Eurobank Ergasias SA v Kalliroi Navigation Company Ltd and Others
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Waksman |
| Judgment Date | 10 August 2015 |
| Neutral Citation | [2015] EWHC 2377 (Comm) |
| Docket Number | Claim No: 2014 Folio 862 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 10 August 2015 |
[2015] EWHC 2377 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
His Honour Judge Waksman QC
(sitting as a Judge of the High Court)
Claim No: 2014 Folio 862
Steven Berry QC and John Snider (instructed by Holman Fenwick Willan LLP, Solicitors) for the Claimant
Richard Millett QC and Jeremy Brier (instructed by Enyo Law, Solicitors) for the Defendants
Hearing dates: 7 and 8 July 2015
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, Eurobank Ergasias SA ("Eurobank") is a Greek company and the successor-in-title to another Greek bank, Proton Bank SA ("Proton"). It claims monies due pursuant to two separate written loan agreements (as amended).
By the first, made on 19 November 2009, Proton lent US$10m to the First Defendant, Kalliroi Navigation Company Limited, a company incorporated in Malta, ("Kalliroi") to finance its purchase of a bulk carrier vessel then called "Global Discovery" ("the Kalliroi Loan Agreement"). By written guarantees made on the same day, the Second Defendant, Pilot Shipping Co., a Greek company ("Pilot") and the Third Defendant, Captain Georgios Kasapoglou, a Greek national ("Capt. Kasapoglou") guaranteed the liabilities of Kalliroi thereunder. I refer to Kalliroi and those guarantors collectively as "the Kalliroi Defendants".
By the second, made on 31 March 2010 (as amended) with the Third Defendant, Asterias Navigation Company Limited, a company incorporated in Malta, ("Asterias") and the Fourth Defendant, Starfish K Shipping Company Limited, also incorporated in Malta ("Starfish"), Proton lent to both of them, under Tranche A, the sum of US$20m but where only US12m was ever repayable so in effect US$12m, and under Tranche B, US$38m, the latter to enable Asterias and Starfish to purchase, respectively, two bulk carriers ("the Starfish Loan Agreement"). By written guarantees made on the same day, Pilot, Capt. Kasapoglou and Strimon Navigation Limited guaranteed the liabilities of Asterias and Starfish thereunder. I refer to those borrowers and guarantors collectively as "the Starfish Defendants". The nature and purpose of the loan under Tranche A ("the Tranche A Loan") is the subject of substantial dispute between the parties.
I have the following applications before me:
(1) Eurobank's application for summary judgment against Kalliroi for US$9.8m which is the total balance owing under the Kalliroi Loan Agreement, it having fallen due because of events of default on the part of Kalliroi. The events of default were (a) non-payment of instalments of interest and capital and (b) failure to pay the earnings from the vessel into a designated account with Proton. In the alternative, Eurobank claims the arrears (ie on a non-accelerated basis) of US$6.05m. Eurobank also seeks judgments in the same amount against the guarantors, Pilot and Capt. Kasapoglou;
(2) Eurobank's application for summary judgment against Asterias and Starfish for US$13.4m under Tranche A and US$41.8 under Tranche B, being the total balance owing under the Starfish Loan Agreement, again having fallen due because of the same events of default as above. In the alternative, Eurobank claims the arrears (ie on a non-accelerated basis) of US$9.6m and US$30.7m respectively. Eurobank also seeks judgments in the same amount against the guarantors, Pilot Shipping, Capt. Kasapoglou and Strimon;
(3) Eurobank's application for summary judgment against all Defendants so as to dismiss their Counterclaim against Eurobank, and, if the Counterclaim is not dismissed, for security for costs against all Defendants except Capt. Kasapoglou ("the Corporate Defendants");
(4) The Defendants' application for the release of £1.13m from a total of £1.491m representing freight payments earned by Asterias, to the Defendants' solicitors to enable them to continue to act for the Defendants in these proceedings. Of the £1.491m, £466,000 is presently held by the solicitors acting for Indagro Contractors SA, the charterers of the Anastasia K a vessel owned by Kalliroi. The balance of £1.025m is held in Court pursuant to an order made on 25 February 2015. It represents freight earned by Asterias pursuant to the charter of its vessel, the Kalliroi K to Everdere Logistics Limited. I refer to the total of the sums held as "the Freight Payments".
For present purposes it is sufficient to use round figures as I have done above. There is unlikely to be any dispute on the precise amounts owed.
THE KEY ISSUE
All the corporate Defendants are part of a group of companies ("the Pilot Group") whose principal owner (directly or otherwise) and prime mover is Capt. Kasapoglou. In 2004 Capt. Kasapoglou met Mr Dimitrios Panagiotopoulos, then head of shipping at Omega Bank, and later of Proton when the two banks merged. As a result, different companies within the Pilot Group took three loans from those banks, in 2005, 2006 and 2007. The next in sequence were the Kalliroi Loan Agreement and the Starfish Loan Agreement.
The background to the making of the Kalliroi Loan Agreement is not controversial and in essence followed the pattern of the earlier loans. The events leading up to making of the Starfish Loan Agreement, are, however, disputed.
The following terms of that agreement are material:
(1) "1.01. This Agreement sets out the terms and conditions upon and subject to which it is agreed that the Bank will make available to the Borrowers a term loan of up to the amount of ..US$ 58,000,000.00 for a period of seven ..years.. for the purpose of a) acquisition with US$ 20,000,000.00 the existing indebtedness with the Bank of companies NEW ERA SHIPPING INC… with assignment to the Borrowers of all the securities of the loan concerning those two companies ("Tranche A") and b) financing with US Dollars up to ..US$38,000,000,00.. the acquisition of two other Vessels with an average age of ..12 years ("Tranche B")";
(2) " Draw downs means the facility which will be available.. for the following draw downs which will mutually inclusive Tranche A $ 20,000,000.00 and Tranche B $ up to $38,000,000.00. All proceeds which may be collected by the Bank from the auctioning of the Vessels D and E at Hong Kong to reduce equally the Tranche A, Tranche A to be drawn on signing of this Loan Agreement and have Interest 1% per annum on the amount of $12,000,000 until 31 st December 2010.."
(3) " Tranche A means the amount of $20,000,000.00 to be drawn for the acquisition of the existing indebtedness of the Vessels D and E pursuant to the Loan Agreement…between the "Bank" as Lender and the companies NEW ERA SHIPPING INC… with assignment to the "Borrowers" of all the securities of the loan concerning the vessels D and E;
(4) Vessels D and E meant respectively "Med Trust" and "Med Integrity";
(5) Clause 4.04 required the parties to sign an Addendum which is contained in Schedule 3. It provides as follows:
"We refer to the above Loan Agreement and hereby irrevocably and unconditionally agree to reduce the Outstanding Indebtedness of Tranche A to the amount of twelve million Dollars ($12,000,000.00). Such reduction will be effective as of 31.12,2010. ..In view of the above we hereby irrevocably and unconditionally confirm and declare that notwithstanding specific references to the Loan Agreement that Tranche A will have an interest of 1% per annum until 31/12/2010, we hereby irrevocably and unconditionally confirm and guarantee that such interest will not fall due and will not be demanded by the Bank and/or payable by the Borrowers. ..Given the above any and all relevant references made in the Loan Agreement in respect with the Interest Rate of Tranche A up to the Build up period, such build up period as in the Loan Agreement defined, will be considered and treated as null and void and have no force and legal effect whatsoever."
(6) Clause 13.06 provides that "In the event of any provision contained in any one or more of this Agreement…being invalid, illegal or unenforceable in any respect under any applicable law in any jurisdiction whatsoever, such provision shall be ineffective as to that jurisdiction only without affecting the remaining provisions hereof….In case that the invalidity of a part results in the invalidity of the whole agreement, it is hereby agreed that there will exist a separate obligation of the Borrowers for the prompt payment to the Bank of all the Outstanding Indebtedness…"
By way of background, Capt. Kasapoglou says that at a meeting in January 2010 Mr Panagiotopoulos had asked for a favour. Proton had a loan agreement or agreements ("the New Era Loans") which had "gone bad" and he wanted them off the bank's books. He suggested that the Pilot Group bought them from Proton, together with the associated securities which would include the vessels Med Trust and Med Integrity and Proton would lend the purchase price of the loans. In return Proton would provide new 100% financing for the acquisition of four further vessels. Capt. Kasapoglou was interested in the proposal and on 28 February 2010 obtained desktop valuations of the vessels which came out at US$21.25m. A first term sheet from Proton gave the price of buying the loans as US$12m and provided for the giving to the Pilot Group of 50% of the proceeds of sale of the vessels at auction. Capt. Kasapoglou was not happy with this because on his figures, he would obtain only around US$10m from the sale of the vessels and yet have to pay US$12m for...
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