Neutral Citation Number: [2013] EWHC 3611 (Comm)
Case No: 2013 - 749
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL

Date: 21/11/2013

Before :

MR JUSTICE HAMBLEN

Between :

	Credit Suisse AG 	Claimant	
	- and -		
	Up Energy Group Ltd	Defendant	

Daniel Toledano QC (instructed by Clifford Chance LLP) for the Claimant
Stephen Auld QC and Andrew Fulton (instructed by Clyde & Co LLP) for the Defendant

Hearing dates: Friday 15 November 2013
- - - - - - - - - - - - - - - - - - - - -
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

MR JUSTICE HAMBLEN

Mr Justice Hamblen: 

Introduction
1.	This is an application by the Claimant, Credit Suisse AG (“CS”), for summary judgment against the First Defendant, Up Energy Group Limited (“UEGL”), and against the Second Defendant, Mr. Qin Jun (“Mr. Qin”), as guarantor of UEGL.
2.	Should CS’s applications for summary judgment on its primary claim be unsuccessful, CS makes an alternative application for summary judgment on liability only on a fall-back claim recently sought to be introduced by amendment.
3.	CS’s applications are supported by two witness statements from Mr Michael A Criscito of CS and by two witness statements from Mr Christopher John Yates of Clifford Chance LLP.  The Defendants rely on a witness statement from Mr Conrad Walker of Clyde & Co LLP and two witness statements from Mr Qin.
The claim in outline
4.	On 2 April 2013 CS exercised a put option under an English law governed deed of undertaking between CS as Seller, UEGL as Buyer and Mr Qin as Guarantor dated 29 March 2011 (as amended by an amendment and restatement deed dated 29 March 2012) (the "Deed").
5.	The put option in the Deed relates to Convertible Notes (“the Notes”) issued by a subsidiary of UEGL called Up Energy Development Group Limited (a company incorporated in Bermuda but listed on the Hong Kong Stock Exchange and referred to below and in the agreements/evidence as “Listco”) with a face value of HK$150m which CS purchased from UEGL under a Convertible Notes Purchase Agreement dated 29 March 2011.
6.	CS contends that as a result of the exercise of the put option, UEGL  became obliged to pay CS HK$234 million as the Option Consideration following which CS was to transfer the Notes to UEGL “or as it may direct”.  
7.	CS contends that in breach of the terms of the Deed, neither UEGL nor Mr Qin has paid any part of the Option Consideration to CS.  
8.	Accordingly, CS contends that it has straightforward claims in debt and damages against UEGL and Mr Qin under, or for breach of, the Deed as well as an additional claim against Mr Qin under a separate Hong Kong law governed written personal guarantee between CS and Mr Qin dated 29 March 2011 (the "Personal Guarantee").
9.	The essential defence raised by the Defendants is referred to in the evidence as the “connected persons point”.  In essence, the Defendants claim that it would be a breach of the terms of the Notes for UEGL to take a transfer of them because UEGL is a connected person to Listco and clause 2.4 of the terms of the Notes contains a restriction on transfers to connected persons.
10.	The Defendants contend that this has the following consequences:
(1)	The parties’ mutual mistake as to UEGL’s freedom to repurchase the Notes means that the deed is void;
(2)	It would be contrary to Hong Kong public policy to compel performance of the put option;
(3)	If the Deed is valid and enforceable then the mistake justifies refusal of an order compelling performance of the Deed so that CS is left to a claim in damages. 
11.	The Defendants contend that if they have a real prospect of succeeding on any of these arguments then that is sufficient to dispose of CS’s summary judgment application.
12.	CS denies that any of these matters affords a defence to its claim or application.  It stresses that the Deed expressly provides that, upon exercise of the put option, the Notes do not have to be transferred to UEGL.  Instead, they can be transferred “as it [i.e. UEGL] may direct” (see clause 7.2(b)(ii) of the Deed).  It is therefore both possible and permissible for UEGL to direct CS to transfer the Notes to a third party once UEGL has entered into an agreement with that third party providing for the transfer of the Notes to the third party in return for payment of their value by the third party to UEGL.  This is disputed by the Defendants who further contend that, even if that was the case, any such purchase would involve performance which was essentially different to that which the parties believed they were agreeing.
The relevant contractual provisions
13.	The most relevant provisions of the Deed are as follows:
“3.	GRANT OF THE OPTION
3.1 The Buyer grants to the Seller the option (the “Option”) to require the Buyer to purchase all or any part of the Option Securities for the Option Consideration on the terms of this deed.

4.	EXERCISE OF THE OPTION
4.1	The Seller may exercise the Option by serving an Exercise Notice on the Buyer on:
(a)	the date of occurrence of a Mandatory Put Event and any date following such Mandatory Put Event;
(b)	2 April 2013 (the “2013 Put Date”); and
(c)	31 March 2014.

4.2	The Option may be exercised:
(a)	In respect of all or any part of the Option Securities; and
(b)	On no more than two occasions, unless a Mandatory Put Event has occurred.

4.3	Exercise of the Option shall oblige the Seller to sell and the Buyer to purchase the Option Securities.

7.	 COMPLETION
7.1	Completion following a full or partial exercise of the Option shall take place on the Payment Date in respect of the Option Securities which are being sold and purchased under the Option, which for the avoidance of doubt shall be specified in the relevant Exercise Notice.
7.2	At a Completion:
(a)	the Buyer shall pay or procure the payment of the Option Consideration to the bank account designated by the Seller; and

(b)	upon receipt of all the Option Consideration, the Seller shall deliver to the Company, in accordance with Condition 2.5(b) of the Conditions the following (with a copy to the Buyer):
(i)	the original Certificate(s) relating to the Option Securities which are being sold following the exercise of the Option;
(ii)	the original duly executed Transfer Form in favour of the Buyer (or as it may direct); and
(iii)	in the case of execution of the Transfer Form, evidence of the authority of the person authorised to sign the Transfer Form on behalf of the Seller.

7.3	The sale and purchase of Option Securities shall be void if the Buyer does not pay the full Option Consideration on the Payment Date and the Seller shall be entitled to exercise any of its rights under this deed (including the rights pursuant to clause 4 (Exercise of the Options)) in relation to such Option Securities as though that Option was not exercised.
7.4  	Any part of the Option Consideration which is not paid on the Payment Date and/or any amount payable under the 2012 Fee Letter if it is not paid when due shall carry interest from such Payment Date or due date (as applicable) until paid at the rate of two per cent per annum above the base lending rate of Credit Suisse AG, Singapore Branch from time to time.

8.	GUARANTEE AND INDEMNITY
8.1	Guarantee and Indemnity
The Guarantor irrevocably and unconditionally:
(a)	guarantees to the Seller punctual performance by the Buyer of all the Buyer’s obligations under this deed;
(b)	undertakes with the Seller that whenever the Buyer does not pay any amount when due under or in connection with this deed, the Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and
(c)	undertakes to the Seller that if any amount which would otherwise be claimed by the Seller under paragraph(s)  (a) and/or (b) above is for any reason not recoverable thereunder on the basis of a guarantee, the Guarantor shall as a principal debtor and primary obligor indemnify the Seller immediately on demand against any cost, loss or liability which the Seller may incur or suffer as a result of the Buyer not paying any amount when (if such amount were recoverable from the Buyer) it would have been due under or in connection with this deed; and the amount payable by the Guarantor under this indemnity shall not exceed the amount it would have had to pay under paragraph(s) (a) and/or (b) above if the amount claimed had been recoverable on the basis of a guarantee. For the avoidance of doubt, the Guarantor’s agreement to pay any amount under this indemnity shall not preclude its right to seek repayment if it is conclusively determined that the Seller’s claim is invalid or that the amount claimed by the Seller is excessive.
8.2	Continuing Guarantee
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by the Buyer under this deed, regardless of any intermediate payment or discharge in whole or in part.

9.	REPRESENTATIONS AND WARRANTIES
9.1	On both the Transfer Date and the Effective Date the Seller represents and warrants to the Buyer that it has full power and authority to grant the Option in respect of the Option Securities set out in the terms and conditions of this deed.
9.2	On the date of the Original Deed of Undertaking and on each subsequent day until the Option expires, the Buyer represents and warrants to the Seller that:
(a)	it has full power and authority to enter into and undertake the obligations set out in the terms and conditions of this deed.
(b)	the execution and delivery by it of this deed, and the performance by the Buyer of its obligations hereunder, as of the date hereof do not and will not (i) violate or contravene any provision of applicable Laws  or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Buyer (ii) violate or contravene the certificate of incorporation or by-laws of the Company or require any consent or other action by any person or entity under, constitute a default under, any agreement, contract or note binding upon the Buyer, or (iv) violate or contravene any organizational document of the Buyer.

10.	UNDERTAKINGS
10.2	
The Buyer shall ensure that the execution and delivery by the Buyer of this deed, and the performance by the Buyer of its obligations hereunder, as of the date hereof do not and will not (i) violate or contravene any provision of applicable laws or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Buyer or, to the Buyer’s knowledge, the Company, (ii) violate or contravene the certificate of incorporation or by-laws of the Buyer or, to the Buyer’s knowledge, the Company, or (iii) violate or contravene, or require any consent or other action by any person or entity under, constitute a default under, any material agreement, contract or note binding upon the Buyer or, to the Buyer’s knowledge, the Company.”

14.	In addition the Amendment and Restatement deed of 29 March 2012 provided:
“5.3	Non-conflict with Other Obligations
The entry into and performance by it of, and the transactions contemplated by, this deed do not and will not conflict with:
(a)	any law or regulation applicable to it;
(b)	its constitutional documents; or
(c)	any deed or instrument binding upon it or any of its assets.”

15.	Both the certificate of the Notes (“the Certificate”) and the Terms and Conditions of the Notes annexed to the Purchase Agreement (“the Terms and Conditions”) prohibit the transfer of the Notes to a person connected to Listco.
16.	The Certificate states that:
“This Note cannot be transferred to bearer on delivery and is transferable only to the extent permitted by Condition 2 of the Conditions. This Note must be delivered to the Company Secretary of [ListCo] for cancellation and reissue of an appropriate certificate in the event of any such transfer.”

17.	The Terms and Conditions state that:
“2.3  This Note or any part(s) thereof may be assigned or transferred at any time provided that such assignment or transfer shall be in compliance with the conditions hereunder and further subject to (where applicable) the conditions, approvals, requirements and any other provisions of or under:
(a)	the Stock Exchange [of Hong Kong Limited] (and any other stock exchange on which the Shares may be listed at the relevant time) or its rules and regulations; and
(b)	the Listing Rules and all applicable laws and regulations

2.4  The permitted assignment or transfer of this Note may be in respect of the whole or any part(s) of the outstanding principal amount of this Note and may only be made to person(s) which are not connected persons of the Company (as defined in the Listing Rules).

18.	The Personal Guarantee provides that:
“2.	GUARANTEE
(a)	In consideration of CS entering into the Deed of Undertaking the Guarantor irrevocably and unconditionally:
(i)	guarantees to CS the due and punctual payment and due performance by UEGL of all UEGL’s obligations under the Deed of Undertaking (the “Debtor’s Obligations”);
(ii)	undertakes with CS that whenever UEGL does not perform the Debtor’s Obligations when due under or in connection with the Deed of Undertaking, the Guarantor shall immediately on demand as a separate and distinct obligation, perform the Debtor’s Obligations as if it was the principal obligor; and
(iii)	undertakes with CS that, if any Debtor’s Obligations are not duly performed under paragraph(s) (i) and/or (ii) above or any amount which would otherwise be claimed by CS is for any reason not recoverable thereunder on the basis of a guarantee, the Guarantor shall as a principal debtor and primary obligor indemnify CS immediately on demand against any cost, loss or liability which CS may incur or suffer as a result of UEGL not performing the Debtor’s Obligations, including without limitation paying any amount when (if such amount were recoverable from UEGL) it would have been due under or in connection with the Deed of Undertaking; and the amount payable by the Guarantor under this indemnity shall not exceed the amount it would have had to pay under paragraph(s) (i) and/or (ii) above if the amount claimed had been recoverable on the basis of a guarantee. For the avoidance of doubt, the Guarantor’s agreement to pay any amount under this indemnity shall not preclude its right to seek repayment if it is conclusively determined that CS’ claim is invalid or that the amount claimed by CS is excessive.

4. WAIVER OF DEFENCES
4.1The Guarantee Obligations shall not be discharged diminished or in any way affected as a result of any of the following (whether or not known to the Guarantor or CS):
(e) Any purported obligation of UEGL or any other person to CS (or any security for that obligation) becoming wholly or in part void, invalid, illegal or unenforceable for any reason.”

The principles relating to summary judgment 
19.	The relevant principles are helpfully summarised by Lewison J in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]:
i) The court must consider whether the claimant has a “realistic” as opposed to a “fanciful” prospect of success: Swain v Hillman [2001] 2 All ER 91; 
ii) A “realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8] 
iii) In reaching its conclusion the court must not conduct a “mini-trial”: Swain v Hillman 
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10] 
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550 ; 
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63; 
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 .”
The law of common mistake
20.	The requirements of common mistake are summarised in Chitty on Contracts (31st ed) at para. 5-017 as follows:
“Common mistake.  Where the mistake is common, that is shared by both parties, there is consensus ad idem, but the law may nullify this consent if the parties are mistaken as to some fact or point of law which lies at the basis of the contract. In summary, if: (i) the parties have entered a contract under a shared and self-induced mistake as to the facts or law affecting the contract; (ii) under the express or implied terms of the contract neither party is treated as taking the risk of the situation being as it really is, (iii) neither party was responsible for or should have known of the true state of affairs; and (iv) the mistake is so fundamental that it makes the “contractual adventure” impossible, or makes performance essentially different to what the parties anticipated, the contract will be void.”

21.	The reference to making the “contractual adventure” impossible picks up the language used by the Court of Appeal in part of its judgment in The Great Peace [2003] QB 679.  At [76] Lord Phillips MR stated:
“If one applies the passage from the judgment of Lord Alverstone CJ in Blakeley v Muller & Co 19 TLR 186 , which we quoted above to a case of common mistake, it suggests that the following elements must be present if common mistake is to avoid a contract: (i) there must be a common assumption as to the existence of a state of affairs; (ii) there must be no warranty by either party that that state of affairs exists; (iii) the non-existence of the state of affairs must not be attributable to the fault of either party; (iv) the non-existence of the state of affairs must render performance of the contract impossible; (v) the state of affairs may be the existence, or a vital attribute, of the consideration to be provided or circumstances which must subsist if performance of the contractual adventure is to be possible.”

22.	The reference to performance being “essentially different” to that anticipated reflects the language used by Lord Atkin in Bell v Lever Bros Ltd  [1932] AC 161, 236 and is also referred to by the Court of Appeal later in its judgment in The Great Peace.  At [90] Lord Phillips MR approved the following summary of the law by Steyn J in Associated Japanese Bank (International) Ltd v Crédit du Nord SA [1989] 1 WLR 255:
"The first imperative must be that the law ought to uphold rather than destroy apparent contracts. Secondly, the common law rules as to a mistake regarding the quality of the subject matter, like the common law rules regarding commercial frustration, are designed to cope with the impact of unexpected and wholly exceptional circumstances on apparent contracts. Thirdly, such a mistake in order to attract legal consequences must substantially be shared by both parties, and must relate to facts as they existed at the time the contract was made. Fourthly, and this is the point established by Bell v Lever Bros Ltd [1932] AC 161 , the mistake must render the subject matter of the contract essentially and radically different from the subject matter which the parties believed to exist.  Fifthly… a party cannot be allowed to rely on a common mistake where the mistake consists of a belief which is entertained by him without any reasonable grounds for such belief: cf. McRae v. Commonwealth Disposals Commission (1951) 84 C.L.R. 377 , 408…”

23.	Subject to the proviso that the Court considered that the result in McRae’s case can be explained on the basis of construction, it stated that it concurred with that summary.  In accordance with the approach there set out the Court stated that the issue in relation to common mistake in that case as turning on the question of whether the mistake “had the effect that the services that The Great Peace was in a position to provide were something essentially different from that to which the parties had agreed.”
24.	In relation to whether either party has assumed the risk of the relevant mistake, in the Associated Japanese Bank case Steyn J stated at p268 (in a passage approved in The Great Peace at [80]:
“Logically, before one can turn to the rules as to mistake, whether at common law or in equity, one must first determine whether the contract itself, by express or implied condition precedent or otherwise, provides who bears the risk of the relevant mistake. It is at this hurdle that many pleas of mistake will either fail or prove to have been unnecessary. Only if the contract is silent on the point, is there scope for invoking mistake.”

Discussion
25.	The Defendants contend that there is a fundamental obstacle to performance of the put option in the Deed which was unforeseen at the time that the contract was made.
26.	The put option, if exercised, obliged “the Buyer” (i.e. UEGL) “to purchase the option securities” (cl. 4.3).
27.	UEGL is, however, a “Connected Person” of Listco and clause 2.4 of the Terms and Conditions of the Notes prohibits any transfer of the Notes to a connected person.  The put option accordingly cannot be performed consistently with the Note conditions.  Further, non-compliance with the Note conditions would in turn mean that UEGL would not be recognised by Listco as a registered note holder, thereby denying UEGL the benefits of ownership. 
28.	It is the Defendants’ evidence that not only could UEGL not lawfully be the transferee, but nor could an associate of UEGL, or an agent of UEGL or a trustee holding on trust for UEGL.  
29.	It is the evidence of Mr Qin that no-one foresaw this problem at the time and that no-one appreciated that it would not be possible to transfer the Notes back to UEGL.  There is no evidence from anyone with first hand knowledge at CS which disputes this and CS acknowledges that for the purpose of this application the facts must be taken to be as asserted by the Defendants.  It is therefore to be assumed that, as the Defendants contend, the Deed was entered into under a shared mistake that the Notes could lawfully be transferred back to UEGL or its nominee.  It is the Defendants’ case that the Deed was accordingly entered into under a shared fundamental misapprehension of the factual and legal position and thus by mutual mistake.
30.	CS’s principal answer to this case is that clause 7.2(b) (ii) of the Deed allows the Buyer to direct CS to execute the Transfer Form in favour of an independent third party rather than in favour of UEGL or its nominee.  It provides that the Transfer Form may be executed as UEGL “may direct”.  Were such a direction to be issued by UEGL, CS would sign the Transfer Form as transferor and the third party would sign as transferee. The duly completed Transfer Form would then be sent by CS to Listco.  Provided that the transferee was not a connected person of Listco, the restriction in clause 2.4 of the Conditions would not be engaged and Listco would then issue a new certificate in favour of the transferee as specified in clause 2.5 of the Conditions.   In this regard CS relied on evidence from Mr Criscito which explains in practical terms how UEGL may be able to identify a third party buyer utilising, if so required, the services of a broker.
31.	The Defendants contend that it was never contemplated that the exercise of the put option would or could involve a third party buyer. The Deed provided that UEGL was to be the “Buyer” of the Notes.  The structure of the transaction was one whereby the Notes would be sold by UEGL to CS, subject to CS’s option to require UEGL to purchase them back on the occurrence of specified events and on certain dates.  The Option Consideration was to be paid by or on behalf of UEGL and at the same time the requisite Certificates and Transfer Forms were to be delivered by CS.  The Deed makes no clear reference to the possibility of a third party buyer and it is unclear how the mechanics of completion would work in relation to such a third party.  They submit that that the words “as it may direct” in clause 7.2(b) (ii) are there to cater for the possibility of the transferee being a nominee of UEGL, especially given the context of formal registration, and it was not contemplating the interposition of an independent third party.  
32.	I consider that, for the reasons given by the Defendants, it is well arguable that, construed in context, the phrase “as it may direct” is referring to a nominee of UEGL and is not intended fundamentally to alter the purchase back structure of the put option arrangement.  I also consider that this is an issue of construction in relation to which an awareness of the full factual matrix is likely to be important.  In my judgment the Defendants accordingly have a real prospect of establishing a mistake involving impossibility, namely that there could be a legal transfer of the Notes on exercise of the put option.
33.	Even if that be wrong, I consider that the Defendants have a real prospect of establishing a mistake involving “essentially different” performance.  Performance by UEGL finding a third party purchaser would mean UEGL becoming a seller rather than a purchaser as intended.  Whilst the Deed clearly contemplated purchase by UEGL as the “Buyer”, on this basis the only way that UEGL’s purchase obligations can be performed is by it selling the Notes.  This may be said to be the converse of what the contract contemplated and I accept that it is well arguable that this is an essentially different mode of performance from that contemplated and bargained for.
34.	CS submits that what matters so far as the commercial purpose of the Deed is concerned is not whether UEGL or a third party chosen by it ended up with the Notes following exercise of the option but rather who – as between CS and the Defendants – bore the economic risk in relation to them.  From an economic perspective, it is clear that the purpose of the Deed was to transfer any economic risk attaching to the Notes from CS to the Defendants.   However, the risk of having to repurchase the Notes is quite a different risk to the risk of being required to sell them in the market at the time of CS’s choosing.  If the Notes were repurchased then UEGL could keep them until maturity in 2016 in the hope of redeeming them for the full principal amount, and indeed it is Mr Qin’s evidence that redemption at full value is likely.  That is not possible if the Notes are required to be sold.  Equally, assuming there is a market for the Notes, if they were repurchased UEGL could sell them as and when it considered it appropriate to do so.  That is also not possible if the Notes are required to be sold.  
35.	CS further submits that the risk of impossible or essentially different performance is a risk which has been allocated by the contract and that as such there is no scope for invoking the doctrine of mistake. In this connection it relies on:
(1)	 the representation and warranty in clause 9.2(b) of the Deed that performance by UEGL of its obligations under the Deed will not (i) violate or contravene applicable Laws or any judgment, order or decree of any governmental body, agency or court having jurisdiction over UEGL and/or (ii) violate or contravene or constitute a default under any agreement, contract or note binding upon UEGL.  
(2)	clause 10.2 of the Deed which required UEGL to ensure that the performance by it of its obligations under the Deed would not violate or contravene the said matters including those relating to Listco. 
(3)	the representation and warranty that UEGL gave in clause 5.3 of the Amendment and Restatement Deed of 29 March 2012 to the effect that the entry into and performance by it of, and the transactions contemplated by, the 29 March 2012 Deed did not and would not conflict with (a) any law or regulation applicable to UEGL and (b) any deed or instrument binding upon UEGL or any of its assets (see also clauses 5.2 (Power and Authority), 5.4 (Binding Obligations) and 5.5 (Validity) of the 29 March 2012 Deed). 
36.	I am not satisfied that these provisions clearly allocate the risk to UEGL.  The Deed envisages performance by UEGL purchasing back the Notes.  Both parties mistakenly thought this was possible.  None of these provisions specifically address that possibility.  Moreover, none of them address the possibility of the obstacle to performance arising out of the terms of the Notes.  The warranties given relate to contracts and other agreements binding upon UEGL.  The Notes are not binding upon it.  The terms of the Notes may prevent execution of the transfer, but that does not involve any breach or “default” of any contractual obligation binding upon UEGL.  Again these are issues of construction in relation to which an awareness of the full factual matrix is likely to be important. Further, it was CS that devised, drafted and structured these transactions and any ambiguity should be resolved against it.  Moreover, it would be striking if CS had succeeded in obtaining an agreement to allocate the risk as it alleges in circumstances where it should have foreseen that risk, but admittedly did not do so.
37.	For all these reasons, I am satisfied that UEGL’s defence of common mistake does have real prospects of success.  In those circumstances it is not necessary to address the other points raised by the Defendants in opposition to the application.
38.	As to the alternative claim for damages which CS seeks to introduce by amendment, UEGL’s arguable defence that the Deed is void for common mistake is equally an answer to that claim.
39.	CS submits that even if the Deed was void and therefore UEGL had no obligations thereunder, Mr Qin would remain liable under the Personal Guarantee as a result of clause 4.1(e) thereof. This would be surprising.  Clause 4.1 presupposes that there are “Guarantee Obligations”.  Under Clause 2 these obligations relate to non-performance of the “Debtor’s Obligations” which are UEGL’s obligations under the Deed.  If the Deed is void there are no such obligations and therefore can be no failure of performance giving rise to “Guarantee Obligations”.  I am satisfied that there are very real prospects of Mr Qin successfully defending this claim if the Deed is void. 
Conclusion
40.	Since the defence of common mistake has real prospects of success CS’s summary judgment application against both Defendants must be dismissed.