Mr Nobahar-Cookson, along with his family trust, entered into a share purchase agreement (SPA) with The Hut Group Ltd for the sale of his online sports nutrition company. The SPA contained a clause exempting the sellers from liability for any claim "…unless the buyer serves notice of the claim on the sellers…as soon as reasonably practicable and in any event within 20 business days of becoming aware of the matter" (the notice clause).

The Hut Group served notice of a warranty claim on 6 February 2012 and the sellers argued that it was time-barred under the notice clause because the buyer had been aware of various relevant facts by 9 January 2012, that is, outside the 20-day time limit, although it had decided that it had a proper basis for a claim only after seeking advice from its forensic accountants.

The High Court held that The Hut Group’s claim had not fallen outside the 20-day period and was therefore valid ([2014] EWHC 3842 (QB)). The sellers appealed, and their argument turned on the meaning of the phrase "aware of the matter". The court was asked to choose between three possible meanings of this phrase:

It was relevant that clauses of this type are forms of exclusion clause, as they have the effect of potentially excluding or restricting liability, and this led to a debate as to whether they ought to be construed contra proferentem rather than in accordance with the natural meaning of the language used or commercial common sense (see box "The contra proferentem rule").

The court found that the contra proferentem principle still has a part to play where an exclusion clause is ambiguous. However, it is not a special rule of construction that can be used to give a strained meaning to an exclusion clause, particularly in a commercial setting where the courts have repeatedly emphasised that contracting parties should generally be free to allocate risk as they see fit.

Applying the rule can be justified when faced with unclear drafting because exclusion clauses, by their nature, cut down or detract from contractual obligations or remedies for breach of those obligations, and clear words are essential to show that this was what the parties intended. It is something of a last resort rather than an overarching principle and, as Lord Justice Briggs, giving the leading judgment, said "the court must still use all its tools of linguistic, contextual, purposive and common-sense analysis to discern what the clause really means".

The court then looked at the context and the use of the words "claim" and "matter" in the SPA generally. The natural meaning of the words did not really help. It could not be said that "matter", as it appeared in the clause, meant the same as "claim" and the definition of "claim" could cover an entitlement to bring a claim or a situation from which a claim could arise. As a result, the court would have to consider other approaches: firstly, commerciality, and then, if necessary, the principle of narrow construction.

On the first point, according to the court, requiring notice of a claim as soon as suspicions arose is "hopelessly uncertain" and uncommercial in a situation such as this where the parties have an ongoing business relationship. 20 days’ notice is short, but not unrealistic, especially since the purpose of the notice clause was to prevent The Hut Group from concealing claims in order to pursue them later. As a result, the better interpretation should focus on awareness of there being a realistic claim rather than awareness of the underlying facts. However, although sensible in terms of purpose, this approach was not beyond doubt. This led the court to fall back on applying a narrower construction which favoured interpreting the phrase to mean awareness that there is a proper basis for a claim. On this basis, the court held that The Hut Group had not fallen foul of the 20-day time limit for the service of notice for warranty claims.

The interpretation proposed by Mr Nobahar-Cookson would restrict The Hut Group’s remedy to such an extent that clearer words than those used in the SPA would have been needed. Instead, in this case, a thoroughly modern recourse to purposive construction was applied along with the perhaps more old-fashioned recourse to rules of construction, which continue to assist the court where all else fails.