Even, as in Mir Steel UK Ltd v Morris, [2012] EWCA Civ 1397, where the clause allocating that risk didn't clearly spell out how far it was intended to go. Mir Steel bought the assets of the insolvent Alphasteel, including a hot strip mill, knowing that the assets were subject to claims by Lictor Anstalt, which had assembled them. The asset purchase agreement provided in clause 9.5 that Mir Steel would be responsible for settling 'any claim' to the hot strip mill made by Lictor. Lictor later sued Mir Steel for conversion, inducing breach of contract and conspiracy by unlawful means. Mir Steel sought contribution from Alphasteel but was met with the argument that it was off the hook given the broad language of clause 9.5. The trial judge agreed.
Mir Steel argued on appeal that clause 9.5 should be interpreted more narrowly, along the principles set out in R v Canada Steamship Lines Ltd, [1952] AC 192 (PC (Can)), where it was held that express words were required in order to exclude claims for negligence. If express words were required with respect to negligence, Mir Steel contended, they should clearly be required to exclude the claims for intentional wrongdoing being made by Lictor. The English Court of Appeal pointed out that Canada Steamship should not be applied 'mechanistically' and provides only 'guidelines'. What a court really needs to do is determine whether it is 'inherently improbable' that the parties intended to allocate risk in a particular way. On the facts of Mir Steel, it was clear that the parties to the asset purchase were aware that title to them was either 'flawed or possibly flawed' and a claim by Lictor in the offing. The purchase price presumably reflected that risk. It was therefore reasonable to conclude that 'any claims' in clause 9.5 meant exactly that, including claims based on Mir Steel's alleged intentional wrongdoing. The court's job is to interpret 'the particular contract in the context in which it was made', including its 'commercial purpose'.
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