Simon Arthur Samuel Mckay (t/a Mckay Law Solicitors and Advocates) v Centurion Credit Resources LLC
| Jurisdiction | England & Wales |
| Judge | H.H. Judge Keyser Q.C. |
| Judgment Date | 06 December 2011 |
| Neutral Citation | [2011] EWHC 3198 (QB) |
| Court | Queen's Bench Division |
| Date | 06 December 2011 |
| Docket Number | Claim No. 1LS40622 |
[2011] EWHC 3198 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LEEDS DISTRICT REGISTRY
MERCANTILE COURT
Leeds Combined Court Centre
Oxford Row
Leeds LS1 3BG
His Honour Judge Keyser Q.C.
sitting as a Judge of the High Court
Claim No. 1LS40622
HUGH TOMLINSON Q.C. (instructed by Walker Morris of Kings Court, 12 King Street, Leeds, LS1 2HL) for the Claimant
DAVID QUEST (instructed by Simons Muirhead & Burton of 8-9 Frith Street, London W1D 3JB) for the Defendant
Hearing dates: 8 th and 9 th November 2011
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, Mr Simon McKay, carries on practice as a solicitor in Leeds in the name McKay Law Solicitors & Advocates. The defendant is an investment company incorporated in Delaware and carrying on business in New York City. On 19 th November 2009 the claimant and the defendant made a written agreement ("the Loan Agreement"). The purpose of the Loan Agreement was to provide to the claimant funds with which he would be able to pay disbursements, including the premiums due under policies of after-the-event ("ATE") insurance, in respect of up to 6,000 claims in which he proposed to act, pursuant to conditional fee agreements ("CFAs"), for debtors under regulated consumer credit agreements against banks and other financial institutions.
In these proceedings, the claimant alleges that the defendant repudiated the Loan Agreement by refusing to make an advance when validly requested to do so and by subsequently evincing a clear intention not to perform the Loan Agreement according to its terms and that by reason of that repudiation, which he accepted, he has suffered substantial loss and damage, which the particulars of claim put at a figure in excess of £70m. The defendant denies that it was obliged to make an advance, on the ground either that the decision whether or not to do so was within its sole discretion or that conditions precedent to the claimant's right to request an advance had not been satisfied, and it denies that either its actions or its correspondence amounted to a repudiation of the Loan Agreement. It disputes the alleged loss and damage, should that issue ever become relevant.
On 7 th April 2011 Mr Justice David Richards ordered that issues of liability be tried before issues of quantum of damage. This is my judgment upon the issues of liability.
I shall first set out some of the main terms of the Loan Agreement and identify the issues that arise for consideration. Then I shall summarise the relevant facts. Finally I shall turn to a discussion of the issues.
The Loan Agreement
The Loan Agreement is a long and detailed document. It describes the defendant as Lender and the claimant as Borrower (in each case, with inconsistent use of the definite article). The following are among its relevant provisions.
FOR VALUE RECEIVED, and in consideration of the granting by the Lender of financial accommodations to or for the benefit of the Borrower,…, the Borrower represents and agrees with the Lender, as of the date hereof and as of the date of each loan, credit and/or other financial accommodation, as follows:
1.1 Loan. Subject to the terms and conditions of this Agreement, the Lender hereby agrees to make a loan ("the Loan") and extend financial accommodations to or for the benefit of Borrower in the maximum original principal amount of US$7,500,000.00 (the "Maximum Credit Amount") as follows:
(a) Advances. From time to time, upon satisfaction of the conditions precedent herein contained and upon receipt from Borrower of a request for an advance in the form of Schedule 1.1(a) attached hereto…, Lender shall advance an amount of principal under the Loan (each an "Advance") in accordance with the terms hereof. Lender's obligation to make any Advance hereunder shall be in the Lender's sole discretion.
(b) Promise to Pay. The Borrower hereby unconditionally promises to pay to the order of Lender …the principal amount of …US$7,500,000.00 …or so much thereof as may be outstanding from time to time…
…
(i) Modifications and Interpretation. This Agreement may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought. …Notwithstanding the above, from time to time, without affecting the obligation of Borrower or the successors or assigns of Borrower to pay the outstanding principal balance of the Loan …and observe the covenants of Borrower contained herein or in any other Loan Document without affecting the guaranty of any person, corporation, partnership or other entity for payment of the outstanding principal balance of the Loan, without giving notice to or obtaining the consent of Borrower, the successors or assigns of Borrower or guarantors, and without liability on the part of the Lender, the Lender may, at the option of the Lender, decrease the maximum amount of the Loan, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of the Loan, modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given herefor, take or release other or additional security, and agree in writing with Borrower to modify the rate of interest or period of amortization of the Loan or change the amount of the monthly installments payable hereunder.
(l) Delay Not a Waiver. The Lender shall not, by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder and no waiver by the Lender of its rights or remedies hereunder shall be valid against the Lender unless in writing, signed by the Lender, and then only to the extent therein set forth. The waiver by the Lender of any right or remedy hereunder upon any one occasion shall not be construed as a bar to any right or remedy which it would otherwise have had on any future occasion.
1.4 Making Advances: Execution and Delivery of this Agreement. Borrower may request an Advance of the Loan hereunder, in writing, by delivering to Lender a Request for Advance, together with all supporting documentation required thereunder. Prior to Lender's executing and delivering this Agreement to Borrower, Borrower shall have submitted to Lender all information requested by Lender in its sole and absolute discretion in connection with the Loan, and all information submitted pursuant to this Section 1.4 shall be certified as true, accurate and complete in all material respects by Borrower.
1.7 Making of Advances.
(a) The Lender shall execute and deliver this Agreement upon satisfaction, in the Lender's discretion, of the following conditions [there then follows a list of conditions precedent to the execution and delivery of the Loan Agreement].
(b) Borrower may request an Advance of principal under the Loan upon the satisfaction, in the Lender's discretion, of the following conditions:
…
(ii) Borrower shall have delivered to Lender evidence that the applicable ATE insurance and Key Man insurance (as hereinafter defined) has been entered into (subject to the forty-five (45) day grace period provided in Section 4.15 herof, during which time this condition regarding Key Man Insurance shall be deemed satisfied) and all payments with respect thereto have been fully paid;
…
(iv) Lender shall have determined that there has been no Material Adverse Effect on any aspect of the business, operations, properties, prospects or condition (financial or otherwise) of Borrower, or any event or condition which could reasonably be expected to result in such a Material Adverse Effect;
(v) Lender shall have received a duly executed Request for Advance, together with all supporting documentation thereby required to be submitted to Lender;
…
(x) Lender shall have received such other documents, instruments, and/or agreements as Lender may reasonably request.
…
(l) Delay Not a Waiver. The Lender shall not, by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder and no waiver by the Lender of its rights or remedies hereunder shall be valid against the Lender unless in writing, signed by the Lender, and then only to the extent therein set forth.…
2.1 Grant of Security Interest. In consideration of the Lender's extending credit and other financial accommodation to or for the benefit of the Borrower, the Borrower with full title guarantee hereby grants to the Lender a security interest in, a lien on and pledge and assignment of, and a first fixed charge and encumbrance on, the Collateral (as hereinafter defined).
2.3 Definitions. The following definitions shall apply throughout this Agreement:
…
(a) "Collateral" shall mean all of Borrower's present and future right, title and interest in, to and under:
…
(iii) all policies of Key Man Insurance required to be maintained hereunder, together with the proceeds thereof.
(b) "Material Adverse Effect" shall mean, in the opinion of Lender, materially adversely affecting the operations or financial performance of the Borrower taken as a whole.
4.14 ATE Insurance. Throughout the term of the Loan, Borrower shall maintain, and deliver evidence to Lender of the maintenance of, one or more policies of "after-the-event insurance" (" ATE...
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