Trafigura Beheer BV v BCL Trading Ges

Conditional permission to defend may require payment into court or suitable security, but the condition must remain fair and must not become oppressive. Further evidence will be refused where it presents a materially different financial picture from that presented below and is materially incomplete.

For a sale described as CIF, the passing of property and risk depends on the individual contract. CIF terms are not statutory. Where goods have been received, receipt acknowledged, payment instructed under a letter of credit, and rejection occurs only later, it is improbable that the buyer is thereby released from liability for the price. Such issues may nevertheless require trial where the contractual terms and facts are unclear.

The claimants sought the price of a cargo of gas oil supplied to Bulgaria. BCL Trading had opened a letter of credit for the transaction, although the parties disputed whether BCL or its joint-venture partner, BSS Petroleum Handel GmbH, was the buyer.

Mr Justice Steel declined to give unconditional summary judgment, but ordered BCL to pay the price into court or provide security as a condition of defending the claim. He regarded the principal defence as improbable, while leaving the contractual, price and compromise issues open for trial.

BCL appealed and sought permission to adduce further evidence concerning its financial position. The central issues were whether the condition was permissible, whether the further evidence should be admitted, and whether the proposed defences had a sufficient prospect of success.

1. Further evidence. The application to adduce further evidence was refused. The evidence was incomplete and sought to present a materially different account of BCL’s financial position from that presented to the judge. Although fairness required that oppressive or unreasonable conditions should not be imposed, those considerations did not justify admitting the evidence in this case.
2. Sale of goods and liability for the price. The court considered the argument under section 49(1) of the Sale of Goods Act. The fact that a transaction was described as being on CIF terms did not determine when property or risk passed. CIF terms were not statutory, and the effect depended on the terms of the particular contract.
3. The contractual argument was unsuitable for summary determination because the facts and contractual arrangements were unclear. Nevertheless, it was improbable that a buyer who had received the goods, acknowledged receipt, instructed its bank to pay under the letter of credit, and did not purport to reject the goods until much later would be released from its obligation to pay the agreed price.
4. Buyer status. If it were necessary to establish that BCL was the buyer, the opening of the letter of credit and the surrounding circumstances gave rise to an overwhelmingly clear inference of an implied, if not express, contract under which BCL was the buyer. The defence that BCL was merely a finance provider was therefore improbable.
5. Compromise. The judge was correct to treat the alleged compromise agreement as improbable. That issue depended on oral evidence and was not suitable for final determination on the application.
6. The application was refused and the appeal was dismissed.

• High Court, Commercial Court: Mr Justice Steel ordered BCL Trading to pay the claimed price into court or provide suitable security as a condition of defending the claim, while leaving the substantive defences open for trial.
• Court of Appeal (Civil Division): Permission having been granted, the court refused the application to adduce further evidence and dismissed the appeal. [2002] EWCA Civ 251