High Court goes head to head with Bank over “Commercial Purpose”

Despite the substantial financial consequences for the bank, the High Court has interpreted a trust deed and bonds in the light of their admissible factual content and corrected a mistake in the deed in order to give effect to their “objective commercial purpose”.

The fact that the decision to correct the mistake and interpret the particular clause strictly would lead to a very expensive result for one party did not, in the High Court’s opinion, mean it was outside the “commercial purpose” of the transaction.

So what can we take home from this case? This is yet another example of the Courts applying commercial sensibility when interpreting a commercial contract. Whilst best practice is of course to ensure that contracts are drawn up tightly and leave nothing to interpretation, where a contract falls short, applying some commercial common sense is likely to be endorsed by the Courts in the event of subsequent dispute.

BNY Mellon Corporate Trustee Services Ltd v LBG Capital No. 1 Plc and another [2015] EWHC 1560 (Ch)

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