NSB Ltd v Worldpay Ltd

For summary judgment, the court must dismiss a claim only where the claimant has no real prospect of success and there is no other compelling reason for trial. A contractual notice containing an error may remain effective where a reasonable recipient would understand the right being exercised and the intended operation of the notice. A contractual good-faith condition may impose only a limited restraint: the decision-maker must not act arbitrarily, capriciously or by reference to an extraneous factor, but need not satisfy objective commercial criteria unless the contract requires it. A company cannot recover shareholder loss measured by the value of its shares.

NSB Ltd, a merchant providing a lost-pet reunification service, claimed that Worldpay Ltd had breached their merchant-acquiring agreement by terminating the arrangement, withholding remittances to protect against chargebacks, and causing the company to cease trading. It also claimed substantial damages, including the value of its shares.

The claim began in the Bournemouth County Court and was transferred to the Commercial Court after the claim expanded. NSB was in creditors’ voluntary liquidation, but its liquidator continued the proceedings. Worldpay applied for summary judgment under CPR Part 24, contending that the pleaded contractual claims, economic-duress case and damages claim had no real prospect of success. The central issues were the validity of the termination notice, the scope of the good-faith condition governing retention of funds, and the legal viability of the loss claimed.

1. Summary judgment. Applying the principles stated in Three Rivers DC v Bank of England (No 3) [2001] 2 All ER 513, the court disregarded only prospects that were false, fanciful or imaginary. The claimant did not need to show that its case would probably succeed.
2. Implied terms. The claimant abandoned or accepted the inapplicability of several proposed terms. There was no real prospect of implying a duty to provide reasons for retaining funds under clause 8.3, or a duty of frankness and openness. Clauses 8.1 and 8.2 concerned known chargebacks or disputed transactions, whereas clause 8.3 concerned future potential chargebacks. The good-faith wording in clause 8.3 did not require close scrutiny of the decision-making process.
3. Termination. The notice was defective because it specified termination after 30 days rather than on the next anniversary date. Applying the objective approach in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, however, a reasonable recipient would have understood that the notice exercised the contractual right to terminate and had merely misstated when it could take effect. It was therefore not a nullity. The subsequent extensions caused no actionable breach. Any alternative economic-duress case also had no real prospect of success, given the negotiation by solicitors, the claimant’s own initiative in proposing the termination date, and its failure to challenge the agreement promptly.
4. Retention. Clause 8.3 imposed a subjective good-faith standard. Worldpay was not required to establish objectively that a high risk of chargeback in fact existed. It could not act arbitrarily, capriciously or by reference to an extraneous factor, and perversity might provide evidence of such conduct. The documentary evidence showed no tenable challenge to Worldpay’s good faith or to the amount retained.
5. Loss. A company cannot recover loss measured by the diminution in value of its shareholders’ shares. The pleaded loss of profits was also excluded by clause 15, and the amended damages case remained legally and factually untenable.
6. Order. Worldpay was entitled to summary judgment on the claim.

The judgment states that the proceedings originated in the Bournemouth County Court and that an appeal concerning the setting aside of a default judgment had been decided by His Honour Judge Iain Hughes QC. No citation for that decision is stated. The proceedings were subsequently transferred by consent to the High Court Commercial Court.