Matter of Arboretum Devon (RLH) Ltd, Re

Matter of Arboretum Devon (RLH) Ltd, Re

Clause 2.9 of the Intercreditor Deed prevents Shoby from challenging the entitlement of SSSHL to the Fund, as any challenge to the effectiveness of SSSHL’s security to secure the obligations arising from the advances made by the Lenders is a challenge to the validity of that security within the meaning of the clause. Even if Shoby’s proposed challenge succeeded in establishing that the obligations arose by restitution or implied contract, those would still be secured liabilities under the security documents. Further, Shoby is contractually estopped by the terms of the Intercreditor Deed from denying that the obligations owed to the Lenders are secured obligations under the loan agreements.

Parties
Applicant: Terence Guy Jackson; Applicant: James Hawkesworth; Respondent: Phillip Rodney Sykes; Respondent: Mark John Wilson; Respondent: Damian Webb; Respondent: Christine Mary Laverty; Respondent: Helen Julia Dale; Respondent: Patrick O’Sullivan; Respondent: Saving Stream Security Holding Ltd; Respondent: Shoby Investments Ltd
Jurisdiction
England and Wales
Judgment Date
28 April 2021
Procedural Posture
Insolvency Application / Judgment on Preliminary Issue
Outcome
Application by Shoby to challenge SSSHL’s entitlement to the Fund is barred by clause 2.9 of the Intercreditor Deed.
Legal Topics
Priority of Security, Intercreditor Agreements, Secured Lending, Contractual Estoppel
Insolvency Contract Priority of Security Intercreditor Agreements Secured Lending Contractual Estoppel

Case Brief

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Parties

Terence Guy Jackson

Applicant

James Hawkesworth

Applicant

Phillip Rodney Sykes

Respondent

Mark John Wilson

Respondent

Damian Webb

Respondent

Christine Mary Laverty

Respondent

Helen Julia Dale

Respondent

Patrick O’Sullivan

Respondent

Saving Stream Security Holding Ltd

Respondent

Shoby Investments Ltd

Respondent

Procedural Posture

Insolvency Application / Judgment on Preliminary Issue

Legal Issues

  1. 1 Whether clause 2.9 of the Intercreditor Deed prevents Shoby from challenging the entitlement of SSSHL to the Fund pursuant to the security given by Arboretum to SSSHL
  2. 2 Whether Shoby's proposed challenge is barred by the Intercreditor Deed
  3. 3 Construction of SSSHL’s security documents and the Intercreditor Deed

Ratio Decidendi

Clause 2.9 of the Intercreditor Deed prevents Shoby from challenging the entitlement of SSSHL to the Fund, as any challenge to the effectiveness of SSSHL’s security to secure the obligations arising from the advances made by the Lenders is a challenge to the validity of that security within the meaning of the clause. Even if Shoby’s proposed challenge succeeded in establishing that the obligations arose by restitution or implied contract, those would still be secured liabilities under the security documents. Further, Shoby is contractually estopped by the terms of the Intercreditor Deed from denying that the obligations owed to the Lenders are secured obligations under the loan agreements.

Court Disposition

Application by Shoby to challenge SSSHL’s entitlement to the Fund is barred by clause 2.9 of the Intercreditor Deed.

Orders

  • Shoby is prevented from bringing its proposed challenge to SSSHL’s entitlement to the Fund.