Medical Associates of Northern Virginia Inc., Profit Sharing Plan v Steward Malta Ltd
| Jurisdiction | England & Wales |
| Judge | Christopher Hancock |
| Judgment Date | 23 July 2020 |
| Neutral Citation | [2020] EWHC 1995 (Comm) |
| Docket Number | Case No: CL-2019-000142 |
| Date | 23 July 2020 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 1995 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Christopher Hancock QC
(SITTING AS A JUDGE OF THE HIGH COURT)
Case No: CL-2019-000142
Daniel Shapiro QC (instructed by Lewis Silkin) for the Claimant
Lucie Briggs (instructed by DLA Piper UK LLP) for the Defendants
Hearing dates: 5 June 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.
Christopher Hancock QC (sitting as a Judge of the High Court):
Introduction and factual background.
This is an application for summary judgment pursuant to CPR Part 24 and to strike out the Defendants' Defence pursuant to CPR 3.4(2). However, Mr Shapiro QC helpfully conceded that if he did not succeed in his summary judgment application he could not succeed in his alternative application and I therefore concentrate on the summary judgment application.
The facts of the matter can be shortly stated.
(1) The Claimant and Bluestone Investment Management (“BIM”), the parent company of the Defendants, were involved in a joint venture which was bidding for health care concessions in Malta in about 2015.
(2) As part of the arrangements between the parties, the Claimant's evidence is that Dr Gupta, who I am told is a successful health care professional in the USA, and is a trustee of the Claimant, caused the Claimant to make certain loans to the Defendants. In addition, the Claimant says that Dr Gupta advanced funding to support the project and by his participation allayed possible concerns as to the medical capabilities of the Defendants.
(3) In the event, the Defendants were awarded the concession. I return below to certain potential allegations as to the manner in which that concession was obtained, potential alleged wrongdoing in this regard, and the part that it may be said the Claimant had in this.
(4) However, it would appear that there was then a falling out between the Claimant and Defendants, and there were claims and cross claims made by the parties. Thus:
(a) The Claimant alleged that it had not been repaid his loans;
(b) Medical Associates of Northern Virginia Inc also alleged that it had not been paid the agreed consultancy fees;
(c) Finally, Dr Gupta and the Claimant asserted that they had not been allotted promised shares in BIM.
(d) For their part, the Defendants alleged that Dr Gupta was seeking to derail the project and that this might lead to losses of up to $200m.
(5) The parties then entered into a Settlement Agreement, dated 16 December 2016. The material parts of that Agreement, for present purposes, are the Recitals, the payment clause, and the confidentiality clause. Those provided as follows:
WHEREAS:
(A) BIM was involved in negotiations for the purchase of St. James' Hospital in Malta and to undertake a services concession for the redevelopment, maintenance, management, and operation of a number of healthcare sites in Malta, including particularly St. Luke's Hospital, Karin Grech Rehabilitation Hospital and Gozo General Hospital in Malta (hereinafter referred to as the “Healthcare Projects”);
(B) The MANV Parties and the BIM Parties (as defined below), as applicable, entered into a series of agreements on 7 January 2015 and other ancillary agreements thereto for the purpose of defining the terms of their proposed collaboration in support of BIM's tender for the Healthcare Projects and the raising of financing to enable BIM to meet key milestones as part of its tender for the Health care Projects;
(C) Each of MANV Trust, Dr Gupta, BSS#4, Mr Pawley, PIL, Mr Tumuluri and BIM subsequently entered into an agreement on 26 March 2015, setting out in detail the terms of both their collaboration in support of the Healthcare Projects and its financing. Amongst other things the agreement also set out obligations and duties between the parties thereto and terms upon which shares were to be issued and held in BIM;
(D) BIM's tender for the Healthcare Projects was successful. On 30 November 2015 definitive agreements were entered into by BIM's subsidiaries VGHA and VGHM with the Government of Malta. Such agreements included a 142 page Service Concession Agreement and a 151 page Health Services Delivery Agreement;
(E) On 1 December 2015, MANV Inc entered into a Consultancy Agreement with BIM pursuant to which MANV Inc was to provide services in support of the Healthcare Projects (the “Consultancy Agreement”);
(F) Subsequent to the 26 March 2015 agreement, further ancillary agreements were entered into by BIM, PIL, Mr Tumuluri, MANV Trust and Dr Gupta regarding the continued funding of the Healthcare Projects. Such agreements included, but are not limited to, agreements dated 11 January 2016 and 17 January 2016;
(G) As at the date of this Deed MANV Trust has caused a total of US$4,082,000 to be advanced to BIM in support of the collaboration between the Parties, the tender and the Healthcare Projects. Included as part of this advance, MANV Trust caused JAG Partners LLC (“Jag”), who acted as agent for MANV Trust, to advance €650,000 to BIM on MANV Trust's behalf. The MANV Parties understand that the €650,000 was duly used as a bond payment in support of the tender for the Healthcare Projects;
(H) Thereafter a dispute arose between the MANV Parties on the one hand and the BIM Parties on the other in relation to their collaboration in the Healthcare Projects, its funding and their equity shares in BIM arising under the above-mentioned agreements. The claims by the MANV Parties were set out in a letter by their solicitors Lewis Silkin LLP addressed to each of Morgan Lewis & Bockius LLP (for BSS#4 and BIM), Mr Pawley, PIL and Mr Tumuluri, dated 13 September 2016. Subsequently, Messrs Morgan, Lewis & Bockius LLP wrote letters in reply dated 26 September 2016 and 12 October 2016 advancing claims against the MANV Parties including a claim against Dr Gupta personally which was put at in excess of EUR€200,000,000.00, allegations of breach of the Consultancy Agreement and breach of good faith. Further matters were raised by Morgan Lewis & Bockius LLP in correspondence to Lewis Silkin LLP on 9 December 2016 including an apparent leak of confidential documents along with defamatory statements apparently made to third parties. For convenience, the issues between the Parties including the matters as set out in the aforementioned letters by Lewis Silkin LLP and Morgan Lewis & Bockius LLP are hereinafter defined as the “Dispute”;
(I) The MANV Parties do not have, and nor have they had at any point in time, any direct contractual relationship with any of the VGH Parties (as defined below) other than indirectly as consultant and lender; and
(J) The Parties to this agreement are desirous of settling the Dispute and regulating the terms of an exit of the MANV Parties from any further collaboration in BIM and the Healthcare Projects and the termination of the Consultancy Agreement
NOW IT IS HEREBY AGREED as follows:
AGREEMENT TO PAY
The BIM Parties and the VGH Parties shall cause to be paid to MANV Trust the sum of TEN MILLION US DOLLARS (US$10,000,000) (the “Settlement Sum”) as follows:
(a) FIVE MILLION US DOLLARS (US$5,000,000) to be received in cleared funds by no later than 5pm London time on 21 December 2016 (the “First Payment”); and
(b) FIVE MILLION US DOLLARS (US$5,000,000) to be received in cleared funds by no later than 5pm London time on 20 February 2017 (the “Second Payment”).
4.2 If the First Payment and/or the Second Payment is not received on time and in full as required above, interest shall accrue daily and be payable on the amount outstanding at the rate of 8% per annum from the relevant due date until paid in full and MANV Trust shall immediately be entitled to sue for such unpaid sums (together with interest) as a debt without further notice….
… 4.4' Each of BSS#4, PIL, BIM and the VGH Parties shall be jointly and severally liable to make the payments referred to in this clause 4….
CONFIDENTIALITY
The terms of this Deed and the substance of all negotiations in connection with it are private and confidential to the Parties, their lawyers and professional advisers, their Related Parties and Mr Shaukat Ali.
12.2 The Parties further confirm that the underlying agreements made in furtherance of the Healthcare Projects are confidential to the Parties and their professional advisors and the parties to those agreements and their professional advisers.
12.3 The confidential matters at clauses 12.1 and 12.2 shall not be disclosed or otherwise communicated to any other party without the prior written consent of all of the Parties (including in the case of matters in clause 12.2, the parties to those agreements), other than:
(a) Mr Shaukat Ali; or
(b) the Parties' Related Parties; or
(c) in circumstances where a Party seeks to enforce the terms of this Deed in the event of a breach; or
(d) the Parties' respective auditors, brokers, insurers, reinsurers, prospective insurers and reinsurers (and their lawyers) and/or their former and/or present and/or future professional advisers who have a reasonable need to know and on terms which preserve confidentiality; or
(e) pursuant to an order of a court of competent jurisdiction, or pursuant to any proper order or demand made by any...
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