Ventura Capital GP Limited v DNANudge Limited & Ors

There are before the court applications in the nature of summary judgment and striking out of parts of the respective cases. It is made both by the Claimant (“Ventura”) against the Defendants and by the Defendants against Ventura. It is in respect of an issue whether an email dated 18 January 2021 (“the 18 January Email”) from Mr El Husseiny to the First Defendant (“DNA”) gave rise to a binding obligation to subscribe for shares in DNA to an amount of £40,000,000, and if there was such an obligation, whether it was varied and/or abrogated.

The underlying proceedings are to the effect that the investment of Ventura was procured by fraudulent misrepresentation. Whatever happens on these applications, it will not dispose of the action in that the claim for fraud remains to be tried.

Ventura acts in these proceedings on behalf of the two Cayman exempted Limited Partnerships/investment funds, namely Ventura Capital LP Fund IV and Ventura Capital MG1 LP Fund. It sues as the general partner of those funds and references to Ventura are to it in those capacities.

DNA is a medical and health technology company in the business of supplying products for rapid PCR testing for Covid-19 and providing genetic services intended to nudge users to a healthier lifestyle. The Second Defendant (“Professor Toumazou”) is a co-founder of DNA and a shareholder in and director of DNA. The Third Defendant (“Mr Lyons”) was formerly the in-house general counsel of DNA.

In about late 2020 to early 2021 DNA was seeking to raise significant funding from investors in reliance on a substantial contract for the supply of clinical products to the NHS worth up to about £161m (“the DHSC Contract”).

Over the course of 2021, Ventura made investments in DNA in a sum of almost £40m by way of subscription for shares in DNA. It alleges that it was induced (in the cae of £30 thereof) to do so by fraudulent misrepresentations made by the Defendants concerning the commercial performance of DNA’s business. These are alleged to have consisted principally of misrepresentations concerning DNA’s relationship with its then main customer, the Department of Health and Social Care (“the DHSC”). They related in particular to the status of the DHSC Contract for the provision of Covid test kits. Ventura claims damages for fraudulent misrepresentation and/or unlawful means conspiracy against all Defendants and further (against DNA) for damages under s.2 Misrepresentation Act 1967 and breach of contract.

In the Defence and Counterclaim, the Defendants deny every element of the claims based on fraudulent misrepresentation and related wrongs. They also say that the alleged misrepresentations occurred after 21 January 2021, by which time Ventura was already contractually bound to invest a further £40m into DNA. They say that that occurred as a result of the 18 January Email. The Defendants rely upon this as (a) providing a complete defence to Ventura’s claim; and (b) founding a counterclaim of approximately £10m (being the difference between the further amount which they say Ventura was obliged to invest in DNA and the further amount which it actually did invest).

Ventura denies that the 18 January Email gave rise to an obligation to subscribe to shares in DNA to a total value of £40m (on top of an initial subscription in the amount of about £10m). DNA has made a counterclaim against Ventura for a sum of £10,242,596. This is the extent to which the sum of £40m exceeds the shares to which Ventura has subscribed.

Ventura and DNA negotiated terms of an investment to be made. On about 7 October 2020 Ventura and DNA agreed heads of terms concerning a proposed investment by Ventura in DNA (“the Heads of Terms”). Its purpose was to summarise the terms on which Ventura was to invest in DNA. It expressly provided that its terms were not intended to be exhaustive and were not binding (save to the extent that the contrary was expressly stated in the Heads of Terms itself).

The Heads of Terms included the following terms:

In October 2020, pursuant to the Heads of Terms, Ventura paid to DNA the sum of £502,900.

On about 19 November 2020, Ventura and DNA agreed a term sheet (“the Term Sheet”). Its purpose was to provide an updated summary of the terms on which Ventura was to invest in DNA. It expressly provided, subject to certain specific exceptions which are not relevant for present purposes, that its terms were not binding. Among its terms, it provided as follows:

On about 17 December 2020 Ventura sent a letter to DNA concerning its subscription for shares in DNA which letter was ultimately agreed and signed by both parties (“the Subscription Letter”). It was expressly provided that “the parties acknowledge and agree that the terms of this subscription letter agreement are binding and irrevocable between the parties, subject to the conditions set forth herein”. The Subscription Letter provided among other matters that subject to obtaining the approvals as therein defined (which were obtained by 21 January 2021):

It was further provided:

“Ventura will notify [DNA] in writing of the specific amount of its commitment for the Subsequent Subscription on or before 18 January 2021 (or such later date as Ventura and [DNA] may agree in writing). To the extent that Ventura does not so notify [DNA] and commit for some or all of the Subsequent Subscription, [DNA] shall be free to grant rights to other investors to apply and subscribe for the issuance and allotment of the remaining Shares under the Series A Offering (subject always to compliance with any governing agreements, instruments or documents applicable to the [DNA]).”

The Subscription Letter provided when the closing of the Initial and Subsequent Subscriptions should occur. As regards the closing of the Subsequent Subscription, it was provided that:

“The closing of the Subsequent Subscription (if any) shall occur upon receipt of all Approvals on or before February 18, 2021 (or such later date as Ventura and [DNA] may agree in writing) when Ventura shall remit by electronic transfer the Subsequent Subscription amount (exclusive of bank charges) to the Company Bank Account as referenced above.”

On about 29 December 2020 and 13 January 2021 Ventura made further payments of £6,667,000 and £2,800,000 to DNA in respect of its acquisition of shares.

On 18 January 2021 Mr Mo El Husseiny, director of Ventura, sent an e-mail to the Second Defendant under the caption “Notification of the Subsequent Ventura Investment”. In the e-mail Mr El Husseiny stated:

“Pursuant to the terms of our term sheet we are notifying you in writing regarding the Subsequent Ventura Allotment. We intend to take up the entire £40 million subsequent Ventura Allotment. Please note that we have a substantial portion of this additional capital £20 million already committed and we are in process of firming up the remainder via several parties known to you who will be helpful to the Dna Nudge diagnostic and consumer health businesses.”

On 20 January 2021 Ventura paid the sum of £150,000 to DNA, bringing to the sum of £10,001,600 the total amount paid by Ventura to DNA in respect of the Initial Subscription. On or about this date the parties executed a deed of adherence in respect of Ventura’s acquisition of shares .

At some point on or after 21 January 2021 DNA allotted 4,256 preference shares to Ventura. On 20 February 2021 DNA filed a form SH01 Return of Allotment of Shares at Companies House electronically, which recorded the allotment of 4,256 preference shares for a price of £10,001,600.

On 23 February 2021 Mr El Husseiny sent a further email to the Second Defendant in which he (i) stated that Ventura had signed an engagement letter with an institutional investor which had requested an extension of the final closing date until 8 April 2021, and (ii) asked “could you kindly confirm via email that we will have up to £75m total allocation to us until that date [8 April 2021]?”. The Second Defendant replied on the same date “that’s great news re Investor. Yes, i confirm the 75 million”.

There was an exchange of correspondence on 29 March 2021. By an e-mail at 10:52, the Third Defendant wrote to Mr El Husseiny stating:

“Further to the Subscription Letter of 17 December 2020, the Subsequent Subscription is now to close on 6 April 2021 (Closing Date.).

I would be grateful if you could confirm the amount of the Subsequent Subscription which we can expect on the Closing Date.”

The response at 11:07 from Mr El Husseiny was as follows:

“We confirm entering into binding documentation with several groups for an additional £28 million and (subject to receipt of funds) we confirm to remit to you not less than this amount on or around April 6^th.

Please note this amount does not include the receivable from Sumitomo Mitsui Trust Bank who have today also received final approval for their £2m investment.”

The board minutes of DNA dated 6 May 2021 [JMB1 pages 129 - 131] record as follows (among other matters):

In the Deed of Amendment of the same date, 6 May 2021 (“the Deed of Amendment”), DNA and Ventura expressly agreed to vary the terms of the various agreements already reached, including the Heads of Terms, the Term Sheet and the Subscription Letter. The Deed of Amendment provides (among other matters) for the following:

The Deed of Amendment contained an entire agreement clause which stated:

“This Deed of Amendment contains the entire understanding of the parties hereto with respect to its subject matter and supersedes any and all prior agreements, notices or other arrangements or correspondences, oral or written between the Parties and neither it nor any part of it may in any way be altered, amended, extended, waived, modified, discharged or terminated except by a written agreement signed by each of the Parties hereto.” (Section 6).

On about 6 May 2021 DNA issued Ventura with a further 19,770 shares pursuant to Ventura’s further subscription rights.

In September and October 2021, there were allegations by Ventura that DNA had misled it with respect to its DHSC contract, and solicitors were instructed on both sides. During the time of the negotiation and signing of the Deed of Amendment, and the correspondence regarding misleading statements, there was no reference to an alleged obligation of Ventura to subscribe for £40m worth of shares in DNA.

Further, there was consideration of insolvency proceedings on the part of DNA in early 2022, but there was still no statement to the effect that there was a shortfall in sums paid by Ventura to DNA until a letter from DNA’s solicitors dated 22 April 2022. In that letter, DNA asserted a claim against Ventura for £35,260,996 (on the basis of an alleged obligation to subscribe for shares to a total value of £75 million), alternatively for £10,262,596 (on the basis of an obligation to subscribe for shares to a total value of £40 million).

The primary issue between the parties is whether the 18 January Email gave rise to an obligation on the part of Ventura to subscribe £40m worth of shares in DNA. Ventura say that there is no real prospect in this allegation being sustained at trial, as a result of which summary judgment should be given in part in favour of Ventura and the striking out of paras. 3-16 of the Defence and paras. 93-97 of the Counterclaim. Ventura says that this is a result of the construction of the 18 January Email. Alternatively, if the 18 January Email did contain an obligation to subscribe £40m worth of shares in DNA, that obligation was varied and/or abrogated subsequently.

The Defendants say that there should be summary judgment and a striking out of relevant parts of the case to opposite effect. It says that there should be summary judgment in relation to particular issues, namely that (a) there was a binding obligation on Ventura to subscribe for shares in DNA to an amount of £40 million, and (b) such obligation was not subsequently varied or abrogated. Since the representations, which are denied by the Defendants, were made after the 18 January Email, the Defendants say that there should still be summary judgment on these issues and a striking out of parts of the statements of case relating to these issues.

The arguments are all said to the effect that there is no real prospect of success in contending the contrary. This then forms the basis of the respective applications for summary judgment/strike out. It will therefore be necessary to consider first the principles of summary judgment/strike out applications, second the meaning and effect of the 18 January Email and third to consider the effect of the subsequent communications.

CPR 24.2 provides that the Court may give summary judgment on the whole of a claim or on a particular issue if it considers that the claimant or defendant has no real prospect of succeeding on the claim (whether prosecuting or defending) or issue and there is no other compelling reason why the case or issue should be disposed of at a trial.

The general principles were set out by Lewison J (as he then was) in Easyair Ltd (Trading As Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch):

Ventura adds reference to the ‘cautionary precepts’ in Partco v Wragg [2002] 2 BCLC 323 at paras. 27 – 28 per Potter LJ:

The submissions of the Defendants

The Defendants say that the 18 January email was a notice by which Ventura exercised the right to take the Subsequent Subscription in accordance with the terms of the Subscription Letter (“the Option”). They rely on the following matters in particular:

Ventura submits that any exercise of the option must be clear and unequivocal. It is usually to be construed objectively so that a reasonable recipient would recognise it as the exercise of the option. In the event that the recipient knew that the person apparently exercising the option did not intend to exercise an option, then the recipient is not entitled to take advantage of a mistake on the part of the person giving the notice.

Ventura submits that in the instant case there was no exercise of the option for the following reasons:

It is not entirely clear whether the true analysis of the 18 January Email was that it was a contractual notice pursuant to an existing agreement or whether it was acceptance of an offer previously made.

It was submitted on behalf of Ventura that the option is an offer which is capable of acceptance by the offeree. It is therefore said that the analysis of offer and acceptance has to be applied. Accordingly, the exercise of the option is analogised with the communication of acceptance. Attention is drawn to Chitty on Contracts 34^th Edition Chitty at para.4-031, referring to OTM Ltd v Hydranautics [1981] 2 Lloyds Rep 211, at 214 which states as follows concerning the definition of “acceptance”:

“An acceptance is a final and unqualified expression of assent, whether by words or conduct, to the terms of an offer. The objective test of agreement applies to an acceptance no less than to an offer. On this test, a mere acknowledgement of the receipt of an offer does not amount to an acceptance; nor is there acceptance if a person, to whom an offer to sell goods had been made, merely replies that it is his “intention to place an order” or asks for an invoice.” (emphasis added)

The analogy of acceptance has its limitations: its oddity is that this option is conferred only by a contract of the parties, namely the Subscription Letter. It is not an offer outside a contract leading to a contract on acceptance. There is a contract in existence. This was expressed in the case of In re Mulholland's Will Trusts [1949] 1 All E.R. 460,Wynn-Parry J. quoted, at p. 464, from Sir George Jessel M.R. in Gomm's case, 20 Ch.D. 562 , 582, and said:

"As I understand that passage, it amounts to this, that, as regards this option, there was between the parties only one contract, namely, the contract constituted by the provisions in the lease which I have read creating the option. The notice exercising the option did not lead, in my opinion, to the creation of any fresh contractual relationship between the parties, making them for the first time vendors and purchasers, nor did it bring into existence any right in addition to the right conferred by the option."

In Spiro v Glencrown Properties Ltd [1991] Ch 533 at 544, Hoffmann J (as he then was) said:

“An option is not strictly speaking either an offer or a conditional contract. It does not have all the incidents of the standard form of either of these concepts. To that extent it is a relationship sui generis. But there are ways in which it resembles each of them. Each analogy is in the proper context a valid way of characterising the situation created by an option.”

Approaching the option as being sui generis, albeit with resemblances to an offer or a conditional contract, the courts have applied the law relating to unilateral contractual notices to an option: see Peaceform Ltd v Cussens 2006 WL 2929563 (Mr Stuart Isaacs KC sitting as a deputy judge of the High Court) applying Mannai Investment Co Ltd v Eagle Star Assurance Co Ltd [1997] A.C. 749. In Mannai, the House of Lords applied the test for the validity of a notice of Goulding J in Carradine Properties Ltd v Aslam [1976] 1 WLR 442, 444, namely “is the notice quite clear to a reasonable tenant reading it? Is it plain that he cannot be misled by it?” and he went on to say that the reasonable tenant must be taken to know the terms of the lease. On this basis, the notice should be construed against the background of the terms of the lease so that a mistake which could have misled no reasonable tenant would be immaterial: see per Lord Hoffmann at p.779G-780G. As with commercial contracts, the construction of notices is to be “construed in the light of all the background which could reasonably have been expected to have been available to the parties in order to ascertain what would objectively have been understood to be their intention”.

Lord Steyn in Mannai said the following at 767G-768D:

“ (2)      The question is not how the landlord understood the notices. The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene. The approach in Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989, which deals with the construction of commercial contracts, is by analogy of assistance in respect of unilateral notices such as those under consideration in the present case. Relying on the reasoning in Lord Wilberforce's speech in Reardon Smith, at 996D to 997D, three propositions can be formulated. First, in respect of contracts and contractual notices the contextual scene is always relevant. Secondly, what is admissible as a matter of the rules of evidence under this heading is what is arguably relevant. But admissibility is not the decisive matter. The real question is what evidence of surrounding circumstances may ultimately be allowed to influence the question of interpretation. That depends on what meanings the language read against the objective contextual scene will let in. Thirdly, the enquiry is objective: the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind. It follows that one cannot ignore that a reasonable recipient of the notices would have had in the forefront of his mind the terms of the leases. Given that the reasonable recipient must be credited with knowledge of the critical date and the terms of clause 7(13) the question is simply how the reasonable recipient would have understood such a notice. This proposition may in other cases require qualification. Depending on the circumstances a party may be precluded by an estoppel by convention from raising a contention contrary to a common assumption of fact or law (which could include the validity of a notice) upon which they have acted: Norwegian American Cruises A/S (formerly Norwegian American Lines A/S) v. Paul Munday Ltd. (The "Vistafjord") [1988] 2 Lloyds Rep. 343. Such an issue may involve subjective questions. That is, however, a different issue and not one relevant to this appeal. I proceed therefore to examine the matter objectively.”

The question in the instant case is whether the 18 January email would reasonably be understood by a person reading it as an exercise of the Option. This depends on looking at the words used against the objective contractual scene. At the forefront are the terms of the Subscription Letter. There are also the circumstances known to the parties against which the 18 January Email is to be construed.

In my judgment, the construction of the 18 January Email is not suitable for summary determination. This is because there are too many uncertainties inherent in the document which cannot be resolved without reference to the factual matrix as to which there are important issues of fact.

The language in the 18 January Email is imprecise. This is especially so in the following respects, namely:

I have considered the submissions of the parties set out above about the meaning and effect of the words and the factual matrix. The arguments about the words used have some force on each side. The Court is unable to say whose submissions would prevail at trial. It would be wrong to make assumptions about the construction of the 18 January Email without having the full context. Applying the legal tests set out above, the three factors referred to by Lord Steyn in Mannai are matters which can only be brought fully to bear at trial. They are as follows:

I shall first consider the wording of the 18 January email. DNA’s case is, as set out above, that the words of the 18 January email are clear and unambiguous. I have considered carefully the submissions on both sides. There are unsatisfactory features about the submissions on both sides. As regards the submissions of DNA, there is a problem about the language of the second and the third sentences. It is not apparent why the words used are of intent, namely “we intend to take up the entire £40 million” allotment, rather than to say that they are thereby taking it up. That by itself might be explained by reference to the point that Mr El Husseiny was a lay person who would not be expected by another business person to be as precise as a commercial lawyer. However, it is not the only point because the third sentence appears to contain unnecessary information about how far Ventura was in procuring additional capital. It is possible to interpret this as the provision of unnecessary information to fill in DNA as to how the contractual obligation being taken on by the exercise of the option would be fulfilled. In another sense, in the context of the second sentence, it may be that there is no more at this stage to say than that there is an intention to proceed, but that Ventura cannot give an unconditional obligation without having financial commitment of third parties to the extent of the option.

As regards the submissions of Ventura, there is a problem about the above mentioned caption giving notification and then referring in the first sentence to giving notice of the allotment. In that context, the reference to “We intend to take up the entire £40 million” might be understood as meaning that the entire £40 million was being taken up. The mistake about referring to the term sheet is an obvious mistake, and one which would seem to be immaterial to a recipient of the January email.

As regards the third sentence, this does not provide an obvious explanation as to why the notice was being sent on the last day provided in the Subscription Letter and without a request for an extension of time. Without more, the option would lapse, and this valuable entitlement would be lost unless DNA in their absolute discretion chose to agree an extension of time. It can be said that it would appear odd for Ventura to allow this to happen, particularly in circumstances where they were in funds up to £20 million and could have at least secured the exercise of rights limited to that sum. None of these difficulties would take place in the event that the January email were construed as meaning that the option was being exercised as to £40 million. In that context, the third sentence might be construed as meaning that there was a confidence in being able to fulfil the obligation as to £40 million because the £20 million had been raised, and the balance of £20 million was in the process of being firmed up. Even if it were the case that the usual practice of Ventura was to raise the money before commitment, which might indicate a basis on which to proceed.

Considering the January email on the basis of the information known to the parties at the time and not by reference to subsequent conduct, there are real difficulties about interpreting the email without having a full factual matrix. There is already a difference between the parties as to whether (a) there was a settled practice of Ventura in not making a contractual commitment without the investor’s commitment, and (b) such practice was known to DNA.

In order to understand the January email, and to be informed about how to resolve the above points of difference, it is necessary to know far more about the factual matrix than is currently before the Court. The position is that there is very limited information before the Court. At the moment, there are a few references in the pleadings and almost no evidence. As regards the pleadings, there are paras. 7 and 8 of the Reply to the following effect:

“7.

As each of the Defendants knew and understood (both before and following this email), Ventura operated on the basis that it would only commit to the investment of funds when its investors had committed funds and that the commitment to invest would only be confirmed when the monies had been paid to DNA and the shares were about to be allotted. Ventura was seeking to raise funds and wished to maximise its investment, but was unable to confirm the specific amount.

8.

… As DNA knew and understood, Ventura sought the opportunity to apply for up to £40 million in additional shares and could not commit to a specific amount until it had itself received commitments from investors to a specified amount.”

DNA’s reply to this, which is strictly a rejoinder, states at para. 2.1 that para. 7 of Ventura’s reply is inadequately particularised and does not identify how and when DNA is said to have acquired the knowledge referred to, and denies the knowledge. In any event, DNA says that the way in which Ventura may have been accustomed to act is not legally relevant having regard to the terms of the Subscription Letter. Ventura was given a right to participate and it served a notice of its intention to do so and therefore upon obtaining the Approvals was bound to complete the Subsequent Subscription. The only viable interpretation of the 18 January email was that it was a notification that Ventura was exercising the option.

The Defendants submit that the factual matrix did not matter because the drafting of the 18 January Email was inconsistent with the practice contended for by Ventura. That was because the Subscription Letter did not refer to any conditions relating to Ventura having secured its funding position. Further, the deadline was 18 January and so the only way in which Ventura could not miss the investment was exercising the option on 18 January. The very fact that the 18 January Email was served points, say the Defendants, to the conclusion that if Ventura had the alleged practice of only subscribing with the money in place, it chose to depart from it on this occasion. It must have done so in order to secure the ability to subscribe. The problem about these submissions is that without seeing the 18 January Email in a contractual and factual context, it is not possible to say definitively what was its true meaning and effect.

As regards evidence, there are two witness statements of Mr Buckley. He is a solicitor and not a person having direct knowledge of the matters relevant. As noted above, the notices are to be construed in the context of the surrounding circumstances and the contractual documentation. These matters about the knowledge and understanding of the parties may require consideration of more than the particular notice. They may or may not be evident from the contemporaneous documents. In seeking to find this, there are the above assertions in the statements of case, but they are sparse and undetailed. The evidence is very limited, that is to say only from a solicitor for Ventura and none on behalf of DNA.

These matters are in my judgment of importance in order to view the 18 January email in context. They are likely to shed light on the meaning of the third sentence in particular. Why was it that Ventura was giving information relating to its raising money? It may be as Ventura contend. It may be that there is nothing in it. It may be that the knowledge was shared. It may be that it was not. It may be that a reasonable person in the position of the DNA with the information would understand that. It may be that it was irrelevant information.

At a trial, there will be difficult questions for both sides. By way of example only, Ventura will have to deal with why it was the case that it ever wrote the 18 January Email unless it was to exercise the subscription. It will have to explain why it wrote on the last day provided contractually for the taking up of the subscription. It will also have to explain why, if it wanted extra time, this was not expressed in the 18 January Email. Likewise, the Defendants will have difficult questions to answer. This will include how it was to understand the third sentence of the 18 January Email. Noting that the test is an objective test about what the notice meant, it is to be construed by reference to the knowledge of the DNA about the transaction. If it was the case that the obligation was to be unconditional, what was the purpose of providing information about the fact that not all of the funds had been raised and the level of confidence thereafter of raising the balance of the money? In these circumstances, it will be necessary to consider the factual matrix. For all the reasons set out above, these matters ought not to be determined on a summary judgment.

Applying the citations of law above as regards summary judgment cases to the facts of the instant case:

I therefore conclude that the construction of the 18 January Email ought not to be resolved at this summary judgment stage, and that there are real prospects of success which are an answer to the respective applications for summary judgment. This is subject to an important matter. It is whether evidence of subsequent conduct or communications or agreements can be taken into account in the exercise of construction. I have thus far ignored such evidence in the question of construction. It is now necessary to consider this and the extent to which it affects the conclusion thus far.

There is an argument raised by Ventura that examination of the post-contractual notice conduct shows that the parties did not consider that the 18 January Email amounted to the subscription being taken up. It points to a period of 15 months when the point that the Option had been exercised would have been taken up. This reflects, it is said, the objective intention of the parties at the time that the 18 January Email was not the exercise of the Option.

The starting point is that subsequent conduct is not admissible as an aid to contractual construction- see Hyundai Merchant Marine Co Ltd v Daelim Corp [2012] 1 Lloyd’s Rep 211 per Flaux J (as he then was) at para. 13. A fuller quotation is as follows:

“The inadmissibility of a subsequent contract as an aid to construction of a written contract is merely one aspect of the general principle of English contract law that (save in exceptional circumstances not applicable in the present case) the subsequent conduct of the parties cannot be looked at to interpret a written contract: see James Miller & Partners v Whitworth Street Estates [1970] AC 583 per Lord Reid at 603D–E; Schuler AG v Wickman Machine Tool [1974] AC 235 per Lord Reid at 252C–F; Lewison: The Interpretation of Contracts 4th edition para 3.15. It seems to me that the principle that the subsequent contract is inadmissible is equally applicable whether it is made the following day or long after.”

Since contractual notices are analogous to contracts themselves, it is strongly arguable that contractual notices stand to be construed by rules at least analogous to contracts. In that event, subsequent conduct would be inadmissible as to the interpretation of the contractual notice save in certain limited circumstances. The subsequent conduct may be relevant to a variation, which does arise in this case, but that is as to whether there was a variation or a discharge, but not as to the effect of the contractual notice. Subsequent conduct may be relevant to an estoppel, such as an estoppel by convention. The language of para. 44 of the skeleton argument on behalf of Ventura refers to a common understanding as to the absence of any specific commitment or binding obligation on the part of Ventura to invest an additional sum of £40m being evidenced by the course of conduct of the parties after the 18 January Email. Although canvassed during the hearing, no estoppel has been pleaded at this stage.

Even if subsequent conduct could be prayed in aid in respect of construction, there are arguments with a real prospect of success that it does not assist. The reason for this is that the conduct is to be construed objectively and not by reference to the subjective understanding of the parties at the time. Further, as will be discussed in more detail below, the subsequent communications of the parties, relied on by Ventura, were remarkably informal, given the large sums involved. There is an argument that they are not so clear so as to show the question whether or not the subscription was taken up can be determined summarily either way.

I therefore conclude that the argument that the Court must take into account post-contractual notice conduct in interpreting the 18 January Email to be not suitable for summary judgment for the following reasons. First, whilst it may well be that such conduct is inadmissible, there are matters of legal complexity as to the extent, if at all, to which such post-contractual notice documentation will be admissible. Second, even if this material is admissible, there are arguments going both ways as to the probative value of such communications. Those arguments will be set out in the section about variation which follows. Third, if this information is admissible, it will only add for the need for hearing oral evidence and possibly for documents on disclosure to be sought in order to have full understanding of the nature and effect of such post-contractual notice conduct.

The submission of Ventura

Even in the event that there was a binding obligation to subscribe to £40m of shares, Ventura submit that the agreement was varied or discharged by reference to subsequent conduct. The subsequent conduct in the instant case can be summarised as follows.

First, on the basis of the Subscription Letter, the option was to be exercised by 18 January 2021, and payment was to be by 18 February 2021. In the event, the latter came and went and so there was no insistence of payment by that date. If the January email had been recognised as the exercise of the option, then it is said by Ventura that it would have been expected that DNA would have relied upon its rights, but that did not occur. Ventura submits that this evidences that if there was agreement to subscribe, it was treated as at an end by the absence of insistence on payment in February 2021. DNA says that there was nothing in this point because the parties were discussing variations in the amount of the subscription and the time for payment, as is evidenced by the subsequent correspondence of 23 February 2021. This did not mean that there was an intention to abandon accrued rights.

Second, it is said by Ventura that the correspondence of 23 February 2021 was inconsistent with the option having been exercised on 18 January. The reference to a request for an extension date would not have been required if it had already been exercised. The £75 million would not have been referred to by itself but would have referred to including the original £40 million or being in in addition to the £40 million to date if there was a continuing agreement to subscribe £40 million. DNA says that it is not significant because either way the obligation to subscribe for £40 million was unaffected.

Third, Ventura submits that in the event that the option had been exercised as regards the £40 million, the subsequent correspondence of 29 March 2021 would have related the additional £28 million to the £40 million contained in the January email if there was a continuing obligation to subscribe the balance of the £40m. DNA submits that this was unnecessary. The £28 million formed a part of the £40 million, and the balance remained due.

Fourth, Ventura submits that any agreement was amended on 6 May 2021 by the board minutes of DNA and the Deed of Amendment amending the subscription price and increasing the number of shares issued by reference to the moneys paid thus far. There was no reference to any agreement of Ventura to invest in the sum of £40m. Ventura submits that this must have been on the basis that there was no obligation to subscribe for further shares, such that this superseded any previous agreement. Attention is drawn to an entire agreement clause in the Deed of Amendment (section 6).

The Defendants’ submission logically starts from the premise that there was a binding obligation to have a subscription for £40m, and there is no allegation by Ventura that this obligation was discharged by express agreement. It is the inconsistency of the subsequent agreements which is said to lead to a variation or discharge of the obligations.

The Defendants say that the particular subject matter of 23 February exchange was not inconsistent with the continued existence of the obligation taken on by the 18 January Email. The request for a final closing date of 8 April 2021 did not seek to extinguish the obligation of Ventura to invest. The request to subscribe £75m of shares did not seek to extinguish the £40m obligation but provided a higher ceiling.

The Defendants submit that the Deed of Amendment had recitals and Clause 2.01 to the effect that the prior agreements remained including the Term Sheet and the Subscription Agreement remained in full force and effect unless specifically amended by the Deed of Amendment. There was no provision abrogating what had gone before. The amendments of price per share was relevant to what would be acquired for £40m but did not affect the continuing obligation to invest £40m.

The nature of the arrangements between the parties appears to have been informal or without full attention to detail. The result is that it is not possible to reach a conclusion in favour of one party or the other that if the Option had been exercised that it was subsequently abrogated. It may turn out that that was the case or not the case, but it requires a trial in order to consider the various documents against the factual matrix and hearing evidence of the protagonists.

Ventura is right to draw attention to the curiosity that for over a year on the Defendants’ case, there was no contention that Ventura was in default in respect of an obligation to subscribe a total of £40m. The Defendants are entitled to draw attention to the fact that there was no express cancellation of the £40m subscription.

Just as there are critical matters to be explored about the factual matrix relating to the 18 January Email, so too in respect of the subsequent communications from February to May 2021 especially. This is all more of the same. This is not a case which can be decided on a series of documents and evidence limited to that of a solicitor for one side. For very similar reasons as were given above in respect of the 18 January Email as to why a trial was required (at paragraph 58 above), so too the same applies to the subsequent communications which cannot be readily understood without evidence of the protagonists.

For all the above reasons, both the application of Ventura and the application of the Defendants for summary judgment and for strike out of statements of case are dismissed. The Court is grateful to Counsel on both sides for the intelligent and moderate way in which they expressed themselves and for the quality of their respective oral and written submissions.