Lord Justice Christopher Clarke:
1. The question at issue in this appeal is whether Petrosaudi Oil Services (Venezuela) Ltd ("POS") was entitled to call for payment of some US $ 129 million under a standby letter of credit ("SBLC") issued by Banco Espirito Santo S.A., which was later transferred to Novo Banco S.A. ("the bank"), the first respondent, for the account of PDVSA Services BV ("PDVSA Services"), a Dutch company and the third respondent. His Honour Judge Waksman QC, sitting as a judge of the Commercial Court, held that POS was not so entitled and that POS' general counsel - Mr Timothy Buckland, a qualified solicitor and barrister in New Zealand and a solicitor here - had signed a demand presented to the bank under the SBLC which he knew to be untrue. If, in fact, the statement was true, the appeal will succeed. If it was, as the judge found, false it will be necessary to decide whether the judge was right to find that the solicitor was fraudulent; and, if not, what consequences follow.
The background
The drilling contract
2. POS, the appellant, and PDVSA Servicios S.A. ("PDVSA"), the second respondent, are parties to a seven-year drilling contract dated 30 September 2010 under which POS, a Bajan company, provided oil rig drilling services and a drilling vessel to PDVSA, a Venezuelan company. PDVSA is a subsidiary of Petroleos de Venezuela S.A. and is responsible for the development of hydrocarbons in Venezuela. The drilling contract is governed by the law of Venezuela and provides for arbitration under the UNCITRAL Rules. A number of disputes have been submitted to arbitration by three arbitrators. The seat of the arbitration is Paris but hearings have taken place in London.
3. The drilling contract included the following terms:
"803 Payment of invoices
(1) PDVSA shall pay to Contractor the amounts invoiced after deduction for applicable withholding taxes as specified in Paragraph 608(b) but without any set-off whatsoever.
(2) Payments shall be made by PDVSA in sufficient time for receipt by Contractor of the full invoiced amount net of any bank charges by Contractor within thirty (30) days of the date that the relevant invoices received by PDVSA. PDVSA shall be liable to pay interest at the rate specified in Appendix A should there be delay in Contractor receiving any amount due under the invoices before the aforesaid thirty (30) days; whether or not the relevant invoice has been accepted, deemed accepted or disputed by PDVSA. Interest shall be calculated from the date the invoice becomes overdue until date of payment.
(3) If PDVSA for just cause and in good faith disputes an item invoiced, PDVSA shall within fifteen (15) days after receipt of the invoice notify Contractor of the amount disputed and specify the reason therefore, failing which PDVSA shall be deemed to have irrevocably accepted the invoice as correct and that the amounts dated therein as [sic] due and owing to Contractor.
(4) In the event an amount is disputed, notwithstanding such dispute, PDVSA shall pay Contractor the disputed amount within the time limit applicable to the relevant invoice wherein such dispute arose. Contractor shall refund said amount or part thereof with interest, calculated from the date falling thirty (30) days after Contractor's receipt of payment of the invoice relevant to the disputed amount until the date of refund, upon Contractor accepting and agreeing to such disputed amount or part thereof or the mutual agreement of PDVSA and Contractor in respect of such disputed amount or part thereof, or PDVSA proving Contractor is not entitled to the same in accordance with paragraph 1304.
(5) Contractor shall have the right upon three days prior written notice to suspend some or all performance and/or terminate this contract if PDVSA fails or refuses to timely pay Contractor any amount due and owing to the Contractor. If Contractor chooses to suspend this Contract the Operating Rate shall continue to apply and be payable during period of suspension. Exercise of the right of suspension will not preclude Contractor from terminating this Contract for the same reason at any time thereafter."
(Numbers added to the original)
4. Clause 1304 of the drilling contract contained the arbitration agreement. Clause 1305 provided as follows:
"Each Party hereto agrees that all laws, rules and regulations of any federal state or local government authority having jurisdiction over the Operating Area, which are now or may become effective, will apply to the performance of this contract in such jurisdiction. In the event any provision of this contract is inconsistent with or contrary to any applicable federal, state or local law, rule or regulation, said provision shall be deemed to be modified to the extent required to be consistent with said law, rule or regulation, and as so modified, said provision and this Contract shall continue in full force and effect provided that PDVSA shall indemnify and hold harmless Contractor on demand against any cost, expense, liability or loss of right revenue or benefit arising as a result of such modification or change of law, or regulation. If any act or omission by contractor in response to PDVSA's explicit instruction violates such law PDVSA's shall indemnify contractor on demand for any consequences thereof."
The Venezuelan Public Contracting Law
5. Article 141 of the Venezuelan Public Contracting Law ("LCP") provides (in translation from the Spanish) as follows:
"Conditions for Payment.
Article 141. The principal shall pay the obligations assumed under the agreement in compliance with the following:
1. Verification of the compliance in the supply of the good, rendering of the service, performance of the work or any part thereof.
2. Receipt and review of the invoices presented by the contractor.
3. Confirmation, by the supervisor or engineering inspector, of compliance with the established conditions.
4 Authorisation for payment by the persons of competent jurisdiction."
PDVSA is a State entity and the application of the LCP to the contract is not in dispute.
The SBLC
6. Clause 805 (1) of the drilling contract provided that PDVSA would procure the issue of a payment guarantee from Banco Espirito Santo S.A. in the terms agreed in Appendix H in the amount of $ 130 million " to secure payment to [POS] under this contract and to guarantee the performance of this contract by PDVSA". Appendix H was in the form of a standby letter of credit ("SBLC").
7. On 23 August 2011, the SBLC was issued by Banco Espirito Santo S.A. for the account of PDVSA Services. Under it the issuing bank agreed to guarantee the payment of any invoice issued by the beneficiary (POS). By paragraph 3 the SBLC was available to POS against presentation of a number of documents on or before the expiry date (30 April 2018). These included the beneficiary's demand in the form of attachment A duly completed and purportedly signed by the beneficiary and a copy of the beneficiary's commercial invoice addressed to one or other of a number of companies including PDVSA.
8. Attachment A, headed " Demand for Sight Payment", included the following relevant paragraphs:
"We, the beneficiary of the SBLC, hereby demand payment of US $... in words and figures under the SBLC.
We certify that the applicant is obligated to the beneficiary ...to pay the amount demanded under the drilling contract executed among [sic] the beneficiary and PDVSA Servicios S.A."
9. Paragraph 4 of the SBLC provided that the issuing bank would pay the beneficiary upon presentation of the documents in accordance with paragraph 3 and the terms and conditions established in paragraph 7 without any obligation to enquire or verify the accuracy, sufficiency, authenticity or genuineness of the documents referred to in paragraph 3 and provided always that in respect of commercial invoices 30 calendar days had elapsed since PDVSA's receipt of the invoice.
10. Paragraph 7 of the SBLC provided that upon compliant presentation of the documents required payment would be made for the amount set out in the written demand within five Lisbon banking days from the date of receipt of such presentation.
11. Since January 2015, POS has issued a number of invoices for drilling services in respect of which there is a dispute as to whether the day rate on which they are based is the applicable one. POS claims that the appropriate daily rate is the "operating" or "standby" rate whilst PDVSA says that it is a very much lower rate called the "repair" rate. The invoices are based on the higher rate which is about $ 17 million per month. The lower rate would be about £ 500,000 per month. Which rate is applicable forms part of the subject of the arbitration in respect of which the three arbitrators have made two partial awards and a number of procedural orders.
The 1 st partial award
12. By their first partial award of 24 March 2016 ("the FPA") the arbitrators held that clause 803 (4), which is, in effect, a form of "pay now argue later" clause (as the arbitrators described it) was inconsistent with Article 141 of the LCP and was, consequently, null and void: see paragraph 2 of their order. The arbitrators held that the Article laid down a mandatory requirement that a State entity should ascertain that invoices for services rendered were correct before paying them [94]; and that clause 803 (4) combined with the SBLC requiring only proof of receipt of the invoices was designed to secure payment without PDVSA being able to withhold payment before ascertaining the correctness of the invoices [96]. Clause 803 (4) thus violated Article 141, being designed to achieve what Article 141 prohibited [100].
Procedural Order No 8 of 11 May 2016
13. The FPA left undetermined the validity or otherwise of clause 803 (3). Procedural Order No 8 of 11 May 2016 ("PO 8") recorded that the parties agreed on the " deletion" of Clause 803 (4). The order revoked three earlier orders: POs 3, 4 and 5, which had provided that POS could receive payment of invoices delivered before 30 November 2015 if it provided counter security for the amount of the relevant invoices. For invoices delivered from 1 December 2015 the proceeds of such invoices, whether paid directly by PDVSA or by the bank, had to be paid into an account held by Clyde & Co and POS was entitled to withdraw up to $ 18 million in respect of operating expenses up to December 2015 and up to $ 10 million per month in respect of operating expenses for subsequent months. POS then called on the SBLC some 11 times. These orders had followed and replaced PO 2 which had ordered that POS should refrain from seeking payment of invoices under the SBLC and countermand its demand for payment unless it had furnished counter security reasonably acceptable to PDVSA for a refund of the invoices presented for payment and paid, in the event that PDVSA should prevail on the merits of its illegality argument (i.e. the argument based on Article 141). During the currency of POS 3-5 (PO3 being made on 15 December 2015) POS had been able to claim under the SBLC and had done so.
14. Order 4 of PO 8 provided that POS must give 7 days' notice to PDVSA of any intended reliance upon the deeming provisions of clause 803 (3) and apply to the arbitrators within that period for a determination as to the effect of that clause and the impact of the FPA on it, pending which no steps to obtain payment of the relevant invoice might be made.
The second partial award
15. On 16 September 2016 the Arbitrators produced their second partial award ("SPA"). It decided that the deeming provision contained in clause 803 (3) was also inconsistent with Article 141 and was " null" and that POS could not rely on clause 803 (3) to obtain payment of the July-September 2015 invoices.
Procedural Order 16
16. On the same date the Arbitrators revoked order 4 of PO 8. They also refused an application on the part of PDVSA to replace that order by a new injunction to preclude POS from seeking payment under the SBLC. They said that it would be for the English High Court to decide whether POS had made a valid demand under the SBLC and whether it had otherwise satisfied its terms.
The current proceedings
17. On Sunday 18 September 2016 POS began the current proceedings. The claim form asserted that 7 invoices had been properly issued to PDVSA by POS between July 2015 and June 2016 totalling US $ 129,877,699.54, which remained unpaid. It said that POS would make a presentation on 19 September; and sought declarations (i) that that presentation " is a compliant presentation" pursuant to the terms of the SBLC; (ii) that the bank was liable to pay the sum of the invoices; and (iii) that there was no legal basis on which it could decline to do so.
18. On Monday 19 September 2016 POS presented to the bank documents under the SBLC in respect of the seven invoices. These included a demand, signed by Mr Buckland, as a director, which included the following paragraph:
" We certify that the Applicant is obligated to the Beneficiary to pay the amount demanded under the Drilling Contract executed among the Beneficiary and PDVSA Servicios S.A."
19. On Thursday 22 September 2016 PDVSA and PDVSA Services applied for an injunction to restrain the bank from making payment under the SBLC on the ground that, in the light of the tribunal's rulings any demand under it would be fraudulent.
20. On Friday 23 September 2016 Addleshaw Goddard, on behalf of the bank, emailed the solicitors for POS and PDVSA to inform them that the bank considered the demands as presented to be compliant with the terms of the SBLC and intended to make payment pursuant to them on Monday 26 September.
21. On the same day, after a hearing at which PDVSA and PDVSA Services and POS, but not the bank, were represented, Judge Waksman made an order that the bank should pay into the Court Funds Office the sums claimed under the demands presented on 19 September 2016 and prohibited the bank from taking any steps against the applicants or any other person pending further order of the court. In particular, the bank was prohibited from requiring the applicants or anyone else to replenish the SBLC following the payment ordered pending further order of the court. POS was prohibited from contending that the time for replenishment of the SBLC required by clause 805 of the drilling contract had begun to run or from taking any other step under the contract consequent upon the payment into the Court Funds Office. He also ordered an expedited trial.
22. In the event an order was made by consent on 28 September 2016 whereby the paragraphs of the order of 23 September which required the bank to pay funds into court were discharged, upon the bank undertaking that it would comply with any order of the court to pay the sum of $ 129,877,699.54 to POS in settlement of the demands presented on 19 September under the SBLC.
23. By Monday 26 September 2016 5 Lisbon banking days had expired since the presentation of documents under the SBLC. The trial took place on 28 and 29 September 2016. Judgment was delivered on 5 October 2016.
The judgment
24. The judge referred to a number of paragraphs of the arbitrators' reasoning in the FPA in which they concluded that Article 141 implicitly ruled out a payment pending a dispute with the result that invoices would only be payable once the Article 141 procedure had been gone through. Accordingly, under Venezuelan law, if POS tried to claim the monies due under the disputed invoices prior to (i) the completion of the Article 141 procedure ending with appropriate authorisation by PDVSA or (ii) an arbitral award it could not obtain judgment from a Venezuelan court. The judge considered that, as a matter of language one might say that the debt claimed in the invoices had fallen "due" because the invoices had been issued and the agreed credit period of 30 days had elapsed. But he regarded that as a "sterile and irrelevant" conclusion [27] if as a result of the dispute the FPA meant, as the arbitrators had held, that PDVSA had no present legal obligation to pay. The effect of the tribunal's declarations or their logical consequence was to change the effective terms of the contract [33] so as to provide that, in the case of a dispute, sums fell due when payment was approved or the arbitrators so awarded [36]. Accordingly, he held, no debt was due under the contract until it was authorised by PDVSA or was the subject of an award [38].
25. Similarly, in relation to clause 803 (3) the arbitrators had held that PDVSA could pay an invoice only if it had affirmatively approved it and that a payment without such approval contravened Article 141. Consequently, the agreement made in advance in clause 803 (3) that invoices should be deemed irrevocably payable after 15 days of silence was null. By declaring that clause null and void the arbitrators were making it plain that the only legal recourse available to POS to obtain payment of an invoice which had been disputed, in the absence of agreement from PDVSA, was to go to arbitration and obtain an order from the arbitrators.
26. The judge rejected any suggestion that all that POS had to do was to rely on clause 803 (2) providing for payment in 30 days so as to secure a declaration of sums now due and payable. The effect of Article 141 was not merely to impose certain obligations on PDVSA regardless of whether the monies had fallen due under the contract. It prevented them from falling due " in any real sense at all at this stage" [46] (underlining added). At [55] the judge said that the arbitrators had decided " that there was not in any real legal sense, any obligation on the part of [PDVSA] to pay any of the disputed invoices" (underlining added).
27. In respect of the SBLC the judge held that what POS had to certify was that the amount demanded under the SBLC was due and owing by PDVSA to POS under the contract. PDVSA would not be obligated to pay invoices for the purpose of the certificate if the time for payment had not arrived; the sums demanded had to be due immediately and not at some undefined point in the future. The judge said [61] that he took the point that:
"...it cannot be said that there was no debt due in some sense because otherwise there would be nothing to arbitrate about later. But all of this has to be read in the context of the Article 141 procedure as laid down by the arbitrators. Absent authorisation, the debt had to be claimed and adjudicated upon in an arbitration; until and unless that happens there was no present debt due or payable at all. Any debt which, but for Article 141 would have fallen due now, has to be claimed in an arbitration if not agreed..."
(Underlining added)
28. In summary, the judge decided that there was no linguistic or commercial reason why the certificate should be construed so that PDVSA was obliged to pay for the purposes of the certificate and yet not for the purposes of the contract. (POS contends that PDVSA was obliged to pay for the purposes of both). What had to be certified was that the amount now sought under the SBLC was due and payable now under the contract. The amounts sought were not so payable until the Article 141 procedure had been completed or an award had been made.
29. Accordingly, so the judge found, the certificate that PDVSA was obligated to pay POS for the sums claimed was false.
Mr Buckland's state of mind
30. The judge referred to the following paragraphs in Mr Buckland's witness statement:
"12 I have been asked what I understand by such phrase [that is, "obligated"]. I interpret the phrase "obligation to pay" in the SBLC certificate to mean that a debt has arisen from PDVSA to Petrosaudi in respect of a given invoice or invoices. I believe that this debt arises upon the performance of the services under the terms of the Contract. I do not believe that Article 141 of the public Contracting Law affects the "obligation to pay" of PDVSA. Rather I understand that it places an obligation on PDVSA to carry out certain steps before they discharge their pre-existing obligation to pay.
13 This view is entirely consistent with the natural meaning of the words of Article141, which read "...the principal shall pay the obligations assumed under the agreement in compliance with the following" ... To the best of my knowledge and belief the wording of Article 141 recognises a pre-existing obligation to pay, the discharge of which requires PDVSA to go through certain steps laid down by Venezuelan law. I believe this is also consistent with the ability of the Tribunal to determine that an invoice is payable even if Article 141 has not been complied with (which is common ground). I believe my view is also consistent with FPA1, FPA2 and PO16, none of which preclude such a view. Rather the tribunal's careful choice of language would appear to support it.
14 In coming to this conclusion, prior to the execution of the most recent SBLC draw, I considered a number of factors including
(a) Article 141.
(b) the submissions of each of the parties and their counsel in connection with each of the arbitral hearings insofar as they pertain to Article 141 and the SBLC. I attended each of these hearings in person.
(c) The First Partial Award, the Second Partial Award and Procedural Order No. 16.
(d) The oral submissions of Richard Southern QC on 23 July 2016. At that hearing he explained the Article 141 process had no effect on whether a sum is due in response to arguments by PDVSA's counsel, Duncan Matthews QC, which seemed to me to be founded on the same basis as the case now put by PDVSA before the High Court. The reference for these submissions is page 99 to 113 of the transcript.
(e) The fact that despite those submissions of Mr Matthews QC, the post-hearing application of PDVSA, to which Petrosaudi objected and the findings in the Second Partial Award, the Tribunal nonetheless rejected the claimant's application and instead lifted the injunction on an unrestricted basis.
(f) Discussions with the other board members of the POSOVL, following the issue of Procedural Order No. 16. Having discussed the position across the weekend with the benefit of the documents the board agreed that a draw should proceed.
(g) Lengthy discussions with Tim Myers, President of Petrosaudi Oil Services, and Dan Stover, Head of projects, as to the merits of the invoices underlying the SBLC claim and lack of merit in PDVSA's objections.
(h) The various claim defence and counterclaim, reply document and submissions in the arbitrations.
...
19 My view that PDVSA was obligated to pay for the purposes of certification of the SBLC was honestly held at the time of the execution of the recent SBLC demand and remains honestly held, notwithstanding the speculative and baseless claims of fraud made in the witness statement of Haris Zografakis [i.e. on behalf of PDVSA]."
31. The judge recorded that, whilst Mr Buckland accepted in cross examination that as a result of the nullity of clause 803 (3) and (4) and the application of Article 141 PDVSA was not obligated now to pay the sums claimed he focused on the fact, as he saw it that the invoices were "due" for payment once issued, because the invoices related to work which had been done, and laid stress on the reference to "obligations" in the wording of Article 141. The judge said that he found Mr Buckland's focusing on this aspect only in this way as " wholly unrealistic".
32. The judge also recorded that Mr Buckland agreed that he could not have certified that PDVSA was obligated to pay POS now, if that is what "obligated" to pay meant, but he said that this was not what the certificate required. The judge then said this:
"77 When it was put to him that if "obligated" meant "obligated now", it would mean that he could not then or now certify honestly, he said that he would need to take legal advice or reflect further on it which I did not find very satisfactory. Nor did I find convincing his explanation that at the time of certificate he did not consider the "temporal" aspect at all, even though this was what the awards were all about. Instead, he looked at what was due, essentially in the abstract."
33. The judge said that the notion that he did not even consider the " temporal" aspect at the time was wholly at odds with his witness statement where in paragraph 14 he said that in reaching his view about the meaning of "obligated" he drew on a number of sources to reach his conclusion. The judge found it absurd to suggest that in all those deliberations and consultations and taking of advice the question of some competing interpretation of "obligated" was not even canvassed or discussed; or for Mr Buckland to suggest that he did not himself see and consider that there were other candidates for the correct interpretation " including in a temporal sense". The judge said that he simply did not believe that Mr Buckland did not even consider the temporal aspect i.e. that " obligated" meant due and payable now.
34. The judge's conclusion was that Mr Buckland had seized on the notion of " an inchoate prior sum due" (though not due now) as a way of justifying the certificate and that he certified as he did:
"...because he thought that an interpretation could be placed on the word "obligated" which could somehow stand or be argued to stand with what the obvious effect of the FPA and SPA was, i.e. that no sum was presently due. But I do not believe that he actually and honestly believed it to be the real meaning of the certificate, (which is in fact what was due now), and I reject his evidence to the contrary."
35. The judge also thought that Mr Buckland and POS adopted this alternative interpretation on the basis that it might withstand scrutiny for a time and in any event could always be put right or reversed by a court later. That was particularly so because in May 2016 POS was and remained close to insolvency. The interpretation said to have been honestly believed in by Mr Buckland was something of a lawyer's construct and the judge did not accept that he really and honestly believed it. He knew in truth that PDVSA was not obligated in the obvious sense required by the certificate.
36. If Mr Buckland did not know that his certificate was false, then, the judge found, he was certainly reckless as to its falsity. If, contrary to his finding, Mr Buckland did not even consider the temporal aspect then that could only be by wilfully shutting his eyes to the obvious.
37. Accordingly, so the judge found, the fraud exception to the autonomy principle (that, in the absence of fraud, the bank is bound to pay out against apparently conforming documents) applied and the bank had to be restrained from paying out to POS under the SBLC.
The respondent's submissions
38. Mr Mark Howard QC for PDVSA submits that the judge was entirely right in his construction of the contract and the SBLC, and in finding that Mr Buckland was fraudulent. POS had to certify that the sums invoiced were due and payable now (with the result that the position under the SBLC would mirror the position under the contract) and they were not. The SBLC was a performance guarantee which was not intended to provide for payment when the contract did not require it: see clause 805. On the footing that clauses 803 (3) and (4) were valid, as must have been assumed when the contract and SBLC were agreed, there was no need to do so.
39. He drew particular attention to the sequence of the arbitrators' findings.
40. In the FPA the arbitrators had found that the LCP established a binary system. Payment was to be made only upon approval following compliance with Article 141 or in accordance with an award. It precluded a payment pending a dispute: see paragraphs [78] - [79]; [94]; [96]; [100]. He referred to paragraph 14 of PO 8, which, he submitted, was a finding by the arbitrators that it would be a breach of the drilling contract to make a presentation under the SBLC before the completion of the Article 141 procedure or an award.
41. Paragraph 14 reads:
"The Tribunal notes that the debate concerning Clause 803 (3) relates to the "deeming provisions", and that [PDVSA] does not suggest that the rest of the Clause is affected by the FPA. Accordingly, the position under Clause 803 (3) in any event remains that the invoice would need to be disputed within fifteen days in good faith and for just cause. To the extent that [PDVSA] complies with this time limit and in good faith asserts a just cause to dispute an invoice, that invoice shall be considered as disputed, and [POS] may not present it for payment under the SBLC - since the "pay-now-argue-later" mechanism of Clause 803 (4) is void under Article 141 LCP".
42. PO 8 order revoked POs 3-5 which had provided that, if there was drawdown under the SBLC, POS must provide security. The need for that, he submitted, had gone because the arbitrators had held that you could not make a drawdown for disputed invoices.
43. In the SPA, the arbitrators said [63]:
" The FPA found that the LCP is in favour of a binary system with respect to payment for services rendered, according to which an invoice must be paid only upon approval or an arbitral award thus ruling out the possibility of a payment pending a dispute".
The words " must be paid" are, he submits, the language of obligation. In [66] the arbitrators referred to the fact that, if an invoice is not approved, payment can be obtained only through arbitration and in [69] that the obligation provided by 803 (4) to make an interim payment was null. In [74] they said that the consequence of 803 (3) being null is that, failing an affirmative approval, POS' recourse to obtain payment of an invoice was to obtain an arbitral determination that the invoice was due; and said that silence after receipt of an invoice must result in it being treated as disputed. In effect, Mr Howard submits, the arbitrators were saying that, in those circumstances there is no obligation to pay it.
44. The SPA then held that the deeming provision in clause 803 (3) was inconsistent with Article 141. So, all the invoices would be in dispute and the only way they would be payable was if there was an award or approval under Article 141.
45. Paragraph 32 of PO 16 then recorded that the FPA had held that clause 803 (4) was entirely inconsistent with Article 141, which left no room validly to agree a provision such as clause 803 (3) because the LCP prohibited any payment by a State entity before it had expressly authorised such payment or was ordered to pay an arbitral award. The order made in PO 16 revoked PO 8, the order which was designed to address the uncertainty about the validity of 803 (3). Since the arbitrators had now decided that the deeming provision in 803 (3) was invalid the position was no longer uncertain and PO 8 was unnecessary because POS could no longer claim on that basis either.
46. In paragraph 34 of PO 16 the arbitrators said:
" While it is common ground that [POS] has a reasonable possibility of succeeding on the applicable day-rate, it is now clear that one of the consequence of the FPA and the SPA is that there is no longer a reasonable possibility for [POS] to succeed on the claimed contractual right to advance payments of not expressly approved invoices pending an arbitral adjudication of them (Clause 803 (4)) or to payments based on a deemed acceptance of invoices (Clause 803 (3))"
reflecting, Mr Howard submits, the fact that there is no right to payment where there is a dispute.
47. In paragraphs 36-42 of PO 16 all that the arbitrators were doing was to leave to the English courts the question as to what rights exist under the SBLC which was governed by English law. They probably could have given injunctive relief but chose not to do so.
48. Throughout the period from March 2016 onwards POS had been seeking to rely, first on 803(4) and then 803 (3), with a view to claiming under the SBLC in circumstances where there had been no compliance with Article 141. POS must have realised that the effect of the arbitrators' findings was that they could not. Yet on POS' current case they could have claimed under the SBLC in May; because all that PO 8 did was preclude reliance on the deeming provision in clause 803 (3). But they did not. On this latter point, I observe that Mr Buckland's evidence was that " we thought we ought to respect the jurisdiction of the tribunal given that there was an injunction".
The appellant's submissions
1 Was any money due?
49. Mr Jonathan Gaisman QC, for the appellant, submits that the judge's analysis was faulty. Under clauses 803 (1) and (2) it was PDVSA's contractual obligation to pay invoices properly rendered within 30 days. Clause 803 (3) imposed an obligation to pay an invoice, even if it was not properly due, if PDVSA failed to dispute its validity within 15 days. Clause 803 (4) also imposed an obligation to pay an invoice even if it was not properly due. Neither of these clauses (held by the arbitrators to be void) affects in any way the obligation on the part of PDVSA under clauses 803 (1) and (2). The judge was simply wrong to find, as he did in paragraph 46, that the effect of Article 141 prevented any sums from " falling due in any real sense" and in paragraph [61] that absent authorisation under Article 141 " there was no present debt due or payable at all"; or that the arbitrators decided any such thing.
50. What the arbitrators decided in the FPA was that the "pay now argue later" provision in 803 (4) was incompatible with Article 141 and null and void. In the SPA the arbitrators decided that the same applied to the deeming provision in clause 803 (3). The purpose of Article 141, the arbitrators held, was to protect the Venezuelan public patrimony [81] and to prevent a Venezuelan State entity from paying sums for which it in fact had no liability. Clauses 803 (3) and (4) were incompatible with Article 141 and its purpose because their effect was to place PDVSA under an obligation to pay sums which had been invoiced even if they were not in truth due under the contract.
51. The arbitrators were not asked to decide and did not decide whether PDVSA's obligations under clauses 803 (1) and (2) were incompatible with Article 141. Any such conclusion would have produced the nonsensical result that PDVSA had no existing contractual obligation to pay for the work performed under the contract. It would mean that, until compliance with Article 141 (which might be never) there would be no cause of action upon which the arbitrators could found the award which the arbitrators held would have to be made if POS was to be paid if the Article 141 procedure was never completed. Any award would give effect to, but not create, a cause of action. Under clause 803 (2) interest would be payable from the date when the invoice became overdue (i.e. after 30 days) and commercial arbitrators would be likely to award it from that date (rather than that being the speculative possibility to which the judge referred in [61]). This obligation was consistent with the obligation to pay arising at the 30 day point.
52. In addition, Article 141 itself presupposed the existence of a contractual obligation to pay in the phraseology:
"Conditions for Payment
Article 141 The principal shall pay the obligations assumed under the agreement...."
It then set out a mechanism for State entities to ascertain whether an invoiced sum was in fact properly due and payable. The fact that Article 141 prevented PDVSA from discharging the obligation to pay in advance of an award (or its own approval) did not mean that the invoices only became due and payable for the first time when the award was made or the Article 141 procedure was complete. On the arbitrators' findings, an award could be made in the absence of compliance with Article 141, which cannot, therefore, be regarded as preventing any obligation arising.
53. In paragraphs 56 and 57 of his judgment the judge had said this:
"56 Although the phrase, "We certify that the applicant is obligated to the beneficiary to pay the amount demanded under the drilling contract", has been subjected to considerable textual and linguistic analysis, the meaning is plain in my view. POS had to certify that the amount demanded under the LC was indeed due and owing by PDVSA to POS under the Contract. To take an obvious example, POS could not demand or certify £100 under the LC if only £80 had fallen due under the Contract. There is a timing element to this as well. As Mr Bools QC accepted in argument, POS could not demand payment of a sum under the LC if less than the 30 day credit period had elapsed at the time of demand. Again, such a sum had not fallen due.
57 The notion of PDVSA being obligated must be understood in the same way. Accordingly, if invoices had been rendered, PDVSA would not be obligated to pay them for the purpose of the certificate if the time for payment had not arrived. In other words, at the time of the Presentation, the sums demanded had to be due for payment immediately, not at some defined or undefined point in the future. That common sense view is reinforced by the fact that the LC was provided as security for PDVSA's payment obligations under the Contract. If, as I have found, no present debt had yet fallen due under the Contract, it would be very odd if the LC required something less."
54. The timing analogy in paragraph 56 is inapt and the first sentence of 57 wrong. Nothing could be due before the 30 days expired. That does not mean, that once they had expired, nothing was due until the award, whose function would be to declare what had been the case since the expiry of the period. What the arbitrators were considering was the circumstances in which PDVSA was permitted to make a payment in discharge of its accrued obligation to pay and not when that obligation arose.
2 The construction of the agreement
55. The SBLC is to be interpreted by seeking to discern the intention of the parties by reference to what a reasonable person with all the relevant background knowledge would have understood the language used by the parties to mean and, having regard, inter alia, to commercial common sense. The commercial background included the following. Prompt and regular payments under remote drilling contracts are essential to a contractor's cash flow and the parties' intention was that there should be a steady stream of such payments. At the time of the drilling contract PDVSA, an emanation of the Venezuelan State, had a long-established reputation for late payment, or even non-payment, of contractors. Given that history the agreement to provide an SBLC was an essential precondition to POS and its financiers' willingness to enter into the drilling contract. The purpose of a letter of credit is to ensure that the beneficiary can obtain from a bank sums due under the main contract regardless of the fact that there is a dispute between the parties to that contract as to whether those sums are in fact due. The function of a letter of credit is to reverse the risk of non-payment from the payee to the payor.
56. The SBLC was not intended merely as a guarantee that any award against PDVSA would be satisfied by the bank (which is not how it is expressed). It was, as clause 805 (1) recognised in terms, intended to provide POS with security in respect of PDVSA's unpaid liabilities under clause 803 and to guarantee the performance of the contract by PDVSA. That should not sensibly be limited to providing security in respect of any award or in case PDVSA approved sums for payment under Article 141 and then failed to pay - an unlikely event given that step 4 in Article 141 is authorisation for payment.
57. The uncontested evidence of Mr Buckland as to the commercial matrix was that it was essential that the SBLC should be independent of PDVSA and that PDVSA could not stymie its operation by action or inaction. The effect of the judge's decision is that PDVSA can not only prevent payment under the drilling contract by failing to take a decision under Article 141 but can also prevent payment under the SBLC by not doing so, leaving POS to perform its obligations under the drilling contract without payment until some award is made. In regarding the issue of construction as plain and obvious the judge treated the issues before the arbitrators in the FPA and SPA as almost dictating the meaning of the words "obligated to pay" in the SBLC without regard to the separate and autonomous nature of the SBLC (issued by a Portuguese bank and subject to English law and jurisdiction) and the well-known purpose of such instruments, and produced a result which was wholly uncommercial.
Discussion
58. The essential questions are:
(a) whether a certificate pursuant to the SBLC that PDVSA is obligated to pay a specified sum to POS is to be taken to mean:
(i) that PDVSA was both under an obligation to pay POS and presently bound to discharge that obligation; or
(ii) that PDVSA was under an obligation to pay POS even though PDVSA could not presently be compelled to discharge that obligation; and
(b) Whether, in the light of the answer to (a), it was open to POS to certify that PDVSA was obligated to pay the sums demanded.
59. The judge regarded the answer as obvious and apparent from the provisions of Article 141 and the two arbitral awards. A certificate that PDVSA was obligated to pay a specified sum was a certificate that there was a debt of the specified amount owed to POS which PDVSA was then bound to pay. In fact, there were no such debts.
60. In my view the position is not as simple as that. The meaning of the words has to be considered in the particular context in which they appear, which includes the fact that they form part of a certificate to be tendered under a contract which was separate from the drilling contract, with a different party and governed by a different law.
61. Under clauses 803 (1) and (2) of the drilling contract the sums invoiced for drilling operations were to be paid by PDVSA so as to be received by POS within 30 days of the date of the receipt by PDVSA of the invoice. The sums were due and payable on that date in sense (ii) in paragraph 58 (a) above. Article 141 restricted PDVSA from making the payments which clauses 803 (1) and (2) required it to make until it had gone through the Article 141 procedure or there was an award. In a sense, it provided PDVSA with a form of legal excuse for non-fulfilment of its existing obligation to pay. The Article did not, however, mean that no obligation arose until that procedure had been complied with. On the contrary it imposed on PDVSA a restriction on making payment in respect of the obligations which it had assumed - an assumption that was recognised in the opening words of the Article itself.
62. The judge characterised the position taken by POS and Mr Buckland that there was an " inchoate prior sum due" as something of a " lawyer's construct". There is, however, nothing legalistically contrived in recognising different types of debt obligation. A debt can be wholly contingent such that it only arises and becomes payable upon the happening of the contingency. It can be payable only after a period has elapsed, in which case it will not be due and payable until the expiry of the period. It can be due and payable now but there may be some restriction on the discharge of that obligation by the debtor or the debtor may have some excuse for not discharging it. The debt in the present case falls into the latter category, where there has been grafted onto the drilling contract (by clause 1305) a provision of Venezuelan statute law, which imposes a restriction on payment by PDVSA of sums properly due. The modification effected by that provision does not, as it seems to me, mean that there is no extant obligation to make payment but only that PDVSA shall not discharge that obligation until the Article 141 procedure has been complied with or there has been an award. It is not normally necessary to distinguish between a debt in category (i) and one in category (ii) in paragraph 58 (a) above. Most accrued liabilities require immediate discharge: if the debt is due it must be paid. The particular and rather unusual features of this transaction make it appropriate to do so.
63. In my view, it was, therefore, open to POS and Mr Buckland to claim that the sums in question were due and payable by PDVSA to POS in sense (ii). The invoices had all been served and well over 30 days had elapsed since PDVSA had received them. I accept Mr Gaisman's submission that if it were otherwise there would be nothing on which the arbitrators could base any award. In addition, if (absent an award) no invoice is due and owing unless Article 141 has been complied with or there has been an award, the right of suspension under Clause 803 (5) will practically never arise in the event of non-payment where an award has not been made. It would only arise in the unlikely event that PSDVA agreed to pay, following compliance with the Article 141 procedure, and then failed to do so.
64. Such a conclusion is consistent with the contractual provision for interest. I do not accept the submission made by PDVSA that if an invoice is disputed (at any rate if it is disputed within 30 days) payment is not due. The fact of dispute does not mean that sums properly due are not due; or that interest does not accrue thereon (see the wording in clause 803 (2) - " whether disputed or accepted").
65. There remains for consideration the question whether a statement that PDVSA is " obligated to pay" a specified sum must be treated as meaning not only that the sum was due and owing from PDVSA but also that PDVSA was presently obliged to discharge that obligation. It is important, in this respect, to focus on the precise words, rather than considering what might have been the true interpretation if the words used were "now obligated to pay", "obligated now to pay", or "obligated to pay now" or incorporated some phrase with the words "payable" or "due". Differences in phraseology may matter and the introduction of "now" begs the question as to what it applies to.
66. The expression " obligated to pay" is capable of more than one meaning as are the words " pay", " payable" or " paid". It can refer to the accrual of a liability to pay or an obligation to pay which is immediately to be discharged.
67. In Charter Reinsurance v Fagan [1997] AC 313, at 393 Lord Hoffmann referred to the elasticity of the word " pay", recognising that, in some contexts ("What did you pay for the dress?" addressed to a wife who had purchased on credit) it signified only that a liability has been incurred. (In his example the time for payment would not have occurred when the question was asked). The same might be true if the expression used was "actually paid". Lord Hoffmann gave the example of the wife who is told by her husband that the dress was marked £ 300, but they were having a sale, and then asks "So what did you actually pay". The wife who purchased on credit would be giving the question an unnatural meaning if she said "I have not paid anything yet". Seven years earlier in Tea Trade Properties Ltd v CIN Properties Ltd [1990] 1 EGLR 155, as Hoffmann J, he had observed that the word "payable" used in the lease before him to describe the rent was used in two different senses as meaning, on occasion, "accruing from time to time" and on others "falling due for payment".
68. In my judgment, in the particular circumstances of this case, a statement that PDVSA was obligated to pay must be taken to mean that the obligation to pay has accrued due so that PDVSA had become liable to make the payment, even though precluded from discharging that liability until the Article 141 procedure had been complied with or an award made. In a case where there is a potential distinction between a liability to pay and an immediate obligation to discharge that liability, "obligated to pay" is perfectly apt to refer to the former. I note, in this connection, that in his submissions to the arbitrators on 23 July 2016 Mr Duncan Matthews QC, who then appeared for PDVSA, said:
"What is the real incentivization we would say under the contract for PDVSA to pay is the fact that after 30 days they are both in breach of an obligation to pay a sum that is actually due and they
, also, contractually are required to pay interest in relation to it"
[Bold added]
69. In the present case after the 30 days had elapsed PDVSA was obligated to pay the sums specified in the invoices. That proposition assumes that the invoices were calculated with the right rates. It is not, however, suggested that Mr Buckland did not honestly believe that the invoices were correctly calculated; and, in the absence of fraud, it is the function of a letter of credit to pay the amount called for on presentation of conforming documents. Disputes between the parties are not to affect liability thereunder.
70. I regard this construction as consistent with commercial good sense and, on that account, preferable to the rival one. The availability of the letter of credit was of critical importance given PDVSA's dilatory payment history. A drilling contractor needed, and PDVSA needed to offer, an assured source of regular payment. The drilling contract envisaged a steady cash flow. The fact that the combination of the contract and Article 141 might well preclude POS from securing regular payment would, itself, be good reason for requiring an independent and autonomous letter of credit governed by English law, issued by a body which was not a Venezuelan State entity, and to which Article 141 did not apply. The letter of credit did not limit itself to payment only in the event of an award; and was unlikely to be needed if PDVSA had gone through the Article 141 procedure.
71. The construction which I favour is consistent with the other terms of the SBLC. By paragraph 1 of the SBLC the bank issued the SBLC " to guarantee the payment of any invoice issued by the beneficiary". The SBLC calls for production of a copy of the invoice marked unpaid together with evidence of receipt of the invoice, drilling reports and a certificate that PDVSA has an obligation to pay. By paragraph 2 payment is to be made provided that 30 days have elapsed since PDVSA's receipt of the invoice. The SBLC does not call for production of an award or of evidence that Article 141 has been complied with. I recognize that the SBLC was entered into as a contract ancillary to the drilling contract, which contained clauses 803 (3) and (4). On the footing that those clauses were valid, as must originally have been assumed, the service of an invoice would either produce the result that they were deemed to be correct (if no dispute was raised within 15 days) or, in any event, mean that PDVSA was bound to pay even if there was a dispute. Nevertheless, the absence of any requirement to present an award or proof of compliance with Article 141 remains a guide to construction.
72. I do not regard the arbitrators as having decided anything contrary to the above analysis. Their award was in relation to clauses 803 (3) and (4), not clauses 803 (1) and (2). They were not concerned with the distinction between a liability and its discharge. They did not relevantly address clauses 803 (1) and (2) or consider whether liability to pay had arisen under those clauses or hold that it had not. They were concerned with whether payment fell to be made by PDVSA without compliance with Article 141 or an award.
73. As PO 16 records, when POS applied to have the injunction in PO 8 lifted it did so on the basis that POS had the right under the SBLC to certify that sums were due and that that right was not qualified by or subject to the terms of the drilling contract. POS claimed that, even if clause 803 (3) was incompatible with Article 141, POS was entitled to call on the SBLC if it considered that it had correctly invoiced PDVSA at the correct rate and that the sums invoiced were due, in which case it could make the necessary certification under the SBLC.
74. PDVSA, for its part, sought an order that no steps be taken by or on behalf of POS to obtain payment of any invoice unless Article 141 had been complied with or the arbitrators had ordered that payment was due. It submitted that the SBLC required POS to certify that invoices were due; and disputed invoices were clearly not due under the contract in circumstances where PDVSA had disputed an invoice and Article 141 had not been complied with and no award obtained.
75. The arbitrators recorded that it was common ground that POS had a reasonable possibility of succeeding on the applicable day rate but not on the claimed contractual right to advance payment (i.e. under clause 803 (4) or (3)). They decided (i) that they had the procedural authority to make an interim injunction to protect the rights asserted by PDVSA if it was appropriate to do so; (ii) that POS was given independent rights under the SBLC to which PDVSA had agreed; (iii) that a presentation under the SBLC did not directly engage the parties' substantive rights to be adjudicated by the Tribunal since it was the bank, and not PDVSA, which would have to make payment; and (iv) that the basis on which that free standing arrangement could be said to be prohibited in Venezuelan law under the provisions of that law so far debated " was not canvassed before the Tribunal by the claimant". The arbitrators held that the question whether a payment claim met the requirements of the SBLC would depend on whether POS had made a valid demand under the terms of the SBLC which it was for the English court to decide, in particular in circumstances where invoices had not been approved nor made the subject of an award, " with the court applying the relevant law of the SBLC and taking account of the Tribunal's findings". The arbitrators said that in doing so " the Tribunal leaves intact [POS'] right to obtain any remedy available to it under the SBLC mechanism to which it agreed".
76. If the arbitrators' view was that no obligation to pay of any kind could ever arise under the drilling contract in the absence of compliance with the requirements of Article 141 or an award, they would hardly have expressed themselves as they did.
77. As I have said Mr Howard submitted that paragraph 14 of PO 8 (see [41] above) had the effect that POS was not permitted to trigger the SBLC in respect of any disputed invoice and that the conclusion was so obvious that the fact that Mr Buckland presented the demand at all was an indication that he was deceitful. This point found no place in any of PDVSA's skeleton arguments; nor in any part of the cross examination of Mr Buckland; nor in the judgment below.
78. I do not regard that paragraph as saying anything about clause 803 (2) or as to when any liability/obligation to pay arose. The paragraph appears in part of the ruling in which the arbitrators were considering the possibility that, although clause 803 (4) had been held to be void, POS might seek to make use of the deeming provision in clause 803 (3), on which the arbitrators had not then ruled. In order to deal with that possibility, the arbitrators made the order referred to in paragraph [41] above. In paragraph 14 of PO 8 they were proceeding on the basis that, as PDVSA then claimed, it was only the deeming provisions of clause 803 (3) that were affected by the FPA, so that there remained an obligation on the part of PDVSA to notify a dispute within 15 days. It is not clear to me whether PDVSA ever complied with that timetable.
79. The last sentence states that, if PDVSA does so, POS may not present the invoice for payment under the SBLC because the pay-now-argue-later mechanism in clause 803 (4) was void. It is not wholly clear to me on exactly what basis the arbitrators thought that the conclusion would follow from the premise. It may be that all that they were saying was that POS could not present an invoice on the footing that it was, on any view, due by virtue of clause 803 (4). Alternatively, and more likely, they may have been saying that a presentation under the SBLC would, in effect, require payment now and argument later which Article 141 forbade. This would, however, ignore the fact that Article 141 does not apply to the SBLC. I cannot regard the arbitrators as making in this paragraph of a procedural order a binding determination that any presentation by POS under the SBLC prior to an award or compliance with Article 141 would be a breach of contract. No such determination is to be found in the order actually made; nor is the order made dependent on any such determination. Further, and in any event, Procedural Order 16 is, as it seems to me, wholly inconsistent with any such determination.
Conclusion
80. In my judgment, the judge was wrong to conclude that PDVSA was under no obligation under the drilling contract to pay any invoice submitted by POS; and that Mr Buckland on behalf of POS was not entitled to certify that PDVSA was obligated to pay POS the amount of those invoices.
81. It follows that in signing the certificate Mr Buckland was not fraudulent in any sense. On the contrary he was entitled to sign it. He was not dishonest.
82. If I had decided that the judge was right to conclude that PDVSA had no obligation to pay, it would have been necessary to determine whether he was entitled to find that Mr Buckland was fraudulent in signing the certificate, and what would be the consequences if he was not. I do not propose to embark upon that exercise for two reasons.
83. First, there would be a degree of artificiality, to say nothing of difficulty in detachment, for me to assume that the conclusion which I have reached as to the meaning of the certificate is wrong in order to decide whether the judge was entitled to hold that Mr Buckland was fraudulent in reaching the same conclusion as I have reached.
84. Second, if Mr Buckland was not fraudulent in signing the certificate, the question would arise as to whether, in the light of the judge's conclusion that PDVSA was not obligated to pay any of the sums, it would now be dishonest for POS to rely on the certificate and whether the bank would be bound to pay out under it. The judge decided that it was only if there was dishonesty at the time of presentation of the documents that the fraud exception applied; if the original presentation was not dishonest, the bank would be bound to pay under the SBLC.
85. PDVSA say that the judge was wrong. They submit that the question is whether the falsity of the presentation became apparent (either to POS or the bank) prior to the latest date when payment was due under the letter of credit. That date is said not to have arisen because, as the judge recorded [6] the parties agreed a holding position whereby the bank would not pay out and would not be obliged to pay out under the SBLC, until he decided the issues at the trial and that, in the meantime, it was agreed that a total of US$5m should be released to POS from an escrow account which contained funds paid by or on behalf of PDVSA on account of the drilling services provided. As the judge later put it [86] " by agreement the clock has stopped running, the bank is not yet in breach of its obligation to pay out upon presentation". Mr Gaisman said that no such agreement was made.
86. If there was no such agreement, the time for payment under the SBLC occurred before the hearing. Whether or not time had in fact stopped is highly debatable. Counsel for PDVSA and the bank appear to have accepted before the judge that that was the effect of the order made on the Friday before trial. Whether Mr Michael Bools QC, acting for POS, did so is less clear although he did not challenge what was being said by the other counsel.
87. In addition the question whether knowledge of falsity acquired after presentation but before the time for payment has arisen gives rise to the fraud exception involves consideration of a number of authorities, an exercise which I do not regard it as appropriate to undertake on an obiter basis.
88. I wish, however, to express some disquiet at the finding of the judge that, on the view that he took of the legal position, Mr Buckland was fraudulent in signing the certificate. Whilst there is only one true construction of an instrument such as the certificate, different legal minds may obviously take different views on such a question. Had it been necessary to do so I would wish to have given anxious consideration to the question whether, despite the well-recognised advantages of a trial judge and the inhibition rightly felt by this court in overturning findings of fact, the judge was entitled to conclude that Mr Buckland was fraudulent (i.e. conscious of the falsity of what he was saying or with no honest belief in, or a reckless indifference to, its truth) in holding the view that I currently hold, when making what was, in essence, a representation of law. It may be that the judge was under a misapprehension as to exactly what Mr Buckland was really saying in relation to his consideration of what he called the "temporal" point, which, in any event, the judge found that he had considered: see paragraphs [77] - [80] and [89] of the judgment.
Disposition
89. Accordingly I would allow the appeal. The question then arises as to what order we should now make. In this respect a complication arises. Judge Waksman's order, as well as declaring that the bank was not liable to pay under the SBLC, ordered POS forthwith to withdraw the demands presented to the bank under it. By an email to the bank of 5 October 2016 all those demands were withdrawn. The Notices of Withdrawal which were attached to the email irrevocably withdrew the outstanding demands with immediate effect; and stated that POS no longer required payment in respect of the demands and that the bank was no longer under any obligation to make any payments to it. The bank is concerned that if it is now required to make payment it may have difficulties in claiming reimbursement.
90. In my view, subject to any further submissions that may be made as to the form of the order in the light of this judgment, we should:
(a) set aside paragraphs 1-5 of the order of 5 October 2016;
(b) order that the notices of withdrawal of 5 October 2016 made pursuant to the order of 5 October 2016 are to be treated as always having been null, void and of no effect; and
(c) order the bank forthwith to pay to the solicitors for POS, for the account of POS, the sum of US $ 129, 877, 699.54 in settlement of the demands presented on 19 September 2016 under the SBLC.
Order (a) is necessary to give effect to this judgment. Order (c) is the order contemplated by the undertaking given by the bank on 28 September 2016. Orders (b) and (c) fall to be made in the light of the power and practice of the court to " make consequential orders as nearly as is reasonably possible to achieve the restitution which the result requires"; per Lord Nicholls in Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd [1997] 1 WLR 1627, 1637.
Lord Justice Lewison:
91. I agree.
