ICI Chemicals & Polymers Ltd v TTE Training Ltd

On an application under Part 24 of the Civil Procedure Rules, the court should determine a short point of law or contractual construction where all necessary evidence is available and the parties have had an adequate opportunity to address it. A respondent cannot establish a real prospect of success merely by suggesting that helpful evidence may emerge at trial.

Contractual language transferring rights in an all-embracing sense may include accrued rights and a right to repayment of a debt. The contract must be read objectively. A party’s subjective understanding of its effect does not influence its construction.

ICI Chemicals and Polymers Ltd sought £359,763 from TTE Training Ltd as a debt representing funds previously contributed to finance TTE’s vocational training activities. TTE applied for summary judgment under Part 24 of the Civil Procedure Rules. It contended that a 2002 agreement substituting Ineos Chlor for ICI had transferred to Ineos Chlor all ICI’s rights concerning TTE, including any accrued right to repayment.

HHJ Hegarty QC, sitting in the High Court in the Manchester Mercantile Court, dismissed the application. He considered it arguable that the substitution agreement operated only prospectively and did not affect accrued rights.

TTE appealed. The central question was whether the 2002 agreement transferred ICI’s existing rights as well as rights arising in the future, so that ICI had no real prospect of succeeding in its debt claim.

Appeal allowed. The Court of Appeal unanimously held that the claim had no real prospect of success. The claim was dismissed and the costs order against TTE was set aside.

1. Moore-Bick LJ held that an application under Part 24 of the Civil Procedure Rules may properly determine a short point of law or construction. The court should decide that point where all necessary evidence is before it and the parties have had an adequate opportunity to address it. A legally unsustainable case has no real prospect of success.

   A respondent who contends that surrounding circumstances may alter a document’s natural meaning must provide sufficient evidence to show that relevant facts are likely to be established at trial and may affect the result. A bare suggestion that something useful may emerge through disclosure or at trial is insufficient. ICI had produced no evidence establishing that relevant additional material was likely to emerge. The agreement therefore fell to be construed according to its natural meaning.

2. The expression “with effect from the date of this agreement” was consistent with either prospective or retrospective operation. Clause 2.1, however, transferred ICI’s rights and obligations under the principal agreement or otherwise in respect of TTE, while expressly excluding obligations arising from an existing breach. That exclusion could apply only to obligations due before the substitution agreement. Its presence indicated that the general language addressed existing as well as future obligations and rights.

   The word “rights” was used comprehensively and included a right to claim repayment of a debt. Had the parties intended to exclude accrued rights, the general language would have required qualification. The agreement therefore placed Ineos Chlor in ICI’s position for all purposes concerning TTE, apart from liabilities arising from an existing breach. It transferred any existing right to recover the members’ funds.

3. ICI’s subsequent statement that the debt should remain recorded as owing to it reflected only its subjective understanding, which had no bearing on objective contractual construction. Rectification raised separate issues and had not been claimed. The court also observed, without needing to decide the point, that an earlier letter concerning the timing of repayment established no contractual variation, collateral agreement or estoppel.

Buxton LJ agreed and emphasised that recording the debt as an asset in ICI’s accounts did not alter its character as a right to repayment. Ward LJ agreed with both judgments.

• Court of Appeal (Civil Division): In ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725, the court unanimously allowed TTE’s appeal, dismissed ICI’s claim and set aside the costs order against TTE.
• High Court, Manchester Mercantile Court: HHJ Hegarty QC dismissed TTE’s application for summary judgment. He considered it arguable that the 2002 agreement did not transfer ICI’s accrued rights. No citation for that decision is stated.