TB Property Investments (Plymouth) Limited v TB Property SARL & Anor [2025] EWHC 1618 (Ch)

[2025] EWHC 1618 (Ch)

Case No CH-2024-000219

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NL

Date 27/06/2025

Before

SIR ANTHONY MANN

(SITTING AS A JUDGE OF THE HIGH COURT)

Between

TB PROPERTY INVESTMENTS (PLYMOUTH) LIMITEDClaimant/Appellant

TB PROPERTY SARLDefendants/Respondents

EPISO 4 PILGRIM, HOLDINGS SARLRespondent

Mr Edmund Cullen KC (instructed by Clintons LLP) for Appellant

Mr Bobby Friedman and Mr Benjamin Slingo (instructed by Bryan Cave Leighton Paisner LLP) for Respondents

Hearing Hearing date: 14 th May 2025

Approved Judgment

This judgment was handed down remotely at 10.30am on 27 th June 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives and other websites.

.............................

SIR ANTHONY MANN

Sir Anthony Mann :

[1]This is an appeal from a decision of HHJ Raeside KC of 12th January 2024 in which he refused to give summary judgment in favour of a claimant which was suing for a debt, where the claim was resisted on the basis that the debt was and remained the subject of subordination arrangements between joint venture parties. He determined that more evidence was required and justifiable in order to resolve the matter (paragraph 148). He made no order on a cross-application by the defendants other than allowing expert evidence (order dated 19th January 2024). The claimant appeals (pursuant to permission granted by Mellor J) on the basis that it was entitled to summary judgment and the judge was wrong to refuse it. The defendants uphold the judgment below, but further say (and cross-appeal) that if the matter is susceptible to summary judgment without further evidence then the judgment should be in its favour. They also claim to have a counterclaim which, if good, overtops the claim, and resist summary judgment on that basis too. Mellor J gave permission to cross-appeal.

[2]Mr Edmund Cullen KC appeared on this appeal for the claimant/appellant; Mr Bobby Friedman led for the defendants/respondents with Mr Benjamin Slingo. They managed their written and oral submissions efficiently though it was still necessary for Mr Cullen’s reply to be done in writing because there was not time for it during the day allocated for the hearing of this appeal.

The basic chronology and the essential facts

[3]A large part of the central facts are agreed or appear from the transactional documents in this case. In the narrative which follows (and in the rest of this judgment) I shall on occasion adopt slightly different names for the parties from those used by the judge below in order to distinguish more clearly between them.

[4]Thames Bank Property Company Ltd (“Thames Bank”) is a creature of Mr Colin Morris and Mr Tim Davies. It started the events by entering into a contract with Borough of South Tyneside (“the Seller”) to purchase a property known as Derry’s Cross department store in Plymouth on 15th September 2015. Pursuant to that agreement it paid a deposit of £750,000 to the buyer’s solicitors to hold as stakeholder. It is the amount of this deposit which is the subject of the claim in this litigation. Completion of this agreement was as a result of an agreed extension due on 16th December 2016.

[5]Thames Bank sought a financier and a co-venturer in order to develop the site and brought in the second defendant (“Episo”) for that purpose. The negotiations resulted in an agreement to carry out the development through a joint venture company, the first defendant (“JVCO”). It was incorporated by Thames Bank in Luxembourg on or around 28th November 2016, and at this stage Thames Bank was the sole shareholder. It was to be the purchaser of the land so the introduction of that company required a novation of the purchase agreement which was done by a “Novation Agreement” dated 20th December 2016. Under this agreement the Seller agreed to the substitution of JVCO as the buyer and JVCO agreed to take on the obligations of the buyer. It contained the principal clause on which the claimant sues in this action (having taken an assignment as will appear below): “3.2 For the avoidance of doubt, as from the date of this agreement the Deposit (as defined in the Contract) shall be held by Mishcon de Reya LLP as stakeholder under the terms of the Contract as if it had been provided by the Substitute Buyer (and the Substitute Buyer shall pay an equivalent sum to the Buyer on demand but the Seller shall not be concerned to see that this is done).” [Mishcon de Reya were Thames Bank’s solicitors.]

[6]On or about 6th January 2017 the parties decided that a new company would be used as the vehicle for the Morris/Davies side of the transaction in place of Thames Bank. The claimant company (“TB Investments”), was incorporated for this purpose and pursuant to a Share Purchase Agreement dated 11th January 2017 all the shares in JVCO were transferred from Thames Bank to TB Investments.

[7]Stepping back in time for the moment, the original long-stop date for completion of the acquisition was 17th June 2016. It became apparent that Thames Bank was not going to be able to complete by the specified completion date, and on 8th July 2016 an extension was agreed with the Seller to 16th December 2016 on financially quite onerous ongoing terms.

[8]The major transactional documents were all dated or executed on 17th January 2017. Some of them are undated, but the parties seem to have proceeded on this application on the footing that they were all executed on the same date. In general terms the principal documents (for the purposes of this narrative) were as follows (the capitalised names of the agreements will be used hereafter in order to describe them):(a) A Joint Venture Agreement between the claimant (TB Investments), Episo and JVCO. Under this agreement Episo acquired half of the shares in JVCO for a subscription of £5.6m, so that it became an equal shareholder in JVCO with the claimant. A “waterfall” provision determined how the profits of the venture were to be distributed - they were to be distributed to Episo alone until it had achieved a multiple of 1.5 return on its investment. Thereafter the profits were to be split 60:40 in favour of Episo until Episo had achieved a return multiple of 2; and thereafter 50:50. In this agreement there was also a clause (clause 15.3) which provided for what was to happen if one shareholder sold or transferred its shares to the other. Its general effect was to achieve what the claimant describes as some sort of clean break by providing for the payment or repayment of debts existing between the parties.

(b) A Facility Agreement providing for Episo to lend the venture up to £14.5m. Episo was therefore essentially the internal financier of this development. The Morris/Davies side did not inject funds other than the amount of the deposit. The share subscription moneys and the first part of the drawdown were to be used to pay for the land and the initial phases of the development. The £14.5m facility was to be repaid in 3 months.

(d) TB Investments granted a share pledge to Episo (pursuant to a Share Pledge Agreement) over its shares to secure the Secured Liabilities referred to therein - essentially the liabilities of JVCO.

(e) By a Deed of Subordination TB Investments (and 2 other parties irrelevant to this appeal) agreed to subordinate certain debts that might be owed by, among others, JVCO, to debts owed to Episo. This subordination agreement is relied on by the defendants in this action as a defence to the claim.

(f) By an Assignment of Subordinated Debt, JVCO and the claimant agreed to charge certain assets in favour of Episo.

[9]The purchase completed on the same day at what was actually an agreed reduced price. By a subsequent Deed of Assignment dated 22nd March 2017 Thames Bank assigned to the claimant its right to be paid the deposit sum which was conferred by the Novation Agreement.

[10]On 14th July 2022 the claimant made a demand for payment on JVCO at its Luxembourg office, pursuant to the term of the Novation Agreement set out above. It was not paid, and a claim for it is one of the subjects of this action.

[11]Things did not go well with the development and it was not a financial success. On 14th December 2020 Episo gave various notices of default and enforcement. Significantly for the purposes of this matter, it gave notice of enforcement under the share pledge agreement and enforced it by a share transfer of the claimant’s shares in JVCO under that document to itself, for a market value to be determined by a valuer. The effect of that transfer on the obligation to pay the deposit sum is the other principal subject of the claim. It is said by the claimant to trigger an obligation to pay the deposit debt and to release the subordination.

[12]There are certain counterclaims, which I refer to below but which I do not need to elaborate at this point.

The material provisions whose construction is under consideration

[13]It is unnecessary to set out detailed provisions in the Subordination Agreement because their effect on the Novation Agreement debt (the subordination issue in this case) is no longer sought to be determined in this summary judgment application. The claimant does not pursue an appeal from the judge’s refusal to grant summary judgment on this point. The case of the claimants on the rest of the application is that even if it is subject to the subordination, Episo is obliged to procure the release of the subordination and repayment of the debt (which it is said Episo is capable of achieving by using its shareholder powers in JVCO) because of the provisions of clause 15.3 of the Joint Venture Agreement (the release issue in this case). That provision reads:

“15.3 On a sale or transfer of Shares (save for a transfer or sale to a third party) the buying Shareholder shall: (a) procure that all loans, loan capital, borrowings and indebtedness in the nature of borrowings (other than those incurred in the normal course of trade) owed by the Company and/or its subsidiary undertakings to the selling Shareholder or its Associates (together with any accrued interest) are either assigned to the buying Shareholder for such value as may be agreed between the Shareholders or, failing agreement, are repaid by the Company or its subsidiary undertakings; and (b) use all reasonable endeavours (but without involving any financial obligation on its part) to procure the release of any guarantees, indemnities, security or other comfort given by the selling Shareholder to or in respect of the Company and its subsidiary undertakings.”

[14]The argument of the claimant is that the transfer of shares in JVCO to Episo that took place when Episo enforced its security was a transfer within 15.3. That triggered an obligation on Episo as “buying Shareholder” to procure the repayment of debt owed to the claimant as “selling Shareholder” (or to take an assignment at full value). There was also an obligation to procure the release of the subordination under paragraph (b), which meant that the provisions for enforcing the subordination (including an obligation to hold any repayment on trust for Episo until Episo was paid) fell away. What Episo was therefore obliged to procure the assignment of, or to procure repayment of, was an unsubordinated debt.

[15]The defendants disputed that the transfer that had happened was a transfer within paragraph (a), which was really concerned with voluntary transfers in which one side or the other was exiting the venture - a “clean break” sort of transaction on a voluntary exit. The transfer of shares under the security arrangement was not such a transaction. It was therefore under no obligation to take an assignment for value or to procure repayment. Furthermore, the debt was “incurred in the normal course of trade”, so it did not fall for repayment anyway. So far as the removal of the subordination under (b) is concerned, the defendants maintained the subordinaation did not come within the expression “other comfort”, so the obligation did not arise.

[16]Each side ventured on the exercise of construing these provisions in their respective favours, Mr Cullen submitting that the wording plainly supported him, and the defendants, so far as necessary but only as a secondary case, saying that the wording failed to support the claimant’s claim. Their primary case was that the issue ought not to be determined on a summary judgment application because further evidence was required and some of it was, or was likely to be, disputed. Their various arguments involved delving into further provisions of the Joint Venture Agreement and some of the other transactional documents in order to follow through on definitions or to establish context. The arguments were not confined closely to just the wording of this clause. For reasons that will appear, I do not propose to go through those arguments.

[17]The counterclaim is said to arise out of the provisions of clause 15.2 of the Joint Venture Agreement, which is a sort of counterpoint to clause 15.3 requiring debts going the other way to be settled by the selling shareholder:

“15.2 On a sale or transfer of Shares the selling Shareholder shall: (a) repay all loans, loan capital, borrowings and indebtedness in the nature of borrowings owed by that Shareholder or its Associates (together with any accrued interest) to the Group; and (b) procure the removal of any Managers of the Company and its subsidiary undertakings appointed by it.”

[18]The dispute turns on whether certain debtor companies are “Associates” for these purposes.

The decision below

[19]What was before HHJ Raeside were cross-applications for summary judgment, and an application by the defendants to adduce expert evidence. So far as the claimant’s application was concerned, there was an application for judgment in the sum of £750,000 pursuant to the assigned claim under the Novation Agreement, or damages, and matching claims to strike out the Defence and Counterclaim on the basis (putting it shortly) that it was doomed to failure. There was also a claim for releases under clause 15.3 of the Joint Venture Agreement which I have referred to above.

[20]The issues on which summary judgment was fought were:(a) The subordination issue. It was not denied by the defendants that the claimants had a claim against JVCO for the amount of deposit under the assigned Novation Agreement. However, it was said by the defendant that the subordination agreement provided a contractual bar against enforcement until the Episo parties had been repaid their indebtedness. The claimant maintained that the deposit amount was not caught by the subordination provisions in the Joint Venture Agreement.

(b) The release issue. If and to the extent that the deposit claim would otherwise be subordinated, the claimant claimed Episo was under an obligation to release that subordination pursuant the the clean break provisions in the Joint Venture agreement (clause 15.3) because the forced transfer of the claimant’s shares in JVCO (under the security arrangements) was a transfer within that provision.

(c) The counterclaim issue. This was not raised as point on which summary judgment was sought by the defendants because they accepted that a trial of the counterclaim was appropriate in order to decide it. Rather, it was said to be a potentially good claim for sums topping the claim so that, if the claim was good, there should still not be summary judgment on it because of the potential counterclaim.

(d) Overall, whether the claims made could be determined on a summary judgment application.

[21]The judge below, in a detailed and thorough judgment, decided in favour of the defendants’ first stand, namely that the claims were not appropriate for summary judgment. He set out the general factual background appearing from the documents and the evidence before him. He considered each of the agreements and commented on their terms, from time to time emphasising the need for evidence and disclosure to appreciate their proper meaning and effect. In the context of considering the Novation Agreement the judge reflected on an absence of evidence as to why the Seller did not simply forfeit the deposit when the new longstop date had passed, and said that that would be the subject of disclosure at a trial. This would seem to be part of his perception (evidenced later in his judgment, and not supported by the parties on the appeal) that one of the things one had to understand for the purposes of construing the documents was what happened to the deposit. I would agree with the parties that that is not a relevant disputed matter.

[22]He made other references to the need to consider contemporaneous evidence. Thus in paragraph 15 he said:

“It seems to be common ground, and is in any event correct, that it will be necessary to understand the commercial context and business common sense of the relevant agreements to determine their proper construction. Both factual and expert witness evidence will be highly relevant.”

[23]I am not sure that it was common ground that expert evidence would be required, but the rest was probably common ground; what was not common ground was the extent of factual evidence required, because it was of the essence of the claimant’s application that no further evidence (beyond that already put in) was required or justified.

[24]Having considered and commented on the relevant transactional documents, the judge gave his conclusion and reasons in a short section entitled “Short discussion”. He concluded that the case was one in which a further investigation of the facts was required and that the necessary facts did not all clearly appear in the evidence which he had (paragraph 127). He went further and embarked on a bit of research of his own. He requested Land Registry documentation while he was writing his judgment (which documentation was then supplied by the parties) which he said made it even clearer that further factual evidence would be appropriate. His researches led him to conclude that the £750,000 deposit was not used in the purchase of the land (paragraph 132) and that raised a further question of fact:

“ 133. What the Court needs to know as a question of fact which remains unanswered on the basis of the present contemporaneous documents thus far available is what agreement was reached by Thames Bank, TB Investments and Episo in respect of what and how if at all the £750,000 Deposit would be used for the development of the Property because on the present documents the probability is that it was no longer used as a Deposit towards the purchase of the Property. The probability is that Colin Morris knew very well what took place given his first-hand involvement and, therefore, could and should have provided documentation to inform the Court what took place or a witness statement as to those facts. It is not satisfactory to simply assert, as he does in his witness statement; "There was never any doubt that TB Property had to pay £750,000 to Thames Bank and later TB Investments.”

The support he has for this bland assertion in his witness statement lies in correspondence a year later which, as a matter of law, is probably of no relevance in construing an agreement a year earlier and is in a different context. What the Court has to understand is what was agreed at the time in 2017 and when that agreement took place. 134 Remarkably despite a suite of documents around 17 January 2017 some involving TP Investments is that none of them actually record what was agreed in respect of the Deposit of £750,000. In circumstances in which the Novation Agreement was not effective and was not used for the purchase of the Property, something else must have taken place.”

[25]There are two (related) errors in that approach, on which the parties are agreed on this appeal. First, the deposit moneys were (as one would have expected) used as part of the completion moneys for the purchase. There was never any dispute about that, and the evidence did not refer to it because it was not in issue. Second, the judge considered that there was another, unstated and unevidenced, agreement about the deposit which needed to be determined as part of a trial. In fact neither party had suggested any such thing and neither party alleged such an agreement in the course of this appeal. This was a point of the judge’s own making unsupported by any evidence or averment.

[26]In deciding, as he did, that the case was not suitable for summary judgment because further evidence might affect the outcome, the judge therefore took into account a major factor which did not exist, and that was a material error. However, that was not the only matter in relation to which the judge said more evidence was required. As well as observing the need for evidence from time to time in his narration of the documents, he went on after paragraph 134: “135 … [Having referred to the assignment of the debt] … An obvious inference is that Colin Morris had decided that he did want the £750,000 Deposit to stay in this development of the Property and not demanded [presumably “demand it”] back on the basis that he would make a profit from it but on what basis it would stay in and how it was used or what the terms were and when it was made is quite unknown at this stage. This is a matter must be properly investigated for the trial.” [sic] This would again seem to require investigation of a non-existent and non-asserted separate agreement.

[27]Paragraph 136 refers to the Luxembourg law accounts of JVCO and observes that the Novation Agreement is not referred to in those accounts, and goes on:

“… what the Court needs to know is when and on what terms the Deposit was provided to TB Property for use in the development of the Property and thus appearing in their accounts as a credit.”

It is not apparent why that should be relevant to the construction of the various documents in this case.

[28]Paragraph 137 refers to the need to pursue an analogous line of inquiry:

“ 137 … What is unclear is why, if there was an on demand right under the Novation Agreement, Thames Bank and later by assignment TB Investments did not simply call upon their money and have it returned and not invest it the Property. That after all is the whole point of a novation. Thus, what was agreed and when is obviously central to this case in order to understand the basis upon which that Deposit could or could not be returned.”

The judge then drew some strands together:

“139. For the purposes of summary judgment, there is in my judgment sufficient proper argument to be made out that the Deposit of £750,000 paid by Thames Bank towards the development of the Property, subsequently assigned to TB Investments, would be subordinated to the other investments of Episo in circumstances where TB Investments were the “subordinated creditor,”

Episo were the “senior secured creditor” under their various guises. To understand the Deed of Subordination and the Assignment of the Subordinated Debt reference is required to the Joint Venture Agreement to give meaning and effect. On the express words used in those two contracts there is a proper argument that TB Investments investment of the Deposit was subordinated to Episo but as Colin Morris has not provided any documents or witness statement setting out when and the terms of the investment of the Deposit at this stage of proceedings it is not possible to come to a final or fair judgment. What can be seen is that this is not a straightforward, simple point of law on a known and agreed factual matrix which can be resolved in the way suggested by TB Investments summarily. 140. In my judgment, this is not a fanciful but realistic and a properly arguable case that TP Investments cannot demand the Deposit as a standalone debt without regard to the investment of Episo which properly arguably must be given precedence. I do not accept that this case has been complicated or obfuscated by TB Property and Episo. To the contrary, what they are doing is setting out by reference to the contemporaneous documents the case and what took place though I acknowledge that I have asked for further documents and once yet further documents are made available for trial in the normal way everyone will be in a better position to come to a fair judgment on the full facts to which the law can then be applied. 141. I am quite satisfied that the Deed of Subordination and the Assignment of Subordinated Debt when construed in accordance with the agreed legal as set out above, does not give rise to a short point of law, and a construction that is bad in law, that has no real prospects of succeeding at trial such as to induce the Court at this point to grasp the nettle and decide the point. Once the facts are fully appreciated based on contemporary documents not available thus far as to TB Investments’ involvement, in particular, how the Deposit was used and the basis of such an agreement, it will be possible to give further meaning and effect to these agreements. For summary purposes it is properly arguable that the £750,000 Deposit was a “subordinated debt” from TB Investments to the “senior creditor,” Episo. If, as asserted by Colin Morris without proof, this should be paid, then so far as this Court is concerned, that is a question of fact which needs further investigation and further documents. It is a central argument of this case and one that therefore should give rise to a trial in the usual way, including a further understanding of the true and proper meaning of clause 15.3 of the Joint Venture Agreement. 142 In those circumstances, until the basic factual questions are properly understood by this Court and supported by relevant contemporary documentation, it would be quite wrong to proceed as to a true and proper meaning of clause 15.3 of the Joint Venture Agreement because one has to put this in the context of the factual background which at present is not fully available.”

[30]Much of that goes to the subordination question, but he made similar findings in relation to the release issue:

“144 …While the relief is limited to a declaration it is quite obvious that the grant of such a declaration the Court would have to consider whether or not TB Property and indebtedness to TB Investments and this requires consideration of basic facts which are not available on this summary application. It is not for a Court to construe clause 15.3 of the Joint Venture Agreement until those findings of fact have been made. Otherwise, one is proceeding on a hypothetical basis which the Court does not do for a declaration. 145. Equally so in respect of the pleaded assertion that: “In breach of clause 15.3 of the Joint Venture Agreement Episo failed to procure a deposit of £750,000 being assigned to pay TB Investments and used all reasonable endeavours to procure TB Investments’ release.”

Again, unless and until the background facts are understood, it would not be right to find this breach of contract and proceed on that basis. The basic facts are clearly in dispute and have to be resolved before such a breach can be ascertained. This will have to be done at trial.”

[31]Accordingly, the judge made his order dismissing the claimants’ application for summary judgment.

The points arising on this appeal

[32]The claimant does not seek to appeal on the subordination point, but it does appeal on the release issue. The appeal therefore has to be approached on the assumption that the claim to the deposit is indeed subordinated to the claims of Episo, and that the Episo claims have not yet been satisfied. On that footing the deposit claim cannot be pursued unless and to the extent that clause 15.3 of the Joint Venture Agreement requires it to be released. The judge below declined to make a declaration that Episo was obliged to procure the release of the subordination provisions, declined to make an order requiring them to do so, and declined to strike out the Defence. As I understand it, on this appeal the claimants seek such declarations or orders at this stage. Mr Cullen also referred to a claim in damages. Presumably striking out the Defence would be thought to open up a claim to a money judgment on the deposit claim. In any event, whatever relief Mr Cullen may get to at the end of the day depends on his succeeding on the construction point on clause 15.3.

[33]The issues arising on the appeal are as follows:(a) Did the judgment below reveal a material irregularity insofar as it was based on the judge’s finding that there seemed to be some unascertained further agreement which needed to be determined at a trial?

(b) Did the judge err in finding that further evidence would be required in order to determine the true effect of clause 15.3, so the matter was not amenable to summary judgment?

(c) In the event that he did so err, and if the matter is amenable to summary judgment, on the true construction of clause 15.3 are the claimants entitled to the relief they seek under it as matter of construction?

(d) Do the defendants have an arguable counterclaim under clause 15.2? The parties agree that for these purposes any counterclaim which does exist tops, or might top, the claim of the claimants, so this is a construction point only and there is no quantum point on this appeal.

[34]No separate issues arise on the striking out aspects - in terms of argument, all the same points arise.

[35]The defendants have served a respondent’s notice which seeks to say that the defendants’, not the claimants’, construction of clause 15.3 is correct in the event that I were to determine that this matter is amenable to summary judgment. As I have said, they were given permission to cross-appeal by Mellor J.

The summary judgment test and other points of law

[36]It is unnecessary to set out any more than the oft-repeated passage in the judgment of Lewison J in Easyair Ltd v Opal Telecom Ltd

[2009] EWHC 339 (Ch)

about summary judgment:

“15. … The correct approach on applications by defendants is, in my judgment, as follows: i) The court must consider whether the claimant has a “realistic” as opposed to a “fanciful” prospect of success: Swain v Hillman [2001] 2 All ER 91; ii) A “realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8] iii) In reaching its conclusion the court must not conduct a “mini-trial”: Swain v Hillman iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10] v) However, 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 also 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; vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63; vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.”

[37]The centrepoint of this appeal turns around sub-paragraph (vii) of that judgment and the reference to the court’s having, or not having, all the relevant factual material before it. The essence of the judge’s decision below was that he did not have all that material. The claimant challenges that determination. It says that no further evidence was necessary or appropriate on the release issue, and the points of construction in this case are not so complex that they cannot be determined on a summary judgment application. They urge the court to give primacy to the wording of the provisions, which they say the judge did not do - see Rainy Sky SA v Kookmin Bank

[2011] UKSC 50

; Arnold v Britton

[2015] UKSC 36

and Wood v Capita Insurance Services Ltd

[2017] UKSC 24

. While they accept that commercial efficacy is a relevant consideration as part of the factual matrix, they submit that one does not use that as a starting point for the exercise of construction. One starts with the wording.

[38]At this stage of the reasoning I accept the general propositions of the claimant about the approach to construction, though one always has to have some regard to the factual matrix. I did not detect that there was much between the parties on this approach. At the end of the day I do not consider that this appeal turns on refined arguments about the interaction between the wording, the factual matrix and commercial efficacy.

Further determinations by the judge below

[39]The judge below did not consider questions of construction in order to decide who was right. Rather, he declined to consider them on the evidence available, and dismissed the claimant’s application on that basis. In those circumstances the basis of the claimant’s appeal is, first, that he was wrong to take that view. In order to succeed it needs to establish that the judge was wrong to take the view that he should not determine the construction points on the basis of the evidential material before him because it was appropriate to consider more of the factual matrix.

[40]I have already set out extensive passages in which the judge expressed a view as to the unsuitability of the claim for determination summarily. The sort of relevant background which he seems to have thought required consideration at a trial also included the following:

“49 …The impression given is that the documents set out below (though, of course, they are in draft office copy form only and bear the date of January 2017,) were in fact settled by 16 January 2017 but original documents must of course be made available and would be important documentary evidence at trial to establish when in fact they were completed. What is apparent from the suite of documents is that that were settled under some pressure of time.”

The pressure is disputed as a matter of fact by the claimant.

[41]“50. A suite of six documents were apparently settled and the drafts bear that date, though it would appear that that was not the date. Some may well have been settled later, possibly the assignment document, but this is not yet clear until discovery is provided.” I did not detect that either party supported a finding that the documents were executed on any date other than the dates appearing on them, so this would appear to be a non-issue in the case.

[42]“53. After the definitions in clause 1 [of the Facility Agreement], reference is made in clause 2 to the facility made available for the purposes as set out in clause 3 by which TB Property applied those amounts received from Episo for the acquisition of the development, and the finance payable to the Council of the Borough of South Tyneside on completion of the purchase of the Property, the redevelopment of the Property in accordance with the budgeted costs, business plan, the facilities and security documents. These are all details that need to be looked at with some considerable care in order to understand the full background of this suite of documents. For the purpose of a summary application, it is not possible to fully understand the background and probably is not necessary.”

[43]Again, I have to say that it is not all apparent why that sort of detail would assist in construing the particular clauses in issue in this case. The same applies to a finding in paragraph 57:

“57. Precisely what role was played by Colin Morris and TB Investments in the drafting of this agreement and his understanding of his and TB Investments roll in the Deed of Subordination and the Assignment of Subordinated Dept is not clear at present. Again, these are matters which disclosure could make apparent in due course as one would expect for a trial.”

[44]Paragraph 64 contains something a little more justifiable:

“64. For this clause [vis clause 15.3] to be put into operation for the purposes of this summary application it would have been axiomatic that there had to be an understanding of any indebtedness that TB Property owed to TB Investments and therefore the basis on which that obligation was payable and, in particular, an understanding of the £750,000 Deposit which is the subject of this case. To ascertain that, it is necessary to appreciate the basic facts in this case for the purposes of summary judgment before one can see whether this could or could not be put into effect.”

[45]Paragraph 84 is based on the fact that the Share Pledge Agreement is subject to Luxembourg: law:

“84. It would be possible to construe this document and to do so properly regard would be had to Luxembourg laws and how those laws affect such an agreement. This again would be a matter on which David Griffiths could give expert evidence. He has knowledge of these matters and for present purposes and summary application purposes this is unnecessary. This is a detailed agreement which requires further consideration and cannot easily be resolved at this stage of the process. It must be set in the light of all the relevant known facts at the time but at this summary stage are not known.”

[46]It is not readily apparent what issues of construction might arise under this document which would require the assistance of an expert in Luxembourg law. The defendants’ expert witness gave evidence of his experience which indicated that such agreements took place because under Luxembourg law a floating charge could not be created, so a share pledge agreement was necessary in order to give a would be chargee control of a company’s assets, but that is not a question of construction and it is not apparent that as a technique it was disputed.

[47]Paragraph 90 refers to the need for a trial to ascertain the circumstances in which the debt arising out of the Novation Agreement was assigned in March 2017. It is not clear to me how that can be relevant to the construction of documents entered into 2 months previously.

[48]I refer below to the impact of these findings on the sustainability of HHJ Raeside’s decision.

Determination

[49]The judge’s decision that the matter was not suitable for summary judgment because a fuller account of the factual matrix was required is a case management decision on the authorities (Allied Fort Insurance Services v Ahmed

[2015] EWCA Civ 841

at para 101) and as such should be accorded the now familiar degree of deference. It involves the exercise of discretion or evaluation from which an appeal is usually difficult, and the special protection accorded to case management decisions makes this appeal, in principle, even more difficult for the claimant.

[50]However, two things might be said to assist the claimant in its endeavours. The first is that the decision seems to have been heavily based on a misconception that there was some further undisclosed agreement, and on the introduction of some doubt about the application of the deposit and the need to investigate that further. As already pointed out, it is no-one’s case that there was such a further agreement, and there was no dispute of difficulty about the application of the deposit. Those misconceptions are serious and Mr Cullen categorised them as a material procedural irregularity. I do not think that that characterisation is necessarily appropriate, but that does not matter because on any footing the judge’s points had a material effect on the exercise of his judgment (discretion) and his concerns were misplaced. Mr Friedman sought to play this point down by suggesting that the judge’s concerns were but one element in his judgment and there were other reasons which would support it. I do not fully agree with his analysis. I consider that those misconceptions are capable of seriously undermining his reasoning to an extent which might require a wholesale reconsideration of it.

[51]The second is that, as appears above, the judge seemed to consider as relevant to the factual background various factors which it is not apparent would be truly relevant or properly considered, such as matters of subjective intention.

[52]Those seem to me to be flaws which undermine the judge’s reasoning and which might justify and require a reconsideration of the final result. However, elements of the judge’s reasoning can be said to survive. There are disputes as to whether the documents were entered into under time and commercial pressures. That might just be of some relevance. Mr Friedman urged on me several other matters as to which extrinsic evidence would be rightly admitted and which make it inappropriate to grant summary judgment. I reject some of them, including an investigation as to why it was that it took so long for Mr Morris to procure a demand under the Novation Agreement - I fail to see how that is relevant to a construction of the relevant documents or the question of whether the debt was within the subordination provisions. I suppose the availability of alternative finance (an aspect of commercial pressure) might have some relevance, but I am deeply sceptical about the need for evidence of “market practice” which Mr Friedman would seek to introduce and for which he has got expert evidence permission. He may have a potential point about evidence going to the assumptions made about subordination when a reduction in price was negotiated. I will say no more about the detail of his submissions because ultimately they would be a question for the trial judge (or conceivably a judge entertaining the PTR). The bottom line is that there are some potential areas of disputed factual matrix which survive even if some that the judge relied on would not be appropriate.

[53]Those matters are potentially capable of going to the extent of the operation of clause 15.3. Dealing first with the question of whether the forced transfer under security arrangements is a transfer within that provision, this is not a question of whether the transaction can be described as a transfer simpliciter. The question is more complicated than that. A determination of this point requires a consideration of the whole commercial background, the reasons for the structuring of security in that way (said to be because Luxembourg law does not recognise a floating charge), the effect of the description of Episo as a Security Agent (relied by Mr Friedman as being a reason why the invocation of the security right is different from a willing transfer), and whether or not the contemplations of the parties make that description irrelevant for these purposes (a question of fact raised by the claimant, not by the defendants). The detailed interaction between the various provisions of the various transactional documents construction points which I have not set out in this judgment also contributes to making this point less appropriate for summary judgment. The exercise involved cannot easily be described as a “short point of construction” (as per Lewison J) or a short point of law.

[54]I would accept that the debate on clause 15.3(b) (the obligation to procure the release of “any other comfort”) is probably a much shorter and non-evidence affected question. If it were the only question it might well fall into the category of issues on which the nettle should be grasped and the construction point decided now. However, it is only relevant if the claimant’s debt is indeed subject to subordination, and that will not be decided until trial. So on this appeal a decision would have to be reached on an assumption that the debt is indeed subordinated. A debate on an assumption is more appropriately raised on a clearly defined preliminary issue rather than on a summary judgment application, and while I think that the question is probably clear enough in this case, and if it were clear that a decision on that point alone would serve some useful foreclosing purpose for the benefit of the litigation as a whole, then it might just be worth dealing at least with that. However, it is not apparent that deciding just that point would serve a useful purpose in terms of shaping the direction of the rest of the litigation (or otherwise), and it is much more appropriate to have it dealt with other points which need to go to trial.

[55]Coupled with these points is the important fact that there is going to have to be a trial of the subordination point anyway. That is to take place against a factual background which has to be fully established (according to the non-appealed view of the judge). It would not be safe, in my view, to assume that the appealed construction points can be taken without any reference to that background, and it is rather better to take them altogether.

[56]In all the circumstances, therefore, and while not necessarily supporting all the reasoning of the judge below as to why this matter is not suitable for summary judgment (or striking out), I would agree with his overall decision.

The counterclaim

[57]This issue only really arises if I were to decide that the claim were otherwise amenable to summary judgment in the claimant’s favour. It is said by the defendants that if (contrary to their primary case) clause 15 has any application to the transfer of shares that has taken place, any monetary claim that might arise under clause 15.3 of the JVA is over-topped by a counterclaim that the defendants have under clause 15.2. The claim is that a company owned by Mr Morris, and which provided services to the venture, was overpaid in a substantial sum exceeding £750,000 and that the claimant is obliged to, and has failed, to procure the repayment of the excess. For the purposes of this appeal it is to be assumed that such a claim arguably exists and that it arguably exceeds £750,000. The arguments on this claim turn on whether the company falls to be treated as an “Associate” of the claimant within the meaning of clause 15.2 and the Joint Venture Agreement, which sends one on a journey through various definitions in the transactional documents and the Companies Act 2006. The parties made increasingly complex submissions on those points. Mr Cullen sought to say that the relevant company was not an “Associate”, and that that could be clearly demonstrated. Mr Friedman mounted counter-arguments, which he said prevented there being summary judgment in favour of the claimant, but he did not go so far as to mount an entirely separate claim for summary judgment on the point. The existence of a bona fide and arguable counterclaim which over-topped the claim was said to be another reason for not granting summary judgment on the claim.

[58]In the light of the limited status of the counterclaim as a bar to summary judgment, and since I have decided that the claimant’s summary judgment application fails. I do not have to reach a decision on the counterclaim and I need say no more about it.

Conclusion

[59]I will therefore dismiss the appeal and make no order on the cross-appeal.