Caxton International Limited & Ors v Essity Aktiebolag (Publ) & Anor [2025] EWHC 2020 (Ch)

[2025] EWHC 2020 (Ch)Case No FL-2024-000021IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS OF ENGLAND AND WALESFINANCIAL LIST (ChD)Venue Royal Courts of Justice, The Rolls Building, Fetter LaneLONDONEC4A 1NLDate 31 July 2025
Before
MR JUSTICE FANCOURT
Between
CAXTON INTERNATIONAL LIMITEDClaimantOCM LUXEMBOURG VOF SARLClaimantBOSTON PATRIOT ARLINGTON ST LLCClaimantNORTHLIGHT EUROPEAN FUNDAMENTAL CREDIT MASTER FUNDClaimantMFM NORTHLIGHT EUROPEAN CREDIT OPPORTUNITIESClaimantSONA CREDIT MASTER FUND LIMITEDClaimantSONA BLUE PEAK LTDClaimantSPARTA GLOBAL OPPORTUNITIES MASTER FUND LPClaimant- and –
Between
ESSITY AKTIEBOLAG (PUBL)DefendantESSITY CAPITAL B.V.Defendant
Tom Smith KC and Annabella Wang (instructed by White & Case LLP) for ClaimantsSonia Tolaney KC and Tom Foxton (instructed by Linklaters LLP) for Defendants
APPROVED JUDGMENT
[1]This judgment is concerned with issues consequential upon my judgment handed down on 16 June 2025 (“the Judgment”) and the Order dated 16 June 2025 (“the Order”), which the parties have been unable to agree. There are three such matters remaining for decision: i) whether permission should be granted to the existing Claimants, pursuant to CPR Part 19, to join Rokos Global Macro Investments 2 Limited (“RGMI2L”) and Northlight QIAIF plc – Northlight Opportunity Funds (“Northlight”) as additional claimants in the claim, with their consent; ii) whether this claim should continue under Part 8 of the CPR or be directed to continue as if started as a Part 7 claim; iii) case management directions pending the disposal by the Court of Appeal of the Defendants’ application for permission to appeal the Order and the appeal, if permission is granted.[2]Owing to the difficulty of convening a hearing convenient to all before the end of term, the parties agreed to make submissions on these matters in writing, and that I should determine them on paper, which I agreed to do.[3]I have had the benefit of detailed submissions from Ms Tolaney KC and Mr Foxton on behalf of the Defendants, Mr Smith KC and Ms Wang in response, on behalf of the Claimants, and then a reply on behalf of the Defendants, with helpful reference to various authorities, which I have carefully considered. With no disrespect to the industry of Counsel, I can deal with each of the matters in issue relatively briefly, because each raises a question of case management on which I have been able to reach a clear conclusion.[4]The declarations sought in the claim form (as amended) are that:
“(i) the disposal by Essity Group of its entire stake in Vinda constituted the cessation of a substantial part of Essity's business and/or the whole or a substantial part of the business of a Material Subsidiary of Essity, such that an Event of Default has occurred and is continuing pursuant to the Conditions of the Notes; (ii) upon the occurrence of an Event of Default which is continuing, the “Noteholder” (as defined in the Conditions) being the party shown in the records of the clearing systems (Euroclear and Clearstream, Luxembourg, as applicable) as the holder of a nominal amount of such Notes, is entitled to give notice of acceleration of the Notes (i.e. to declare that any Note held by it is immediately due and payable).”
[5]The issues turn principally on the meaning of the notes in issue, which I have described and quoted in the Judgment and need not rehearse here, and on the facts relating to the Defendants’ disposal of their (approximately) 51% shareholding in Vinda. Following that transaction, acceleration notices were served by account holders with the clearing systems (“Custodians”) on behalf of some of the Claimants, and the Defendants disputed that such acceleration notices were validly served by Custodians, both on the ground that there was no Event of Default, and on the ground that such notices could only validly be served by the clearing systems. The second ground depends entirely on who is to be treated as the “Noteholder” for these purposes under the Conditions governing the notes.[6]As a result of the jurisdiction challenge, it is apparent that an additional issue at trial will be whether each of the Claimants has a sufficient proprietary interest in the notes to justify their being granted declaratory relief.[7]The amendment and joinder application dated 28 April 2025 (“the Application”) was issued by the Claimants just before the hearing of the jurisdiction challenge disposed of by the Order.

Joinder

[8]Each of RGMI2L and Northlight is said to be in the same position as the other Claimants in relation to an ultimate beneficial interest in the notes. The only new issue raised by their joinder would therefore be whether each of them can prove a beneficial interest in the notes, which is an issue that the other Claimants will individually have to prove at trial. Otherwise, the issues of whether an Event of Default has arisen and who is entitled under the notes to serve an acceleration notice are the same as those raised by the other Claimants.[9]In those circumstances, the Defendants’ position is as follows. Essentially, joinder of the new claimants will do no more than add a superfluous fifth wheel to the coach, but at increased cost, and is wholly unnecessary and therefore not desirable. The purpose of the existing proceedings was said to be to bring clarity to the position, so that those with the ultimate interests in the notes could instruct their counterparties to serve valid notices to accelerate the debt. Since, in the absence of the Custodians and clearing systems as parties to the claim, there can be no issue estoppel arising that will bind the Custodians and account holders in any event, a decision binding the new claimants is of no greater significance to them than a decision as between the existing Claimants and the Defendants, which will be a decision in principle on the two issues of interpretation of the notes.[10]It is not really disputed by the Defendants that the Claimants and the new claimants satisfy the threshold condition in rule 19.2(2)(a) or (b), on the basis that the issues between the new claimants and the Defendants are connected to the matters in dispute, and that accordingly the relevant questions for me are whether it is “desirable” to add the new claimants to the claim, and whether I should exercise my discretion to do so.[11]The Defendants referred to the assertion made in the Claimants’ solicitors’ letter dated 8 July 2025 that the alternative for the new claimants would be to issue their own parallel proceedings, but say that that is not understood since the existing proceedings will determine the issues of principle anyway.[12]The new claimants could have decided to sit back and wait for resolution of the existing proceedings, and, if they are resolved in favour of the Claimants, then instruct their Custodians to serve acceleration notices. But it is evident that they are not content to do so. For one reason or another (possibly the issue raised by the Defendants as to the sufficiency of the Claimants’ interests), they wish to have a determination made in their favour too, as between them and the issuers of the notes. They have instructed the same solicitors, White & Case LLP, who are acting for the existing Claimants.[13]The question is therefore whether it is more convenient, and so desirable, for the new claimants to be joined to the existing proceedings, to that end, or for them to be left to bring a new set of proceedings for the same relief. The Court cannot prevent the new claimants from taking the latter course, if so advised.[14]Looked at in that way, it does seem to me to be more convenient and desirable for the new claimants to be brought within the existing claim, at this early stage, rather than have duplication of proceedings. That is consistent with the approach generally taken to cases in the Financial List. The only additional issue that they will raise is similar to the issue raised in relation to the other Claimants, namely proof of their own beneficial interest in the notes. Given that the evidence sufficient to establish a good arguable case in that regard (as I have held in the Judgment, in principle) is in the evidence supporting the Application, and that the same legal team will be used, the additional cost resulting from joinder is relatively small. The application was made in good time and no permission is sought to adduce further evidence on behalf of the new claimants at this stage, other than the 4th witness statement of Ms Tripathi dated 28 April 2025 in support of the Application. I therefore exercise my discretion to permit joinder of RGMI2L and Northlight.[15]In case the court came to that conclusion, it has been agreed in principle by the parties that the order I make should record that the new claimants are to be treated in the same way as the existing Claimants, for the purpose of the jurisdiction challenge, so that if an appeal against the Order succeeds the claims of the new claimants will also be struck out, but otherwise on the basis that permission to serve out is deemed to have been granted. There is no material difference between the new claimants and the existing Claimants on the issue raised by the jurisdiction challenge.[16]If larger numbers of new claimants were to make similar applications at a later stage, the court would not necessarily make the same order, depending on when the applications were made and how many new claimants were involved. The court might instead make a representation order, depending on any factual differences in the positions of such claimants, or refuse joinder and stay any new claims that were issued at an appropriate stage. But for the sake of adding only two new claimants at this early stage, it is more convenient to allow joinder.[17]The joinder application having been successful, and having been resisted root and branch by the Defendants, it seems to me that some of the costs of the Application should be paid by the Defendants to the Claimants. Those costs do not include the part of the costs of the Application attributable to the amendment of the claim form, where it is agreed that those costs of the Application should be costs in the case, nor should they include the costs of issuing the Application and supporting it with evidence, which would have been required to be incurred under Part 19 in any event for the joinder. I will however direct that the Claimants’ reasonable and proportionate costs of the joinder part of the Application, from and including 16 June 2025 to date, shall be payable by the Defendants in any event.

Part 7 or Part 8?

[18]On the face of it, the claim seeking only the two declarations set out in [4] above and costs was appropriately brought as a Part 8 claim, as it principally raises issues of interpretation of the notes and associated contractual documents. Having read the pre-issue correspondence, including the letter before action and the responses to it and subsequent correspondence, I am satisfied that no significant dispute of fact relating to the Vinda transaction was raised. On the contrary, Linklaters LLP on behalf of the Defendants confirmed, in response to a request for disclosure, that there were no documents relevant to the issues that are now the subject of the claim that were not already in the public domain.[19]The question for me now is accordingly whether the claim remains “unlikely to involve a substantial dispute of fact” (CPR rule 8.1(2)). A claim will not involve a substantial dispute of fact unless there are facts to be advanced by way of defence that are(a) likely to be disputed and(b) would be a sufficient reason to refuse summary judgment, i.e. the factual dispute in question has legal relevance and will have to be resolved. That applies to mixed questions of fact and law as it does to pure questions of fact, if the facts are in dispute. If the facts asserted, though highly material to the decision on the issue, are undisputed, the issue remains suitable for determination under Part 8.[20]In my judgment, these principles apply equally if it is the evaluation and relevance of the facts to the legal issue that is disputed, rather than the truth of the facts themselves, because the court is as well able to hear argument and determine the significance of undisputed facts at a Part 8 trial as it would be following case management under Part 7. Thus, how the terms of a contract (the meaning of which may itself be in dispute) apply to certain facts is an issue as well capable of determination under Part 8 as under Part 7. If, however, material facts (in the sense explained in [19] above) are themselves in dispute, the claim should generally continue under Part 7, in order to establish with clarity what the factual case of each party is.[21]Here, the Defendants contend that the disposal of the shares in Vinda gives rise to questions of law (interpretation) and “questions of how those provisions (once construed) fall to be applied to the particular facts of the case”. However, the application of the contract to undisputed facts is not “a substantial dispute of fact” within the meaning of rule 8.1(2). The Defendants identified, in para 29 of their submissions, various issues that include a factual component, such as the nature of the Vinda transaction or Vinda’s business, but where the relevant facts are not disputed. In para 32, they set out various assertions of fact, or mixed fact and law, which they say may be relevant, but these do not disclose any dispute of fact. The Defendants are of course at liberty, in their evidence in response to the claim in due course, to advance all the facts that they say are relevant. The fact that the Defendants seek to rely on them does not disclose a substantial dispute of fact if it is only the relevance or significance of the facts that is in issue.[22]As to the facts relating to the standing of the Claimants to seek relief, this depends entirely on the evidence that will be put forward by the Claimants themselves. Although the Defendants contest that the Claimants have sufficiently proved a beneficial interest in the notes, there is no indication, as yet, that there will be factual disagreement between the parties about what those interests are. The Defendants’ case (without prejudice to its case that no claim by ultimate beneficial owners should be allowed) will be that the Claimants have not proved what they need to prove, namely a beneficial interest under a sub-trust. The fact that the Defendants may argue that the Claimants have not discharged the burden of proving a sufficient interest in the notes is not a relevant dispute of fact.[23]The Defendants further seek to argue that there may be disputed expert evidence, including expert evidence on foreign law, expert evidence on how a cessation of business may be measured or established, accounting evidence as to how Essity’s group accounts are prepared, and evidence on the market perspective of Essity’s business. It is sufficient to say that I am, as things stand, far from persuaded that any such evidence will be necessary to assist the court to decide the issues for decision in this claim – but since the Defendants’ evidence has not yet been filed and no application for permission to rely on expert opinion evidence is before me, I do not need to decide that. No disputed issue is currently identified by the Defendants on which the court may need such assistance.[24]Neither am I persuaded by the argument about lack of clarity of the Claimants’ case needing to be resolved by particulars of claim. Subject to one matter discussed in this paragraph, if there is any such lack of clarity following exchange of evidence, it can be addressed at a future case management conference. It is evident from the pre-action correspondence that the parties have divergent views on how Essity’s previous interest in Vinda should be characterised, whether as part of the business of Essity or its subsidiary, or as an investment without business control. The one matter that I do not consider to be sufficiently clear is whether the Claimants’ case is that because Essity, through its subsidiary, held a 51% shareholding in Vinda, it had effective control of Vinda and therefore Vinda’s business should be treated as a substantial part of Essity’s business (or the business of its subsidiary). That is however a matter that can and should be raised and answered, with adequate particulars, in correspondence. It is entirely disproportionate to direct statements of case and that the claim continue as a Part 7 claim to achieve clarity on that issue.[25]Accordingly, I am not persuaded that there is likely to be a substantial dispute of fact within the meaning of CPR rule 8.1(2) that would justify ordering this claim to continue as a Part 7 claim. Part 7 proceedings will inevitably be slower and more expensive, and therefore are not consistent with the overriding objective, unless there is a clear need for them. I am satisfied that there is no such need.[26]Although the Defendants have therefore unsuccessfully sought a Part 7 direction, it was a matter of case management rather than a discrete application, and I consider that the costs relating to it should be costs in the case.

Case management directions

[27]It is agreed that, in view of the Order and the later consent order dated 27 June 2025, if I do not direct the claim to continue as a Part 7 claim, the time for the Defendants to file their evidence in response is 28 days after filing the further acknowledgement of service. The date for that acknowledgement of service is 7 days after final determination of the proposed appeal.[28]That means that, unless I order otherwise, the next steps in the Part 8 proceedings will not be due until after the disposal of the appeal.[29]The Defendants nevertheless invite me to stay the claim until that stage is reached, accepting that it might technically not be necessary, but suggesting that it provides clarity. The Claimants on the other hand invite me to give directions for evidence to be filed by the Defendants in response to the claim within 6 weeks, and for evidence in reply 5 weeks thereafter, to be followed by a case management conference in October 2025.[30]The Defendants having only recently filed their application for permission to appeal at the Court of Appeal, it is unlikely that that application will be determined before October 2025, possibly even later.[31]I am satisfied that it would be inappropriate to order the Defendants to file evidence in response to the claim before they are obliged to file a further acknowledgment of service. Nor would it be appropriate to go behind the Consent Order. In those circumstances, those steps must now await a decision in the Court of Appeal. That being so, I do not see fit to grant any general stay of the claim: it will remain becalmed until the appeal has been disposed of in any event. That means that the parties are entitled to seek to clarify matters in correspondence or in Part 18 requests in the meantime, as they see fit, including the matter that I have identified in [24] above.[32]The costs of determining these case management matters will also be costs in the case.