Singapore International Commercial Court

1 These proceedings concern a claim by Macquarie Bank Limited ("Macquarie") for US$1.2 million (alternatively damages to be assessed) in relation to what is said to be an "over-the-counter" ("OTC") commodity swap agreement (the "Transaction") in respect of 30,000 metric tonnes ("mts") of nitrogen fertiliser (urea) at a fixed price of US$275 per mt between Macquarie and the Defendant, Graceland Industry Pte Ltd ("Graceland"), a subsidiary of Wengfu (Group) Co., Ltd ("Wengfu Group") which is a Chinese state-owned enterprise involved in the manufacture and supply of phosphate-based chemical products.

2 In summary, it is Macquarie's case that the Transaction was made in the course of certain emails in May 2014 and recorded in a Long Form Confirmation ("LFC") dated 6 June 2014 incorporating the standard 2002 International Swaps and Derivatives Association Inc. Master Agreement (the "ISDA Form"); that Graceland wrongfully repudiated the Transaction thereby entitling Macquarie to terminate the Transaction as it did on 8 July 2014; and that the sum of US$1.2 million is recoverable by Macquarie as the "Close-out Amount" (as defined in the ISDA Form). As appears below, Graceland denies such claim and advances a counterclaim against Macquarie and also Mr Stephen Wolfe who was, at all material times, employed by Macquarie as a Senior Advisor.

3 By way of defence and counterclaim, Graceland raises a number of wide-ranging issues with regard to the proper analysis of the relationship between Macquarie/Mr Wolfe and Graceland, the nature and terms of the Transaction, the obligations of Macquarie/Mr Wolfe, alleged fraudulent misrepresentations/non-disclosures by Macquarie/Mr Wolfe and whether, as Graceland alleges, the Transaction was void ab initio and/or has been rescinded. In very broad terms, it was submitted on behalf of Graceland that it never thought that it was selling 30,000 mts of urea in a swap deal with Macquarie as a counterparty, but that Macquarie acted throughout as its agent, broker or fiduciary; that, in that capacity and against the background of more than 20 years of friendship and business relationship ( g uanxi ) which Mr Wolfe enjoyed with Graceland's director, Mr Liu Zhongjin, and the Wengfu Group, Mr Liu reposed confidence and goodwill in Mr Wolfe; that at every juncture, Mr Liu looked to Mr Wolfe for and relied entirely on Macquarie and Mr Wolfe for their advice and recommendations; that Mr Wolfe abused that relationship by misleading Graceland and enticing it to enter into a sector which it had no experience in, ie , commodity derivatives; and that, unknown to Graceland, this was a "recipe for commercial disaster" . As described somewhat dramatically by Mr Darrell Ingram (one of Graceland's experts) in his supplementary report, the transaction was from both a transactional and financial point of view, simply "an off-course drone strike from the very start." In addition, there is also an issue between the parties concerning the proper calculation of Macquarie's claim for the Close-out Amount under the ISDA Form (if incorporated into the Transaction). As such, the present case involves issues which are potentially of considerable significance to the derivatives market.

4 It is important to note that, as originally pleaded in the defence, it was Graceland's primary case that there was never any binding agreement between Macquarie and Graceland because there was no offer and acceptance. However, that issue was determined at a previous hearing before Woo Bih Li J in Registrar's Appeal No 30 of 2017 before this case was transferred to the Singapore International Commercial Court ("SICC"). In particular, Woo J struck out the portion of Graceland's defence pleading that "no contract was concluded between [Macquarie] and [Graceland] as [Macquarie's] offer for a swap transaction had expired as time had lapsed before [Graceland's] purported acceptance." Graceland did not seek to appeal Woo J's decision. Thus, the present position is that Graceland accepts (as it must) that there was a binding agreement, although (as referred to below) there are important "live" issues as to (a) the precise terms of such agreement; and (b) whether such agreement was void or voidable.

5 In summary, Graceland denies the claim on four main grounds:

(a)  Unilateral mistake : The Transaction was void ab initio and/or has been rescinded on the basis of Graceland's "unilateral mistake". In particular, it is Graceland's case that it did not intend to enter an OTC transaction and that it was under the mistaken belief that the Transaction was not such a transaction. Further, it is Graceland's case that Macquarie and/or Mr Wolfe had actual and/or constructive knowledge of and/or unconscionably took advantage of such mistaken belief.

(b)  Mutual mistake : The Transaction was void ab initio on the basis that the Transaction was entered into by a "mutual mistake" by Macquarie and Graceland, viz , Graceland had thought that Macquarie was at all material times acting as its agent or broker in the Transaction, whereas Macquarie thought Graceland wanted to transact with Macquarie as a counterparty ( ie , principal to principal) to the Transaction.

(c)  Breach of fiduciary duties : Macquarie and/or Mr Wolfe breached their fiduciary duties such that Graceland was entitled to and did validly elect to "reject" the Transaction.

(d)  Fraudulent misrepresentation or non-disclosure : The Transaction has been validly rescinded by Graceland by virtue of fraudulent misrepresentations made by Macquarie and/or Mr Wolfe, alternatively, their material non-disclosure of certain matters. In the further alternative, Graceland relies upon s 2 of the Misrepresentation Act 1967 (c 7) (UK).

6  As stated above, Graceland also challenges the calculation of the amount claimed by Macquarie and advances a counterclaim for damages to be assessed against Macquarie and/or Mr Wolfe.

7 Save as set out below, it is common ground between the parties that all these issues are to be determined as a matter of English law.

8 Macquarie is a company incorporated in Australia. It is a global provider of banking, advisory, trading, asset management and retail financial services. The second defendant in counterclaim, Mr Wolfe, was, at all material times, employed by Macquarie as a Senior Advisor.

9 Graceland is a company incorporated in Singapore. As stated above, it is a subsidiary of the Wengfu Group which is a Chinese state-owned enterprise involved in the manufacture and supply of phosphate-based chemical products. As a subsidiary of the Wengfu Group, Graceland facilitates the Wengfu Group's manufacture and supply of these products including the trading of phosphate-based chemical products. It is a very substantial trading company with paid-up capital of US$50 million and revenues in 2013 of some US$2.3 billion. However, it is an important part of Graceland's case that the vast majority of its business concerned the trading of physical products; that, so far as urea is concerned, its trading business was very limited, to perhaps about 150,000 mts of physical product per year; and that it had no prior experience of derivatives in fertilisers. Even so, Graceland cannot, in my judgment, be regarded as minnows. As Mr Liu accepted, it had its own in-house "legal guy" and had the fullest opportunity to take legal advice, if it wished. Indeed, it is noteworthy that, as appears below, Mr Wolfe recommended Graceland to take its own legal advice - which Graceland declined to do.

10 The vast bulk of the evidence consists of the contemporaneous email exchanges between the parties which speak for themselves. In addition, in support of its claims, Macquarie relied upon the evidence of Mr Wolfe. Graceland relied upon the evidence of two witnesses, viz , Ms Zhang Lin and Mr Liu Zhongjin. All three witnesses served affidavits of evidence-in-chief ("AEICs") and were cross-examined in the course of the trial. Although Ms Zhang confirmed that she was able to and did speak English, that was not her first language and accordingly she gave evidence through an interpreter. Mr Liu understood and spoke English fluently. He gave his evidence in English although he occasionally had the assistance of the interpreter from time to time.

11 Mr Wolfe is currently the Executive Director in the Commodities and Global Markets Group of Macquarie. He first started work at Macquarie from 1984 to 1990 as a Senior Manager involved in the trade of derivatives and metals. After he left Macquarie, he worked at a number of other firms and was involved in the trade and finance of, among other things, base and precious metals, chemical fertilisers and their derivatives. In about December 2013, he re-joined Macquarie as a Senior Advisor in Macquarie's Fixed Income, Currencies and Commodities group (the "FICC Group"), which is now named the Commodities and Global Markets group (the "CGM Group"). In particular, the FICC Group was involved in, among other things, the financing, trading and pricing of commodities globally. As set out in his Consultancy Agreement dated 3 December 2013, Mr Wolfe's role as a Senior Advisor in the FICC Group included, among other things, the promotion and development of the FICC business in China. In particular, his role was to identify, promote and progress business opportunities in China with specific reference to physical commodities and their related derivative products as well as with existing and newly developed exchange-traded futures contracts. In his present role as an Executive Director in the CGM Group, he is now in charge of Macquarie's commodities businesses in China. At the relevant time, Mr Wolfe worked mainly from Macquarie's offices in Sydney, Australia but he would also travel on business to other places including China and Hong Kong. Further, as he explained in evidence, Macquarie's trading desk operations were based in New York.

12 It was submitted on behalf of Graceland that the evidence of Mr Wolfe lacked credibility and that the Court should be slow to accept his testimony. In particular, it was submitted that Mr Wolfe was evasive and that his testimony was riddled with inadmissible opinion, speculations and submissions and was inconsistent at points. It is fair to say that certain of these criticisms have some justification. However, Mr Wolfe was often simply responding to vague and confusing questions in cross-examination. At times, he appeared - perhaps unsurprisingly - to be somewhat exasperated by the line of questioning. I agree that his occasionally somewhat flippant responses were not entirely satisfactory or helpful although, in the circumstances, his reaction to the questioning was not impossible to understand. I also agree that with regard to the important meeting on 16 May 2014 (which I refer to below), Mr Wolfe's oral evidence went somewhat beyond what he had originally said in his AEICs. I consider this evidence further below. In any event, it is my conclusion that Mr Wolfe was an entirely honest witness doing his best to recollect events almost four years ago. However, I should emphasise that I approach the assessment of the evidence of Mr Wolfe (as with all oral evidence concerning events some time ago) with a proper degree of caution doing my best to carry out that task in light of the contemporaneous documents and, where appropriate, what seem to me to be the inherent probabilities.

13 For its part, Graceland relied upon the evidence of the following witnesses:

(a) Ms Zhang Lin, the Finance Manager in Wengfu Intertrade Limited ("Wengfu Intertrade"), a subsidiary of the Wengfu Group. She was the person "frontlining" the negotiations with Mr Wolfe. Prior to 2 January 2014, she was on secondment from Wengfu Intertrade to Graceland. After 2 January 2014, she was released from her secondment and returned to China. To assist in the transition period after the release from her secondment, she continued to assist Graceland with isolated matters which she had been involved in prior to the end of her secondment, including the Transaction which is the subject matter of this action. It was the evidence of Ms Zhang that her scope of work did not require her to be familiar with derivatives or other complex financial instruments; that instead, the finance work which she was and still is involved in mainly concerns the application for banking and financing facilities from various international banks for the international sale of the physical fertilisers which the Wengfu Group manufactures and supplies; and that she had only been involved in one previous transaction involving the ISDA Form - but that concerned what she said was the preservation of the value of foreign currency and had nothing to do with derivatives. As appears further below, Ms Zhang asserted that she either had not read or not understood the contents of certain documents. I consider this evidence further below. However, at this stage, I should emphasise that I regarded Ms Zhang as a highly intelligent individual. Although she was not a trained lawyer, she occupied an important role both generally and in "frontlining" the negotiations with Mr Wolfe and appears to have carried out her work with a considerable degree of care and attention. In my view, the contemporaneous documents demonstrate that she took a keen interest in her work and that she must have read and considered the various documents as referred to below. Even if she herself did not understand fully some of the detail contained in certain of the documents, there is no doubt that she knew or, at the very least, ought reasonably to have known, the general nature of the Transaction as described more fully below. To the extent that Ms Zhang asserted otherwise, I do not accept such evidence.

(b) Mr Liu Zhongjin, the Vice-President of the Wengfu Group. He was a director of Graceland from the time it was incorporated in Singapore in 2009. He left Graceland on 4 January 2016. In my view, Mr Liu was not a satisfactory witness. He was evasive, argumentative and combative. At times, his answers were incoherent and difficult to understand; and he occasionally became very excited, angry and aggressive in the course of giving evidence. In broad terms, Mr Liu's general refrain in evidence was that Mr Wolfe was Graceland's "agent" and that he (Mr Liu) had been misled by Mr Wolfe - a man with whom he (Mr Liu) had done business over a number of years and whom he had come to trust. For reasons set out below, I do not consider that there is any proper justification for this attack on Mr Wolfe. Indeed, it is noteworthy that after Mr Wolfe confirmed the Transaction on 4 June 2014, Mr Liu replied in glowing terms: " That is very good Stepehen [ sic ]. I will ask, Zhanglin to follow up with the rest of the work. We look forward to doing even more for a small margin". As appears below, it was only about a week later , after the market started to turn, that Mr Liu began to question the swap deal. Like Ms Zhang, Mr Liu asserted that he had not read certain of the documents provided by Mr Wolfe. So far as Mr Liu is concerned, this may well be true at least in part: it may be that Mr Liu left the details to Ms Zhang. However, in my view, there is no doubt that he had the opportunity to read the relevant documents and, in truth, like Ms Zhang, he knew or at least ought reasonably to have known the general nature of the Transaction as described more fully below. To the extent that Mr Liu asserted otherwise, I do not accept that evidence.

14 In addition, the parties relied on expert evidence from the following individuals, all of whom served expert reports:

(a)  On behalf of Macquarie:

(i) Mr Robert D. Selvaggio, an economist by profession with over 30 years of experience working in the financial derivatives industry, including as Co-Owner and Head of Analytics of Rutter Associates LLC, Senior Vice President and Head of Risk Analytics at Fidelity Investments, Managing Director of Capital Planning and Risk Analysis at Ambac Financial Group, and Managing Director at The Chase Manhattan Bank. His experience in OTC and exchange-traded derivatives is on both the buy-side and sell-side. Mr Selvaggio speaks frequently at conferences and courses for various financial organisations, and over the past ten years has published a number of articles and research papers.

(ii) Mr Joseph P. Bauman, who has over 40 years of experience in the financial services industry and over 30 years of experience in the OTC derivatives markets, including his role in managing the Global Swaps Group at Chemical Bank, as head of business development for Citibank's Global Derivatives Group and as managing director and head of Bank of America's Financial Engineering and Risk Management Group. Mr Bauman also served on the International Swaps and Derivative Association ("ISDA") board of directors from 1989 to 1999. In 2015, he was named to the Panel of Recognized International Market Experts ("P.R.I.M.E. Finance"). As a senior derivatives business manager, board member and chairman of ISDA, he has spoken at conferences on various derivatives matters and also testified before US congressional committees and various international regulatory bodies.

(b) On behalf of Graceland:

(i) Mr Darrell Dean Ingram, who has more than 30 years of experience in the fertiliser trading and derivatives industry, including about 12 years in Direct Hedge where he was a trader and broker for fertiliser swaps. He worked at Direct Hedge during the start-up of the fertiliser swaps industry, and was instrumental in the development of Direct Hedge's systems and procedures. He now provides consultancy services to clients on, among other things, matters relating to the financial derivative markets and the use of appropriate financial instruments to achieve particular objectives ( eg , hedging). He never worked in a bank. His previous experience was negotiating physical trades on a principal to principal basis - or as a broker in derivatives swaps.

(ii)  Mr Schuyler K. Henderson, a lawyer with some 40 years of experience in the OTC derivatives markets. He has served as the partner in charge of the OTC derivatives practice at four major international law firms and represented more than 60 international financial institutions and many end-users. He has been responsible for developing standard form ISDA documentation for clients (including for use for specialised counterparties and confirmation templates for many types of derivatives), negotiating ISDA documentation and representation of parties in derivatives disputes, including in litigation and acting as an expert witness. He is the author of the leading textbook, Henderson on Derivatives (LexisNexis, 1st Ed, 2003 and 2nd Ed, 2010). He has lectured on matters relating to OTC derivatives for over 30 years for academic institutions, public conferences, banks and professional groups like P.R.I.M.E. Finance.

15 In addition to their individual reports, the experts prepared a very helpful joint memorandum setting out the points of agreement and disagreement; and they all gave evidence and were cross-examined in the course of the trial. As to such expert evidence, it is convenient to make some general observations and comments at this stage:

(a) The application to adduce expert evidence was initially made by Graceland.

(b) At a case management conference ("CMC") on 13 July 2017, I indicated that, at that stage, I was not persuaded that expert evidence was necessary and directed Graceland to set out the proposed areas or issues for expert testimony ("list of expert issues").

(c) Following service by Graceland of the list of expert issues, Counsel for Macquarie and Mr Wolfe set out their objections.

(d) After the service of further (lengthy) submissions and hearing of further argument at a CMC on 4 September 2017, I directed that Graceland serve expert reports without prejudice to any question of admissibility and/or relevance.

(e) Following the service of such expert reports and further submissions from the parties, I declined to make any order excluding such expert reports without prejudice to hearing further submissions at trial with regard to admissibility and weight and laid down a timetable for the service by Macquarie of its own responsive expert report, the preparation of a joint experts' report and further supplementary reports. This was subsequently done.

(f) At the trial, it was again submitted on behalf of Macquarie and Mr Wolfe that the expert reports of both Mr Ingram and Mr Henderson were inadmissible and/or should be excluded in whole or in part on a variety of grounds. In particular, it was submitted that Mr Ingram and Mr Henderson lacked impartiality; and that the contents of their reports were (at least in part) irrelevant to the pleaded issues and expressed views beyond the proper scope of expert evidence. For example, various views were expressed by these experts in the course of their reports as to what Ms Zhang and Mr Liu supposedly knew or believed and whether Mr Wolfe was lying. I do not consider that such matters properly fall within the scope of expert evidence; and I understood that this was accepted by Counsel on behalf of Graceland. Ultimately, it is for the Court to reach conclusions on such matters having regard to the totality of the evidence including, of course, such expert evidence as may be admissible and relevant. Be all this as it may, I did not make any formal order excluding any parts of the evidence for the simple reason that it would have been difficult to separate what was and what was not admissible and to have carried out that exercise would have required a line-by-line examination of the expert reports submitted by Graceland which would have taken up precious time in the course of the trial.

(g) It is fair to say that, as submitted by Counsel on behalf of both Macquarie and Mr Wolfe, both Mr Ingram and Mr Henderson seemed, at times, to take on the role of advocates on the part of Graceland rather than independent experts. Notwithstanding, it is important to emphasise that I fully recognise that both Mr Ingram and Mr Henderson have very considerable experience in the derivatives market as summarised above; that certain parts of their reports and evidence were very helpful in explaining the general nature of the derivatives market with regard specifically to the particular transaction in the present case; and that I am grateful for their assistance. I should also state that, in my view, both Mr Selvaggio and Mr Bauman gave most helpful evidence as independent experts in an objective way. Again, I am grateful for their assistance. I bear all such evidence well in mind. However, for the reasons set out below, it is my view that this case turns very much on its own facts. To that extent, it does not seem to me that the expert evidence is ultimately of much, if any, assistance.

16 Before turning to consider the facts, it is convenient to explain certain key terms that were referred to in the course of the evidence and the parties' submissions. I set out brief explanations below although I should emphasise that they are not intended to be necessarily definitive or exhaustive.

(a) " Forward ": A privately-negotiated transaction between two parties pursuant to which one agrees to sell and the other agrees to buy a specified amount of a particular asset or commodity at a specified price at a pre-determined future date. The terms of forwards can be tailored to the unique needs of the parties.

(b) " Future ": A derivative that is bought and sold on an exchange. Futures are carried out in contracts of fixed terms ( eg , dates, amounts and minimum price movements).

(c) " Swap ": In a typical swap, one party agrees to pay the other a fixed price (or rate) for a specified amount of a financial asset or commodity while the other party agrees to pay the first party a floating price for such asset or commodity with the floating price being set by reference to actual market prices observed over a specified period of time. A swap is a privately-negotiated transaction between a bank and one of its clients and its terms can be tailored to the precise needs of the parties.

(d) " OTC derivative ": An individually-negotiated, bilateral derivative that does not trade on an exchange. Forwards and swaps are types of OTC derivatives.

(e)  " Exchange-traded derivative ": A derivative that is traded on an exchange. The terms of anexchange-traded derivative are standardised.

17 The relevant events begin towards the end of 2013 when Mr Wolfe approached Mr Damien Heath, who was then the CEO and a director of Graceland and who reported to Mr Liu, to suggest that he (Mr Wolfe) conduct a presentation for Graceland on the use of derivatives. In so doing, I have no doubt that (as submitted by Counsel on behalf of Graceland), Mr Wolfe was keen for Graceland to do business with Macquarie. This presentation took place in Graceland's Singapore office on 17 December 2013. Various possible transactions were discussed in the course of this meeting, following which Mr Wolfe sent an email to Mr Heath and his other colleagues at Graceland, viz , Mr Liu, Ms Lai Han (a director of Graceland at the material time) and Ms Zhang. The email addressed various possible transactions including what Mr Wolfe referred to as "fertiliser forward swaps". The email ended by saying:

18 From December 2013 onwards, Mr Wolfe (on behalf of Macquarie) actively pursued business with Graceland, the Wengfu Group and the Wengfu Group's subsidiaries on several fronts, including possible fertiliser derivative transaction(s) for Graceland; metal business financing and trading for Graceland, the Wengfu Group or its subsidiaries; and inventory financing of stock belonging to Wengfu Australia, a subsidiary of Graceland.

19 In the course of 2014, there was a stream of emails between, in particular, Mr Wolfe, Ms Zhang and Mr Liu as well as various internal emails relating to what ultimately became the Transaction which lies at the heart of these proceedings. Many of these emails were referred to in the course of the trial. I do not propose to set out in full each and every email that passed between the parties. However, I set out or refer to below what I consider to be the most important emails.

20 On 9 January 2014, Mr Wolfe sent an email to Mr Heath (copying Ms Lai, Ms Zhang and Mr Liu) stating:

Mr Heath replied: "Thanks, we look forward to hearing more."

21  On 7 February 2014, Mr Wolfe sent an email to Mr Heath under the subject header "Fertiliser Swaps" stating :

Although this email was at a relatively early stage, it is plain from its face that the type of transaction being contemplated is one which involves the bank itself having some kind of credit exposure.

22 On 27 February 2014, Mr Wolfe sent Mr Liu an email with some questions from Macquarie's credit team. On 28 February 2014, Mr Liu replied by email. The excerpt below sets out the material part of Mr Wolfe's email, with Mr Liu's responses indicated in bold.

23 Mr Wolfe subsequently requested and obtained from Ms Zhang a summary of Graceland's working capital facilities as at that point of time, ie , February 2014. The evidence of Mr Liu was that Graceland would not have provided Macquarie and Mr Wolfe with this information (in particular, Graceland's function within the Wengfu Group organisation; Graceland's key buyers; the geographical distribution of sales by Graceland; Graceland's management of credit risk; and Graceland's working capital facilities) if Graceland had known that Macquarie was the counterparty of the Transaction and/or acting independently of and/or contrary to Graceland's best interests. As stated, such evidence is tendentious and needs to be broken down. Of course, I accept that this information would, in the ordinary course, be confidential. I also accept that if Mr Liu had known that Mr Wolfe was indeed acting contrary to Graceland's best interests, he would not have provided such information. But, in the circumstances of the present case and for the reasons set out below, it is not, in my view, correct to say that Macquarie was acting contrary to Graceland's best interests. The fact that one party acts as a counterparty to another party (as, for example, in many banking transactions) does not necessarily mean that such other party is acting "contrary" to the best interests of the other party and, speaking generally, it would be misleading and wrong to characterise such relationship in such terms. Certainly, as appears further below, I have no doubt that Macquarie's intention throughout was to act as an independent counterparty in any swap deal with Graceland; and, in that capacity and in the circumstances of the present case, I see nothing extraordinary in Macquarie requesting such information nor any reason why Mr Liu or Graceland might wish to refuse to give such information particularly since the discussions between Mr Liu and Mr Wolfe covered a broad spectrum of possible business between Graceland and Macquarie. On the contrary, I can well understand why a bank in the position of Macquarie wishing to do new business with a new party like Graceland would want this information - particularly at this early stage of their discussions and in circumstances where Macquarie would be undertaking potentially substantial exposure in its capacity as an independent counterparty in any swap deal with Graceland.

24 Mr Wolfe's evidence was that on about 4 March 2014, Mr Liu called him to say that Graceland was interested in, among other things, entering into fertiliser forward swaps with Macquarie to protect itself against price fluctuations of the fertilisers that it traded in. Mr Liu was unable to recall this specific conversation; but there is no reason to doubt what Mr Wolfe says Mr Liu told him and it fits well with the chronology as evidenced by the contemporaneous documents.

25 As to the general position at this time, Mr Liu's evidence was, in summary, as follows:

(a) He did not understand how swaps and OTC transactions operated.

(b) He remembered informing Mr Wolfe at some stage that Graceland was looking for a financial instrument which could assist Graceland to protect itself against price fluctuations of the commodity fertilisers that it traded in, in particular diammonium phosphate ("DAP") products.

(c) Graceland had never previously executed any ISDA agreement for any commodity derivative transaction and he was not familiar with the ISDA agreement.

(d) Sometime in about early March 2014, he requested Mr Wolfe to provide Graceland with some document(s) to assist its understanding of how fertiliser derivatives operated as Graceland was not experienced in swap transactions.

(e) Graceland did not typically provide or discuss with a buyer commercially sensitive and confidential internal information; Graceland had provided this information to Macquarie (through Mr Wolfe) only because Macquarie and Mr Wolfe had voluntarily held themselves out as Graceland's agent, broker or fiduciary.

(f) Mr Wolfe explained to Mr Liu that Macquarie could assist with arranging an appropriate financial instrument for Graceland through Macquarie's New York office.

(g) Mr Wolfe did not inform Mr Liu that Macquarie would be the counterparty of this financial instrument.

(h) Consequently, Mr Liu understood that Macquarie would be acting as Graceland's agent, broker or fiduciary in respect of such a financial instrument.

26 This evidence is, again, tendentious and needs to be broken down. It is true that, at this stage, there is nothing which indicates that Mr Wolfe specifically informed Mr Liu that Macquarie would be acting as a counterparty in any swap deal - although the obvious inference from the email dated 7 February 2014 referred to above is that this would (or at least might) be so. For present purposes, the crucial point from Graceland's point of view is Mr Liu's evidence that he "understood" that Macquarie would be acting as Graceland's "agent/broker/fiduciary". As stated, it is a bald assertion which I do not accept. Moreover, Mr Liu does not say that such alleged understanding was the result of anything that Mr Wolfe might have said; and, so far as may be necessary, I do not accept that Mr Wolfe did say anything to that effect or which might reasonably have led Mr Liu to believe that was the case either generally or with regard, in particular, to any swap transaction. In any event, as set out below, subsequent contemporaneous documents show that Mr Wolfe was careful to explain that Macquarie would act as a counterparty in any swap deal.

27 Following that telephone conversation, on 4 March 2014, Mr Wolfe sent Mr Liu a further email attaching examples of the documents that would have to be executed by Graceland in order to establish a fertiliser forwards swap trading account with Macquarie, namely: (a) the ISDA Form showing Macquarie as a named party; and (b) the ISDA Cross-Border Swaps Representation Letter, also known as the "Frank Dodd Letter". In that email, Mr Wolfe stated: "Please let me know if you have any questions in regard to these documents." Mr Liu subsequently forwarded the email and attachments on 6 March 2014 to Ms Zhang.

28 It is fair to say that the ISDA Form is a detailed document which is far from straightforward. However, it is absolutely plain from even a cursory glance of the main provisions that there is nothing in the ISDA Form to indicate that Macquarie would be acting as an "agent", "broker" or "fiduciary". On the contrary, it is plain that, as appears from Clause 2, its purpose is to create independent obligations on the contracting parties; and, in my view, this would or should have been obvious to both Mr Liu and Ms Zhang.

29 Meanwhile, Mr Wolfe sent a further email to Mr Liu on 4 March 2014 with indicative bids for DAP as follows:

30 In my view, this is an important email. There is no doubt that Mr Liu read it; and according to his own evidence, he understood well from the penultimate paragraph that Macquarie would be requiring security or a "kind of collateral" to protect itself against the exposure of price fluctuations. In my view, the request for such security or collateral is consistent and consistent only with Macquarie acting as an independent counterparty.

31 Following receipt of that email, Mr Liu asked Mr Wolfe to provide further information with regard to the operation of a swap. Pursuant to that request, Mr Wolfe sent a set of PowerPoint slides via email dated 6 March 2014 to Mr Liu entitled "Fertiliser Swap Overview - Graceland Industry Pte Ltd and Macquarie Bank" (the "Overview"). The email and attached slides were forwarded on the same day by Mr Liu to Ms Zhang. Mr Wolfe had prepared and sent the Overview to Graceland so as to (a) provide a broad overview of Macquarie's fertiliser swap trading process; and (b) set out the issues Graceland would have to consider prior to entering into the fertiliser swap. As stated by Mr Wolfe, he had prepared the Overview because Macquarie had never done a transaction with Graceland before and Mr Wolfe wanted to make sure that Graceland was being very well taken of.

32 The Overview explained that the fertiliser swap trading process would be broadly as follows and also set out the decisions and issues which Graceland would have to consider prior to entering into a swap transaction, viz :

33 In addition, one of the slides provided two worked examples of swap transactions between Macquarie and Graceland, one showing Macquarie remitting US$250,000 to Graceland ( ie , a profit to Graceland) and the other showing Graceland remitting US$250,000 to Macquarie ( ie , a loss to Graceland).

34 Initially, Mr Liu said in evidence that he had read the Overview "roughly" but that he " could not understand it well" . However, he then stated that he had not had the time to read the document. In any event, he accepted in cross-examination that he understood that a swap transaction could result in either a loss or a profit. Despite being told specifically by Mr Wolfe in the Overview that Graceland should get its own legal advice, it appears that Mr Liu never did so himself. Rather, his evidence was that he asked his team to follow up on the document and left the decision whether or not to get legal advice to his team. In the event, it appears that no outside legal advice was obtained.

35 In paragraph 33 of her AEIC, Ms Zhang stated that although she had read the Overview, she did not fully understand how swaps operated. In cross-examination, she said:

To my mind, that explanation is (at the very least) difficult to accept. I am not sure what Ms Zhang intends to mean by saying that the Overview was "only" an attachment to an email from Mr Liu. In any event, Ms Zhang was, as she, accepted, "frontlining" the negotiations with Mr Wolfe. Although English was not her native language and she may have had some difficulty in understanding certain specialist terminology, there is, in my view, no doubt that she was fully capable of reading and understanding the English language. The Overview was expressed in relatively simple terms. Moreover, if Ms Zhang was indeed not familiar with the business of swaps, then one would have thought that such unfamiliarity would and should have prompted Ms Zhang to pay particular attention to the information provided by Mr Wolfe. Further, there is no doubt that the information provided in the slides was clear and important; and Ms Zhang (and also Mr Liu) had ample opportunity (if they so wished and had been sufficiently bothered) to read and digest what was stated. Moreover, although the precise detailed mechanism of a swap may not be entirely straightforward, the information contained in the slides was not difficult to understand. For present purposes, it is a crucial document because it made at least three points absolutely clear, viz , (a) any swap would be entered into by Macquarie and Graceland as principals, ie , counterparties; (b) Macquarie was not providing any advice to Graceland about the likely future direction of any price movements; and (c) depending on price fluctuations, Macquarie might end up paying Graceland money and vice versa .

36 Shortly after Mr Wolfe sent his email, he spoke to Mr Liu over the phone. During that conversation, Mr Liu informed Mr Wolfe that Graceland was looking to trade in fertiliser forward swaps urgently , and asked what Macquarie could do to speed up the process. Shortly thereafter, Mr Wolfe sent a follow-up email on the same day ( ie , 6 March 2014). In summary, Mr Wolfe informed Mr Liu that "depending on how urgent [Graceland's] requirement to trade is", Macquarie and Graceland could enter into "an interim contract" on the basis of a less detailed document known as the LFC instead of the ISDA Form. In particular, Mr Wolfe highlighted to Mr Liu in that email that (a) the LFC would essentially operate as a "mini-ISDA" and could be used for the initial transaction; and (b) using the LFC would give Macquarie's clients (like Graceland) time to get their own independent legal advice on the ISDA Form. How Mr Liu wished to proceed, Mr Wolfe stated, would depend on how keen he was in getting "some forward cover into place". In re-examination, Mr Liu said that he did not understand quite well what Mr Wolfe was trying to tell him; and that is why he asked Mr Wolfe to talk to Ms Zhang. I am prepared to accept that Mr Liu did not appreciate or at least may not have appreciated the full details of the intended transaction and that he was content to leave such details to Ms Zhang. But, in my view, there can again be no doubt that Mr Liu fully appreciated (or ought reasonably to have appreciated) by this stage at the latest that (as appears clearly from the Overview) Macquarie was not providing any advice to Graceland about the likely future direction of any price movements; and that the proposed swaps would involve Macquarie and Graceland acting as principals ( ie , counterparties) in circumstances where, depending on price movements in the market, Macquarie might end up paying Graceland or vice versa.

37 On the same day ( ie , 6 March 2014), Mr Liu then emailed Mr Wolfe saying he wished "to consolidate this within next week so that we are able to initiate the forward cover for saying 100kts DAP as a trial". Mr Liu stated that Ms Zhang from Graceland would contact Mr Wolfe regarding the details of the LFC, explaining that Ms Zhang was (a) a manager in a department called "Commodity Trade and Financing Division" they had set up under Wengfu Intertrade; and (b) the "deputy manage [ sic ] of Finance Division of of [ sic ] Wengfu Intertrade who is in charge of international financing on behalf of Intertrade and Graceland". The email ended with Mr Liu stating that he was "looking forward to get[ting] all the facilities in place so that we are able to start some physical business with Macquarie" and that Ms Zhang would be reviewing the format of documents and will be in "constant contact" with Mr Wolfe for the operation.

38 With regard to this email, Mr Liu was at pains to emphasise in his evidence that when he used the word "forward", he was not referring to any specific type of derivatives product since he was not aware of the difference between "futures" and "forwards" but that he was simply copying Mr Wolfe's use of the term and intended it to mean that it was a "cover" for Graceland against fluctuations in the price of fertilisers moving forward.

39 More generally, it was Mr Liu's evidence that at this time, his intention was to execute a trade on the market through Macquarie as Graceland's agent, broker or fiduciary for DAP products which was a product which he was familiar with, as Graceland facilitates the Wengfu Group's manufacture and supply of phosphate-based chemical products. In his evidence, Mr Liu was also keen to (in his words) "clarify" that he was and still is not familiar with derivatives or other complex financial instruments; that the commodities trading which the Wengfu Group and its subsidiaries and representatives were and are involved in are typically of physical products and not financial products; that the financing which Ms Zhang and Wengfu Intertrade were involved in was the application for banking and financing facilities from various international banks for the international sale of the physical fertilisers which the Wengfu Group manufactures and supplies; that he trusted that Mr Wolfe would take care of Graceland's best interests given the long-standing relationship between Mr Wolfe, Graceland, Wengfu Group and himself; that this was also because Macquarie and Mr Wolfe had voluntarily held themselves out as Graceland's agent, broker or fiduciary when they advised Graceland of (a) the indicative bids for DAP; (b) the suggested need for independent legal advice; and (c) the requirement to lodge some standby security or margin for the transaction; that it was on this basis that he decided to rely on and proceeded with (as Mr Liu described) Mr Wolfe's advice for Graceland to enter into the swap transaction for DAP through Macquarie and on the ISDA documentation or subsequently, the LFC; and that he trusted Mr Wolfe to give the most appropriate advice to Graceland so as to protect Graceland's interests and ensure that Graceland would not suffer loss in this first swap transaction which Graceland intended to enter into.

40 Once again, this evidence is tendentious and needs to be broken down. First, for reasons which I have already given and which I do not need to repeat, I do not accept that Mr Liu understood (or at least could reasonably have understood) that Macquarie was going to act as Graceland's agent, broker or fiduciary in the proposed swap(s). On the contrary, Macquarie and/or Mr Wolfe had made it absolutely plain that Macquarie and Graceland would be acting as principals, ie , counterparties.

41 Second, Mr Liu's repeated mantra that he trusted Mr Wolfe to give advice is not inconsistent with this conclusion - both as a matter of fact and as a matter of law. At this stage, it is sufficient to note the example of the car salesman given by Gloster J in JP Morgan Chase Bank v Springwell Navigation Corporation [2008] EWHC 1186 (Comm) at [449] and cited (with other authorities) by Moulder HHJ in Thornbridge Ltd v Barclays Bank Plc [2015] EWHC 3430 (QB) (" Thornbridge ") at [25]-[33]. Thus, A may buy a car from B. A may do so because he has bought many cars from B in previous years and, in a general sense, trusts B. However, those facts do not of themselves justify the conclusion that B is A's agent nor that A and B are acting other than as principals - although, of course, each case must depend on its own facts and, as is plain from the cases just cited, circumstances may exist which give rise to an "advisory relationship" with consequential duties of care and/or liability for misrepresentation.

42 Third, the suggestion that Mr Liu trusted Mr Wolfe to give the most appropriate advice to Graceland so as to protect Graceland's interests and ensure that Graceland would not suffer loss in this first swap transaction is both bizarre and factually unsustainable. It is, in my view, bizarre because it is inherently improbable that anyone in the position of Mr Wolfe could conceivably suggest or that anyone in the position of Mr Liu could conceivably believe that Mr Wolfe might be able to give advice to "ensure" that Graceland would not suffer loss in the proposed swap particularly since Mr Liu was well aware that the physical market in fertilisers was volatile. No one in Mr Liu's position could possibly have thought that the swap market was any different. Moreover, at the risk of repetition, it is important to recall that the Overview stated in the clearest possible terms that Macquarie was not providing any advice to Graceland about the likely future direction of any price movements and that Graceland might end up losing money.

43 On 7 March 2014, Mr Wolfe then sent an email to Ms Zhang (copied to, inter alia , Mr Liu) stating in material part as follows:

44 Within less than an hour on the same day ( ie , 7 March 2014), Ms Zhang replied to Mr Wolfe thanking him for his email explaining the procedures, agreeing with him to "start with fertilizer line first" and stating amongst other things:

In my view, the emphasised portion above is particularly significant because it shows that Ms Zhang understood full well that the proposed swap was one in which it was contemplated that a "branch" within the Macquarie Group would "deal" with Graceland. On the same morning, Mr Liu also sent Mr Wolfe an email saying, in effect, that Mr Wolfe's proposal to use the LFC would be a "good idea" and requesting an "interim contract".

45 On 10 March 2014, Mr Wolfe received an email from Ms Zhang. She noted that it would "take a long time to keep all docs in place, but international DAP price is declining recently". Ms Zhang asked if Graceland could perform one trial swap first, to lock in the DAP selling price in May and June. Graceland wanted to know the "easiest and simplest way soon". Mr Wolfe replied later that day to say that Graceland could not do a trial until the documents were in place and that there were a few minimum requirements that could not be skipped. Mr Wolfe also added that the fertiliser forwards swap would have to be confirmed and signed off with a LFC.

46 Over this period of time, Mr Wolfe also received a number of follow-up chasers from Graceland for the draft LFC to be provided on an urgent basis. In particular, in an email dated 11 March 2014, Ms Zhang requested that Mr Wolfe "please push [his] team to send us long form confirmation a.s.a.p."; and in an email dated 12 March 2014, Ms Zhang asked Mr Wolfe if there was "[a]ny update for long form confirmation". Various other emails were also exchanged with regard to other documentation including the Frank Dodd Letter. As Ms Zhang accepted in cross-examination, these "chasers" reflected the fact that there was urgency on the part of Graceland to do the swaps transaction. This chain of emails belies any suggestion that Mr Wolfe was "pressurising" Graceland. On the contrary, they show that it was Graceland who was keen to "push" ahead with regard, at least, to the proposed DAP swap.

47 Meanwhile, there was also a number of internal discussions and emails within Graceland concerning the proposed swaps transaction as well as what was described as a "DAP forward" between (amongst others) Ms Zhang, Mr Liu, Mr Chen Shiqing (Deputy General Manager of Wengfu Intertrade) and Mr Heath. For example, on 11 March 2014, Ms Zhang sent an email to Mr Chen stating that:

Ms Zhang also attached to her email what she described as a "schematic representation based on [her] understanding". The attachment had various boxes, lines and arrows showing (amongst other things) "swap price" and "index price" and different scenarios described as "Losses from futures" and "Profits from futures". This confirms, once again, that Ms Zhang was well aware of the possibility of losses from any swap deal with Macquarie.

48 During this period, there were other emails between the parties concerning a proposed "DAP forward". For example, on 13 March 2014, Mr Wolfe sent an email to Mr Liu stating:

49 Mr Liu replied almost immediately on the same day as follows;

Mr Liu replied: "Sure, please let me know. Pleased to discuss." Mr Wolfe then replied: "OK I will see what feedback I can get and then we can discuss from there."

50 Emails continued to be exchanged between the parties concerning a possible "DAP forward" during March and into April and May 2014. Thus, on 18 March 2014, Mr Wolfe emailed Ms Zhang a draft of the LFC requesting her to let him have her questions or comments. This draft LFC was addressed to Graceland and headed "Transaction Confirmation". At the very beginning, it expressly provided, among other things, that Macquarie and Graceland would each be acting as principals in the transaction. Thus, the opening paragraphs of the LFC stated in material part:

In addition, the draft LFC extending to some 12 pages contained numerous detailed provisions setting out the terms of the proposed transaction with space at the end for the document to be signed by authorised signatories for and on behalf of the two named parties, ie , Macquarie and Graceland. Those terms included in Clause 3(a) certain "Additional representations" as follows:

51 On 20 March 2014, Ms Zhang circulated the draft LFC and the ISDA Form internally to Mr Liu and others within Graceland and/or the Wengfu Group requesting them to read those documents and to provide their comments. On 21 March 2014, Mr Wolfe sent a follow-up email to Ms Zhang to check if she had received the draft LFC.

52 The evidence as to what Mr Zhang actually did on receipt of the draft LFC is unclear. In paragraph 72 of her AEIC, she stated only that in relation to the draft LFC, she subsequently replied to Mr Wolfe by email on 21 March 2014 (copying Ms Lai and Mr Liu) with what she described as "largely administrative queries/clarifications which I had crafted based on Graceland's and the Wengfu Group's usual practices when trading in physical fertiliser products since Graceland was inexperienced in derivative transactions". However, her email stated in material part:

The email then continued with four detailed points, viz , (a) a request to increase the "threshold" stated in Clause 11 from US$2 million to US$2.5 million; (b) a request to change the "rounding" figure from US$100,000 to US$10,000; (c) a request to delete Paragraph 11(h)(viii); and (d) a request to clarify certain of the transaction particulars in Clause 1. The precise details of these requests are not crucial. However, in my view, Ms Zhang's email is important because (a) it states, on its face, that she had "gone through" the draft LFC and she needed more time to discuss some issues (whatever they might be) internally; and (b) the four specific points raised by Ms Zhang are not merely administrative queries or clarifications, but instead show that she must have gone through the LFC with some care.

53 In the course of giving oral evidence, Ms Zhang stated that there had been an internal discussion concerning the draft LFC (although it is not clear with whom and when this might have been) and that "[they] didn't understand most of the clauses in the LFC". Even taking this evidence at face value, I do not accept that Ms Zhang (or Mr Liu) could have been in any doubt about the general nature of the Transaction, viz , that as stated in the opening paragraphs of the LFC, each party was acting as principal.

54 On 26 March 2014, Mr Wolfe sent an email to Ms Zhang to update her with some responses to her questions on the draft LFC. On 1 April 2014, Ms Zhang forwarded an amended marked-up version of the draft LFC (marked "Graceland Industry LFC v2.docx") to Mr Luo (a Manager of Wengfu Intertrade) asking him to review that document.

55 On 2 April 2014, Ms Zhang sent an email to Mr Wolfe attaching a marked-up version of the draft LFC ("2 April 2014 Draft LFC") with some "small amendments", as well as a list of Graceland's authorised signatories. For present purposes, it is important to note that Graceland did not amend the part of the draft LFC identifying Macquarie and Graceland as principals or the confirmation that Macquarie was not acting as advisor or fiduciary to Graceland.

56 On 4 April 2014, Mr Wolfe emailed Mr Liu stating:

In passing, I should note that the latter phraseology was heavily relied upon by Counsel on behalf of Graceland. In particular, it was submitted on behalf of Graceland that the phrase "we can work it in the market" showed that Macquarie was, in truth, acting as an agent on behalf of Graceland. In cross-examination, this was strongly disputed by Mr Wolfe. So far as relevant, I consider this phraseology below in the context of later similar emails.

57 On 4 April 2014, Mr Wolfe replied to Ms Zhang stating that Macquarie could accept most (although not all) of the changes that she had proposed in the 2 April 2014 Draft LFC. Later that day, Ms Zhang replied to Mr Wolfe stating, among other things, that she would report to Mr Liu and get back to Mr Wolfe regarding the LFC although Mr Wolfe did not in fact hear from Graceland regarding the LFC until much later, ie , 20 May 2014 (see further below).

58 Meanwhile, on 6 April 2014, Mr Wolfe responded saying with regard to the LFC that he would "wait to hear". That email also addressed the question of the opening of a standby letter of credit ("SBLC"). The email concluded by Mr Wolfe stating in material part:

59 During the rest of April and mid-May, there were no major developments between Macquarie and Graceland. However, the contemporaneous documents show that there continued to be internal activity and discussions within Graceland with regard to possible swap transactions. For example, it appears from internal emails on 14 April 2014 that Mr Heath was telling Ms Zhang that he had been in contact with another party, ie , FIS (a broker for, among other things, fertiliser swaps) with regard to possible swap transactions and had been making enquiries with regard to Macquarie's position in the market. Ms Zhang responded attaching a FIS presentation and saying inter alia that she would keep him posted. A few weeks later, on 7 May 2014, Mr Heath again emailed Ms Zhang asking: "Is anything happening with all this swaps stuff?" Ms Zhang responded saying inter alia that Mr Liu thought that the swap prices being quoted by Macquarie and FIS were too low to cover all their costs "so maybe it's not [a] good time to deal with them. But we will still pay close attention to the swap market". Mr Heath then responded asking whether they were going to put documentation in place with FIS or Macquarie "to allow us to move when we think [it's] the right time?" Ms Zhang then replied:

The reference to preparing more documents is somewhat unclear because no further documents have been disclosed by Graceland. Ms Zhang's evidence was that no more documents were in fact prepared and that following 7 May 2014, she reported orally to Mr Liu.

60 On 7 May 2014, Mr Wolfe emailed Mr Liu stating that Macquarie's New York desk had a client who was interested in a DAP deal. In addition, the email stated in material part:

61 In the event, the proposed DAP deal did not take place due (it would seem) to the state of the market with regard to DAP prices. However, it was Mr Liu's evidence that Mr Wolfe's (a) reference to a potential DAP buyer, (b) advice on the market conditions, and (c) assurance that he had the best solution to get Graceland the best price, are consistent with Graceland's belief that Macquarie and/or Mr Wolfe were acting as Graceland's agent, broker or fiduciary and not the buyer or counterparty in a transaction in particular because there was no necessity for Macquarie and Mr Wolfe to inform Graceland of such information if Macquarie was simply the buyer or counterparty of the transaction; and that, in light of Mr Wolfe's emails, Graceland proceeded under the impression that any deal would therefore be done through Macquarie as an agent, broker or fiduciary who would source for a buyer in the transaction with Graceland. So far as relevant, I deal with this evidence below.

62  Shortly thereafter, on 16 May 2014, Mr Wolfe had a meeting with, among others, Mr Liu, Ms Lai and Ms Zhang in Guizhou, China (the "Guizhou meeting"). This meeting is important because it is Graceland's case that it was then that the possibility of doing a urea swap was first raised and that during the Guizhou meeting and other follow-up phone conversations between Mr Wolfe and Mr Liu from 16 to 21 May 2014, Mr Wolfe made certain alleged fraudulent misrepresentations to Graceland. As pleaded in paragraph 31 of the amended defence and counterclaim, these alleged representations are as follows:

(a) Graceland should focus on entering into urea swap transactions instead of DAP swap transactions (which Graceland was originally inclined to enter into) ("Representation A");

(b) Based on the market movements of the prices of urea in or around May 2014, Graceland would not make any losses from entering into a urea swap transaction ("Representation B");

(c) Graceland would profit from the urea swap transaction if Graceland makes an order to sell urea at US$275 per mt ("Representation C");

(d) Any transaction under the Agreement would be an "Exchange-Traded Transaction" (defined by Graceland to mean "a transaction to be traded or subsequently placed on or cleared with an exchange or a transaction fundamentally similar to an exchange-traded transaction") and priced accordingly ("Representation D"); and

(e) Macquarie was acting as an agent or broker of Graceland and not as a principal or a counterparty to the Agreement ("Representation E").

I refer to the above collectively as the "Representations".

63 In advance of the Guizhou meeting on 16 May 2014, Mr Wolfe sent Mr Liu an email dated 13 May 2014 setting out a list of things to be covered at the meeting. The list included a number of possible projects. With regard to fertiliser hedging, Mr Wolfe stated: "[F]inalisation of ISDA and where to from here?". There are no minutes of the Guizhou meeting or any other detailed record of what was then discussed. However, it is common ground that the meeting lasted much of the day; and it is plain that various matters were discussed including the possibility of doing a urea swap deal.

64 The discussions in the course of that meeting were the subject of evidence by Mr Liu, Ms Zhang and Mr Wolfe in their respective AEICs and in their oral evidence. In approaching this evidence, I bear well in mind that the burden of proof lies on Graceland with regard to the alleged fraudulent misrepresentations.

65 In summary, it is my conclusion that Graceland has not shown on a balance of probabilities that Mr Wolfe made any of the alleged representations whether fraudulently or otherwise, whether at the Guizhou meeting or subsequently. Indeed, it is my conclusion that he did not. Quite apart from the evidence of Mr Wolfe (who denies making the Representations), there is no contemporaneous documentary evidence to support them; and, as submitted on behalf of Macquarie, there is overwhelming contemporaneous evidence which makes clear the nature of the Transaction and which undermines most, if not all, of the alleged misrepresentations. More specifically, with regard to the discussions during the Guizhou meeting, my comments and conclusions with regard thereto are as follows.

66 At that meeting, there were discussions with regard to, among other things, forward swaps for both DAP and urea. Mr Wolfe could not recall who brought up the idea of doing a urea swap deal. However, as I understood his evidence, he "conceded" that he probably brought it up; and that he told Graceland that Macquarie's fertiliser desk in New York was doing such swaps. However, as to Representation A, I am unpersuaded that Mr Wolfe represented to Graceland that it "should focus" on entering into urea swap transactions whether instead of DAP swap transactions, or otherwise in the sense that he was giving any advice as to what Graceland "should" do. According to the evidence of Mr Wolfe, Mr Liu informed him that Graceland and the Wengfu Group had accumulated or at least were planning to accumulate around 300,000 mts of urea, in anticipation of exporting them outside of China. Mr Liu disputed that he had ever said that Graceland or the Wengfu Group had 300,000 mts of urea. Absent proper disclosure, it is impossible to say whether Graceland or the Wengfu Group did in fact have this quantity of urea at this point of time or what plans might have been in place on the part of Graceland with regard thereto; and I find it equally impossible to reach a conclusion one way or another as to precisely what Mr Liu might or might not have said at the Guizhou meeting with regard to any specific quantity of urea which had been or might be accumulated by Graceland or the Wengfu Group. In the event, I do not find it necessary to do so. For present purposes, it is sufficient to say that I accept that Mr Liu did tell Mr Wolfe that Graceland or the Wengfu Group either had accumulated or were intending to accumulate a substantial quantity of urea.

67 At this time, ie , 16 May 2014, it appears that the Chinese government regulated the export of urea and other fertiliser products. To control the quantities exported, the Chinese government levied a high export tax during certain periods in the year to deter domestic producers from exporting their products. A low tax period was referred to in the industry as the "export window" because domestic producers would take advantage of the lower taxes to export their products. Understandably, a shift to the export window invariably led to price fluctuations and the passage of time during which the export cargo was accumulated led to market price exposure for domestic producers and traders, such as Graceland. According to Mr Wolfe, Mr Liu told him at the Guizhou meeting that the accumulation of urea gave Graceland and the Wengfu Group very substantial exposure to movements in the price of urea, and they therefore wanted to hedge their price risk for a portion of the accumulated urea. I accept that evidence. For the avoidance of doubt, I should emphasise that I have borne well in mind the contrary evidence of Mr Liu and Ms Zhang. For example, in the course of cross-examination, Ms Zhang emphatically denied that the reason why Graceland subsequently entered the transaction with Macquarie was to hedge its exposure in relation to its physical quantities of urea. However, the contemporaneous correspondence shows at the very least that that was Mr Wolfe's understanding based on what he had been told by Graceland.

68 For the avoidance of doubt and in any event, there is and can be no doubt that Mr Liu told Mr Wolfe at the Guizhou meeting that Graceland would be interested in entering into a swap with Macquarie for urea at a minimum price of US$275 per mt. On the evidence, I reject the general submission made on behalf of Graceland that Mr Wolfe abused the relationship with Graceland by "enticing" it to enter into a sector which it had no experience of. Rather, it is plain from the contemporaneous documents and the evidence of Mr Liu and Ms Zhang that regardless of what Mr Wolfe allegedly said, it was Graceland's own independent decision subsequently to enter into the Transaction. Specifically, the quantity to be sold was based on instructions of Mr Liu; and it was Mr Liu who stipulated the price of US$275 per mt.

69 As to Representations B and C (it is convenient to take these together), the starting point is the inherent improbability that anyone in the position of Mr Wolfe might conceivably suggest that Graceland would not make any losses from entering a swap transaction (by reference to historic prices or otherwise) still less that Graceland would make a profit at a selling price of US$275 per mt. In my view, these would be absurd suggestions particularly in view of the fact that (a) it must have been obvious to Graceland that the swap market in urea was volatile even if Graceland had no specific prior experience in such market; (b) Mr Wolfe had made it absolutely plain from the very start when he provided the Overview that the result of a swap may well give rise to losses on the part of Graceland; (c) that such possibility existed was also made plain by, for example, the email from Mr Wolfe dated 4 March 2014; (d) it is obvious from even a cursory reading of both the LFC and the ISDA Form that depending on market movements, one party would have to pay the other on the due date; (e) a number of Graceland's internal emails discuss the possibility of losses; and (f) on Mr Liu's own evidence, he raised the possibility of including a "cap" on the profit or loss amounts for any swap deal. This is inconsistent with any representation that Graceland would not make a loss.

70 As to Representations D and E (it is convenient to take these together), the starting point is that prior to the meeting on 16 May 2014 and at the risk of repetition, there is no doubt that the nature of the proposed swap was plain from the explanations given by Mr Wolfe in the Overview and also from even a cursory glance of both the LFC and the ISDA Form, ie , that Graceland and Macquarie would be acting as principals in an OTC trade. I do not accept that anything was said at the meeting on 16 May 2014 to suggest otherwise or to indicate that Macquarie would be acting as an agent or broker on behalf of Graceland. Equally, there was no discussion about the swap being an Exchange-Traded Transaction (as defined by Graceland).

71 However, I accept that there was an important discussion during the Guizhou meeting with regard to how Macquarie would make money out of the fertiliser forward swaps. The evidence of Mr Wolfe was that Mr Liu was curious to know how this would be achieved by Macquarie and that, in response, he (Mr Wolfe) explained to Mr Liu that Macquarie would make money on margins, ie , after receiving an order from a customer to sell a commodity, Macquarie would look for market participants willing to enter into a back-to-back commodity swap with another buyer on largely similar terms, except that Macquarie would be selling the commodity in the second commodity swap at a higher fixed price than what the first party had agreed to; and that the difference in the fixed price in the back-to-back commodity swap was the margin that Macquarie would make. In the course of cross-examination, Mr Wolfe said that Macquarie was expecting to make a margin of about US$5 per mt; that he did not tell that figure to Mr Liu or the other participants in the meeting but that he would have told them if they had asked. (In passing, I should note that Mr Ingram gave evidence that this figure was "exorbitant" and that the "norm" would have been US$1 to US$2, certainly not US$5 (presumably per mt). Mr Ingram may well be right. However, (a) this did not form part of any pleaded issue; (b) such evidence was introduced on the last day of the main hearing in the course of Mr Ingram giving evidence, the latter part during his re-examination; (c) as I understood his evidence, this view related to what a broker might charge by way of commission rather than any "margin" which might be made by a principal on back-to-back deals; and (d) it had not been considered by the other experts. For these reasons, I say no more about this point.)

72 In the course of his oral evidence, Mr Wolfe expanded and to a certain extent qualified his evidence with regard to the proposed back-to-back arrangement referred to in the previous paragraph. As I understood his evidence, the intention on the part of Macquarie was that the first swap ( ie , the swap between Macquarie and Graceland) would not be finalised until the second swap ( ie , the swap between Macquarie and a third party at a higher price) was done, or that at least the two different swaps would be done simultaneously. As stated by Mr Wolfe in evidence, this was subject to a further qualification that Macquarie's trader was always able to take a risk, ie , the trader might not sell everything back-to-back. In particular, according to Mr Wolfe, the traders have to manage their risk profile within agreed limits and that therefore it "[did] not necessarily mean that they [ i e , the traders] have to enter into another transaction for the whole transaction. I would expect that they would not run completely unhedged risk and that they would sell the majority of it".

73 It is fair to say that these further explanations and qualifications referred to in the above paragraph were not set out in Mr Wolfe's AEICs. In any event, I did not understand Mr Wolfe to suggest that he had specifically told Mr Liu or the other Graceland representatives at the Guizhou meeting such further explanations and qualifications and, so far as may be necessary, I do not find that he did. However, it is my conclusion that he certainly did explain to them at that meeting that Macquarie was intending to enter a back-to-back swap as described above and that Macquarie would therefore be making a margin in the way described above.

74 I reach this conclusion not only because my assessment was that Mr Wolfe was an honest witness but also because it is consistent with, and indeed supported by, the contemporaneous documents - both positively and negatively. For example, as I have already noted, following Mr Wolfe's confirmation of the swap with Graceland in early June 2014, Mr Liu replied by email: "That is very good Stepehen [ sic ]. I will ask, Zhanglin to follow up with the rest of the work. We look forward to doing even more for a small margin". The reference to doing even more "for a small margin" is and, in my view, can only be a reference to Macquarie's own margin. By contrast, there is nothing in the documents to suggest any possibility that Graceland would pay any commission to Macquarie - which would certainly have been the case if it had been intended that Macquarie would simply be Graceland's agent or broker. In the course of cross-examination of Mr Wolfe, Counsel on behalf of Graceland did put to Mr Wolfe that he had said at the Guizhou meeting that Macquarie would charge a commission for arranging the deal. But this was emphatically denied by Mr Wolfe. I accept Mr Wolfe's evidence without hesitation. For the sake of completeness, I should also mention that in the course of cross-examination, various questions were put to Mr Wolfe as to what else was allegedly said at the Guizhou meeting. I do not propose to examine each and every question so put. For present purposes, it is sufficient to state that I accept Mr Wolfe's evidence in that regard; and that my conclusions with regard to the main points as to what was said at that meeting are as summarised above.

75 A few days after the meeting, on 19 May 2014, Ms Zhang sent Mr Wolfe an email setting out some of the matters arising from the Guizhou meeting. In particular, Ms Zhang asked for the swap prices for (a) DAP in the months of June, July and August; and (b) urea for the months of July, August and September. Mr Wolfe sent a holding response later that same day saying inter alia that he was waiting for some further information from his fertiliser desk. In addition, he sent a further email responding to certain other points raised in Ms Zhang's email - in particular with regard to a "futures account" and a prepayment guarantee and SBLC. It was the evidence of both Mr Liu and Ms Zhang that the contents of this latter email were consistent with their belief that Macquarie and/or Mr Wolfe would act as Graceland's agent, broker or fiduciary in an Exchange-Traded Transaction through which Macquarie and/or Mr Wolfe would earn a brokerage commission; and that it was clear from the way Mr Wolfe was pressing Graceland on the SBLC issue that Graceland did not have an equal bargaining position vis-à-vis Macquarie. I do not consider that it is necessary to set out this email. The contents speak for themselves. For present purposes, it is sufficient to say that I do not accept the premise underlying these assertions nor the gloss placed on this email.

76 On 20 May 2014, Mr Wolfe sent another email to Mr Liu stating in material part as follows:

77 Again, this email was relied on heavily by Graceland in support of its case. In particular, it was submitted on behalf of Graceland that it showed Mr Wolfe giving advice qua agent with regard to price levels for a swap and his references to "best result" and "best outcome". I do not accept that submission. In my view, it is important to bear in mind that Mr Liu had already indicated only a few days previously at the Guizhou meeting on 16 May 2014 that he was looking to do a deal at US$275 mt. On that basis, it is hardly surprising that when Mr Wolfe found that Yuzhny urea swap for June was trading at US$275 to US$280 he said that this should be an interesting price for Graceland; and that Mr Wolfe was keen to know what was Graceland's lower price limit. In that context, the references to "best result" and "best outcome" are, in my view, simply to be regarded as part of a negotiation process in which Mr Wolfe was trying to conclude a deal.

78 It was also strongly submitted on behalf of Graceland that the further wording as emphasised above in this email (in particular the reference to Macquarie being able to "work an order") is again consistent with Mr Wolfe acting as an agent going out into the market to conclude a swap deal in the nature of an Exchange-Traded Transaction (as defined in Graceland's pleading) on behalf of Graceland. On this point there was divergent expert evidence as to what such wording would reasonably be understood to mean. I bear such evidence well in mind. However, in my view, it is unnecessary to consider such evidence in any detail because what seems to me important is to recognise the specific context in which this email was sent. In particular, as I have found, Mr Wolfe had previously explained to Mr Liu at the Guizhou meeting on 16 May 2014 the intended back-to-back arrangement as I have described above. In that context, the reference in this email dated 20 May 2014 to being able to "work an order" makes sense, ie , Macquarie would receive an "order" for a swap from Graceland but no swap deal would be concluded between Graceland and Macquarie until (a) Macquarie had itself gone out into the market and secured a back-to-back swap for its own account at a higher price ( i e , Macquarie's margin) or Macquarie's traders had decided to take part of that risk for Macquarie's own account and (b) Macquarie then confirmed the swap deal between itself and Graceland. For these reasons, I do not accept that this email supports the case advanced by Graceland; and similar reasoning applies to various emails referred to above and below where Mr Wolfe used similar language.

79 Later that same day ( ie , 20 May 2014), Ms Zhang responded by email to Mr Wolfe saying:

At the risk of repetition, it is important to emphasise that the decision to sell this quantity of urea at this price on the terms of the LFC was taken by Mr Liu on behalf of Graceland and not based on any advice of Macquarie or Mr Wolfe. As explained by Mr Liu in evidence, he regarded the stated quantity ( ie , 50,000 mt) as being "an economic size of shipment to everywhere" and that "the idea of this forward swap was to hedge against price volatility".

80 Mr Wolfe responded by email initially requesting the 2013 accounts for Graceland and the Wengfu Group. These were duly provided. Mr Wolfe then raised certain queries which Ms Zhang answered.

81 On 21 May 2014, Mr Wolfe sent a further important email to Ms Zhang as follows:

82 The LFC as attached to this email (the "Revised LFC") provided, in material part, as follows:

(a)  The opening paragraphs provided, among other things, that the terms of the ISDA Form were incorporated into the Revised LFC;

(b) Clause 1 set out the commercial terms of the Transaction, including, among other things, the following "Settlement Terms":

(c) Clause 3 contained certain "Additional representations" as already referred to above.

(d) Clause 9(B) provided that: "It shall be an Additional Termination Event with [Graceland] as the Affected Party if and [ sic ] ISDA Master Agreement is not executed between [Macquarie] and [Graceland] on or before the date falling 30 days from the Trade Date."

83 The ISDA Form contained detailed provisions which I do not propose to set out in full. For present purposes, it is sufficient to note the following:

(a) Clause 3 set out certain "Representations" including Clause 3(g) which stated " No Agency . [Each party] is entering into this Agreement, including each Transaction, as principal and not as agent of any person or entity." This was relied upon by Macquarie but, in my view, by virtue of the opening part of Clause 3, Clause 3(g) only applies when it is "specified" in the Schedule to the ISDA Form which was not the case here.

(b) Clause 6(b)(iv) provided that if an Additional Termination Event occurred, the "Non-affected party" ( ie , Macquarie) may, "if the relevant Termination Event is then continuing, by not more than 20 days notice to the other party, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions."

(c) Clause 6(e) provided that an "Early Termination Amount" would be payable if an Early Termination Date occurred, and that the "Early Termination Amount" would be "an amount equal to (1) the sum of (A) the Termination Currency Equivalent of the Close-out Amount or Close-out Amounts (whether positive or negative) determined by the Non-defaulting Party for each Termination Transaction or group of Termination Transactions and (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting party less (2) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party."

(d)  Clause 9(a) provided: " Entire Agreement . This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter. Each of the parties acknowledges that in entering into this Agreement it has not relied on any oral or written representation, warranty or other assurance (except as provided for or referred to in this Agreement) and waives all rights and remedies which might otherwise be available to it in respect thereof, except that nothing in this Agreement will limit or exclude any liability of a party for fraud."

(e) Clause 14 provided that the "Close-out Amount" means "the amount of the losses or costs of the Determining Party that are or would be incurred under then prevailing circumstances ... in replacing, or in providing for the Determining Party the economic equivalent of, (a) the material terms of that Terminated Transaction or group of Terminated Transactions, including the payments and deliveries by the parties under Clause 2(a)(i) in respect of that Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date ..."

84 Later that evening, Mr Liu responded by email stating:

85 Shortly thereafter, Mr Wolfe responded by email to Mr Liu (copying Ms Zhang) seeking clarification of certain matters as follows:

As stated in this email, Mr Liu was indeed travelling at this time. His evidence was that he was tired and Mr Wolfe kept phoning him and that he did not check this email carefully. Meanwhile, on 22 May 2014, Ms Zhang raised a query with regard to the Revised LFC saying that Mr Wolfe had sent both a "Final" and "Clean" version to Graceland and sought clarification that the "Clean" version was the one which Graceland needed to confirm. Mr Wolfe responded by email saying: "Yes - the Clean version will be the version that you will sign once we have executed some swaps for you in the market." At about the same time as this email ( ie , seemingly just after midnight), Mr Liu sent an email to Mr Wolfe stating:

There was much discussion by the experts as to the effect and proper characterisation of this email. In my view, it is properly regarded as an "open order" or a "good-til-cancelled" order at a certain quantity and a fixed price of US$275 per mt. In legal terms, it was an "offer" which could be withdrawn at any time prior to "acceptance" by Macquarie. It follows that there was no binding swap at this stage.

86 Shortly thereafter, Ms Zhang sent a further email to Mr Wolfe raising a question about amending the settlement date in the Revised LFC to 31 July 2014 instead of 31 August 2014 adding: "I understand that we just placed an order of 30,000 Mt to be settled in July . " Mr Wolfe replied saying that the Revised LFC was "just the format that will be sent to confirm any trades that are done". Mr Wolfe also added that Mr Liu had placed "an order for July Yuzhny urea which will be settled against the average FOB price for July" and that "this detail will be contained in the confirmation for any transactions that are done for you". Ms Zhang then replied to Mr Wolfe to thank him for the clarification, and added that once Macquarie "filled the order, [Graceland would] arrange to sign the confirmation accordingly."

87 Later on that same day ( ie , 22 May 2014), Mr Wolfe sent an email to Ms Zhang stating:

Ms Zhang responded to Mr Wolfe stating: "Well noted, thanks."

88 The phraseology of these further emails (in particular, the references in (a) the email from Mr Wolfe to Ms Zhang referred to at [81] above stating that with the two things requested, Macquarie would "go into the market and start to fill the swap order"; and (b) the email from Mr Wolfe to Mr Liu referred to at [85] above stating that he required a response if Mr Liu wanted Mr Wolfe "to proceed to try and place these swaps in the market") was again relied upon strongly by Graceland in support of its case that Macquarie was acting as Graceland's broker or agent. In this context, I bear well in mind the forceful evidence of Mr Henderson that based on his experience, he had never seen the terms "order" and "fill" used in the OTC derivatives market (although Mr Bauman's evidence was that these terms are used in both the exchange-traded and OTC derivatives markets); and also the evidence of Mr Ingram that when used on someone with no or little relevant knowledge or experience, these terms (and also the phrases "place in the market" and "go into the market") could lead that person to the mistaken belief that the transaction would be exchange-cleared. I agree that in the abstract and taken in isolation, such phraseology would or at least might be understood in that way. However, in my view, and for reasons similar to those stated in [78] above, the wording of these emails must be read and understood in their proper context and, in particular, against the background of the other documents provided by Macquarie and Mr Wolfe (including the Overview and the LFC) as well as the discussion at the Guizhou meeting as referred to above. When that is done and proper account is taken of the entirety of the evidence, I do not consider that the phraseology of these emails assists Graceland. For the avoidance of doubt, I remain unpersuaded that, on the basis of these emails (or otherwise), Mr Liu or Ms Zhang (or anyone else at Graceland) actually thought or believed that the swap would be effected by Macquarie as agent or broker on behalf of Graceland with some third party in what Counsel on behalf of Graceland submitted would be an Exchange-Traded Transaction (as defined by Graceland) or otherwise. On the contrary, consistent with, in particular, the explanation provided by Mr Wolfe in the Overview, the discussion at the Guizhou meeting, the express terms of the LFC, the absence of any agreement by Graceland to pay commission to Macquarie and Mr Liu's email dated 5 June 2014 when he referred to doing more with Macquarie for a "small margin" (see [74] above and [95] below), it is my conclusion that Graceland (including Mr Liu and Ms Zhang) was well aware that the swap would be between Macquarie and Graceland as principals in what would, in effect, be an OTC transaction.

89 In the days that followed ( ie , from 22 May 2014 to 4 June 2014), there were various internal exchanges between Mr Wolfe and Macquarie's traders in New York. During this period, it was Mr Wolfe's evidence that Macquarie tried to "fill" Graceland's order, ie , to look for market participants who were willing to enter into back-to-back swaps with Macquarie for the urea which Graceland was offering to sell at US$275 per mt; and that Macquarie was unable to fill Graceland's order. As explained by Mr Wolfe, the market for urea swaps was very quiet, and the market price for Yuzhny urea swaps to be settled in July was trading at below Graceland's price.

90 On 23 May 2014, Mr Wolfe sent an email to Mr Liu (copied to Ms Zhang) as follows:

91 Thereafter, there was little, if any, communication between Mr Wolfe and Mr Liu or Ms Zhang and, in the event, it was not until 4 June 2014 that the Transaction in the present case between Graceland and Macquarie was confirmed. This delay was the subject of considerable and indeed virulent criticism by Mr Ingram and Mr Henderson and generally by Counsel on behalf of Graceland. In the abstract, I agree that this delay was extraordinary. According to Mr Bauman, the longest open order he ever dealt with (which was in the rubber market) was two days. However, it seems to me important to bear in mind the following. First, although the delay extended in total to some 13 or 14 days, the period in question covered a holiday weekend (three days) and a further weekend (two days). Thus, the delay was about eight or nine working days. Even so, I agree that on the evidence, this period of delay is, in the abstract, extraordinary. Second, although what might be described as a "pure vanilla swap" or a "straight swap" could no doubt be finalised and executed between two counterparties in the ordinary course within a very short time, the back-to-back arrangement contemplated by Macquarie as described above necessarily meant that the execution of the swap between Macquarie and Graceland was dependent on Macquarie finding a suitable counterparty for its own back-to-back swap on appropriate terms allowing Macquarie's desired margin (unless Macquarie's traders decided to take on any part of the risk themselves). In other words, this was not a "pure vanilla swap" or a "straight swap". Third, there is no doubt that the market for urea swaps (particularly over that holiday period) was very quiet at that time. In my view, these points sufficiently explain the delay. In any event and for the avoidance of doubt, I do not consider that this delay in executing the swap is of any particular significance in the circumstances of the present case given, in particular, that the "order" by Graceland was, as stated above, for a certain quantity at a fixed price, ie , US$275 per mt which was the price subsequently confirmed by Macquarie (see further below). Further, it does not appear that there were any significant price movements during this period. At most, it would appear that the market moved up by about US$5 per mt ( ie , less than 2%) during this period but only very shortly before 4 June 2014. By contrast, it is fair to say that the market did move up significantly immediately after 4 June 2014 as appears from Table 2 of Mr Selvaggio's expert report. For present purposes, it is sufficient to note a peak of some US$310 per mt between about 13-19 June 2014 and, after a slight fall, a further peak of US$310 per mt on 9 July 2014 - although the volumes were all relatively small.

92 In addition, I should mention that Mr Wolfe's conduct in failing to keep Mr Liu and Ms Zhang properly informed as to what was happening with regard to the urea swap during this period, ie , between 23 May and 4 June 2014 was the subject of strong criticism in the course of the trial. In my view, there is some justification for this criticism. In particular, it is noteworthy that although Mr Wolfe said at the end of the email quoted above at [90] that he would be in touch, it does not appear that he ever did get back to Mr Liu or Ms Zhang until 4 June 2014. However, it is fair to say that neither Mr Liu nor Ms Zhang chased Mr Wolfe for a response as they might have done during this period. In any event, I do not consider that this criticism is of particular significance in the circumstances of the present case.

93 More fundamentally, perhaps, the general nature of the back-to-back arrangement described above was also the focus of a virulent attack by, in particular, Mr Ingram. In very broad summary, the basis of such attack was, as I understood, that following Mr Liu's email on 22 May 2014, Macquarie was, in effect, in the unbelievably fortunate position of sitting on an open order from Graceland at a certain quantity and price and that Macquarie's traders could then wait for the market to rise and, in effect, make a certain profit for themselves - even perhaps a huge profit - by making a back-to-back swap at a higher (perhaps very considerably so) price; and that this was, in effect, a win-win situation for Macquarie because it provided Macquarie with the opportunity to make a substantial profit for itself if the market rose and, if the market did not rise, Macquarie would be able to simply decline the order from Graceland. In the abstract, I see considerable force and justification in that attack - although it does not seem to me that it is one which falls properly within the scope of Graceland's pleaded case. Be that as it may, I do not consider that the attack is properly justified in the circumstances of the present case in particular because the intended back-to-back arrangement was, as I have found, disclosed by Mr Wolfe at the Guizhou meeting, including Macquarie's intention to make a margin although it is fair to say (as I have already noted) that the amount of such intended margin was not disclosed. (For the sake of completeness, I should mention that, on the evidence, I do not know and it is impossible to say what margin (if any) was or may have been made by Macquarie in the present case. However, given the market, it seems highly unlikely that it was more than US$5 per mt at most.)

94 Be all this as it may, on 4 June 2014, Mr Wolfe sent an email confirming the order as follows:

95 On 5 June 2014, Mr Liu replied to Mr Wolfe in an email already quoted above:

96 Similarly, Ms Zhang also replied to Mr Wolfe on the same day stating: "Thanks [ sic ] you for the good news. We'll wait for your final LFC for execution."

97 On the same day ( ie , 5 June 2014), there was a further exchange of emails between Mr Wolfe, Mr Liu and Ms Zhang regarding a possible change of the index against which the settlement price would be obtained. First, Mr Wolfe sent an email to Mr Liu suggesting that Graceland might wish to consider changing the index from the one set out in the Revised LFC to one known as the "CME Index". Mr Wolfe explained that his trader believed that the CME Index was "slightly preferred" but said that "you [ ie , Graceland] can choose which one you prefer." Following receipt of that email, it appears that Ms Zhang contacted Mr Heath confirming that Graceland "had just filled a sale of 30,000 mt of July Yuzhny urea swaps with Macquarie bank" and asking his opinion with regard to a possible change to the CME Index. Mr Heath's response was that he did not have any data to confirm whether the CME Index was best. Ms Zhang then replied to Mr Wolfe to ask for information regarding the "CME Index". Mr Wolfe replied to Ms Zhang saying that he could arrange for the information to be sent, but that in the meantime Macquarie would issue the LFC as agreed. Mr Wolfe added that the index could be amended at a later stage if and when both Macquarie and Graceland agreed to the amendment. Ms Zhang then replied to Mr Wolfe saying that after Graceland had discussed the matter, they wanted to change the existing index to the CME Index. Ms Zhang also asked Mr Wolfe to "send the final LFC to [Graceland]".

98 On or around 6 June 2014, Macquarie provided the LFC to Graceland for Graceland's execution (the "Execution LFC"). The Execution LFC was materially similar to the earlier Revised LFC with full details of the particular swap deal inserted as follows:

99 On 10 June 2014, Mr Wolfe sent an email to Ms Zhang to set out more information regarding the CME Index. Ms Zhang replied to Mr Wolfe that day to thank him for the information, and to ask when Graceland could expect to receive the final LFC for this first deal. Mr Wolfe subsequently informed her that it would have been sent by Macquarie's Market Operations team the day before. Ms Zhang then replied to Mr Wolfe later that day to say that Graceland would "check and arrange to sign back [the LFC]".

100 On 12 and 13 June 2014, Mr Wolfe sent two email chasers to Ms Zhang asking for Graceland to send the Execution LFC. The latter email (copied to Mr Liu) stated that Macquarie's Market Operations Group had not yet received back the Execution LFC from Graceland and requested Ms Zhang to advise the status of this by return. Ms Zhang responded later that day saying that she would follow this up and additionally asked: "Could we request to cancel swap deal after done? Or some other opposite ways to offset it just like Futures?" Mr Wolfe's evidence (which I accept) was that he was surprised by Ms Zhang's email; that he did not understand why she was suddenly asking questions about cancelling the Transaction, especially because she had been asking Mr Wolfe to send the LFC just three days before, ie , 10 June 2014. So far as relevant, it is my view that the reason for the request to cancel was simply that the market had turned against Graceland (see [91] above).

101 In any event, Mr Wolfe replied to her by email saying, among other things, that Graceland could not cancel the Transaction but could buy the swap back. Ms Zhang then replied by email to ask Mr Wolfe if Graceland would be able to buy back the same amount of Yuzhny urea at the same price that very day. Mr Wolfe's evidence (which I again accept) was that he was again quite surprised by Ms Zhang's email because the price levels of the urea market had moved higher than US$275, and it would have been clear that Graceland could only buy back the urea at such higher price. Mr Wolfe therefore sent an email to Ms Zhang saying that she would not be able to buy back the urea forward at US$275. Mr Wolfe also highlighted that:

Ms Zhang then replied by email to Mr Wolfe saying that Graceland had placed its order in the morning of 22 May 2014, and that the order was only filled two weeks later. She stated that because the transaction took so long, "it's away from our original intention (risk hedge) based on the market situation at that time". She then repeated Graceland's desire to, among other things, cancel the Transaction.

102 After Ms Zhang sent this email, Mr Wolfe called Mr Liu to try and understand what was going on. According to Mr Wolfe, Mr Liu told Mr Wolfe over the phone that things were fine; that it was actually good that the price of urea had gone up, because that meant that Graceland would be able to get more for its physical stock of urea; that contrary to what Ms Zhang had been saying, he would get the LFC executed; and that Mr Liu said Graceland was considering doing more hedging by selling more urea forwards at the higher market price. In evidence, Mr Liu did not accept this version of the call. His evidence was that he was very upset at the time because he felt he had been fooled and cheated by Mr Wolfe. In the event, it is, in my view, unnecessary to seek to resolve this particular dispute. For present purposes, it is sufficient to note that, after his call with Mr Liu, Mr Wolfe sent an email to Ms Zhang with a copy to Mr Liu summarising what, according to Mr Wolfe, Mr Liu had told him. Shortly thereafter, Mr Liu replied as follows:

103 Thereafter, there was a series of emails exchanged between Mr Wolfe and Mr Liu during the rest of June and early July which is unnecessary to set out in detail. For present purposes, it is sufficient to note that Graceland refused to execute the documents. Eventually, on 7 July 2014, Mr Wolfe sent an email to Mr Liu to let him know that because Graceland did not execute the relevant documentation there would be some unavoidable processes in motion. In particular, Mr Wolfe highlighted that Macquarie's credit department would be communicating with Graceland directly. Following a further email exchange, Macquarie sent a formal letter to Graceland dated 8 July 2014 which stated in material part as follows:

104 Following a further exchange of emails, Graceland sent a letter to Macquarie dated 10 July 2014 stating, among other things, that: (a) Graceland did not execute the ISDA Form or the LFC because "there was no instruction from person in charge" and that there were no plans to execute those documents; (b) Mr Luo and Ms Zhang (to whom Macquarie's letter of 8 July 2014 was addressed) were not "authorised persons of Graceland, and thus they are unable to act on behalf of Graceland in any correspondence or signed documents". Graceland also stated that it did not "accept" Macquarie's letter of 8 July 2014 notifying Graceland of the Additional Termination Event.

105 On 11 July 2014, Macquarie sent a letter to Graceland stating, among other things, that the Early Termination Amount payable by Graceland to Macquarie was US$1.2 million. The Early Termination Amount was calculated by Macquarie as follows:

(a) On 8 July 2014, Macquarie went into the market in order to determine the cost of obtaining the economic equivalent of the material terms of the Transaction. It was Mr Wolfe's evidence (which I accept) that he understood that in so doing, Macquarie's traders were also looking to close out Macquarie's positions in respect of the back-to-back swaps that had been entered into with third parties. In the event, on 8 July 2014, Macquarie bought 20,000 mts of urea at US$310 per mt and obtained a further quote for the balance of 10,000 mts of urea at US$320 per mt.

(b) As a matter of arithmetic, this produced an average figure of US$313.34 per mt. After taking into account the brokerage cost of US$0.50 per mt and Macquarie's operations costs of US$1.00 per mt, the average cost amounted to US$314.84 per mt of urea. For the purposes of calculating the Close-out Amount, this figure was rounded up to US$315 per mt of urea.

(c) Accordingly, the Close-out Amount was US$1.2 million, being the difference between US$315 and US$275 ( ie , US$40) multiplied by 30,000 mts.

106 Later that day ( ie , 11 July 2014), Mr Liu sent Mr Wolfe an email to say, among other things, that Graceland had received Macquarie's "termination notice and settlement statement which looks very ridiculous", and that they would not be "honoured". Mr Liu also added that Graceland had requested that correspondence be addressed to him directly instead of Mr Luo and Ms Zhang "since they are not authorized". Following further correspondence (which is unnecessary to set out), the present proceedings were commenced by Writ of Summons dated 22 April 2016.

107  Against that background, I now turn to consider the main issues which I can deal with quite shortly in light of my factual conclusions as already stated above.

108 It is convenient to deal first with the question of the terms of the Transaction. At the risk of repetition, it is important to emphasise that this particular question is not whether there was any binding agreement, but only what were the terms of the Transaction. In summary, it was Macquarie's case that the agreement between the parties was that the Transaction would be on the terms of the Revised LFC (which itself incorporated the terms of the ISDA Form) with full details of the swap as contained in the Execution LFC. In contrast, it was Graceland's case that the LFC (whether in the form of the Revised LFC or the Execution LFC) and the ISDA Form were not incorporated into the agreement between the parties; alternatively that, even if the LFC was incorporated, the ISDA Form was not.

109 In particular, it was submitted on behalf of Graceland that this was not a case governed by the so-called rule in L'Estrange v F Graucob Ltd [1934] 2 KB 394 which provides that a party who signs a document would ordinarily be bound by the terms contained therein; that where (as in the present case) there is no signed document, the Court must "scrutinise parties' intentions"; and that such exercise includes consideration of the "background", ie , absolutely anything reasonably available to the parties which would have affected the way in which the language of the document would have been understood by the reasonable man. In support of such submissions, I was referred to various textbooks and the decision of the House of Lords in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896. However, it is important to bear in mind that such exercise is one which generally is confined to what "crosses the line" between the parties or information in common available to both parties.

110 This issue was dealt with at some length in paragraphs 95-105 of Graceland's closing written submissions which I have carefully considered. However, I do not consider that it is necessary to set out such submissions in detail because, in my view, the determination of this issue is relatively straightforward in light of basic applicable legal principles and the emails which passed between the parties. These have already been set out above but in summary:

(a) On 21 May 2014, Mr Wolfe sent an email to Ms Zhang (copied to Mr Liu) attaching the Revised LFC which was stated to be "in final form for [Graceland's] acceptance". This email also stated expressly that in order to do the first swap, Macquarie needed from Graceland an email response confirming that Graceland accepted the wording of the Revised LFC (see [81] above).

(b) Following an email from Mr Liu, Mr Wolfe replied on 22 May 2014 seeking clarification of five points. In particular, in his fourth point ("Point 4"), Mr Wolfe sought confirmation that the swap would be "booked in the name of Graceland and covered by the LFC documentation that ha[d] been provided" (see [85] above).

(c) Shortly thereafter, Mr Liu responded confirming his agreement to all the points listed in Mr Wolfe's email - including Point 4 (see [85] above).

111 In light of the above, it is my conclusion that the agreement of the parties is to be found in the emails which "crossed the line", ie , the parties agreed that the swap would be on the terms of the Revised LFC which on its face made an express and direct reference to the ISDA Form and was effective to incorporate its terms (see Credit Suisse Financial Products v Société Generale d'Enterprises [1997] CLC 168 at 172; 7E Communications Ltd v Vertex Antennentechnik GmbH [2007] 1 WLR 2175 at [31]-[35]; and Calyon v Wytwornia Sprzetu Komunikacynego PZL Swidnik SA [2009] 2 All ER (Comm) 603 at [81]-[83]). (Insofar as may be relevant, this conclusion is also supported by Graceland's internal discussions which referred to an index price "as detailed in the draft LFC agreed between us", where in this context it is clear that the term "us" is a reference to Macquarie and Graceland.) For the avoidance of doubt, the Execution LFC subsequently prepared by Macquarie and sent to Graceland does no more than set out the full details of the transaction as executed on the basis of Mr Liu's confirmation and thus contains or evidences the agreement between Macquarie and Graceland. (For the sake of completeness, I should mention that Graceland raised in argument a further point with regard to the alleged failure by Mr Wolfe to follow certain internal procedures. However, this point was not pleaded and, even if correct in fact, is in my view, legally irrelevant.)