ICICI Bank UK Plc v Assam Oil Co Ltd & Ors

On an application for summary judgment, the claimant must show that the defence has no realistic, rather than fanciful, prospect of success. The court should not conduct a mini-trial, but should decide a short legal or construction issue where the evidence and submissions are sufficient.

Payments made under a valid contractual obligation cannot generally be recovered in restitution for mistake. A contractual default-interest increase may be enforceable where it is agreed in return for continuation of the facility, and a further rate will not be a penalty unless it is out of all proportion to the creditor’s legitimate interest.

Contractual currency provisions govern unless a sufficiently clear variation or estoppel is established.

ICICI Bank UK plc sought summary judgment on a debt claim under an amended facility agreement. Assam Oil Co Ltd and Cromwell Securities Ltd relied on an amended defence alleging misrepresentation, rescission and restitution for mistake in respect of four categories of payments: default interest, structuring fees, default interest for non-payment and legal fees.

The claimant’s primary claim measured the debt in US dollars. Its alternative claim measured the debt in sterling. The central issues were whether the disputed payments were contractually owed and whether the amended agreement had made sterling the currency of the debt despite the parties’ subsequent dealings in US dollars.

1. Summary judgment. Applying [2001] 1 All ER 91, [2003] EWCA Civ 472 and [2009] EWHC 339 (Ch), the question was whether the defendants had a realistic prospect of defending the claim. The court was entitled to decide short points of law and construction where the necessary evidence was available.
2. The additional 2% interest charged before the amended facility agreement was contractually owed. The bank’s letter made continuation of the facility conditional on payment of the additional interest, and the borrower accepted that arrangement by continuing performance and making the payments. Later payments were also supported by the amended agreement’s default-interest clause.
3. The four sets of structuring fees were supported by contemporaneous contractual documents and there was no realistic prospect of proving that they were sham agreements or unsupported by consideration. The additional default interest for non-payment was not a penalty under the test in [2015] UKSC 67: the contractual interest for the loan was the price of the loan, and only the additional 4% could be challenged. That additional sum was not out of all proportion to the lender’s legitimate interest. The legal fees were reasonably incurred.
4. Because the payments were contractually owed, the alleged misrepresentation as to the outstanding principal and the claim for restitution for mistake had no realistic prospect of success. A mistaken payer cannot recover money paid in discharge of a contractual debt owed to the payee, including where the payment discharges a third-party debt in circumstances recognised in [1980] QB 677.
5. The amended agreement specified sterling as the currency of the facility, outstanding loan and account. Continued dealings in US dollars did not establish a variation or estoppel. The claimant had no realistic prospect of obtaining summary judgment on its primary US-dollar claim. The alleged pleading admission was insufficiently clear and, in any event, permission was granted to withdraw it.
6. Summary judgment was therefore entered for the alternative sterling claim. The US-dollar claim could proceed to trial if maintained.

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