CA-2024-002194 - [2025] EWCA Civ 1210

By claim form issued on 5 October 2023 Orion sought permission to appeal to the Commercial Court pursuant to s. 69 of the Arbitration Act 1996 on the following question of law:

“If a Memorandum of Agreement on the SALEFORM 2012 form is lawfully cancelled by a buyer under clause 14 because the vessel is not delivered by the cancelling date as a result of the seller’s “proven negligence”, is that buyer entitled to recover loss of bargain damages absent an accepted repudiatory breach of contract?”

On 20 March 2024 Bright J granted permission on the basis that the question was one of general public importance and the decision of the Tribunal was open to serious doubt.

The appeal was heard by the Judge in June 2024. She handed down the Judgment allowing the appeal on 9 August 2024.

I will have to look at the Judgment in more detail in due course, but for present purposes can summarise it quite briefly. Having set out the relevant contractual provisions and the background facts, the Judge first addressed an argument advanced by Great Asia to the effect that the time of delivery was of the essence and that their cancellation under Clause 14 was in substance a termination for breach of condition. This was a question which the Tribunal had not considered it necessary to address and on which they expressed no view. She rejected the argument: neither Clause 5 nor any other provision of the MoA imposed any positive obligation on Sellers to deliver, or give Notice of Readiness, by the Cancelling Date (at [15]). The question whether any such obligation was a condition or innominate term therefore did not arise (at [20]). Even if she had concluded that there was a positive obligation on Sellers to tender Notice of Readiness by the Cancelling Date, she would not have construed it as a condition (at [33]). In the current appeal Great Asia challenge her decision that the MoA did not impose any obligation; but do not dispute that any such obligation would not be a condition.

The Judge continued that Buyers’ ability to recover loss of bargain damages therefore turned solely on the construction of Clause 14. Her initial reaction was that loss of bargain damages were recoverable under Clause 14 for much the same reasons as given by the Tribunal. But on closer analysis, she was not persuaded that that was right (at [43]). The starting point had to be to identify the particular breach or trigger in respect of which damages are recoverable (at [52]); that was the failure to give Notice of Readiness by the Cancelling Date, and it was only losses caused by that specific failure which were recoverable under Clause 14. That was not equivalent to a case of non-delivery, and Buyers’ unilateral decision to terminate pursuant to a cancellation right could not transform the case into one of non-delivery (at [53]).

Having considered various authorities, she concluded that there was no binding authority contrary to her preferred construction of the clause (at [55]).

At [63] she said that the formulation of the question of law posed for the determination of the Court was inapt insofar as it addressed cancellation for failure to deliver by the Cancelling Date. It should be more accurately re-worded as follows:

“Where a Memorandum of Agreement on the SALEFORM 2012 form is lawfully cancelled by a buyer under clause 14 in circumstances where the seller has failed to give notice of readiness or failed to be ready to validly complete a legal transfer by the Cancelling Date and such failure is due to the seller’s “proven negligence”, is that buyer entitled to recover loss of bargain damages absent an accepted repudiatory breach of contract?”

She would answer that question No.

Effect was given to the Judgment by her Order dated 9 September 2024 which allowed the appeal and set aside the relevant parts of the Award.

She also granted Great Asia permission to appeal. Great Asia had sought permission on three grounds, the third of which was that she had been wrong to alter the question of law and/or to answer a question which the Tribunal had not been asked to determine (cf Sharp Corp Ltd v Viterra BV [2024] UKSC 14, [2024] 4 All ER 273 (“Sharp”) at [54]-[70] per Lord Hamblen JSC). The Judge granted permission on the other two grounds but refused permission on this third ground and we have heard no argument on it.