Deutsche Bank AG and Others v Unitech Global Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Teare |
| Judgment Date | 20 September 2013 |
| Neutral Citation | [2013] EWHC 2793 (Comm) |
| Docket Number | Cases No: 2011 FOLIO 1199 and 2012 FOLIO 464 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 20 September 2013 |
[2013] EWHC 2793 (Comm)
Mr. Justice Teare
Cases No: 2011 FOLIO 1199 and 2012 FOLIO 464
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Thomas Sharpe QC, John BrisbyQC, Alastair TomsonandMichael d'Arcy (instructed by Stephenson Harwood) for the Defendants
Richard Handyside QC and Adam Zellick (instructed by Allen & Overy) for the Claimants in 2011 Folio 1199
Mark Hapgood QC, Timothy HoweQC andAdam Sher (instructed by Freshfields) for the Claimant in 2012 Folio 464
Hearing dates: 22, 23, 25, 29 and 30 July 2013
There are before the court a number of interlocutory applications in a matter in which there has already been one contested interlocutory application which is the subject of an appeal. The Defendants, who are being sued upon a bank loan (in one action) for a sum in excess of US$150m. and in relation to an interest rate swap agreement (in another action) for a sum in excess of US$11m., wish to amend their Defences to plead a number of new defences. The Claimants say that none of these new defences has any real prospect of success and that permission to amend should therefore be refused. They also say that the existing defences have no prospect of success and that they are entitled to summary judgment in respect of them. And, finally, the Defendants say that the Claimants' applications for summary judgment are an abuse of process which the court should not entertain.
The Claimants, at my request, produced a list of the issues which I must determine. They total 23 and have been culled from the 140 pages of skeleton arguments. The list has not met with the approval of the Defendants but I was not provided with a copy of their list of issues until after I had prepared this judgment in draft, using the Claimants' list of 23 issues as a helpful guide to the many issues which arise on the several applications before the court. I have not sought to redraft this judgment in the light of the Defendants' list of 27 issues but have sought to ensure that I have dealt with any additional issues identified by the Defendants which appear to me to require a decision.
An outline of the nature of the claims brought by the Claimants can be found in the judgment of Cooke J. on the first interlocutory application; see [2013] EWHC 471 (Comm) paragraphs 3–6. I shall refer to the several Claimants as the Claimants and to the two Defendants as the Defendants without differentiating between them. But on occasion it will be necessary to refer to Deutsche Bank AG, the first Claimant in the lenders' action and only Claimant in the swap action, as DB, to Unitech Global Limited, the first Defendant in the lenders' action and borrower, as UGL and to Unitech Limited, guarantor and second Defendant in the lenders' action and only Defendant in the swap action, as Unitech.
The application to amend the defence in the lenders' action.
There is no dispute that the criterion required for granting permission to amend is whether the proposed amendment has a real as opposed to a fanciful prospect of success.
Issue 1: Whether the Defendants are entitled to claim rescission of the Credit Agreement for misrepresentation (notwithstanding the judgment of Cooke J.).
This issue arises because the Defendants wish to amend their existing plea that the Claimants misrepresented the suitability of the swap by adding two further particulars of unsuitability which are explained at paragraphs 62–72 of Mr. Brisby's Skeleton Argument. The remedy sought is the remedy of rescission. The debate under this head concerns the amendment to the plea for rescission in principle, not whether the two further particulars of unsuitability are arguable.
The Claimants say that the Defendants are estopped by reason of the decision of Cooke J. from raising a defence based upon rescission of the Credit Agreement. The basis upon which Cooke J. held that the Defendants are not entitled to the remedy of rescission for misrepresentation is that the effect of subsequent novations of the Credit Agreement precluded any claim to rescission; see paragraphs 50–51 of Cooke J.'s judgment.
The Defendants take a number of points in response. First, they say that they did not have a proper opportunity to address Cooke J. on the question of novation. It seems to me that I must deal with Cooke J.'s judgment as I find it. If the Defendants have any legitimate complaint about the course of the hearing before Cooke J. that is a matter which, if it is to be advanced, must be advanced on appeal. The decision of Cooke J. contains a clear decision as to the effect of novation on the availability of the remedy of rescission. That was an issue raised in the Claimants' skeleton argument before Cooke J. and he dealt with it.
Second, the Defendants say that Cooke J.'s remarks about rescission were obiter and they rely upon the circumstance that after delivering his judgment orally he revised his judgment at the request of the Claimants to make clear that certain submissions made on behalf of the Claimants were correct. But I must, as I have already said, deal with Cooke J.'s judgment as I find it and as approved by him. As such it contains a clear decision that rescission is not available as a remedy in the light of the novation of the Credit Agreement.
Third, the Defendants say that the issue of novation had not been pleaded. However, paragraph 7 of the Particulars of Claim pleads "an assignment or transfer of rights". In the context of the Credit Agreement which uses the word transfer in clause 29.2 to include a transfer "either by way of novation or by way of assignment, assumption and release" that would appear to be a plea which is capable of referring to novation. The pleading certainly appears to have been understood as referring to a novation because the Defendants' draft pleading in response which was before Cooke J. referred to a novation in paragraph 5EA. It is true that the Claimants' pleading seeks relief pursuant to the original Credit Agreement rather than expressly pursuant to a later novated agreement but this is consistent with the language of the Credit Agreement; see clause 29.5(c)(iii). In any event there can have been no doubt that a novation was being relied upon. It was expressly referred to in the Claimants' Skeleton Argument, the Defendants' draft pleading referred to it and Cooke J. dealt with the argument based upon novation.
Fourth, the Defendants say that they have put the Claimants to proof of the novations relied upon. But Cooke J.'s decision was premised upon the novations having been proved. He referred to the documents "which show that there were transfers by way of novation"; see paragraph 50 of his judgment. The Defendants are therefore estopped from requiring the Claimants to prove the novations relied upon.
I therefore consider that Cooke J.'s decision gives rise to an issue estoppel as to the non-availability of rescission as a remedy. It follows that the Defendants are estopped from alleging rescission of the Credit Agreement based upon misrepresentation. Whether Cooke J.'s decision was right or wrong, whether novation was properly pleaded and whether the Defendants had a proper opportunity to argue the novation point are matters which, I was told by Mr. Brisby, will be raised before the Court of Appeal in October 2013. They are not matters which I can entertain.
Permission to amend the plea in the Defence which seeks rescission must therefore be refused.
After the hearing the Defendants' solicitors submitted by letter dated 2 August 2013 that there cannot in practice be an issue estoppel. Reliance was placed upon an observation by Moore-Bick LJ in R v Helen Chapman [2013] EWCA Crim 1370 at paragraph 24:
"Once an appeal has been constituted, however, either by filing a notice of appeal in time or by obtaining an extension of time from the court, the order of the court below, although not formally provisional, is subject to review. In practical terms it is not final…"
This observation was made in the context of an application to amend a notice of appeal from a decision of a criminal court to raise a new point based upon a change in the law subsequent to the decision. The court referred to a line of authority pursuant to which the Court of Appeal (Criminal Division) will not normally extend time for filing a notice of appeal in order to allow an appellant to take advantage of a subsequent change in the law. That followed from the principle of finality. However, a distinction was drawn between a case where a notice of appeal had been filed within time and a case where a notice of appeal had not been filed within time. In the former case refusal to allow an amendment of the notice of appeal to take advantage of a change in the law would be inconsistent with the appeal process.
The Court of Appeal (Criminal Division) was not concerned with the doctrine of issue estoppel in civil cases but with an application to amend a notice of appeal in a criminal matter. I am not persuaded that the decision or reasoning of the Court of Appeal in R v Helen Chapman is of any real assistance to me in deciding whether or not to grant permission to amend the Defence to raise further particulars of unsuitability in support of a claim to the remedy of rescission. The decision of Cooke J. that the remedy of rescission is not available to the Defendants is binding upon the parties unless it is overturned by the Court of Appeal. I must therefore deal with the application to amend the Defence on that basis. If an appeal is allowed from the decision of Cooke J. on this...
To continue reading
Request your trial
-
Spliethoff's Bevrachtingskantoor BV v Bank of China Ltd
...Caja de Ahorros del Mediterraneo v Gold Coast LtdUNK [2001] EWCA Civ 1806; [2002] CLC 397. Deutsche Bank AG v Unitech Global LtdUNK [2013] EWHC 2793 (Comm). Deutsche Bank (Suisse) SA v KhanUNK [2013] EWHC 482 (Comm). HIH Casualty & General Insurance Ltd v Chase Manhattan BankUNK [2003] UKHL......
-
John Hall (in his own right and as assignee of 1st Class Legal (IS) Ltd) v Saunders Law Ltd
...relevant to disclose”: Conlon v Simms (fn 35 above). Cf Deutsche Bank AG and others v Unitech Global Limited, Unitech Limited [2013] EWHC 2793 (Comm), [2014] 2 All ER (Comm) 268 at [54] to [56], per Teare J (affmd without discussion of this point [2016] EWCA Civ 119, [2016] 1 WLR 41 I am......
-
Deutsche Bank AG and Others v Unitech Global Ltd and another; Deutsche Bank AG v Unitech Ltd
...OF APPEAL (CIVIL DIVISION) ON APPEAL FROM THE HIGH COURT QUEEN'S BENCH DIVISION COMMERCIAL COURT THE HONOURABLE MR JUSTICE TEARE [2013] EWHC 2793 (Comm) & [2014] EWHC 3177 (Comm) Royal Courts of Justice Strand, London, WC2A 2LL The Right Honourable Lord Justice Longmore The Right Honourable......
-
Peak Hotels and Resorts Ltd (Claimant) (1) Tarek Investments Ltd and Others (Defendants) (1) Phrl Holdings Ltd (First Named Third Party) (2) Omar Sharif Amanat (Second Named Third Party) (3) Lalit Modi (Third Named Third Party)
...part was induced by fraud, was discussed and endorsed by Teare J in Deutsche Bank AG and others v Unitech Global Limited and another [2013] EWHC 2793 (Comm) (" Deutsche Bank (1)"). The learned Judge relied upon the decisions of Mance J (as he then was) in Skipskreditt v Emperor Navigation [......
-
Barclays Settles Two LIBOR Cases
...471 (Comm) (Mr Justice Cooke) Deutsche Bank AG & Ors v Unitech Global Limited & Or and Deutsche Bank AG v Unitech Limited [2013] EWHC 2793 (Comm) (Mr Justice The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought ......