Torm A/S v Gulf Petrochem FZC

This is the hearing of six applications being (a) applications by each of the claimants for summary judgment and (b) the defendant's applications for permission to amend its defences in each claim. At paragraph 17 of his skeleton submissions, Mr Shirazi, who appears on behalf of the defendant, accepted that subject to the amendments that the defendant sought permission to make that the defendant had not " ... advanced a defence on liability ... ". Subject to the application to amend, Mr Shirazi confines his submissions on the summary judgment application to two generic points, being (a) as against V8 and OCM that judgment should not be given summarily on its claim for final injunctions by reference to the defendant's argument concerning financial impossibility which in turn depends upon two points being (i) alleged illegality to pay given the defendant's alleged financial position and (ii) an alleged absence of funds necessary to enable payment to be made; and (b) as against NOC an assertion that the defendant has a realistically arguable defence to the money claims it makes.

The only basis on which liability can be disputed is by reference to a new assertion that the individuals who signed the letters of indemnity on which the claimants' claims depend lacked authority to execute those documents. That is the principal issue that the defendant seeks to advance by way of amendment. Since it is accepted that the claimants are entitled to judgment if the application to amend fails, all parties considered, and I agree, that the application to amend should be considered before the summary judgment applications.

It is at this point that I would normally set out the factual background to the level necessary to understand the applications and this judgment. This is not necessary in this case however because I set out the background in my judgment in these proceedings delivered on 22 December 2020 bearing the neutral citation number [2020] EWHC 3689 (Comm) at paragraphs 13 to 15 in relation to the OCM claim and at paragraphs 21 to 23 in relation to the V8 claim. The facts relevant to the NOC claim are set out in my judgment of 13 October 2020 bearing the neutral citation number [2020] EWHC 2820 (Comm) at paragraphs 3 to 8. Since those judgments were delivered there have been some changes to matters of detail but not in ways that affect materially the applications I have to determine at this hearing. In those circumstances, I incorporate by reference into this judgment the summary of primary facts set out in the earlier judgments to which I referred a moment ago.

As is apparent from each of these summaries, each claimant carrier agreed to release a hydrocarbon cargo without sight of the original bills of lading relevant to that cargo against a letter of indemnity ("LOI") provided by the defendant to each respective claimant. In each case the holders of the original bills made claims for wrongful delivery against the claimants and in turn the claimants intimated claims against the defendant under the respective LOIs. In each case, the defendant failed to comply with the terms of the LOI. Proceedings having been commenced by the claimants against defendants on the LOIs, the defendant filed defences in each claim. It did so when represented by experienced specialist maritime solicitors.

It is necessary that I set out what was initially pleaded by the defendant in relation to each of these cases because each claimant contends, and it is not in dispute, that the proposed amendment involves not merely asserting a positive case that has not before been pleaded but also involves the withdrawal of widespread admissions both express and implied by the defendant as to its liability to each of the claimants under the LOIs.

Paragraphs 1 to 8 of the particulars of claim set out all the relevant primary facts. Paragraph 1 pleads the time charter by the first to the second claimant. Paragraph 2 pleads the voyage charter by the second claimant to the defendant. Paragraph 3 pleads the agreement contained within clause 15 of the voyage charterparty that the owners would discharge against the letter of indemnity in approved form where original bills of lading were not available. Paragraph 4 pleads various variations to the voyage charterparty. Paragraphs 5 to 6 plead the loading of the cargo and subsequent instructions to the vessel. Paragraph 7 pleads that the defendant ordered the vessel to proceed and discharge at Fujairah and at paragraph 8 it is pleaded that:

In fact the original bills of lading were held by a trade finance house called Natixis France and at paragraph 12 of the particulars of claim the claimant pleads:

At paragraph 13 of the particulars of claim the claimant pleads:

On 22 July 2020 the defendant amended the defence to add a counterclaim relating to some proceedings commenced in India. Those proceedings are principally brought against the directors and shareholders of the defendant but name the defendant as a party as well. The claimants contend that the defendant was added as a requirement of Indian procedural law, India being the jurisdiction where the claim to which the counterclaim relates has been commenced, and that no relief is claimed as against the defendant in the Indian proceedings. Nonetheless it is alleged by the defendant in the counterclaim that the Indian proceedings have been commenced in breach of a London arbitration agreement contained in the voyage charterparty. This dispute is immaterial for present purposes other than to note that the voyage charterparty contained a London arbitration provision and is governed by agreement between the parties by English law.

Both the original defence and the defence and counterclaim contain statements of truth. The statement of truth on the original defence was signed by a partner in Mills & Co, the specialist maritime law firm then acting for the defendant.

The defendant changed solicitors on 22 March 2021 and its counsel on 11 April 2021. The statement of truth in respect of the counterclaim was signed by a senior associate employed by the defendant's replacement solicitors, Messrs Stephenson Harwood. The first mention of an amendment to the defence came in a letter from Stephenson Harwood to the claimants' solicitors dated 7 May 2021, where it was said that:

The pattern of allegations made by the claimant and the response of the defendant was similar to that in the OCM claim. In particular at paragraph 4 of the defence the defendant pleaded:

The primary facts alleged are all admitted in the original defence. The circumstances leading to the issue of the LOI are pleaded in paragraph 11 of the particulars of claim. The terms of the LOI and that it was signed and stamped on behalf of the defendant are pleaded at paragraph 12 of the particulars of claim and at paragraphs 13 to 15 of the particulars of claim the claimant pleads that it accepted the LOI by its conduct in effecting delivery of the relevant cargo in accordance with the defendant's instructions and the terms of the LOI and that by so delivering the defendant's obligations under the LOI were engaged. Each of these allegations is unequivocally admitted by the defendant in paragraph 5 of its original defence. The V8 LOI was apparently signed on behalf of the defendant and is stamped with the defendant's stamp. But the signatory is not identified by name by the signature and the signature itself is illegible.

The V8 application to amend the defence was issued on 30 July 2021 and the evidence in Part C of the form is materially similar to that in the application notices in the other claims. The draft amended defence seeks to withdraw the unqualified admissions made of paragraphs 10 to 15 of the particulars of claim by seeking to assert that the LOI concerned was entered into without authority - see paragraph 5BB of the draft amendment. On the basis of that assertion, paragraph 12 of the particulars of claim would be denied by amendment other than to the extent of admitting the document on which the claimant relies was issued and paragraphs 14 to 15 of the particulars of claim again would be denied as would the allegation that the defendant was under an obligation to provide the security the subject of the claim.

In summary:

the applications to amend are all made under CPR Rule 17.1(2)(b) and thus require the permission of the court;

in deciding whether to give permission the court must apply the summary judgment test and give permission only where the proposed amendment has a realistic prospect of success - see SPI North Limited v Swiss Post International (UK) Limited [2019] EWHC 2004 (Ch) per Andrew Hochhauser QC at paragraph 5;

a defence with a real prospect of success is one which is more than merely fanciful; is one that carries some degree of conviction and is one that is more than merely arguable;

the applicable summary judgment principles are those approved by the Court of Appeal in TfL Management Services Ltd v Lloyds Bank Plc [2013] EWCA (Civ) 1415 and include:

in reaching a conclusion the court must not conduct a mini trial;

the obligation not to conduct a mini trial does not mean that the court must accept at face value and without analysis everything that a defendant says;

in arriving at a conclusion the court must take into account not only the evidence before it but the evidence that can reasonably be expected to be available at trial; and

short points of law can and should be resolved but difficult points of law, particularly those in developing areas, should be left for trial so that they can be decided by reference to actual as opposed to assumed facts;

permission to amend will be refused where the defence sought to be raised is implausible or not supported by contemporaneous documentation - see Collier v P & MJ Wright (Holdings) Ltd [2008] 1 WLR 643 per Arden LJ (as she then was) at paragraph 21) - or which is speculative, surmise or invention - see Clarke v Marlborough Fine Art Ltd [2002] 1 WLR 1731;

since the defendant seeks to withdraw admissions, it requires the permission of the court to do so - see CPR Rule 14.1(5);

in deciding whether in the exercise of discretion a party should be permitted to withdraw an admission the court will consider all the circumstances of the case - see Sowerby v Charlton [2006] 1 WLR 568 at paragraph 35 - which circumstances include:

As will be apparent from what I have said so far, the amendment for which permission is sought that is material for present purposes is that relating to authority. As to that:

Whether the signatory of the LOIs had actual authority to do so is at least realistically arguably governed by the law of the UAE, being the law that, at least realistically arguably, governs the relationship between the defendant and Mr Sharma in the NOC and OCM claims or the unknown signatory in the V8 claim - see in this regard Bowstead & Reynolds on Agency 22nd Edition at paragraph 12-015;

The claimants contend, but the defendant disputes, that whether the signatories had apparent authority in the circumstances of the case is a question governed by English law as the law governing the LOI and for that matter the charterparties. I return to that issue in detail later in this judgment to the extent it is necessary to do so;

In relation to apparent authority, on the basis that English law applies to the determination of that issue, it is common ground that the question in each case is whether the defendant has as against the claimant cloaked the signor with apparent or ostensible authority by

Even if wrong in their cases concerning actual, apparent or ostensible authority, the claimants maintain that the defendant ratified the LOIs either before the commencement of proceedings by seeking or obtaining and accepting delivery of the cargos by tendering the LOIs. It is common ground that whether there has been ratification is a question governed by English law - see paragraph 47 of Mr Shirazi skeleton argument.

In relation to ratification, the claimants contend and I accept that in English law, ratification will be implied where a principal receives property with knowledge of the circumstance of a contract under which it has been received - see most pertinently for present purposes Cornwal v Wilson [1750] 27 ER 1173, where in essence a foreign based agent purchased hemp and shipped it to his principal in London having purchased it at a price in excess of his authority. The Lord Chancellor in that case held that the principal had been entitled to accept delivery only as agent for his agent by reason of the breach of mandate concerning price but in fact had chosen to accept the goods and deal with them as principal and therefore was bound by the arrangements between the principal and agent. Although the word "ratification" does not appear in the judgment, the underlying principle is clear enough from the judgment when read as a whole. In this context, as long as the principal, here the defendant, knows what the agent, here the signor, has done, the principal is bound - see Ing Re (UK) Ltd v R & V Versicherung AG [2006] 2 All ER (Comm) 870 per Toulson J (as he then was) at paragraphs 153 to 155. It is not asserted in the evidence that the defendant or anyone required to know was not aware of all the material facts. The only asserted lack of knowledge is that of Mr Sutton. However his knowledge or lack of it is immaterial for these present purposes since he was not in office at the time the LOIs were presented and delivery obtained by the defendant on the basis of the LOIs.

Given the difference between the circumstances surrounding the signing of the V8 LOI and those surrounding the signatories of the NOC and OCM LOIs it is necessary to distinguish between them when considering the authority issues that arise.

The defendant submits it has at least a realistically arguable case that the V8 LOI was signed by someone acting without actual authority. As I have said already, the document is signed but the signatory is not identified by name, nor is the signature sufficiently legible for the name of the signatory to be identified from it. The defendant has not identified who it alleges to be the signatory in its evidence or explained why it has not done so. The V8 LOI has been stamped with the defendant's stamp, as I said earlier. As I have also said already, it is for a party applying for permission to amend a pleading to show that it has a realistically arguable case as to the point it seeks to raise by way of amendment. Although it is necessary to distinguish between the NOC and OCM LOIs on the one hand and the V8 LOI on the other, I am satisfied that the defendant has failed to show it has a realistically arguable case that any of the LOIs was signed (or tendered to the claimants) by someone without actual authority to do so.

The defendant maintains that it has shown at least a realistically arguable case that the only persons with actual authority to sign the LOI were the defendant's directors at the time. In so doing, it relies on the terms of the defendant’s Memorandum of Association. I reject that submission because (i) it is based on a misunderstanding as to effect of the defendant's Memorandum, (ii) it ignores the defendant’s Articles of Association and (iii) is inherently implausible in any event. It is inherently implausible because at the time when the LOIs were executed the defendant was a substantial trading company as is apparent not least from the transactions the subject of these claims. It is inherently implausible that the internal arrangements within such a company would require all contracts of whatever nature to be signed by one of its directors. There is no evidence that such were the arrangements at the time the LOIs were signed and tendered on behalf of the defendant. The directors of the defendant at the time (and at all material times) were Messrs. Sudhir, Manan and Prerit Goel (collectively "the Goels"). They continue to be the directors of the defendant notwithstanding Mr Sutton’s appointment as Global Restructuring Officer. Mr Sutton's evidence has consistently been that the Goels continue in office to assist him in restructuring the defendant. There is no evidence that this is no longer so or that Mr Sutton is not in contact with them or that they were approached to give evidence but had refused to do so. In those circumstances, the absence of any evidence from any of the Goels (or indeed anyone who was employed by the defendant in a senior managerial role at the relevant time) to the effect that no one other than one of the directors had authority to sign the LOIs (or authorise delivery of them to the claimants) is a startling omission. If there was a structure within the company under which authority was conferred on specific employees for specific purposes, they or one of them were the persons or person to give that explanation in evidence. That has not been done either.

In the absence of such evidence, the assertion of an absence of actual authority cannot pass the summary judgment test unless it is at least realistically arguable the effect of the Memorandum or Articles of Association of the defendant is such that only the directors have authority to sign contracts on behalf of the company and, critically, that such powers could not be conferred on or delegated to others. In my judgment, that is not even realistically arguably the effect of the Memorandum or Articles of Association. My reasons for reaching that conclusion are as follows.

Insofar as is material, the Memorandum of Association identify the shareholders in the defendant at Article 7 The Memorandum then continues:

Turning to the Articles of Association, Article 13 provides as follows:

The Memorandum of Association does not either expressly or impliedly state that only one of the directors can exercise the powers referred to in Article 10(c) to the exclusion of any other person. In my judgment, the purpose of Article 10 was to establish what could be done by one director acting alone and which directors were required to act together for particular purposes. The Memorandum cannot be read separately from the Articles and Article 13(a) expressly provides that any contract may be made by any person acting under the authority of the company. Reading Article 13(a) of the Articles of Association, together with the Memorandum of Association, renders the defendant's construction of Article 10(c) of the memorandum unarguable.

In any event, there is no reason why Article 13(a) of the Articles of Association should not take effect in accordance with its terms. Not merely is it obvious on the face of this material that it was open to the defendant to authorise any person to enter into contracts on behalf of the company but that is the evidence of the defendant's UAE expert Mr Al Zarouni. He accepts in paragraphs 27 and 41 of his opinion that it was open to the defendant to delegate or assign powers to employees to execute contracts on behalf of the defendant. This concession, coupled with the terms of the Memorandum and Articles of Association, mean the defendant's case concerning lack of actual authority cannot succeed in the absence of evidence stating that no authority was conferred on anyone for the purposes of executing the letters of indemnity in the case of V8 or on Mr Sharma in relation to the other letters of indemnity. As I have said, that evidence, if correct, could have been given by one or more of the directors or for that matter a senior manager employed by the defendant at the time when the letters of indemnity were executed. There is no such evidence and no explanation as to why such evidence has not been provided.

In relation to V8, the defendant cannot succeed unless either it identifies the signatory of the V8 letter of indemnity and evidence is given by at least one of the Goels or a senior manager with the requisite knowledge that the signatory so identified did not have actual authority to sign the document or, if the signatory could not be identified, that no one other than the directors were authorised to sign letters of indemnity. There is no such evidence.

The only evidence in support of the applications comes from Mr Sutton. He was not in post when the letters of indemnity were issued. His evidence, at paragraphs 6 to 9, is in these terms:

Mr Sutton's evidence is unsatisfactory. It does not refer to the Articles of Association at all as I have said, notwithstanding the terms in which Article 13 is expressed. He does not suggest that the terms of the Articles were not known to him and it is inherently implausible that someone in the position of Mr Sutton would be aware of the memorandum of Association but not its Articles of Association. He does not explain how it is that he could only have become aware that Mr Sharma was the signatory of the OCM and NOC LOIs as he alleges in paragraph 8, when Mr Sharma's name appears in the clearest terms in typescript on these documents and those documents had formed the basis of the OCM and NOC claims from the outset.

More particularly, in paragraph 9 he accords to Article 10 the meaning that only one of the Goels could sign a contract on behalf of the company where that is not the effect of the Memorandum. Aside from the fact that Mr Sutton's opinion as to the meaning of the document is irrelevant, what the evidence shows is that an assertion that the signatory does not have actual authority is a legal theory based on the documents Mr Sutton refers to, namely the Memorandum of Association alone. For the reasons I have explained, that is a legal theory that is mistaken and in my judgment unarguable. Further it was this point in Mr Sutton’s evidence that an explanation of why no evidence could be offered from the Goels or a senior manager with the requisite knowledge concerning the authority of the signatories of the LOIs. No such explanation has been provided either there or anywhere else. The evidence does not even state that the V8 LOI has not been signed by one of the Goels.

In relation specifically to the V8 LOI, the defendants collectively adduced evidence from a UAE lawyer, Mr Heloo, who is a partner in a Dubai based law firm. Mr Al Zarouni was instructed on behalf of the defendant to respond to Mr Heloo's opinion - see paragraph 4 of Mr Al Zarouni's opinion. As I have said, the signatory has not been identified but in addition to the signature there appears also the stamp of the defendant. The impact of the presence of the stamp was considered by Mr Heloo at paragraph 4.20 to 4.25 of his opinion, where he states:

The Dubai Court of Cassation in Case No. 386 of 2015 stated:

This point is not addressed by Mr Al Zarouni in his opinion. He mentions only NOC and OCM LOIs in paragraph 53 of his opinion. Even in relation to Mr Sharma his opinion assumes as true the absence of any delegation of authority to any employee, for, as he puts it in paragraph 48 of his report:

I remind myself that in deciding whether a realistic case has been made out I must take account not only of the evidence available at a hearing such as this but the evidence that can reasonably be expected to be available for trial. However, the points I have made concerning the absence of evidence are fundamental and the absence is absolute and unexplained. There is no evidence that suggests these omissions can or will be corrected at trial nor any evidence as to why the evidence could not be adduced now as opposed to some later stage.

In those circumstances, I conclude that the defendant has not shown that it has a realistically arguable case that (a) Mr Sharma did not have actual authority to sign the OCM and NOC LOIs or (b) that whoever signed the V8 LOI did not have actual authority to do so.

In the light of these conclusions strictly speaking it is not necessary to consider apparent authority other than to the extent that I have done so by reference to the absence of any challenge to the legal opinion advanced on behalf of the claimants. There is no need to consider ratification either. However, Mr Karia QC argued very strongly that there was simply no answer to the defendant's case that the defendant had ratified the LOIs even if, contrary to the claimants' case, the signatories of the LOIs had neither actual or apparent authority sign them. Mr Karia argued that in those circumstances ratification should be considered ahead of his case on apparent authority because the ratification issue was so strongly one to be resolved in the claimants' favour. In those circumstances I have considered whether or not I should deal with the ratification issue even though I have reached the conclusions I have concerning actual authority. In light of the supposed strength of these arguments I propose to address, albeit briefly, the ratification issues even though strictly speaking it is unnecessary to do so. It necessarily follows that I do so on the counterfactual basis that the defendant has demonstrated a realistically arguable case that the signatories lacked both actual and ostensible or apparent authority to sign the LOIs. As I have said earlier, it is common ground that English law applies to the ratification issues.

The claimants' primary case on ratification is that the defendant ratified by seeking and obtaining delivery on the basis of the LOIs. I accept Mr Karia's submission on this issue. The only basis on which it might be suggested that the defendant had a realistically arguable answer to this would be if there was evidence that the defendant sought and obtained delivery without full knowledge of all the material facts at the time when delivery was sought and obtained either directly to the defendant or to its order to a third party. However, that is not alleged. The only alleged lack of knowledge is by Mr Sutton and the only facts that he alleges he was unaware of was that (a) the OCM and NOC LOIs had been signed by Mr Sharma and (b) Mr Sharma did not allegedly have authority sign the LOIs. However, that is entirely immaterial to the issue I am now considering since Mr Sutton had not been appointed as the defendant's global restructuring officer at the time when the LOIs were executed and delivery of the goods obtained.

This issue is not addressed at all in Mr Shirazi's skeleton argument as far as I can see. As I recall it he did not address it either in his initial oral arguments. In his reply submissions Mr Shirazi suggested that the principal authority relied on by Mr Karia, Cornwal v Wilson (ibid.) was distinguishable on its facts. In my judgment, that is not to the point. It is the principle that is relevant and, as Mr Karia submits, the defendant cannot rely upon the LOIs for the purpose of obtaining delivery or delivery to its order but then be permitted to disavow the LOI (and the defendants obligations thereunder) on the basis that it was signed by someone without authority to do so. Such an outcome would be at best commercially absurd. Further, as Steyn LJ observed in First Energy UK Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd's Rep 194 at 196:

In light of these conclusions it is not necessary that I consider whether Mr Sutton ratified the letters of indemnity in the various ways identified by the claimants. However, in summary, I reject as unarguable the suggestion that Mr Sutton could not ratify the LOI because he was not in post at the time when the LOIs were signed. Mr Sutton is not the principal. The principal is the defendant and Mr Sutton is its agent. The defendant had capacity to enter into the LOIs at the time they were signed and tendered to the claimants. In those circumstances, that Mr Sutton was not in post at that time is entirely irrelevant if otherwise he ratified the LOIs. Equally, Mr Sutton's lack of knowledge of Mr Sharma's alleged lack of authority at the time he allegedly ratified the LOIs is immaterial as well - see Ing Re UK Ltd v R and V Versichung AG (ibid.) per Toulson J at paragraphs 153 and 155, relying in the latter to the dictum of Steyn LJ cited earlier; Brown v Innovatorone Plc [2012] EWHC 1312 (Comm) per Hamblen J (as he then was) at paragraph 858 and Bowstead on Agency, (ibid.) at paragraph 2-068. That said, I consider it realistically arguable that referring to a letter of indemnity in a litigation context without qualification, without also relying on the letters of indemnity to found a claim, is not ratification. However, it is not necessary that I comment further on this point in light of the conclusions I have so far reached. In summary, the defendant has failed to show a realistically arguable defence based on lack of authority or a realistically arguable basis for contending that the defendant did not ratify the LOI’s by relying on them to obtain delivery of the cargoes from the claimants and on that basis I refuse permission to amend so to allege. It would be entirely wrong to permit the defendant to withdraw his admissions irrelevant to these issues in those circumstances.

Turning now to the application to amend the defences so as to rely on Article 1002 of the UAE Federal Civil Code, the essence of this point is that if payment was to be made to the claimants of any part of the sums they claim in these proceedings that would be a breach of Article 1002 and expose Mr Sutton to criminal liability under Article 404 of UAE Federal Penal Code for misuse of funds held on trust. This application is not supported by expert evidence and I agree with Mr Caplin that that is of itself fatal to the application since it was for the defendant to show that it had a realistic defence based on this proposition, particularly having regard to the fact that a similar argument failed comprehensively for the reasons set out in my 22 December 2020 judgment, from which there has been no appeal. Expert evidence was required in order to show why none of the reasons identified in that judgment apply to the reliance placed on Article 1002. The onus rests on the defendant to address this since it is it as the party applying for permission to amend to show that it has a realistically arguable case on the issue I am now considering. One issue that would have to be addressed is why, on the one hand, the claimant can apparently continue to trade and pay its current creditors whilst allegedly being insolvent whilst at the same time being prevented from paying the claimants on pain of prosecution and how and why in those circumstances paying current creditors is not as much of a breach of the provisions on which reliance is apparently placed as paying the claimants. No attempt has been made to address these issues. Applying the principles set out above, it would be wrong to permit the defendant to amend its defences by pleading reliance on Article 1002 in those circumstances.

As I explained earlier, Mr Shirazi accepts that if the applications to amend failed then in principle all the claimants were entitled to judgment. I agree.

Two issues remain. Firstly whether NOC is entitled to recover the damages it claims at the hearing and whether OCM and V8 claims for a final injunction should be refused on the financial impossibility ground that failed when the application for interim orders was determined.

NOC made clear by its applications and evidence in support that it was seeking payment of sums US$6,062,431.80. NOC's evidence in support of the application is set out comprehensively in the fifth statement of Mr Strub. This evidence has not been challenged evidentially. Mr Shirazi addresses the issue at paragraph 69 and following of his skeleton submissions. He submits that there " ... is a real prospect that a court might conclude ..." that the settlement that forms the basis of the money claims was not a reasonable settlement. It is clear that the onus of proving unreasonableness rests on the defendant - see OBS (Nominees) v Lend Lease Construction (Europe) Ltd [2017] EWHC 25 (TCC) per Stuart-Smith J (as he then was) at paragraph 1875. The judgment in that case was given following a trial and this of course is an application for summary judgment. That being so, it is for the defendant to show a realistically arguable basis for challenging NOC's entitlement to the sums claimed. In my judgment, the defendant has not come close to satisfying that requirement in the circumstances, particularly having regard to the two points Stuart-Smith J made at paragraph 187(i) and (ii) of his judgment in OBS. In principle, I am satisfied NOC is entitled to recover the sums claimed in respect of its settlement. In relation to any claim in respect of costs that have yet to be assessed, I consider provisionally that there should be judgment for the sum found due following an assessment but will hear counsel further on that point since it has not been the subject of argument at the hearing.

The defendant relies on the same financial impossibility defence that it relied on when resisting the application for interim mandatory orders but with a further explanation contained in Mr Sutton's seventh witness statement. The general principles that apply are those identified in my judgments leading to the interim mandatory orders.

Mr Shirazi submits that the test that arises on this issue is different from that which applied to the interim applications and that for present purposes the defendant has only to show a realistically arguable case that it would be financially impossible for the defendant to pay the sums sought for it to be entitled to a trial on that issue. All relevant claimants maintain that this is no more than an impermissible attempt to rerun the impossibility defence that failed on the interim application.

I accept Mr Shirazi's submission that for present purposes the defendant has only to show a realistically arguable case on the issue. However, applying the principles set out earlier, that does not mean that I should accept at face value and without analysis what Mr Sutton says on this issue either in his seventh or earlier witness statements. Whilst that is so in relation to all issues that arise on the summary judgment application, it is particularly the case in relation to an issue such as financial impossibility. I reiterate the principles that apply as summarised in paragraph 24, (a) to (c) and (e) to (f) of my 22 December 2020 judgment and in particular the principle summarised at (e)(iii) applies as much on an application for summary judgment as it did on an the applications for interim orders.

In my 22 December 2020 judgment, I set out at paragraphs 26 to 48 why the evidence filed down to the date of that judgment did not support the conclusion that the defendant had made out to the level required at the financial impossibility defence. The standout point is that the defendant continues to trade with the support of the limited group of "Lenders" as defined in Mr Sutton's letter of appointment and the restructuring which he is carrying out is being carried out for the benefit of those limited group of Lenders. Mr Sutton has never been able to explain how it can be appropriate for an ostensibly insolvent company to continue to trade while insolvent paying some creditors but not others as Mr Sutton apparently chooses, perhaps with the support, encouragement or sanction of the "Lenders" concerned.

Mr Sutton's most recent evidence on the financial position of the defendant is contained in his seventh statement. It is apparent from that, for example, that at least some of the defendant's assets are being sold to meet some creditors' claims - see paragraph 10.1. It is clear from paragraph 11, as it has been in the earlier evidence, that the defendant continues to incur and meet its current operating expenses. At paragraph 23, Mr Sutton implies that the defendant continues to meet the operating expenses of its oil storage terminal at the rate of about US$500,000 to US$600,000 per month while the maintaining that the defendant had no funds available to comply with the court orders made in these proceedings even on an instalment basis. The documents attached to Mr Sutton's seventh statement do not disclose a realistically arguable basis for asserting financial impossibility because they are not a comprehensive statement of the defendant's assets, are not profit and loss accounts and appear to be at best a partial balance sheet statement based on cash holdings alone and outgoings for particular and limited snapshot periods. In these circumstances, I am not able to accept at face value the assertions made. Further, to the extent necessary, I do not accept that Mr Sutton has met the point concerning third party financing for the reasons set out in the fifth statement of Mr Houghton at paragraph 13(d) to (g).

Given the conclusions I have reached on the summary judgment application, the V8 strike-out application does not arise. Had it done so, I would have made the order sought for the same reasons that I made a similar order in Aramco Trading Fujairah FZE v Gulf Petrochem FZC [2021] EWHC 2650 (Comm).

In the result, he applications for permission to amend the defences fail and the applications for summary judgment succeed.
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