Astra Asset Management UK v The Co-operative Bank Plc
| Jurisdiction | England & Wales |
| Judge | Mr Andrew Henshaw |
| Judgment Date | 10 April 2019 |
| Neutral Citation | [2019] EWHC 897 (Comm) |
| Docket Number | Case No: CL-2018-000251 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 10 April 2019 |
[2019] EWHC 897 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
7 Rolls Buildings, Fetter Lane,
London, EC4A 1NL
Andrew Henshaw QC (sitting as a Judge of the High Court)
Case No: CL-2018-000251
Jonathan Davies-Jones QC (instructed by Eversheds Sutherland (International) LLP) for the Defendant/Applicant
Christopher Harrison (instructed by Simmons & Simmons LLP) for the Claimant/Respondent
Hearing dates: 4 and 5 March 2019
APPROVED JUDGMENT
Mr Andrew Henshaw QC:
(A) INTRODUCTION
The Defendant (“ the Bank”) applies for summary judgment under CPR 24, alternatively strike-out under CPR 3.4(2)(a), in respect of claims brought by the Claimant (“ Astra”) for:
i) breach of an alleged contract for the sale by the Bank to Astra of certain debts and security interests (“ the Rights”) under a £19 million credit facility between the Bank and Oxford GB Two Limited, a company in administration;
ii) breach of an alleged express or implied agreement to negotiate in good faith to conclude such a transaction; and/or
iii) restitution, founded on unjust enrichment, based on the value of services which Astra allegedly provided to the Bank and said to have resulted in a substantial benefit to the Bank.
The Court of Appeal in The LCD Appeals [2018] EWCA Civ 220 §§ 38–39 set out the principles to be applied to applications for summary judgment and strike-out:
“The court may strike out a statement of case if, amongst other things, it appears that it discloses no reasonable grounds for bringing the claim: CPR 3.4(2)(a). It may grant reverse summary judgment where it considers that there is no real prospect of the claimant succeeding on the claim or issue and there is no other compelling reason why the case should be disposed of at trial: CPR 24.2(a)(i) and (b). In order to defeat an application for summary judgment it is only necessary to show that there is a real as opposed to a fanciful prospect of success. Although it is necessary to have a case which is better than merely arguable, a party is not required to show that they will probably succeed at trial. A case may have a real prospect of success even if it is improbable. Furthermore, an application for summary judgment is not appropriate to resolve a complex question of law and fact.”
The Court of Appeal quoted with approval the following considerations applicable to summary judgment applications, taken from passages in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) and Swain v Hillman [2001] 1 All ER 91 at 94:
i) the court must consider whether the claimant has a “ realistic” as opposed to a “ fanciful” prospect of success: Swain v Hillman [2001] 1 All ER 91;
ii) a “ realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 § 8;
iii) in reaching its conclusion the court must not conduct a “ mini-trial”: Swain v Hillman;
iv) this does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel § 10;
v) however, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 3;
vii) on the other hand, it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725”; and
viii) a judge in appropriate cases should make use of the powers contained in Part 24. In doing so he or she gives effect to the overriding objective as contained in Part 1. It saves expense; it achieves expedition; it avoids the court's resources being used up on cases where this serves no purpose; and it is in the interests of justice. If the claimant has a case which is bound to fail, then it is in the claimant's interest to know as soon as possible that that is the position: Swain v Hillman [2001] 1 All ER 91 § 94.
In addition to these points, Astra particularly highlights:
i) that the burden is on the Bank to show that Astra's claims are fanciful;
ii) that a claim is fanciful only if it is entirely without substance: see Three Rivers District Council v Bank of England [2001] UKHL 16 [2003] 2 AC 1, where Lord Hope stated at § 95:
“The method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well-recognised exceptions. For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman, at p 95, that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all.”
Lord Hobhouse said at § 158 ( “The criterion which the judge has to apply under Part 24 is not one of probability; it is absence of reality”);
iii) Nugee J's statement in Sharp v Blank [2015] EWHC 3219 (Ch) at § 33 that “it is only if the Court can at this stage say with confidence that there is nothing of substance in the claim that summary judgment can be given”;
iv) that even if a point of construction appears to be short, it may be better to have a trial where there are standard terms used in the market: A C Ward & Sons Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098 [2010] Lloyd's Rep IR 301 § 35 per Etherton LJ; and
v) the statement of Peter Smith J in Groveholt v Hughes [2008] EWHC 1358 (Ch) § 29, citing Mummery LJ's observations in Doncaster Pharmaceuticals §§ 4–18, that “the Court needs to distinguish between “cocky Claimants” on the one hand and “rubbishy Defendants” on the other part”.
(B) FACTUAL CONTEXT
The Bank began to seek a buyer for the Rights in early 2015. Astra eventually emerged as a potential bidder in December 2016. The Bank indicated that it was prepared to offer Astra a limited period of exclusivity, and the parties executed a Non-Disclosure Agreement on 4 January 2017 and a first Exclusivity Agreement (“ EA1”) on 9 January 2017. The Non-Disclosure Agreement was in a standard Loan Market Association (“ LMA”) form, and EA1 envisaged that the transaction would involve an assignment of the Rights in accordance with “ a Loan Market Association Assignment”.
Before outlining the key events, in section (C) below, I summarise certain aspects of the context which Astra particularly stressed. These are (a) the general practice for the execution of transactions under LMA terms, and (b) the urgency on both sides to bring about the proposed transaction in the present case. Both of these, Astra says, make it particularly likely that the parties intended to reach a binding contract by telephone at an early stage in the process, which would be followed by a second stage during which the detailed documentation would be negotiated and executed.
(1) Loan Market Association...
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