LCP Holding Ltd v Hombergh Holdings BV & Ors

On an application for summary judgment, the court must decide whether the defence has a realistic, rather than fanciful, prospect of success. It must avoid a mini-trial, while testing factual assertions against the available evidence and taking account of evidence reasonably expected to be available before trial.

Economic duress requires illegitimate pressure which practically compels the claimant, and which significantly induces entry into the contract. Sophisticated commercial negotiation and ordinary pressure to pay for work do not, without more, establish duress. A compromise of an arguable claim may constitute consideration even if the underlying right is ultimately invalid. An agreement signed by the contracting parties is not invalid merely because an additional signature was contemplated for a non-existent entity.

LCP Holding Ltd sought summary judgment for fees under an agreement dated 5 October 2011 concerning work connected with the proposed acquisition of Theis. The defendants resisted payment on three grounds: economic duress, absence of consideration, and failure to execute the agreement on behalf of the FNsteel Group.

The court considered whether any defence had a real prospect of success, against the factual disputes and documentary evidence. It also addressed the effect of an earlier key-terms document, the alleged compromise of rights under that document, and the reference to a non-existent group entity in the fee agreement.

1. Summary judgment. The court applied the approach summarised in Nigeria v Santolina Investment Corporation [2007] EWHC 437 (Ch). The court must distinguish a realistic defence from a merely arguable one, avoid conducting a mini-trial, and may reject factual assertions that lack substance or are contradicted by contemporaneous documents. The court may also consider evidence reasonably expected to become available before trial.
2. Economic duress. The ingredients identified in DSND Subsea v Petroleum Geo Services were pressure producing compulsion or lack of practical choice, illegitimate pressure, and pressure which significantly caused entry into the contract. Relevant factors included threatened breach, good or bad faith, practical alternatives, contemporaneous protest, and affirmation. On the evidence, the alleged pressure was ordinary commercial negotiation. The defendants were sophisticated, had time and access to advice, and the agreement was made after the principal transaction had been agreed. The defence was fanciful.
3. Consideration. The enforceability of the earlier key-terms agreement was immaterial. Giving up a claim honestly believed on reasonable grounds to have a fair chance of success constituted consideration, even if the claim was legally invalid. The court relied on Hill & Anor v Haines [2007] EWHC 1012. Alternatively, the claimant could rely on a quantum meruit or the principle discussed in Pao On v Lau Yiu Long [1979] UKPC 2.
4. Execution. The absence of a signature by the FNsteel Group did not prevent the agreement from binding the claimant and Hombergh Holdings BV, because the group was not a legal entity.
5. The application succeeded. The court determined that the defendants were in breach, ordered payment of £750,000 then due, and granted permission to amend the pleadings concerning the remaining sums. Permission to appeal was not granted at first instance, although renewal before a Lord or Lady Justice was permitted.

The judgment records no earlier decision in the same proceedings. The court refused permission to appeal on the basis that there was no real prospect of success, while noting that the application could be renewed before a Lord or Lady Justice of the Court of Appeal.