistic prospect of benefit to the parties, then the application may proceed but it will be necessary to keep well in mind the nature of the exercise which is permissible under Part 24.
ISSUE (I): CONSTRUCTION
i) MBEL does not suggest that anything, or anything additional, will be forthcoming by way of "matrix" evidence in relation to the 1995 SPA. This is unsurprising, not least given that it is MBEL's case that no one in its "camp" was in 1995 aware of the 1978 TA. Leaving aside somewhat theoretical questions – which are unnecessary to resolve in this case – as to whether a fact of which a reasonable party ought to have been aware but the actual party was not can constitute a part of the contractual matrix, matrix evidence must involve circumstances of which both parties were aware. If MBEL was in 1995 unaware of the 1978 TA, then whatever complaint could be made as to BIL/BML/BIG's knowledge in this regard, it could not give rise to additional matrix evidence. For completeness, it is fair to note in this regard: (1) that, on the available material, it would seem that, for its part, the BIL camp too had overlooked or forgotten the existence of the 1978 TA but, for the reasons already set out, even should that prove to be incorrect, no additional matrix evidence could be generated; (2) BIL's stance was that MESCO could make no complaint as to ignorance of the TA; as already noted, the TA had been filed at Companies House and the Disclosure letter referred expressly to "any matter which might be revealed by searches … at Companies House".
ii) Mr Kealey QC raised the possibility of whether there might be matrix evidence outstanding in relation to the 1978 TA "which would inform the Court … that what was being transferred was purely the insurance risk and nothing more" (Transcript 19th September, p.79). For my part, I regard the possibility, now 24 years after the event, of there being in this context (1) additional matrix evidence in existence which is (2) useful and materially adds to Mr Kealey's submissions, as altogether too speculative to warrant adjourning the present Issue on this ground. Nothing in the available material even hints at the existence of such additional evidence.
iii) It does not appear to me that Issue (I) is so intertwined with any of the remaining Issues that were I to refuse summary judgment on those Issues it would be appropriate to postpone a decision on Issue (I). Plainly too, no question concerning CPR Part 24.2(b) arises in respect of Issue (I). In the circumstances, I shall proceed to determine Issue (I).
i) First, I of course respectfully accept everything said in The "Fanti" and "Padre Island but I am not persuaded that those authoritative observations assist in answering the question here, as to whether the TA is properly to be characterised as an "indemnity".
ii) Secondly, it must not be overlooked that cll. 1 and 2 of the TA were addressing the future as well as pre-1978 employee liabilities. With regard to the future, the TA plainly intended to effect the transition of MBEL (B&WO) from an agent to an operating company, leaving BIL (B&W) as simply a holding company. In this regard, it was, as will be recollected, common ground that MBEL assumed liability in respect of production division employees as from 31st March, 1978. At least for the future, therefore, cll. 1 and 2 of the TA could not possibly be categorised as an "indemnity". It follows that for Mr Kealey's submission to be well-founded, cll. 1 and 2 would have to mean one thing for the future and another for the past. I do not think that could be right.
iii) Thirdly, as between BIL and MBEL (and regardless of how the TA worked out towards third parties), I see no difficulty in MBEL assuming the "primary" obligations set out in cll. 1 and 2 of the TA, both in respect of BIL's pre-1978 employee liabilities and for the future. In commercial terms, the intent of those clauses is clear. As Mr Swainston put it, as between BIL and MBEL, there are three distinct aspects to these provisions: (1) MBEL agreed to treat the obligations in question as its own; (2) MBEL agreed to take on and discharge these obligations; (3) MBEL agreed to indemnify BIL as there set out. As it seems to me, in context, unless it is correct to ignore or treat as meaningless aspects (1) and (2), the TA cannot be characterised as an "indemnity"; I am, however, unpersuaded that there is any good reason for ignoring aspects (1) and (2). In terms of the corporate re-organisation – even if it was as Mr Kealey described it, an internal re-organisation – such a transfer of responsibility made good sense. Once, however, all three aspects of the relevant provisions of the TA are taken into account, then, in my judgment, the TA is not an "indemnity" but is something in substance more than that; MBEL is not simply holding BIL harmless, it is assuming additional obligations.
(4) Fourthly, the same conclusion may be reached by a different route. Unless it be right to ignore what I have termed aspects (1) and (2) of the TA, then the consequence of releasing MBEL from the "indemnity" in the TA would leave untouched its "primary" obligations and its potential liability in damages (at law) for breach thereof.
ISSUE (II): ESTOPPEL
" BML and BIG had, by reason of the circumstances of this case … a duty to speak and to tell MESCO not only what the true level of claims insured by Iron Trades 1 was, but also, in those circumstances, that Iron Trades 1 was in a ring-fenced run-off. Therefore there was some uncertainty about its future solvency.
If that duty had been performed, MESCO – and, therefore, MBEL – would have obtained protection from the risk of having to meet BIL's liabilities because of the inadequacy or insufficiency of BIL's insurance.
The means of providing that protection is to deny BML and/or BIG the ability to advance any construction of paragraph 13 that would prevent MESCO or MBEL from obtaining that protection. In other words they should be estopped from denying that they are obliged, in accordance with that paragraph, to procure MBEL's release from the indemnity in clause 2 of the Transfer Agreement.
… there was a conscious decision taken not to disclose all of the recent Iron Trades claims… against that background I invite you to conclude that an honest, reasonable or responsible person in the position of the contracting parties with MESCO, under the 1995 contract, would have disclosed to MESCO not only the true level of the recent claims involving Iron Trades, but also given those level of claims that Iron Trades 1 was in ring-fenced run-off. In other words … that Iron Trades 1 had ceased writing prospective policies from 1989, and moreover had been replaced for the purposes of renewals and writing of new policies as from 1989 by another Iron Trades company within the same group. Because … it is to be inferred from that factual circumstance that Iron Trades 1 had to be isolated from Iron Trades 2, or vice versa, so that the business which Iron Trades 1 had written and the consequences or the results of that writing, should not affect the liquidity of a succeeding insurer. In other words, you cut off a company so that it is in run-off, and if, ultimately, it goes into insolvent run-off, that does not affect the replacement corporate entity.
… in circumstances where a party has consciously and deliberately chosen not to give full and appropriate details of recent claims involving an insurer .. which is, in ring-fenced run-off, and in circumstances where, therefore, one may infer that that party who fails to give that disclosure is aware of the possibility that the other party may not have the same degree of knowledge, even in the absence of a contract of the utmost good faith, the first party… if acting responsibly and honestly, has a positive duty to disabuse the other party of his happy contemplation that there is no problem."
Secondly, on the 19th September, Mr. Kealey added the following clarification (at pp. 9-12):
" … in terms of causation… [had] MESCO been told of the level of claims, the true level of claims, then … MESCO would not have behaved differently from how it did behave… Mr. Majima thought they were all insured and had no reason to doubt the solvency of the insurer…. the duty to speak and the unconscionable behaviour extended to the correction of the impression that MESCO had, and which one infers it was known that MESCO would have, that the claims, whatever their level, were fully insured by an insurer which possessed no financial characteristic or other characteristic that might suggest a future inability to meet those claims….
Mr. JUSTICE GROSS: Your misrepresentation had someone … pleaded it, would have been as to the state of the insurer.
Mr. KEALEY: Yes.
Mr. JUSTICE GROSS: Not as to the level of the claims. Any complaint about the level of claims would have been doomed to failure.
Mr. KEALEY: That is absolutely right. The importance of the misrepresentation in relation to the levels of claims… is the fact that … there was a conscious and deliberate decision to mislead us about the level of claims."
" … inaction or silence, by contrast with positive conduct or statement, is colourless; it cannot influence a person to act to his detriment unless it acquires a positive content such that that person is entitled to rely on it. In order that silence or inaction may acquire a positive content it is usually said that there must be a duty to speak or to act in a particular way, owed to the person prejudiced … The necessity for this duty, particularly with regard to silence or omission, has been stated in many authoritative judgments too well known to need complete citation…. the test of duty is one which can safely be applied so long as it is understood what we mean… What I think we are looking for here is an answer to the question whether, having regard to the situation in which the relevant transaction occurred, as known to both parties, a reasonable man, in the position of the "acquirer" of the property, would expect the "owner" acting honestly and responsibly, if he claimed any title in the property, to take steps to make that claim known to, and discoverable by, the "acquirer" and whether, in the face of an omission to do so, the "acquirer" could reasonably assume that no such title was claimed."
" … were the circumstances such that silence had legal effects? That is… essentially a question of fact. Were the circumstances such that silence was equivalent to a positive statement ? If so, then a representation was made, because there was a duty to speak if the impression otherwise given was to be contradicted."
i) As to the levels of asbestos claims, the evidential foundation is simply lacking for the submission that these were rising from the early 1990s so as to give rise to concerns as to the financial soundness of Iron Trades 1. Though there is an assertion to this effect in the witness statement of a Mr. Keaveney, it is belied by his own reports in 1996 and 1997, exhibited thereto and which comprise the contemporaneous evidence relied on in this regard. The high point of these reports from the MBEL/MESCO point of view comprises the reference to an "increasing trend in the level of asbestos related claims"; the consequence, however, is a forecast of rising premium levels, not risk to or collapse of the insurer. Beyond that, Mr. Keaveney's contemporaneous reports evidence a variety of employers' liability claims including deafness and white finger; they simply do not disclose a torrent of asbestos related claims. Furthermore, as Mr. Keaveney's reports post-date the SPA and as the thrust of this MBEL/ MESCO argument is an increase in asbestos related claims over time, it follows that there can be no question of the situation being worse at the time of the conclusion of the SPA; if anything, it could only have been less alarming. I add only this. With the benefit of hindsight knowledge as to asbestos claims levels, it might be tempting to conclude that "everyone knew" about rising levels of asbestos claims in the early 1990s. That temptation must, however, be resisted. First, I must be guided by evidence; "judicial knowledge" should only be used with caution. Secondly, that was not MBEL's/MESCO's case; to the contrary if "everyone knew" that case would have been dealt a body blow. Thirdly, general or generalised knowledge would not assist on the question of whether particular claims levels posed a threat to the solvency of Iron Trades 1.
ii) I turn next to the suggestion of suppression of true claims levels. Had the MBEL/MESCO case here turned simply on a failure to provide full claims information, then, at least in the context of Part 24, I would have understood the force of it. However, as already observed, the alleged "suppression" is a key part of the argument that BML/BIG had taken a conscious decision to mislead MESCO. In support of this submission, MBEL relied on a witness statement of Ms. Atherton (its Legal and Commercial Director and Company Secretary) which, in turn, was based on a Schedule (at p.2022 of the Bundles) of recent claims (ie., "recent" at the time of the conclusion of the SPA); the Schedule, it was said, did not include claims against Iron Trades policies in respect of occurrences before 1988 and was also incomplete in other respects. In my judgment, the Schedule provides no support whatsoever for the submission of any conscious misleading, or fraud; this is so, because the Schedule, on its face, makes plain that it does not apply to any pre-1988 claims. The reasons given by the BIL witness statements as to why more information was not supplied may be more or less persuasive but it is incontrovertible that the fact that the Schedule was limited to post-1988 claims was or must have been obvious to MESCO and its advisers in 1995. Given Mr. Kealey's clarification of the MBEL case (transcript, 19th September), it is unnecessary to take time here in considering the other details in respect of which the Schedule was said to be incomplete; indeed I understood Mr. Kealey in argument to accept that such details did not matter.
iii) Pausing here, if I am right so far, then the "estoppel" case does not get off the ground. There is no real prospect of MBEL succeeding in mounting a fraud or bad faith claim. Moreover, there can be no question of the case improving at trial. Key witnesses, such as Mr. Keaveney, crossed from the "Babcock" to the "Mitsui" camp in 1995 and MBEL has been run by "Mitsui" ever since. In case, however, I am wrong on this, I go on to consider the allegations concerning BML/BIG and the soundness of Iron Trades 1.
i) First, having regard to the carefully drawn contract (the SPA), I am not persuaded that BML/BIG came under any "duty" to speak to the financial soundness of the then BEL's insurers. Schedule 4, para.9 to the SPA stops short of giving any such warranty. If there had been a warranty in this regard, breach of warranty would have given rise to a contractual remedy; if there was no warranty, I am unable to see why there should be a duty to speak, at least unless BML/BIG had created a false impression as to Iron Trades 1's soundness by some or other representation.
ii) Secondly, I cannot spell out, even arguably, any such representation, let alone unequivocal representation (see Orion Finance, supra), from BML/BIG's conduct, words or silence, to which I have been referred. No false impression was created requiring contradiction. For reasons already given, the arguments as to claims levels and their alleged suppression do not assist; even with those arguments, I would have had difficulty discerning any such representation; without them, there is really nothing to support this aspect of MBEL's case.
iii) Thirdly, if, contrary to the above, there had been any representation as to Iron Trades 1 being sound and good for claims in 1995, then there is no foundation for the submission that such a representation was false, still less knowingly false. Mr. Swainston argued forcefully that the mere fact that an insurer was in ring-fenced run-off carried no implication of a threat to solvency. I do not, however, rest my conclusion on that argument. Instead, here, as it seems to me, the very practical consideration arises that Chester Street did not go into liquidation until 6 years later; it is fanciful to seek to infer from that fact the conclusion that in 1995 Iron Trades 1 was not sound and good for claims. The matter does not end there. In July 1997, some two years after the conclusion of the SPA, the assets and liabilities of Iron Trades 1 were transferred to Chester Street. That transfer was effected pursuant to the provisions of the Insurance Companies Act 1982 ("the 1982 Act"). Such transfers require Treasury approval, not least as to the transferee (here Chester Street) having the necessary margin of solvency after taking the proposed transfer into account. In my judgment, this consideration alone is fatal to the MBEL estoppel case. It establishes – some two years after the conclusion of the SPA during which time on the MBEL/MESCO case the position as to asbestos related claims must have worsened – that Chester Street was solvent in 1997. It follows, as MBEL/MESCO accepted in argument (transcript, 19th September, pp. 130-131), that in 1997 MBEL had a solvent insurer. Viewed in this light alone, the estoppel point goes and can go nowhere.
i) For the same reasons as those already given, any argument as to "reliance" by MESCO/MBEL, a necessary ingredient of the estoppel case, is doomed to failure.
ii) As it seemed to me, the estoppel case involved in any event a leap too far. It is one thing to have treated charterers in The "Henrik Sif" (supra), as estopped from denying that they were parties to the contract in question; the linkage between their failure to alert the plaintiffs to the truth and that which they were estopped from denying was direct and immediate. By contrast, here, had BIL been estopped from denying that Iron Trades 1 was sound and good for claims in 1995, it would have assisted MBEL/MESCO not at all. Accordingly, MBEL/MESCO needed to go altogether further and estop BIL from relying on (ex hypothesi) the true construction of paragraph 13 of Schedule 2 to the SPA. For that, I can see no justification.
iii) Overall, though my decision on this Issue has not rested on it, there was the strong flavour that the estoppel case represented a backdoor route by which MBEL sought to raise arguments belonging more naturally to a warranty claim under the SPA or to a claim for misrepresentation relating thereto but which were now time barred (SPA, cl.10) or otherwise excluded (SPA, cl. 22.5,) or for some other reason have not been pursued.
iv) In all the circumstances, I express no concluded view on Mr. Swainston's further submission that the estoppel, whatever its impact on BML/BIG, could not affect BIL at all (not being a party to the SPA).
ISSUE (III): EQUITY
i) (A) Release in equity: Here, the relief sought by MBEL/MESCO was a declaration that, in equity, MBEL was released from the indemnity in the TA; equity regards as already done that which parties to a transaction have agreed to do. BIL resisted the application of this equitable principle on the basis of (lack of) privity of contract, in essence, as I understood it, by reason of neither MBEL nor BIL being parties to the SPA. MBEL/MESCO responded by reference to the authority which BML/BIG warranted they possessed under para. 1.2 of Schedule 4 to the SPA. For my part and with respect to these arguments, I doubt that in a situation where para. 13 of Schedule 2 to the SPA requires a "duly executed release and discharge", it would be sufficient to rely on the equitable principle contended for by MBEL/ MESCO. I would not therefore have been minded to determine sub-issue (A) summarily (if at all) in favour of MBEL/MESCO. Conversely, I reach no final conclusion in favour of BIL on this sub-issue. On its own it would be of no practical use to BIL and, in my judgment, this sub-issue is best finally resolved (if ever necessary) in company with the remaining sub-issues under Issue (III).
ii) (B) Specific Performance: If not entitled to release in equity, then MESCO contended that it was entitled to specific performance of the obligation to give or procure the giving of the release in question under para. 13 of Schedule 2 to the SPA. Here, as it emerged, the real question was not the availability of specific performance in principle. Instead, the real dispute goes to whether MESCO was disentitled to such relief by reason of the remaining sub-issues under Issue (III). Given the view which I take on those sub-issues, there can be no question of a summary determination on this sub-issue.
iii) (C) Waiver by election: BIL's case was that MBEL's/MESCO's entitlement to a release was waived by election in (1) proceeding with completion of the SPA on 30th September, 1995 without first having obtained such a release ("alleged waiver 1"); and/or (2) not calling for such a release until late 2001 ("alleged waiver 2"). I am not prepared to grant BIL summary judgment on either basis. First, though not decisive had it stood alone, cl. 22.2 of the SPA would need to be considered. Secondly, my strong inclination is that alleged waiver results in no more being waived than the right to refuse to complete because of the absence of a relevant release. I do not grant MBEL/MESCO summary judgment in this regard only because of my view that should the question of waiver ever return to be dealt with, it is desirable that it be dealt with as a whole. Thirdly, alleged waiver 2 appears, as it seems to me, to turn on lapse of time. Not only would I not wish to deal with this topic in isolation from the sub-issue of laches (see below) but I would also decline to deal with it absent a full inquiry into the facts. For his part, in this regard, Mr. Swainston placed much reliance on Leaf v International Galleries [1950] 2 KB 86; he urged me to conclude that the mere fact that in practical terms nothing turned on the present dispute until the liquidation of the common insurers in 2001, was not a good reason for inaction on MBEL's/ MESCO's part any more than on the part of the disappointed buyer who failed to obtain rescission in Leaf. At least for the purposes of Part 24, I cannot accept this argument; Leaf was concerned with rescission not waiver; there the buyer was seeking to set aside the contract; it is understandable that a time will come when that is simply too late; here, if Mr. Kealey is otherwise right, MBEL/MESCO seek to give effect to the SPA; different considerations apply, at least under Part 24. Mr. Swainston further sought to argue by analogy from the sale of goods cases where a party lost the right to reject goods or documents by not doing so timeously; for present purposes, suffice to say that such cases fall to be considered against the background of the Sale of Goods legislation and do not therefore require an answer in Mr. Swainston's favour here. For all these reasons, should it matter, the sub-issue of waiver would have to go to trial.
iv) (D) Time bar by analogy: BIL's argument here was that MBEL's/MESCO's claim to specific performance was time barred. This submission was based on s.36 of the Limitation Act 1980 ("the 1980 Act"). S.36 of the 1980 Act disapplies the time limit laid down by s.5 of the Act for actions founded on simple contract to claims for specific performance or (inter alia) other equitable relief, but provides that the statutory time limit "may be applied by the court by analogy in like manner as the corresponding time limit under any enactment repealed by the Limitation Act 1939 was applied before 1st July 1940". Mr. Swainston argued for the application of the time limit by analogy; Mr. Kealey argued that it should not be so applied. If I may say so, the argument was interesting and not straightforward; both Mr. Swainston and Mr. Kealey supported their respective arguments by reference to authority. In the event, for present purposes, there is a short answer to Mr. Swainston's point. As appears from Cia de Seguros Imperio v Heath Ltd [2001] 1 WLR 112, esp. at pp. 120 and 126, the application of the statutory time limit by analogy depends on there being nothing in the circumstances of the case that renders it unjust to do so. It follows that it would be wrong to determine this sub-issue without a full consideration of the facts. It is in any event to be remembered that as with the whole of Issue (III), this sub-issue only arises on the assumption that Issues (I) and/or (II) had been determined in favour of MBEL/MESCO; as it seems to me, it is artificial and unsatisfactory to seek to determine it summarily given the academic basis on which it currently rests. Accordingly, this sub-issue too cannot be determined under Part 24 and, should it matter, must go to trial.
v) (E) Laches: As is well-established, questions of laches do not turn on mere lapse of time; all the circumstances must be considered. Such an inquiry is inappropriate for Part 24. Realistically, Mr. Swainston did not contend (or seriously contend) otherwise. Accordingly, should it matter, this sub-issue must go to trial.
ISSUE (IV): SCOPE OF BUSINESS
" 5. COMPANY REORGANISATION
It was officially noted that with effect from 1st October, 1976, the Construction Division was transferred from Scottish Division into Babcock & Wilcox (Operations) Ltd."
This item supported the MBEL/MESCO case of a separate transfer of the construction division, prior to the TA. In passing, this document also served to explain the MBEL concession recorded in paragraph 28(2) above as to the date on which it assumed liability in respect of workers in the construction division. Secondly, Mr. Kealey referred to a statement attributed to a Mr. Holt, a B&W board member, at a meeting of the management committee of B&WO, held on 15th November, 1976:
" Mr. Holt stated that B&W Ltd. would, from 1st January 1978, transfer all its UK assets and liabilities in respect of its boilermaking activities to Babcock & Wilcox (Operations) Ltd. and thereafter would have the relationship of a normal holding company. The effect of this would once again unite the Production Division with the other divisions of B&W (Operations)" Ltd. and the company would own all those assets which were employed in its activities."
Mr. Kealey relied especially on the wording that the contemplated transfer "would once again unite the Production Division with the other divisions"; that statement was consistent with an earlier transfer of the construction division; moreover, this passage supported the argument that the "boiler-making undertaking" in the TA was not the entirety of the B&W (BIL) business.
i) There can be no (realistic) doubt that when B&WO (MBEL) was originally constituted as agent of B&W (BIL) in 1965, the business it conducted included construction and everything to do with boilers.
ii) In 1976, there were changes or proposals affecting the construction division; but these changes or proposals went only to management, reporting and administration, rather than a transfer of business and physical assets. Here, Mr. Swainston relied, inter alia, on the various witness statements of a Mr. Lewis, together with selected supporting documentation. Mr. Lewis had joined "Babcock" in 1956 and had become manager of the patents department in the 1970s; he remained working there full-time until his retirement in 1996 and thereafter continued on a part-time basis as a consultant.
iii) Whatever the true view of the events of 1976, the TA in 1978 was intended to extend and did extend to both production and construction divisions and, if need be, regularised the position. This was plain on the true construction of the TA and from the surrounding matrix. As to the TA itself, the expression "business" was deemed to include:
" … all … assets and liabilities whatsoever and wheresoever of the Vendor whether now held in the name of the Vendor or the Purchaser to the intent that the same shall vest in the Purchaser for all the estate and interest of the Vendor therein …."
It followed, said Mr. Swainston in a written note, that "any prior administrative transfer, or even beneficial one, was subsumed within the definition of the Business, and the related assumption of liabilities, obligations, debts and duties which was expressly agreed between BIL and MBEL under the 1978 Transfer Agreement". As to the surrounding matrix, Mr. Swainston underlined the fact that prior to 1978 there was no mention in the MBEL accounts of any elements of the boiler-making business whereas in 1978 and thereafter the MBEL accounts dealt expressly with all of them. In this regard, the Annual Report of B&WO (MBEL) for 1978 contained the following:
" The company was reconstituted in 1978 and the whole of the United Kingdom power plant and heavy engineering business of Babcock & Wilcox Limited, together with all the related assets and liabilities were transferred to it with effect from the beginning of that year."
iv) Facing up to the requirements of Part 24 and addressing the question of the absence of disclosure, Mr. Swainston said this:
" … there is a large volume of documents already in play… it is overwhelmingly apparent from the documents .. that there is no reasonable prospect of MBEL or MESCO succeeding on the construction division point….. we take our chances on showing that but we are confident that we can … in the 1978 agreement it is quite clear that the construction division was embraced. Accordingly, it is within the business as defined and within the scope of the assumed duties, obligations and liabilities."