State Street Bank and Trust Company v Sompo Japan Insurance Inc & Ors

State Street Bank and Trust Company v Sompo Japan Insurance Inc & Ors

The court found that there was a clear mistake in the definition of 'Financial Guarantee Floating Amount' in the Conditions, as it failed to include the Total Return Swap Termination Amount. Considering all relevant documents, including the Offering Circular and the commercial context, it was clear that the parties intended the Guarantor to be reimbursed for such amounts. The court held that the definition should be construed to include the Total Return Swap Termination Amount, entitling the Guarantor to reimbursement.

Parties
Claimant: State Street Bank and Trust Company; Defendant/part 20 Claimant: Sompo Japan Insurance Inc; Defendant/part 20 Defendant: Cheyne CLO Investments I Limited; Defendant/part 20 Defendant: KBC Investments Limited
Jurisdiction
England and Wales
Judgment Date
17 June 2010
Procedural Posture
Civil (commercial/trust) / Judgment After Part 8 Proceedings
Outcome
Declaration granted in favour of the Guarantor; court corrected the contractual definition as a matter of construction.
Legal Topics
Interpretation of Contracts, Rectification of Documents, Trustee Duties, Priority of Payments, Mistake in Legal Instruments
Commercial Law Trust Law Contract Law Interpretation of Contracts Rectification of Documents Trustee Duties Priority of Payments Mistake in Legal Instruments

Case Brief

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Parties

State Street Bank and Trust Company

Claimant

Sompo Japan Insurance Inc

Defendant/part 20 Claimant

Cheyne CLO Investments I Limited

Defendant/part 20 Defendant

KBC Investments Limited

Defendant/part 20 Defendant

Procedural Posture

Civil (commercial/trust) / Judgment After Part 8 Proceedings

Legal Issues

  1. 1 Whether there was a clear mistake in the definition of 'Financial Guarantee Floating Amount' in the Conditions and whether the court can correct it as a matter of construction
  2. 2 Whether the Guarantor is entitled to reimbursement for Total Return Swap Termination Amounts under the relevant contractual documents

Ratio Decidendi

The court found that there was a clear mistake in the definition of 'Financial Guarantee Floating Amount' in the Conditions, as it failed to include the Total Return Swap Termination Amount. Considering all relevant documents, including the Offering Circular and the commercial context, it was clear that the parties intended the Guarantor to be reimbursed for such amounts. The court held that the definition should be construed to include the Total Return Swap Termination Amount, entitling the Guarantor to reimbursement.

Court Disposition

Declaration granted in favour of the Guarantor; court corrected the contractual definition as a matter of construction.

Orders

  • Declaration that the definition of 'Financial Guarantee Floating Amount' in the Conditions should include the Total Return Swap Termination Amount owed by the Issuer to the Swap Counterparty.