Midtown Acquisitions LP v Essar Global Fund Ltd, Court of Appeal - Commercial Court, October 04, 2018, [2018] EWHC 2545 (Comm)

Resolution Date:October 04, 2018
Issuing Organization:Commercial Court
Actores:Midtown Acquisitions LP v Essar Global Fund Ltd
 
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Neutral Citation Number: [2018] EWHC 2545 (Comm)

Case No: CL-2018-000139

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

COMMERCIAL COURT (QBD)

Royal Courts of Justice

Rolls Building

London, EC4A 1NL

Date: 04/10/2018

Before :

MRS JUSTICE MOULDER

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Between :

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Michael Bloch QC (instructed by Boies Schiller Flexner (UK) LLP) for the Claimant

David Wolfson QC and Scott Ralston (instructed by RPC) for the Defendant

Hearing dates: 5 and 6 September 2018

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Mrs Justice Moulder :

Introduction

  1. This is the reserved judgment of the court on an application by the claimant, Midtown Acquisitions LP (``Midtown'') dated 16 April 2018 for summary judgment pursuant to CPR 24.2.

  2. By its claim the claimant is seeking payment of a debt created by a judgment (the ``ECA Judgment'') in its favour of the Supreme Court of the State of New York, County of New York dated as of 11 November 2016 in the amount of US$409,220,240.51 together with interest.

  3. By an application dated 16 August 2018 the defendant seeks a case management stay of execution pending the determination of the defendant's challenges to the ECA Judgment in the New York courts.

    Background

  4. The claimant is a limited partnership incorporated under the laws of the State of New York. The defendant is a company incorporated under the laws of the Cayman Islands.

  5. By a credit agreement dated 30 September 2014 the claimant together with other lenders agreed to provide a loan facility up to a value of US$450 million to Essar Steel Minnesota LLC (``Essar Minnesota''). Pursuant to a guarantee of the same date, the defendant guaranteed the obligations of Essar Minnesota under the credit agreement with a limit of US$200 million. By an equity contribution agreement (the ``ECA'') of the same date the defendant agreed to provide cash common equity contributions to Essar Minnesota. The ECA is governed by the law of the State of New York.

  6. On 18 March 2016 the defendant entered into two affidavits of confession of judgment: one (the ``Guarantee Confession'') related to the guarantee and was in an amount of US$201,575,000 and the other (the ``ECA Confession'') in relation to the ECA was in the amount of US$415,378,356 less any amount paid to the lenders under the guarantee.

  7. Also on 18 March 2016 the defendant entered into a term sheet (the ``Term Sheet'') with the agent for the lenders which agreed a settlement amount in relation to the guarantee and ECA and a payment plan for repayment of the settlement amount.

  8. On 25 August 2016 the Supreme Court of the State of New York, County of New York (the ``NY Court'') entered judgment on the basis of the Guarantee Confession for the claimant and the other lenders for the total sum of US$171,769,169 (the ``Guarantee Judgment'').

  9. On 9 November 2016 the NY Court entered judgment for the claimant alone pursuant to the ECA Confession in the sum of US$375,378,356 together with interest and costs amounting to a total figure of US$409,220,241.51.

  10. In November/December 2016 the defendant filed motions to vacate the Guarantee Judgment.

  11. On 17 March 2017 the claimant was granted summary judgment in the High Court by Teare J in relation to its application for recognition and enforcement of the Guarantee Judgment ([2017] 1 WLR 3083).

  12. The motion to vacate the Guarantee Judgment was denied in May 2017. On 22 May 2017 the defendant filed a notice of appeal against that order (the ``Guarantee Appeal'').

  13. On 12 July 2017 the defendant commenced a Plenary Action in the NY Court to challenge the ECA Judgment (the ``Plenary Action'').

  14. On 18 September 2017 the NY Court entered a stipulation and order (the ``Stay Order'') providing that proceedings in the Plenary Action were stayed pending the determination of the Related Appeal (which was defined as, and is accepted to be a reference to, the Guarantee Appeal). The scope of that Stay Order is disputed and is discussed below.

  15. The Guarantee Appeal was rejected by order of 26 June 2018. On 19 July 2018 the defendant filed a notice of motion to re-argue the Guarantee Appeal and that motion remains pending. The defendant contends that, upon re-argument, the appellate court should find that the filing of the Guarantee Confession was conditional on the defendant's default under the Term Sheet.

    Evidence

  16. For the claimant I was referred in submissions to the following witness statements in support of the claimant's case:

    i) a first witness statement of Matthew Getz dated 16 April 2018. Mr Getz is a partner in the firm of Boies Schiller Flexner (UK) LLP (``BSF''), acting for the claimant;

    ii) a first witness statement of Daniel Rapport dated 16 April 2018, a second witness statement dated 11 June 2018 and a third witness statement dated 29 August 2018. Mr Rapport is a partner in the firm of Friedman Kaplan Seiler & Adelman LLP;

    iii) a first witness statement of Benjamin Finestone dated 11 June 2018. Mr Finestone is a partner of Quinn Emanuel Urquhart & Sullivan LLP based in New York.

  17. For the defendant I was referred in submissions to the following witness statements in support of the defendant's case:

    i) a first witness statement of Simon Hart, a partner in the firm of RPC, solicitors acting for the defendant;

    ii) a first witness statement of Stephen Meister dated 21 May 2018. Mr Meister is a partner of the law firm Meister Seelig and Fein LLP (``MSF''), New York counsel for the defendant;

    iii) a second witness statement of Kevin Fritz dated 31 August 2018. Mr Fritz is also a partner of the law firm MSF.

    Summary judgment

  18. CPR Part 24.2 provides:

    The court may give summary judgment against a claimant or defendant on the whole or part of a claim or on a particular issue if -

    (a) it considers that -

    ...

    (ii) that defendant has no real prospect of successfully defending the claim or issue; and

    (b) there is no other compelling reason why the case or issue should be disposed of at a trial.''

  19. I was referred to the summary of the relevant principles on a summary judgment application set out by Simon J in JSC VTB Bank v Skurikhin [2014] EWHC 271 (Comm) at [15] which so far as relevant to the issues are as follows:

    ``(1) The Court must consider whether the defendant has a `realistic' as opposed to a `fanciful' prospect of success, see Swain v Hillman [2001] 2 All ER 91 , 92. A claim is `fanciful' if it is entirely without substance, see Lord Hope in Three Rivers District Council v Bank of England [2001] UKHL 16 at [95].

    (2) A `realistic' prospect of success is one that carries some degree of conviction and not one that is merely arguable, see ED & F Man Liquid Products v. Patel [2003] EWCA Civ 472 .

    (3) The court must avoid conducting a `mini-trial' without disclosure and oral evidence: Swain v Hillman (above) at p.95. As Lord Hope observed in the Three Rivers case, the object of the rule is to deal with cases that are not fit for trial at all.

    (4) This does not mean that the Court must take everything that a party says in his witness statement at face value and without analysis. In some cases it may be clear that there is no real substance in factual assertions which are made, particularly if they are contradicted by contemporaneous documents, see ED & F Man Liquid Products v. Patel (above) at [10]. Contemporary activity or lack of activity may similarly cast doubt on the substance of factual assertions.

    (5) However, the Court should avoid being drawn into an attempt to resolve those conflicts of fact which are normally resolved by a trial process, see Doncaster Pharmaceuticals Group Ltd v. Bolton Pharmaceutical Co 100 Ltd [2006] EWCA Civ 661 , Mummery LJ at [17].

    (6) In reaching its conclusion, the court must take into account not only the evidence actually placed before it on the application for summary judgment, but the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond ( No. 5) [2001] EWCA Civ 550 , [19].

    (7) ...

    (8) Some disputes on the law or the construction of a document are suitable for summary determination, since (if it is bad in law) the sooner it is determined the better, see the Easyair case. On the other hand the Court should heed the warning of Lord Collins in AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at [84] that it may not be appropriate to decide difficult questions of law on an interlocutory application where the facts may determine how those legal issues will present themselves for determination and/or the legal issues are in an area that requires detailed argument and mature consideration, see also at [116].

    (9) The overall burden of proof remains on the claimant,

    ...to establish, if it can, the negative proposition that the defendant has no real prospect of success (in the sense mentioned above) and that there is no other reason for a trial, see Henderson J in Apovodedo v Collins [2008] EWHC 775 (Ch), at [32].

    (10) So far as Part 24.2(b) is concerned, there will be a compelling reason for trial where `there are circumstances that ought to be investigated', see Miles v Bull [1969] 1 QB 258 at 266A...

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