ICICI Bank UK Plc v Assam Oil Company Ltd
| Jurisdiction | England & Wales |
| Judge | Andrew Burrows |
| Judgment Date | 27 March 2019 |
| Neutral Citation | [2019] EWHC 750 (Comm) |
| Docket Number | Case No: CL-2017-000770 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 March 2019 |
[2019] EWHC 750 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Andrew Burrows QC
(SITTING AS A JUDGE OF THE HIGH COURT)
Case No: CL-2017-000770
Ms Laura John and Mr Max Evans (instructed by Stephenson Harwood LLP) for the Claimant
Mr David Joseph QC and Ms Claudia Renton (instructed by Penningtons Manches LLP) for the Defendants
Hearing dates: 5–6 March 2019
Approved Judgment
Andrew Burrows QC:
Introduction
This is an application by the claimant for summary judgment under CPR 24.2 on the basis that the defendants have no real prospect of successfully defending the claim. The claim is brought under an Amended Facility Agreement (‘AFA’) dated 15 April 2011. This followed an Original Facility Agreement (‘OFA’) dated 21 December 2007. The claim is a debt claim whereby the claimant bank, ICICI Bank UK plc (‘ICICI Bank UK’), as lender, alleges that the first defendant, Assam Oil Co Ltd (‘Assam Oil’), as borrower, and the second and third defendants, AIL Holdings Ltd and Cromwell Securities Ltd, as guarantors, have failed to pay sums owing under the AFA. The sums allegedly owed are, under the primary claim, which is measured in US dollars, US$41,623,254.87 as principal plus, as at 27 December 2017, $22,025,490.97 as interest (accruing at the contractual rate). There is an alternative claim for payment measured in sterling. On that alternative claim the principal claimed is £25,526,000.30 plus, as at 27 December 2017, £13,127,867.91 as interest (accruing at the contractual rate).
ICICI Bank UK's claim was issued on 18 December 2017 (although the sums claimed were amended shortly afterwards with interest updated to 27 December 2017) and the Particulars of Claim were served on 13 April 2018. The defendants served a Defence and Counterclaim on 21 June 2018. That included alleged defences of economic duress, non-disclosure, misrepresentation as to fees, and conspiracy to injure. The claimant served a Reply to Defence and Counterclaim on 9 August 2018. The claimant issued this application for summary judgment on 6 September 2018.
The defendants have applied for permission to serve a very different Amended Defence and Counterclaim (sent to the claimant on 28 February 2019). All the previously alleged defences and counterclaim have been abandoned. Instead, in essence, the defendants seek rescission for a misrepresentation (inducing the defendants to enter into the AFA) as to the sum of unpaid principal owing under the OFA; and restitution of sums mistakenly paid by Assam Oil. Laura John, counsel for the claimant, clarified that she would not resist that application for permission to amend (subject to costs) if the claimant's summary judgment application were to fail. It follows, and is not in dispute between the parties, that I must decide this summary judgment application on the basis of that Amended Defence and Counterclaim (subject to one point concerning an alleged admission in the original Defence that is dealt with in paragraph 49 below).
The second defendant, a company incorporated in Guernsey, has been struck off the register of Guernsey companies and has therefore played no part in these proceedings. David Joseph QC, for the defendants, made clear that he had no instructions from the second defendant and was therefore representing the first and third defendant only. I can therefore largely ignore the second defendant for the purposes of this judgment.
The correct approach for a court to take on an application for summary judgment under CPR 24.2 was not in dispute between the parties and has been clarified in several cases. These include Swain v Hillman [2001] 1 All ER 91, ED & F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472, at [10], and Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch)at [15]. As regards applications by claimants for summary judgment, the central points to be derived from those cases are as follows:
(i) The burden of proof is on the claimant.
(ii) The court must consider whether the defendant has a ‘realistic’, as opposed to a ‘fanciful’, prospect of successfully defending the claim.
(iii) The court should not conduct a mini-trial. Where there is a dispute on the facts, the court should assume that the defendant will be able to prove the facts it is alleging unless it is clear that there is no real substance to those allegations, as where they are contradicted by the documentary evidence.
(iv) If there is a short point of law, or construction, and 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, the court should grasp the nettle and decide it.
What defences are the defendants here relying on? There were times during the hearing, and this is reflected in the Amended Defence and Counterclaim and in parts of the defendants' skeleton argument, where Mr Joseph tended to suggest that payments had been made by Assam Oil to ICICI Bank UK that ICICI Bank UK could not properly account for (ie it was unclear where those payments had gone). But it became clear that the essential thrust of the defences, as ultimately put forward, was that, although paid and accounted for, ICICI Bank UK had been charging Assam Oil for payments that were not contractually due and had therefore been mistakenly paid by Assam Oil; and this then tied in with the submission that, in entering into the AFA, there was a misrepresentation as to the principal sum owed that entitled Assam Oil to rescind the AFA. This clarification may have followed from the realisation that, although involving some complexity and a headache-inducing paper-chase, the claimant was able to show where the payments had gone by reference to contemporaneous documents. I will need to set this out in some detail below. But, in so far as Mr Joseph was meaning to leave in play that some of the money paid could not be accounted for by ICICI Bank UK (ie that the bank could not say what had happened to it), I should make clear now that I am satisfied that there is no realistic prospect of the defendants successfully establishing at a trial that payments made by Assam Oil cannot be accounted for by ICICI Bank UK.
It follows that the thrust of the defences, that I am from here on concerned with, is expressed not by saying ‘we do not know where our payments have gone and the bank is unable to account for them’ but rather by saying ‘some of those significant payments we made were not contractually due’. And if they were not contractually due, Mr Joseph's submission is that not only can there be restitution for mistake (so that the sum claimed in debt under the AFA is not owing because it ignores the deduction required for restitution of the mistaken payments) but also, and principally, there can be rescission for a misrepresentation as to the sum of principal still owing under the OFA at the time the AFA was entered into.
Finally, by way of introduction, it is convenient to explain that, as regards sums which both ICICI Bank UK and Assam Oil classified as repayments of principal — of course Assam Oil is alleging that there were many more payments that should have been treated by ICICI Bank UK as paying off principal but were not — there appears to be no real dispute that, at the end of the OFA, $10m of the principal sum loaned of $63m had been paid off. In the AFA, it was stated in the Recital at (B) ( 4/14/862), clause 6 ( 4/14/865), and Schedule 3 clause 5.1 ( 4/14/900) (and note that, from here on, my references to clauses of the AFA will omit the reference to Schedule 3) that the principal sum still owing on the OFA was $53m so that $10m of the original principal sum loaned of $63m had been paid off. That correlates to Table 1 in Appendix A in the defendants' own pleadings (ie its Amended Defence and Counterclaim). That table shows two payments on 21 January and 26 January 2011 amounting to $10m. At one point, Mr Joseph appeared to cast some doubt on this by pointing to the ‘704’ bank account of Assam Oil at ICICI Bank UK ( 4/13/856). That showed that ICICI Bank UK had debited, as paying off principal, two sums of $6,844,347.02 and $5,024,421.09 (totalling $11,868,768.11 not $10m). But it is clear from Table 1 in Appendix A of the defendants' own pleadings that the first of those payments was regarded as including interest of $1,868,768.11 (and, under clause 31.5(a) of the OFA, money paid was to be applied to pay off outstanding interest before principal). That left $10m for the payment of principal.
The disputed four categories of payment
Having cleared the ground, it follows that what I need to focus on in this judgment are the payments that the defendants allege were not contractually due but were paid to ICICI Bank UK (or ICICI Bank Ltd Offshore Banking Unit). In line with the parties' skeleton arguments, those payments may be said to fall into four categories:
(i) Payments of default interest (especially prior to the AFA) which were labelled as being for the non-creation of security.
(ii) Payments of fees (between December 2007 and June 2011) for ‘structuring’ services.
(iii) Payments of default interest (under clause 8.3(a) of the OFA and 8.3(b) of the AFA).
(iv) Payments of legal fees (under clause 16.1 of the OFA and the AFA).
It is in relation to those four categories of payment (I shall refer to them as the ‘disputed four categories of payment’) that Assam Oil alleges not only that it is entitled to restitution, and hence to a deduction from the sum claimed by ICICI Bank UK under the AFA, but also that, in so far as the payments were made prior to 15 April 2011, they...
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