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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Murfet & Anor v Property Lending LLP & Anor [2024] EWHC 2787 (Ch) (05 November 2024) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2024/2787.html Cite as: [2024] EWHC 2787 (Ch) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
APPEALS (ChD)
ON APPEAL FROM CHIEF ICC JUDGE BRIGGS IN BR-2022-000505
AND BR-2022-000507
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
____________________
(1) WAYNE MURFET (2) PAMELA MURFET |
Appellants |
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- and - |
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(1) PROPERTY LENDING LLP (2) SKYRED INTERNATIONAL S.A.R.L. |
Respondents |
____________________
Mr Samuel Parsons (instructed by Howard Kennedy LLP) for the Respondents
Hearing dates: 25 October and 5 November 2024
____________________
Crown Copyright ©
Mr Justice Thompsell:
1. INTRODUCTION
i) Ground 2 was that Judge Briggs did not consider the principle of contra proferentem.
ii) Ground 3 was that Judge Briggs erred in holding that the Lender could demand full repayment at any time without any reason: this matter was a trial issue which could not be determined in the insolvency courts; it would depend on the intention of the parties, and so would require witness evidence; and as the Borrower was not a party to the insolvency proceedings, it was not possible for the court to reach any conclusion about the intentions of the Borrower.
iii) Ground 4 was that Judge Briggs was incorrect in holding that Clause 7.2 of the Facility Letter was a termination clause.
iv) Ground 11 was that Judge Briggs fell to consider the applicability of s.3 UCTA.
2. RELEVANT LEGAL TESTS
"The debt is disputed on grounds which appear to the court to be substantial."
"The court is satisfied on other grounds that the demand ought to be set aside."
"As being akin to that applicable to the test applied under CPR 24 for a reverse summary judgment, namely that there is "no real prospect of successfully defending the claim".
"If the correct test was that of the balance of probability, it may be that on this appeal the Court would not interfere, but that is not the correct test. It is not appropriate on an application to set aside a statutory demand to conduct anything approaching a mini-trial."
i) The Court must consider whether the respondent to the application has a "realistic" as opposed to a "fanciful" prospect of success i.e. one that carries some degree of conviction - a claim that is more than merely arguable.
ii) The Court must not conduct a "mini-trial". This does not mean that the Court must take at face value and without analysis everything that a respondent to the application says in his statements before the Court.
iii) The Court must take into account not only the evidence actually placed before it upon the application, but also the evidence that can be reasonably expected to be available at trial.
iv) Although a case may turn out at trial not to be complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus, the Court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.
v) On the other hand, it is not uncommon for an application under CPR Part 24 to give rise to a short point of law or construction and, if the Court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should "grasp the nettle" and decide it. If the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be.
"when faced with a summary judgment application it is not enough to say, with Mr Micawber, that something may turn up."
3. GROUND 3
"The Learned Judge erred in holding that the Respondent could demand full repayment at any time without any reason.
a. The question of whether parties intend such an interpretation was a trial issue which could not be determined in the insolvency courts – the Court seeking to establish intention would have properly required an analysis of the witness evidence, which, on the papers, was disputed – as such, this dispute and the need for the Court to have explored this in live witness evidence should have been sufficient alone, to warrant a bona fide dispute being established, sufficient to set aside the Demands
b. As the Borrower was not a party to the insolvency proceedings, it was not possible for the court to reach any conclusion about the intentions of the Borrower.
c. Evidence from the Borrower would be required and tested at trial before any determination on this issue.
d. The evidence before the court met the threshold for holding that there was a substantial dispute as to the meaning of Clause 7.2."
The interpretation of Clause 7.2
"7.1 Subject to Clause 7.2 below, the Facility will expire and the Borrower must repay or discharge the liabilities irrevocably and in full by no later than: (a) the date of completion of the sale of the whole or substantially the whole of the Property; and (b) the Termination Date.
7.2 Notwithstanding the above or any other provision of this Agreement, the Liabilities (including without limitation all capitalised interest under Condition 6.2) are repayable on demand.
7.3 [Following the repayment of any senior debt,] [T]he Borrower must pay the Net Proceeds of Sale to the account notified to you by us, to be applied in reduction of the Liabilities."
"(i) the objective nature of the assessment; (ii) the "factual matrix" or "available background"; (iii) the meaning of the language used by the parties; (iv) the need to have regard to the contract as a whole; (v) the significance of the nature, formality and quality of the drafting of the contract; (vi) what is to be done when there are two possible meanings of the disputed clause; (vii) the unitary and iterative nature of the process; and (viii) striking the balance between the various, potentially conflicting, principles."
"Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract."
"Subject to the requirement that it should have been reasonably available to the parties … it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man."
"I did not think it necessary to emphasise that I meant anything which a reasonable man would have regarded as relevant. I was merely saying that there is no conceptual limit to what can be regarded as background … I was certainly not encouraging a trawl through 'background' which could not have made a reasonable person think that the parties must have departed from conventional usage.
"…it can be said that the function of the matrix of fact is to "elucidate the contract, and not contradict it". Thus it has been stated that it is not "permissible" to construct from the matrix of fact "a meaning that the words of the contract will not legitimately bear". However, the latter statement must be seen in context. Cases can be found in which the courts have given to words a meaning which, as a matter of their natural and ordinary meaning, they will not legitimately bear. But the courts will not lightly reach such a conclusion and reliance on the matrix of fact alone, without clear evidence both that something has gone wrong with the language and clear evidence of what it was that the parties intended to provide, will not generally suffice to persuade the court to depart from the meaning of the words which the parties have used.
"The drift of modern authority is in the direction of putting greater emphasis on textual analysis and on the meaning of the words which have been used by the parties, particularly in the case where the contract has been drafted with the benefit of skilled professional advice."
and reconciles the authorities with a conclusion that:
"The instrument must speak for itself, but the words used must, as stated by Lord Hoffmann, be understood to bear the meaning which they would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
"The reliance placed in some cases on commercial common sense and surrounding circumstances (e g in Chartbrook [2009] AC 1101, paras 16—26) should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision."
The definition of Liabilities
"all sums due to all the Lender from any Obligor in connection with the Finance Documents on any account whatsoever, whether actual or contingent, present or future, alone or with any other person."
Implied Terms
"As it was put by Hoffmann J in Re Potters Oils Ltd (No 2) [1986] BCLC 98 at 103, [1986] 1 WLR 201 at 206 a mortgagee 'is under no duty to refrain from exercising his rights merely because doing so may cause loss to the [mortgagor] or its unsecured creditors."
"(1) It is not every contractual power or discretion that will be subject to a Braganza limitation. The language of the contract will be an important factor.
(2) The types of contractual decisions that are amenable to the implication of a Braganza term are decisions which affect the rights of both parties to the contract where the decision-maker has a clear conflict of interest. In one sense all decisions made under a contract affect both parties, but it is clear that Baroness Hale had in mind the type of decision where one party is given a role in the on-going performance of the contract; such as where an assessment has to be made. This can be contrasted with a unilateral right given to one party to act in a particular way, such as right to terminate a contract without cause.
(3) The nature of the contractual relationship, including the balance of power between the parties is a factor to be taken into account: per Braganza per Baroness Hale. Thus, it is more likely for a Braganza term to be implied in, say, a contract of employment than in other less 'relational' contracts such as mortgages.
(4) The scope of the term to be implied will vary according to the circumstances and the terms of the contract."
4. GROUND 2: CONTRA PROFERENTEM
5. GROUND 4: WAS CLAUSE 7.2 A TERMINATION CLAUSE?
6. GROUND 11: UCTA
"3.— Liability arising in contract.
(1) This section applies as between contracting parties where one of them deals [...] on the other's written standard terms of business.
(2) As against that party, the other cannot by reference to any contract term—
(a) when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or
(b) claim to be entitled—
(i) to render a contractual performance substantially different from that which was reasonably expected of him, or
(ii) in respect of the whole or any part of his contractual obligation, to render no performance at all,
except in so far as (in any of the cases mentioned above in this subsection) the contract term satisfies the requirement of reasonableness."
7. CONCLUSION