ED&F Man Commodity Advisers Ltd & Anor v Fluxo-Cane Overseas Ltd & Anor

There are distinctions between the first appellants and the second appellants and between the first respondents and the second respondents which are irrelevant to the point which the judge decided. For the purposes of his judgment and this judgment no distinction needs to be made and I shall call the appellants Man and the respondents FCO.

This is an appeal from a ruling by Walker J made on 8^th August 2008 on one issue determined under Part 24. He gave his full reasons in writing by a judgment handed down on 19^th September 2008. As is apparent from the history and background set out at the commencement of those reasons the issue he resolved was whether a legally enforceable agreement had been reached during telephone and round table conversations which took place on 17^th January 2008 between representatives of ten sugar brokers, including Man, and Mr Manoel Garcia representing FCO.

A less likely subject for decision under Part 24 seems at first sight difficult to imagine but there were extensive transcripts of the discussion and Mr Paul Downes, for Man, was able to submit to the judge that it was possible to take a view that it was unarguable that there was a contract. Mr Stephen Males QC, for FCO, was able to argue to the contrary and his main argument was that the issue was unsuitable for summary determination, having regard to the further materials that might be available at a trial. But he also submitted that if the judge concluded, on the basis of the transcript, that there was a binding agreement he had no objection to the judge determining the matter summarily in FCO’s favour.

The judge decided in a very detailed judgment analysing many pages of the transcript that there was a provisional or conditional contract which on fulfilment of certain conditions would be finalised at a meeting arranged for the 18^th January and that there was an interim binding contract under which the brokers agreed not to take any individual action which they might otherwise have been entitled to take until that meeting. On appeal, Mr Timothy Young QC, leading Mr Downes representing Man, argued primarily that it was clearly arguable that there was no contract of any kind and that the judge should not have decided that there was a contract under Part 24. By the end of the argument however, and in response to questions from the court, on instructions he was content that the matter should be decided on the transcript by the Court of Appeal one way or the other, rather than have the matter sent off to a full trial. He was, of course, submitting that it was clear on the transcript that there was no contract.

Mr Males, for FCO, primarily argued that the judge’s decision should be upheld on the basis that it was clear on the transcript, or by necessary inference from what was said and the conduct of the brokers, that there was at least the interim contract, but in the alternative he submitted (again in answer to questions from the court) that, if the only reason why the court could not so conclude was because of the absence of more of the surrounding circumstances, since it was clearly arguable there was a contract, the matter should go to trial.

The idea of deciding on a Part 24 application, even by reference to an extensive transcript, whether an oral agreement or an agreement by conduct was reached, seemed to me at least initially unlikely to be a proper use of that summary procedure. I have been tempted simply to say that. But once, as has happened in this instance, the court below has been persuaded to embark on the exercise and has effectively tried out the whole question almost as if it were a full trial, and once his decision is both attacked but also sought to be upheld, it is difficult to contemplate both wrestling with the detail and then concluding that the whole exercise should be carried out again at a trial unless there is likely to be further material available for a trial which might make a difference. If both parties are saying that it is possible to reach final conclusions by reference to the transcript under Part 24 in their favour, it is unattractive of either to say that if the decision is not in their favour then the only answer is a further trial. Although, thus, one answer might be simply to ask whether there are arguable points, and whether the matter is a proper one for determination under Part 24, since FCO are seeking to uphold the judge’s decision and it is necessary to wrestle with that, I am not attracted by their alternative stance, which is to say, if they fail there should be a further trial.

This is thus an unusual case where it will be necessary to descend into considerable detail.

FCO were trading both in physical sugar and on the futures markets in London and New York. They were using the futures market to hedge physical trading, although it would seem that there was some speculative trading on the futures market as well. FCO traded direct and through a number of brokers. By 14^th January 2008 FCO held extensive short positions for delivery in March 2008, such that on 14^th January the New York Exchange (“the ICE”) issued a directive requiring all brokers to collect an additional 20% “super margin” on all positions held by them on FCO’s account. This super margin seems to have been claimed by most brokers prior to 17^th January and paid. Man may only have claimed the super margin on 17^th January and this super margin was due and unpaid at the time of the meeting.

On 16^th January the ICE sent a letter to FCO in the following terms so far as material:-

“Dear Mr Garcia

I am writing to advise you that a special meeting of the Board of Directors of ICE Futures U.S, Inc. (the “Exchange”) was held on January 15, 2008, at which the following actions were taken pursuant to Exchange Rule 21.29:

(1)

the Board of Directors determined that there is a substantial questions as to whether a “Financial Emergency”, as such term is defined in Chapter 21 of the Exchange Rules, exists with respect to Fluxo-Cane Overseas, Ltd. and you; and

(2)

the Board of Directors determined that all orders for the account of Fluxo-Cane Overseas Ltd, and its affiliates (including you)(“Fluxo”) in the Sugar No. 11 futures contract and any options on such Contract may only be placed or executed by or through a clearing member and not by or through any other person.

The decision of the board of Directors with respect to the placement of orders, as specified above, becomes effective on Wednesday, January 16, 2008 upon the posting of a Release to Members on the Exchange’s website, and will remain in effect until further notice. The decision of the Board of Directors was based upon the facts, including but not limited to, that: Fluxo has significantly exceeded the position accountability levels established for it by the Exchange with respect to the futures equivalent position permitted to be held by Fluxo in the March 08 Sugar No. 11 delivery month and in all delivery months of the Sugar No. 11 contract, combined; Fluxo has refused to bring its position into compliance with the levels established by the Exchange, notwithstanding repeated requests to do so by the Exchange; and Fluxo has increased its short futures equivalent position when instructed to reduce such position in the March 08 delivery month.

Due to the gravity of the situation, it was not practicable for the Exchange to afford you a hearing before taking action. Accordingly, you and Fluxo may request a hearing before the Board regarding the actions described above. Any such request should be made in writing to the undersigned within five business days of the date hereof, and should specify when you would be available for such a hearing and whether you will appear in person or through counsel or other representative.

On a separate but related matter, in addition to the actions described above, please be further advised that pursuant to Rule 6.13, the Exchange has instructed each firm carrying positions for Fluxo in the Sugar No. 11 futures contract and/or options thereon to:

(a)

reduce Fluxo’s short futures equivalent position in the March 08 Sugar No. 11 delivery month to not more than a specified level, based on the proportion of Fluxo’s position carried by each such firm, such that by the close of business on January 23, 2008 Fluxo is in compliance with the position limits established for it by the Exchange with respect to the March 08 delivery month, and to not increase the futures equivalent position carried in all Sugar No. 11 delivery months combined, beyond its current level.

(b)

not accept any orders, electronic or otherwise, that would result in an increase of Fluxo’s short futures equivalent position in the March 08 Sugar No. 11 delivery month or its short futures equivalent position in all delivery months combined; and

(c)

not approve the transfer of any Sugar No. 11 futures or options contracts carried for Fluxo to an account at another clearing member, without first notifying the Exchange of the intended transfer.

You may obtain further details directly from your clearing members regarding the position reductions that have been requested of each such firm, or contact Susan Gallant at the Exchange at 212-748-4030.

Please also be aware that the foregoing action is not intended in any way to preclude the clearing members from further reducing positions or taking any other action which they may deem necessary or proper in light of the relevant circumstances.”

On the same day they sent a letter to the brokers through whom FCO were trading including the following terms:-

“The Exchange is hereby notifying MF Global Inc. (“the Clearing Member”) that the futures equivalent position of Fluxo-Cane Overseas Ltd, and its affiliates (“Fluxo”) in the March 08 Sugar No. 11 contract, which is carried by multiple firms including E D & F Man Commodity Advisers, is significantly in excess of the Exchange’s position limit established for Fluxo. In addition, Fluxo’s all-months-combined position in the Sugar No. 11 contract exceeds the position limit set by the Exchange for all months combined in such Contract.

In accordance with rule 6.13, the Exchange is instructing the Clearing Member to reduce Fluxo’s short futures equivalent position at E D & F Man Commodity Advisers in the March 08 Sugar No. 11 contract to no more than 8,000 futures equivalent contracts by no later than the close of trading on Wednesday, January 23, 2008 and not to increase Fluxo’s short futures equivalent position for Sugar No. 11 in all months combined beyond the current level. The Exchange expects the Clearing Member to accomplish some reduction in Fluxo’s positions each day until the specified levels have been achieved.

The Clearing Member is further directed not to accept any orders, electronic or otherwise, from Fluxo that would result in an increase in Fluxo’s short futures equivalent position in the March 08 Sugar 11 contract or in all months combined. Accordingly, we request that the Clearing member establish procedures to ensure that it can affirmatively monitor or restrict Fluxo’s order flow consistent with this restriction.

Please be advised that, as specified in the Member Release dated today, the Exchange is requiring that any orders in the Sugar No. 11 contract and/or options thereon for the account of Fluxo and/or its affiliates be entered exclusively with or by clearing members of ICE Clear US, Inc. and not by any other person.”

As at 16^th January 2008, as the above letters indicated, FCO from this time had no direct access to the market via the TT Trading platforms; FCO had to trade through a clearing member of the ICE; those members could no longer accept an order from FCO to sell; and ICE was insisting that FCO reduced its extensive short position for March 2008 day by day and finally reduce it to within acceptable limits by 23^rd January 2008. Neither the judge nor ourselves know the full details of FCO’s position with the ICE or the brokers. Indeed at the time of the critical meeting on 17^th January individual brokers did not know the position of other individual brokers or of FCO’s position with the ICE. Furthermore, despite requests to Mr Garcia of FCO during the meeting of 17^th January, Mr Garcia would not allow FCO’s position with individual brokers or with the exchange to be disclosed to those present at the meeting.

Before the judge there were no agreed details as to precisely how the price of sugar was moving at this time, but it is clear that it was rising and that with many if not all brokers FCO held a short position which the ICE required to be reduced and which was resulting in FCO being called upon for further margin. That indicated that FCO was in excess of its credit limits with most if not all brokers. Man it seems made two margin calls on 17^th January a call of $7,525,179.39 at 1.17 am and one of $9,468,847.79 at 10.23 [see paragraphs 22E and 23 of the Amended Particulars of Claim].

Mr Garcia appreciated that FCO could no longer trade direct in order to satisfy the ICE, and there was a risk that in order to comply with the wishes of the exchange, the brokers would all begin to buy individually and the result would be that prices would continue to rise at an even greater rate. We have not got the terms of the contracts between FCO and its brokers other than Man, nor was there any debate before us as to the entitlement of brokers, including Man, to buy so as to reduce FCO’s open positions, even if no instructions had been received from FCO and even though no margin was strictly due. But Man pleads in its amended particulars of claim terms within its contract on which it relies for being entitled to buy without instructions from FCO, e.g. clauses 16.1.13 when “you are declared a defaulter for the purposes of the default rules of any exchange or clearing house” and 16.1.14 when “we reasonably consider it necessary or desirable for our own protection”, which may well be replicated in the contracts with other brokers.

FCO through Mr Garcia certainly contemplated the possibility that brokers might, in order to comply with the exchange’s requirements, act individually with a result that would be catastrophic for FCO. He also appreciated that, if FCO could not pay its losses and became insolvent, that would produce a serious position for the brokers and that this might give him a negotiating position with the brokers under which he might get coordinated action from them to persuade the exchange of some means, whereby FCO’s position would become acceptable to the exchange and coordinated action which would help to stop a severe price rise.

Against that background Mr Garcia thus called a meeting in New York between himself, supported by his lawyer Mr David Yeres from Clifford Chance, and the brokers used by FCO, through whom he was now going to have to trade to reduce FCO’s positions. Most brokers accepted that invitation and ten attended. The meeting was to be both physically round a table and by virtue of a conference call arrangement with those who could not be there physically. Mr Garcia’s aim was to try and reach an agreement under which his positions could be dealt with in an orderly fashion to satisfy the requirement of the exchange. He hoped the brokers might be able to negotiate with the exchange some form of joint action and some methods e.g. the use of spreads or terms which would persuade the exchange to allow FCO to trade without a devastating rise in the price of sugar. He also wished to gain time while he negotiated borrowing with his banks to enable him to meet margin calls.

Before considering what happened at the meeting it is helpful just to see how ultimately proceedings were commenced and how the question whether an agreement was reached came to be alleged. As indicated, on the morning of 17^th January Man had made margin calls and these were unpaid when the meeting commenced and remained unpaid. After the meeting Man began to buy and close out certain of FCO’s short positions. It did so early on 18^th January. [As the schedules served under Clyde &Co’s letter of 18 June (Tab 6) indicate, some positions were closed out between 2.24 am and 3.10 am New York time, and more extensive closing out of positions took place between 9 and 10 am New York time and 2 and 3 pm London time].

In their Amended Particulars of Claim Man rely on terms such as those referred to above, i.e. that FCO were in breach of the Rules of the ICE and that Man were reasonably entitled to consider it necessary or desirable for their own protection as well as FCO’s failure to pay margin, as entitling them to close out positions. Man made a further margin call of $29,783,602.29 on 18^th January that sum indicating the effect on the market of the activity of both Man and other brokers as certain if not all of FCO’s positions were closed out.

Man commenced proceedings on 30th March 2008. In their Defence and Counterclaim FCO do not accept that Man under the customer contract between Man and FCO were entitled to act unilaterally to close out any of their positions. They maintain that margin was not in fact due before Man commenced to buy. But that issue was not one of those resolved by the judge. The one issue resolved by the judge, and the critical issue so far as this appeal is concerned, was a further issue raised by the Defence and Counterclaim. Was there by the end of the meeting on 17th January a legally binding contract between all the brokers, who attended either physically or via a phone link, and Mr Garcia for FCO, that the brokers would not act individually to close out any positions prior to the meeting (or I suppose the end of the meeting) which had been arranged for the 18^th January?

The question whether an agreement was made during the meeting needs examination of the transcript and I will not shirk that exercise, but it is worth standing back a moment and looking at the matter overall and tracing how the suggestion that there was such an agreement arose. First, if there was an agreement that all the brokers had agreed to forego their contractual rights and had agreed to stay their hands until the meeting on 18^th January, that was an agreement of some importance, concluded at a meeting at which Mr Garcia and his lawyer were present. Whatever else happened at the meeting there was no statement at its conclusion and as they adjourned until the next day from either Mr Garcia or his lawyer to the effect that “We are agreed that at least until the meeting tomorrow no broker will act individually or without instructions from FCO”. Second, following the meeting there was no e-mail or faxed communication from the lawyer or Mr Garcia to all the brokers present at the meeting confirming that it was at least agreed that no broker would act individually or without instructions from FCO until the meeting the next day. Third, the latter is true despite a discovery, according to Mr Garcia immediately following the meeting when going down in the lift, that some brokers had been acting extensively to close out some of his positions during the meeting. Fourth, in his statement for the proceedings in which he provides that piece of information, he does not suggest that he protested in the lift that some agreement had been reached and that individual action was or would be a breach of that agreement. Fifth, even in the statement he does not allege that he thought that such an interim agreement had been reached. Sixth, although this agreement if it existed was for the benefit of the brokers as well as for FCO, it is not consistent with the fact that some brokers were actually acting individually to close out some positions during the meeting, to the knowledge of those at the meeting. It is further inconsistent with what appears to have been a much more extensive closing of positions by some brokers and indeed a complete closing out by three brokers between that meeting and the meeting the next day. In addition, when the meeting started the next day with the brokers in attendance and not Mr Garcia, and when it was known that some brokers had already acted individually (three to the extent of closing out FCO’s positions through them completely), there is absolutely no trace of a suggestion by the brokers that individual action before the meeting of 18^th January was in breach of an agreement reached on the 17^th. It is true that the meeting only continued between brokers who still had open positions, i.e. seven out of the ten, but there was no protest from those who had not acted individually that some agreement had been broken. Seventh, when Mr Garcia joined the meeting on the 18^th January he protested strongly and emotionally about the conduct of the brokers who had acted individually while they were discussing the possibility of an organised reduction, but he never suggested, and nor did his lawyer who accompanied him, that there had been concluded a contract under which it had been agreed that all would stay their hand.

Mr Males submitted that none of the above points are relevant or admissible on the question whether an agreement was reached. I disagree. As paragraph 12-127 of the 30^th Edition of Chitty states “Subsequent actions are…inadmissible to interpret a written agreement although there are certain exceptions to this rule (i) where the contract is oral or partly oral …..(iv) to show whether there was a contract and what the terms of the contract were…” The footnotes which support the propositions refer to a number of cases. One citation is enough coming as it does from, My Lord, Longmore LJ in GNER v Avon Insce [2001] 2 Lloyds Reports 649 at paragraph 29 of a judgment with which Chadwick LJ and Sir Philip Otton agreed. There he said in relation to the question whether a term had been incorporated into a contract the following :-

“29.

Secondly, the Judge was correct to find it very telling that, when Mr Aylett was asked by his colleagues to obtain the terms of the contract, he sent them the Fenchurch terms. If the question is whether a term was incorporated into a contract, the subsequent conduct of the parties may be very relevant to the inquiry whether such a term was or was not agreed. Mr Flaux’s submissions to the contrary were, with respect, a misapplication of the principle that the subsequent conduct of the parties cannot be relied on as an aid to the construction of the contract, see James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 1 Lloyd’s Rep 269 at 9 271, col 1; [1970] AC 583 at pp 603D-E per Lord Reid at p 279, col 2; p 615A, per Lord Wilberforce. No such principle exists in relation to the question whether an alleged term of a contract was, in fact, agreed.”

The same principle must apply as the text of Chitty supports to whether a contract was made at all.

I am afraid, thus, I start from a position in which such evidence as there was outside the transcript and following the meeting did not support the making of an agreement that the brokers would forego their contractual rights pending the meeting on 18^th January. Against the above background without clear words intended to have legal effect accepted orally or by conduct I would find it difficult to conclude that it was even arguable that there was a contract under which Man and others had agreed between themselves and with FCO not to act individually to close out any open position without instructions from FCO until the conclusion of the meeting on 18^th January.

It is in any event worth remembering that, where conduct is relied on as producing a binding contract, if the conduct were consistent with both a contract and no contract the answer would have to be that there was no contract. As Bingham LJ (as he then was) said in The Aramis [1989] 1 LLR 213 at 224:-

“Most contracts are, of course, made expressly, whether orally or in writing. But here, on the evidence, nothing was said, nothing was written. So regard must be paid to the conduct of the parties alone. The questions to be answered are, I think, twofold: (1) Whether the conduct of the bill of lading holder in presenting the bill of lading to the ship’s agent would be reasonably understood by the agents (or the shipowner) as an offer to enter into a contract on the bill of lading terms. (2) Whether the conduct of the ship’s agent in accepting the bill or the conduct of the master in agreeing to give delivery or in giving delivery would be reasonably understood by the bill of lading holder as an acceptance of his offer.

I do not think it is enough for the party seeking the implication of a contract to obtain “it might” as an answer to these questions, for it would, in my view, be contrary to principle to countenance the implication of a contract from conduct if the conduct relied upon is no more consistent with an intention to contract than with an intention not to contract. It must, surely, be necessary to identify conduct referable to the contract contended for or, at the very least, conduct inconsistent with there being no contract made between the parties to the effect contended for. Put another way, I think it must be fatal to the implication of a contract if the parties would or might have acted exactly as they did in the absence of a contract.”

I turn now to the transcript of discussions at the meetings and via the telephone link of 17^th January. If I were construing the transcript and what was likely to be occurring during the conversations that are transcribed and without regard, for the present, to the views expressed by the judge, it would be along the following lines:-

Where then does my analysis differ from that of the judge and Mr Males? First, I cannot agree with the judge’s provisional conclusion that it is clear that by taking part in the discussions “each broker was assuring FCO and the other participants that it had not taken [action] and, while seeking to achieve ultimate agreement, would not take action unilaterally to liquidate FCO’s position”. Of course I accept that many of the brokers would feel that it was in all their interests not to act unilaterally while they tried to formulate a plan. But I cannot construe their participation as “promising” that they would not act unilaterally. All participants were aware that individual brokers were not making such a promise because reports were coming in during the meeting of unilateral activity. Furthermore all would understand that obligations owed to the exchange, quite apart from actions of brokers not present at the meeting, which might be causing prices to rise, might compel individual action.

I do not disagree with the judge’s provisional conclusion (2) that Mr Garcia’s proposal was if FCO fulfilled its side of the bargain by paying margins, the brokers would agree to work together to formulate a plan. But it is important that at this stage Mr Garcia was saying that actual payment would be made for the first day, but there is nothing in my view approaching a contract since there is absolutely no certainty as to what plan could be agreed.

As regards the judge’s provisional conclusion (3) which relates to the situation after Mr Garcia had refused to give any orders despite the market being about to close, and after an agreement as to the division of the one thousand lots, I would agree that the brokers are still looking for a possible plan under which they can all act together. But for some brokers any chance of agreement with FCO has broken down because he has refused to commit to pay what is due. Furthermore, I do not accept that there is any indication that the brokers were offering to bind themselves not to act individually, even between themselves never mind to FCO. The purchase of the 1000 lots by one broker demonstrated that that broker was free; it also demonstrates the necessity to be free because those lots were bought pursuant to pressure from the exchange.

I myself doubt whether provisional conclusion (4) is justified i.e. that the brokers had identified an achievable method of complying with the exchange’s requirements. What the judge described as the “what if” proposal was unspecific and had been overtaken by a request by the brokers for FCO to give instructions to buy which FCO had refused to do. I cannot quite see how it can be said it “had been worked through in discussion”. But that matters not because it is provisional conclusion (5) that Mr Garcia had “significantly advanced matters by making plain that he would seek to be in a position the following morning where FCO could give brokers what they wanted: a commitment to pay margin”, with which I simply cannot agree. In my view the judge overlooks the difference between a commitment, only to be given the next day that margin would be paid, and the demands of the brokers who are already owed money and who are saying they need a commitment there and then that the money owed will actually be paid the next day. They do not simply want a commitment that Mr Garcia will negotiate with his banks so that the next day he can give a commitment that margins will be paid in the future. Mr Garcia refuses to give a commitment that money owed will be paid. Furthermore the judge does not refer to Mr Garcia’s own words recognising that “I’m not interested . . . to eliminate your rights, if you collectively tomorrow morning this time liquidate . . .”.

I am also doubtful whether provisional conclusion (6), that at this stage the brokers perceived a real prospect sufficient to keep the “what if” proposal on the table, that Mr Garcia would on 18^th January have secured enough financial support from FCO’s bankers to enable both the timely payment of margin and the orderly reduction in its positions, was justified. First, “timely” payment of sums due would have meant cash in the morning and Mr Garcia had made it clear that was not to be, unless his bank promised to pay future margins as well. Second, even if some brokers were still hopeful of something being possible, others were extremely sceptical. But the real question is whether, following the sorting out of the 1000 lots and the possibility of an order from FCO of three or four thousand lots, the proper inference is that there was at this stage between all brokers and FCO “a conditional agreement that if the following day FCO gave a commitment to pay margin . . . the brokers would put in hand steps to achieve an orderly reduction”. In my view certain of the brokers had made clear that it was not enough for them to reach any kind of consensus other than on the basis that FCO committed itself to actually paying the margin it owed, a commitment that Mr Garcia would not give.

It is true that the strongest case for there being some agreement not to act unilaterally flows from the words used in relation to obtaining the instructions from Mr Garcia relating to the three or four thousand lots to “show the commitment that we are not going to start buying ourselves”. But this is only said in the context of obtaining those instructions by one broker after there has been a failure on Mr Garcia’s part to give the commitment in relation to paying the margins owed. The word ‘commitment’ does not necessarily carry with it the notion of it being ‘legally binding’. One can be committed to a cause without being legally bound to do anything. In the context of the refusal of FCO to commit to pay margin that was due, at least those brokers who were so insisting cannot in my view be understood to be offering FCO a binding promise not to buy individually while margin remained unpaid.

The words used by Fabrice are as consistent with seeking to persuade FCO to give instructions to buy and to persuade brokers not to act unilaterally as opposed to being words of a contractual offer to which all brokers would be understood to be agreeing. I furthermore do not quite understand why the exchange would want a commitment from brokers not to act unilaterally as the judge suggests in paragraph 114. I would have thought the exchange would want to be free to insist on individual brokers acting to close out FCO’s positions and indeed that is the way it seems that they acted.

Provisional conclusion (12) is one again with which I find it difficult to agree. The suggested agreement does not reflect what the judge suggests had been agreed by this stage. The reaction to the suggested agreement in principle emphasises the point that certainly some of the brokers were looking for a commitment that they would actually be paid the margin they were owed for there to be such an agreement. I furthermore do not quite follow the judge’s provisional conclusion (13) that although Mr Coffin and Mr Hopkins were at that stage making suggestions which might have stood in the way of a conditional agreement, since they were not maintained, it means one should conclude “all parties proceeded on the footing that a conditional agreement was in place”. If the questions and answers are inconsistent with the agreement suggested by the judge, I would say that points in the direction of there being no such agreement.

Mr Males seeks in his skeleton to support the judge’s conclusions. It seems to me there is one fundamental point of difference between the position taken up by the judge and supported by Mr Males, and what I suggest the transcript shows. Mr Males summarises the position in this way “At this point the meeting ended. Agreement had been reached subject only to the question whether Mr Garcia would be able to give a commitment to pay margin the next day.” That is the agreement the judge suggests was made. In my view the transcript indicates that certain brokers at least needed a commitment that monies due would be paid the next day, not simply that Mr Garcia should come back the next day and say what commitment he could give. That was a commitment Mr Garcia was not prepared to give.

What then is the appropriate conclusion? As is obvious I do not think the judge was correct in his conclusion that, by reference to the transcripts, FCO have established a contract by which Man and other brokers had agreed not to act unilaterally. Looking at the transcript alone left to myself I would hold that FCO would have no real prospect of succeeding in establishing such a contract if the matter went to a full trial. Furthermore, since FCO have argued on the appeal that the matter can be finally determined on the transcript, they should not be entitled to resile from that position if the decision is against them. In any event it is difficult to think of evidence outside the transcript that would assist FCO’s case. I can see there might be other evidence relevant to the likelihood of a contract being concluded. There could be evidence of the extent of FCO’s open positions with the exchange and the brokers; there could be a complete picture of the way in which the price of sugar was rising; there could be a complete picture as to what steps individual brokers were taking during the meeting; and indeed there could be evidence as to the extent to which all brokers were actually taking part in the discussions particularly by the end in the light of Mr Garcia’s refusal to commit to pay margin actually due. But I cannot see how that the further evidence would assist FCO’s case as opposed to confirming the view which, I suggest, the transcript reveals.

For my part I would allow the appeal. I would further hold that it was not right to send off for a trial the question whether any agreement was reached at the meeting or telephone conference calls of 17^th January. I would hold that summary judgment under part 24 should be given in Man’s favour on that question.

I agree that there is no reasonable prospect of FCO establishing at any trial that a binding agreement was reached on 17^th January 2008 to the effect that the participating brokers would take no further action in closing out FCO’s positions until a further meeting had taken place on the following day.

It would be difficult to criticise the judge if he had merely said that, since the alleged agreement was an oral agreement (or a mainly oral agreement supplemented by conduct), it was inappropriate to use the court’s summary procedure to determine (as Man asked him to do) that no such agreement existed. But such a conclusion would not have been helpful to the parties and he sensibly decided that, since all the relevant conversations had been transcribed, he should reach a conclusion about the existence of the agreement one way or the other. He decided that there was indeed an agreement as FCO alleged there to be.

I consider that, on the facts of this case, we should adopt the same sensible approach as the judge and decide the matter one way or the other. After a no doubt expensive 3 day hearing before the judge and a no doubt almost equally expensive 2 day hearing before us, neither side would thank this court if we merely said that each side’s case was arguable and an even more expensive trial on this point had then to take place, ventilating the issues in yet more detail on more or less identical material.

I should, however, emphasize for my part that this conclusion should not be taken as any encouragement to practitioners to ask the court, on summary application, to determine whether an oral agreement has been made. Normally that can only be determined after a trial. If the judge had so decided here, it is most unlikely that this court would undertake, for the first time, the kind of detailed analysis which my Lord has conducted in order to decide that there was (or in this case that there was not) an oral agreement of the kind alleged.

Although there is, therefore, a slight oddity in our deciding that the judge, in holding that an agreement had been made, reached a conclusion that is not seriously arguable, we should be prepared to say so if that is indeed our view. That is my view and I agree, therefore, that this appeal should be allowed and a declaration made that no such agreement as FCO allege was made.

I agree with both judgments.