Mauri Garments Trading and Marketing Limited v The Mauritius Commercial Bank Limited

Posted by David Miles on
On 24th March, the Privy Council handed down Judgment in an appeal from the Court of Appeal of Mauritius. The Appellant had brought a claim in tort against the Respondent for having obtained more than was actually owed by the Appellant under a sale and purchase contract.

In November 1992 the Appellant entered into a contract with a clothing manufacturer, Mauri Garments Co Ltd ("Mauri Garments") - a customer of the Respondent bank - for the purchase of a large quantity of shirts. The contract provided for a bank guarantee to be put in place as security for payment, and a letter of indemnity for up to FF5m was accordingly issued by the Appellant's Swiss bank in favour of the Respondent.

The Respondent put Mauri Garments into receivership and subsequently made a demand, duly acted upon by the Appellant's bank, for the full amount of FF5m under the letter of indemnity. This was on the basis that the Appellant had failed to make payment totalling FF6.7m for goods previously supplied by Mauri Garments.

It was suggested by the Appellant that the monies payable to Mauri Garments only amounted to FF2.5m. This was due primarily to the offsetting of sums allegedly owed by Mauri Garments to the Appellant in respect of raw materials paid for by the Appellant.

It was submitted that the Receiver's statement of the accounting position between the Appellant and Mauri Garments, of which the Respondent must have been aware (having put Mauri Garments into receivership), had identified the sum of FF2.5m to be outstanding. With that knowledge, the Appellant claimed that the Respondent had no basis for demanding more.

The Privy Council (Lords Mance, Clarke, Sumption, Carnwath and Toulson) held that the Appellant's tort claim was not maintainable at law.

Lord Mance stated that, "Where parties have, as here, entered into carefully structured contractual arrangements, involving two separate and autonomous contracts each between different parties to the other, it is impossible for the law to recognise tortious duties outside and cutting across the terms and performance of those contracts."

It was decided that any set-off which might exist as between the Appellant and Mauri Garments (whether under the sale contract or under any separate agreement), and any knowledge which the Respondent had of the accounting position between these two parties, was irrelevant.

Lord Mance added that the Appellant's attempt to assert a tortious duty owed to it by the Respondent "would undermine and conflict with the deliberate and familiar contractual scheme agreed between the parties."

The appeal was dismissed. Blake Morgan LLP acted as Agent for the Respondent.

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David has acted as a Privy Council agent since 1993. He has conducted many cases from most of the Privy Council jurisdictions.

David Miles
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