Crastvell Trading Limited v Bozel SA - Radcliffe Chambers

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10 Secondly, they obtained a freezing order in the BVI, the jurisdiction of incorporation of Welgate, in which Welgate were restrained from disposing of any assets save in excess of the value of the claimant’s claim, and also sought an order for winding up of the company following a statutory demand. 11 That latter order was duly made. It was followed by an application by Welgate to set that order aside. The grounds for so doing have an echo of the points that are being made by <strong>Bozel</strong> in the present proceedings, namely to the effect that in some respect the claimants had taken steps to prevent Welgate from obtaining refinance or otherwise repaying the loan from some other source. The application to set aside failed. The court held that there was no cross claim of the kind in fact intimated in the present proceedings which Welgate wished to pursue. 12 Lastly, in relation to the proceedings in Luxembourg, the claimants sought a winding up order. That application was dismissed on the grounds that, as I understand it, the court was not satisfied that the inability to meet the loan repayments may have been only temporary. All this activity, in my judgment, supports the proposition that the interest of the claimants is indeed to recover its money and no more. 13 The defendants say that the reason why the loans have not been repaid is because the defendants have been unable to refinance the loan. It is submitted that the reason they have been unable to refinance the loan is because the claimants have taken every possible step to be obstructive and prevent the defendants from making a successful agreement with third parties to provide funds, almost all those potential agreements being on the basis that the third party would purchase the shares in the <strong>Bozel</strong> group of companies. 14 This immediately raises what seems to me to be an important threshold issue, namely whether, on the assumption that such a counterclaim is a good claim (namely that the claimants did indeed conduct itself in that way and secondly that such conduct was in breach of the loan agreement, and thirdly that the impact of the conduct was to prevent the refinancing) does the consequential counterclaim constitute a ground for refusing judgment on the claim? Of course, in this respect, the claimants rely upon the no set-off clauses (if I may call them that) in the various loan agreements. 15 The legitimacy of the parties entering into an agreement whereby they separate out frontline claims on their agreement from cross claims, so that judgment can be accorded on the claim, leaving the defendant to advance his cross claim in due course, has received the clearest possible judicial approval in Coca Cola Financial Corporation v. Finsat (six) [1998] QB 43. Just to cite from the judgment of Neill LJ at page 52: BEVERLEY F NUNNERY & CO OFFICIAL SHORTHAND WRITERS
“Moreover, I can see no reason in principle why parties who are in general a contractual relationship cannot isolate one contract or one aspect of their dealing and provide their rights in relation thereto are to be treated separately from their other dealings.” 16 Accordingly, what the claimants say in the present proceedings is that they are fully entitled to obtain judgment on their claim, leaving the defendants (if so advised) to advance their counterclaim in due course. 17 The answer that is advanced in regard to that proposition is that the claim which the defendants wish to advance on the basis of the alleged implied term (which, for present purposes we must assume to be a good claim) means that there will be a claim which is pari passu with the loan monies, and accordingly, within the meaning of the set-off provisions in the loan agreements, the payments said to be due to the lender under the agreement are not in fact “due”. Therefore the bar to the effect that the claim be free and clear of deductions and withholdings such as set-off has no application on the facts of this case. 18 The basis of this submission, as I understand it, is founded on a judgment of Mr. Geoffrey Brice QC in a case called Schenkers Ltd v. Overland Shoes. In that case the relevant clause provided that: “The customer shall pay to the company in cash or as otherwise agreed all sums immediately when due, without reduction or deferment on account of any claim, counterclaim or set-off”. The issue that arose from that case was the question whether such a provision fell foul of the Unfair Contract Terms Act. Perhaps not surprisingly, the plaintiff was anxious to restrict the apparently wide nature of that provision so as to support its claim that the term was a reasonable one. 19 The outcome can be discerned from a passage at page 502 in the report [1998] 1 Lloyd’s Rep 498 where the learned judge said this: “The no set-off provision of Clause 23(a) is very wide indeed. Mr. Irvine for the plaintiff contended that the clause did not apply to a defence to a particular transaction as opposed to complaints arising from other earlier transactions. Indeed, it was, or appeared to become, common ground that the reduction or deferment referred to in the clause related only to transactions other than the particular transaction with which the plaintiff’s invoice was concerned. The reason for this was the use of the expression ‘when due’, and it was accepted that if there was a defence to an individual invoice when the sum so claimed was not due, I agree with this construction.” BEVERLEY F NUNNERY & CO OFFICIAL SHORTHAND WRITERS
Page 1 and 2: IN THE HIGH COURT OF JUSTICE No. Fo
Page 3: Welgate and Bozel, but the relation
Page 7 and 8: 26 The defendants’ counter to thi
Page 9 and 10: sale into an escrow account for the
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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