Elevar Finance SPV Photon LLC v Mr Sabesan Somasundaram
| Jurisdiction | England & Wales |
| Judge | Master Teverson |
| Judgment Date | 27 January 2023 |
| Neutral Citation | [2023] EWHC 151 (Ch) |
| Docket Number | Case No: BL-2021-000721 |
| Court | Chancery Division |
[2023] EWHC 151 (Ch)
DEPUTY Master Teverson
Case No: BL-2021-000721
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Ololade Saromi (instructed by Addleshaw Goddard LLP solicitors) for the Claimant
Robin Howard (instructed by Lawbriefs Ltd solicitors) for the Defendant
Hearing dates: 8 and 9 December 2022
Approved Judgment
This Judgment is being handed down remotely at 10.30am on 27 January 2023 when it will be emailed to the parties and sent to the National Archives
DEPUTY Master Teverson
This is the adjourned hearing of the Claimant's application by notice dated 1 October 2022, issued on 20 October 2022, to strike out the Defendant's defence dated 23 June 2021 pursuant to CPR 3.4(2)(a) and for consequential judgment to be entered on the claim; alternatively, that summary judgment be entered on the entire claim for the Claimant as claimed pursuant to CPR 24.2 and that the Defendant pay the costs of the Claimant's application and the claim.
Since the application was issued, the Defendant was granted permission by Deputy Master Bowles on 18 July 2022 to amend his defence. The amended defence is dated 18 July 2022. It is in relation to the amended defence that the application is pursued and now falls to be determined.
The Claimant (“Elevar”) is a company incorporated with limited liability and registered in the State of Delaware, United States of America. Elevar carries on the business of providing business finance primarily to companies engaged in technology driven ethical enterprise.
Mr Arshabh Sarda (“Mr Sarda”) is employed as the Authorised Individual ofElevar. Mr Sarda is also the President of Elevar's ultimate parent entity, EF Labs Inc, a company incorporated and registered in Delaware.
The Defendant, Mr Sabesan Somasundaram, is the sole director and shareholder of Teleunique Solutions Limited (“Teleunique”) a company incorporated in England and Wales whose registered office is at 226a Northolt Road, Harrow, Middlesex HA2 8DU. At all material times, Teleunique carried on the business of providing international telecommunications services, in particular, international direct dial services via voice over internet protocol data transfers (“VoIP”). The Defendant is referred to as Sabesh in the WhatsApp communications between him and Mr Sarda.
Teleunique's primary customer was at all relevant times Dialog Broadband Networks (Private) Limited (“Dialog”) a company registered in Sri Lanka which provided services similar to those provided by Teleunique.
In December 2019 the Defendant and Mr Sarda began to discuss a proposal for Elevar to provide Teleunique with a factoring facility which would help it provide VoIP transfer services to Dialog by alleviating its cash flow pressures.
On 9 December 2019 the Defendant on behalf of Teleunique completed Elevar's Telecom Factoring Questionnaire. In reply to the question “Do you have any other netting relationship with this Obligor?”, the Defendant replied “No”.
In January 2020 the Defendant began negotiating a new carrier agreement with Dialog for the transfer of VoIP traffic. On 24 January 2020 the Defendant sent Mr Sarda an unsigned interconnection agreement dated 24 January 2020 between Teleunique and Dialog. Mr Sarda in an email to the Defendant dated 26 January 2020 said this seemed to be a bilateral contract and that Elevar needed it to be unilateral. Mr Sarda said that at minimum it should be changed to unilateral traffic to eliminate the language that allowed traffic going to Dialog.
On 18 March 2020 Elevar and Teleunique entered into an agreement (“the Factoring Deed”) pursuant to which Elevar purchased receivables and the right to future receivables from Teleunique at a discount to their value. The Factoring Deed was executed by Mr Sarda as authorized signer on behalf of Elevar as the factor and by the Defendant as director on behalf of Teleunique as the seller.
By Clause 17.1:
“The Seller represents, warrants and undertakes to the Factor on this date of this Deed:
17.1.1 in relation to any Sales Assets, in the form of the Asset Warranties; and
17.1.2 in relation to the Seller itself, in the form of the Seller Warranties,
which Warranties shall be deemed repeated on each Sale Date in relation to the Sales Assets on such Sale Date, and in relation to clause 17.1.2 each date while any Sales Asset sold is outstanding, in each case by reference to the facts and circumstances then subsisting.”
The Asset Warranties in Part 1 of Schedule 2 include:-
“5. Set-off: Each Sales Asset offered for sale to, and purchased by, the Factor under the terms of this Deed is…an identifiable, unconditional, irrevocable and non-refundable payment obligation by the Approved Carrier or by the obligor of the Related Rights on its Due Date, without any right of set-off or other right,…which may operate to reduce the amount payable.
6. VoIP Traffic: Each Sales Asset represents VoIP Traffic which has been terminated on behalf of and accepted by Approved Carriers and shall be free and clear of any offset, deduction, counterclaim, lien, Encumbrance or any other claim or dispute.
10. Seller has not done any act or thing or abstained from doing any act or thing which adversely affects the amount to be paid by the Approved Carrier or obligor of the Related Rights.”
The Seller Warranties in Part 2 of Schedule 2 include:-
7. No set-off: The Seller has not exercised any right of set-off in respect of any Sales Asset which would result in the Factor receiving less in respect of the Sales Asset than was due (but for such set-off).”
The Factoring Deed provided for Receivables Transfer Offers (“RTOs”) in the Schedule 5 Form to be made by the Seller to the Factor under which the Seller offered to sell, assign and transfer to the Factor on the Sale Date the Sales Assets identified in the attached computer file or invoice. In the RTO the seller repeated in favour of Elevar the representations and warranties mentioned in clause 17.1 of the Factoring Deed.
On 19 March 2020 Teleunique entered into an interconnection agreement with Dialog incorporating the amendments to clause 4 required by Elevar.
Trading started in June 2020. By July 2020 Dialog was late in making a payment on a Teleunique invoice.
RTOs dated 12 September 2020 and 30 September 2020 (“the September RTOs”) were made and accepted in relation to Unbilled Utilised Capacity as defined in the Factoring Deed for $123,324.59 and $188,546.52. These were on terms that the Applicable Discount Factor was 3.5% and the Initial Purchase Price by Elevar was 90%.
RTOs dated 10 October 2020, 24 October 2020 and 31 October 2020 (“the October RTO's”) were made and accepted in respect of Unbilled Utilised Capacity for $102,171.98, $144,925.37 and $92,249.39 on the same terms as the September RTO's.
Elevar paid $110,992.13 and $169,691.87 to Teleunique in respect of the September RTO's and $91,954.78 and $130,432.83 in respect of the first two October RTOs. The last of these payments was made on 27 October 2020. Although the 31 October RTO was accepted by Elevar, no payment was made to Teleunique in respect of it because of continuing payment delays by Dialog of 30 days on average.
On 1 October 2020 Teleunique issued and on 15 October 2020 delivered via email to Dialog an invoice no 1202 in respect of the Sales Assets acquired by Elevar pursuant to the September RTOs in the sum of $311,871.11. Payment was due by 31 October 2020.
On 1 November 2020 Teleunique issued and on 19 November 2020 delivered via email to Dialog an invoice no 1204 in respect of the Sales Assets acquired by Elevar pursuant to the October RTOs in the sum of $339,346.73. Payment was due by 1 December 2020.
In late October or early November 2020 Elevar stopped accepting RTOs and suspended payments to Teleunique. By then, invoices in the amount of $651,217.83 were outstanding.
On 3 December 2020 Mr Sarda held a video call with Mr Rajith Adikaram, Unit Manager and Head of International Voice Calling at Dialog at the time. Mr Adikiaram told Mr Sarda that payment of the October and November invoices would be made as soon as Dialog received certain “backend payments” from a customer of theirs. At Mr Adikaram's request the October and November invoices were re-sent by Teleunique on 4 December 2020.
On 17 December 2020 Mr Sarda sent a WhatsApp message to Mr Adikaram in which he stated:-
“To summarise, we have around $800k outstanding from Dialog currently, of which $311k is now 47 days overdue, and as I mentioned we will soon be required to start legal action simply from a procedural requirement. I understand that you want to receive all payments without dispute from your backend customer, but this is not something we can wait for indefinitely”
On 18 December 2020 Mr Adikaram replied:-
“Can you talk with Kumar and the team as we have now cleared the o/S's and have got confirmation also
This led to further WhatsApp exchanges on 18 December 2020:-
Sure-who do you mean when you say Kumar, sorry?
Sorry Not Kumar-Krish
That's been processed by the bank you mean
So will keep a look out for it
We also work with sabesh/Teleunique and have $650,000 outstanding on there.
Any idea on those invoices re status?
Can you talk with them as these were sorted out
You mean all of these were sent to the bank?
These 3 invoices
They get paid into a bank account we control, but we have not seen any funds clear”
On 5 January 2021 Mr Sarda sent by email a final notice to Dialog for payment of three invoices. Mr Sarda recorded they were for a total of just over $800k. Two of the...
To continue reading
Request your trial