Hayfin Opal Luxco 3 SARL & Anor v Windermere VII Cmbs Plc & Ors [2016] EWHC 782 (Ch) (08 April 2016)

Hayfin Opal Luxco 3 SARL & Anor v Windermere VII Cmbs Plc & Ors [2016] EWHC 782 (Ch) (08 April 2016)

The court held that the definitions of 'Senior Rate' and 'Junior Rate' in the Intercreditor Agreement are clear and unambiguous, referring only to EURIBOR, and there is no basis for correction by construction or implication of terms to substitute the Fixed Rate in the absence of a swap. The parties must be taken to have intended the consequences of the language used, even if commercially disadvantageous. The capitalisation of interest on the Adductor Mortgage Loan under French law validly reduced the amount of interest due and payable for the purposes of the Class X calculation. There was no underpayment of the Class X Note, and thus no entitlement to interest or Event of Default.

Citation
[2016] EWHC 782 (Ch)
Parties
Claimant: Hayfin Opal Luxco 3 S. A. R. L.; Claimant: Hayfin Topaz 3 S. C. A.; First Defendant: Windermere VII CMBS plc; Second Defendant: U. S. Bank Trustees Limited; Third Defendant: Elavon Financial Services Limited
Jurisdiction
England and Wales
Judgment Date
08 April 2016
Procedural Posture
Part 8 Claim (financial List) / Expedited Trial of Preliminary Issues
Outcome
Claim dismissed
Legal Topics
Interpretation of Financial Instruments, Securitisation, CMBS Structures, Implied Terms, Correction by Construction
Banking and Finance Law Commercial Law Interpretation of Financial Instruments Securitisation CMBS Structures Implied Terms Correction by Construction

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Parties

Hayfin Opal Luxco 3 S. A. R. L.

Claimant

Hayfin Topaz 3 S. C. A.

Claimant

Windermere VII CMBS plc

First Defendant

U. S. Bank Trustees Limited

Second Defendant

Elavon Financial Services Limited

Third Defendant

Procedural Posture

Part 8 Claim (financial List) / Expedited Trial of Preliminary Issues

Legal Issues

  1. 1 Proper construction of the definitions of 'Senior Rate' and 'Junior Rate' in the Intercreditor Agreement for the purpose of calculating payments on the Class X Note after expiry of the swap agreement; whether terms should be implied or corrected by construction to address the absence of a swap; effect of capitalisation of interest under French law on the Adductor Mortgage Loan; entitlement to interest on underpayments; whether underpayments constitute an Event of Default.

Ratio Decidendi

The court held that the definitions of 'Senior Rate' and 'Junior Rate' in the Intercreditor Agreement are clear and unambiguous, referring only to EURIBOR, and there is no basis for correction by construction or implication of terms to substitute the Fixed Rate in the absence of a swap. The parties must be taken to have intended the consequences of the language used, even if commercially disadvantageous. The capitalisation of interest on the Adductor Mortgage Loan under French law validly reduced the amount of interest due and payable for the purposes of the Class X calculation. There was no underpayment of the Class X Note, and thus no entitlement to interest or Event of Default.

Court Disposition

Claim dismissed

Orders

  • Declaration that the definitions of 'Senior Rate' and 'Junior Rate' in the Intercreditor Agreement are to be applied as written, without correction or implication of terms.
  • Declaration that the capitalisation of interest on the Adductor Mortgage Loan was valid and reduced the interest due and payable for the purposes of the Class X calculation.