Cargill International Trading Pte Ltd v Uttam Galva Steels Ltd

Summary judgment is appropriate where the defence has no realistic prospect of success and no compelling reason requires a trial. The court may decide a short point of law or contractual construction if it has the evidence necessary for proper determination, but must avoid a mini-trial.

A contractual obligation to repay advance payments may remain enforceable despite the buyer’s breach where the contract expressly preserves that obligation. An estoppel by convention cannot ordinarily require parties to enter into a fresh agreement whose important terms remain unsettled.

The claimant sought summary judgment for approximately US$61.8 million advanced under two Advance Payment and Steel Supply Agreements. The defendant had failed to repay the advances at maturity and relied on two defences.

1. The claimant’s alleged failure to accept or decline an offer to purchase steel had allegedly prevented repayment through further steel sales.
2. The parties allegedly operated on a common assumption that the claimant would renew the financing arrangements, giving rise to an estoppel by convention.

The central questions were whether either defence had a real prospect of success and whether there was any other compelling reason for a trial.

1. Summary judgment. The court applied the principles governing CPR 24 applications. It had to determine whether the defence was realistic rather than fanciful, without conducting a mini-trial. It could decide a short point of law or construction where the evidence was sufficient and the parties had had an adequate opportunity to argue the issue.
2. Prevention principle. Even assuming that the claimant had breached the agreements by failing to accept or decline a November 2015 offer, that breach did not give the defence a real prospect of success. The alleged breach did not explain how the defendant was prevented from making further offers totalling US$61.8 million. In any event, the claimant was not obliged to accept offers and could require repayment in cash.
3. The agreements expressly provided that the seller’s repayment obligation was not affected by the buyer’s breach. The no-set-off provisions were valid. The claimant’s debt arose independently from any alleged breach, because the sums became due on the maturity dates. The authorities relied upon by the defendant concerned materially different contractual arrangements and did not assist its case.
4. Estoppel by convention. The contemporaneous emails and the defendant’s own request for a rollover did not support a common assumption that a new facility would necessarily be provided. The alleged estoppel would also have required the claimant to enter into a fresh agreement. An agreement of that nature was not enforceable while important terms, including the facility amount and credit period, remained for agreement.
5. The possibility that further evidence might emerge at trial was insufficient. There was no reasonable prospect that further evidence would assist either defence, and no compelling reason for a trial. Summary judgment was therefore given for the claimant. The amount of interest remained to be determined.