Oxus Gold Plc (Formerly Oxus Mining Plc) & Anor v Templeton Insurance Ltd

Where contractual terms are assembled from several documents and discussions, the court must construe the agreement objectively by considering the relevant exchanges and commercial context. Warrants issued under deed are unconditional according to their terms unless a binding agreement clearly restricts their exercise. An obligation to begin work investigating whether insurance-backed finance can be obtained is distinct from an obligation to procure the finance itself. A party acting to obtain insurance may owe duties arising from an assumption of responsibility, but those duties depend on the responsibility actually undertaken and the claimant’s reliance. A commitment fee held by an agent for an insurer may be recoverable from the insurer, without making the agent personally liable to refund it.

Oxus Gold plc and its subsidiary claimed against Templeton Insurance Ltd in contract, negligence and restitution. The dispute concerned five million warrants issued to Templeton in connection with Templeton’s proposed provision or procurement of an insurance bond for financing the Amantaytau gold-mining project in Uzbekistan.

Oxus argued that the August 2001 agreement made the warrants exercisable only if the bond was obtained, and that Templeton was liable for losses arising from the unsuccessful attempt to obtain a performance guarantee from Hermes through College Hill. Oxus also sought return of a £75,000 commitment fee. The central issues were the construction of the August agreement, the scope of any duty of care, and entitlement to repayment of the fee.

1. Contractual claim dismissed. The exchange of 8 and 9 August 2001 could not be construed in isolation. The agreement had to be pieced together from the parties’ earlier letters, discussions and documents, viewed objectively in their commercial context.
2. The warrants deed gave Templeton an unconditional right to exercise the warrants during the stated period. Neither the August correspondence nor the surrounding dealings made issue or exercise conditional on obtaining a bond. If that had been intended, the warrants would have been withheld until the bond was obtained or their terms would have expressly imposed that condition.
3. The August agreement required Templeton to proceed with the necessary activity to enable it to provide or procure a bond. It did not impose an obligation to obtain the bond. The obligation was sufficiently certain and was performed. The deed was unimpeachable, and there was no total failure of consideration.
4. The earlier arrangements, including the 9 July letter, were superseded or replaced by the July and August arrangements. Any arguable claim arising from the earlier arrangements was also capable of being waived and supplied consideration. The possible non-disclosure of the 9 July arrangement did not make the warrants void for illegality. Section 151 of the Companies Act 1985 did not apply, and the disclosure provisions of the Financial Services Public Offer of Securities Regulations 1995 contemplated compensation for omissions rather than rendering the underlying contract unenforceable.
5. Negligence claim dismissed. Templeton’s role was essentially introductory and concerned seeking a bond or guarantee. It had not undertaken responsibility to provide legal advice on College Hill’s authority, the characterisation of the guarantee, or the viability of the proposed structure. Oxus and its advisers knew that Hermes would provide a performance guarantee rather than an ordinary financial guarantee and knew of the principal structural risks. No relevant duty was established, no breach was proved, and no causation was shown.
6. Oxus was entitled to the return of £75,000 held by Templeton for College Hill and Hermes. The repayment obligation was that of Hermes, not Templeton as principal, but the fund held by Templeton could be subject to a third-party debt order. Costs were to follow the event, subject to formal order.

First-instance decision. No appellate history was stated in the judgment.