Case No: HC-2015-004418
Neutral Citation Number: [2016] EWHC 1124 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 17 May 2016

Before :

MR JUSTICE ARNOLD
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Between :

	(1)	TUSCOLA (110) LIMITED
(2)	TUSCOLA (104) LIMITED	Claimants	
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	THE Y2K COMPANY LIMITED	Defendant	

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Martin Hutchings QC (instructed by Collyer Bristow LLP) for the Claimants
Adam Smith (instructed by Ashteds Solicitors) for the Defendant

Hearing dates: 25-28 April 2016
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Judgment
MR JUSTICE ARNOLD : 
Contents

Topic											Paragraphs

Introduction									1-3
The parties										4-7
The witnesses									8-12
	Tuscola’s witnesses							8-10
	Y2K’s witnesses								11
	Others									12
The facts										13-182
	GRB approaches Y2K on behalf of Tuscola			14
	Y2K obtains funds from the Funders				15
	Tuscola enter into the Loans and Olswang give			16-20
	undertakings
	Tuscola default on the Loans						21-22
	Olswang seeks an undertaking from Mr Unett			23-25
	Mr Unett sends Olswang the DS1s					26-29
	Olswang gives undertakings to Barclays and Pinsents	30-32
	DD10 becomes available						33-35
	Discussions from 2 to 22 March 2015				36-46
	The Statutory Demands						47-48
	Discussions from 5 June to 30 July 2015				49-60
	The Offers									61-63
	Events from 20 to 27 August 2015					64-71
	Friday 28 August 2015							72-77
	Saturday 29 and Sunday 30 August 2015				78-79
	Monday 31 August 2015						80
	Tuesday 1 September 2015						81-87
	Wednesday 2 September 2015					88-92
	Thursday 3 September 2015						93-119
	Friday 4 September 2015						120-131
	Saturday 5 September 2015						132
	Monday 7 September 2015						133-138
	Tuesday 8 September 2015						139-143
	Wednesday 9 September 2015					144-148
	Thursday 10 September 2015						149-151
Friday 11 September 2015						152-155
	Events from 17 September to 16 October 2015			156-158
	Tuesday 27 October 2015						159
	Wednesday 28 October 2015						160-162
	Thursday 29 October 2015						163-168
	Friday 30 October 2015						169-177
	Monday 2 November 2015						178-181
	Tuesday 3 November 2015						182
Tuscola’s contentions in summary						183
Tuscola’s primary contention: construction of Mr Unett’s		194-198
email at 15:12 on 3 September 2015
Tuscola’s secondary contention: affirmation				199-221
	Did Tuscola’s acceptance of the Offers give rise to 		200
	enforceable contracts of compromise?
		Compromise of a bona fide dispute				201-204
		Section 2(1) of the 1989 Act					205-213
		Conclusion								214		
	Construction of the offers						215-218
	Election									219-220
	Affirmation								221-222
Tuscola’s tertiary contention: waiver or estoppel			223-228
Conclusion										229
Introduction
1.	This claim was commenced by Olswang LLP (“Olswang”) as a stakeholder application under CPR rule 86.2(1) in respect of two undated Land Registry Form DS1s (“the DS1s”) executed by the Defendant (“Y2K”) which are in the custody of Olswang. The DS1s respectively relate to: 
i)	a charge dated 30 June 2014 (“the Bramley Court Charge”) over a property known as Phase 2, Bramley Court, Dunstable (“Bramley Court”) granted to Y2K by the First Claimant (“T110”) as security for the obligations of T110 to Y2K pursuant to a bridging loan agreement entered into by Y2K as lender and T110 as borrower on the same date (“the Bramley Court Loan”); and
ii)	a charge dated 4 July 2014 (“the Cable House Charge”) over a property known as Cable House, Liverpool (“Cable House”) granted to Y2K by the Second Claimant (“T104”) as security for the obligations of T104 to Y2K pursuant to a bridging loan agreement entered into by Y2K as lender and T104 as borrower on the same date (“the Cable House Loan”).
2.	The DS1s declare that the lender (Y2K) “acknowledges that the property identified … is no longer charged as security for the payment of sums due under the charge”. The DS1s thus permit the cancellation of any entries from the registers of Bramley Court and Cable House (together, “the Properties”) in respect of the Bramley Court Charge and the Cable House Charge (together, “the Charges”) respectively. 
3.	The DS1s were sent to Olswang by Iain Unett, a solicitor and Group Legal Counsel to Y2K, on 16 October 2014 upon terms that the DS1s were to be held by Olswang to his order pending release by him in writing. The effect of this was to prevent the DS1s from being delivered as deeds until released. The Claimants (collectively, “Tuscola”) contend that they subsequently became entitled to possession of the DS1s, and hence delivery of them as deeds. Y2K disputes this. It was as a result of this dispute that Olswang made its stakeholder application. On 28 January 2016 Master Teverson directed the trial of the following issue pursuant to CPR rule 86.3(1)(b): “have [T110 and T104] respectively become entitled to possession of the two Forms DS1 the subject of this claim?”
The parties
4.	T110 and T104 are both companies incorporated in the British Virgin Islands (“BVI”). They are part of a group of companies which invest in ground rent portfolios. This involves acquiring freehold sites in the UK which are usually subject to long residential leasehold interests. The income from the sites derives principally from ground rents payable under the long leases. Tuscola’s sole director is Michael Gubbay, who resides in Israel. At the relevant time Olswang acted on behalf of Tuscola. 
5.	Y2K is a company incorporated in Gibraltar. It carries on business as an unregulated lender specialising in bridging finance. Y2K’s sole director is Ian Moorcroft, who resides in Andorra.
6.	Most of the money lent by Y2K to Tuscola was lent to Y2K by a group of five funders (“the Funders”) on terms that profits and losses would be shared. (Mr Moorcroft himself also lent some money to Y2K.) The Funders were Victoria Field and Ian Carrington (through Axioma Ltd, an English company), Jonathan Houghton (through IP Investments Ltd), John Cubley and Kerry Lee. Ms Field also provides administration and bookkeeping services to Y2K, and other companies in the same group, via Axioma SA (an Andorran company).   
7.	Tuscola were introduced to Y2K by Richard Irving of Ground Rent Business Ltd (“GRB”, an English company). GRB acts as an agent for buyers and sellers of properties such as those invested in by Tuscola. Mr Irving has known Mr Moorcroft for getting on for 30 years and Mr Gubbay for about seven years.
The witnesses
Tuscola’s witnesses
8.	Counsel for Y2K submitted that Mr Gubbay was a very unsatisfactory witness who was not truthful and whose evidence should not be accepted unless it was corroborated by other acceptable evidence or adverse to his interest. I accept this submission. Mr Gubbay was a combative witness who repeatedly answered a different question to the one he had been asked and then insisted that he had answered the question asked. Although very quick with answers when confident of his ground, he played for time when in difficulty. I was driven to the conclusion that some of his answers were not truthful. In addition, it is clear that, as I shall discuss, some of his contemporaneous statements were untrue or at least misleading.  
9.	Counsel for Y2K submitted that Mr Irving was not a reliable witness for three reasons. The first was that Mr Irving, although professing to be a neutral broker or mediator, was supportive of Tuscola: Mr Irving was Tuscola’s agent in relation to the transactions in question, and he had convinced himself that Tuscola were morally in the right. The second was that Mr Irving’s evidence was lacking in detail on the crucial points. The third was that, as Mr Irving frankly admitted, Mr Irving’s recollection as to dates and times was very poor. I accept these submissions. 
10.	Michael Grace is a partner in Collyer Bristow LLP (“Collyers”), Tuscola’s current solicitors. As explained below, he gave evidence about events in late October 2015. Counsel for Y2K accepted that Mr Grace had given a truthful account of his understanding at that time to the best of his recollection, but submitted that his recollection was unreliable and his understanding was not objectively justified. I agree with this. 
Y2K’s witnesses
11.	As counsel for Y2K submitted, there was a striking contrast between Tuscola’s witnesses and Y2K’s witnesses. Mr Moorcroft was an excellent witness who gave clear, precise and cogent evidence. Mr Unett was less impressive, but nevertheless was clear and direct. Ms Field was also a straightforward witness. I have no hesitation in preferring the evidence of Y2K’s witnesses to that of Tuscola’s witnesses where they conflict, and in particular the evidence of Mr Moorcroft and Mr Unett to that of Mr Gubbay and Mr Irving.
Others
12.	Stephen Hermer of Olswang made a witness statement in support of Olswang’s application which is before the court, but he was not required by either side to give oral evidence. As counsel for Y2K pointed out, Tuscola did not call any witness from their bank, Barclays Bank plc (“Barclays”). Nor did Tuscola call any witness from a company called Grangeford (109) Ltd, whose role is explained below. Although this appears to have been another of Mr Gubbay’s companies, he gave no evidence as to his relationship with it.
The facts
13.	Although the issues between the parties by the end of closing submissions were relatively narrow in compass, the factual background is quite intricate. Moreover there are certain factual disputes which must be resolved. I must therefore set out the facts in considerable detail. I should make it clear before proceeding further that much of the correspondence to which I will refer was at the time marked “without prejudice” or “without prejudice save to costs”, but given the nature of the present issues between the parties, such correspondence has been admitted into evidence. All times given are UK times, although some of the participants were in other time zones.  
GRB approaches Y2K on behalf of Tuscola
14.	On 23 June 2014 GRB approached Y2K on behalf of Tuscola for one-month bridging finance to enable T110 to purchase Bramley Court pursuant to a contract which was due to complete on 30 June 2014. Tuscola offered to pay Y2K interest at a rate of 10% for the one-month loan. During a conference call between Mr Irving, Mr Moorcroft and Mr Unett on 24 June 2014, Mr Irving said that Tuscola had a facility with Barclays, and that Tuscola had applied for a drawdown under the facility (“DD10”) to enable Y2K to be repaid within the one-month period.
Y2K obtains funds from the Funders
15.	Y2K did not have sufficient ready funds itself to make the loan, and therefore Y2K arranged with three of the Funders (Ms Field, Mr Carrington and Mr Houghton) that they would lend monies to Y2K on terms that profits and losses in relation to the loan would be shared. Y2K has always maintained that it owes a fiduciary duty to the Funders in relation to the loans. It was Mr Moorcroft’s evidence, which I accept, that he had throughout consulted with, and followed the decisions of, the Funders in relation to more important matters which could adversely their interests in relation to the loans. 
Tuscola enter into the Loans and Olswang give undertakings
16.	On 30 June 2014 T110 and Y2K entered into the Bramley Court Loan pursuant to which Y2K advanced £193,584 to T110. The Bramley Court Loan provided for the payment by T110 of interest of 10% per calendar month compounded monthly. On the same date six charges were executed in favour of Y2K as security for the Bramley Court Loan: the Bramley Court Charge, purported first charges granted by T104 over three further properties and purported first charges over two further properties granted by Tuscola (103) Ltd (or Tuscola (199) Ltd) and Tuscola (108) Ltd. For some reason, the Bramley Court Charge was not registered, and thus took effect only in equity.   
17.	Also on 30 June 2014 Olswang sent Y2K by email an unsigned letter containing a number of undertakings in relation to the Bramley Court Loan, one of which was in the following terms (“Undertaking 4”):
“upon receipt of funds from Barclays Bank plc, to redeem the Loan from proceeds of a drawdown which the Borrower has requested from Barclays Bank plc”.
18.	At around the same time Tuscola requested another bridging loan from Y2K, this time in respect of Cable House. On this occasion Y2K borrowed funds from Mr Cubley and Ms Lee. By 3 July 2014 Y2K had been told that Tuscola would redeem the loan “from the proceeds of a re-mortgage already agreed by Barclays”.
19.	On 4 July 2014	T104 and Y2K entered into the Cable House Loan pursuant to which Y2K advanced £101,200 to T104 again at monthly interest of 10%. On the same date seven charges were executed in favour of Y2K as security for the Cable House Loan, including the Cable House Charge and purported first or second charges granted in respect of various other properties by T104 and its sister companies. The Cable House Charge was duly registered.
20.	On 7 July 2014 Olswang sent Y2K an unsigned letter containing a number of undertakings in relation to the Cable House Loan, including Undertaking 4. Hereinafter I shall for convenience refer to Olswang as having given undertakings on 30 June and 7 July 2014 without deciding whether that is what Olswang actually did (which, as will appear, is contentious at least so far as Olswang is concerned). 
Tuscola default on the Loans
21.	On 31 July 2014 the Bramley Court Loan to T110 fell due, but was not repaid. On 1 August 2014 Y2K served notice on T110 that an event of default had occurred. On 4 August 2014 the Cable House Loan to T104 fell due, but was not repaid. On 5 August 2014 Y2K served notice on T104 that an event of default had occurred. On 16 September 2014 Y2K wrote to Tuscola advising them that Y2K intended to exercise its powers of sale.
22.	From 16 September 2014 onwards Tuscola, GRB and Olswang gave Y2K a variety of assurances, excuses and explanations in order to persuade Y2K to allow further time for repayment. During this period, Mr Gubbay said to Mr Moorcroft on occasion that, as and when Tuscola were ready to settle, he intended to make an offer lower than the amount outstanding. Mr Moorcroft told Mr Gubbay that the decision whether to accept a lower offer would rest with the Funders, and that Mr Moorcroft could not predict their response.
Olswang seeks an undertaking from Mr Unett
23.	On 3 October 2014 Adam Burrage of Olswang sent Mr Unett an email, further to an earlier telephone conversation, confirming that Olswang acted for T104 and T110 in relation to the purchases of Cable House and Bramley Court. He required Mr Unett to provide Olswang with “an undertaking that the charge [over Cable House in favour of Y2K] will be discharged on receipt of appropriate funds”. At that stage Mr Burrage’s understanding was that Mr Gubbay “is not seeking to charge [Bramley Court] as part of his next drawdown”.
24.	On 6 October 2014 Mr Unett sent Mr Burrage an email saying that he proposed to let Olswang “have the appropriate DS1’s for the various charges to be held to my order pending repayment of the loans” and would therefore “not need to give you an undertaking”. He went on the say that he felt that, as a matter of courtesy, he should draw Mr Burrage’s attention to the undertakings given by Olswang given the apparent proposal to redeem only one loan.
25.	On 8 October 2014 Mr Burrage replied saying that the charges in respect of Bramley Court and Cable House would both be redeemed from funds drawn down from Barclays “per this firm’s undertakings of, respectively, 30 June and 4 July 2014”. He went on to say that he did not yet have instructions as to a proposed draw down date, but nevertheless asked whether Mr Unett was able “to send me the DS1s held strictly to your order pending repayment?”.         
Mr Unett sends Olswang the DS1s
26.	On 9 October 2014 Mr Unett wrote to Mr Burrage enclosing DS1s for five properties. In his covering letter Mr Unett stated:
“The DS1’s should be held to my order pending release by me in writing (email confirmation will undoubtedly be employed). In the event that the loans made to your client are not satisfied then I will require the return of the DS1’s.”
27.	On 15 October 2014 Mr Burrage sent Mr Unett an email thanking him for the DS1s, but noting that he had not received DS1s for Bramley Court or Cable House. He went on:
“My client is looking to charge these properties with Barclays and so I will require DS1s from you, again held to your order pending your email confirmation of release.”
28.	 On 16 October 2014 Mr Unett wrote to Mr Burrage enclosing the DS1s for Bramley Court and Cable House. In his covering letter Mr Unett said
“As with the previous DS1’s forwarded, these should be held to my order pending release by me in writing (email confirmation will undoubtedly be employed). In the event that the loans made to your client are not satisfied then I will require the return of all the DS1’s.’”
Each of the DS1s was signed as a deed by Mr Moorcroft on behalf Y2K.
29.	On 22 October 2014 Y2K provided redemption figures to Tuscola in respect of the Loans. The figure for T104 was £153,932.59 and the figure for T110 was £294,227.70. On 5 December 2014 Y2K provided further redemption figures. The figure for T104 was £199,531.40 and the figure for T110 was £348,694.49.
Olswang gives undertakings to Barclays and Pinsents
30.	DD10 was repeatedly delayed for reasons that are not in evidence. Prior to receipt of the funds on 27 February 2015 Mr Gubbay informed Olswang that the amount Olswang would receive from DD10 would be sufficient to redeem the Loans and fund the completion of the purchase of several properties.
31.	On 23 February 2015 Olswang wrote to Barclays and to its solicitors Pinsent Masons LLP (“Pinsents”) in relation to loan facilities being provided by Barclays to T110, T104, Tuscola (105) Ltd and Tuscola (101) Ltd. Olswang undertook to Barclays and to Pinsents (inter alia):
“To hold any monies advanced by [Barclays] or by [Pinsents] strictly to [Barclays’] order pending written confirmation from [Pinsents] that the monies may be released to us for the purposes of the Transaction only.
…
To complete the Transaction on the date that the monies are advanced to us or if completion does not take place on that date to hold the monies strictly to the order of [Barclays] and, if requested by [Pinsents] in writing, to return the monies to [Barclays] or [Pinsents] with all accrued interest.”
32.	On 26 February 2015 Mr Gubbay informed Mr Moorcroft that Barclays had released DD10 to Olswang that day, and asked that Y2K consider an offer of a reduced figure for settlement the next day. Mr Moorcroft told Mr Gubbay that he was willing to present the offer for consideration by the Funders on certain conditions, including confirmation by Olswang that it had received cleared funds from Barclays for T104 and T110 and were able to redeem the loans the next day. By email that afternoon Mr Unett reported this to Mr Burrage and asked for a response by close of business that day. 
DD10 becomes available
33.	In fact DD10 did not become available until 27 February 2015. Out of a total amount of £1,541,468, £656,000 was transferred to Olswang’s client account. This sum was held to the order of Barclays and Pinsents pursuant to Olswang’s undertaking of 23 February 2015.
34.	There were a number of emails and a telephone conversation between Mr Burrage and Mr Unett during the course of the day. In an email at 16:30 Mr Unett provided redemption figures in respect of the Loans of £261,030.73 for T104 and £444,813.61 and stated that Y2K would accept payment of these sums on 2 March 2015 even though interest was payable on the first of the month. He went on to say he would of course “release all of the DS1’s” once payment was completed.
35.	Mr Burrage immediately sent Mr Gubbay an email pointing out that Olswang did not have sufficient funds to redeem the Loans on 2 March 2015 and asking him if he would “top-up” the funds from other sources. Mr Gubbay did not do so, and accordingly the Loans were not redeemed on 2 March 2015
Discussions from 2 to 22 March 2015
36.	Although the letter is not in evidence, it is evident that on 2 March 2015 Mr Unett wrote to Olswang demanding compliance with the undertakings contained in Olswang’s letters dated 30 June and 7 July 2014, and in particular Undertaking 4.
37.	On 3 March 2015 Olswang sought and obtained authority from Pinsents releasing £236,327 from DD10 to complete the purchase of two other properties known as Phase 1, Bramley Court and Phase 4, Copper Wells, Unity Mill, Rochdale (“Unity Mill”) and the remainder of the sum received by Olswang (just under £420,000) to redeem the Loans from Y2K.
38.	On 5 March 2015 Olswang replied to Mr Burrage’s letter dated 2 March 2015, disputing that it had any liability to Y2K pursuant to Undertaking 4. Olswang made two points. The first was that it did not appear that the letters dated 30 June and 7 July 2014 had been signed. The second was that that the funds received by Olswang from Barclays on 27 February 2014 “are not unrestricted and as such we do not believe that they fall within the description of the funds referred to in clause 4 of the Undertakings”.
39.	On 6 March 2015 Mr Unett replied to Olswang, contending that Olswang was obliged to redeem the Loans pursuant to Undertaking 4. He acknowledged that the letters were unsigned, but pointed out that they had been sent by email and had been treated by Olswang subsequently as binding upon it.  Accordingly, he said:
“The Undertakings were given by your firm, redemption in full is your responsibility jointly and or severally with your client.”
He also disputed Olswang’s interpretation of Undertaking 4. 
40.	On 11 March 2015 Y2K filed a complaint about Olswang’s conduct with the Solicitors Regulation Authority (“the SRA”). The SRA subsequently declined to consider this complaint.
41.	Also on 11 March 2015 Mr Gubbay sent Mr Moorcroft an email settling out proposed terms of settlement involving the payment by Tuscola to Y2K of a total of £444,584. On 12 March 2015 Mr Moorcroft replied, saying:
“Earlier today I convened a meeting and discussed the proposals set out in your email below with the funders. Your proposals have not been agreed to …”
Mr Moorcroft went on to make a counter-proposal involving release of the charges over Bramley Court and Cable House in return for a part payment of £550,000.
42.	On 13 March 2015 Mr Gubbay replied, arguing that the rejection by “Y2K and their funders” of Mr Gubbay’s offer of 11 March 2015 lacked commercial logic, since “the security they hold against that debt is only worth £475,119 (based on valuation estimates by CBRE and GRB)”.
43.	Also on 13 March 2015 Simon Callender of Olswang sent Mr Unett an email disputing that Olswang was liable under Undertaking 4 and saying that the fullest extent of Olswang’s obligation was to pay £347,983, being the amount of the funds remitted by Barclays to Olswang attributable to Bramley Court and Cable House.
44.	On 16 March 2015 Mr Gubbay sent Mr Moorcroft an email setting out a further settlement proposal. Mr Moorcroft replied later the same day saying that he was “not willing to recommend acceptance” of Mr Gubbay’s proposal “to the funders”, and setting out a counter-proposal which he was “willing to recommend to the funders” involving release of the charges over Bramley Court and Cable House in return for an immediate payment of £375,000 and interest on the remainder of the debt being moderated. Mr Gubbay replied later the same say indicating that he was agreeable to this counter-proposal.
45.	On 19 March 2015 Mr Moorcroft on behalf Y2K sent a letter to Mr Gubbay on behalf of Tuscola by email offering to release the charges over Bramley Court and Cable House upon receipt of £375,000 that day, allocated as to £135,362.18 to T104 and £239,637.82 to T110, without prejudice to the positions of Y2K, Tuscola and Olswang with respect to the “disputed undertakings”.     
46.	On 22 March 2015 Mr Unett wrote to Mr Callender recording that Mr Gubbay had informed Y2K that Olswang had refused to pay £375,000 to Y2K as instructed by Tuscola in acceptance of the offer of 19 March 2015 because the offer “did not provide for the release of the undertakings given by your firm”. Mr Unett went to offer, on behalf of Y2K, “to release the legal charge it holds over … Cable House … and to release Olswang … from the undertakings given to Y2K on 7th July 2014” upon receipt of £203,263 by close of business on 25 March 2015. This offer was not accepted. 
The Statutory Demands
47.	On 7 April 2015 Y2K served statutory demands on T104 and T110 for the amounts of £169,244.68 and £209,980.78 respectively (“the Statutory Demands”). These amounts were calculated after giving credit for the security held by Y2K against T104 and T110’s indebtedness as at 5 April 2015 of £317,761.68 and £555,194.78 respectively. On 22 April 2015 Tuscola issued applications in the BVI to set aside the Statutory Demands. In these applications, Tuscola acknowledged (i) the Loans and their receipt of the principal sums advanced, and (ii) that they had made no payments other than of £19,358.49 by T110 on 10 November 2014 and of £10,200 by T104 on 3 March 2015. They stated they “disputed the amount of interest claimed by” Y2K since Tuscola had “not been provided details of the interest calculation by” Y2K. They also disputed the costs claimed by Y2K since Y2K had not “formally demanded the costs and rendered copies of invoices or reasonably explained how they have been calculated”. Tuscola also disputed that Y2K had “formally or correctly demanded repayment of the loan in accordance with the terms of the [Loans]”. Reference was also to the dispute between Y2K and Olswang and to an English exclusive jurisdiction clause in the Loans.
48.	On 22 April 2015 Mr Moorcroft sent Mr Gubbay an email saying that he had met with the majority of the Funders to discuss a settlement proposal of Mr Gubbay’s, which was not accepted by them. He went on to say that the unanimous feeling of the group was that Olswang had acted “atrociously in not honouring the undertakings they have given and there is no willingness to release them from their undertakings until they have been complied with”. 
Discussions from 5 June to 30 July 2015
49.	On about 5 June 2015 a meeting between Tuscola, Y2K and Olswang was arranged to take place at Olswang’s office on 17 June 2015. On 8 June 2015 Mr Callender sent Mr Unett an email informing him that Olswang would not be representing Tuscola at the meeting, but would be attending as a participant in its own right.
50.	The meeting on 17 June 2015 was attended by Mr Callender and a colleague for Olswang, Mr Moorcroft and Mr Unett for Y2K, Ms Field and Mr Cubley of the Funders, Mr Gubbay for Tuscola and Mr Irving for GRB. During the meeting Ms Field and Mr Cubley were introduced as Funders to Y2K in respect of the Loans, and it was made clear that they and Y2K would all need to agree in order for any proposal to be accepted. Mr Gubbay argued that it was not in Tuscola’s commercial interests to pay more than the properties were worth. Mr Irving said that the properties were worth about £600,000. Mr Gubbay offered to pay £500,000. No agreement was reached at the meeting, however.
51.	On 22 June 2015 Mr Callender sent Mr Gubbay by an email for his comments a draft of a letter addressed to both Y2K and Tuscola. In his covering email Mr Callender said that Olswang held £532,159.28 in its client account; that payment of £347,897 Y2K would leave a balance of £184,266.28; and that, if Tuscola agreed to the proposal contained in the draft letter, Olswang was prepared to waive its lien as to £130,000 of this sum, and apply it in completing the purchase of Unity Mill Phase 4, on the basis that the remainder of the sum of £184,266.28 was used to discharge Olswang’s fees. He went on: 
“ … I would remind you that because of the conflict of interest between the companies and us in relation to the undertakings, we cannot and are not advising you in relation to this proposal and/or any of the negotiations, I am proceeding on the basis that you continue to obtain independent advice on these matters.”
52.	On 23 June 2015 Mr Gubbay replied saying that Tuscola were happy for the letter to be sent. On the same day Mr Callender duly sent the letter to Y2K and Tuscola. The letter began by stating that disputes had arisen (i) between Y2K and Tuscola in connection with the bridging finance provided by Y2K and (ii) between Y2K and Olswang with respect to the draft undertakings provided by Olswang to Y2K, and that the purpose of the letter was to set out Olswang’s proposals to resolve the second dispute. The letter went on to propose that Olswang would pay T104 £203,267 and T110 £144,630 if Y2K agreed on the receipt of those payments:
“i.	To release any and all security that it holds over Cable House … and over … Bramley Court …;
ii.	To fully and unconditionally release Olswang … from any and all liability to Y2K … including … any liability pursuant to the draft undertakings … dated 30 June 2014 and 7 July 2014 …  ”
53.	On 30 June 2015 Mr Unett replied to Mr Callender’s letter to Olswang in a letter copied to Mr Gubbay saying that Y2K and the Funders had discussed matters and that YSK had instructed counsel to advise, who had asked for  certain further information. 
54.	On 9 July 2015 Mr Unett wrote again to Olswang in a letter copied to Mr Gubbay saying that he had discussed matters with Mr Moorcroft, but it would take time to get the responses of the Funders and to obtain counsel’s advice.
55.	On the same day Mr Gubbay sent Mr Unett an email referring to the forthcoming hearing in the BVI and saying that Tuscola maintained that there were still “significant issues in this case, including:
1.		Olswang undertakings …
2.		Non-recourse nature of the loans
3.		Costs and fees.
4.		Good faith in the administration of the loans.”
Mr Gubbay went on to offer Y2K £500,000 in full and final settlement alternatively a partial settlement as proposed in Mr Callender’s letter of 23 June 2015.
56.	On 11 July 2015 Mr Unett sent Mr Gubbay a letter replying to his email of 9 July 2015 and saying that Y2K was obtaining an opinion from counsel which would be discussed with the Funders before Y2K responded to Olswang regarding its offer. He went to say that he did not “intend to prejudice the interests of Y2K or of the Funders by acting without proper advice”. He also stated that the sums currently owing under the Loans were £445,280.48 from T104 and £772,663.36 from T110 (a total of £1,217,943.84).
57.	On 13 July 2015 Tuscola’s applications to set aside the Statutory Demands were dismissed with costs. At the hearing, Tuscola advanced no argument as to why the sums claimed by Y2K were not due.
58.	On 16 July 2015 there was a telephone conversation between Mr Gubbay  and Mr Moorcroft which Mr Moorcroft reported to the Funders by email later that day as follows:
“[Mr Gubbay’s] tactic is to make his own application to have T104 and T110 wound up before we make an application to have them wound up. That would mean the liquidation would be voluntary not compulsory and therefore he would probably be able to hold onto his Barclays facilities, though most probably by the skin of his teeth. He prefers not to do that … due to cost, loss of reputation etc. … Iain has checked and he can do this if he chooses. If he did, it would not stop us enforcing our security, but we’ve checked all the Land Registry records and there’s nothing else in any of the relevant Tuscolas that isn’t charged to Barclays, so we’d get what we can get for the properties (less receiver’s, agent’s and lawyer’s fees) and bugger all else (Olswang excepted, but more of that later). 
In an attempt to avoid winding the companies up, Gubbay has upped his settlement offer to £600,000. The gross value of the security is about £550,000. Even if we got more than £550,000, after fees it is safe to say that £600,000 is more than we would realise from selling the properties. He says he can pay £450,000 right away and £150,000 within three months. We’d have to release the undertakings and the charges over Bramley & Cable to get the £450,000. At that point the back of my fag packet says the [Funders] would get the stake money back plus about 16.5% … He would leave the other existing security in place (£90,000) and add to it to the tune of another £90,000 such that we had £180,000 of mortgages securing £150,000. … 
Subject to the Olswang situation, a dispassionate analysis suggests we should accept this offer. ….
The elephant in the room is the Olswang undertakings. … We’d be pretty gutted if we accepted this settlement and then got told by Counsel that we have Olswang on the hook for the lot. So, I’ve agreed with Gubbay that we now have a situation where either he or we can wind up T104 and T110 at will. I’ve further agreed that neither he or we will make any application to the Courts in the BVI before Monday 27th July. We’ve agreed this as I need to speak to the [Funders], some of whom are on holiday about his offer. Happily, it also allows us time to get the opinion of Counsel …’”
59.	On 22 July 2015 Mr Gubbay emailed Mr Moorcroft, with a copy to Mr Irving, a brief description of a property at Ethelbert Terrace, Margate, Kent (“Ethelbert Terrace”) saying that Tuscola valued it at £60,000.
60.	Between 24 and 31 July 2015 Mr Moorcroft discussed Mr Gubbay’s settlement offer with the Funders. The Funders were broadly agreeable to the proposal, but insisted on certain conditions, including that time be made of the essence, and that proper security be required in relation to the second instalment of a value of not less than 135% of £150,000.
The Offers
61.	On 31 July 2015 Mr Unett sent Mr Gubbay, copied to Mr Callender, two letters setting out offers by Y2K, one to T104 and one to T110 (“the Offers”). Since the Offers are central to the issues between the parties, I must set out their terms in full. The Offer to T104 read as follows.    
“PART 36 CIVIL PROCEDURE RULES OFFER TO SETTLE
WITHOUT PREJUDICE SAVE AS TO COSTS
I refer to the Loan made to your company on 4th July 2014 (‘the Loan’) by The Y2K Company Limited (‘Y2K’). Y2K hereby offers to accept settlement as set out below. Y2K reserves its position by submitting these terms of settlement in accordance with Part 36 of the Civil Procedure Rules.
The terms of settlement will be effective as soon as Tuscola (104) Limited accepts them in writing. Acceptance should be sent to me at my UK address, PSG Bahamas Limited, West Walk House, 99 Princess Road East, Leicester, LEI 7LF.
Terms of Settlement
1. 	Time is of the essence.
2. 	Tuscola (104) Limited will make payment in the sum of £219,360.10 (two hundred and nineteen thousand three hundred and sixty pounds and ten pence) to Y2K within 14 days of acceptance of this offer.
3. 	In consideration of the payment and receipt by way of cleared funds of £219,360.10 (two hundred and nineteen thousand three hundred and sixty pounds and ten pence), on behalf of Y2K I will:
a. 	release Olswang LLP from their undertakings of 7th July 2014;
b. 	release the Land Registry Forms DS1 relating to the mortgages granted to Y2K to secure the Loan; and
c. 	withdraw the Statutory Demand served upon Tuscola (104) Limited.
4. 	This offer is open for acceptance until and including 28th August 2015, whereafter it is to be considered withdrawn.
5. 	All money payable under this settlement will be paid to Y2K’s account with Barclays Bank plc, Leicester, Narborough Road Branch, Sort Code 20-49-08, Account Number 70168068, with reference ‘Tuscola (104)’.
6. 	This offer refers to the claim Y2K has against Tuscola (104) Limited in respect of both the Loan Amount defined in the Loan Agreement dated 4th July 2014 in respect of the Loan and interest accrued thereon.
7. 	This offer takes into account any counterclaim, though none has been made.
Installments [sic]
At the election of Tuscola (104) Limited, Y2K is willing to accept settlement in the sum of £219,360.10 in two installments;
•	the first such installment being £164,520.08 (one hundred and sixty four thousand five hundred and twenty pounds and eight pence) to be received by Y2K in cleared funds no later than fourteen days after acceptance of this offer or 31st August 2015, whichever will be the earlier; and
•	the second such installment being £54,840.02 (fifty four thousand eight hundred and forty pounds and two pence) to be received by Y2K in cleared funds no later than 31st October 2015.
This offer to accept payment in installments is subject to the following conditions:
A. 	Time is of the essence.
B. 	Upon receipt by Y2K of the first installment of £164,520.08 (one hundred and sixty four thousand five hundred and twenty pounds and eight pence) in cleared funds, on behalf of Y2K, I will:
i. 	release Olswang LLP from their undertakings of 7th July 2014; and
ii. 	release Land Registry form DS1 in respect of the charge granted by Tuscola (104) Limited in favour of Y2K as security for the Loan over Cable House, Cheapside in the City of Liverpool, L2 2SX registered at the Land Registry under Title Number MS248331.
C. 	Tuscola (104) Limited must provide, or procure the provision of, further security for the payment of the second installment, acceptable to Y2K and of a value not less than £74,000.00 (seventy four thousand pounds). Such security to be granted in favour of Y2K prior to the releases referred to in paragraphs B i and B ii.
D. 	Upon receipt by Y2K of full settlement in cleared funds, on behalf of Y2K, I will:
i. 	Withdraw the Statutory Demand served upon Tuscola (104) Limited; and
ii. 	release the Land Registry forms DS1 in respect of all charges granted to Y2K as security for the Loan.
E. 	In the event that the first or second installment is not paid timeously, or if such security as demanded by Y2K is not provided in accordance with paragraph C then:
a. 	this Settlement will be void;
b. 	Tuscola (104) Limited will remain liable for the full amount then due under the terms of the Loan repayable to Y2K; and
c. 	Y2K will be at liberty at its absolute discretion to:
i. 	Commence proceedings in the English courts against 	Tuscola (104) Limited to enforce the terms of the original loan in full;
ii. 	Take such proceedings in the British Virgin Islands as it deems appropriate; and
iii. 	Appoint such liquidators, administrators and/or receivers it deems appropriate, such appointment may not necessitate application to a court of competent jurisdiction.
If you are agreeable to the terms of this settlement please sign and return the duplicate letter to me.”
62.	The Offer to T110 was identical save that the settlement amount in paragraph 1 was £380,639.90, the instalments were £285,489.92 and £95,159.98 and paragraph B(ii) referred to the DS1 in respect of Bramley Court. Although both offers were described as Part 36 offers, Tuscola deny that they were offers in accordance with CPR Part 36, and Y2K does not contend that they were.
63.	On the same day Mr Moorcroft sent copies of the Offers to the Funders commenting that, if accepted, “we’d be settling for £600,000 in total, £450,000 and £150,000 by the end of October”. As Mr Moorcroft accepted, this shows that he expected Tuscola to elect for the instalment option. As Mr Moorcroft emphasised, however, he did not know for certain whether Tuscola would accept either option, let alone comply with the conditions attached to it.  
Events from 20 to 27 August 2015
64.	On 20 August 2015 Mr Moorcroft had a telephone conversation with Mr Gubbay which he reported to Mr Unett and the Funders shortly afterwards as follows: 
“[Mr Gubbay] now has confirmation of Olswang’s co-operation. … Olswang are to let you have a draft of the release they want tomorrow.
Gubbay is to sign the acceptances of the Part 36 offers tomorrow and send them over with details of the proposed additional security. We’ll then need to work out what papers we need signing. Apparently the extra security is owned by a UK company. 
Simon Callander will do his last day’s work for Olswang next Friday, 28th August, so he wants it wrapped up before then.’”
65.	At 07:53 on 21 August 2015 Mr Callender sent Mr Unett an email, copied to Mr Gubbay, saying that he had spoken to Mr Gubbay the night before and understood that Tuscola and Y2K had reached an agreement and that, in order to implement that agreement, Olswang would be asked to release the £347,897 that it was holding in its client account representing the moneys received in relation to the two properties concerned with the loan arrangements. He went on:
“In order to be in a position to release the funds I will need from Y2K confirmation that on release of the funds to Y2K Limited you each acknowledge and confirm that Olswang … is fully and completely discharged from any obligations it owes Y2K … including but not limited to any obligations in relation to either of the (draft) undertakings given to Y2K …. or any alleged representations made in relation to timing and receipt of funds (cf the allegations made to the SRA). I am happy for that confirmation to come in the form of a letter from you rather than anything more intricate – indeed a simple response to this e-mail providing that confirmation would also suffice.
In addition I will need formal confirmation form the Tuscola entities that we are instructed to release the funds to you but I assume that Michael can provide that easily …”
66.	At 07:56 Mr Callender sent Mr Gubbay an email asking him to provide the confirmation sought from the Tuscola entities in Mr Callender’s email to Mr Unett and to confirm that once “the funds … have been released then the balance remaining in our client account is to be applied in accordance with the terms of my e-mail to you of 22 June”.
67.	At 12:07 Mr Unett replied to Mr Callender’s email, with a copy to Mr Gubbay. This is an important email, and therefore I must quote it virtually in full:
“I have no problem confirming that if The Y2K Company Limited (Y2K) receives funds complying with the terms of [the Offers], then on behalf of Y2K I can acknowledge and confirm that Olswang … will be fully and completely discharged from any obligations owed to Y2K including but not limited to any obligations in relation to either of the undertakings given to Y2K or any alleged representations made in relation to timing and receipt of funds.
Just to be clear given that time is of the essence. Y2K expects the funds released by Olswang to be in accordance with the Part 36 Offers and form part of the payments due on or before Friday 11th September 2015 from:
•	Tuscola (104) Limited £219,360.10 … and
•	Tuscola (110) Limited £380,639.90 …
If however the two companies avail themselves of the generous instalment terms then these sums are reduced for your ‘discharge purposes’ to:
•	Tuscola (104) Limited £164,520.08 … and
•	Tuscola (110) Limited £285,479.92 …
In summary therefore, unless Y2K is in receipt of formal acceptance of the Part 36 offer indicating the options accepted on or before 28th August 2015 and
•	no less than £450,000 by way of cleared funds on or before Monday 31st August 2015, or
•	no less than £600,000 by way of cleared funds on or before Friday 11th September 2015,
then I cannot give the confirmation you seek as there has been no compliance with the Part 36 offer.
Might I suggest therefore that it is in your interest to coordinate the payments. A payment from Olswang with no corresponding payment from either Tuscola company will not enable me to confirm the discharge of Olswang.’
68.	At 14:01 Mr Gubbay sent Mr Moorcroft an email attaching copies of Land Registry documents showing Grangeford (109) Ltd as the registered proprietor of Ethelbert Terrace and saying “I am reviewing the letters and will return them over the weekend”. Mr Gubbay did not do so, however.
69.	At around the same time Mr Gubbay telephoned Mr Moorcroft and proposed that he also provide a limited personal guarantee as further security. Mr Moorcroft told him that Y2K would not prepare any security documentation until the Offers had been formally accepted.
70.	On 24 August 2015 Mr Callender sent Mr Gubbay an email asking him to “advise your intentions as to payment date and amount so that we can co-ordinate”, suggesting that Tuscola make payment a day or two before the dates specified by Y2K, so that Olswang has time to get an acknowledgment of receipt from Y2K and to get its payment made.
71.	Late on 26 August 2015 Mr Callender sent Mr Gubbay another email noting that Mr Callender had not heard back from Mr Gubbay, but understood that Mr Gubbay had requested Adam Burrage of Olswang to complete the purchase of Unity Mill. He went on:
“We cannot do anything more until the situation with Y2K is resolved. Once that is resolved we can complete on the Unity Mill purchase but will, of course, assert our lien post transactio in respect of unpaid fees.
The way forward, please, is for you to confirm how you are proposing to accept/implement the Y2K offers and for us to receive confirmation of your payment to Y2K so that we can implement our payment.
I look forward to hearing from you asap tomorrow.”
Friday 28 August 2015
72.	At 11:42 on Friday 28 August 2015 Mr Moorcroft sent Mr Gubbay an email noting that Mr Moorcroft has not heard back from Mr Gubbay. Mr Moorcroft went on:
“As you are aware, the Part 36 Settlement Offers are … open for acceptance until the end of today …, whereafter they are to be considered withdrawn if not accepted. The settlement terms offered were set out after conversations between you and I, reflecting payments of amounts which you had originally suggested. If they are not accepted before they expire then I am of the opinion that the funders will feel that the discussions we held regarding settlement were nothing more than a delaying tactic on the part of the borrowers. I very much doubt that the offers will be extended or renewed.”
73.	Shortly afterwards Mr Gubbay telephoned Mr Moorcroft, and said that he would sign the Offers on behalf of Tuscola and send them back that afternoon. Mr Moorcroft said that, if the instalment options were to be exercised, payment would be required that afternoon, because Monday 31 August 2015 was a bank holiday, something he had not realised when the letters were drafted. Mr Gubbay replied that Olswang was in funds, and so payment could be made that afternoon. That statement was untrue.
74.	At 12:42 and 12:48 Mr Gubbay emailed PDF copies of the Offers signed by himself on behalf Tuscola to Mr Unett and Mr Moorcroft respectively.
75.	At 13:07 and 13:08 Mr Moorcroft sent emails to the Funders reporting that Mr Gubbay had accepted the Offers. He went on:
“He now has until Monday to get £450,000 to us. What we had overlooked is that Monday is a bank holiday in the UK, so realistically Tuesday is the earliest we are likely to get paid – unless Olswang move very rapidly today. We shall see, but I think the chances of him being able to meet the settlement terms we set out are pretty slim as he’s left himself no time to comply and we have said that time is of the essence’.”
76.	At 14:35 Mr Unett sent Mr Callender an email informing him that Tuscola had accepted the Offers. He went on:
“Mr Gubbay has confirmed to [Mr Moorcroft] that your firm is holding £450,000 and that this will be remitted to us today. … 
Please let me know when the monies have been sent in order that I can monitor receipt and confirm release of your undertakings as per our exchange below.”
The “exchange below” referred to comprised Mr Callender’s email to Mr Unett of 21 August 2015 and Mr Unett’s reply of the same date. 
77.	At 14:58 Mr Callender forwarded Mr Unett’s email to Mr Gubbay saying:
“We are not holding £450k that can be paid over. We need to hear from you urgently and I suspect that we may now be too late to make any payment today.”
Saturday 29 and Sunday 30 August 2015
78.	On 29 August 2015 Mr Callender sent Mr Gubbay an email noting that Olswang had not heard back from him, and therefore had not remitted any funds to Y2K. He went on:
“We have been clear as to the extent of the funds which we are willing to release and look to hear from you as to how the remaining balance of the £450k will be funded and when it will be paid. Clearly funds will not arrive with Y2K by 31 August now given that Monday is a Bank Holiday here.”
79.	Mr Moorcroft’s evidence, which I accept, was that on 29 or 30 August 2015 he spoke to Mr Irving on the telephone. Mr Moorcroft described the conversation as a “chatty review” of where matters stood and what was likely to happen next. They discussed the fact that Mr Gubbay had left it very late to accept the Offers. Mr Irving asked Mr Moorcroft if Y2K had received any payment from Tuscola pursuant to the Offers, and Mr Moorcroft informed Mr Irving that Y2K had not. They discussed the fact that the next banking day was 1 September, and that under the instalment options payment of £450,000 was required by no later than 31 August. Both Mr Irving and Mr Moorcroft anticipated that Tuscola would be asked by Mr Gubbay to accept £450,000 on 1 September as if it has been paid on 31 August, due to the fact that 31 August was a bank holiday. Mr Moorcroft’s evidence was that he was relatively confident that, if the £450,000 was paid on 1 September, he would obtain the Funders’ agreement to treat it as if it had been received on 31 August. Mr Irving knew that, if Mr Gubbay made such a request, Mr Moorcroft would need to obtain the Funders’ agreement. To the extent that Mr Irving’s evidence was at variance with this account, I do not accept it.
Monday 31 August 2015
80.	During the evening of 31 August 2015 Mr Irving telephoned Mr Moorcroft and said that he had been made aware that the vendors of Unity Mill had been asked to provide a completion figure for 2 September 2015. Shortly afterwards Mr Moorcroft reported the conversation to the Funders by emailing, commenting “Looks like progress”.
Tuesday 1 September 2015
81.	At 10:03 on 1 September 2015 Mr Gubbay sent Mr Hermer of Olswang an email, copied to Mr Callender and Simon Kanter, saying:
“We need to make a payment to Y2K for value today of £450,000 pursuant to the acceptance that I signed on Friday (copy attached). 
Your firm is currently holding £532,159.28 belonging to Tuscola (FC101) Limited and payment to Y2K will leave a balance of £82,159.28.
There is a requirement to complete the acquisition of [Unity Mill] ….. I attach a copy of the last completion statement that we had requiring a balance of £113,741.96 to complete … Subject to your agreement, we will top up the funds you hold by circa £33,000 such that you have sufficient funds to complete. This property will then be mortgaged to Barclays and will discharge your firms undertaking to Pinsent Mason acting for the bank.”
82.	At 10:08 Mr Gubbay sent Mr Moorcroft an email:
“I have just been in contact with Olswang and they are £33,000 short to make the payment. I am just arranging to put them in funds.”
Given what Mr Gubbay knew about Olswang’s position at that time, this was somewhat misleading.
83.	At 11:19 Mr Hermer replied to Mr Gubbay’s email of 10:03 saying:
“My understanding of the Y2K Part 36 offers is that ayment of £450,000 was required to have been made by yesterday. Accordingly I think we are now looking at a payment to Y2K of £600,000 before Friday 11 September. Please let me know if you have a different understanding. 
In addition, if you are going to settle on the terms of the Y2K Part 36 offers, the amount we would be holding for release to Y2K would be £347,897 rather than £532,159.28.”
84.	At 13:21 Mr Gubbay replied to Mr Hermer’s email of 11:19 saying: 
“Y2K have accepted that they made a mistake in putting yesterday’s date as a payment date given that it was a bank holiday so the payment to be made will be £450,000. 
Your firm is holding the £532,159.28 for Tuscola and Tuscola is authorising the release of the full £450,000 to Y2K  subject to making up the shortfall in order to complete [Unity Mill] … 
It is acknowledged that Tuscola owe fees to Olswang, part of which was due to be discharged from the funds currently held. Tuscola are currently in the midst of a Bond issue which expects to yield between £20m and £25m during October 2015 and undertakes to bring the Olswang account up to date from those proceeds. …’”
85.	At 15:55 Mr Hermer replied to Mr Gubbay’s email of 13:21 saying: 
“1.	The Part 36 offers are very clear. The offer of payment in two instalments has now been withdrawn. It may be that the offers contained the wrong date, but until Y2K correct the error, we will need to proceed on the basis of the uncorrected documentation. 
2.	We do not have authority to release to Y2K more than 347k of the monies held on our client account. It is for that reason that Simon Callender was asking you to top up the monies we hold.”
86.	At 16:24 Mr Gubbay replied to Mr Hermer’s email of 15:55 saying:
“1.	I will arrange for Y2K to amend the Part 36 offer once we are ready to send the funds. They have already confirmed to me that they will.
2.	The money you currently hold is currently unrestricted from a Pinsent Mason point of view save for the requirement to complete [Unity Mill] and register the Barclays charge.”
Mr Gubbay’s statement that Y2K had already confirmed to him that it would amend the Offers was untrue, as he was eventually forced to accept in cross-examination (instead, he claimed that it was his belief that Y2K would agree to do so).
87.	During the evening Mr Irving telephoned Mr Moorcroft. Shortly afterwards Mr Moorcroft reported the conversation to the Funders by email as follows:
“It appears that Olswang have now dug in their heels and refused to act on the instructions to pay us without they get their fees. They are owed circa £66k and it looks like they’ll agree to pay us and complete another purchase when they get £33k, which Mr Gubbay has agreed to pay, but he wants confirmation from Olswang that they won’t get the £33k and then still refuse to complete until they get the rest! 
I’m told it should get sorted, and we should get £450k tomorrow. Now where have I heard that before?”
Wednesday 2 September 2015
88.	At 12:58 on 2 September 2015 Mr Burrage sent three representatives of Pinsents an email, copied to Mr Gubbay, asking Pinsents to confirm that it authorised Olswang to use the £532,159 it currently held to contribute towards completion monies for Unity Mill (as to c. £82,159, with the balance of c. £35,000 having been promised to Olswang but not yet received) and to pay £450,000 to Y2K.
89.	At 13:05 Mr Hermer sent Mr Gubbay an email asking him, on top of the balance of the completion monies for Phase 4, to contribute an additional £50,000 by way of part payment of Olswang’s fees.
90.	At 15:11 Mr Burrage sent Mr Gubbay an email saying: 
“Pinsents tell me they have forwarded the email [of 12:58] to Barclays for instructions.
The reality is that we have almost certainly missed the CHAPS payment deadline for today, which means Y2K will not receive funds today. I do not know the extent to which Richard is able to pause things with Y2K but until we have the green light funds will not be heading to Y2K at this stage.”
91.	Later that afternoon Mr Irving called Mr Moorcroft. Shortly afterwards, Mr Moorcroft reported the conversation to Mr Unett and the Funders by email at 17:33 as follows:
“Gubbay has sent the required £33k to Olswang and it has been received. For some reason Olswang have asked Barclays lawyers, Pinsent Mason, to confirm that they can still use  the Barclays as set out in DD10 - this seems to be entirely unnecessary, but they’ve done it anyway. Pinsent Mason have gone to for confirmation. Gubbay’s manager at Barclays is on holiday! An alternative manager has been found and he has given/will give Pinsent Mason the OK either today or tomorrow morning. Then Pinsent Mason can give the OK to Olswang and we should get £450,000 tomorrow.
I have told Richard Irving that I am away with several [Funders] on a … trip from Friday to Sunday, and that I need this wrapping up before then otherwise the whole situation may below up. He has relayed that message to all concerned.
I have, of course, been careful not to say that it won’t blow up if it is sorted before Friday as I can’t be sure that the [Funders] won’t get the hump anyway because they weren’t paid by 31st August. As you know, those [Funders] can be unpredictable.”
92.	Following his conversation with Mr Moorcroft, Mr Irving spoke to Mr Gubbay. Mr Gubbay accepted that Mr Irving might well have relayed to him the message that Y2K would only agree to an extension of time with the Funders’ approval and that such approval was unlikely to be forthcoming if the first instalment was paid after 3 September 2015. Consistently with this, at 20:41 Mr Burrage sent Pinsents an email saying that Olswang was “firmly instructed” that the following day was the “hard deadline” for making the payment to Y2K. 
Thursday 3 September 2015
93.	Mr Moorcroft’s evidence was that 3 September 2015 was a high-pressure and busy day for him: the monthly accounts for his group of companies were drawn up that day, and he was due to leave on a trip the following day. Ms Field was present in his office helping him with the preparation of the monthly accounts.
94.	At 10:39 on 3 September 2015 Mr Burrage sent Pinsents an email saying that payment must be made to Y2K that day “otherwise the current negotiated agreement between our client and Y2K will purportedly fall away”.
95.	At	11:26 Mr Burrage sent Mr Gubbay an email, copied to Mr Kanter and Mr Hermer, saying (emphasis in the original):
“I have just spoken to Pinsents and Barclays. They have authorised us to send the £450,000 to Y2K today provided that:
1. 	We provide to them evidence that such payment will release the Y2K charges over the DD10 properties (ie Bramley Court … and Cable House) - we therefore need you to obtain from Y2K a revised Part 36 offer (manuscript amend seems most practical) stating that the £450,000 payment can be made today rather than by 31 August – alternatively formal correspondence from Y2K to that effect may suffice;
2. 	Tuscola pays to Olswang’s client account £120,000, as to £70,000 by way of top up to c. £150,222, which is the sum ascribed by Barclays which was lent against Unity Mill …, and as to £50,000 by way of contribution to fees arrears, per Stephen’s email yesterday - we therefore need from you payment of £120,000 as soon as possible (bearing in mind CHAPS payment timings)…’
3. 	We undertake to Barclays that £150,222 is held to their order for the purpose of completing the purchase of Unity Mill …
…
Please confirm that you can comply with the above as soon as possible. We are all working towards the Y2K payment today and it is imperative that the above steps are taken.”
As will appear, Mr Gubbay did not ask Y2K to amend the Offers in the manner suggested by Mr Burrage.
96.	At 11:27 William Oliver of Pinsents sent Mr Burrage an email saying: 
“As discussed can you therefore send something from their solicitors confirming that they will be released upon receipt of £450k? 
Also we’ll need the confirmation that you hold £150,222 to ours and Barclays’ order as discussed.”
97.	At 11:44 Mr Burrage sent Mr Gubbay an email saying that he had just spoken to Mr Oliver and it would not be possible to complete Unity Mill that day, and accordingly Olswang required the extra £70,000 in order to provide the undertaking Pinsents required.   
98.	At 13:09 Mr Gubbay replied saying:
“I am arranging to send you the £70,000 now. I have had to borrow the £37,000 short term and need you to return the surplus once Unity [Mill] is completed so that I can return it.  
I am conscious of the need to pay fees on account to your firm and will try to make arrangements for an interim payment shortly.”
99.	At 14:06 Mr Kanter sent Mr Gubbay an email, copied to Mr Burrage and Mr Hermer, saying that Olswang had heard nothing from Y2K “as regards the extension of the date for payment of the first instalment” and that Olswang was owed about £200,000 plus VAT and disbursements for its work for Mr Gubbay’s companies.
100.	At	14:25 Mr Gubbay replied to Mr Kanter’s email of 14:06, making a proposal in respect of payment of Olswang’s fees, and asking that Olswang confirm agreement “so that the £70,000 can be sent immediately as time is running short”.
101.	Mr Moorcroft and Ms Field’s evidence was that, just after this, Mr Gubbay called Mr Moorcroft to say that Olswang was ready to send £450,000, but required a confirmation from Mr Unett that, if the payment was made, Mr Unett would release Olswang from their undertakings, notwithstanding that payment was being made on 3 September 2015 instead of by 31 August 2015. Mr Gubbay asked Mr Moorcroft to get Mr Unett to confirm this to Olswang. Mr Moorcroft’s end of the conversation was heard by Ms Field. Immediately afterwards, Mr Moorcroft contacted Mr Unett by Skype. On this occasion, Ms Field was able to hear both ends of the conversation. Mr Moorcroft told Mr Unett that he had been asked by Mr Gubbay to ask Mr Unett to confirm to Olswang that, if Olswang paid £450,000 to Y2K that day, then Olswang would be released from its undertakings. Mr Moorcroft asked Mr Unett to do this and Mr Unett agreed to do so. During the course of this conversation, Ms Field indicated to Mr Moorcroft by a nod and a smile that she was content with this.
102.	Other than Ms Field, Mr Moorcroft did not consult the Funders about this. Mr Moorcroft’s explanation for this, which was corroborated by Ms Field, was that by this time Y2K, with the Funders’ agreement, had already decided in the light of the legal advice it had received not to bring proceedings against Olswang to attempt to enforce the undertakings. Accordingly, by agreeing to release Olswang from the undertakings, Y2K was not agreeing to anything which was of any real value to Y2K or the Funders. I do not accept the submission of counsel for Tuscola that this shows that Mr Moorcroft did not need to consult the Funders in relation to granting Tuscola an extension of time for compliance with the instalment option of the Offers. 
103.	I have no hesitation in accepting the evidence of Y2K’s witnesses as to what was said during the conversation between Mr Gubbay and Mr Moorcroft, and hence during the conversation between Mr Moorcroft and Mr Unett. Accordingly, I find that there was no mention of the DS1s during those conversations. I also note that Tuscola’s pleaded case that the DS1s were mentioned in the conversation between Mr Gubbay and Mr Moorcroft was not supported by Mr Gubbay’s evidence in any event. Mr Gubbay’s evidence was that Mr Moorcroft agreed to “an extension of the Offers from the 31 August 2015 to the 3 September 2015”. Mr Gubbay also claimed that “Mr Unett then wrote to [Olswang] confirming the extension”. But, as will appear, Mr Unett’s email did not extend time for compliance with (the instalments option of) the Offers (see paragraph 108 below). Accordingly, I do not accept Mr Gubbay’s evidence on this point. I would also add that Mr Gubbay did not suggest that Mr Moorcroft had obtained the consent of the Funders to an extension of time at this juncture.    
104.	At 14:34 Mr Gubbay sent Mr Kanter an email, copied to Mr Burrage and Mr Hermer, saying:
“I have just spoken to Y2K and Iain Unett is writing to you directly to confirm that payment of the £450,000 payment [sic] will be accepted notwithstanding the payment date of the 31 August 2015 in the Part 36 offer. 
I await your response on fees so that I can send the £70,000.”
105.	At 14:44 Mr Burrage replied to Mr Gubbay’s email of 14:34 saying:
“My final concern is around paragraph C of the Part 36 offer. Given that the instalments option is being used, Y2K state that they require additional security for the other portion of the debt, being £74,000 in the case of Cable House and £33,500 in the case of Bramley Court… I trust you have this covered? If not, this technical breach will strictly speaking render the whole thing void. …
Or perhaps this has been discussed with them? To be clear, payment will only be made to Y2K if paragraph B of the ‘installments’ section of the Offers comes into effect, i.e. we simultaneously have the two DS1s released to us and this firm is released from its (draft) undertakings.”
106.	At 14:46 Mr Gubbay replied to Mr Burrage saying “We have given the security over another property to Y2K to cover this point”. This was untrue: Tuscola had offered to give security over Ethelbert, but no security had actually been given.
107.	At 15:11 Mr Burrage sent Mr Gubbay an email, copied to Mr Kanter and Mr Hermer, saying:
“To reiterate, the biggest issue right now is the lack of word from Iain to Simon that the payment can be made and accepted today.
We are perilously close to the CHAPS cut-off.”
108.	 At 15:12 Mr Unett sent Mr Kanter an email saying:
“I understand you are holding £450,000 on behalf of the Tuscola companies. 
I confirm that if Y2K receives the £450,000 by way of cleared funds today then I will release Olswang LLP from the undertakings as detailed below in the email exchange with Simon Callander notwithstanding the payment was not made on or before the 31st August 2015, again time is of the essence.”
The email exchange with Mr Callender referred to comprised Mr Callender’s email at 07:53 on 21 August 2015, Mr Unett’s email at 12:07 on 21 August 2015 and Mr Unett’s email at 14:35 on 28 August 2015.
109.	At 15:13 Mr Kanter sent Mr Gubbay an email, copied to Mr Burrage and Mr Hermer, further to Mr Burrage’s email of 15:11 saying:
“Together with confirmation from Iain that he has the additional security for the other portion of debt, being £74,000 in the case of Cable House and £33,500 in the case of Bramley Court …”
110.	At 15:17 Mr Gubbay replied to Mr Kanter saying that “an email dealing with both points has just been sent”. In fact, Mr Gubbay did not send an email to Y2K at this juncture.
111.	At around the same time Mr Gubbay called Mr Moorcroft again, and said that Olswang required a second confirmation from Mr Unett, namely that their undertakings would be released notwithstanding that Tuscola had not provided further security. Mr Moorcroft said that he did not understand why this was required, but agreed that it was quicker to provide it than discuss it. Again, the DS1s were not mentioned. Again, immediately afterwards Mr Moorcroft relayed the request to Mr Unett. Again, Ms Field heard Mr Moorcroft’s end of the conversation with Mr Gubbay and both ends of the conversation with Mr Unett.
112.	According to Mr Hermer’s evidence, which Mr Gubbay confirmed to be accurate, at about 15:20 Mr Gubbay telephoned Mr Burrage, and said that he has been in contact with Y2K throughout the day, and that the additional security was indeed in place. Again, this was untrue.
113.	At 15:21 Mr Unett sent Mr Kanter another email stating: 
“Just to be clear I will not withhold the release of your firm from its undertakings below on the grounds that any additional security has not been supplied.”
114.	At 15:27 Mr Gubbay sent Mr Burrage an email saying: 
“We have transferred £70,000 to your Client Account ….. 
On behalf of Tuscola, I authorise you to hold £150,222 to the order of Pinsent Mason in relation to [Unity Mill] …”
115.	At 15:30 Mr Burrage sent Pinsents copies of Mr Unett’s emails to Mr Kanter of 15:12 and 15:21, saying that they were “evidence from Y2K that payment today will accord with the terms of the settlement offer”. He went on:
“In accordance with our discussions £450,000 has been sent to Y2K. 
The undertaking to you re the £150,222 for Unity Mill (to be held to your order) will follow once we are in receipt of adequate funds; anticipated in the next 15 minutes since we have confirmation that funds are in the system and will arrive today.”
116.	At 15:36 Adam Waite of Pinsents replied to Mr Burrage’s email of 15:30 saying: 
“We have not received an undertaking from Y2K’s lawyers to release the DS1s to you when they receive the monies. We will require an undertaking or confirmation that the DS1s are now released to you.”
117.	At 16:29 Mr Unett forwarded to Mr Gubbay copies of his emails of Mr Kanter at 15:12 and 15:21.
118.	At 16:32 Mr Burrage replied to Mr Waite’s email of 15:36 saying:
“YSK are not represented – their in-house counsel has been dealing with this throughout. We are confirming to Y2K that the DS1s are released in accordance with the terms of the Offer. 
…  
Please accept this email as this firm’s undertaking to hold to your order (and that of your client, Barclays …) the sum of £150,222 pending completion of the purchase of Unity Mill …. We will not remit such funds (or as the case may be part thereof) to the vendor of that property unless and until we receive from you written confirmation that such sum may be released.”
119.	At 17:11 Mr Kanter sent Mr Unett an email, copied to Mr Burrage and Mr Hermer, saying:
“I can confirm that £450,000 was sent to Y2K today. Please confirm receipt. On that basis and in accordance with the Offer and subsequent emails, I confirm that:
1.	The two Forms DS1 relating to … Bramley Court … and Cable House … are released to us and have been dated today; and 
2.	Olswang … is now fully and completely discharged and released from any obligations it owes to … Y2K … including any (alleged) obligations in relation to either of the (draft) undertakings given to Y2K … ”
Friday 4 September 2015
120.	At 09:54 on 4 September 2015 Mr Unett replied to Mr Kanter’s email of 17:11 on 3 September 2015 acknowledging receipt by Y2K of £450,000 as “a payment on account in respect of the sum owed by [T104] in the sum of £164,520.08 and a payment on account in respect of the sum owed by [T110] of £285,479.92”. He went on:
“I confirm the release of your firm from the undertakings given to Y2K on 30th June 2014 and 4th July 2014.  
The conditions to be met before any legal charges are released by Y2K are set out clearly in the Part 36 offers and again in my email of 21st August 2015 to Simon Callender (below). Those conditions have not yet been met, all legal charges remain in place and all forms DS1 remain held by your firm strictly to my order.
My e-mails of yesterday refer only to the release of your undertakings, not to the release of any DS1’s.”
121.	At 11:04 Mr Burrage sent Mr Gubbay an email, copied to Mr Kanter and Mr Hermer, saying:
“I am very disappointed to report that Y2K have not yet released the DS1s and cite non-compliance with conditions of the Offer(s).
Our deduction is that the additional security required pursuant to paragraph C of the Offers … has not been satisfactorily provided.
We await your instructions and will do nothing more on this until the DS1s are released.”
122.	At 11:08 Mr Gubbay replied to Mr Burrage saying “I have just spoken to them and it is being dealt with now”. As Mr Gubbay accepted at one point in cross-examination, although he later tried to resile from it, this statement was untrue.
123.	At 13:58 Mr Burrage sent Mr Gubbay an email attaching “the latest demand from Pinsents” (which does not appear to be in evidence) and saying “the pressure is really on”.
124.	At 14:02 Mr Gubbay sent Mr Unett an email saying:
“Pinsent Mason on behalf of Barclays are chasing for the DS1’s on Cable and Bramley and we need to address the matter urgently.
Can you please email the charging document for Ethelbert so that we can conclude matters.”
125.	At 14:10 Mr Burrage sent Mr Waite an email saying “I have confirmation that a release is en route to us and have been told that it will all be effected this afternoon.”
126.	 At 14:38 Mr Gubbay sent Mr Moorcroft an email saying:
“The lack of the release of the DS1’s is causing a real issue for me with Barclays. I need them released urgently.”
127.	At	14:51 Mr Oliver sent Mr Burrage an email saying:
“This is now becoming very serious. We are concerned that Barclays’s monies have been sent (we did not authorise that disbursement) without the security being released and that Y2K are in funds but not obliged to release.”
128.	At 14:56 Mr Burrage replied to Mr Oliver saying:
“We are instructed that the delay is due to the lack of a signature on a charging document which was required to be executed pursuant to the overall deal which was reached between the parties, the outcome of which facilitates the release of the DS1s. We are assured that the relevant document is (or was at 2pm) in the process of being executed and returned, following which the DS1s would be immediately released.”
129.	At 15:00 Mr Burrage sent Mr Gubbay  an email saying:
“We have some very unhappy bankers and solicitors knocking on our door for the releases. It was understood that the released would be provided on receipt of the funds.
Please urgently advise whether Y2K have all they need to release the documents to us and procure that this happens immediately.”
130.	At 16:17 Mr Kanter replied to Mr Gubbay’s email of 11:08 saying “Notwithstanding your assurances nothing appears to be ‘being dealt with’”.
131.	At 16:36 Mr Gubbay replied to Mr Kanter saying “I am just waiting for the charge in [sic] the additional property so I can sign it”.    
Saturday 5 September 2015
132.	At 21:14 on 5 September 2015, after two chasing emails from Mr Burrage to Mr Gubbay on Friday evening, Mr Kanter sent Mr Gubbay an email asking “Has the additional security been resolved or not?”. At 21:42 Mr Gubbay replied to Mr Kanter:
“It has. Iain Unett will be in touch with you on Monday morning to release the DS1’s.”
This was untrue. Tuscola had not given the additional security and he had not been in contact with Mr Unett that day.
Monday 7 September 2015
133.	At 10:29 and 11:45 on 7 September 2015 Mr Burrage sent Mr Gubbay emails saying that Olswang had not heard from Y2K or him since Saturday night, and asking for an update. 
134.	At 12:42 Mr Burrage sent Mr Unett an email saying:
“Mr Gubbay informs me that confirmation of release of the Forms DS1 is being sent over to us right now. Could you please ensure that such confirmation is sent to me by email …”
135.	At 16:01 Mr Unett replied to Mr Burrage saying: 
“Neither the director of Y2K nor I have communicated any information to Mr Gubbay since my e-mail of 4th September (below). The position is unchanged. The forms DS1 are held by your firm strictly to my order.
I have advised the director of Y2K that the company has a fiduciary duty to the funders of the loans made to [T104] and [T110]. If the company were to voluntarily weaken its security position without the unanimous agreement of the funders then it would, in my opinion, be in breach of that fiduciary duty.”
136.	At 16:10 Mr Burrage sent an email to Mr Gubbay setting out the text of Mr Unett’s email of 16:01 and continuing:
“This is extremely urgent and we need you to clarify the position. My reading of Iain’s email is that additional security, as required under the Offer, has not been provided. Please let me know the position by call or email as I know that Pinsents’ patience is running out …”
137.	At about 16:30 Mr Burrage telephoned Mr Unett to ask why he had not released the DS1s. Mr Unett said that the DS1s remained held to his order. Mr Burrage asked him what he was waiting for before releasing them. Mr Unett replied that the terms of the Offers had not been complied with in that the time for compliance had now passed in respect of the first instalment and  that the only way to satisfy the Offers was for Tuscola to pay the remaining £150,000 to Y2K on or before 11 September 2015 in accordance with the non-instalment option.
138.	It appears that shortly afterwards Mr Burrage reported this conversation to Mr Gubbay by telephone.
Tuesday 8 September 2015
139.	At 10:35 on 8 September 2015 Mr Burrage sent Mr Gubbay an email saying:
“Following my call with Iain Unett yesterday evening my realistic view is that nothing will change unless the additional £150,000 is paid to them (which will secure all releases). In light of the pressure from Pinsents (which absolutely cannot endure) it would seem that payment of the other £150,000 will have to be expedited; payment at the end of October will not suffice. Please confirm that this can be effected.”
140.	At 15:12 Mr Burrage sent an email to Pinsents saying:
“Further to our earlier conversation we confirm that the £450k was sent by us directly to Y2K on the assurance from our client that the two DS1s in question would automatically be released to us. Such was our understanding, based on the accepted Part 36 Offer, that having sent the money we confirmed to Y2K that we took the DS1s to be released to us and would date them.
Leading up to that point we were provided with multiple assurances that (1) the date for compliance with the Part 36 Offer conditions had been extended to 3 September and (2) the interim security as required by Y2K under the terms of the Offer had been provided. In seeking confirmation of release of the DS1s we were assured that they were in the process of being released to us, first on 3 September, second on 4 September and then finally we were told that on the morning of Monday 7 September we would definitely have the release. As you know, such confirmation of releases is still awaited …
… We are endeavouring to persuade our client that in default of it being able to procure the releases immediately, the cleanest way out of this is to expedite such payment of £150,000 [by 31 October 2015] in order to obtain all releases. …”
141.	At 15:14 Mr Moorcroft sent Mr Gubbay a long email, copied to Mr Irving and Mr Unett, after having spoken to Mr Unett, in which he reviewed what had happened since 31 July 2015. In summary, Mr Moorcroft said that the Offers “remain binding on all parties”, and that, under the Offers, a total of £600,000 was due to Y2K by 11 September 2015, of which £450,000 had been received as part payment. If £150,000 was received on or before 11 September 2015, Mr Unett would release the DS1s. The instalments option had lapsed at the end of 31 August 2015, however.  
142.	At 18:47 Mr Irving sent to Mr Gubbay a draft of an email to Mr Moorcroft. Mr Gubbay approved the draft. At 20:00 Mr Irving sent the email to Mr Moorcroft saying:
“The settlement I negotiated between Y2K and Tuscola was that Tuscola would pay you £600,000 in two instalments. The first payment of £450,000 would be subject to Barclays being able to take security on two properties. The second payment of £150,000 being subject to Y2K taking a first charge over a number of properties enabling Y2K to seize and sell these number of number of properties if Tuscola was in breach.  
The first payment was made, albeit late, but in an agreed manner but you have not enabled Barclays to take a charge over the two properties.   
The second payment is now due on Friday, and if Tuscola is late our agreement provides you with the opportunity to seize and sell the number of properties or renegotiate the position with Tuscola.
Your refusal to enable Barclays to take a charge over the two properties because of phraseology within the legal documents supporting the deal is both abhorrent and immoral.
…”
After Mr Moorcroft had received this email, there was a telephone conversation between Mr Moorcroft and Mr Irving.
143.	At 22:16 Mr Kanter sent Mr Unett an email saying that it was Olswang’s understanding that the DS1s “were released to this firm on the payment by us to Y2K of £450,000”. He went on:
“The terms of the Part 36 Offer are such that the release of this firm from its alleged undertakings and the release of those two DS1s were not severable and by confirming our release you also impliedly confirmed that the other terms of the Offer had been satisfied …
I can understand that there may be some frustration at the lack of completion of the addition security … but that should not detract from the fact that the release of the DS1s are interdependent with and were simultaneously released with the discharge and released of the draft Olswang undertakings.”
Wednesday 9 September 2015
144.	At 11:37 on 9 September 2015 Mr Moorcroft replied at some length to Mr Irving’s email of 20:00 the day before. Among other things, Mr Moorcroft said:
“When, on the 28th August, Michael [Gubbay] called me to query a few points before signing to accept the offers on behalf of the Tuscolas, the subject of whether Olswang had the £450,000 and would be capable of paying it that day was raised by me. It was perfectly clear to Michael that time was of the essence and I was told that Olswang could make payment that same day. A week before the offers were accepted, Iain had e-mailed Olswang pointing out that time was of the essence and, within an hour of the offers being accepted, Iain e-mailed Olswang again pointing out that payment was required that day.
The clear common continuing intention of the parties was that time was of the essence and that the DS1s would only be released if Y2K received £450,000 on or before 31st August. It did not. Rather, the £450,000 was received on 3rd September. The metaphorical honest handshake has been entirely honoured on the Y2K side ….”
He concluded by proposing three ways forward, of which the first was the payment of £150,000 by Tuscola by 11 September 2015.
145.	At 11:56 Mr Irving replied to Mr Moorcroft saying:
“Our conversation last night cleared a lot of things up for me and I apologise for my misunderstanding of the situation.
…
After the call I rang Michael and explained to him very clearly why you had not released the DS1’s and also clearly explained to him what the solution was.”
146.	At 14:58 Mr Gubbay replied to Mr Moorcroft’s email of the day before, saying among other things that “it was explicit in all our negotiations that the DS1’s would have to be released on payment of the £450,000 as that money was held to Barclays order”. He proposed that, on receipt of security documents in respect of Etherbert Terrace, Y2K should immediately release the DS1s.
147.	At 15:32 Mr Unett replied to Mr Kanter’s mail of the day before, saying among other things:
“The release of your undertakings to Y2K of 30th June 2014 and 4th July 2014 was made pursuant to my e-mails of 3rd September 2015 and not pursuant to the offer to accept payment by instalments, which had by then lapsed.”
148.	At 16:43 Mr Moorcroft replied to Mr Gubbay’s email of 14:58, saying among other things:
“I informed you that although you had provided details of Ethelbert Terrace, I would not instruct Iain to begin work on the matter until the Part 36 offers were accepted. In the event, the acceptance was not received until the afternoon of 28th August. By the next working day, 1st September, the offer to take payment by instalments had expired.
I did not agree to extent the time deadlines under the Part 36 offers. I did agree to instruct Iain to release Olswang from their undertakings notwithstanding that the £450,000 was received on 3rd September.”
Thursday 10 September 2015 
149.	At 08:15 on 10 September Mr Gubbay replied to Mr Moorcroft’s email of 16:43 the day before saying that he was prepared to offer a personal guarantee of up to £50,000 in addition to security over Ethelbert Terrace. 
150.	During the afternoon and evening there was a number of telephone conversations between Mr Irving and Mr Moorcroft. Mr Irving said that Tuscola could not pay £150,000 on 11 September 2015, but would be able to pay £100,000 on that date.
151.	At 23:34 Mr Unett sent Mr Gubbay an email, copied to Mr Irving, offering that, upon the receipt on 11 September 2015 by Y2K of £100,000, executed charges over Ethelbert Terrace and executed personal guarantees of Mr Gubbay, the DS1s would be released.
Friday 11 September 2015
152.	At 09:34 on 11 September 2015 Mr Gubbay sent Mr Hermer an email, copied to Mr Kanter and Mr Burrage, saying:
“Barclays propose to allow the completion of [Unity Mill] … today… That will release the additional £33,000 that Tuscola sent your firm last Friday and Tuscola will send your firm a further £67,000 today so that you are holding a total of £100,000 in your client account.
Tuscola have agreed to pay Y2K a further £100,000 today on the basis that they release the DS1’s leaving a balance due to Y2K of £50,000 and this … balance will be paid to them on or before the 31 October 2015. Tuscola will also provide additional security to Y2K as set out in the attached email.”
153.	At 11:22 Mr Burrage sent Mr Gubbay an email informing him that Pinsents had said that Unity Mill “will not be able to complete today for reasons including that a BVI opinion will be required since the companies show as inactive”. He went on:
“They sign off with ‘Put simply to deal with Y2K today your client will need to be putting in place arrangements to send you the further £150k (or £100k if that is agreed).’
It would therefore seem that you may well need to send us the full £100k for passing to Y2K.”
154.	At 17:36 Mr Burrage sent Mr Gubbay an email saying:
“Obviously no payments were made to Y2K today, nor did we receive any monies from you. Pinsents have said that the most important point is to remedy the current status of the BVI companies. … Richard tells me that Y2K will accept payment on Monday of the £100,000 in exchange for releasing the DS1s (provided guarantees etc. in place).”
155.	It can be seen from the documents that Tuscola’s failure to pay Y2K £100,000 on 11 September 2015 was due to its inability to complete on Unity Mill. In his evidence, however, Mr Gubbay tried to blame Y2K for not providing documentation for the additional security which was to be provided by Tuscola. 
Events from 17 September to 16 October 2015
156.	On 17 September 2015 Mr Unett sent letters to each of T104 and T110 stating that, although sums totalling £450,000 had been received on 3 September 2015, the balance under the Offers remained unpaid. Since the time allowed under the Offers had expired, Tuscola were “no longer entitled to benefit from the offer made by Y2K”. Accordingly, T110 now owed Y2K the sum of £682,278.51 and T104 the sum of £370,977.63.
157.	It appears that Tuscola (or an associated company) completed the purchase of Unity Mill on about 30 September 2015.
158.	On 25 September, 2 October and 9 October 2015 Olswang wrote to Y2K setting out arguments as to why Tuscola were entitled to possession of the DS1s and saying that, if Y2K did not accept this, Olswang would apply to the court. On each occasion Y2K replied setting out its position. On 16 October 2015 RPC wrote to Y2K stating that it was instructed on behalf of Olswang and asking whether Y2K would accept service at an address in England. On 19 October 2015 Y2K replied accepting service at Mr Unett’s address in England. On 23 October 2015 Olswang commenced this claim. 
Tuesday 27 October 2015
159.	At 16:06 on 27 October 2015 Mr Gubbay sent Pinsents an email, copied to various representatives of Barclays, asking to complete the grant to Barclays of security over Unity Mill on 28 October 2015 “as I need to send out the £150,000 held by Olswang to Collyer Bristow (acting for Tuscola) to try and settle matters with Y2K”.
Wednesday 28 October 2015
160.	At 10:33 on 28 October 2015 Charles Conway of Barclays replied to Mr Gubbay’s email of the day before saying “I am not going to ok this pending the fact that we have a facility breach to fix”.
161.	At 15:17 Mr Burrage sent Pinsents an email, copied to Mr Kanter and others, noting that Olswang held £150,122 to Pinsents’ order pursuant to undertakings given on 3 and 4 September 2015 and saying that, now that the purchase of Unity Mill had been completed, the money should be released.
162.	At 15:42 Anaïs Spacey of Pinsents replied that Pinsents’ instructions were that the £150,222 should still be held to Pinsents’ and Barclays’ order, since Tuscola were in breach of the facility agreement due to the fact that the funds for Bramley Court and Cable House were transferred without Barclays having security over the properties, and that Olswang was therefore not released from its undertakings.
Thursday 29 October 2015
163.	On 29 October 2015 Collyers wrote to Y2K setting out Tuscola’s case with respect to the DS1s (albeit in materially different terms to Tuscola’s case at trial). The letter also stated: 
“We are instructed that funds are available to make the payment of £150,000 and that Tuscola is ready willing and able to pay the same in cleared funds tomorrow.”
The funds can be transferred to your account subject to you and Mr Unett confirming in irrevocable terms that when received the finds will fully discharge Tuscola’s from its obligations under the terms of the Offers and that all DS1s held by Olswang pursuant to obligations given by them to Mr Unett are forthwith released to Olswang. …”
164.	At 17:25 Ms Spacey sent an email to Mr Gubbay and Mr Grace saying that Pinsents would ask Barclays whether it was happy for Collyers to hold the money (i.e. the £150,222 in Olswang’s client account) and asking for a form of undertaking. 
165.	At 17:26 Mr Burrage sent Ms Spacey an email proposing a form of undertaking from Collyers to Pinsents and Barclays with respect to the £150,222. 
166.	At 17:57 Mr Gubbay replied to Ms Spacey saying that Mr Grace would be in touch with her shortly in relation to the undertaking. He went on:
“We will be seeking a clear and unequivocal statement from Y2K and their solicitor that the terms of Settlement Agreement have been met in full on payment of the £150,0000 and that all the charges/Ds1’s are released.”
167.	At 19:28 Ms Spacey replied to Mr Burrage’s email of 17:26 saying that Pinsents would take instructions.
168.	Mr Grace stated in his witness statement that he “had a couple of telephone conversations” with Ms Spacey during this period, but the conversations were “of a general nature and focused on timing rather than anything else”. This account fits with the documentary record. Mr Grace also stated, however, that it was “absolutely clear” to him at this point that “Olswang held sufficient funds to pay the £150,000 either to [Collyers] or direct to [Y2K] and that Barclays were in agreement to the payment being made to [Y2K] whether it was by Olswang or [Collyers], subject only to [Y2K’s] solicitor confirming that, on receipt of the money, the DS1s and any other security the subject of the dispute, would be released to whichever firm made the payment to them…”. The documentary record does not support this understanding. When this was pointed out to Mr Grace in cross-examination, he suggested that there had been more to his conversations with Ms Spacey than he had stated in his witness statement. In the absence of any attendance note, and given the absence of any trace in the documentary record of a more substantive conversation, I consider that the account of those conversations given by Mr Grace in his witness statement is more reliable.      
Friday 30 October 2015
169.	On 30 October 2015 Collyers wrote to Y2K saying:
“For clarity, Tuscola’s position is that the Offers are still open and that having elected to pay the settlement sum by instalments, Tuscola is ready, willing and able to pay the second and final instalment today.
Due to the manner in which you conducted yourself in respect of the payment of £450,000 made on 3 September 2015, Tuscola is not prepared to make the payment without us being satisfied that forthwith on receipt of the payment by you it is acknowledged and accepted by you to be in complete discharge of Tuscola’s obligations under the Offers and that on receipt of the payment all of the DS1s held by Olswang are forthwith and unconditionally released to them. …
In addition as you and/or third parties on your behalf have made priority searches in respect of title number BD255018, WYK641650, MS520516 and MS248331 we will require prior written confirmation in terms acceptable to us that in each case the priorities are forthwith withdrawn.
If you refuse to provide us with the comfort requested then Tuscola is not willing to make the payment of £150,000 to you today but by not doing so it should not be interpreted as Tuscola not being ready, willing and able to do so. …”
170.	At 10:14 Mr Gubbay sent an email to Ms Spacey, copied to Mr Conway and others at Barclays:
“Subject to instructions from Barclays, can you please take security over Unity Mill … so that the £150,000 held at Olswang can be moved at short notice if required. To be clear, the £150,000 will not be moved unless the release of the DS1’s are secured at the same time.”
171.	At 10:29 Ms Spacey replied to Mr Gubbay saying that Pinsents had spoken to Barclays and to Mr Grace: 
“… we have explained to [Mr Grace] that he will need to be in possession of the following:-
1.	The duly executed Forms DS1 held by … Olswang … in favour of … Y2K … listed below (assuming Y2K agree for Olswang to deliver the DS1s to Collyer Bristow):- 
[Bramley Court]
	[Cable House]
2.	A duly completed Form UN2 signed by Iain Unett for and on behalf of … Y2K … in relation to the Unilateral Notice in favour of … Y2K … registered against [Bramley Court]
3.	A letter signed by Iain Unett addressed to the Land Registry to validly waive and withdraw the priority searches at the Land Registry listed below:
3.1	Priority Search in respect of [Bramley Court] 
3.2	Priority Search in respect of [Cable House].
Collyer Bristow must be able to date the above documents once the £150k is released to them for sending to Y2K and either file them at the Land Registry or deliver them to us.
Once we have an undertaking from Collyer Bristow to hold the monies to our and Barclays’ order we will instruct Olswang to send the monies to them.”
172.	At 10:57 Mr Burrage sent Ms Spacey an email asking whether Pinsents had instructions, further to Ms Spacey’s email of 19:28 on 29 October 2015.
173.	At 11:00 Ms Spacey replied to Mr Burrage saying:
“We expect we will be in a position to instruct you to send the moneys to Collyer Bristow at some point today but we are not there yet. We will keep you updated.’”
174.	At 11:02 Mr Grace sent RPC an email saying among other things:
“I have also been in discussions with Pinsent Masons acting for Barclays with regard to the payment of £150,000. I am in the process of trying to agree terms upon which Barclays will instruct Olswang to transfer the £150,000 to Collyer Bristow’s client account which in turn will enable me to take control of the payment (subject to satisfying all of Barclay’s terms which will be protected by undertakings given by given by Collyer Bristow).”
He also set out details of his firm’s bank account. 
175.	At 11:46 Caroline Schiffner of RPC replied to Mr Grace saying:
“I have passed your firm’s bank details to Olswang who of course will require written confirmation that they are released from their undertaking(s) to Barclays in respect of the monies before they can be transferred to your firm.”
176.	At 17:36 Mr Grace sent Mr Kanter and Mr Burrage an email, copied to Mr Gubbay, Ms Spacey and Ms Shiffner, saying:
“I have not heard from Y2K today (I just have), therefore my endeavours to make the second and final instalment payment of £150,000 in return for confirmation that the Part 36 Offers have now been fully complied with has failed. Nevertheless, my main objective is to try and resolve this matter and my efforts will continue on Monday.
In the meantime, I want to be certain what DS1s you hold.
…”
177.	Thus the upshot was that Tuscola did not pay Y2K £150,000 on 30 October 2015. Furthermore, the sum of £150,000 which Tuscola wished to have available for that purpose was held to Barclays’ order. There is no evidence from Barclays that it would have agreed to release that money at that date. 
Monday 2 November 2015
178.	At 13:28 on 2 November 2011 Mr Grace sent Ms Spacey an email saying:
“I believe that the next couple of days will be critical and I anticipate that Y2K will endeavour to settle this matter. In the circumstances it would be preferable if I held the £150,000 settlement payment. I confirm that I will hold the money strictly to your client’s order and that it will not be released unless I receive either from you or your clients directly authorisation and that the funds will only be applied to the completion of the settlement of the Part 36 Offers made by Y2K and accepted by Tuscola, to include the discharge of all the charges in favour of Y2K over property owned by any of the Tuscola companies.”
179.	At 15:28 Ms Spacey replied to Mr Grace saying “we are waiting for Barclays to confirm that they’re happy for the £150,000 to be sent to your client account and that they don’t require an undertaking on your headed paper.”
180.	At 17:11 Mr Oliver sent Mr Gubbay an email, copied to Ms Spacey, Mr Burrage, Mr Grace and others replying to an email from Mr Gubbay and saying: 
“To reiterate the funds should continue to be held by Olswang under undertaking. 
…
I am sure that once the situation with Y2K is resolved Barclays will instruct us to release Olswang from their undertaking but at this stage we have no such instructions and don’t expect to receive them until Y2K are sorted out.
We have not as yet taken the security over Unity Mill … as we are waiting for instructions from Barclays. That’s why the funds are to be sent to Collyer Bristow subject to an undertaking to hold to our order. …”
181.	 At 18:24 Mr Grace sent Mr Burrage an email, copied to Ms Spacey and others, saying he “will need Olswang to undertake to deliver to me all the DS1s they hold in respect of the Barclays security immediately those DS1s are released by Y2K …”.
Tuesday 3 November 2015
182.	At 16:28 Mr Grace sent Mr Oliver an email confirming that he had received the £150,000, and held it “pursuant to the terms of my email undertaking given to Anais at 13:28 yesterday”.
Tuscola’s contentions in summary
183.	In closing submissions counsel for Tuscola confined Tuscola’s case to three alternative contentions which may be summarised as follows:
i)	On the true construction of Mr Unett’s email of 15:12 on 3 September 2015 (paragraph 108 above), Olswang was in fact released from its obligation to hold the DS1s to Mr Unett’s order. Although Tuscola rely upon Mr Unett’s email of 15:21 on 3 September 2015 (paragraph 113 above) as confirming the email of 15:12, it is not suggested that the later email has any separate effect for this purpose.
ii)	Tuscola’s acceptance of the Offers gave rise to contracts. Tuscola elected for the instalments option under the Offers, but failed to perform its obligation to pay the first instalment timeously. Thereafter Y2K affirmed the contracts. Accordingly, Y2K could not demand performance of the contracts in an alternative way as it tried to do.
iii)	Y2K either waived the time stipulation in the Offers or is estopped from relying upon Tuscola’s failure to pay the first instalment on 31 August 2015.
Tuscola’s primary contention: construction of Mr Unett’s email at 15:12 on 3 September 2015 
184.	It is common ground that Mr Unett’s email of 15:12 on 3 September 2015 should be construed in the same manner as a written contract is construed. The principles of contractual interpretation have been considered by the House of Lords and the Supreme Court in a series of recent cases, including Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, Re Sigma Finance Corp [2000] UKSC 2, [2010] 1 All ER 571, Rainy Sky SA v Kookmin Bank [2011] UKSC 50 [2011] 1 WLR 2900, Aberdeen City Council v Stewart Milne Group Ltd [2011] UKSC 56, [2012] SLT 205 and Arnold v Britton [2015] UKSC 36, [2015] AC 1619. In brief summary, the interpretation of a contract is an objective exercise in which the court’s task is to ascertain the meaning that the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
185.	It is also common ground that the background knowledge in the light of which Mr Unett’s email of 15:12 on 3 September 2015 must be interpreted includes in particular:
i)	Olswang’s letters dated 30 June and 7 June 2014 giving the undertakings (paragraphs 17 and 20 above);
ii)	Mr Unett’s letter dated 16 October 2014 enclosing the DS1s (paragraph 28 above) which followed his previous letter dated 9 October 2014 enclosing other DS1s (paragraph 26 above); 
iii)	the terms of the Offers (paragraphs 61 and 62 above); and 
iv)	Mr Callender’s email of 07:53 on 21 August 2015 (paragraph 65 above), Mr Unett’s email of 12:07 on 21 August 2015 (paragraph 67 above) and Mr Unett’s email of 14:35 on 28 August 2015 (paragraph 76 above).
186.	Tuscola contend that, construed in the light of that background knowledge, the words “I will release Olswang … from the undertakings detailed below” would be understood by a reasonable person as meaning “I will release Olswang from any obligations owed to Y2K, including, but not limited to, any obligations in relation to the undertakings”. Tuscola further contend that such “obligations” would be understood by a reasonable person as including release of the DS1s. Accordingly, Tuscola contend that, once the payment of £450,000 was received by Y2K, the DS1s were released. 
187.	I do not accept this argument. My reasons are as follows.
188.	The Offers clearly provided that, if Tuscola elected for the instalment option, then, upon receipt by Y2K of the first instalment, Mr Unett would do two things which are separately listed and differently described in paragraph B of each Offer. First, he would release Olswang from their undertakings of 30 June and 7 July 2014 (sub-paragraph B(i)). Secondly, he would release the DS1s in respect of Bramley Court and Cable House (sub-paragraph B(ii)). So far as the second item is concerned, there is no reference to Olswang in the way that it is described. It is referred to simply as release of the DS1s, i.e. so that they are delivered as deeds. (Delivery as a deed is required of a document executed by an overseas company such as Y2K as a deed by virtue of regulation 4 of the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 (SI 2009/1917), which applies section 46(1)(b) of the Companies Act 2006 as modified by regulation 4 to an overseas company. The reason why the DS1s had to be delivered as deeds is explained more fully below.) Nor did there need to be any reference to Olswang in that regard: Olswang had not given any undertakings with regard to the DS1s, it had simply received the DS1s upon the terms imposed by Mr Unett in his letter dated 16 October 2014. Thus it was a gratuitous bailee of the DS1s.
189.	Turning to Mr Callender’s email of 07:53 on 21 August 2015, this email was sent before Tuscola had accepted the Offers, let alone elected for the instalment option. Moreover, it was sent against the background of the dispute which had arisen between Y2K and Olswang as to whether Olswang had given undertakings to Y2K, and, if so, as to the correct interpretation of Undertaking 4. Mr Callender’s email was concerned with the basis upon which Olswang would be prepared to release the £347,897 held in its client account. What Mr Callender asked for was confirmation that Olswang would be “fully and completely discharged from any obligations it owes Y2K … including but not limited to any obligations in relation to either of the (draft) undertakings given to Y2K”. No reference was made to the DS1s. That is unsurprising, because there had been no dispute between Y2K and Olswang with regard to the DS1s. Moreover, it would have been obvious to all concerned at that stage that, in order to procure release of the DS1s by making the first instalment payment of £450,000, Tuscola would not only have to pay or procure the payment of the difference between £450,000 and £347,897 from some other source, but also provide additional security in accordance with paragraph C of the Offers. 
190.	Turning to Mr Unett’s email of 12:07 on 21 August 2015, again this email was sent before Tuscola had accepted the Offers, let alone elected for the instalment option. The first paragraph of Mr Unett’s email said that, if Y2K received funds complying with the terms of the Offers, then Olswang would be “fully and completely discharged from any obligations owed to Y2K including but not limited to any obligations in relation to either of the  undertakings given to Y2K”. In the second paragraph Mr Unett set out what the lump-sum option required, namely payment of a total of £600,000 by 11 September 2015. In the third paragraph Mr Unett said that, if Tuscola availed themselves of the instalment option, then the sums were reduced “for your ‘discharge’ purposes” to a total of £450,000. This accorded with paragraph B(i) of the Offers. In the fourth paragraph, Mr Unett made it clear that he could not give the confirmation sought unless Tuscola accepted the Offers by 28 August 2015 and Y2K received £450,000 by 31 August 2015 or £600,000 by 11 September 2015, as in those circumstances there would not be compliance with the Offers. In the last paragraph Mr Unett said that a payment from Olswang with no additional payment from Tuscola would not enable him to confirm the discharge of Olswang.
191.	In short, Mr Unett made it clear that Tuscola had to ensure that it complied with the terms of the Offers, but if it did Olswang would be released from its obligations to Y2K. He did not refer to the DS1s, nor did he need to.
192.	As for Mr Unett’s email of 14:35 on 28 August 2015, this was sent shortly after Tuscola had accepted the Offers. It was also sent at a time when (i) Mr Gubbay had represented that Olswang was in funds and payment could be made that afternoon and (ii) there was still time for Olswang to make a CHAPS transfer that afternoon. All that Mr Unett did in his email was to ask Olswang to let him know when the money had been sent in order that Mr Unett could confirm release of the undertakings. This email added nothing of substance to Mr Unett’s email of 12:07 on 21 August 2015.
193.	By the time of Mr Unett’s email of 15:12 on 3 September 2015, the circumstances had changed in two important respects. First, Tuscola had failed to ensure the payment of £450,000 by 31 August 2015. Secondly, Tuscola had failed to ensure payment of £450,000 on 1 September 2015, as discussed between Mr Moorcroft and Mr Irving on 29 or 30 September 2015, and hence was not in a position to ask YSK to treat a payment made on 1 September 2015 as if it had been made on 31 August 2015. Equally, Tuscola had failed to ensure payment of £450,000 on 2 September 2015.
194.	Before turning to the wording of the email, it is important to emphasise two further aspects of the factual context in which it was sent. The first is that Mr Gubbay left it until rather late in the day on 3 September 2015 (relative to the CHAPS cut-off time) to put Olswang in a position to make the payment of £450,000 to Y2K.
195.	The second aspect is that the email was sent as a result of a request made by Mr Gubbay to Mr Moorcroft. It was not sent as a result of any request made by Olswang to Mr Unett (as might have been expected). Although Mr Kanter was not party to that conversation, he knew that he had not communicated directly with Mr Unett and he knew (because Mr Gubbay had told him) that Mr Gubbay had communicated with Y2K. It follows that, even though Mr Kanter did not specifically know that Mr Gubbay had only asked for the release of Olswang’s undertakings, he had no reason to believe that anything more was asked for than Mr Unett specifically stated in the email of 15:12. Furthermore, Mr Kanter had no reason to believe that Y2K had agreed to amend the Offers in the manner suggested by Mr Burrage at 11:26.
196.	Turning to the email of 15:12 itself, I accept the first stage in Tuscola’s argument summarised in paragraph 186 above. The email referred back to the exchange on 21 August 2015, and accordingly amounted to a statement that Mr Unett would release Olswang from any obligations Olswang owed Y2K. I do not accept the second stage of the argument, however. The reasonable reader of the email of 15:12 would not have understood that this included release of the DS1s. This is for four main reasons. First, as discussed above, release of the DS1s was always distinct from release of Olswang’s undertakings, and there was no mention of the DS1s in any of the relevant communications. Secondly, release of the DS1s did not amount to release of an obligation of Olswang. Rather, it amounted to delivery by Y2K of the DS1s as deeds. Thirdly, release of the DS1 would have released the Charges. The reasonable reader would appreciate that Y2K would only be likely to agree to that as part of an agreement by Y2K (and the Funders) to a variation of the Offers such that payment of £450,000 on 3 September 2015 was treated as payment on 31 August 2015; but the email of 15:12 does not amount to such an agreement. While Mr Unett’s email of 15:21 added that release of Olswang’s undertakings would not be withheld due to Tuscola’s failure to provide the additional security, that email did not amount to an agreement to vary the Offers either. Fourthly, Tuscola’s argument proves too much: if the words “any obligations” embraced release of the DS1s, then they would equally embrace release of all the other DS1s which had been sent by Mr Unett to Olswang on terms that they be held to his order. No reasonable reader of the email of 15:12 could have thought that Mr Unett was intending to agree to release of all the DS1s in Olswang’s possession, since on any view there had been no discussion of that.
197.	Counsel for Tuscola submitted that Olswang’s representatives had interpreted the email in the manner contended for by Tuscola, relying upon Mr Burrage’s email of 15:30 (paragraph 115 above), to which one could add Mr Burrage’s email of 16:32 (paragraph 118 above) and possibly Mr Kanter’s email of 17:11 (paragraph 119 above). Even if that is correct, their subjective understanding is immaterial. Y2K’s subjective understanding, which is equally immaterial, was different, as Mr Unett pointed out in his email of 09:54 on 4 September 2015 (paragraph 120 above). Moreover, as counsel for Y2K pointed out, Pinsents did not share Olswang’s view (see e.g. Mr Waite’s email of 15:36 on 3 September 2015 (paragraph 116 above)).
198.	Since I do not accept Tuscola’s construction of the email of 15:12 on 3 September 2015, it is not necessary for me to consider the legal correctness of Tuscola’s argument that, if construed in the manner contended for, the email has the effect of releasing the DS1s. All I will say is that I have some doubt about this, given that on its face the email contained a promise by Mr Unett that he would provide a release rather than a statement that he did provide a release and given that, when asked to confirm that he had released the DS1s, Mr Unett declined to do in his email of 09:54 on 4 September 2015.                                          
Tuscola’s secondary contention: affirmation
199.	Tuscola’s secondary contention raises a series of issues which I will consider in turn.
Did Tuscola’s acceptance of the Offers give rise to enforceable contracts of compromise?
200.	Tuscola contend that their acceptance of the Offers gave rise to enforceable contracts of compromise. Y2K disputes this for two distinct reasons. First, Y2K contends that there was no compromise of a bona fide dispute. Secondly, Y2K contends that any contract was unenforceable by virtue of section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989.
201.	Compromise of a bona fide dispute. Y2K contends that the Offers were merely offers by a creditor to accept part payment in full settlement of a debt. It is well established that a creditor is not bound by such a promise: see Chitty on Contracts (32nd ed) at 4-117 to 4-119. Although Y2K acknowledges that the instalment option included a further promise by Tuscola, namely to give additional security, Y2K points out that the instalment option only arose if Tuscola elected for it. Accordingly, Y2K relies on the principle that a discretionary promise is not consideration: see Chitty at 4-025. Tuscola contend that the agreement which resulted from their acceptance of the Offers was binding because it amounted to a compromise of a bona fide dispute and thus consideration was given by Tuscola. Y2K disputes this.
202.	Tuscola put their case on this point in two alternative ways. First, Tuscola contend that there was a compromise of a dispute between Tuscola and Y2K. Secondly, Tuscola contend that there was a compromise of a three-way dispute between Tuscola, Y2K and Olswang.
203.	So far as Tuscola’s first way of putting their case is concerned, Tuscola contend that there was a dispute over Tuscola’s indebtedness to Y2K and that it is irrelevant that Tuscola’s defences to Y2K’s demands were flimsy or that Y2K had a very good chance of success on its claims for the outstanding sums. I do not accept this contention. As at 31 July 2015, there was no substantial or bona fide dispute as to T110’s and T104’s liability to pay sums substantially in excess of, respectively, £380,639.90 and £219,380.10 to Y2K. On the contrary, the grounds in support of Tuscola’s applications to set aside the Statutory Demands disclosed no substantial or bona fide dispute as to Tuscola’s liability to pay £380,639.90 and £219,380.10 to Y2K, the applications had been dismissed on 13 July 2015 and there had been no suggestion that Tuscola were going to appeal. Moreover, Tuscola’s awareness at this time that they had no defence to Y2K’s claims under the Loans is demonstrated by Mr Gubbay’s threat to Mr Moorcroft to put Tuscola into voluntary liquidation (see paragraph 58 above).  
204.	As to Tuscola’s second way of putting their case, I do not accept this either. There was not a three-way dispute, rather there was a dispute between Y2K and Olswang over the undertakings which was distinct from the question of Tuscola’s indebtedness to Y2K. Furthermore, Olswang was not a party to the Offers or to Tuscola’s acceptance thereof. Yet further, although Y2K promised to release Olswang from its undertakings, Olswang gave no consideration either to Y2K or to Tuscola under the Offers.      
205.	Section 2(1) of the 1989 Act. Section 2(1) of the 1989 Act provides:
“A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.”
It is common ground that, if section 2(1) applies, the formalities specified in section 2(3) were not complied with. The issue is whether section 2(1) applies. For this purpose it must be assumed, contrary to the conclusion I have reached above, that Tuscola’s acceptance of the Offers gave rise to contracts.
206.	A contract is a “contract for the disposition of an interest in land” if it is a contract to do something which has the effect that a disposition in land is made: see Dalia Ltd v Four Millbank Nominees Ltd [1978] 1 Ch 231 at 240F-241B (Goff LJ) (a decision in respect of the phrase “any contract for the sale or other disposition of land or any interest in land” in section 40 of the Law of Property Act 1925, but the change in language does not affect its scope: see Nweze v Nwoko [2004] EWCA Civ 379 at [34] (Carnwath LJ, as he then was)). This includes an agreement under which there is created an option for the disposition of an interest in land: see Spiro v Glencrown Properties Ltd [1991] Ch 537 at 541C-E and 546F-G (Hoffmann J). On the other hand, a contract which itself amounts to a disposition of an interest in land is not a contract for the disposition of such an interest: see McLaughlin v Duffill [2008] EWCA Civ 1627, [2010] Ch 1 at [20] (Sir Andrew Morritt C) and Helden v Strathmore Ltd [2011] EWCA Civ 542, [2011] Bus LR 1592 at [27]-[28] (Lord Neuberger of Abbotsbury MR, as he then was).
207.	A “disposition” for the purposes of section 2(1) is defined by section 2(6) as having the same meaning as in section 201(1)(ii) of the Law of Property Act 1925, and thus includes a charge, a release, and “every other assurance of property or of an interest therein by any instrument”. “Interest in land’ is defined by section 2(6) to mean “any estate, interest or charge in over land”.
208.	Y2K contends that the contracts were contracts for the disposition of an interest in land because they created options the exercise of which would lead to the release by Y2K of the DS1s. The status of the DS1s at that stage was that they had not been executed as deeds, as is required of a form DS1, because they had not been delivered as deeds. Rather, they had been sent to Olswang on terms that they were to be held to Mr Unett’s order “pending release by me in writing” (paragraph 28 above). Thus the irrevocable instructions which are necessary for the delivery of a deed (see Longman v Viscount Chelsea [1989] 2 EGLR 242 at 245E-F (Nourse LJ)) had not been given. Accordingly, the DS1s would only take effect when formally released by Y2K, whereupon they would be delivered as deeds. Upon release of the DS1s, and their consequential delivery as deeds, the Charges would cease to exist in equity.
209.	Tuscola take issue with the last link in this chain of reasoning. Counsel for Tuscola submitted that the requirement for a DS1 was purely evidential, and did not affect the common law rule that, when a debt is discharged, nothing further is required to release the security in respect of that debt: see Fisher and Lightwood’s Law of Mortgage (14th ed) at 49.3.
210.	This submission depends on the terms of rule 114 of the Land Registration Rules 2003 (SI 2003/1417), which provides as follows:
“(1) 	Subject to rule 115, a discharge of a registered charge must be in Form DS1.
…
(3) 	Any discharge or release in Form DS1 or DS3 must be executed as a deed or authenticated in such other manner as the registrar may approve.
(4) 	Notwithstanding paragraphs (1) and (2) and rule 115, the registrar is entitled to accept and act upon any other proof of satisfaction of a charge that he may regard as sufficient.
….”
211.	Against this, counsel for Y2K relied upon the judgment of Norris J in Garwood v Bank of Scotland plc [2013] EWHC 415 (Ch), [2013] BPIR 450 at [54]:
“Counsel for BoS argued that the submission of the e-DS1 (and the subsequent removal of an entry relating to the 2004 Charge) simply altered the register: it did not operate as any form of statutory receipt within section 115 of the Law of Property Act 1925. It therefore left the charge existing in equity and capable of re-registration under section 27 of the Land Registration Act 2002. I do not accept this argument. Section 115 of the Law of Property Act 1925 does not apply to registered land (see s.115(10)): so it is dangerous to import its conceptual framework into the 2002 Act. The e-DS1 acts as both evidence of discharge and as an application to alter the register: see rules 114 & 115 LRR 2003 and the terms of form DS1. As Counsel for the trustee put it ‘the discharge and cancellation caused the charge to cease to exist at law and in equity’. He cited (by way of illustration from another jurisdiction) State Bank of New South Wales v Berowa Holdings Pty Ltd (1986) 4NSWLR 398 .”
212.	In my judgment this reasoning is applicable to the present case. Although rule 114(4) shows that the registrar can act upon other evidence of discharge of a registered charge, it remains the case that the primary instrument specified by rule 114 for effecting discharge is a form DS1. Moreover, the method chosen by the parties in the present case was release, and hence delivery, of the DS1s. In those circumstances I do not accept that the DS1s were of purely evidential effect. This is particularly so given that, under the Offers, Y2K was offering to accept payment of less than the full amount secured by the various charges it held. When the DS1s were delivered, the Charges would cease to exist in equity.
213.	Accordingly, I conclude that, if contracts were concluded by Tuscola’s acceptance of the Offers, they were contracts for the disposition of interests in land, namely for the discharge of the Charges. As such, they were caught by section 2(1).      
214.	Conclusion. For both of the reasons given above, I conclude that Tuscola’s acceptance of the Offers did not give rise to enforceable contracts.
Construction of the Offers
215.	The next issue is as to interpretation of the stipulations as to time contained in the Offers. Both paragraph 1 and paragraph A provided that “time is of the essence”. The generally accepted meaning of this expression is that a failure to pay in time amounts to a repudiation of the contract which is capable of acceptance by the innocent party.
216.	Tuscola contend that time was not of the essence in relation to acceptance of the Offers themselves. I accept this, since there was no agreement unless and until the Offers were accepted. But this is immaterial since paragraph 4 provided for withdrawal of the Offers unless accepted by 28 August 2015.
217.	The Offers do not expressly provide when the election between the lump-sum option and the instalments option must be made. Tuscola contend that it is implicit that this election must be made before the first instalment payment is due on 31 August 2015. I agree with this. Tuscola also contend that time was not of the essence in relation to the election. I accept this, but I consider that this is again immaterial. This is because paragraph E expressly provides that, if the instalments option is elected, but either instalment is not paid timeously, then the settlement is “void” i.e. the contracts are discharged.
218.	What if Tuscola failed both to make their election and to make the first instalment payment by 31 August 2015? Then it seems to me that it is implicit that Tuscola would lose the ability to elect for the instalments option, but would still be able to avail themselves of the lump-sum option provided that the lump sum was paid in time i.e. by 11 September 2015.
Election
219.	The next issue is whether Tuscola elected for the instalment option. An election does not need to be made in any particular language or form, so long as it is made clearly and unequivocally: see The Kanchenjunga [1990] 1 Lloyd’s Rep 391.
220.	Tuscola contend that they elected during the conversation between Mr Gubbay and Mr Moorcroft on 28 August 2015. I do not accept this. Mr Gubbay did not give evidence that he told Mr Moorcroft that Tuscola were electing to pay by instalments. Indeed, he did not even mention the conversation in his witness statement. Having referred to his written acceptance of the Offers, Mr Gubbay simply asserted that Mr Moorcroft and Mr Unett were aware that Tuscola’s intention was to proceed by making the instalment payments. Mr Moorcroft’s evidence was that, during the conversation, Mr Gubbay did not mention the fact that payment was required that day if the instalment option was to be exercised, but that Mr Moorcroft did. This was simply a discussion about the timing if the instalment option was to be exercised. Moreover, Mr Moorcroft was clear that Mr Gubbay never expressly confirmed that Tuscola wished to exercise the instalment options. Mr Moorcroft accepted that he assumed that Tuscola would wish to pay by instalments, but that is not the same thing.
Affirmation
221.	Assuming that Tuscola’s acceptance of the Offers gave rise to contracts and that Tuscola elected for the instalment option, Tuscola accept, for the purposes of this part of their case, that they did not pay the first instalment timeously. Tuscola contend that, although Y2K could have terminated the contracts, Y2K affirmed them. In this regard, Tuscola rely in particular on Mr Moorcroft’s email to Mr Gubbay at 15:14 on 8 September 2015 (paragraph 141 above). Having affirmed the contracts, Y2K could not vary the terms of the contracts by demanding performance of the contracts in a different way, namely by treating the £450,000 as a part payment of the lump sum of £600,000 due by 11 September 2015.
222.	I do not accept this argument. I shall assume for this purpose that, contrary to the conclusion I have reached above, Tuscola elected for the instalment option on 28 August 2015. Accordingly, Tuscola had until 31 August 2015 to pay the first instalment, but it did not do so. As discussed above, paragraph E specified that in those circumstances the settlement was “void”. While it is correct that Mr Moorcroft’s email of 15:14 on 8 September 2015 said that the Offers remain binding, and made it clear that Y2K remained willing to accept performance of the lump-sum option, it also said that instalments option had lapsed. Given that Y2K did not consider that Tuscola had elected, this was in accordance with the interpretation of the contracts I have set out in paragraph 218 above. But even on the basis that Tuscola had elected, I do not consider that the email affirmed the contracts. Rather, it amounted to an offer to continue to perform the lump-sum option notwithstanding the discharge of the contracts.      
Tuscola’s tertiary contention: waiver or estoppel
223.	Tuscola contend that Y2K waived compliance by Tuscola with the time limit of 31 August 2015 for payment of the first instalment either orally or in writing or by its conduct. In the alternative, Tuscola rely upon the same matters as founding an estoppel precluding Y2K from relying upon Tuscola’s failure to pay the first instalment on time. In this regard, Tuscola rely upon a series of allegations as to what was said by the parties which are contrary to my findings of fact. I shall therefore deal with them relatively briefly.
224.	First, Tuscola allege that, during the conversation between Mr Irving and Mr Moorcroft on 29 or 30 August 2015, Mr Moorcroft agreed to extend time for payment of the first instalment until 1 September 2015. I have found, however, that Mr Moorcroft did not do so (paragraph 79 above). In any event, this would not avail Tuscola, since the £450,000 was not paid until 3 September 2015. 
225.	Secondly, Tuscola allege that, during the first conversation between Mr Gubbay and Mr Moorcroft on 3 September 2015, Mr Moorcroft agreed to a further extension of time for payment of the first instalment until 3 September 2015. I have found, however, that Mr Moorcroft did not do so (paragraphs 101-103 above).
226.	Thirdly, Tuscola rely upon Mr Unett’s emails of 15:12 and 15:21 on 3 September 2015. But those emails did not extend time for payment of the first instalment or waive Tuscola’s failure to pay the first instalment timeously. Rather, they said that Olswang would be released from its undertakings to Y2K if £450,000 was paid that day.
227.	Fourthly, Tuscola rely upon Y2K’s course of conduct from 28 August to 3 September 2015. In my view there is nothing in the course of conduct viewed as a whole which adds to Tuscola’s case on the individual communications relied upon. There was no waiver or forbearance by Y2K, nor did Y2K make any representation that it would accept payment of the first instalment on 3 September 2015.
228.	Given the conclusions reached above, it is not necessary for me to consider Y2K’s other answers to Tuscola’s case on waiver or estoppel. 
Conclusion
229.	For the reasons given above, I conclude that Tuscola have not become entitled to possession of the DS1s.