Mabanga v Ophir Energy Plc & Anor

For summary judgment, the claimant must show a realistic, rather than fanciful, prospect of success. The court must also consider whether another compelling reason requires a trial.

Whether words amount to a representation is judged objectively, in their full context and having regard to the characteristics and knowledge of the parties. A written representation must be read as part of the document as a whole. Statements of opinion may imply that the opinion is honestly held and, depending on the circumstances, that the maker had reasonable grounds for expressing it.

A commercial summary of transaction terms is construed consistently with the detailed terms immediately preceding it. Where the pleaded facts establish its accuracy, a misrepresentation claim based upon it has no realistic prospect of success.

The claimant alleged that the defendants had misrepresented the value of his net profit interest in Tanzanian oil and gas production-sharing agreements. The claim was brought in deceit and under section 2(1) of the Misrepresentation Act 1967.

The alleged representations arose from a letter describing a proposed farmout transaction and offering US$6.15 million for termination of the claimant’s interest. The defendants applied for summary judgment or strike-out. The central issue was whether the letter inaccurately represented the consideration payable for a 60 per cent interest in the production-sharing agreements.

1. Summary judgment test. The court applied the test under CPR 24.2 and CPR 3.4(2)(a). The claimant had to show a realistic prospect of success, meaning more than a merely fanciful or barely arguable case. There also had to be no other compelling reason for a trial.
2. Construction of the representations. The meaning of an alleged representation is determined objectively by considering the words used, their context, the characteristics and knowledge of the maker and recipient, and the parties’ relationship. A written representation must be read in the context of the whole document and surrounding communications.
3. Statement of consideration. The bullet points in the letter accurately described the proposed farmout. The figures of US$43.75 million and US$143.75 million represented the 25 per cent carry cost for the relevant expenditure ranges. The following statement that Ophir was selling 60 per cent of the production-sharing agreements for that consideration was therefore a consistent and accurate summary.
4. A 60 per cent stake in a production-sharing agreement ordinarily encompasses both the benefits and the burdens of participation. The obligation to contribute 60 per cent of costs was part of the interest transferred, rather than additional consideration for it. The price could be used as a valuation mechanism for the transferred participation, even though it did not represent either the total costs or total benefits in isolation.
5. The statement was a statement of fact, not merely an argument or contention about contractual terms. However, it was accurate. The claims based on the first and second representations therefore failed. The claimant accepted that the claims based on the third and fourth representations could not succeed unless the statement of consideration was inaccurate. Those claims consequently also had no real prospect of success.
6. Disposition. Summary judgment was entered for the defendants.