Representation of G Finance Limited and HSBC International Trustee Limited Jersey Branch 03-Nov-2020 [2020] JRC 230 (03 November 2020)

Representation of G Finance Limited and HSBC International Trustee Limited Jersey Branch 03-Nov-2020 [2020] JRC 230 (03 November 2020)

The 2017 Agreement failed to reflect the parties' common intention to cease interest accrual from 6 April 2017, as advised by Grant Thornton. The evidence established a continuing common intention, outwardly expressed, and a drafting mistake. Rectification is granted to reflect this intention. The 2018 and 2019 Agreements, properly construed in light of the rectified 2017 Agreement, do not impose further interest liability. If the 2019 Agreement were construed otherwise, it would be void for mistake (erreur sur la substance).

Citation
[2020] JRC 230
Parties
Second Representor / Trustee: HSBC; First Representor / Lender: The Company (wholly owned special purpose vehicle); Borrower / Beneficiary: The Beneficiary
Jurisdiction
Jersey
Judgment Date
03 November 2020
Procedural Posture
Application for Rectification and Declarations / Judgment After Hearing of Application
Outcome
Application granted.
Legal Topics
Rectification of Contracts, Interpretation of Contracts, Mistake in Contracts, Trustee Powers, Loan Agreements
Contract Law Trust Law Equity Rectification of Contracts Interpretation of Contracts Mistake in Contracts Trustee Powers Loan Agreements

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Parties

HSBC

Second Representor / Trustee

The Company (wholly owned special purpose vehicle)

First Representor / Lender

The Beneficiary

Borrower / Beneficiary

Procedural Posture

Application for Rectification and Declarations / Judgment After Hearing of Application

Legal Issues

  1. 1 Whether the 2017 loan agreement should be rectified to reflect the parties' common intention regarding interest accrual.
  2. 2 Proper construction of the 2018 and 2019 loan agreements regarding interest liability.
  3. 3 Whether the 2019 agreement is void due to mistake (erreur sur la substance).

Ratio Decidendi

The 2017 Agreement failed to reflect the parties' common intention to cease interest accrual from 6 April 2017, as advised by Grant Thornton. The evidence established a continuing common intention, outwardly expressed, and a drafting mistake. Rectification is granted to reflect this intention. The 2018 and 2019 Agreements, properly construed in light of the rectified 2017 Agreement, do not impose further interest liability. If the 2019 Agreement were construed otherwise, it would be void for mistake (erreur sur la substance).

Court Disposition

Application granted.

Orders

  • Rectification of the 2017 Agreement as specified in paragraphs 42 and 44, effective from 5 April 2017.
  • Declaration that the 2018 Agreement does not impose further interest liability beyond acknowledging the loans are non-interest bearing from 5 April 2017.