Montreux Capital Management (UK) Ltd & Ors v Godden & Ors

Summary judgment should be granted only where the opposing case has no realistic prospect of success. The court must avoid a mini-trial, while considering the evidence reasonably expected to be available at trial. Contract construction may generally be determined summarily where the relevant factual matrix is undisputed. The court must identify the objective meaning of the contractual language in its context, read the agreement as a whole, and consider commercial consequences without disregarding the words chosen by the parties. Where competing constructions remain more than fanciful, summary judgment is inappropriate. A contractual reference to identified investors may form part of the substance of the bargain and cannot simply be ignored.

The claimants sought summary judgment against the first defendant concerning clauses 3.3 and 3.4 of a settlement agreement. Those clauses required notice and payment of a 1% fee if either of two defined “Deals” completed. The first defendant had subsequently participated in the acquisition of Pathways Care Group through a company associated with him, but neither of the named potential investors had invested in that acquisition.

The claimants argued that “deal 1” meant any acquisition of Pathways, regardless of the financier. The first defendant argued that the involvement of Kolaghassi Capital or Gulf Financial Holdings was required. The issue was whether that interpretation was sufficiently arguable to defeat summary judgment.

1. Application dismissed. The first defendant’s construction of “Deals” was more than arguable and gave him a real prospect of successfully defending the claim.
2. Under CPR 24.2, the court must distinguish a realistic prospect of success from a fanciful one and must not conduct a mini-trial. It must consider both the evidence before it and evidence reasonably expected to be available at trial. Where a fuller investigation of the factual matrix might affect construction, the court should hesitate before finally deciding the matter summarily.
3. The contractual task was to ascertain the objective meaning of the language used, having regard to the background reasonably available to the parties, the agreement as a whole and commercial consequences. Business common sense could assist between competing constructions, but could not justify ignoring express contractual language.
4. The definition of “Deals” expressly identified Kolaghassi in relation to deal 1 and GFH in relation to deal 2. The references to those investors, the description of “two deals”, and the coupling of Kolaghassi with “Panama” made it more than arguable that the relevant investor had to be involved. Clauses 3.3 and 3.4 operated only after a transaction fell within the definition of “Deal”; their wording could not itself expand that definition.
5. The court therefore rejected the claimants’ summary construction. The related declaration, interim payment and indemnity-cost requests fell away. An estoppel by convention issue, if pursued, would be fact-dependent and unlikely to be suitable for summary determination. No additional disclosure order was made.