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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Frischmann v Vaxeal Holdings SA & Ors [2023] EWHC 2698 (Ch) (03 November 2023) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2023/2698.html Cite as: [2023] EWHC 2698 (Ch) |
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BUSINESS AND PROPERTY COURTS
BUSINESS LIST (ChD)
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
____________________
| (1) RICHARD SANDOR FRISCHMANN |
Claimants |
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| - and - |
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| (1) VAXEAL HOLDINGS SA (2) IDM VENTURES LIMITED (3) CHRISTOPHER SAMUELSON |
Defendants |
____________________
Rory Brown (instructed by Gunnercooke LLP) for the Second and Third Defendants
Hearing dates: 10 and 11 July 2023
____________________
Crown Copyright ©
This judgment will be handed down remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 2pm on 3 November 2023
Master McQuail:
(i) for sums said to be due to him from IDM and Mr Samuelson under written loan and guarantee agreements which he says have been assigned to him; and
(ii) for the provision of certain information by IDM to which he claims to be contractually entitled under those agreements.
(i) four witness statements of Mr William Castledine of Olephant Solicitors acting for Mr Frischmann; and
(ii) two witness statements of Ms Rashmi Dubé acting for the defendants.
Background
"[IDM] covenants with [Dr Frischmann] that, from the date of this agreement until all its liabilities under this agreement have been discharged … it will deliver to [Dr Frischmann] promptly such financial or other information as [Dr Frischmann] may, from time to time, request relating to [IDM] or its business".
"We refer to the Term Loan Facility agreement dated 24th October 2018 ("the Agreement"), the Promissory Note for £1 million issued thereunder, the subsequent loan of £165,000 and the personal guarantee of Christopher Samuelson covering £165,000. We have raised additional funds and agree to the repayment of £582,500 plus interest of £72,653 making a total payment of £635,260 subject to:
1. The cancellation of the Promissory Note for £1 million and its replacement by a new Promissory Note for £582,500;
2. The amendment of the repayment terms for the £582,500 per the revised Atlantic Subsea Ventures Ltd Shareholders Agreement dated 25th February 2019 whereby IDM Ventures Ltd (IDMV) receives repayment of its loans after James Fisher & Son PLC per Clause 5.2. (see attachment). Your percentage share of the net proceeds received by IDMV becomes 6.85%. (£582,500 equals 34.26% of £1,700,000 and 34.26% of 20% equals 6.85%).
3. That the interest rate for the period of both the £1 million and the £165,000 and for the loan balance outstanding post the repayment of £582,500 be at 15% per annum. The interest of £72,653 is calculated according to this amendment.
4. That the guarantee given by Christopher Samuelson for £165,000 is cancelled.
Please countersign this letter confirming your agreement to the above amendments under the Agreement and letters related thereto. We expect to make the repayment before 31st March 2019 and have calculated the interest due to that date."
"Notice of assignment
"We refer to the Term Loan Facility Agreement dated 24 October 2018 for the loan of £1,700,000 and the Term Loan Facility Agreement dated 23 November 2018 for the loan of £165,000 made by Dr Wilem Frischmann to IDM Ventures Limited (the "Debts"), as well as the personal guarantee given by Christopher Samuelson on 23 November 2018 (together the "Assigned Documents").
"On and with effect from 18 June 2020 the Assignor assigned to Mr Richard Frischmann (the "Assignee") all its rights, title, interest and benefits in and to the Assigned Documents and the Debts. All future correspondence, dealings, deliveries and payments in respect of the Assigned Documents or the Debts should be made to the Assignee."
"(i) an update to the Statement [of IDM's funds with Finsbury Trust, sent on 5 March 2021] together with confirmation if Finsbury Trust and Corporate Service Ltd has handled all incoming and outgoing payments for [IDM] to date;
(ii) a statement of [IDM]'s financial position at 4 November 2022
(iii) copies of [IDM]'s accounts (filed, audited, unaudited, management or otherwise) if any from the date of the First IDM Loan … ie 24 October 2018 to date;
(iv) a financial forecast for [IDM] including as to the joint venture with Britannia's Gold Ltd."
The Issues
(i) the Assignment was not effective;
(ii) no notice of Assignment has been given;
(iii) the claim was compromised by the March Agreement;
(iv) there was a collateral agreement that repayment was conditional upon salvage;
(v) on its true construction the Assignment was not effective to assign the Guarantee;
(vi) the obligation in the Guarantee to pay interest at 12% above Dr Frischmann's base rate is meaningless because Dr Frischmann has no base rate.
Summary Judgment
"(i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All ER 91;
"(ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8];
(iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman;
"(iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10];
"(v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No.5) [2001] EWCA Civ 550;
"(vi) Although a case may turn out at trial not to be really 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: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] F.S.R. 3;
"(vii) On the other hand it is not uncommon for an application under Pt 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. The reason is quite simple: 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. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725."
"21. The authorities therefore make clear that in the context of summary judgment the court is by no means barred from evaluating the evidence, and concluding that on the evidence there is no real (as opposed to fanciful) prospect of success. It will of course be cautious in doing so. It will bear in mind the clarity of the evidence available and the potential for other evidence to be available at trial which is likely to bear on the issues. It will avoid conducting a mini-trial. But there will be cases where the Court will be entitled to draw a line and say that - even bearing well in mind all of those points - it would be contrary to principle for a case to proceed to trial.
"22. So, when faced with a summary judgment application it is not enough to say, with Mr Micawber, that something may turn up."
"41. For the amendments to be allowed the Appellants need to show that they have a real as opposed to fanciful prospect of success which is one that is more than merely arguable and carries some degree of conviction: ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472. A claim does not have such a prospect where (a) it is possible to say with confidence that the factual basis for the claim is fanciful because it is entirely without substance; (b) the claimant does not have material to support at least a prima facie case that the allegations are correct; and/or (c) the claim has pleaded insufficient facts in support of their case to entitle the Court to draw the necessary inferences: Three Rivers District Council v Bank of England (No. 3) [2003] 2 AC 1.
"42. The court is entitled to reject a version of the facts which is implausible, self-contradictory or not supported by the contemporaneous documents and it is appropriate for the court to consider whether the proposed pleading is coherent and contains the properly particularised elements of the cause of action relied upon."
"the Court hearing a Pt 24 application should be wary of trying issues of fact on evidence where the facts are apparently credible and are to be set against the facts being advanced by the other side. Choosing between them is the function of the trial judge, not the judge on an interim application, unless there is some inherent improbability in what is being asserted or some extraneous evidence which would contradict it".
Validity of Assignment
(1) Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice—
(a) the legal right to such debt or thing in action;
(b) all legal and other remedies for the same; and
(c) the power to give a good discharge for the same without the concurrence of the assignor:
Provided that, if the debtor, trustee or other person liable in respect of such debt or thing in action has notice—
(a) that the assignment is disputed by the assignor or any person claiming under him; or
(b) of any other opposing or conflicting claims to such debt or thing in action;
he may, if he thinks fit, either call upon the persons making claim thereto to interplead concerning the same, or pay the debt or other thing in action into court under the provisions of the Trustee Act 1925.
"If the donee of a power of attorney is an individual, he may, if he thinks fit – (a) execute any instrument with his own signature, and (b) do any other thing in his own name, by the authority of the donor of the power; and any instrument executed or thing done in that manner shall … be as effective as if executed by the donee in any manner which would constitute due execution of that instrument by the donor or, as the case may be, as if done by the donee in the name of the donor".
"in view of the specific references to signature by an agent in ss.40 and 53 of the same Act (cf. Law of Property (Miscellaneous Provisions) Act 1989 s.2(3)), it would seem that signature by an agent is here insufficient, at any rate if he signs his own name: see Wilson v Wallani (1880) 5 Ex. D. 155."
(i) Curran v Newpark Cinemas [1951] 1 All ER 295 (CA), 299F-H where Jenkins LJ said:
"the sub-section does, however, clearly postulate that, whatever its form, there should be a document amounting to an absolute assignment under the hand of the assignor";
(ii) Technocrats where Field J concluded that the words of s.136 do not allow for the possibility of someone other than the assignor signing in the assignor's name in a statute which makes specific provision for signature by an agent in case where it is intended that that be permitted; and
(iii) Mailbox (Birmingham) Ltd v Galliford Try Construction Ltd [2017] EWHC 67 (TCC) where O'Farrell J approved at [28] Chitty's summary of the requirements for a valid assignment including that it be signed by the assignor.
Validity of Assignment - Analysis and Conclusions
Notice
(i) IDM and Mr Samuelson have admitted that they received a letter of 18 June 2020 which states clearly that an assignment of the Loans and the Guarantee had taken place;
(ii) the defendants' argument appears to be that because they were not provided with the Assignment itself, the notice was in some way not valid;
(iii) [16.47] of Smith & Leslie explains that to comply with s 136 what is needed is to convey the fact that there has been an assignment of the debt in writing but that there is no need to provide proof of the assignment; and
(iv) as to equitable assignments, [13.79] of the same work explains: "no particular words are required so long as the debtor or assignee is given to understand in plain and unambiguous terms that the interest has been made over to the assignee."
Notice - Analysis and Conclusion
Guarantee Assignment Issue
(i) Clause 1 defined "Guarantee" as "any guarantee, indemnity or other obligation of any kind in respect of the obligations of [IDM] to [Dr Frischmann] under or in connection with the [First or Second IDM Loans]". That definition plainly encompasses the Guarantee.
(ii) Clause 2(c) assigned the "Guarantee", so defined, to Mr Frischmann.
(i) recital A deals with the facility agreements (the First and Second IDM Loans). Recital B was plainly intended to deal with something different, which could only be the Guarantee;
(ii) a mistake has evidently occurred in that Recital B refers to the Guarantee having been given by the "Borrower" in circumstances where IDM had given no guarantee and the only guarantee that was given was by Mr Samuelson;
(iii) Schedule 1 to the Assignment contains an agreed form of Notice of Assignment. That Notice includes the Guarantee within its definition of "Assigned Documents", and expressly refers to it as "the personal guarantee given by [Mr Samuelson] on 23 November 2018"; and
(iv) it would be a nonsense for IDM to give a guarantee in respect of its own obligation.
Guarantee Assignment – Analysis and Conclusion
Interest
Interest – Analysis and Conclusions
Compromise
"There is no doubt that the general principle is that an accord without satisfaction has no legal effect, and that the original cause of action is not discharged as long as the satisfaction agreed upon remains executory. That was decided so long ago as 1611 in Peytoe's case ((1611) 9 Rep. 77b , 79b). If, however, it can be shown that what a creditor accepts in satisfaction is merely his debtor's promise and not the performance of that promise, the original cause of action is discharged from the date when the promise is made."
(i) the language used is that IDM agreed to "repayment" and "making a payment" which refer to the act of paying. It was not framed in terms of a promise to pay in contrast with the promissory notes which provide that IDM "unconditionally promise to pay".
(ii) the terms of the March Agreement provided for payment within 14 days (by 31 March 2019). In other words, payment in short order was anticipated. That demonstrates the importance of actual payment. Dr Frischmann was bargaining for actual payment in the near future in exchange for giving up the rights he had under the original agreements.
(iii) it does not make sense that Dr Frischmann would exchange a promise to receive payment (under the First and Second IDM Loans and the Guarantee) for a mere promise to receive payment without the benefit of a Guarantee. That could have been of no benefit to him. The benefit must have been actual payment in 14 days time and until actual payment was made no rights would be given up.
(i) Chitty says this at [6-127]:
"A counter-promise by the debtor to pay only part of the debt provides no consideration for the accord, as it is merely a promise to perform part of an existing duty owed to the creditor. And the actual payment is no satisfaction under the rule in Pinnel's Case that "Payment of a lesser sum on the day in satisfaction of a greater sum cannot be any satisfaction for the whole". This rule was approved by the House of Lords in Foakes v Beer."
(ii) at the time of the March Agreement, the First IDM Loan (of £1,000,000) was not due but the Second IDM Loan (of £165,000) was. Chitty says at [6-138]:
"Consideration for a creditor's promise to accept part payment of a debt in full settlement can be provided by the debtor's doing some act that they were not previously bound by the contract to do. For example, payment of a smaller sum at the creditor's request before the due day is good consideration for a promise to forgo the balance, since it is a benefit to the creditor to be paid before they were entitled to payment, and a corresponding detriment to the debtor to pay early."
Compromise – Analysis and Conclusion
Collateral Agreement
(i) the First and Second IDM Loans provide for repayment on the earlier of successful salvage and a specific date and the respective promissory notes included unconditional promises to pay on those dates;
(ii) the parties formalised the First IDM Loan, the Second IDM Loan, the Guarantee, the promissory notes and the March Agreement in writing. Against that background it is extraordinary that there should have been a fundamental but undocumented collateral agreement;
(iii) both IDM Loans contained 'formality' clauses in relation to both amendments and waivers which required signed writing.
Collateral Agreement -Analysis and Conclusion
Conclusion on the Defences to the Money Claims
Information
(i) An explanation, giving a reasonable amount of detail, of each transaction recorded in the updated Statement which was provided pursuant to the November 2022 Order, to be supported by documentation establishing the fact, nature and reason for each such transaction, and:
(a) in the case of outgoing payments, documentation establishing the terms on which the relevant payments were made and the nature of the consideration actually provided by the recipient; and
(b) in the case of incoming payments, documentation establishing the terms on which the relevant payments were made and the nature of the consideration provided in return.
(ii) An explanation, giving a reasonable amount of detail, as to how IDM's financial performance to date compares to its budgets and forecasts, and the reasons for any deviations from the same and the steps IDM has taken or intends to take in relation to such deviations.
(iii) An update, giving a reasonable amount of detail, on IDM's business, including in relation to the joint venture with Britannia's Gold Ltd and the funding of the same.
(i) whether Mr Frischmann is Dr Frischmann's assignee;
(ii) whether the Information Request was sent in a contractually compliant manner; and
(iii) whether the information requested is information to which Mr Frischmann is entitled under the First and Second IDM Loans.
compliant manner:
(i) the address for IDM given in both the First and Second IDM Loans was 50 Town Range, Gibraltar.
(ii) Clause 13 of both the First and Second IDM Loans provided that "[e]ach notice or other communication under this agreement shall be in writing and shall be given by being left at or sent by post or fax to [IDM] or to [Dr Frischmann] at their respective addresses set out above … Any such notice or communication shall be deemed to have been given in the case of post two days after being put in the post …"
(iii) the Information Request was sent by post to IDM at 50 Town Range, Gibraltar.
(i) it is accepted by Mr Frischmann that IDM was obliged to provide only information
(a) reasonably requested; and
(b) relevant to his position as a creditor of IDM.
(ii) by its Re-Amended Defence IDM has pleaded the more restrictive implication, that IDM was obliged to provide only such information "as was necessary and proportionate and relevant to Dr Frischmann's standing as lender". Mr Frischmann says that there is no basis for implying such a restriction. It does not satisfy the test of necessity for an implied term: Ali v Petroleum Company of Trinidad and Tobago [2017] UKPC 2 at [7];
(iii) No positive case is put that any information has been unreasonably requested or is irrelevant to Mr Frischmann's position as creditor of IDM where the loaned monies were covenanted to be spent with a specific purpose. The requests seek information that goes to how IDM's business is progressing and how it has spent the money loaned; both of which are material in understanding whether the terms have been complied with and which are relevant to Mr Frischmann's position as a creditor.
Provision of Information – Analysis and Conclusions
Judgment