Rosserlane Consultants Ltd & Anor v Credit Suisse International

A court will not imply into a carefully negotiated commercial agreement a positive duty to obtain the best price merely because one party has power to procure a sale of the other’s property. The agreement must be construed as a whole, and implication requires necessity rather than fairness or commercial desirability. Duties imposed by equity on a mortgagee do not arise by analogy where the transaction is not a mortgage. Nor does a general agency duty arise merely because an attorney is authorised to execute documents for a forced sale. A loss-of-chance claim requires proof of a substantial, non-speculative chance and assessment on the evidence. The claim was dismissed because the alleged implied duty was not established and, alternatively, the proved breaches caused no recoverable loss.

The claimants owned the economic interest in an Azerbaijani oilfield and borrowed money from the defendant under a suite of commercial agreements. The Participation Agreement allowed the defendant, after a specified date, to procure a forced sale if the claimants had not sold the asset. It also authorised the defendant to execute documents and involved an affiliated company, CSS, in the sale process.

The claimants alleged that the defendant owed an implied contractual duty, and an equivalent tortious duty, to take reasonable care to obtain the best price reasonably obtainable. They alleged failures in the marketing process, including failure to approach Russian bidders and improper treatment of BSG. The central issues were whether the duty existed, whether it was breached, and whether any breach caused loss.

1. Claim dismissed. The Participation Agreement was a self-standing commercial agreement negotiated by sophisticated parties with legal advice. It was complete without the proposed term. The court could not rewrite the bargain because its terms were harsh or one-sided.
2. The implication question was one of construction. The agreement, read as a whole against its background, did not require the defendant to obtain the best price. The absence of such an obligation was significant, particularly because the claimants had been given an express best-price obligation by the May 2007 variation. The proposed term was not necessary to give the agreement business efficacy, was not so obvious that it went without saying, and contradicted the contractual allocation of risk.
3. The defendant was not a general agent of the claimants. The power of attorney enabled it to execute documents necessary to implement a forced sale and protect its own interests. It did not make the defendant an agent providing sale services for the claimants or impose full fiduciary duties.
4. There was no general rule that anyone empowered to sell another’s property must take reasonable care to obtain a proper price. Mortgagee duties arise from the true legal character of a mortgage and are imposed in equity. They cannot be imported by analogy into a different commercial contract.
5. Alternatively, the court found that after the Trigger Notice the defendant controlled the sale process and was responsible for CSS. The defendant failed properly to investigate GazpromNeft and CSS acted as its agent. However, the claimants had not shown that GazpromNeft would have been granted the site access it required, and the other alleged failures did not cause loss. The evidence supported, at most, a substantial chance of a sale at $400 million, assessed at 65% if access were assumed.
6. The indemnities and exclusion clauses did not assist the defendant in respect of a freestanding breach by the defendant itself. That issue did not affect the result because the claim failed on duty and causation.

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