Case summary written by Angela Paschalides and checked by Michal Asoulin
The High Court of Justice of England and Wales (Queen’s Bench Division Commercial Court) (the “Court”) heard a case in which Valla PTC Limited (the “Claimant”) applied for permission to issue an application, as well as an order for summary judgment against Jonathan Moss Faiman (the “Defendant”) (the “Claim”).
The Claim was brought in relation to a loan consolidation agreement entered into between the Claimant and the Defendant on or about 3 September 2019 (the “Agreement”). In terms of the Agreement, the Claimant agreed to consolidate certain of the Defendant’s debts and the Defendant agreed to repay the Claimant a total of €29 763 040.00 (twenty nine million, seven hundred and sixty three thousand and forty Euros). Debt consolidation refers to the act of taking out a new loan to pay off other liabilities and consumer debts.
The salient terms of the Agreement were as follows;
- the Agreement was governed by English law and an English court would have jurisdiction;
- the Defendant agreed to pay the Claimant the sum of €29 763 040.00;
- the Defendant agreed to pay interest at the rate of 8% (eight percent) per annum;
- the Defendant agreed to repay the Claimant the full amount of the loan, together with all interest, by the “Repayment Date”, defined as 31 January 2020;
- Clause 7.1 held that the Defendant agreed to, within 1 (one) month of the “Effective Date”, being the date that the Agreement was concluded, (a) pledge assets in favour of the Claimant with a value not less than the amount of the consolidated loan as security (the “Security”), and (b) execute and deliver all agreements conferring this Security on the Claimant in a form and substance satisfactory to the Claimant (the “Security Agreement”);
- failure by the Defendant to satisfy the Security requirements in terms of Clause 7.1, would amount to an immediate “Event of Default”;
- upon an Event of Default, the Claimant may give notice to the Defendant to accelerate the loan, requiring the full loan to be immediately due and payable; and
- interest in the Event of Default would be payable at 8% (eight percent) on any amount due and owing.
Despite having agreed to the above terms of the Agreement, the Defendant failed to execute the Security Agreement by 3 October 2019 (being 1 (one) month from the Effective Date) and was thus in breach of the Agreement. Pursuant to this breach, the Claimant gave the Defendant written notice of default and acceleration, declaring the full amount of the loan immediately due and payable.
Further to the above, the Claimant duly served a letter of claim on the Defendant on or about 4 November 2019 (the “Letter of Claim”). In terms of English law, a letter of claim is used for debt recovery if a debtor has failed to settle or agree to settle an outstanding debt and must be served on the debtor if the creditor intends bringing a court proceeding against the debtor. The Defendant failed to respond to the main substance of the Letter of Claim and did not include any proposals for repayment, however, he did send a reply stating that “I agree I owe the debt and I will pay but I need more time to pay” (the “Reply”). The Claimant, once again, received no repayment from the Defendant pursuant to the Letter of Claim or the Reply.
In or during April 2020, the Claimant validly served a claim form, together with a particulars of claim, on the Defendant (the “Documents”). In terms of English law, a claim form is a document or form on which a court case is issued. The Defendant acknowledged receipt of the Documents which clearly explained that the Defendant was required to file an acknowledgement of service and that failure to do so would result in the Claimant applying for summary judgment. The Defendant still made no repayment and did not file an acknowledgement of service.
In light of this, the Claimant issued the application for summary judgment with the Court and duly served the application on the Defendant. At the date of hearing, the Defendant had still not repaid any amount of the loan or interest.
Due to the fact that the Defendant had not filed an acknowledgment of service, the Claimant required permission in terms of the Civil Procedure Rule 24.4(1) (“CPR 24.4(1)”) in order to apply for summary judgment. CPR 24.4(1) provides that “[a] claimant may not apply for summary judgment until the defendant against whom the application is made has filed (a) an acknowledgement of service; or (b) a defence, unless (i) the court gives permission; or (ii) a practice direction provides otherwise.”
The Court held that “[generally], permission should be granted only where the Court is satisfied that the claim has been validly served and that the Court has jurisdiction to hear it. Once those conditions are met there is generally no reason why the Court should prevent a claimant with a legitimate claim from seeking summary judgment.”
The Court assumed the position that the Defendant was aware of the proceedings and had the opportunity to participate and to serve evidence. Further, the Defendant was aware that summary judgment was being sought and had not disputed the application. On this basis, the Court granted permission for the application of summary judgment in terms of CPR 24.4(1).
In light of this decision, the Court found that there was nothing indicating the Defendant’s defence to the Claim and found that the Defendant had accepted that the debt was due. Consequently, the Court granted summary judgment in favour of the Claimant.
This decision confirms the position in English law that a claim for summary judgment will be granted in favour of a claimant where the requisite procedural steps have been taken to verify the claim.
The High Court of Justice of England and Wales (Queen’s Bench Division Commercial Court) heard a case in which the Claimant applied for summary judgment against the Defendant pursuant to an event of default in terms of a Loan Consolidation Agreement.
English Law, Commercial Law, Contract Law, Debt Consolidation, Event of Default, Letter of Claim, Civil Procedure Rules.