National Westminster Bank Plc v Utrecht-America Finance Company [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CLARKE,LORD JUSTICE LAWS,LORD JUSTICE ALDOUS |
| Judgment Date | 10 May 2001 |
| Neutral Citation | [2001] EWCA Civ 658 |
| Docket Number | Case No: 2000/3688 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 May 2001 |
[2001] EWCA Civ 658
Lord Justice Aldous
Lord Justice Clarke and
Lord Justice Laws
Case No: 2000/3688
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COMMERCIAL COURT
Peter Gross QC (Sitting as a Deputy Judge of the High Court)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Michael Brindle QC and Mr Bankim Thanki (instructed by Herbert Smith for the Appellant)
Lord Grabiner QC and Mr Robin Dicker QC (instructed by Allen & Overy for the Respondent)
Introduction
This is an appeal by Utrecht-America Finance Co ("Utrecht") against an order dated 27 th November 2000 made by Mr Peter Gross QC sitting as a deputy judge of the High Court. The appeal is brought with the permission of the judge. The action arises out of an agreement known as a take out agreement ("TOA") between Utrecht, National Westminster Bank PLC ("NWB") and others dated 15 th October 1997 under which Utrecht bought NWB's interest in a credit agreement dated 21 st March 1996 (as subsequently amended). Utrecht brought proceedings in California in order inter alia to obtain rescission of the TOA. NWB commenced this action in order to obtain declarations that the Californian proceedings were begun in breach of the TOA and sought a permanent injunction to restrain Utrecht from continuing them against NWB in so far as they are in breach of the TOA.
NWB did not seek an interlocutory injunction against Utrecht but issued an application for summary judgment. Utrecht contended that the judge should not entertain the application for summary judgment, that (if he did) he should not give summary judgment and that, in any event, he should not grant an injunction restraining Utrecht from pursuing any part of the proceedings in California. The judge rejected all those submissions, gave summary judgment and granted an injunction.
The judge made declarations that the 9 th, 10 th and 12 th causes of action pleaded in the Californian proceedings were brought by Utrecht in breach of the TOA and that Utrecht is liable to indemnify NWB in respect of all costs and expenses (except for the costs of this action) incurred and to be incurred in defence of the 9 th, 10 th and 12 th causes of action. He also granted an injunction restraining Utrecht from pursuing those causes of action against NWB in California or from taking any further steps in relation to them except as provided in paragraph 4 of his order. Paragraph 4 ordered Utrecht forthwith to withdraw those causes of action as against NWB. The judge further ordered Utrecht to pay damages to NWB in respect of the loss and damage suffered by reason of the commencement and pursuit by Utrecht of the same causes of action together with interest and costs. Utrecht's application for a stay of the action was refused. Utrecht appeals against that order and essentially advances the same arguments as it did before the judge.
Background
The underlying facts are not in dispute. I take them largely from the judgment. Utrecht is a company incorporated under the laws of Delaware with its principal place of business in New York. It is indirectly a wholly owned subsidiary of a Dutch bank called Rabobank Nederland ("Rabobank"). By a written agreement dated 21 st March 1996 ("the credit agreement") NWB and Rabobank agreed to provide Yorkshire Food Group PLC ("YFG") and certain subsidiary companies of YFG with a credit facility of up to US$100,000,000, of which NWB and Rabobank each agreed to provide up to US$50,000,000. The subsidiaries were incorporated either in England or in the United States. The total sum of US$100,000,000 was subsequently increased by a further US$19,000,000 in the form of US$9,500,000 from each of NWB and Rabobank.
The parties to the TOA were NWB, Utrecht, Rabobank, YFG and a Delaware subsidiary of YFG called Yorkshire Dried Fruit & Nuts Inc. As already stated, the essential purpose of the TOA was to effect a novation under which Utrecht took out or purchased NWB's interest in the credit agreement. At the time of the TOA the sums advanced under the various facilities in the credit agreement were already due and were unpaid. The price which Utrecht paid NWB to purchase its interest in the credit agreement was at a discount to the outstanding amounts of the loans. In accordance with a pricing letter dated 14 th October 1997 Utrecht paid the sum of US$39,525,386.30 which was calculated in such a way as to ensure that the overall discount did not exceed £11,300,000. Whether that discount represented good business for Utrecht or not depended of course upon what the judge called the quality of the debt.
The Californian Proceedings
The Californian proceedings were commenced on 28 th October 1999 by Rabobank and Utrecht against NWB and various individual directors and officers of certain subsidiaries of YFG based in California. The case against NWB originally comprised the 9 th, 10 th, 12 th and 14 th causes of action pleaded in the complaint. The 14 th cause of action has recently been abandoned so that we are concerned only with the 9 th, 10 th and 12 th causes of action. I shall return to them in a little more detail below, but they essentially allege fraudulent concealment of information, negligent failure to disclose information and a breach of good faith or fair dealing in failing to disclose such information. In each case it is alleged that NWB was under a duty to disclose the information to Utrecht.
On 30 th December 1999 the solicitors for NWB wrote a letter before action alleging that the commencement and pursuit of the Californian proceedings by Utrecht against NWB were a breach of the TOA on the ground that by clause 8.2(d) Utrecht had agreed to bring no action against NWB in respect of non-disclosure of the classes of information alleged in the complaint. The letter asked for an undertaking from Utrecht that it would withdraw the relevant parts of the proceedings, failing which NWB would commence proceedings in England for appropriate relief. No such undertaking was or has been given and the whole purpose of this appeal is to enable Utrecht to continue to advance the 9 th, 10 th and 12 th causes of action in California against NWB.
On 3 rd January 2000 NWB filed an answer and cross-complaint in California. However, it did so under cover of a letter from its Californian attorneys indicating in effect that it was doing so without prejudice to its position in the English proceedings which it intended to commence. In short the letter asserted that NWB was advancing certain causes of action in order to preserve its right to assert them under the Californian procedural code and without prejudice to its right to commence proceedings in England and that it would pursue its cross-claims in California only to the extent necessary to preserve its rights to those claims. It is not now in dispute that NWB had to take those steps to preserve its position in California and that it did not make an irrevocable election by doing so. It is right to add that there is no suggestion that the courts of California do not have jurisdiction to determine either the claims or cross-claims in those proceedings.
On 18 th January 2000 NWB commenced this action in England and on 9 th February it issued its application for summary judgment seeking the declarations and the injunction which the judge subsequently granted. It is important to note (as I have said already) that NWB did not seek an interlocutory injunction prior to the determination of its summary judgment application. Indeed, as I understand it, if summary judgment is refused, NWB intends to obtain directions for the trial of the action in England and does not intend to seek an interlocutory injunction in the meantime. On 1 st August 2000 Utrecht served an application for an order staying this action until after the conclusion of the proceedings in California.
The TOA
The terms of the TOA are central to the issues in this appeal as they were before the judge. It provides, so far as relevant, as follows:
"1. INTERPRETATION
1.1 Definitions
…
'Collateral'
means any property … in which or over which an Encumbrance has been … granted to or for the benefit of the Banks under any Security Document.
…
'Purchaser Warranties'
means the warranties, representations and indemnities made by, and the covenants and agreements of, the Purchaser in this Deed.
'Seller Warranties'
means the warranties, representations and indemnities made by, and the covenants and agreements of, the Seller in this Deed.
…
'Transfer Assets'
means all rights, title and interests … of the Seller under the Credit Agreement, the UK Facility Agreement, the Security Documents and any Collateral:
(a)in, under and to:
(i)the Advances;
(ii) … all interests, fees, costs, expenses and other amounts in relation to the Advances and the Commitments
(iii) the Credit Agreement, the UK Facility Agreement, the Security Documents and any Collateral;
(b) to or in respect of any and all other claims, rights or causes of action against persons arising from or otherwise in relation to or in connection with the rights, title and interests described in paragraph (a) …
2. AGREEMENT TO NOVATE
2.1 Agreement to novate
In consideration of the mutual covenants and agreements contained in this Deed and subject to the terms and conditions of this Deed the Parties … agree as follows:
(a) that the Seller with full title guarantee, subject to payment of the Purchase Price to the Seller … will novate … in favour of the Purchaser … the Transfer Assets and the Novated Obligations …
7. REPRESENTATIONS AND...
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