ABM Amro Commercial Finance Plc v Ambrose McGinn and Others
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Flaux,The Honourable Mr Justice Flaux |
| Judgment Date | 23 May 2014 |
| Neutral Citation | [2014] EWHC 1674 (Comm) |
| Docket Number | Case No: 2012 FOLIO 560 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 23 May 2014 |
[2014] EWHC 1674 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Rolls Building
Fetter Lane, London, EC4A 1NL
The Honourable Mr Justice Flaux
Case No: 2012 FOLIO 560
Simon Mills (instructed by Squire Sanders (UK) LLP) for the Claimant
Kavan Gunaratna (instructed by Coyle White Devine) for the Defendants
Hearing dates: 16 May 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The claimant is a factor which purchased the debts of its client Jenks Sales Brokers Limited (referred to hereafter as "the company") pursuant to an Agreement dated 30 June 2003. The defendants were the directors of the company. Each of them entered into a deed of indemnity with the claimant (dated 2 May 2007 in the case of the first and second defendants and 10 December 2008 in the case of the third defendant). In May 2009 the company entered administration and many debts were disputed. The claimant employed a specialist collection agent and when they had exhausted the collection process after some two years, the administrators of the company acknowledged in writing to the claimant that the company was indebted to the claimant in the sum of £8,924,783.
The claimant commenced these proceedings in April 2012 seeking to recover that sum from the defendants under the deeds of indemnity. The defendants served a Defence in June 2012 denying liability on a number of grounds including that their liability was secondary and not primary and their liability was discharged by material variations to the Agreement, that the claimants had not taken proper steps to collect and enforce the debts and that the claimant had represented to the company that it could continue to notify new debts as approved debts notwithstanding the knowledge that the invoices could not be guaranteed for full payment, so that the claimant is estopped from relying on its strict rights under the Agreement in respect of debts notified after 24 February 2009.
The claimant subsequently served certificates of indebtedness on the defendants originally dated 23 October 2013 which it contends are conclusive against the defendants by virtue of clause 3 of each of the deeds of indemnity. Accordingly on 7 November 2013 the claimant issued this application for summary judgment under CPR Part 24. For reasons set out in more detail below, the claimant no longer pursues a money judgment against any of the defendants at this stage, but it seeks judgment on a number of issues of construction and law on which it contends the defendants have no real prospect of success at trial. Those issues are set out at [18] below.
The terms of the Agreement and the deeds of indemnity
Before setting out the factual background to the application in more detail, I will set out the terms of the various agreements which are relevant for the purposes of this application.
The Agreement for the Purchase of Debts dated 30 June 2003 between the company and Venture Finance PLC (as the claimant was then known) provided inter alia as follows:
"4 TRANSFER OF OWNERSHIP OP DEBTS
(1) This Agreement is for the Sale by the Client and the Purchase by Venture of all Debts which are in existence at the Commencement Date or which afterwards arise during the currency of this Agreement. On the Commencement Date the Client shall deliver an Offer in respect of each such Debt unpaid at that date. Venture shall only accept such Offer by crediting the value of the Debt, as shown in the Offer, to the Debts Purchased Account, where upon Venture's ownership of such Debt shall be complete.
7 CREDIT OF THE PURCHASE PRICE AND PAYMENT BY VENTURE
(1) Following receipt of a Notification, Venture shall on the next Working Day credit the Purchase Price to the Debts Purchased Account. For administrative convenience Venture may make such credit before the deduction of any of the items which, in accordance with clause 6(1), are to be deducted in computing the Purchase Price. Venture may consequently, if it so wishes, aggregate and debit all such items at any time thereafter to either the Debts Purchased Account or the Current Account.
(4) Venture shall be entitled to debit the Current Account and/or or the Debts Purchased Account with:
(i) all bank charges incurred by Venture in respect of an instrument of payment not cleared for fate as described in Clause 7(4) for a Debt which is not a Credit Approved Debt;
(ii) if so provided in paragraph 15 of the Schedule, all banking charges and other costs and expenses it may incur in relation to any account to which it directs that any payments by Debtors shall be credited;
(iii) such other charges or fees as are referred to in the Schedule or any rider to the Schedule and all bank charges incurred in collecting Export Debts and converting the proceeds of a Foreign Currency Debt into Sterling;
(iv) any amount due to Venture in relation to the matters referred to in clauses 14 and 18(2)(v);
(v) any other amounts due to Venture.
10 DISPUTES AND CREDIT NOTES
(1) If a Debtor disputes its liability to pay the full Notified amount of any Debt (less any discount or allowance approved by Venture) the Client shall forthwith notify Venture of such dispute (if the same has not already been advised to the Client by Venture) and undertakes:
(i) to use its best endeavours promptly to settle every such dispute, subject to the right of Venture itself to settle or compromise any such dispute or to require that the Client should settle or compromise it on such terms as Venture may in its absolute discretion think fit;
(ii) to perform promptly all further and continuing obligations of the Client to the Debtor under any Sale Contract and to give evidence to Venture of such performance and to agree that in the event of the failure of such performance Venture may itself perform such obligations at the expense of the Client;
(iii) to issue promptly all credit notes due in respect of Debts and to Notify same within three Working Days of issue subject to the right of Venture to require that no credit note shall be authorised or issued without Venture's consent and that the originals of such credit notes shall be sent to Venture;
and the Client shall be bound by anything done by or at the direction of Venture in accordance with this sub-clause (1), including any corresponding reduction in the Purchase Price.
12 NOTICES TO AND COLLECTIONS FROM DEBTORS
(1) Whilst the ownership of any Debt remains vested in Venture or any Debt is held in trust for Venture pursuant to Clause 5, Venture shall have the sole right to enforce payment of and determine whether such Debt shall be collected by Venture or by the Client (as the agent of Venture) and to institute, carry on, defend or compromise proceedings in its own name or the name of the Client in such manner and upon such terms as it may in its absolute discretion think fit. The Client shall co-operate in such enforcement, collection or proceedings and in the recovery of any Transferred Goods.
(5) The Client shall at its own cost forthwith deliver to Venture or, if so required by Venture, directly to a bank account designated by Venture the actual cash, cheque, instrument or payment received by the Client in or on account of the discharge of each Debt. Until so delivered, the Client shall meanwhile hold such cash, cheque, instrument or payment in trust for Venture. The Client shall not deal with, negotiate or pay the same into any bank account unless so directed by Venture. If it be necessary for any instrument to be endorsed to enable Venture to receive payment then the Client shall endorse the same prior to its delivery to Venture. If so required, the Client shall give an indemnity to Venture's bankers in respect of 'account payee" cheques made payable to the Client and so endorsed.
16 CLIENT'S ACCOUNTS AND RECORDS
(3) The Client shall promptly provide Venture (at the Client's expense) with such of the Financial Records included in the Related Rights or copies of them and of any other records or documents of the Client as Venture may at any time require or any other evidence of the performance of Contracts of Sale.
18 WARRANTIES AND UNDERTAKINGS OF THE CLIENT
(3) The inclusion of any Debt in a Notification (other than a Notification pursuant to clause 6(3)) or in any report made to Venture pursuant to clause 12(4)(i)(d) shall be treated as a warranty by the Client that:
(i) the Sale Contract does not include any prohibition against the assignment of the Debt;
(ii) the Goods have been Delivered and the Debt is a legally binding obligation of the Debtor for the Notified amount and has arisen from a Sale Contract made in the ordinary course of the Client's business…
(iv) the Client is not in breach of any of its obligations under the relevant Sale Contract and the Debtor will accept the Goods and the invoice therefor without any dispute or claim, including claims for release of liability (or inability to pay) because of force majeure or because of the requirements of any law wherever applying or of rules orders or regulations having the force of law in any jurisdiction;
19 COMMENCEMENT AND TERMINATION
(2) If any of the following events happen, Venture shall have the right by notice to the Client to terminate this Agreement forthwith or at any time thereafter:
(i) the Client's Insolvency or its calling any meeting of its creditors; or any petitions or applications being issued before a Court with a view to the Client's Insolvency;
(ii) a petition for an administration order pursuant to the Insolvency Act...
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