20/01/2022
Commercial Court grants summary judgment and dismisses application to withdraw admissions in maritime LOI enforcement dispute
OCM Singapore Njord Holdings and Others v Gulf Petrochem FZC [2022] EWHC 57 (Comm)
Oliver Caplin acted for the successful claimant V8 Pools Inc (V8) in obtaining an order for summary judgment on its LOI enforcement claim against Gulf Petrochem FZE (GP). V8 was also granted a final mandatory injunction, following on from the interim injunction obtained in December 2020 (V8 Pools Inc v Gulf Petrochem [2020] EWHC 3689 (Comm)).
The judgment provides a useful recap of the tests applicable to obtaining summary judgment and the withdrawal of an admission via amendment to a statement of case. The judge’s indication that he would have granted the unless / strike out order that V8 sought indicates the strong sanctions that a court may apply to a party breaching interim costs orders of the court.
Background
The dispute concerns V8’s attempt to enforce a maritime LOI issued to it by GP in return for the former’s delivery of an oil cargo at Fujairah without presentation of the original bills of lading from the vessel the Pacific A Dorodchi (the “Vessel”). Following delivery a trade finance bank alleged misdelivery and arrested the Vessel, seeking security of around US$10m to obtain its release. V8’s position was that the terms of the GP LOI obliged GP to put up that security. GP refused, citing impossibility by reason of impecuniosity. V8 sought injunctive relief to compel GP to provide the security. In December 2020 it obtained an interim mandatory injunction to that effect, with GP’s impossibility defence being rejected by HHJ Pelling QC (see the 2020 judgment citation above). GP failed to comply with the injunction.
GP filed a defence after the December 2020 hearing, admitting large parts of V8’s claim. V8 subsequently applied for summary judgment and/or for GP’s defence to be struck out in light of its failure to comply with the December 2020 costs award in V8’s favour. At the same time, GP applied to amend its defence, including to withdraw various important admissions it had made. GP sought to advance a new case that the individual who signed the GP LOI had no authority as a matter of UAE law to do so.
The various applications were heard in December 2021 along with similar applications in two other sets of proceedings.
Legal issues
GP accepted that if its application to amend its defence failed, summary judgment should be entered on its original defence. The court therefore focused on GP’s amendment application, and in particular its attempt to introduce the new authority defence.
The court set out at §15 of the judgment the enhanced test applicable to an application to amend where the amendments amount to or require the withdrawal of admissions. In addition to showing a real prospect of success for the new amended case (reminiscent of the summary judgment test, as the court found), the applicant must also address a number of discretionary factors, including the prejudice suffered to other users of the court, the other party, and the reasons for why the application is being made – see the court’s citation of Sowerby v Charlton [2006] 1 WLR 568 at §35.
GP’s application to amend failed because it could not satisfy the threshold real prospect element of the test. The court was able to reach this view despite GP’s case raising issues of UAE law concerning actual authority (albeit V8 had a number of legal arguments too on apparent authority and ratification, which the court also found in its favour on). The parties adduced expert evidence by way of written reports on authority, and the court was able to resolve the disputed points without the need for oral evidence. It was also important that GP’s case on authority contradicted good commercial sense, and was therefore inherently implausible.
It followed that as the amendments were not to be allowed, summary judgment was to be entered in V8’s favour. The court also granted V8 a final mandatory injunction, rejecting once again Gulf Petrochem’s impossibility by impecuniosity defence on the evidence. The judge at §43 of the judgment cross-referred to his December 2020 judgment which sets out the approach to be taken to impossibility defences in the context of applications for injunctive relief.
Given his decision on summary judgment, the judge did not need to decide V8’s contingent strike out application. HHJ Pelling QC indicated that he would have granted it had it been necessary. That is significant. The application to strike out the defence was predicated on GP’s failure to pay an interim costs order from the December 2020 hearing. This shows the Commercial Court will act powerfully to protect its procedures and orders in the face of their disregard.
Oliver Caplin acted for V8, instructed by Ince Gordon Dadds.
Read the full judgment
