Cargill International Trading Pte Ltd v Uttam Galva Steels Ltd, Court of Appeal - Commercial Court, November 09, 2018, [2018] EWHC 2977 (Comm)

Resolution Date:November 09, 2018
Issuing Organization:Commercial Court
Actores:Cargill International Trading Pte Ltd v Uttam Galva Steels Ltd
 
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Neutral Citation Number: [2018] EWHC 2977 (Comm)

Case No: CL-2017-000499

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, 7 Rolls Buildings

Fetter Lane, London EC4A 1NL

Date: 9/11/2018

Before :

MR. JUSTICE TEARE

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Between :

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David Foxton QC and Jackie McArthur (instructed by Freshfields Bruckhaus Deringer LLP) for the Claimant

Karishma Vora (instructed by Marsans) for the Defendant

Hearing date: 30 October 2018

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Mr. Justice Teare :

  1. This is an application by the Claimant, Cargill, for summary judgment on its claim against the Defendant, Uttam, for sums due (some US$61.8 million plus interest) under what are called Advance Payment and Steel Supply Agreements. In effect these are contracts for the sale and purchase of steel whereby Cargill, the Buyer, can be called upon to make advance payments in respect of the price (though it is not obliged to do so). The Seller, Uttam, is then obliged either to sell steel of the requisite value to the Buyer or to repay the sum paid in advance. There are two such contracts relevant to this application, APSA 1 and APSA 2 which are dated 11 February 2015 and 3 July 2015 respectively. There was evidence that the parties had been dealing with each other on similar terms to these two agreements for some years.

  2. The operation of the contracts is summarised in Mr. Foxton's skeleton argument at paragraph 14. I shall summarise that summary.

  3. Each contract set out the total facility available, US$51.8 million under APSA 1 and US$10 million under APSA 2. Following receipt of a notice of draw down the Buyer had the right, but not the obligation, to pay the amount requested to be drawn down; see clause 8.1. At the maturity date (360 days from payment in the case of APSA 1 and 180 days from payment in the case of APSA 2) the Seller was obliged to repay the amount advanced; see clause 8.5. The Seller could repay in one of three ways. The first was by the sale and delivery of steel, the second was by the sale and delivery, through the Buyer, of steel to an alternative buyer and the third was repayment in cash; see clause 8.4. All payments were to be made ``without set-off, counterclaim or condition whatsoever''; see clause 8.6.

  4. If the Seller wished to pay by means of a sale of steel the Offer to Purchase had to be made 60 days before the maturity date and, although there could be one or more such offers, they had to be for no less than the amount due for repayment; see clause 5.1. The Offer would be valid for 7 days during which time the Buyer ``may either accept ... or may decline ... in writing''; see clause 5.2.

  5. The Seller's obligations under clause 8.5 to pay on the maturity date were not to be affected, terminated or suspended by any failure of the Buyer to make an offer or by any breach of its obligations under clause 5; see clause 5.5. Further, no default by the Buyer of its obligations under the agreement was to suspend, terminate or otherwise extinguish the Seller's payment obligations under clause 8.5; see clause 6.4.

  6. The clauses to which reference has been made are set out in an annex to this judgment.

  7. In 2015 the Seller submitted six notices of draw down and the Buyer responded to each. The full amount of the financing facility under each APSA was drawn down and paid, US$61.8 million in total. The earliest maturity date was under APSA 2 because the maturity date was 180 days, as opposed to 360 days, after payment. Thus the first maturity date, for repayment of US$10 million, was 5 January 2016. That sum was not repaid. Thereafter, on each succeeding maturity date, no repayment was made. Accordingly the Buyer has made a claim for US$61.8 million as a debt, together with interest. There does not appear to be any dispute that, prima facie, that sum is due pursuant to the terms of the APSA agreements.

  8. It is apparent from the Seller's email to the Buyer dated 21 January 2016 that the Seller's ability to repay had been damaged by ``huge cash flow pressure'' caused by the downturn in the steel industry due to reduced demand and surplus capacity in China. As a result the Seller requested the Buyer to ``rollover its amount due of US$ 61.8 million.'' However, no further APSA was entered into between the parties.

  9. The Seller has served a defence to the Buyer's claim. The Buyer nevertheless seeks summary judgment upon its claim because, it says, the Seller's defence has no real prospect of success.

  10. CPR 24 provides that summary judgment may only be given where the defendant has no real prospect of defending the claim and there is no other compelling reason for a trial. Prospects of success are considered by reference to the principles set out by Lewison J in Easyair v Opal [2009] EWHC 339 (Ch) at paragraph 15 and approved by the Court of Appeal in AC Ward v Catlin [2009] EWCA Civ 1098 at paragraph 24. They are as follows:

    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 at [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 at [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)...

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