Astor Management AG v Atalaya Mining Plc & Ors [2018] EWCA Civ 2407 (01 November 2018)

Astor Management AG v Atalaya Mining Plc & Ors [2018] EWCA Civ 2407 (01 November 2018)

The obligation to pay Deferred Consideration under the Master Agreement was not triggered because the express contractual condition precedent—securing a Senior Debt Facility—was not satisfied. Intra-group loans do not qualify as a Senior Debt Facility, and the 'principle of futility' does not override the clear language of the contract. However, the restrictions in clause 6(g)(iv) on distributions and repayments, and the requirement to apply excess cash to Deferred Consideration, remain operative until the Deferred Consideration is paid, even if not yet triggered. Up-tick Payments are not included in the Deferred Consideration for these purposes unless and until their conditions are met.

Citation
[2018] EWCA Civ 2407
Parties
Appellant (claimant): Astor Management AG (formerly known as MRI Holdings AG); Appellant (claimant): Astor Resources AG (formerly known as MRI Resources AG); Respondent (defendant): Atalaya Mining Plc (formerly known as Emed Mining Public Limited); Respondent (defendant): Atalaya Riotinto Minera SL (formerly known as Emed Tartessus SL); Respondent (defendant): Emed Holdings (UK) Limited; Respondent (defendant): Emed Marketing Limited
Jurisdiction
England and Wales
Judgment Date
01 November 2018
Procedural Posture
Appeal (civil) / Court of Appeal Judgment on Appeal From High Court (commercial Court)
Outcome
Appeal dismissed; cross-appeal dismissed; declarations as to construction of clause 6(g)(iv) upheld.
Legal Topics
Interpretation of Contracts, Conditions Precedent, Deferred Consideration, Construction of Commercial Agreements, Triggering Events for Payment Obligations
Contract Law Commercial Law Interpretation of Contracts Conditions Precedent Deferred Consideration Construction of Commercial Agreements Triggering Events for Payment Obligations

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Parties

Astor Management AG (formerly known as MRI Holdings AG)

Appellant (claimant)

Astor Resources AG (formerly known as MRI Resources AG)

Appellant (claimant)

Atalaya Mining Plc (formerly known as Emed Mining Public Limited)

Respondent (defendant)

Atalaya Riotinto Minera SL (formerly known as Emed Tartessus SL)

Respondent (defendant)

Emed Holdings (UK) Limited

Respondent (defendant)

Emed Marketing Limited

Respondent (defendant)

Procedural Posture

Appeal (civil) / Court of Appeal Judgment on Appeal From High Court (commercial Court)

Legal Issues

  1. 1 Whether the obligation to pay Deferred Consideration under the Master Agreement was triggered absent a 'Senior Debt Facility'
  2. 2 Whether alternative financing (intra-group loans) could satisfy the contractual trigger for payment
  3. 3 Whether the 'principle of futility' applies to contractual conditions precedent

Ratio Decidendi

The obligation to pay Deferred Consideration under the Master Agreement was not triggered because the express contractual condition precedent—securing a Senior Debt Facility—was not satisfied. Intra-group loans do not qualify as a Senior Debt Facility, and the 'principle of futility' does not override the clear language of the contract. However, the restrictions in clause 6(g)(iv) on distributions and repayments, and the requirement to apply excess cash to Deferred Consideration, remain operative until the Deferred Consideration is paid, even if not yet triggered. Up-tick Payments are not included in the Deferred Consideration for these purposes unless and until their conditions are met.

Court Disposition

Appeal dismissed; cross-appeal dismissed; declarations as to construction of clause 6(g)(iv) upheld.

Orders

  • Declaration that EMED Tartessus must not make, declare or pay any dividend or distribution or repay group loans (except as specified) until the Consideration (including Deferred Consideration) is paid in full.
  • Declaration that EMED Tartessus must apply any excess cash to pay outstanding amounts of the Consideration (excluding Up-tick Payments) early.