Astor Management AG & Anor v Atalaya Mining Plc & Ors

Contractual declarations should reflect the proper construction of the agreement. Where wording is ambiguous, the court may adopt the commercially reasonable interpretation which gives the clause practical effect. An obligation to apply excess cash to pay amounts due early does not require payment only after the contractual payment date has arrived. It concerns amounts owed to the creditor, even if payment has been deferred. Conditional profit-share payments are different. They are not outstanding debts and cannot be paid early before the condition giving rise to liability occurs. Permission to appeal should be refused where the alleged procedural irregularity is baseless because the party had a full and fair opportunity to address the issue, and where the proposed contractual construction is commercially unreasonable and has no real prospect of success.

The judgment gave reasons on two matters consequential to an earlier judgment delivered on 6 March 2017. First, the court considered the form of declarations concerning restrictions on distributions, borrowing and the application of excess cash under clause 6(g)(iv) of a Master Agreement. The issue included whether references to Deferred Consideration encompassed conditional Up-Tick Payments.

Secondly, the defendants sought permission to appeal. They alleged a serious procedural irregularity and argued that the court’s construction of clause 6(g)(iv) was erroneous. The central issues were the contractual meaning of the relevant payment obligations and whether the proposed appeal grounds had a real prospect of success.

1. Declarations. The declarations were settled to make clear that “Consideration” included Deferred Consideration. The reference to Deferred Consideration did not include the Up-Tick Payments.
2. Deferred Consideration and Up-Tick Payments. The basic Deferred Consideration was an outstanding amount owed to the claimants, payment of which had been deferred. The Up-Tick Payments were conditional additional profit-share payments. They were not owed unless the specified copper-price condition was satisfied at the specified time. Consequently, no Up-Tick Payment could be paid early before that condition arose.
3. Meaning of “due to” and “early”. In clause 6(g)(iv)(B), “due to” identified the party to whom the outstanding amount was owed. It did not mean “presently payable”, since that interpretation would make an obligation to pay early nonsensical. The clause therefore required excess cash to be applied to outstanding Deferred Consideration notwithstanding that the scheduled payment date had not arrived.
4. Permission to appeal. The alleged serious procedural irregularity was baseless. The defendants had a full and fair opportunity to address whether clause 6(g)(iv) continued to operate where payment of the Deferred Consideration had not been triggered, and they had in fact argued the issue at trial. The principle illustrated by Omnibridge Consulting Ltd v Clearsprings (Management) Ltd [2004] EWHC 2276 (Comm) did not assist them.
5. The proposed alternative construction was not merely a linguistic possibility. It had to be commercially reasonable. The defendants’ construction would allow them to restart mining without senior debt finance, avoid immediate payment, and ultimately obtain a substantial windfall. It had no real prospect of success. Permission to appeal was refused, as was the permission application made by Astor.

The judgment records that it followed an earlier judgment of the High Court delivered on 6 March 2017. The defendants’ application for permission to appeal was refused. The judgment also records that Astor’s application for permission to appeal was refused.