The English Court of Appeal in Credit Suisse Asset Management LLC v Titan Europe 2006-1 PLC & Ors [2016] EWCA Civ 1293 considered the proper interpretation of notes in a securitisation structure.  The case arose out of a dispute about the correct calculation of interest for a tranche of notes issued as part of a commercial mortgage-backed securitisation (the Class X Notes).  The issue on appeal was ordinary or default interest was payable following a default in the underlying structure. 

The Court of Appeal held, with Briggs LJ dissenting, that the Class X Notes interest calculation did not include default interest.  The majority's view was that natural construction of the phrase "per annum", read in context of the documentation in its entirety, excluded default interest, and that commercial common sense supported that construction. 

It is evident from the decision that commercial common sense will rarely be able to impose a particular construction, and to too-readily do so would be to undervalue the "importance of the words used by the parties to express their bargain".  In expressing the majority view, Arden LJ concluded that the Offering Circular was not merely part of the surrounding circumstances but is a document with a special status.  While an Offering Circular cannot displace a transaction document, it was nonetheless an "aid to construction". 

See the Court's decision here.