Nomura International Plc v Granada Group Ltd and Others
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE COOKE,Mr Justice Cooke |
| Judgment Date | 23 March 2007 |
| Neutral Citation | [2007] EWHC 642 (Comm) |
| Docket Number | Case No: 2006 FOLIO 613 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 23 March 2007 |
[2007] EWHC 642 (Comm)
The Honourable Mr Justice Cooke
Case No: 2006 FOLIO 613
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
COMMERCIAL COURT
Mr I Milligan QC and Mr O Gledhill (instructed by Ashurst) for the Claimant
Mr A Gledhill (instructed by Travers Smith) for the First-Third and Fifth Defendants
Hearing dates: 19–20 March 2007
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.
Mr Justice Cooke:
The Application
The first to third and fifth defendants to whom I shall collectively refer as Granada, issued an application on 9 October 2006 to strike out the Claim Form issued on 21 June 2006 by the claimant, to whom I shall refer as Nomura. As a result of a slightly convoluted history, connected with another action brought by West LB AG (West) against Nomura, no Particulars of Claim have yet been served. Granada contends that Nomura's Claim Form and therefore the action, should be struck out as an abuse of the process of the court.
Background
In December 1999 West entered into a Commitment Letter in relation to the lending of £860 million to a vehicle for the merger of two consumer goods rental businesses owned by Thorn (itself owned by Nomura) and Granada. That vehicle was Box Clever Finance Ltd (Box Clever). The loan was drawn down in June 2000 but was subsequently the subject of re-financing in a securitisation arranged by West and CIBC in June 2002. In 2003 Box Clever went into receivership and proceedings were subsequently commenced against West and CIBC by CDC IXIS, alleging that it had been induced to take up notes issued in the securitisation on the basis of false information relating to the profitability of the goods rental business.
On 15 December 2005, West issued a Claim Form against Nomura. The endorsement set out the claim as for “damages for negligent misstatement and/or negligence and/or breaches of duty arising out of the defendant's financial models and/or projections and/or advice and/or information provided to the claimant between about October 1999 and June 2000 and in reliance upon which the claimant agreed to and did provide £860 million of loan finance to Box Clever Finance Limited to fund the merger of the businesses of UK Consumer Electronics Limited (formerly Granada TV Rental Limited) and TUK Holdings Limited (formerly Thorn UK Limited).” Having issued a Claim Form, West took no steps to serve it but in March 2006 invited Nomura to agree to a twelve month standstill. In consequence on 31 March 2006 a form of Standstill Agreement was concluded between them. This provided that any limitation period expiring during the currency of the agreement should be deemed to expire on a date thirty days after notice of termination or, at latest, on 31 March 2007.
On 20 April 2006 Nomura's solicitors (Ashurst) contacted Granada's solicitors (Travers Smith) by telephone, explained that a Standstill Agreement had been concluded with West and said that Nomura considered itself to have claims over against Granada which it was anxious to protect by a similar Standstill Agreement (so as to protect its limitation position).
On 28 April 2006 Ashurst emailed a draft Standstill Agreement to Travers Smith. That Standstill Agreement referred to the potential claims of Nomura in the following way:—
“Whereas
(A) West….have asserted that they have claims against Nomura….for alleged negligent misstatement and/or negligence and/or breaches of duty arising out of Nomura's financial models and/or projections and/or advice and/or information provided to West….in reliance upon which West agreed to and, in June 2000, did provide £860 million of loan finance to Box Clever Finance Limited to fund the merger of the businesses of UK Consumer Electronics Limited (formerly Granada TV Rental Limited) and TUK Holdings Limited (formerly Thorn UK Limited) (the “West LB claim”)
(B) Nomura asserts that if, contrary to its belief, Nomura is liable to West…in connection with the West LB claim, the Granada Parties may in turn be liable to Nomura either directly or by way of contribution, in respect of any part of the financial models and/or projections and/or advice and/or information provided to West LB which related to the business of Granada TV Rental Limited (whether alone or in conjunction with the business of Thorn UK Limited) and/or which was provided by, or on behalf or at the instruction of, Granada Parties or a Granada Parties Affiliate either to West….or to Nomura (the Nomura claim).”
On 18 May 2006 Travers Smith wrote to Ashurst asking for a proper explanation of Nomura's claims. On 23 May 2006 Ashurst replied in the following way:—
“…In the interests of avoiding the issuing of proceedings against your client, Nomura is happy to provide an outline of the potential claims, but you must appreciate that this is subject to the uncertainty of the detail of the claim that West LB may seek to pursue against Nomura.
We have set out the nature of West LB's asserted claims in the draft Standstill Agreement. It is made clear that West LB asserts that it relied upon certain information supplied by Nomura such that “West LB agreed to and in June 2000 did provide £860 million of loan finance to Box Clever Finance Limited to fund the merger” that led to the creation of the Box Clever business. The information in question is said to have been financial models and/or projections and/or advice and/or other information.
Your clients will be well aware that information of that nature was supplied to West LB in the context of negotiations between West LB, Granada and Nomura. In the case of the model of the proposed merged business, information to prepare it was provided to Nomura by both joint venture partners including, of course, Granada. That information related to various aspects of the Granada rental business, including data as to the profile and behaviour of its customers, data as to termination rates, information as to historical and projected working capital requirements and other balance sheet and profit and loss information. This information was supplied by individuals within the Granada Group Companies identified in the draft Standstill Agreement all of whom I understand to be clients of yours in this matter (but perhaps you could confirm the position in respect of UK Consumer Electronics Limited which is currently in receivership).
To the extent that West LB makes any claims or pursues any legal remedies in connection with the provision of any information which was supplied by Nomura to West LB, but which was obtained from one or more of the Granada companies identified in the Standstill Agreement……then Nomura may need to make a claim against one or more of those Granada companies…..at this stage however and until West LB makes out a case against Nomura we are not in a position to identify the detail of Nomura's case and nor would it be appropriate, or in our clients' respective interests, to do so for the purposes only of presenting Nomura's rights against your clients.
….However I believe that the substance of Nomura's claims should be understandable to you and your clients and will help to explain why, particularly bearing in mind the delay since we spoke on 20 April 2006, we are unable to wait any longer to obtain your agreement to enter into a standstill. Therefore if I do not hear from you with a substantive response along those lines by close of business on Friday 26 May 2006, we will issue the claim in order to protect Nomura's position. It may then be that there is still scope within the usual 4 month period for service in which to enter into a Standstill Agreement, broadly along the lines of the agreement that I have told you Nomura was willing to enter into with West LB to avoid unnecessary litigation. It follows that I do not agree that in these circumstances it is necessary for my clients to be in possession of full Particulars of Claim before issuing proceedings.”
It will be noted that whereas the draft Standstill Agreement referred to potential claims by Nomura against Granada “in respect of any part of the financial models and/or projections and/or advice and/or information provided to West LB which related to the business of Granada TV Rental Limited and/or which was provided by or on behalf of or at the instruction of Granada”, the letter of 23 May was more limited in referring to the supply of information relating to various aspects of the Granada Rental business alone. At paragraph 35 of the first statement of Mr Sparrow of Ashurst (Sparrow 1) he states that during the conversations which took place regarding the West Claim Form, it had not been made clear to Ashurst or Nomura which particular information it was that West alleged had been provided to it by Nomura which was said to be inaccurate. Nomura and Ashurst were however aware that, in the context of the commercial discussions and due diligence which took place prior to West providing the loan facilities in June 2000, Granada provided information to parties including Nomura. Mr Sparrow states that Nomura and West were reliant on Granada for information about the past performance and projected future performance of the Granada Television Rentals business.
On 1 June 2006 Ashurst sent Travers Smith a draft Claim Form which Nomura was considering issuing to protect its ability to bring claims against Granada in respect of the Box Clever financing or merger. In that letter Mr Sparrow...
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