Pandora Jewellery UK Limited & Anor v EML Payments Europe Limited

The two summary judgment applications before the Court give rise to a short point of construction and law relating to the meaning and effect of a written agreement dated 31 March 2011 (the “Agreement”) between Pandora Jewellery UK Limited (“Pandora”) and EML Payments Europe Ltd (“EML”) by which EML agreed to implement a gift card system for use in Pandora’s stores and online in return for payment of certain fees and charges. The Agreement was extended subsequently to cover Pan Jewelry Limited’s (“Pan”) business in the Republic of Ireland as well. Pandora and Pan are the Claimants in this action.

Gift cards issued under the scheme were subject to a contractual expiry date after which the funds associated with the expired card could no longer be used by the customer (the “Expired Funds”, as defined in Section 2.2.g of the Agreement).  It is common ground between the parties that the Claimants were entitled to the benefit of the Expired Funds throughout the term of the Agreement.  But the parties disagree about what should happen to the Expired Funds after the Agreement came to an end.  The Agreement provided that the gift card scheme would continue to operate after the end of the “Term” during what is referred to in the Agreement as the “Transition Period” and the “Run-off Period” until all Card Funds (as defined in Section 1.1.d of the Agreement) had been reduced to zero. 

On 18 April 2024, EML made a payment to Pandora in respect of the Expired Funds that had accrued prior to 31 March 2024, being the agreed expiry date of the Agreement. On 26 September 2024, Pandora queried why no further payments had been made in respect of the Expired Funds. EML replied on 1 October 2024 that no further sums were payable to Pandora as Expired Funds and that, pursuant to the terms of the Agreement, EML was entitled to retain the Expired Funds (a position that would also apply to the cards issued by Pan as and when they expired).

The Claimants now seek payment of the Expired Funds from EML.

These proceedings were commenced by the Claimants on 23 September 2025. EML filed its Defence to the same on 7 November 2025. No Reply was filed by the Claimants.

The Claimants’ case is that EML’s obligation to make payments to them in relation to Expired Funds continued during the Transition Period and the Run-off Period by operation of Sections 7.3 and 7.4 of the Agreement, and that, by refusing to pay what it owes, EML has acted in breach of contract and trust. The Claimants seek declaratory relief and monetary relief together with interest and costs.

EML denies the claim on the basis that Section 2.2.g when read as a whole with the Agreement expressly provided that it was entitled to retain Expired Funds during the Transition Period and the Run-off Period. EML also denies the Agreement gave rise to the trust averred by the Claimants.

The issue raised is whether EML’s obligations in relation to the Expired Funds continued to operate during the Transition Period and the Run-off Period, as the Claimants allege, or whether EML was entitled to keep the Expired Funds for itself.  The parties agree that this raises a question of construction and law which is suitable for summary determination under CPR r.24.2. 

The issue can be reformulated into two questions:

The Court may give summary judgment in favour of a party pursuant to CPR r.24.3 if it considers that the respondent has no real prospect of succeeding on its claim and there is no other compelling reason why the case or issue should be disposed of at trial.

The legal principles relating to summary judgment are well-established; see, e.g., Easyair Limitedv Opal Telecom Limited [2009] EWHC 339 (Ch) at [15], where Lewison J (as he then was) set out the correct approach on summary judgment applications by defendants:

By the Agreement, EML agreed to implement a gift card system for use in the Claimants’ stores and online in consideration for the payment by the Claimants of various fees and charges.  The Agreement was amended on seven occasions pursuant to a series of written amendment agreements.  

“Cards” issued under the Agreement (as defined in Section 1.1.b) had an “Expiry Date” of 12 months (for cards issued by Pandora in the United Kingdom) and five years (for cards issued by Pan in Ireland), as defined in Section 2.2.g. From the beginning of the Agreement in 2011 until it expired in 2024, Expired Funds were paid to Pandora pursuant to Section 2.2.g. No Expired Funds accrued during this period in relation to Pan because Ireland was only added to the Agreement in 2020, and the five year Expiry Date in Ireland had not yet occurred.

Pursuant to Addendum No.7, the parties acknowledged that the Agreement was to expire on 31 March 2024 but made provision for an extension of the Transition Period contemplated therein and to the provisions of Section 7.3 relating to the Run-off Period. Section 4.1 of Addendum No.7 provides that the Agreement shall remain in full force and effect save as expressly modified therein.

The relevant provisions of the Agreement and its various Addenda are as follows.

The Agreement provided for the establishment of two accounts called the “Distributor Deposit Account” and the “Programme Account”. In broad outline, the Claimants were required initially to deposit the funds which they collected from their cardholders (the “Card Funds”) into the Distributor Deposit Account and then to pay those funds into the Programme Account where they would thereafter be held for the purposes of settling any transaction on the cards.

It is common ground that the parties agreed to fund the Distributor Deposit Account and the Programme Account as follows:

The contractual mechanism through which funds transfers worked is set out in Sections 2.5.a and 2.5.b of the Agreement.

Section 2.5.a of the Agreement provides (emphasis added):

Pursuant to Section 2.4 (as amended by Addendum No.1), EML was named as the “Issuer” and was thereby obliged to maintain or hold the Programme Account; see Addendum No.1, Section C, which provides in relevant part (emphasis added):

Section 2.6 then provides (emphasis added):

Section 2.2.g of the Agreement provides (emphasis added):

Fee Schedule D provides that:

Paragraph 2 of Fee Schedule D provides for the payment of a fee by EML to the Claimants on the following terms (emphasis added):

Paragraph 2 thus defines the “Breakage Payments” by reference to a period of time, and confirms that the payments in relation to that period of time would terminate at the end of that period.

By paragraph 5 of Fee Schedule D, the parties acknowledge that (emphasis added):

A similar acknowledgment is contained in Section 5.1, which provides that:

There are no relevant amendments to Fee Schedule D.

The original “Term” of the Agreement was defined in Sections 1.1.o and 7.1 and commenced on the Effective Date (defined in the preamble as 31 March 2011) and continued for five years following the “Programme Commencement Date” (defined in Programme Schedule A as when the first Card is sold to a “Purchaser” and activated for use in the Programme); thereafter, the Agreement automatically renewed for three year terms.

Pursuant to Addendum No.7, the parties acknowledge that the Agreement was to expire on 31 March 2024 but provided for an extension of the Transition Period contemplated therein and to the provisions of Section 7.3 relating to the Run-off Period. Section 4.1 of Addendum No.7 provides that the Agreement shall remain in full force and effect save as expressly modified therein.

Section 7.3, as amended by Addendum No.7, provides as follows (emphasis added):

The “Programme” is defined in Sections 1.1.j and 2.1 as follows:

Section 7.4 provides that Sections 6.2 to 6.7, 7.2 to 7.4, 8.1, 8.3, 8.4, and Article 9 shall survive termination of the Agreement and that the provisions of (emphasis added):

Article 2 includes Section 2.2.g, which imposes the obligation on EML to remit to itself Expired Funds and to make payments to the Claimants in accordance with Section 2.2.g and the Breakage Payment provision in Fee Schedule D. Thus it appears that, by the amendments made through Addendum No.7, the parties agreed that Section 2.2.g would survive termination of the Agreement, and continue to operate, during and as required for the run-off under Section 7.3.

The legal principles relating to the construction of contracts are well-established and uncontroversial.  In JP Morgan International Finance Limited v Werealize.Com Limited [2025] EWCA Civ 57 Lewison LJ summarised (at [21]) some of the salient points as follows (emphasis added): 

As Snowden LJ (as he then was) said in Sahara Energy Resource Limited v Société Nationale de Raffinage SA [2026] EWCA Civ 54, at [45]:

His Lordship went on to say, at [76]:

I pause here to observe that this last principle is of some importance in this case, as I emphasised in Lewison LJ’s summary from Werealize.Com at [21]. The Agreement is reasonably detailed, and has been amended on a number of occasions. It appears to be the product of negotiation between sophisticated parties. I return to this point in my discussion and analysis of the parties’ submissions on its proper construction.

To these general principles can be added two further points of relevance in this case:  (1) where possible, the court will seek to give effect to all parts of the contract and will avoid treating any part of it as inoperative or surplus:  A&V Building Solutions Limited v J&B Hopkins Limited [2023] EWCA Civ 54 at [46], per Coulson LJ; and (2) where a contract contains general provisions and specific provisions, the specific provisions will be given greater weight than the general provisions where the facts to which the contract is to be applied fall within the scope of the specific provisions.  The specific thus overrides the general:  see Steve Ward Services (UK) Limited v Davies & Davies Associates Limited [2022] EWCA Civ 153 at [16], per Coulson LJ.

James McWilliams, who appears for EML, invites the Court to enter reverse summary judgment in EML’s favour and to dismiss the Claimants’ cross-application on both questions. As to the construction question, Mr McWilliams submits the Claimants are wrong on this issue because, while EML was obliged to make Breakage Payments to the Claimants in respect of outstanding balances on expired gift cards during the term of the Agreement, that obligation ceased on termination. Mr McWilliams submits this is put beyond sensible argument by the Agreement itself, which states in terms at paragraph 2 of Fee Schedule D that:

see [24] above. Mr McWilliams submits there is no textual foundation for the Claimant’s case that EML somehow nevertheless remained obliged to make such payments, nor any justification for looking beyond the clear and unambiguous language that the parties did use. In the absence of a contractual obligation to pay the Expired Funds to Pandora as Breakage Payments, it follows that EML is entitled to retain the same for itself.

Mr McWilliams developed this argument as follows:

Mr McWilliams submits this construction of the Agreement is the correct one for three reasons.

First, it is the ordinary and obvious meaning of the words used by the parties in Section 2.2.g and paragraph 2 of Fee Schedule D. He submits that, in a detailed written contract of this type between sophisticated commercial parties, this is decisive.

Second, it gives effect to the Agreement as a whole and avoids treating any part of it as inoperative or surplusage:

Third, it gives primacy to the specific provision in the Agreement dealing with Breakage Payments, namely paragraph 2 of Fee Schedule D. While Section 2.2.g of the Agreement read in isolation might give the impression that the Expired Funds will always be paid to the Claimants, it is only the general provision.

Michael Watkins, who appears for the Claimants, submits the proper application of the relevant legal principles leads to the opposite conclusion:

While the Claimants’ arguments are carefully and attractively presented by Mr Watkins, I do not consider they sit with the proper construction of the Agreement as a whole on the close analysis that the authorities require. The starting point is the language of Section 2.2.g itself. As Mr McWilliams submits, while Section 2.2.g read in isolation might give the impression that the Expired Funds will always be paid to the Claimants, it is only the general provision. It does not confer a free standing or unqualified right on the Claimants to receive payment of Expired Funds. It provides instead that, upon expiry of a gift card, the Expired Funds (emphasis added):

EML’s obligation to pay is therefore expressly conditioned by, and referable to, the Breakage Payment regime.

The substantive content and temporal scope of that mechanism is set out by specific provision in paragraph 2 of Fee Schedule D. That paragraph defines the “Breakage Payment Period” as the period:

and provides, in clear and unqualified terms, that:

In my judgment, read in context of the Agreement as a whole that language lends itself only one proper interpretation: the parties agreed that EML’s obligation to make Breakage Payments would come to an end on termination of the Agreement. The general provision in Section 2.2.g must give way to the specific provision in Fee Schedule D. I cannot see any basis for reading paragraph 2 of Fee Schedule D to mean that payments continue after termination, or, as Mr Watkins implies, that termination refers only to the end of the quarterly payment mechanism rather than to the underlying entitlement itself.

Mr Watkins submits that Sections 7.3 and 7.4 have the effect of extending the obligation to make Breakage Payments beyond termination. While Section 2.2.g survived termination “during and as required for the run-off”, that did not enlarge or alter its substantive content. Sections 7.3 and 7.4 determine whether Section 2.2.g continues to operate after termination, not what Section 2.2.g requires when it does so. Section 2.2.g continues to operate during run-off, but according to its terms. Those terms include the express limitation contained in Fee Schedule D. Reading Section 2.2.g together with paragraph 2 of Fee Schedule D, the obligation to make Breakage Payments did not survive termination of the Agreement on 31 March 2024.

I do not see how the run-off provisions compel a different conclusion. Section 7.3.c requires the parties to cooperate to run-off existing card accounts “until the Card Accounts have a zero balance”. The position with Cards which expire during run-off is not provided for in Section 7.3.c; instead, Section 2.2.g remains operative. As I have found, it does not require payment of those funds to the Claimants in those circumstances. The mechanism for run-off is therefore complete without any continuing Breakage Payment obligation.

Indeed, the wording of Section 2.2.g itself supports this interpretation. It contemplates two distinct steps: first, the remission of Expired Funds from the “Gift Card Account”/Programme Account to EML; and, second, payment to the Claimants, but only “in accordance with” the Breakage Payments provisions. That can only have a sensible meaning if there are circumstances in which Expired Funds are remitted to EML but no onward payment is due. Termination of the Agreement is such a circumstance. To construe Section 2.2.g as conferring an ongoing entitlement to Expired Funds after termination would render both the defined “Breakage Payment Period” and the express termination provision in Fee Schedule D otiose. That would be contrary to the well-established principles of contractual construction I have set out above, particularly in the context of a detailed commercial agreement. The Expired Funds are not a “fee or charge”, and so do not offend any other provision of the Agreement. While the result in law is a contractual bounty for EML, (as Arnold v Britton holds) this Court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be an imprudent one for one of the parties to have agreed. I have been so; the Agreement is detailed, it has been amended on a number of occasions, and it appears to be the product of negotiation between sophisticated parties.

Submitting that it would be surprising or unreasonable for a payment services provider to retain Expired Funds in this way, Mr Watkins further argues this interpretation of Section 2.2.g and Fee Schedule D does not produce a commercially reasonable result. Even if that were so, that cannot justify departing from the clear language of the Agreement. The Court’s task is to interpret the bargain the parties made, not the bargain they might be thought to have made. While it may be that there is no other provision of the Agreement which allows EML to keep Expired Funds for itself and other provisions of the Agreement make it clear that EML is not entitled to do so in other circumstances (see, e.g., Sections 2.5.b, 2.6, 5.1, and paragraphs 3 and 5 of Fee Schedule D), the words “will be remitted to[EML]” in Section 2.2.g are plain and speak for themselves.

Lastly, Mr Watkins prays in aid the trust over the Programme Account monies created by Section 2.5.b of the Agreement (emphasis added):

That, however, does not take Mr Watkins’ arguments further.  The Expired Funds do not remain in the Programme Account (with each Card tracked separately therein by EML as a “[Gift] Card Account” in accordance with Section 2.6) because they are remitted to EML in accordance with Section 2.2.g and paid to the Claimants in accordance with the Breakage Payment.  That is what happened:  the Expired Funds were remitted to EML in accordance with Section 2.2.g, i.e. no longer held in the Programme Account, and paid to the Claimants in accordance with Section 2.2.g and Fee Schedule D.  As I have found, paragraph 2 of Fee Schedule D only imposes upon EML an obligation to make Breakage Payments:

contractually defined as the “Breakage Payment Period”. This envisages a period after which EML is not required to make such payments. That period is after termination of the Agreement. Accordingly, the Expired Funds were remitted to EML in accordance with the purpose for which the trust was impressed upon it by Section 2.5.b, as I explain further below in answering the question posed on breach of trust.

For all those reasons, I find that, on the proper construction of the Agreement, EML’s obligation to make Breakage Payments terminated on 31 March 2024. Section 2.2.g does not require payment of Expired Funds to the Claimants in respect of Cards expiring after that date.

The answer to the question posed on construction is “no”.

The legal principles in relation to this issue are also well-established:

Mr Watkins contends the Agreement was intended to and did in fact create a Quistclose trust on the terms pleaded in paragraphs 30 and 31 of the Particulars of Claim. Section 2.5.b expressly provides that the Card Funds were to be held by the EML in the Programme Account, which was to be:

Thus, says Mr Watkins, Section 2.5.b expressly provides for there to be a trust, expressly provides that the trust property should be “ring fenced” (i.e., kept separate from the Defendant’s own affairs), and expressly provides that the funds could only be used for the purpose stated therein. In such cases, it is well-established that the property is held on resulting trust for the benefit of the payor (i.e., the Claimants): see Lewin, at 9-055.

It seems to me that this argument faces two hurdles and falls at each.

First, even if a Quistclose trust arises, its purpose is to ensure monies are applied in accordance with the Agreement. Section 2.2.g expressly permits Expired Funds to be remitted to EML. Once that occurs, the trust is discharged in orthodox Quistclose terms. As Lewin sets out, at 9-051:

The purposes to which EML was entitled to apply monies it held in the Programme Account are set out in the Agreement. In the case of Expired Funds, Section 2.2.g of the Agreement expressly provides that those monies are to be remitted from the ringfenced Programme Account in respect of which EML was said to be Trustee to EML itself. In making such payment, EML applied the monies it held in the Programme Account in accordance with the Agreement and thereby discharged any trust to which they were subject. Its obligation thereafter to make a Breakage Payment was purely contractual. Whatever credit risk the Claimants assumed once the monies were in EML’s hands and subject to payment to the Claimants in accordance with Section 2.2.g and Fee Schedule D was one the Claimants accepted by the express words of the Agreement itself. Had the parties intended to mitigate any such risk by requiring the monies to remain held on trust until payment over the Claimants, they could have provided so in the Agreement. They did not.

Second, and developing the last point further, the Agreement does not treat Expired Funds as the Claimants’ property held for return, but as sums generating a contractual payment obligation (i.e. the “Breakage Payments”) during a defined period. The Agreement does not provide that the Claimants are entitled to the Expired Funds. Section 2.2.g provides in terms for the Expired Funds to be remitted out of the Programme Account in respect of which they are said to be held on trust and EML’s only obligation thereafter is to make the Breakage Payments in accordance with Fee Schedule D. If, as is in fact the case, Fee Schedule D provides that EML does not have to make a Breakage Payment in a given circumstance, it must follow that the parties understood that EML should be entitled to keep the Expired Funds for itself. That architecture is inconsistent with an ongoing proprietary entitlement.

For all those reasons, I find the Expired Funds are not held on resulting trust for the Claimants and the Claimants’ trust claims also all fall to be dismissed.

The answer to the question posed on this point is also “no”.

There are no reasons, still less compelling ones, for there to be a trial in these proceedings.

For the reasons which I have set out, I grant EML’s application and enter reverse summary judgment in its favour and dismiss the Claimants’ application. I will order accordingly.