Trade Credit Finance No (1) Ltd and National Westminster Bank Plc and Dinc Bilgin Lime Company Ltd and Coutts & Company
| Jurisdiction | England & Wales |
| Judge | Gavin Kealey QC |
| Judgment Date | 03 November 2004 |
| Neutral Citation | [2004] EWHC 2732 (Comm) |
| Docket Number | Case No: 2004 Folio 319 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 03 November 2004 |
[2004] EWHC 2732 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London WC2A 2LL
Gavin Kealey Qc Sitting as a Deputy High Court Judge
Case No: 2004 Folio 319
Mr Paul Downes and Mr Peter de Verneuil Smith (instructed by Clyde & Co) for the claimants
Mr Khawar Qureshi (instructed by St Davids) for the first defendant
Mr Stuart Adair (instructed by Arnold Fooks Chadwick) for the second defendant
Hearing dates: 28 & 29June, 1, 7 & 15 July, 13 & 30 September, 5 October
Approved Judgment
I direct that pursuant to CPR PD 3 9A 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.
Gavin Kealey QC
INTRODUCTION
There are before the court six applications as follows: (i) the claimants' application for summary judgment against the first defendant; (ii) the second defendant's application for summary judgment against the claimant; (iii) the claimants' application for a continuation of the freezing injunction against the first and second defendants until further order; (iv) the first defendant's application to set aside the freezing injunction; (v) the first defendant's application for specific disclosure; and (vi) an application by the first defendant's wife, Mrs Guler Bilgin, to be added as a defendant to the action and for declaratory relief. It is agreed by all the parties, and also by Mrs Bilgin, that her application should be adjourned.
The original time estimate for these applications was three days. In the event, they occupied just short of eight days of the court's time. This is not surprising: the documentary evidence alone filled eight lever arch files, and the authorities (once supplemented in the course of the hearing) filled more than three lever arch files. Much of this material was referred to in the written submissions. Much more was then referred to during the course of oral argument. As time wore on, the applications for summary judgment appeared more and more to take the form of mini-trials. There was a temptation to bring matters to a more speedy solution than any of the parties might have liked. In the end, however, it seemed to me that, since so much time and effort had been invested by the parties in these applications and, further, since it was possible to reach final conclusions on some of the issues raised, the interests of justice were best served by permitting the applications for summary judgment to be heard in full.
THE FACTS
There is little significant dispute among the parties in relation to the essential background facts.
By a conditional sale agreement dated 16 October 1998 the first claimant ("TCF") agreed to sell a Goss Colorline 80 printing press to Sabah Yayincilik AS ("Sabah") for a total price, including finance charges, of £10,253,225.07. The printing press had been the subject of an earlier sale agreement between Goss Graphic Systems Limited ("Goss") and Sabah dated 9 April 1998 but, after TCF had agreed to provide a facility of £8,300,000 to Sabah to facilitate the purchase, the earlier agreement was varied under the terms of a variation agreement dated 16 October 1998 so that TCF was substituted for Sabah as purchaser of the printing press from Goss.
The conditional sale agreement provided for payment of a deposit followed by the balance of the purchase price by 10 instalments falling due on various dates between 1 September 1999 and 1 March 2004. Clause 16 contained a retention of title provision by which the printing press was to remain TCF's sole and exclusive property until the entire purchase price (the deposit and all 10 instalments) had been fully paid.
By virtue of clause 3.1.2, Sabah was required to procure, as part of the security for payment of the instalments, the issuance of a personal guarantee and indemnity by the first defendant, Mr Dinc Bilgin, in form and substance acceptable to TCF. Sabah is one of Turkey's leading newspaper groups and Mr Bilgin was its driving force.
By a deed of guarantee executed on 16 October 1998, Mr Bilgin guaranteed to TCF the payment by Sabah of 12 per cent of the first four instalments and 100 per cent of the last six instalments under the conditional sale agreement. TCF assigned all its rights, title and interest in the guarantee to the second claimant, National Westminster Bank plc, by an assignment dated 30 November 1998. Written notice of the assignment was given to Mr Bilgin on 4 December 1998, and Mr Bilgin duly confirmed receipt of that notice on about the same date.
Pursuant to the conditional sale agreement, the deposit for the printing press was paid. The press itself was delivered to Sabah in Turkey. TCF paid Goss the purchase price due under the terms of the Variation agreement, and Sabah paid the first four instalments under the conditional sale agreement as and when they fell due. It was thereafter that problems arose.
On the basis of the material before the court, it appears that the origin of these problems was Mr Bilgin's decision to expand his business interests into the field of banking. Mr Bilgin acquired a Turkish bank called Eti Bank, In 2000, there was a banking crisis in Turkey, and special legislation was passed to enable the Turkish financial regulatory and supervisory authorities to take over affected banking institutions. Eti Bank had not proved to be a success under Mr Bilgin's governance and it was one of eight Turkish banks taken over by the authorities. In November 2000, the Turkish banking authorities also froze all of Mr Bilgin's assets and a criminal investigation was begun into his business affairs. In April 2001, Mr Bilgin was arrested and imprisoned without charge. He remained in prison for 10 months, all the while without charge. During that period, Mr Bilgin was unable to conduct any business and, in his evidence to the court, he attributes the failure of his businesses, including Sabah, to discharge their debts as and when they fell due to his incarceration.
The fifth instalment under the conditional sale agreement fell due on 1st September 2001 but was not paid. Following non-payment of that instalment, TCF and Sabah reached an agreement as to the payment of the outstanding amount and the re-scheduling of payment of the balance. That agreement was set out in a protocol (the "first protocol") dated 28 May 2002. It described itself as a rescheduling of the payment terms of the conditional sale agreement, and stipulated that TCF retained the option to initiate any legal action that it deemed necessary or appropriate against Mr Bilgin as guarantor under the original guarantee. Only the first two of the rescheduled payments, each of £75,000, were made, and those were late.
Sometime towards the end of 2002 (Mr Bilgin's evidence does not specify with any greater certainty when), Mr Bilgin granted a licence over his newspaper and other media operations to another Turkish company called Merkez. He did so, apparently, in order to enable those operations to survive and to facilitate an agreement with the Turkish banking authorities in resolution of his previous difficulties. According to Mr Bilgin's evidence, "Merkez wishes to purchase the printing press and to this end agreements have been entered into between Sabah and Merkez in terms whereof Merkez will purchase the asset from the claimants" (by which, I presume, he means from TCF).
Following the apparent breakdown of the re-scheduled payment plan set out in the first protocol, on 24 January 2003, TCF commenced an action against Sabah in the High Court in England seeking declarations that, pursuant to the retention of title provision in the conditional sale agreement, the printing press remained TCF's sole and exclusive property and that it was entitled to repossess it. Those proceedings were not far advanced when, on 17 March 2003, a further protocol (the "second protocol") was signed. The parties to the second protocol included TCF, Sabah and Mr Bilgin. In its preamble, the second protocol recorded that the purchase price for the printing press had been guaranteed by Mr Bilgin but had not been fully paid, and that TCF was seeking declaratory relief in England in relation to the press. Thereafter, the second protocol was in four principal sections, of which only parts are of immediate relevance to the present applications. First, by clause 1, TCF agreed that, upon receipt of a definitive Turkish court judgment to the effect that it had title in the printing press (and upon the assumption that it was otherwise in a position to sell the press), it would give Merkez a first option to purchase the press on terms and conditions acceptable to TCF. Secondly, by clause 2, TCF agreed that, if it signed an agreement with Merkez for the sale of the press, it would thereafter release Mr Bilgin from any further obligations under his guarantee. Thirdly, by clause 3, Sabah and Mr Bilgin agreed to co-operate with TCF in relation to TCF's action for declaratory relief in England and such application as it might make to the Turkish courts for the recognition and enforcement of an English judgment. Fourthly, by clause 4, it was agreed that the terms of the second protocol did not affect Mr Bilgin's obligations and responsibilities under the guarantee, and that the guarantee continued in full force and effect.
Shortly after the second protocol was signed, and as its terms envisaged, TCF sought without opposition and on 27 March 2003 obtained declaratory orders from the High Court in England against Sabah that the printing press was its property and that it was entitled to its repossession. On 3...
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