Fraser Turner Ltd v Pricewaterhousecoopers LLP & Ors

On an application for strike-out or summary judgment, the court should decide a short point of law or construction where the evidence is sufficient and the parties have had a proper opportunity to address it. Contractual construction begins with the natural and ordinary meaning of the words in their context. Commercial common sense cannot be used retrospectively to improve an imprudent bargain.

A term is implied only where the established requirements, including necessity, obviousness, certainty and consistency with express terms, are met. Administrators generally owe duties to creditors collectively, not individual creditors, absent a special relationship or personal statutory right. Harm is not unfair under Schedule B1 merely because an individual creditor suffers loss from a decision properly directed to creditors as a whole.

The claimant provided consultancy services to London Mining plc and claimed a continuing royalty under a settlement deed concerning the Marampa mine. London Mining and its subsidiary later entered administration, and the mine’s business and assets were sold without the purchaser assuming the royalty obligation.

The claimant sought to amend its particulars of claim to pursue claims for procuring breach of contract, unlawful-means conspiracy, breach of administrators’ duties, misfeasance and relief under paragraph 74 of Schedule B1 to the Insolvency Act 1986. The defendants applied to strike out the claim or obtain summary judgment. The central questions were whether the deed imposed express or implied obligations to procure a purchaser’s assumption of the royalty, whether the administrators owed the claimant a direct duty, and whether the alleged loss was unfair harm.

1. Disposition. The claims were not maintainable. Permission to amend was refused and the proceedings were dismissed.
2. The court had sufficient evidence to determine the short points of construction and law summarily. The construction of the Royalty Deed was governed by the natural and ordinary meaning of its language read in context. Recitals, the invoicing mechanism, the transfer provisions and the accession machinery did not impose an express obligation on London Mining or LMCL to procure that a purchaser entered an Accession Deed, assumed the royalty, or provided a deed of guarantee. Clause 3.5 identified a possible invoice recipient; it did not make accession mandatory.
3. No term of that kind was implied. Clause 6 expressly dealt with the consequences of an asset sale. Its natural meaning was that London Mining’s obligations and guarantee continued unless the specified accession or guarantee conditions were fulfilled. Literal difficulties after a sale justified a limited implication extending references to production and sales by a purchaser where necessary to make the deed effective, but not the broader terms claimed.
4. The administrators did not owe the claimant a separate direct duty. The claimant’s assertions and the administrators’ failure to contradict them did not amount to an assumption of responsibility or special relationship. The claimant’s interests could conflict with those of the general body of creditors, since securing assumption of the royalty might reduce the sale consideration.
5. The dissolution of London Mining did not create a direct common-law claim. The authorities concerning personal statutory rights of creditors related to breaches concerning distribution or treatment of a particular proved claim, not the alleged failure to obtain a better asset-sale price.
6. Relief under paragraph 74 of Schedule B1 was unavailable. Harm alone was insufficient; the harm also had to be unfair. Avoiding a reduction in sale consideration and acting in the interests of creditors generally could not be characterised as unfair harm on the pleaded facts.

First-instance decision. The judgment records no prior appellate decision in the proceedings.