MTF Funding Ltd (In Liquidation) & Anor v Synergy Agroscience Ltd & Ors

A defendant must pursue a misrepresentation or rescission case on the basis pleaded. Later events do not, without more, establish that an earlier opinion was dishonestly or falsely held. A revolving specialist trade-finance facility is not equivalent to an overdraft: funding remains subject to the contractual requirement for approval of each transaction.

An insurance condition imposed for the financier’s benefit does not ordinarily promise protection for the customer or require the financier to claim under the policy. Where a money claim is not expressly admitted, Civil Procedure Rules 1998, rule 16.5(4), requires proof of the amount, but does not require the defendant to provide its own alternative calculation. An account may be refused where disproportionate. The duty to mitigate does not apply to a claim in debt.

MTF Funding Ltd and MTF Resources Ltd claimed approximately £428,000 from Synergy Agroscience Ltd under specialist trade-finance facilities. Claims were also made against Nicholas Gooch and D.A.V. Property Ltd under personal and corporate guarantees.

The defendants alleged that the facilities were induced by fraudulent or actionable misrepresentations concerning funding capacity, transaction speed and credit insurance. They also challenged the sums claimed, relied on contractual conclusive-evidence clauses, sought an account, and alleged failure to mitigate losses by pursuing customers or insurers.

The court determined the pleaded misrepresentation defences, the construction and effect of the facility documents, the evidence required to establish the debt, and the guarantors’ liabilities.

1. Misrepresentation and pleading. The defendants could not rely on allegations developed in evidence but absent from the Defence and Counterclaim. The requirements in Civil Procedure Rules 1998, Practice Direction 16, paragraph 8.2, applied to the counterclaim. No pleaded case established a false representation concerning MTFF’s own funding, and subsequent delays did not prove that an earlier opinion had not been genuinely held (paras 58–64).
2. Insurance. The reference to sufficient credit insurance in the Offer Letter was a condition precedent for MTFF’s benefit. It did not represent that insurance would protect Synergy or require MTFF to claim under the policy. The TFA and RFA preserved MTFF’s right to recover from Synergy irrespective of other security or insurance rights. The insurance-based defences and rescission claims therefore failed (paras 65–68).
3. MTFR facility. Synergy knew that the later facility involved matched funding. The representation that the new facility was better suited to its operations was an honestly held opinion, not a false statement of present fact. No pleaded claim alleged that delayed approval or non-funding was itself a contractual breach. A revolving facility permitted further drawings as previous funding was repaid, subject to the contractual requirement that proposed transactions be approved; it was not an overdraft or a promise to fund every transaction within a particular period (paras 83–93).
4. Quantification. The conclusive-evidence clause in the TFA was limited to liabilities under that agreement and did not establish the amounts claimed from Synergy under the composite facility. Under rule 16.5(4), the claimants therefore had to prove the debt, but the defendants’ failure to provide any competing calculation did not require an account. The claimants’ statements were sufficient evidence, and an account would be disproportionate. Judgment was accordingly given against Synergy on the MTF6 figures, subject to contractual interest (paras 111–125).
5. Other issues and guarantees. The duty to mitigate had no application to the debt claims. The misrepresentation defences to the guarantees failed. The guarantors were liable on the certified statements under their conclusive-evidence clauses, subject to the contractual limits of £250,000 and £50,000 respectively (paras 126–131).

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