Credit Suisse AG v Up Energy Group Ltd

Summary judgment should be granted only where the opposing party has no realistic prospect of success. The court may decide a short point of law or construction if the evidence is sufficient, but must avoid a mini-trial where fuller factual investigation could affect the result.

A common mistake may render a contract void where both parties share a fundamental mistake, neither bears the risk under the contract, neither is at fault, and the mistake makes performance impossible or essentially different from the contractual adventure contemplated. Contractual warranties allocate the risk only if they clearly address the relevant mistake.

Credit Suisse applied for summary judgment against Up Energy Group Ltd under a deed of undertaking containing a put option over convertible notes, and against Mr Qin Jun as guarantor. Credit Suisse claimed the option consideration after exercising the option.

The defendants argued that the deed was void for common mistake because the notes could not lawfully be transferred to Up Energy, a connected person of the issuing company. They also argued that performance through an independent third-party purchaser would be essentially different from the agreed purchase-back arrangement. Credit Suisse relied on contractual provisions and warranties said to allocate that risk.

1. Summary judgment. The principles summarised in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) were applicable. The court had to assess whether the defence had a realistic prospect of success without conducting a mini-trial. Although a short point of law or construction could be decided summarily where the evidence was sufficient, the court should hesitate where fuller factual investigation might affect the outcome.
2. Common mistake. The defendants had a real prospect of establishing that the parties shared a mistake as to whether the notes could be transferred back to Up Energy or its nominee. The phrase in clause 7.2(b)(ii) permitting transfer to a person whom Up Energy “may direct” was arguably directed to a nominee and did not clearly alter the purchase-back structure. Its construction was likely to depend on the full factual matrix.
3. Alternatively, there was a real prospect of establishing that performance through Up Energy finding an independent third-party purchaser would be essentially different from the performance contemplated. Up Energy would thereby act as a seller rather than as the buyer of the notes, and would lose the ability to retain or later sell them.
4. The contractual warranties and undertakings did not clearly allocate this risk to Up Energy. They did not specifically address the obstacle arising from the terms of the notes, which were not binding contractual obligations of Up Energy. The ambiguity was also relevantly construed against Credit Suisse, which had devised and structured the transaction.
5. Since the common-mistake defence had a realistic prospect of success, it also answered Credit Suisse’s proposed alternative damages claim. If the deed were void, Mr Qin had very real prospects of resisting liability under the personal guarantee because there would be no underlying debtor’s obligations or guarantee obligations.
6. Credit Suisse’s summary judgment applications against both defendants were dismissed. It was unnecessary to determine the defendants’ public-policy or specific-performance arguments.

First-instance application for summary judgment. No prior appellate decision is stated in the judgment.