Brown-Forman Beverages Europe Ltd v Bacardi UK Ltd [2021] EWHC 1259 (Comm) (19 May 2021)

Brown-Forman Beverages Europe Ltd v Bacardi UK Ltd [2021] EWHC 1259 (Comm) (19 May 2021)

The court held that the third sentence of clause 6.2 creates a primary indemnity obligation, not a guarantee, but does not entitle BFBE to recover sums from BUKL where BML has validly asserted an equitable set off; the indemnity is limited to consequential losses, not unpaid sums subject to set off. Paragraph 5 of...

Source-derived case information.

Citation
[2021] EWHC 1259 (Comm)
Parties
Claimant: Brown-Forman Beverages Europe, Ltd; Defendant: Bacardi UK Limited
Jurisdiction
England and Wales
Judgment Date
19 May 2021
Procedural Posture
Commercial Contract Claim (suretyship) / Trial of Preliminary Issues
Outcome
Claim dismissed on preliminary issues; BUKL not liable to BFBE for sums claimed while BML's equitable set off defence is validly asserted.
Legal Topics
Suretyship, Guarantee and Indemnity, Equitable Set Off, Contract Variation, Interpretation of Contracts
Contract Law Commercial Law Suretyship Guarantee and Indemnity Equitable Set Off Contract Variation Interpretation of Contracts

Source-derived case record

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 16 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Parties

Brown-Forman Beverages Europe, Ltd

Claimant

Bacardi UK Limited

Defendant

Procedural Posture

Commercial Contract Claim (suretyship) / Trial of Preliminary Issues

Legal Issues

  1. 1 Whether Bacardi UK Limited (BUKL) is liable under the surety provisions for sums claimed by Brown-Forman Beverages Europe (BFBE) against Bacardi-Martini Limited (BML) when BML asserts equitable set off;
  2. 2 Proper construction of clause 6.2 (third sentence) and paragraph 5 of Schedule 6.2 of the Agreement;
  3. 3 Whether the rule in Holme v Brunskill applies to the indemnity and surety obligations in this case.

Ratio Decidendi

The court held that the third sentence of clause 6.2 creates a primary indemnity obligation, not a guarantee, but does not entitle BFBE to recover sums from BUKL where BML has validly asserted an equitable set off; the indemnity is limited to consequential losses, not unpaid sums subject to set off. Paragraph 5 of Schedule 6.2 is also a primary obligation but is not triggered by BML's assertion of equitable set off, as such assertion does not render the obligation unenforceable or irrecoverable within the meaning of the clause. The rule in Holme v Brunskill does not apply to the indemnity obligations in this case. Accordingly, BUKL is not liable to BFBE for the sums claimed while BML's...

Court Disposition

Claim dismissed on preliminary issues; BUKL not liable to BFBE for sums claimed while BML's equitable set off defence is validly asserted.

Orders

  • No order for payment by BUKL to BFBE under clause 6.2 or paragraph 5 of Schedule 6.2 while BML's equitable set off defence remains unresolved.