Anron Bunkering DMCC v Glencore Energy UK Ltd

The Defendant (‘Glencore’) seeks summary judgment on the claim brought against it by the Claimant (‘Anron’). In the alternative, Glencore seeks security for its costs.

For the purposes of this summary judgment application, I assume that the facts pleaded in the Particulars of Claim are true.

So far as material, the relevant facts are as follows.

The parties entered into a written contract dated 15 July 2015 (the ‘July Contract’) under which Glencore would sell Anron 60,000 metric tonnes (m.t.) of unleaded gasoline, to be delivered to Hodeida (Yemen). By a further written contract dated 27 November 2015 (the ‘November Contract’), Glencore agreed to sell two instalments of 30-35,000 m.t. of unleaded gasoline to Anron, again for delivery to Hodeida.

In performance of the July Contract, unleaded gasoline was shipped by Glencore and discharge was completed on or around 29 November 2015. The place of delivery of the November Contract was varied by the parties to Mukalla (Yemen). About 12,500 m.t. of unleaded gasoline was discharged there by 27 April 2016 (the ‘first instalment’), at which point the vessel discontinued discharging and sailed instead to Fujairah, where the remaining cargo was discharged and placed into storage before being sold to a third party pursuant to a contract dated 4 May 2016. The remaining quantity under the November Contract (the ‘second instalment’) was not delivered because in about late December 2015 Anron elected to accept Glencore’s repudiation of the remainder of the November Contract.

Advance payments totalling around US$ 48.8 million were made by or on behalf of Anron between July and November 2015. Further payments of around US$ 3.3 million were made by Anron in April 2016.

An email was sent on behalf of Glencore on 10 December 2015, providing information as to the accounting position under the July and November Contracts. On 10 June 2016, a further email was sent by Glencore, which attached two statements of account. The first statement of account showed overpayments of US$ 8.7 million on the July Contract, which was allocated to the November Contract; the second statement of account showed this allocation, together with the advance payments made under the November Contract, giving a total amount received on the November Contract of just under $12 million. After deducting costs in respect of performance of the first instalment of the November Contract, this statement implicitly accepted a balance of US$ 1,957,479.40 standing to Anron’s credit, but then showed the entire sum being expunged by entries purporting to produce a debt owed by Anron to Glencore of just under US$ 75,000. Anron says these entries lacked any proper basis, and that the statement should have accepted a balance owed to it of US$ 1,958,219.40.

These proceedings were begun by issue of a claim form on 6 June 2022.

In its claim form, Anron pleads:

“The Claimant claims the sum of USD 1,958,219.40 due under two contracts for the sale and purchase of gasoline dated 15 July 2015 and 27 November 2015 respectively, as more particularly described in the attached particulars of claim.”

It may be noted that the sums are described as sums “due under” the two contracts, which might give the impression that these are claims for contractual debts. However, the Particulars of Claim re-cast the claims.

First, the Particulars of Claim allege that there were implied terms in the July Contract and the November Contract that:

“(1)

in respect of any advance payments made by the Claimant to the Defendant, the Defendant would render an account in respect of those advance payments which correctly stated the amounts of any debits falling to be deducted; and/or

(2)

that it would not incorrectly deduct amounts from advance payments for which there was no proper basis when rendering such an account.”

It is pleaded that the statements of account rendered on 10 June 2016 breached these implied terms, so that the sum of US$ 1,958,219.40 is recoverable as damages for breach of contract. Alternatively it is pleaded that this sum is recoverable “as money had and received by the Defendant to the Claimant’s use”.

In the further alternative, Anron brings claims for US$64,972.60 and US$ 197,609.43, each on the basis that entries expunging the debt owed to Anron under the November Contract were miscalculated with, again, a claim for money had and received in the alternative.

Glencore served a Request for Further Information under CPR 18, which was answered by Anron on 11 July 2022. Anron was asked to explain the basis on which the alleged enrichment was said to be unjust. Anron replied:

“The facts upon which the Claimant relies as entitling it to restitution for unjust enrichment have been adequately stated in the Particulars of Claim. Without prejudice thereto, the Claimant responds as follows. As stated in the Particulars of Claim, the Advance Payments were made in respect of the July Contract and the first instalment of the November Contract and they exceed what was, following the performance of the July Contract and the first instalment of the November contract, due and owing to the Defendant. The excess was in the amount of USD 1,957,479.40. In the premises, the Defendant has been unjustly enriched by reason of such overpayment.”

Glencore acknowledged service on 16 June 2022 and then, without serving a defence, on 20 July 2022 issued the present application. The application was supported by witness evidence from Ms Anna Fomina of Glencore’s solicitors, Clyde & Co.

Glencore indicated in its evidence in support the basis on which it was pursuing the summary judgment application. In summary, Glencore argues:

Anron served no evidence in response.

On 6 February 2023, two days before the present hearing, the court was emailed on behalf of Anron by someone signing themselves Hamza Abbass, requesting that the present hearing be adjourned (the ‘adjournment application’). The email was in the following terms:

“Dear Sirs,

We are Anron Bunkering DMCC, The claimant of the above cited claim filed on 6th of June 2022 agains Glencore Energy UK Ltd. We have wrote to Clyde & co on 3rd of February 2023 requesting for the hearing session to be pospone due to the following fact:-

1- Our Solicitors have come off record on 27th of January 2023

2- We have been in discussion with solicitors since then and yet have not been able to appoint a solicitor due to the fact that we are based out side uK.

3- On 3rd of February we have wrote to Clyde & Co requesting for a possible postpone to hearing session to be held on 8th of February by 30 days and this will enable us find a solicitor who can act on our behalf in a effective timely manner.

4- We have been trying to appoint a new solicitor bust all of the solicitors and barrister we have approached have declined due to time constraint as they need to study the whole case and issue witness statement having gone through all case documents which is impossible to do it in a very short time, in addition to this, since payment are made from yemen and yemen is under war conditions payments are delayed and hence it take some time to reach beneficiary

In view of the above explaination given above we are pleading for an extention of time so that we are file our defence and present all fact and circumstances surrounding the case.”

In accordance with my direction, Mr Benjamin Coffer, Counsel for Glencore, filed brief submissions on the adjournment application shortly before 10am on 7 February 2023. These submissions helpfully set out the relevant principles to be considered on an adjournment application, the procedural background, and Glencore’s case as to why an adjournment should not be permitted. Glencore also submitted that if the Court were minded to adjourn the hearing, it should be on terms that unless the summarily-assessed costs of the present hearing were paid within 21 days, the claim would be struck out.

In accordance with my further direction, Anron submitted a reply shortly before 4pm on 7 February 2023. According to Anron’s email sent at this time:

I indicated to the parties on the evening of 7 February 2023 that I was minded to reject the adjournment application, and that I would give my reasons in writing in due course.

Shortly thereafter, Anron provided a bundle of materials to support its reply. This bundle contained Anron’s original retainer letter with its former solicitor; correspondence with its former solicitor; and correspondence with prospective new legal representatives. That included, in particular:

Having considered the additional material, I was confirmed in my judgment that the adjournment sought by Anron would not be consistent with the overriding objective, for the following reasons.

First, adjourning the hearing would have caused significant further delay. While Anron sought an adjournment of just 30 days, published lead times for the Commercial Court show that applications with a time estimate of one day are currently being listed from 9 October 2023 onwards, suggesting that the delay was more likely to be of the order of seven months. An adjournment would also be a waste of the court’s resources (since the application was made too late to enable allocated judicial resources – i.e., me – to be re-deployed efficiently), and would be a waste of money (since Glencore would incur additional costs for an adjourned hearing). There is a real risk that Glencore would never recover the additional costs, since Anron appears to be an insolvent company based in the UAE, although its emails refer to residence in Yemen.

Second, I was not satisfied with Anron’s explanation for why it is without legal representation.

Overall, I was not satisfied that it is unfair to Anron for the summary judgment application to proceed. The burden lies on Anron to justify the adjournment, and it did not satisfy me that it is not itself responsible for its lack of legal representation. On the contrary, on the materials I have seen it appears to me to be more likely than not that Anron – having been advised that its claim was bound to fail – has been dragging its heels, in the hope that it can achieve a negotiated resolution of these proceedings without the need to incur legal fees.

For these reasons, I rejected the adjournment application.

The principles applicable to summary judgment applications are well known. In Easyair Limited v Opal Telecom Ltd [2009] EWHC 339 (Ch), at [15], Lewison J provided a much-cited summary of them. Of particular relevance to the present application, at [15(vii)] he held:

“On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.”

The present application turns on points of law where, in my judgment, it is appropriate for the court to ‘grasp the nettle’ and decide the issue on the basis of the pleaded facts. In particular, it forms no part of Anron’s pleaded case that there is some factual matrix to which the court should have regard in deciding the question whether a term is to be implied into the July Contract or November Contract.

Two other matters are worthy of note:

The circumstances in which a term is to be implied into a contract are well known, having been helpfully summarised by Lord Neuberger PSC in Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72, [2016] AC 742 at [15] and following.

At [18] Lord Neuberger cited Lord Simon of Glaisdale in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283:

“for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.”

At [19], Lord Neuberger cited Bingham MR in Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472, 481, where Bingham MR held:

“The question of whether a term should be implied, and if so what, almost inevitably arises after a crisis has been reached in the performance of the contract. So the court comes to the task of implication with the benefit of hindsight, and it is tempting for the court then to fashion a term which will reflect the merits of the situation as they then appear. Tempting, but wrong. [He then quoted the observations of Scrutton LJ in the Reigate case, and continued] it is not enough to show that had the parties foreseen the eventuality which in fact occurred they would have wished to make provision for it, unless it can also be shown either that there was only one contractual solution or that one of several possible solutions would without doubt have been preferred . . .”

At [21], Lord Neuberger held:

“In my judgment, the judicial observations so far considered represent a clear, consistent and principled approach. It could be dangerous to reformulate the principles, but I would add six comments on the summary given by Lord Simon in the BP Refinery case 180 CLR 266, 283 as extended by Bingham MR in the Philips case [1995] EMLR 472 and exemplified in The APJ Priti [1987] 2 Lloyd’s Rep 37. First, in Equitable Life Assurance Society v Hyman [2002] 1 AC 408, 459, Lord Steyn rightly observed that the implication of a term was ‘not critically dependent on proof of an actual intention of the parties’ when negotiating the contract. If one approaches the question by reference to what the parties would have agreed, one is not strictly concerned with the hypothetical answer of the actual parties, but with that of notional reasonable people in the position of the parties at the time at which they were contracting. Secondly, a term should not be implied into a detailed commercial contract merely because it appears fair or merely because one considers that the parties would have agreed it if it had been suggested to them. Those are necessary but not sufficient grounds for including a term. However, and thirdly, it is questionable whether Lord Simon’s first requirement, reasonableness and equitableness, will usually, if ever, add anything: if a term satisfies the other requirements, it is hard to think that it would not be reasonable and equitable. Fourthly, as Lord Hoffmann I think suggested in Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988, para 27, although Lord Simon’s requirements are otherwise cumulative, I would accept that business necessity and obviousness, his second and third requirements, can be alternatives in the sense that only one of them needs to be satisfied, although I suspect that in practice it would be a rare case where only one of those two requirements would be satisfied. Fifthly, if one approaches the issue by reference to the officious bystander, it is ‘vital to formulate the question to be posed by [him] with the utmost care’, to quote from Lewison, The Interpretation of Contracts 5th ed (2011), p 300, para 6.09. Sixthly, necessity for business efficacy involves a value judgment. It is rightly common ground on this appeal that the test is not one of ‘absolute necessity’, not least because the necessity is judged by reference to business efficacy. It may well be that a more helpful way of putting Lord Simon’s second requirement is, as suggested by Lord Sumption JSC in argument, that a term can only be implied if, without the term, the contract would lack commercial or practical coherence.”

In my judgment, the terms for which Anron contends are not to be implied into the July Contract or the November Contract. I reach this conclusion for the following reasons:

For these reasons, I consider Anron’s claims based on breach of an implied term can be summarily dismissed, and I accordingly do not need to deal with Glencore’s alternative argument that, even if the terms were to be implied, they did not cause Anron loss.

Turning to the alternative claims, for monies had and received, I find that these too are bound to fail.

These are claims for unjust enrichment which are “founded on simple contract” within the meaning of section 5 of the Limitation Act 1980: Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners [2020] UKSC 47 at [7]. The limitation period is accordingly six years.

The claims are for the recovery of sums transferred on a basis that subsequently fails: compare BP Oil International Ltd v Vega Petroleum Ltd [2021] EWHC 1364 (Comm) at [199]-[203]. The causes of action accrued when the failure of basis occurred: see Goff & Jones on Unjust Enrichment (10^th edition) at ¶33-17; and A Restatement of the English Law of Unjust Enrichment (Burrows) at p145.

This leads to the question: when, on the pleaded case, did the failure of basis occur?

In this regard, Mr Coffer identified a possible argument, potentially assisting Anron, that a claim in unjust enrichment on the ground of failure of basis arising out of a contract which has failed, might require the contract in question to have been terminated, determined or discharged. In BP Oil International Ltd v Vega Petroleum Ltd [2021] EWHC 1364 (Comm), [2022] 1 Lloyd’s Rep 89, at [202], Mrs Justice Cockerill identified this as one of two hurdles to be established to make good such a claim, a point which she described at [205] as “not controversial”. In the present case, if such were a hurdle to be established in bringing this claim, and that hurdle was first overcome after 6 June 2016, then the claim for unjust enrichment would have been brought in time.

This is an argument which affects only the first instalment of the November Contract, since the July Contract was fully performed by 29 November 2015, and the second instalment of the November Contract was terminated: see paragraph 5 above.

Mr Coffer advanced three responses to this putative argument of Anron. First, he submitted that if termination of the November Contract in respect of the first instalment is indeed an essential element of the cause of action, then the claim is bound to fail because there is no pleading of such termination. Second, however, he submitted that subsequent to the decision in BP v Vega it has been decided that termination of the contract in question is not a necessary ingredient in a claim for unjust enrichment on the ground of failure of basis. Mr Coffer cites in this regard the decision of the Court of Appeal in Dargamo Holdings Ltd v Avonwick Holdings Ltd [2021] EWCA Civ 1149, especially at [67] and [77]-[80]. Third, and adopting the approach in Dargamo, he submitted that from the facts pleaded in Anron’s claim it can be seen that there was no further prospect of the first instalment being delivered by (at latest) 4 May 2016, and so by that time (adopting the extended meaning of failure of basis in Dargamo at [80]), “the state of affairs contemplated as the basis or reason for that payment [had] failed to materialise”. I note that Dargamo was approvingly mentioned in all of the speeches in Barton v Morris [2023] UKSC 3, with this extended meaning expressly approved by Lord Burrows (dissenting in the result), who observed “Identifying the basis is a matter for objective interpretation”.

It seems to me that the question whether, following Dargamo, it remains the law that in a case such as this the contract in question must be terminated before a claim can be brought in unjust enrichment, is a question I should grasp the nettle and decide. While I would have preferred to hear contested argument on the point, that was not possible in light of Anron’s non-attendance at the hearing.

In my judgment, it is not a requirement that the contract in question be terminated in a sale of goods case before a claim in unjust enrichment can be brought. The test is whether “the state of affairs contemplated as the basis or reason for that payment [had] failed to materialise”, and that test may, in appropriate circumstances, be met without termination of the contract. To be clear, there will be circumstances where the test is not met without termination: for example, where defective goods are delivered, the buyer cannot recover an advance payment, or an instalment, unless and until it has decided to reject the goods: Yeoman Credit v Apps [1962] 2 QB 508 (CA). Similarly, in the case of late delivery, if delivery remains a possibility under the contract, then it may not be possible to conclude that there is a failure of basis unless and until delivery ceases to be a possibility – which may, in reality, be only if and when the contract is brought to an end. But in other circumstances, it may be concluded that the basis has failed to materialise even without any party terminating the contract.

I consider the present case to be an example of the latter circumstance. On Anron’s pleaded case, any real possibility of delivery of the first instalment of the November Contract had gone by 4 May 2016, by which time the goods destined for Anron had been delivered to Fujairah, and sold to a third party. From such time, Glencore was no longer entitled to hold the advance payments, since the state of affairs contemplated as the basis for such payments – viz., deliveries under the July Contract and the November Contract – had failed to materialise. Accordingly, on the facts pleaded by Anron, I consider that the cause of action in unjust enrichment on the ground of failure of basis had arisen by, at latest, 4 May 2016.

If I am wrong about that, and it is necessary for the contract in question to have terminated (or, if it is not necessary, but the sale by Glencore to a third party was not sufficient to cause the basis to fail), then I would hold that Anron’s claim must fail in any event because there is no pleaded allegation that the November Contract, in respect of the first instalment, was ever terminated, nor any plea in the Particulars of Claim of some event after 4 May 2016 which might be said to be the failure of basis. As set out at paragraph 14 above, Anron in its Further Information was asked to identify the facts on which it relied as entitling it to restitution for unjust enrichment, and identified no facts going beyond the Particulars of Claim.

Mr Coffer then identified an alternative argument which might have been open to Anron. This was an argument that the statements of account, sent on 10 June 2016, were sufficient to constitute an acknowledgment of the debt owed, within the meaning of sections 29(5) and 30 of the Limitation Act 1980. In this regard, however, Mr Coffer drew my attention to McGee on Limitation Periods (9^th ed, para 18-035) which deals with the question whether a document which acknowledges a debt, but asserts a set-off which extinguishes (or, as in the present case, overtops) the debt, constitutes a statutory acknowledgment. McGee cites two (pre-Limitation Act 1939) authorities which held that such a document does not constitute an acknowledgment, notes the different doctrinal underpinning of the current Act, and continues:

“The second point is that in both cases the alleged set-off exceed the amount of the debt which the claimant claimed, so that, quite apart from the difficulty of finding an implied promise, there is great difficulty in construing the letters as admissions of any net liability. It is therefore submitted that at the present day an acknowledgment of a debt coupled with an admission of a smaller set-off or counterclaim is capable of being an acknowledgment of the net amount of the debt. However, both of the cases discussed in this paragraph are still good law on the ground of the absence of any net acknowledgment.”

I agree with that analysis. I do not consider that the statements of account, which list various debits and credits between the parties but, overall, show a net amount owed to Glencore, can be taken to be a statutory acknowledgment of any debt owed to Anron. There is no admission in them of a legal liability to pay the sum which Anron now seeks to recover: compare Surrendra Overseas Ltd v Government of Sri Lanka [1977] 1 WLR 565, 575E-G.

Accordingly, in my judgment it is clear that these claims were time-barred by at latest 4 May 2022, at least a month before the claim form was issued.

For these reasons, I conclude that the claim should be summarily dismissed. It has no prospect of success.

In the circumstances, I do not need to deal with Glencore’s alternative application for security for costs.