Crastvell Trading Limited v Bozel SA - Radcliffe Chambers

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MR. JUSTICE DAVID STEEL: 1 This is an application by the claimants for summary judgment. It is the claimants’ case that there is no realistic prospect of the defendants successfully defending the claim that is brought against them and that there is no other compelling reason why the case should be disposed of at trial. I do not understand that alternative avenue as being a live proposition in the present application. Accordingly, the court can focus on the question whether the defendants have or have not a realistic prospect of defending the claim successfully. 2 That criterion or test is the subject of numerous authorities. There is no dispute between the parties as to what it means. The defendants have got to establish that they have a case which is better than merely arguable. It is not sufficient that they can establish that there is a fanciful or imaginary prospect of fending off the claim. It is of course also established law that where there are substantial issues of fact the court will not conduct a mini trial, but nonetheless, the court is entitled to inspect the material that has been put before the court on factual issues and be satisfied that the defendants’ case on the issues of fact has some degree of conviction. 3 The parties know what this case is all about and therefore I can introduce it very briefly. It is a claim for monies under three loan agreements. The defendants, Bozel, are a subsidiary of a company called Welgate. Bozel’s business is in the metals and minerals field. It is not necessary to recite the relevant terms of the agreement, save one provision which is common to all three of them, which is Clause 14 of the mezzanine loan agreement, and Clause 15 of the convertible mezzanine and convertible senior loan agreements. The principal part reads: “(1) Except as required by law, all payments due to the lender under this agreement will be made free and clear of all deductions and withholdings whether in respect of taxation, set-off, counterclaim or otherwise.” 4 The monies had been borrowed to finance acquisition by Bozel of various other companies. The monies were originally repayable in July and August 2009. By January that year the Bozel Group (of which the defendants form a part) found itself in financial difficulties in the worldwide downturn, and in particular the fall in demand for steel. Two creditors of Bozel and the Bozel Group, namely the claimant and another company called Trafalgar Capital who had also effected loans, entered into a standstill agreement with Bozel. This agreement contemplated that Bozel would seek to restructure or refinance its obligations. To that end the creditors agreed not to take any enforcement action under the various loan agreements until June 2009, despite the fact that there had already accrued an event of default. It appears that Trafalgar were and remain on friendly terms with BEVERLEY F NUNNERY & CO OFFICIAL SHORTHAND WRITERS
Welgate and Bozel, but the relationship between Welgate and Bozel on the one hand and the claimants on the other deteriorated. 5 When the standstill agreement came to an end in July 2009 the claimants sought to enforce its rights by taking various proceedings against Bozel and, for that matter, Welgate to whom they had also made a loan. The sum at stake was significant, some £13.5 million of which only a very small proportion had been repaid. One of the features of the various loans to Bozel, and indeed to Welgate, were share pledges in respect of the shares of Bozel and various subsidiaries. Those share pledges play somewhat of a significant role in the disputes that have subsequently arisen. 6 It is one of the contentions that is advanced by the defendants that the history of events since the standstill agreement was entered into and the subsequent enforcement action that has been taken by the claimants demonstrates that far from being anxious to be repaid the money they loaned, the claimants want somehow to obtain the ownership of Bozel and its subsidiaries, or the shares in those companies, at some under value. I am bound to say that I see nothing in the documents which begins to support any such contention. To the contrary, it seems to me that the claimants have advanced their claim for recovery of the loan monies with some considerable vigour. It would be, on any view, a surprising situation if, in the context of a Part 24 application, the reality was that the claimants were anxious to lose and not recover the monies that were due to it. 7 The fact that it has pursued its claim with some vigour is the source of some complaint on the part of Bozel and Welgate. The fact that the claimants have behaved in a somewhat hard-nosed manner may have ruffled feathers, but it does not seem to me to have any bearing on the justice of the matter or the appropriate outcome to this application. 8 It seems that a significant number of proceedings have been instituted. First, even before the standstill agreement came to an end, a claim was instituted in Florida against a Bozel subsidiary incorporated in that state and various individuals. In the event, those proceedings were stayed by the Florida courts on the grounds of forum non conveniens. I need say no more about them. Secondly, as I have already intimated, there was a claim against Welgate in this court and judgment in default of acknowledgement of service or defence (I am not quite sure which) resulted. 9 Having obtained judgment, the claimants took various steps. Firstly, and this is of particular materiality, they seized shares in Bozel owned by Welgate which had been pledged to them. They were situate in Luxembourg. BEVERLEY F NUNNERY & CO OFFICIAL SHORTHAND WRITERS
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Page 5 and 6: “Moreover, I can see no reason in
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Page 11 and 12: MR. JUSTICE DAVID STEEL: Is there a
Page 13: MR. POLLEY: My Lord, the instructio

Crastvell Trading Limited v Bozel SA - Radcliffe Chambers

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