Key Facts
- •Tethys Petroleum Limited (Claimant) sued Lord Lilley and Julian Hammond (Defendants), former directors, for US$3.4 million in damages.
- •The claim alleged negligence and breach of directorial duties related to a loan agreement involving a Kazakh subsidiary, Tethys Aral Gas LLP (TAG).
- •The Defendants relied on an indemnity provision in the Claimant's articles of association.
- •A separate claim regarding a Georgia investment was abandoned by the Claimant.
- •The Defendants argued the Claimant suffered no loss, as the loss was incurred by TAG, not the Claimant itself.
- •Mr. Hammond's employment status was also disputed.
Legal Principles
Summary judgment/strike-out test: No real prospect of success.
CPR Part 24, r. 24.2; Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch)
Construction of contractual documents, including articles of association.
Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900; Arnold v Britton [2015] AC 1619
Interpretation of indemnity clauses.
Lewison, The Interpretation of Contracts (7th ed., 2020)
Incorporation of articles of association into director's contracts.
Goodman v Cummings (Cayman Cause No. FSD 204 of 2016)
Meaning of 'wilful neglect or default' in indemnity clauses.
Weavering Macro Fixed Income Fund Limited (In Liquidation) v Peterson
Pleading fraud or dishonesty.
Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm)
Outcomes
Dismissal Application (strike-out or summary judgment) succeeded.
The claim was struck out due to the indemnity provision in the articles of association, the lack of a valid claim against Mr. Hammond as an employee, the absence of loss suffered by the Claimant, and the abandonment of the Georgia claim.
Amendment Application dismissed.
The proposed amendments failed to establish a 'wilful' breach of duty as required to overcome the indemnity.
Expert Application dismissed.
The expert evidence was deemed unnecessary and improper.
Georgia claim struck out.
The claim was abandoned by the Claimant.