King Crude Carriers SA and others v Ridgebury November LLC and others

English law does not deem a condition precedent to a debt obligation fulfilled merely because the debtor’s breach prevented its fulfilment. The creditor’s remedy is ordinarily damages, subject to the contract’s express and implied terms.

The presumption that parties do not intend a person to take advantage of that person’s own wrong concerns reliance on a breach to terminate a contract or obtain a contractual benefit. It does not generally prevent defensive reliance on an unfulfilled condition.

Whether a debt has accrued before it becomes payable depends on the contract. Under the standard ship-sale terms considered, the deposit-holder arrangements were substantive conditions precedent to accrual of the deposit debt, rather than machinery for paying an existing debt.

The respondents agreed to sell three vessels to the appellants under materially identical Norwegian Saleform 2012 memoranda. Clause 2 required a 10% deposit to be lodged after the deposit account had been opened. Both parties had to provide the necessary documentation. The buyers breached that obligation, so the accounts were not opened and the deposits were not lodged.

Arbitration tribunals held that the sellers could claim the deposits as debts because the buyers could not rely on conditions whose fulfilment their own breaches had prevented. Dias J allowed the buyers’ appeal: [2023] EWHC 3220 (Comm); [2024] 2 Lloyd’s Rep 115. The Court of Appeal reversed her decision: [2024] EWCA Civ 719; [2025] KB 311.

The principal issue was whether English law recognises a rule derived from Mackay v Dick under which a wrongfully prevented condition precedent is deemed fulfilled, enabling recovery in debt rather than damages. The court also considered contractual interpretation, implied terms, and whether the deposit debt accrued when each memorandum was concluded.

1. The appeal was allowed unanimously. Lord Hamblen and Lord Burrows gave the judgment, with which Lord Reed, Lord Hodge and Lord Stephens agreed. The court restored paragraphs 1–6 of Dias J’s order.

2. The supposed Mackay v Dick principle is not part of English law. Lord Watson’s deemed-fulfilment reasoning rested on a civil-law doctrine and differed from Lord Blackburn’s uncontroversial reasoning based on an implied duty of co-operation. The English authorities did not speak with one voice, and the principle would conflict with established rules governing accrual of the price in sale contracts. Its formulations as deemed performance, deemed waiver or quasi-estoppel were unexplained legal fictions.

   English contract law instead gives effect to the parties’ express and implied terms. Where a debtor’s breach prevents a condition precedent, the creditor ordinarily has a damages remedy. Damages put the creditor in the position performance would have produced, subject to mitigation and remoteness. The law does not require a debt remedy which may exceed the creditor’s net loss: paras 61–69, 100–101.

3. The maxim that a person cannot take advantage of that person’s own wrong did not alter clause 2. The relevant interpretative presumption concerns a party invoking its breach to terminate a contract or obtain a contractual benefit. The buyers relied on the unfulfilled conditions only defensively and remained liable in damages. Treating the payment obligation as unconditional would strike out the conditions the parties had chosen: paras 70–85.

4. No term could be implied to produce the sellers’ proposed debt claim. Terms deeming the account open would be unworkable because no account existed into which payment could be made. A term requiring direct payment to the sellers would fundamentally redistribute the risk allocated by the agreed escrow arrangement and contradict the express terms. Clause 13 already specified cancellation and compensation as the consequences of failure to lodge the deposit: paras 86–99.

5. A respondent may, under rule 25(1) of the Supreme Court Rules 2009, support the order below on a different ground without cross-appealing. The sellers could therefore argue that the deposit debt accrued upon contract formation. The contention raised a pure question of law and caused no prejudice: paras 103–106.

6. The sellers’ alternative argument nevertheless failed. Accrual of a debt and its later payability may be distinct, but the contract must support that distinction. Here clause 2 made the signature, documentation and deposit-holder confirmation requirements conditions precedent to accrual itself. The escrow arrangements were substantive protection, not mere payment machinery. The debt therefore never accrued, although the sellers retained their damages remedy: paras 107–125.

1. United Kingdom Supreme Court: allowed the buyers’ appeal and restored paragraphs 1–6 of Dias J’s order: [2025] UKSC 39.

2. Court of Appeal: allowed the sellers’ appeal and held that the buyers could not rely on non-fulfilment of the conditions which their breaches had caused: [2024] EWCA Civ 719; [2025] KB 311.

3. Commercial Court: Dias J allowed the buyers’ appeal from the arbitration awards and held that the sellers’ remedy lay in damages rather than debt: [2023] EWHC 3220 (Comm); [2024] 2 Lloyd’s Rep 115.

4. Arbitration tribunals: a majority of each tribunal upheld the sellers’ debt claims and ordered payment of the three deposits.