ABT Auto Investments Ltd v Aapico Investment PTE Ltd & Ors [2022] EWHC 2839 (Comm) (14 November 2022)

ABT Auto Investments Ltd v Aapico Investment PTE Ltd & Ors [2022] EWHC 2839 (Comm) (14 November 2022)

The Court held that the Share Charge conferred a valid power of appropriation compliant with the FCARs, and that the requirement for a commercially reasonable valuation under Regulation 18(1) is mandatory and cannot be excluded by contractual estoppel. However, non-compliance with Regulation 18(1) does not invalidate the appropriation itself but entitles the collateral provider to seek a remedy, such as a substitute valuation or damages. The Court found that the valuation process used by the Defendants was not conducted in a commercially reasonable manner and substituted its own valuation of the appropriated shares.

Citation
[2022] EWHC 2839 (Comm)
Parties
Claimant: ABT Auto Investments Limited; First Defendant: AAPICO Investment Pte Limited; Second Defendant: AAPICO Hitech Public Company Limited; Third Defendant: Sakthi Global Auto Holdings Limited
Jurisdiction
England and Wales
Judgment Date
14 November 2022
Procedural Posture
Commercial Court Claim / Judgment After Trial
Outcome
Claimant succeeds in part; Court sets aside the Defendants' valuation and substitutes its own valuation of the appropriated shares.
Legal Topics
Financial Collateral Arrangements, Appropriation of Shares, Valuation of Security, Contractual Estoppel, Enforcement of Security Interests
Commercial Law Banking and Finance Law Secured Transactions Financial Collateral Arrangements Appropriation of Shares Valuation of Security Contractual Estoppel Enforcement of Security Interests

Case Brief

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Parties

ABT Auto Investments Limited

Claimant

AAPICO Investment Pte Limited

First Defendant

AAPICO Hitech Public Company Limited

Second Defendant

Sakthi Global Auto Holdings Limited

Third Defendant

Procedural Posture

Commercial Court Claim / Judgment After Trial

Legal Issues

  1. 1 Whether the appropriation of shares by the Defendants under a share charge was valid under the Financial Collateral Arrangements (No 2) Regulations 2003 (FCARs)
  2. 2 Whether the valuation of the appropriated shares was conducted in a commercially reasonable manner as required by Regulation 18(1) of the FCARs
  3. 3 Whether the contractual terms of the share charge excluded or limited the statutory requirement of commercial reasonableness

Ratio Decidendi

The Court held that the Share Charge conferred a valid power of appropriation compliant with the FCARs, and that the requirement for a commercially reasonable valuation under Regulation 18(1) is mandatory and cannot be excluded by contractual estoppel. However, non-compliance with Regulation 18(1) does not invalidate the appropriation itself but entitles the collateral provider to seek a remedy, such as a substitute valuation or damages. The Court found that the valuation process used by the Defendants was not conducted in a commercially reasonable manner and substituted its own valuation of the appropriated shares.

Court Disposition

Claimant succeeds in part; Court sets aside the Defendants' valuation and substitutes its own valuation of the appropriated shares.

Orders

  • The Defendants' valuation of the appropriated shares is set aside.
  • The Court determines the value of the appropriated shares in accordance with a commercially reasonable manner under Regulation 18(1) FCARs.