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In The Matter Of Crystal Palace Football Club (1986) Ltd (2005)


Construing the language of clauses contained in a business sale agreement within the context in which it had been agreed, it was clear that rights to contingent fees had not been included within the assets transferred under the agreement to the appellant.


The appellant company, Crystal Palace Football Club (2000) Ltd (X), appealed against a decision ([2004] EWHC 2113 (Ch)) that it had not been entitled to receive the rights to contingent fees as a result of a business sale agreement entered into with the respondent liquidator (L) of Crystal Palace Football Club (1986) Ltd (C). C was in creditors' voluntary liquidation when it sold its business as a going concern to X. The sale had been carried out pursuant to the business sale agreement and the issue between the parties on this appeal had been whether contingent fees had remained part of C's assets or had been assets included in the agreement and therefore transferred to X. The judge had found that the contingent fees had been among the assets excluded from the sale since they had constituted "other outstanding debts" at the relevant time for completion of the sale and so were within the exclusion contained in clause 2.2(ix) of the agreement. X argued that the judge had been wrong to find that the contingent fees were excluded from the agreement since the purpose of the agreement, in particular clause 2.2(ix), had been to exclude liquid assets such as cash in hand, cash at bank and debts which were known to have been available for collection at the relevant time of completion, and that all other assets were to go to X under the remaining provisions of clause 2.2.


Whether the contingent fees were included within the assets transferred to X under the agreement, or whether they remained assets of C, was dependant upon the construction of the terms of the relevant provisions of the agreement taking into account the context within which that agreement had been reached. It was the duty of a liquidator to realise as much money as possible from the company's estate and he would do that by selling some assets and retaining others. In the instant case C was sold as a going concern, accordingly, the purpose of the agreement was to sell assets to allow C to continue as a going concern but to retain money in hand or owing that could be acquired. Accordingly, it was likely that, in entering into the agreement, L would have intended to keep hold of contingency debts to C which were likely to accrue in the near future. All parties must have considered that the agreement was being made in the context of insolvency or pending insolvency. Accordingly, construing the words of the relevant clauses of the agreement within that context it was clear that, given there was a defined list of specified assets that were included within the definition of "Assets" under the agreement, the judge was correct to find that the contingent fees had not been transferred to X under the agreement. Further, the judge was entitled to find that "other debts outstanding" was wide enough to include contingent fees not yet due or paid.

Appeal dismissed.

Court of Appeal
Mummery LJ, Clarke LJ, Wall LJ
Judgment date
3 February 2005

​LTL 3/2/2005, [2005] EWCA Civ 180