Fons HF v Corporal Ltd & Anor [2013] EWHC 1801 (Ch) (28 June 2013)

Fons HF v Corporal Ltd & Anor [2013] EWHC 1801 (Ch) (28 June 2013)

The terms 'other securities' and 'debentures' in the definition of 'Shares' in the legal charge, when read in context and in light of the other instruments listed, do not extend to include simple unsecured shareholder loan agreements such as the SLAs. The ordinary business meaning and legal understanding of these terms do not encompass mere loan agreements absent further indicia of a security or debenture. There is no ambiguity requiring recourse to commercial common sense, and the SLAs are not caught by the charge.

Citation
[2013] EWHC 1801 (Ch)
Parties
Claimant: Fons HF (In Liquidation); First Defendant: Corporal Limited; Second Defendant: Pillar Securitisation S.A.R.L.
Jurisdiction
England and Wales
Judgment Date
28 June 2013
Procedural Posture
Chancery Division Contractual Interpretation / Judgment After Trial
Outcome
Claim allowed; declaration granted in favour of Fons HF.
Legal Topics
Interpretation of Security Documents, Meaning of 'securities' and 'debentures', Scope of Legal Charges, Shareholder Loan Agreements, Contra Proferentem Rule
Commercial Law Contract Law Company Law Interpretation of Security Documents Meaning of 'securities' and 'debentures' Scope of Legal Charges Shareholder Loan Agreements Contra Proferentem Rule

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Parties

Fons HF (In Liquidation)

Claimant

Corporal Limited

First Defendant

Pillar Securitisation S.A.R.L.

Second Defendant

Procedural Posture

Chancery Division Contractual Interpretation / Judgment After Trial

Legal Issues

  1. 1 Whether the definition of 'Shares' in a legal charge includes rights under shareholder loan agreements (SLAs) as 'other securities' or 'debentures'.
  2. 2 Proper construction of the terms 'other securities' and 'debentures' in the context of the charge.

Ratio Decidendi

The terms 'other securities' and 'debentures' in the definition of 'Shares' in the legal charge, when read in context and in light of the other instruments listed, do not extend to include simple unsecured shareholder loan agreements such as the SLAs. The ordinary business meaning and legal understanding of these terms do not encompass mere loan agreements absent further indicia of a security or debenture. There is no ambiguity requiring recourse to commercial common sense, and the SLAs are not caught by the charge.

Court Disposition

Claim allowed; declaration granted in favour of Fons HF.

Orders

  • Declaration that the legal charge does not extend to Fons' rights under the SLAs.
  • Costs to be determined.