Apvodedo NV v Collins

Summary judgment should be granted only where the defendant has no real prospect of successfully defending the claim and there is no other compelling reason for trial. The court must avoid conducting a mini-trial on incomplete evidence.

Contractual provisions allocating the risk of non-performance do not necessarily exclude common mistake. The agreement must be construed as a whole and in its commercial context. A common mistake may arguably invalidate a contract where the assumed state of affairs was fundamental to the contractual adventure, even though the defendant can physically perform the promised obligation.

Apvodedo NV sought summary judgment for £1 million under clause 10.2 of an exclusivity agreement with Mr Collins. Apvodedo had paid that sum to a purported intermediary in connection with a proposed purchase of the Ritz Hotel. The documents and transaction were later revealed to be fraudulent, and the documentation required by the agreement was never supplied.

Mr Collins relied on common mistake and, alternatively, an unsatisfied condition precedent. The central issue was whether those defences had a real prospect of success, despite the apparently unconditional obligation to repay Apvodedo.

1. Application dismissed. The defendant had shown a real prospect of successfully defending the contractual claim, and the issues required determination at trial.
2. Under CPR part 24, the claimant bears the overall burden of showing that the defence has no real prospect of success and that there is no other compelling reason for trial. The defendant’s burden is evidential. The court must not conduct a mini-trial on documents without full disclosure and oral evidence, particularly where the result depends on disputed factual evidence.
3. The Exclusivity Agreement had to be construed as a whole and in its commercial context. Clause 10 could not be isolated merely because it survived termination under clause 9. On the assumed facts, Apvodedo and Mr Collins may have shared an underlying assumption that they were dealing with a genuine vendor able to sell the Ritz and that the Documentation existed.
4. Although clause 10.2 stated that Mr Collins was to pay £1 million if the Documentation was not received by the specified date, it was arguable that the obligation was predicated on the truth of that underlying assumption. The risk allocation might have been absolute, or might have depended on the existence of a genuine vendor and real Documentation. That question required evidence.
5. The elements identified in Great Peace Shipping Ltd v Tsavliris Salvage Ltd [2002] EWCA Civ 1407, [2003] QB 679 were arguably satisfied or raised triable issues. In particular, the absence of the assumed state of affairs might render performance in accordance with the common assumption impossible, even though payment itself remained physically possible. Associated Japanese Bank (International) Ltd v Credit du Nord [1989] 1 WLR 255 supported that possibility, while the reasoning in Bell v Lever Bros Ltd [1932] AC 161 and Krell v Henry [1903] 2 KB 740 provided further assistance.
6. The condition precedent defence was not separately determined, but was likely to turn on similar considerations and should be considered with the common-mistake defence at trial.