DVB Bank SE (formerly named DVB Bank AG) v Norddeutsche Landesbank girozentrale
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henshaw |
| Judgment Date | 10 June 2020 |
| Neutral Citation | [2020] EWHC 1494 (Comm) |
| Date | 10 June 2020 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2019-000484 |
[2020] EWHC 1494 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building,
Fetter Lane
London, EC4A 1NL
THE HONOURABLE Mr Justice Henshaw
Case No: CL-2019-000484
Tom Bird (instructed by Stephenson Harwood LLP) for the Claimants
The Defendants did not appear and were not represented
Hearing date: 3 April 2020
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.
| (A) INTRODUCTION | 2 |
| (B) PROCEDURAL HISTORY | 3 |
| (C) PRINCIPAL FACTS | 5 |
| (1) The parties and the Loan Agreement | 5 |
| (2) The Fourth Supplemental Agreement | 6 |
| (3) The Personal Guarantee | 10 |
| (4) Notice of Demand | 12 |
| (5) Assumption of rights by Second Claimant | 12 |
| (D) PERMISSION TO SERVE PROCEEDINGS ON DEFENDANTS' PROCESS AGENTS | 13 |
| (E) PERMISSION TO APPLY FOR SUMMARY JUDGMENT | 16 |
| (F) SUMMARY JUDGMENT | 18 |
| (G) CONCLUSION | 20 |
(A) INTRODUCTION
The Claimants apply for summary judgment and other relief in respect of sums claimed to be due to them as lenders pursuant to (a) a loan agreement dated 23 April 2007 (“ the Loan Agreement”), as amended and supplemented by a series of later agreements including a fourth supplemental agreement dated 25 November 2016 (“ the Fourth Supplemental Agreement”), and (b) a written guarantee dated 25 November 2016 (“ the Guarantee”) between the First Claimant and the Third Defendant, Mr Livanos (“ the Guarantor”).
The Claimants' applications are for:
i) permission under CPR 6.27 to serve documents other than the claim form on the Defendants' process agents (where the claim form was served pursuant to CPR 6.11);
ii) permission to seek summary judgment against the Defendants pursuant to CPR 24.4(1)(i), on the basis that the Claimants should have the opportunity to apply for judgment on the merits so as to ensure that the judgment is more readily enforceable in jurisdictions where the Defendants' assets may be located; and
iii) summary judgment against the Defendants under CPR 24.2, on the grounds that the Defendants have no real prospect of successfully defending the Claimants' claims and there is no other compelling reason for the claims to be determined at trial.
The Loan Agreement, Fourth Supplemental Agreement and Guarantee are all subject to English law and jurisdiction (see clauses 31.1 and 31.2 of the Loan Agreement, clauses 12.1 and 12.2 of the Fourth Supplemental Agreement, and clauses 18.1 and 18.2 of the Guarantee).
(B) PROCEDURAL HISTORY
The Claimants issued these proceedings on 31 July 2019. The claim form, Particulars of Claim and other relevant documents were served on the Defendants' process agents, Saville & Co, in London on 1 August 2019 pursuant to clause 12.4 of the Fourth Supplemental Agreement and clause 18.4 of the Guarantee. Each of those clauses provided for the service of “any process or other document relating to any proceedings in the English courts” on Saville & Co, who are a firm of scrivener notaries in London. The Defendants had duly appointed Saville & Co as process agents, and Saville & Co accepted service of the documents served on 1 August 2019.
There was correspondence about the claim on 13 August 2019 between the Claimants and the Guarantor, who (the evidence indicates) is the beneficial owner of the First and Second Defendants (together, “ the Borrowers”).
The Defendants thus had been duly served with and were aware of the proceedings. However, none of them filed an Acknowledgment of Service or a Defence.
On 17 January 2020 the Claimants issued the present applications. The application notice, draft order and original supporting evidence were served on Saville & Co by hand on 20 January 2020.
On 20 March 2020 the Claimants' solicitors, Stephenson Harwood, emailed the Guarantor to propose that this hearing take place remotely pursuant to the Protocol Regarding Remote Hearings issued by the Business and Property Courts of England and Wales, in light of the Coronavirus pandemic. Stephenson Harwood asked for a response by 5pm on 23 March, but heard nothing back.
On 24 March 2020 Stephenson Harwood wrote to the Commercial Court Listing Office, with a copy to the Guarantor, to request that the hearing take place remotely and in public. The Listing Office subsequently confirmed that the hearing would take place by telephone. It took place on 3 April 2020.
None of the Defendants appeared or was represented at the hearing, nor made any approach to the Claimants or the court with a view to participating in the hearing. I therefore considered whether to proceed with the hearing in their absence pursuant to CPR 23.11. In doing so I took account, by analogy, of the factors identified by the Court of Appeal in R v Hayward, Jones and Purvis [2001] EWCA Crim 168, [2001] 2 Cr. App. R. 11 at § 22.5.
The evidence presented showed that:
i) the proceedings had been served on the Defendants through their duly appointed agent for service of process, and the agents accepted service, as indicated in § 4 above;
ii) the Guarantor, who is also the beneficial owner of the Borrowers, has demonstrable actual knowledge of the proceedings: see § 5 above;
iii) none of the Defendants filed an Acknowledgment of Service or Defence within time, or at all;
iv) the Claimants' present applications (together with the evidence in support) were served on Saville & Co, as the Defendants' duly appointed agent for service, on 20 January 2020;
v) on 21 January 2020 the Claimants notified the Defendants, using the email address nel@kylashipping.com which had been used in previous correspondence between the parties, that their Counsel's clerk would be attending the Commercial Court Listing Office at 11am on Thursday 23 January 2020 to fix a date for the hearing. The Claimants' message provided the address and contact details for the Listing Office;
vi) notice of the hearing on 3 April 2020 was sent by email to the Defendants on 23 January 2020 using the same email address; and
vii) on 2 April 2020 the Claimants sent emails to the same email address and also to Saville & Co (using two email addresses), informing the Defendants that the hearing the following day would commence at 2pm, attaching instructions on how to join the hearing, and attaching a copy of the Claimants' skeleton argument and draft order which had been filed that day. Automatic responses indicated that all three emails had been delivered.
In these circumstances, I was (and remain) satisfied that:
i) the Defendants had been given sufficient notice of the proceedings, the present applications and the hearing, and had had ample opportunity to attend and/or be represented at the hearing;
ii) there was no reason to believe that an adjournment would be likely to result in the Defendants (or any of them) attending the hearing at a later date;
iii) there was no reason to believe that any of the Defendants wished to be represented at the hearing;
iv) the Defendants had voluntarily waived their right to appear or to be represented at the hearing, and were voluntarily absent; and
v) although the claims are for significant sums of money, there was a public interest in the matter proceeding without further delay.
I therefore indicated that I would proceed with the hearing, and asked counsel for the Claimants to ensure that the court was made aware, so far as possible, of such points as the Defendants might reasonably have been expected to take had they been present or represented at the hearing. I am satisfied that this was done, and at the hearing on 3 April 2020 counsel for the Claimants also took me carefully through the transaction documents and other relevant evidence.
(C) PRINCIPAL FACTS
(1) The parties and the Loan Agreement
The Claimants are German banks. The Borrowers are companies incorporated in Liberia. The Guarantor is a Greek national involved in the shipping industry.
Under the Loan Agreement, as amended and supplemented by later agreements, the Claimants agreed to make available to the Borrowers a facility in the principal amount of US$ 97 million for the purpose of financing two vessels named the “ Captain Vangelis L” and the “ Kyla Fortune”. Clause 2 provided for “ Advance A”, of up to US$29 million, to be made for the purpose of financing part of the fair market value of the “ Captain Vangelis L”; and for “ Advance B”, of up to US$68 million, to be made for the purpose of financing part of the fair market value of the “ Cape Kennedy”, which the agreement stated was to be renamed the “ Kyla Fortune”. Clause 8 provided for Advance A to be repaid by 20 consecutive quarterly instalments (the last one accompanied by a final balloon payment) and for Advance B to be repaid by 36 consecutive quarterly instalments (the last one accompanied by a final balloon payment). In each case the first instalment would fall due three months after drawdown. Thus Advance A would be repaid over a period of 5 years and Advance B over 9 years.
The Loan Agreement was originally between the First Claimant and the Borrowers. However, clause 26.2 provided that a Lender could, without the Borrowers' prior consent, transfer all or part of its rights (defined to include loan monies owed to it) and/or obligations to another bank or financial institution, by delivering to the “ Agent” (defined as being the First Claimant) a completed transfer certificate executed by the transferor and transferee lender in the form set out in Schedule 4 to the Loan Agreement. Clause...
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