IG Index Plc v Leung -Cheun & Ors

A contractual payment statement is not necessarily a margin call merely because it requests immediate payment. The court must determine what the parties’ agreement, read in context and against their communications and conduct, required and how the parties understood the statement. A contractual obligation to close out “such Bets” after an unpaid margin call applies to the specific bets for which the call was made, rather than automatically to every bet on the account. A deposit-account requirement may continue throughout the life of the account, but the operator may waive it under an express contractual discretion. An express waiver is not essential where the operator’s conduct shows that the requirement was waived.

IG Index claimed £773,152.09 under spread-betting contracts entered into by the defendants. The defendants counterclaimed for losses allegedly caused by IG Index’s failure to close open bets within five business days of margin calls and by its acceptance of further bets without obtaining advance deposits.

The central factual issue was whether daily account statements issued on 8 and 9 September 2008 constituted margin calls. The defendants also argued that seven accounts were deposit accounts requiring funds to cover the maximum potential loss before further bets could be opened. The court determined the contractual meaning and effect of the relevant provisions and rejected both counterclaims.

1. Margin calls. The daily statements were not margin calls for the purposes of Term 16(4). Although the starting point was that the statements meant what they said, the parties’ established practice showed that statements generated before the manual SPAN adjustment did not represent an operative demand for payment. The defendants knew that the SPAN process would be applied, and IG Index did not pursue payment as it would have done if a genuine margin call had been made. The contractual five-business-day close-out obligation was therefore not engaged (paras [34], [38]).
2. “Such Bets”. Alternatively, Term 16(4)(a) required closure only of the specific bets in respect of which a deposit or margin call had been made. The phrase did not extend automatically to all bets forming part of the overall account or portfolio (paras [39]–[41]).
3. Deposit accounts. Term 15(2)(c) imposed a continuing requirement during the life of a Deposit Account, and “funds” meant funds sufficient to meet the applicable deposit or margin requirement. However, the agreement permitted IG Index to waive the condition. By accepting further bets in the circumstances, IG Index exercised that discretion. The waiver did not have to be express. Terms 5(4) and 5(5)(k) also gave IG Index an absolute discretion to permit the bets to be opened, in which event the defendants remained bound by them (paras [47]–[54]).
4. Disposition. The counterclaims based on margin and deposit failed. The claimant’s claims therefore succeeded. The parties were directed to provide corrections and a draft order before judgment was handed down (paras [55]–[56]).