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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> AMC III Purple BV v Amethyst Radiotherapy Ltd [2019] EWHC 1503 (Comm) (14 June 2019) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2019/1503.html Cite as: [2019] EWHC 1503 (Comm) |
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BUSINESS AND PROPERTY COURTS OF
ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
____________________
AMC III PURPLE B.V. |
Claimant |
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- and - |
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AMETHYST RADIOTHERAPY LIMITED |
Defendant |
____________________
Alex Barden (instructed by Latham & Watkins (London) LLP) for the Defendant
Hearing dates: 5 June 2019
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Crown Copyright ©
Mr Justice Butcher :
Introduction
(i) Its claim for a declaration that there have been "Events of Default" under each of the MFA and the SLA as a consequence of: (a) the Defendant's failure to pay interest under the MFA on 31 December 2018; (b) the Defendant's failure to pay interest due under the MFA on 31 March 2019; (c) the Defendant's failure to repay the principal sum of 4 million that it borrowed under the SLA either by the "Repayment Date" (21 April 2018) or at all; and (d) the Defendant's failure to pay interest of approximately 1.127 million due under the SLA.
(ii) An order that the Defendant pay sums due to the Claimant in respect of outstanding but unpaid interest under the MFA.
(iii) An order that the Defendant pay the principal and interest outstanding under the SLA.
Factual Background
Summary Judgment: the MFA claims
(1) Sums lent under the MFA fall due to be repaid on the Termination Date, to wit 7 May 2021: clause 6.
(2) Clause 22.1 which stipulates that "each of the events or circumstances set out in clause 22 is an Event of Default (save for clause 22.30 (Acceleration))".
(3) One of the events or circumstances set out in clause 22 is that in clause 22.2, namely when "An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless: (a) its failure to pay is caused by administrative or technical error or a Disruption Event; and (b) payment is made within 2 Business Days of its due date."
(4) By clause 1.1, a "Finance Document" includes the MFA itself.
(5) By clause 1.6, "A Default (other than an Event of Default) is continuing if it has not been remedied or waived in writing and an Event of Default is continuing if it has not been waived in writing, in each case to the satisfaction of the Lender."
(6) Pursuant to sub-clause 10.2(a), the Defendant, as Borrower, is obliged to pay interest on sums advanced under the MFA (a) at the rate of the "Cash Pay Margin", being 7% per annum, (b) on each "Cash Interest Payment Date", namely 31 March, 30 June, 30 September and 31 December of each year.
(7) Pursuant to sub-clauses 10.3 and 10.5 of the MFA, in the event of non-payment of interest due on a "Cash Interest Payment Date", interest would accrue at a default rate of 9% per annum, compounded at the end of each "Cash Interest Period".
(8) By clause 27.6, "All payments to be made by the Borrower under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim."
(1) The Defendant failed to pay the sum of 295,544.55 that was questions of potential set-off apart due in respect of interest by 31 December 2018;
(2) The Defendant failed to pay the sum of 296,407.07 that was questions of potential set-off apart due in respect of interest by 31 March 2019;
(3) The Defendant did pay the sum of 295,544.55 that was due by 31 December 2018, together with further interest due at the default rate pursuant to sub-clauses 10.3 and 10.5 of the MFA, on 1 April 2019.
The claim for a declaration
Money claim for interest under the MFA
Summary Judgment: the SLA Claims
(1) By clause 2.1, "The [Claimant] will lend to the [Defendant] up to 4,000,000 (the Facility)."
(2) By clause 4.1, "The [Defendant] will repay the loan in full (together with all other amounts due but unpaid under this Agreement) on the date falling 36 months from the date of this Agreement (the Repayment Date)."
(3) By Clause 6:
"6.1 The [Defendant] will pay interest on the Loan at the rate of 6% per annum.
6.3 Interest on the Loan will be paid on the Repayment Date.
6.4 Interest on any unpaid amount will accrue on the same basis but at a rate 2% per annum higher than the rate specified in clause 6.1 above. Unpaid interest will be compounded and added to the Principal Amount."
(4) By clause 7, which was entitled "Events of Default"
"7.1 Each of the matters listed in the rest of this clause 7 is an event of default (Event of Default)
(a) the [Defendant] fails to pay any amount payable by it under this Agreement in the manner stipulated;
(b) the [Defendant] breaches any term of this Agreement
Consequences of an Event of Default
7.2 If an Event of Default has occurred and is continuing, the [Claimant] may at any time, by giving notice to the [Defendant]:
(a) terminate the Facility (thereby reducing the Facility to zero);
(b) demand repayment of all or any part of the Loan and payment of any other amounts accrued under this Agreement; and/or
(c) declare that all or any part of the Loan is repayable, and any other amounts accrued under the Agreement are repayable, on demand by the [Claimant] at any time.
7.3 Notwithstanding the occurrence of an Event of Default, but without prejudice of (sic) the rights of the [Claimant] under clause 7.2, the [Claimant] agrees that it shall only apply proceeds recovered from the [Defendant] in repayment of the Loan after all amounts outstanding under the EUR 21,000,000 mezzanine facility agreement dated 7 May 2014 between the [Defendant] and the [Claimant] have been repaid in full."
(5) By clause 8.1: "Each payment to be made by the [Defendant] under this Agreement will be made in full, without any set-off or deduction."
(1) That the SLA was subordinated and postponed to the MFA. It was intended to be an "equity contribution", subordinated to the MFA in the same way as the Original Shareholder Loans were;
(2) That the Claimant has prevented the proposed refinancing intended by the Defendant and accordingly could not complain that there had not been a repayment under the SLA or payment of interest thereunder;
(3) That the Defendant can set off claims against the Lender for the various matters alleged in Section D of the draft Defence, to which I have already referred in the context of the MFA.
(1) That the SLA was intended to provide finance in a context in which it was the AMC Group's own view, as expressed by Mr Buckle at the January 2015 Vienna meeting, that the Defendant was "overleveraged".
(2) That in an email sent to individuals who were, amongst other things, representatives of the Defendant, following the Vienna meeting, Mr Buckle stated:
"As discussed, I have summarised below the key terms that we shook hands on. I trust this reflects our discussions.
1. AMC III will invest via its subsidiaries EUR 4 million in a mixture of new ordinary shares and shareholder loans, pro-rata existing shareholders, for a shareholding of 15% and 15% of shareholder loans."
Though the Claimant had contended that this email was inadmissible, as being part of the negotiations, this was incorrect as it indicated the commercial purpose of the contract.
(3) That the core terms of the SLA matched those of the Original Shareholder Loans.
(4) That the First Addendum to the MFA, executed on the same date as the SLA, provided for the SLA to be "included in the definition of Equity Contribution for the purpose of the Equity Contribution Percentage", and defined the SLA as the "Subordinated Lender Loan".
Cross-application: Case Management Stay
(1) The Claimant is not a party to the arbitration, and the arbitration cannot, without further agreement between the parties as to the jurisdiction of the arbitrators, determine the Claimant's claims under the MFA and the SLA.
(2) Both the MFA and the SLA contain exclusive jurisdiction clauses in favour of the courts of England, which are agreed to be "the most appropriate and convenient courts to settle Disputes". This is a matter of considerable significance, as was the presence of English jurisdiction clauses in Standard Chartered Bank (Hong Kong) Ltd v Independent Power Tanzania Ltd [2016] 1 CLC 750, and Classic Maritime Inc v Lion Diversified Holdings Berhad [2010] 1 Lloyd's Rep 59. To grant a case management stay would effectively deprive the Claimant of the benefit of these provisions, including the English court's process of summary judgment, which the Defendant agreed to.
(3) The fact that the Claimant is, in my judgment, entitled to summary judgment, is itself a reason for a refusal of a case management stay: Classic Maritime Inc. v Lion Diversified at [25].
(4) The arbitration has only just been commenced. This is not a case in which there are alternative proceedings which have been significantly progressed.
(5) Insofar as the stay is sought on the basis that the result of the arbitration may be that the Claimant's claims under the MFA and SLA will "fall away", this appears to be premised on the assumption that an award may be made in the arbitration which will in effect require the Claimant not to continue with the claims it has made in this action, and that the party bound by the award would be able to prevent the pursuit of such claims. That assumption is questionable, however, not least because the shareholder of the Claimant is at liberty to sell its shareholding, and because the MFA expressly permits the assignment of the loans made thereunder.
Cross-application: Stay of Enforcement
Conclusion