Valla PTC Ltd (acting as Trustee of the Westline Trust) v Jonathan Moss Faiman

Hearing dates: 3 July 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.

Introduction

In this case the Claimant Valla PTC applies for permission to issue an application for, and an order for summary judgment against the Defendant Jonathan Moss Faiman.

There are two issues which I need to consider:

i) The jurisdiction to grant summary judgment in this case;

ii) The application for summary judgment.

I will first however outline the relevant procedural history, which is relevant to both questions.

Summary of the claim

The Claim is brought in relation to a Loan Consolidation Agreement (the “ LCA”) entered into between the Claimant and the Defendant on 3 September 2019, pursuant to which the Claimant agreed to consolidate certain of the Defendant's debts and the Defendant agreed to repay to the Claimant a total sum of EUR 29,763,040 by 31 January 2020. I have before me a copy of that agreement and a witness statement which sets out the history of the Defendant's indebtedness which has its origin in loans made in 2017 and 2018 and prior defaults, which resulted in the loan consolidation. In summary the Defendant indicated that via various business interests, in particular in a company called Energicon, he anticipated being able to pay off his indebtedness by early 2020.

The LCA arrangements have a number of complexities, arising out of past dealings, but for present purposes encapsulate a fairly simple debt arrangement. The key terms of the LCA are in particular:

i) By Clauses 13.1 and 13.2, the LCA is governed by English law with an English court jurisdiction clause;

ii) By Clause 3.1, the Defendant agreed to repay the Claimant the sum of EUR 29,763,040;

iii) By Clause 3.3, the Defendant agreed to pay interest at a rate of 8% per annum;

iv) By Clause 5.1, the Defendant agreed to repay the full amount of the loan, together with interest, by the “ Repayment Date”, which is defined as “ 31 January 2020”;

v) By Clause 7.1, the Defendant agreed, within one month of the “ Effective Date” (i.e. by 3 October 2019), to: (a) pledge in favour of the Claimant assets with a value not less than the amount of the consolidated loan as security for all its present and future payment and performance obligations under the LCA (the “Security”); and (b) execute and deliver the agreements conferring the Security on the Claimant in a form and substance satisfactory to the Claimant (the “Security Agreements”). The security envisaged was apparently shares in Energicon.

vi) By Clauses 7.2 and 8.1(c), it was agreed that any failure by the Defendant to satisfy the Security requirements of Clause 7.1 would amount to an immediate Event of Default;

vii) By Clause 8.2, on an Event of Default, the Claimant may give notice to the Defendant to accelerate the loan, requiring the full loan to be immediately due and repayable and;

viii) By Clause 3.4, the parties agreed that interest in the event of default would be payable at 8% on any amount due.

However, despite having agreed to pledge his shares in Energicon as Security in accordance with Clause 7.1, the Defendant failed, by 3 October 2019, to execute the Security Agreements in breach of the LCA. He informed the Claimant that he could not do so without consents which he had not obtained.

On 11 October 2019, the Claimant gave written notice of this default to the Defendant pursuant to the notice terms of the LCA, declaring the full amount of the loan due and payable.

To date, the Defendant has still not repaid any amount of the loan or interest (simple and default).

As is also apparent, the term of the loan has also since expired: pursuant to Clause 5.1, the loan was due to be repaid by 31 January 2020.

As is explained in the first witness statement in support of the application, the Claimant has followed the Pre-Action Protocol for Debt Claims. On 4 November a Letter of Claim was served on the Defendant.

While the Defendant failed to respond to the substance of the Claimant's letter before action, he did return a Reply Form dated 3 December 2019 in which he confirmed: “ I agree I owe the debt” and “ I will pay, but I need more time to pay”. That was a partial but not a full completion of the reply letter. He did not include proposals for repayment, or include details of his financial position.

A draft Claim Form was served on 3 April and 21 days was given for response. No response was received so on 24 April 2020 the Claim Form was issued.

Service of the Claim Form is explained in detail in the first witness statement of Mark Cooper in support of the application. In short, pursuant to section 1140 of the Companies Act 2006, the Defendant, as a director of a number of companies with UK registered addresses, can be validly served at the service address filed under the Act. I have read the evidence on this point and am satisfied that valid service was effected at two of these addresses. A certificate of service was filed promptly at court in respect of this service.

Moreover, it is clear that the Defendant is aware of the proceedings, the application and the hearing date:

i) The Claim Form and Particulars of Claim were also emailed to the Defendant to an account from which he has continued to correspond with the Claimant's solicitors. He responded to at least one email after being informed of the fact of proceedings.

ii) The proceedings were also sent to his Monaco address by post, with delivery being evidenced.

iii) On 18 May 2020, the Defendant acknowledged that he had received the documents sent to his Monaco address (which includes the Claim Form and Particulars of Claim) and responded to the email from the Claimant's solicitors which had explained that he was required to file an Acknowledgment of Service and that, if he did not, the Claimant would apply for summary judgment. It is worth setting out this communication, from the same address to which the Claim Form was emailed “ I have got back to Monaco. I have the documents. I can accept service”.

iv) Although the Defendant was keen to enter into discussions, and did not appear to dispute the debt, no payment was made, and no late acknowledgement of service filed.

v) This application was then issued on 22 May 2020. The application was served at the same registered addresses, and also sent to his Monaco address and emailed to him.

vi) On 2 June 2020, the Defendant replied to the Claimant's solicitors' email regarding...