Porter Capital Corporation v Masters [2017] EWHC 2215 (Ch) (06 September 2017)

Porter Capital Corporation v Masters [2017] EWHC 2215 (Ch) (06 September 2017)

The CFA is, in substance, a secured lending agreement, not a true sale of receivables. Under Connecticut law and the CFA, in the absence of express direction by the debtor at or before payment, and absent contractual provision to the contrary, the United States Rule applies, entitling Porter to appropriate payments first to interest and fees, then to principal. Porter is entitled to charge back invoices and revisit fees in the rewritten account, and no estoppel arises to prevent this. The reasonableness of legal fees and collection expenses is to be determined in accordance with Connecticut law and the agreed principles.

Citation
[2017] EWHC 2215 (Ch)
Parties
Claimant: Porter Capital Corporation; Defendant: Zulfikar Masters
Jurisdiction
England and Wales
Judgment Date
06 September 2017
Procedural Posture
Commercial Enforcement of Guarantee and Account Taking / Trial of Preliminary Issues Following Court of Appeal Remittal
Outcome
Preliminary issues determined in favour of Porter on all substantive points.
Legal Topics
Guarantee Enforcement, Factoring Agreements, Appropriation of Payments, Foreign Law (connecticut), Legal Fees and Costs, Interest Calculation, Estoppel
Commercial Law Contract Law Conflict of Laws Guarantee Enforcement Factoring Agreements Appropriation of Payments Foreign Law (connecticut) Legal Fees and Costs +2 more

Case Brief

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Parties

Porter Capital Corporation

Claimant

Zulfikar Masters

Defendant

Procedural Posture

Commercial Enforcement of Guarantee and Account Taking / Trial of Preliminary Issues Following Court of Appeal Remittal

Legal Issues

  1. 1 How payments received by Porter are to be appropriated under the CFA and Connecticut law
  2. 2 Whether Porter can charge back invoices factored to it
  3. 3 Whether Porter can revisit fees charged and recorded in its accounts

Ratio Decidendi

The CFA is, in substance, a secured lending agreement, not a true sale of receivables. Under Connecticut law and the CFA, in the absence of express direction by the debtor at or before payment, and absent contractual provision to the contrary, the United States Rule applies, entitling Porter to appropriate payments first to interest and fees, then to principal. Porter is entitled to charge back invoices and revisit fees in the rewritten account, and no estoppel arises to prevent this. The reasonableness of legal fees and collection expenses is to be determined in accordance with Connecticut law and the agreed principles.

Court Disposition

Preliminary issues determined in favour of Porter on all substantive points.

Orders

  • Payments received by Porter are to be appropriated first to interest and fees, then to principal, in the rewritten account.
  • Porter is entitled to charge back invoices factored to it under the CFA.