Torm A/S v Gulf Petrochem FZC

Permission to amend a defence should be granted only where the proposed case has a realistic prospect of success. The court must apply the summary judgment test without conducting a mini-trial, but it need not accept evidence at face value. A party seeking to withdraw admissions must also satisfy the court that withdrawal is justified in all the circumstances.

A company cannot disavow letters of indemnity after relying on them to obtain delivery of cargo, where the evidence provides no realistically arguable basis for denying authority or ratification. A financial-impossibility defence requires coherent and sufficiently supported evidence. Unsupported assertions and incomplete financial information will not suffice.

The claimants brought claims under letters of indemnity after hydrocarbon cargoes were delivered without production of the original bills of lading. The defendant had admitted material aspects of liability in its pleaded defences.

The defendant sought permission to amend to allege lack of authority, absence of ratification and illegality in making payment under article 1002 of the UAE Federal Civil Code. The claimants applied for summary judgment. The central issues were whether the proposed amendments had a realistic prospect of success and whether the defendant had any realistically arguable defence to the claims or to final mandatory relief.

1. Permission to amend. Applications under CPR Rule 17.1(2)(b) require the court to apply the summary judgment test. The proposed defence must be more than fanciful or merely arguable. The court must consider evidence reasonably expected to be available at trial, while avoiding a mini-trial. Short points of law may be resolved, but difficult developing questions should ordinarily be left for trial.
2. Withdrawal of admissions. Permission under CPR Rule 14.1(5) depends on all the circumstances, including good faith, prejudice, prospects of success, responsibility for any prejudice and the public interest in avoiding satellite litigation and disproportionate use of court resources.
3. Authority. The defendant failed to show a realistically arguable case that the LOIs were signed without actual authority. The Memorandum and Articles of Association, read together, permitted contracts to be made by a person acting under the company’s expressed or implied authority. The absence of evidence from the directors or relevant senior managers was fundamental and unexplained.
4. Ratification. On the counterfactual assumption that the signatories lacked actual or apparent authority, the defendant had no realistically arguable answer to the claim that it ratified the LOIs by seeking and obtaining delivery on their basis. It would be commercially absurd to accept the benefit of delivery and then disavow the obligations. This reasoning was unnecessary to the decision on actual authority but independently supported refusal of the amendment.
5. Article 1002 defence. The proposed reliance on article 1002 of the UAE Federal Civil Code failed. The defendant produced no expert evidence explaining the provision’s application or addressing the reasons given in the earlier judgment. It therefore failed to demonstrate a realistically arguable defence.
6. Summary judgment. The defendant accepted that, if amendment was refused, the claims could succeed. NOC was entitled in principle to recover its settlement sums because the defendant had not shown a realistically arguable basis for challenging their reasonableness. The financial-impossibility case was unsupported by sufficiently comprehensive financial evidence and could not be accepted at face value.
7. The applications for permission to amend were refused and the applications for summary judgment succeeded.