Does ‘all’ mean ‘all’, or can it mean something less? Construction associate Will Cursham looks at a recent High Court case in which the right to terminate a conditional sale agreement depended on the interpretation of this single word.
Supermarket giant Asda’s right to terminate a £12million conditional sale contract for a new superstore hung on the High Court’s interpretation of the following contractual provision:
“If all of the Conditions have not been discharged in accordance with this Schedule by the Longstop Date, then either Asda or Dooba may rescind this Agreement”.
The judges were asked to determine whether the parties could:
- rescind the agreement on or after the longstop date only if none of the conditions had been discharged? Or
- terminate the agreement on or after the longstop date if one or more of the conditions had not been discharged?
In other words, does ‘all’ mean ‘all’, or does it mean ‘any’?
The clause was part of a conditional sale agreement whereby construction firm Dooba was to purchase a property and build a superstore, petrol station and road for Asda.
Completion of the agreement was conditional on satisfaction of four conditions:
- the planning condition (essentially, granting of a satisfactory planning permission);
- the planning agreement condition (i.e. entering into a section 106 agreement);
- the highways condition; and
- the pre-start condition.
There were three separate provisions that dealt with termination in the event of the conditions not being satisfied. These were:
- if any of the conditions were not discharged by the satisfaction dates set out in the agreement, then either party could terminate the agreement (paragraph 2.2);
- if all of the conditions had not been discharged by the longstop date, then either party could terminate the agreement (paragraph 2.3); and
- if the planning condition had not been discharged by the longstop date, then the agreement could be terminated as per paragraph 2.3 (paragraph 3.3)
As it happened, the highway condition was not discharged by the longstop date (23 July 2014). Asda considered that the property was useless unless all the conditions had been fulfilled and therefore attempted to terminate the agreement under paragraph 2.3.
In doing so, Asda assumed that ‘all’ should mean ‘any’. In other words, if one or more of the conditions remained undischarged at the longstop date, then it was entitled to terminate the agreement.
Dooba argued for the literal meaning of paragraph 2.3 – i.e. that Asda could only terminate the agreement if none of the conditions had been discharged by the longstop date.
The judge found that the arguments on either side were finely balanced. He acknowledged that, according to commercial common sense, the property would be useless to Asda unless all of the conditions had been fulfilled. However, he refused to interpret the word ‘all’ to mean ‘any’. His main reasons for doing so were:
- the paragraph immediately before clause 2.3, clause 2.2, uses the word ‘any’ in relation to the discharging of conditions, and the judge took the view that the drafter would have used this word in clause 2.3 if that was what he or she meant;
- there is no reason why ‘all’ should not be given its literal meaning in this context; and
- paragraphs 2.3 and 3.3 still allow for termination when one or more of the conditions had not been satisfied.
Since the Supreme Court decision in Arnold v Britton the courts appear to be favouring a literal, as opposed to a commercial, approach when interpreting contracts. So when drafting contracts, it is important to look at each word to make sure it says what you really mean.
For further information, please contact:
William Cursham, associate in the construction team,
T: 0121 234 3066
 Dooba Developments Ltd v McLagan Investments Limited (Asda)  EWHC 2944 (CH)
  AC 1619