Porter Capital Corporation v Zulfikar Masters [2016] EWCA Civ 5 (15 January 2016)

Porter Capital Corporation v Zulfikar Masters [2016] EWCA Civ 5 (15 January 2016)

The Court held that 'over-advance' under the CFA arises only when there is a negative balance in the Reserve Account, and interest at the higher rate is only payable on such balances. Compound interest is not payable under either clause 8 or Exhibit B, as the contract does not clearly provide for it. Legal fees and expenses are recoverable under clause 10 of the CFA and clause 1 of the PCW without a demand, but must be reasonable; a bill is not a precondition to liability. The release of security and other guarantors did not release Mr Masters, as the PCW provided for consent to such releases. The correct calculation of rebate periods excludes the first terminal day. Interest is not...

Citation
[2016] EWCA Civ 5
Parties
Claimant: Porter Capital Corporation; Defendant: Zulfikar Masters
Jurisdiction
England and Wales
Judgment Date
15 January 2016
Procedural Posture
Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeals allowed in part and dismissed in part.
Legal Topics
Guarantee Enforcement, Interest Calculation, Legal Fees Recovery, Release of Security, Contractual Construction, Factoring Agreements
Contract Law Commercial Law Guarantee Enforcement Interest Calculation Legal Fees Recovery Release of Security Contractual Construction Factoring Agreements

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Parties

Porter Capital Corporation

Claimant

Zulfikar Masters

Defendant

Procedural Posture

Appeal / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Construction of 'over-advance' and reserve account provisions under the CFA
  2. 2 Entitlement to compound interest under the CFA and Exhibit B
  3. 3 Recovery of legal fees and expenses under the CFA and PCW

Ratio Decidendi

The Court held that 'over-advance' under the CFA arises only when there is a negative balance in the Reserve Account, and interest at the higher rate is only payable on such balances. Compound interest is not payable under either clause 8 or Exhibit B, as the contract does not clearly provide for it. Legal fees and expenses are recoverable under clause 10 of the CFA and clause 1 of the PCW without a demand, but must be reasonable; a bill is not a precondition to liability. The release of security and other guarantors did not release Mr Masters, as the PCW provided for consent to such releases. The correct calculation of rebate periods excludes the first terminal day. Interest is not...

Court Disposition

Appeals allowed in part and dismissed in part.

Orders

  • Clause 8 interest only payable on negative Reserve Account balances.
  • Only simple interest payable under CFA; no compound interest under clause 8 or Exhibit B.