Commercial Disputes Weekly – Issue 1371 November 2022

COA – sanctions – force majeure
A vessel owner invoked the force majeure clause in a contract of affreightment (‘COA’) when the charterer’s parent company became subject to US sanctions. The charterer offered to pay the owner in Euros (rather than dollars as provided in the contract) and cover the cost of conversion to dollars. Force majeure was defined as an event that could not be overcome by reasonable endeavours. The Court of Appeal overturned the lower court decision and held that this clause required the owner to accept payment in euros as reasonable endeavours to overcome the state of affairs. The performance did not have to be in strict accordance with the terms of the contract if it avoided the problem without adverse consequences to the owner.
MUR Shipping BV v RTI Ltd [2022] EWCA Civ 1406, 27 October 2022

Proprietary Estoppel
A son had worked on the family farm for many years with low wages following a promise that he would receive a substantial proportion of the farm on his parents’ death. After a falling out, the parents changed their wills to remove his inheritance. He brought a claim seeking a share of the farm. The lower courts held that his parents were estopped from denying him a share of the farm because of his reliance on their promises. The Supreme Court held that the test of proportionality was the correct way to assess the appropriate remedy, namely that the remedy, should not, without good reason, be out of all proportion to the detriment suffered by the promisee. Taking account of the fact that the son would receive compensation earlier than he had expected to receive his inheritance, the parents could choose between putting the farm into trust for the children (the son had two siblings) subject to a life interest in the parents’ favour or making an immediate payment of £1.3 million (subject to certain adjustments).
Guest and another v Guest [2022] UKSC 27, 19 October 2022

Covid-19 – Business Interruption Insurance
The Commercial Court has significantly reduced the claim made by a pub owner against its business interruption policy following the Covid-19 pandemic. The insurance policy had been ‘triggered’ by the closure of the claimant’s pubs or venues, the insured locations, under compulsion or instruction by the government, but Stonegate had to give credit in its claim for furlough money received from the government. The losses from the first lockdown should be aggregated as a Single Business Interruption Loss and capped at £2.5 million and Stonegate had not established causation from the first lockdown for losses that would continue until April 2023. The claim for £1.1 billion was reduced to just a few million.
Stonegate Pub Company Ltd v MS Amlin Corporate Member Ltd and others [2022] EWHC 2548 (Comm), 17 October 2022

Landlord and Tenant
A landlord is not entitled to charge the tenant an administration fee for preparing and serving notices for the collection of ground rent. The lease allowed the Landlord’s expenses from the collection of rents to be recovered from the tenants. The formal notice was required by section 166 of the Commonhold and Leasehold Reform Act 2002 for the rent to become due but that did not make it the collection of rent itself and was therefore not recoverable as a Landlord’s expense.
Avon Ground Rents Ltd v Stampfer [2022] EWCA Civ 1375, 24 October 2022

Jurisdiction
The Commercial Court has rejected an application to amend a claim because it amounted to an abuse of process. Verlox was a shell company controlled entirely by Mr Sychev and issued claims against the defendants arising out of an alleged share agreement. Verlox obtained its right to sue by assignment from Mr Sychev in 2016. Permission to serve the claim form out of the jurisdiction was given on the basis that Verlox could establish English jurisdiction and Mr Sychev was a necessary and proper party. On 17 July 2022 Verlox reassigned the claim back to Mr Sychev and then sought to amend the claim form to have Mr Sychev bringing the claim, not Verlox. It was common ground that Mr Sychev could not (and would not) have had jurisdiction in this matter without the intervention of Verlox. As a result, the court rejected the application and said that a claimant cannot manoeuvre itself into jurisdiction by using a holding company as a vehicle and then abandon that vehicle by assigning the claim away again.
Verlox International Ltd and Sychev v Antoshin and others [2022] EWHC 2667 (Comm), 25 October 2022

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