Harbour Fund III, LP v Kazakhstan Kagazy Plc & Ors

Harbour Fund III, LP v Kazakhstan Kagazy Plc & Ors

Mr Werner did not have actual or ostensible authority under Kazakh law to enter into the Disputed Variation Letters on behalf of KK JSC without creditors’ consent. Payments made by HF3 in excess of the Agreed Budget were not Claimants’ Legal Costs under the Investment Agreement. HF3 did not have an honest belief in Mr Werner’s authority and turned a blind eye to the requirement for creditors’ approval. KK JSC did not freely accept the payments nor was there a mistake or failure of consideration; therefore, HF3 is not entitled to recover the sums in unjust enrichment.

Parties
Claimant: Harbour Fund III, L.P.; Defendant: Kazakhstan Kagazy PLC; Defendant: Kazakhstan Kagazy JSC; Defendant: Prime Estate Activities Kazakhstan LLP; Defendant: Peak Akzhal LLP
Jurisdiction
England and Wales
Judgment Date
05 May 2021
Procedural Posture
Commercial Court Claim / Phase 1 Trial Judgment
Outcome
Claim dismissed
Legal Topics
Authority of Agents, Variation of Contracts, Litigation Funding Agreements, Interpretation of Contracts, Enforcement of Judgments, Unjust Enrichment
Contract Law Insolvency Law Unjust Enrichment Authority of Agents Variation of Contracts Litigation Funding Agreements Interpretation of Contracts Enforcement of Judgments

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Parties

Harbour Fund III, L.P.

Claimant

Kazakhstan Kagazy PLC

Defendant

Kazakhstan Kagazy JSC

Defendant

Prime Estate Activities Kazakhstan LLP

Defendant

Peak Akzhal LLP

Defendant

Procedural Posture

Commercial Court Claim / Phase 1 Trial Judgment

Legal Issues

  1. 1 Did Mr Werner have actual authority under Kazakh law to enter into the Disputed Variation Letters on behalf of KK JSC?
  2. 2 Did Mr Werner have ostensible authority to enter into the Disputed Variation Letters?
  3. 3 Did KK JSC intend to be bound by the Disputed Variation Letters?

Ratio Decidendi

Mr Werner did not have actual or ostensible authority under Kazakh law to enter into the Disputed Variation Letters on behalf of KK JSC without creditors’ consent. Payments made by HF3 in excess of the Agreed Budget were not Claimants’ Legal Costs under the Investment Agreement. HF3 did not have an honest belief in Mr Werner’s authority and turned a blind eye to the requirement for creditors’ approval. KK JSC did not freely accept the payments nor was there a mistake or failure of consideration; therefore, HF3 is not entitled to recover the sums in unjust enrichment.

Court Disposition

Claim dismissed

Orders

  • HF3’s claims for recovery of Variation Payments, KK Proceedings Payments, Enforcement Costs, and Harbour’s Other Costs are dismissed.
  • No damages awarded for breach of contract or Clause 10.3.