Natixis S.A. v Marex Financial
| Jurisdiction | England & Wales |
| Judge | Mr Justice Bryan |
| Judgment Date | 02 October 2019 |
| Neutral Citation | [2019] EWHC 2549 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Claim No CL-2017-000325 |
| Date | 02 October 2019 |
[2019] EWHC 2549 (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
Rolls Building, Fetter Lane
London, EC4A 1NL
THE HONOURABLE Mr Justice Bryan
Claim No CL-2017-000325
and
and
Duncan Matthews QC and Susannah Jones (instructed by Stephenson Harwood LLP) for the Claimant
Alain Choo-Choy QC, Robert Weekes, Laura John, and Max Kasriel (instructed by Memery Crystal LLP) for the First Defendant/Part 20 Claimant
Robert Thomas QC and Nicola Allsop (instructed by Hill Dickinson LLP) for the Second Defendant/Part 20 Defendant
Luke Parsons QC and Ben Gardner (instructed by Kennedys Law LLP for the Fourth Party/Part 20 Defendant
Hearing dates: 21, 22, 23, 24, 25, 28, 29, 30, 31 January 2019 1, 4, 5, 6, 7, 8 and 11 February 2019
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Bryan
INDEX
A. Introduction
B. The Witnesses
C. The Facts and Chronology of Events
D. The Terms of the Purchase Contracts
E. The Construction of the Purchase Contracts and their Breach
F. Common Mistake
G. Contractual Promises and Estoppel
H. Negligence and Negligent Misstatement
I. Was Access World negligent in relation to the authentication of PC4–5?
J. Causation and Contributory Negligence
K. Access World's Terms and Conditions
L. Mitigation
M. Quantum
A. INTRODUCTION
A.1 The parties
The Claimant (“Natixis”) is a bank and the international corporate, investment, insurance and financial services arm of Groupe BPCE. The First Defendant/Part 20 Claimant (“Marex”) is an independent commodities broker and trader. The Second Defendant/Third Party (“Access World”/AW”) is part of the Access World Group of companies (formerly Pacorini Metals) and is a provider of London Metals Exchange (“LME”) warehousing. Its LME approved warehouses include warehouses in Gwangyang, Korea (“AW Korea”) and Johor, Malaysia (“AW Malaysia”). The Fourth Party (“MCAP”) is a Lloyd's syndicate and representative underwriter in relation to two Lloyd's contracts of insurance insuring Marex.
A.2 The Purchase Contracts
By five spot purchase contracts dated between 22 November 2016 and 10 January 2017, Marex agreed to sell, and Natixis agreed to buy, nickel stored at AW Korea and AW Malaysia warehouses (the “Purchase Contracts”), which formed part of “conditional repo” transactions, under which Marex had options to repurchase the nickel at later dates. The Purchase Contracts are referred to by the parties as “PC1” to “PC5”. The documentation that Marex was obliged to deliver to Natixis included warehouse receipts. Pursuant to each Purchase Contract, Marex delivered hard copy documents (including documents which purported to be genuine Access World warehouse receipts) to Natixis' London branch and Natixis thereafter transferred the relevant payment amount to Marex (with the last such transfer occurring on 10 January 2017 under PC5). A total of sixteen purported warehouse receipts were delivered to Natixis by Marex: two relating to PC1–PC3; thirteen relating to PC4 and one relating to PC5.
A.3 The false warehouse receipts
On 27 January 2017, Access World issued a press release stating:
“Forged Warehouse Receipts
Access World has become aware that there are forged warehouse receipts in our name circulating in the market. We encourage holders of any Access World warehouse receipts to seek authentication from the relevant issuing office for any warehouse receipts not issued to them directly by Access World.”
On 9 February 2017, Access World issued a further press release stating:
“… In order to provide relevant market participants with additional clarity, we are now announcing a four business day authentication window commencing Friday 10 February 2017 and ending Wednesday 15 February 2017. Holders are requested to make appointments with the relevant issuing office to be scheduled during business hours within this period. We note that currently all relevant forged warehouse receipts we have seen have been in the name of Access World Logistics (Singapore) Pte Ltd (previously Pacorini Metals (Asia) Pte. Ltd.) and have been solely across nickel . …”
On 14 February 2017 at its Asia Regional Office in Singapore, Access World inspected sixteen purported warehouse receipts (which Marex and Natixis say are the same documents as were delivered to Natixis by Marex, and which, in the case of the fourteen documents comprising PC4–5, had previously been authenticated by Access World (as appears below)). Three employees of Access World undertook an authentication procedure in respect of those documents, and following that process Access World informed Natixis that none of the sixteen purported warehouse receipts (the “Purported Warehouse Receipts”/PC1–5) were genuine warehouse receipts issued by Access World.
Although Marex initially alleged that the Purported Warehouse Receipts were genuine documents, by its Re-Amended Defence to Natixis' claim on 7 December 2018, Marex conceded that the Purported Warehouse Receipts were forgeries (the three experts on document authentication all agreed at paragraph 5 of their Joint Memorandum that the Purported Warehouse Receipts were, indeed, counterfeit).
The genuine warehouse receipts in respect of the nickel which was the subject matter of the Purported Warehouse Receipts have all been presented to Access World, authenticated and cancelled, after which the nickel concerned has variously been placed on LME warrants, or made the subject of fresh warehouse receipts, or the nickel has been taken out of Access World's warehouses and put into third party warehouses. Marex never had, and Natixis never acquired, title to any of the nickel.
A.4 The Claims and Part 20 Claims
A.4.1 Natixis' claim
Following the notification by Access World that the Purported Warehouse Receipts were forgeries, on 27 February 2017 Natixis closed out certain nickel futures positions it had opened pursuant to Clause 2(e) of the Purchase Contracts, and now claims damages and/or an indemnity against Marex in a sum of US$32,114,093 (plus costs and expenses relating to its claim against Access World) which it says Marex is obliged to indemnify it in respect of, pursuant to the terms of the Purchase Contracts, in particular on the basis that Marex failed to give it good title to the nickel. Natixis submits that it has a straightforward contractual claim against Marex – it paid Marex the purchase price against the forged receipts, and Marex is liable to it pursuant to the terms of the Purchase Contracts.
More specifically Natixis submits that Marex failed to deliver the Required Documentation to Natixis on the Payment Date (or at all) in breach of Clause 2(b) of the Purchase Contracts; that Marex breached a representation and warranty at Clause 3(a) of the Purchase Contracts as it did not have good title (or any title) to the Purchased Metal and did not have the full and unqualified right to sell and deliver the Purchased Metal to Natixis; that Marex failed to pass title to the Purchased Metal to Natixis on receipt by Marex of the Payment Amounts in breach of Clause 2(d) of the Purchase Contracts; that Marex failed to deliver the Purchased Metal to Natixis on the Payment Date in breach of Clause 6(a) of PC4 and of PC5 and that Marex breached a representation and warranty at Clause 3(b) of the Purchase Contracts as the Purchased Metal was not free of any encumbrance or adverse claim by any third party. Natixis also submits that each of these breaches was also a breach of Clause 5 of the Purchase Contracts, in that those breaches also constituted a failure to execute and deliver all instruments, and/or a failure to take all actions, as were required to carry out the terms of the Purchase Contracts. Natixis has an alternative claim for restitution of the Payment Amounts, as money paid upon a consideration which has wholly failed.
A.4.2 Marex's defences and their evolution
Marex denies that it is liable to Natixis. In its original Defence Marex denied that the purported warehouse receipts were forgeries and denied that they had been confirmed or established by Access World to be forgeries. It said that the purported warehouse receipts delivered by Marex to Natixis were the same as were delivered to it by Come Harvest Holdings Limited (“Come Harvest”/CHH”) under related spot purchase contracts, and that those documents were specifically inspected and authenticated by Access World.
In that regard, in relation to PC1 to PC3, Access World inspected scanned copies of two purported warehouse receipts and reported in relation thereto in an email to Marex dated 22 November 2016 (the “22 November Email”) which (says Marex) created the impression that the warehouse receipts were authentic. For its part Access World says that the 22 November Email says nothing of the sort and that it did not (and could not) authenticate warehouse receipts from photocopies. In the case of PC4 and PC5, a physical inspection of the fourteen purported warehouse receipts was undertaken by Access World at its premises in Singapore, and Access World (it is now known erroneously) confirmed them to be authentic in emails to Marex dated 22 December 2016 and 9 January...
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