Astra Asset Management UK Ltd v Odin Automotive S.a.r.l.

On a summary judgment application, the court may decide a short point of construction where it has the evidence necessary to determine the issue, but must not conduct a mini-trial. A defence based on factual assertions contradicted by contemporaneous documents may be rejected as fanciful where it has no realistic prospect of success.

Where a mandate requires best efforts to arrange facility documents satisfactory to the arranger, the court should not imply a requirement that the proposed terms be reasonable, usual or non-onerous. If the facility is arranged on terms satisfactory to the arranger and the counterparty chooses not to accept it, a contractual payment triggered by failure to close may become due regardless of the counterparty’s reasons.

A broadly worded indemnity payable on demand may not require a detailed breakdown before payment.

Astra Asset Management UK Limited sought summary judgment against Odin Automotive S.à r.l. under a mandate agreement concerning the proposed arrangement of a US$20 million facility.

Astra claimed US$2 million under clause 5.1, which applied if Odin breached specified undertakings or failed to close the transaction for any reason. It also claimed £219,830.56 under clause 8.1, an indemnity for costs and expenses arising from claims or proceedings connected with the mandate agreement.

Odin argued that Astra had failed to use its best efforts, had applied undue pressure, had proposed onerous or unreasonable financial covenants, and could not rely on its own breach. It also disputed the indemnity demand and contended that the alternative allegation of breach of exclusivity was unsuitable for summary determination.

The central issues were whether Odin had a realistic prospect of defending the two claims and whether any other reason justified a trial.

1. Summary judgment principles. The court applied the principles summarised in Easyair Limited v Opal Telecom [2009] EWHC 339 (Ch), as approved in AC Ward & Sons Limited v Catlin (Five) Limited [2009] EWCA Civ 1098. The claimant had to show that the defence had no realistic, rather than fanciful, prospect of success and that there was no other reason for trial. The court could evaluate evidence and draw conclusions where appropriate, but had to avoid a mini-trial. It could decide a short point of law or construction where the necessary evidence was available.
2. Clause 5.1. The allegations of undue pressure and onerous, unusual or unreasonable terms were fanciful and unsupported by the contemporaneous communications. The mandate required Astra to use its best efforts to arrange a facility satisfactory to it as arranger. The words “in form and substance satisfactory to the Arranger” were clear and did not permit implication of a requirement that the proposed terms be reasonable, usual or non-onerous.
3. Astra had arranged and proposed a facility on terms satisfactory to it and the proposed lender. Odin chose not to accept those terms and decided that it wanted a different structure. The words “fails to close the transaction for any reason” bore their usual meaning. Odin’s reasons for refusing to sign were therefore irrelevant. The US$2 million became payable under clause 5.1. Since the contractual conditions were satisfied, the penalty argument could not operate as a defence.
4. The alternative allegation that Odin breached its exclusivity undertaking raised a triable issue of fact. Summary judgment would not have been granted on that alternative claim, although it was unnecessary to determine it given Astra’s success under clause 5.1.
5. Clause 8.1. The indemnity was a wide “pay on demand and quibble later” provision. “Agents” included Astra’s solicitors. The clause did not require Astra to provide documents, spreadsheets or a detailed breakdown before payment. The demand stating the total costs and expenses incurred in connection with the claim was sufficiently precise. The sum fell due three days later.
6. Judgment was entered for Astra for US$2 million, £219,830.56, and interest on both sums, with interest to be determined on written submissions if not agreed.