“13. EHC has a long history of defaulting on its obligations to pay debts owed to lenders and other parties: 13.1. EHC’s pleaded case against Baker Botts is that it had “special vulnerability” in early 2019 as a result of its serious financial difficulties with numerous creditors pressing for payment. [footnote EHC’s Part 20 Particulars of Claim section D]. 13.2. EHC’s 2022 and 2023 financial statements record that EHC was unable to meet principal and interest instalment payments owed to its lenders (TW2/16 and 60). EHC therefore had to negotiate a settlement with its (unidentified) lenders, which was recorded in an agreement dated20 June 2023 (the “Settlement”) (TW2/107). 13.3. EHC then defaulted on its obligations under the Settlement, and so had to renegotiate terms with the lenders. Those revised terms were recorded in an annex to the Settlement dated31 July 2024 (the “Annex”) (TW2/119). 14. In terms of the present position, EHC’s profit and loss account for the seven months ended31 July 2024 (TW2/183) and a balance sheet as at31 July 2024 (TW2/184) show that: 14.1. EHC’s net loss was$18,848,000 , compared to a budget showing a net profit of$5,676,000 ; 14.2. EHC’s ammonium nitrate sales were$55,918,000 , compared to a budget of$114,089,000 ; and 14.3. as at31 July 2024 , EHC’s current liabilities exceeded its current assets by$343,557,000 . 15. It therefore appears that as at31 July 2024 , EHC was unable to meet its current liabilities as they became due. 16. EHC has provided projected cashflows for the three months ended31 December 2024 (TW2/202) which assume that EHC’s monthly ammonium nitrate sales will increase from$10,596,155 in September 2024 to$13,346,700 in November 2024. It also assumes that EHC’s only operating payments will be feedstock payments representing 39.5% of the sales receipts. Based on these key assumptions it is suggested that EHC’s cash position will increase by$3,356,863 from$499,706 as at30 September 2024 to$3,856,569 as at31 December 2024 . 17. However, EHC’s projections do not appear reliable: 17.1. EHC’s actual monthly average ammonium nitrate sales were only$7,988,000 during the seven-month period ending31 July 2024 . That is just 60% of the figure which it suggests it can achieve in November 2024. 17.2. Its cost of sales as a percentage of the sales for the same period ended31 July 2024 was 59.4% - a substantially greater proportion than the 39.5% provided for in EHC’s cashflow projection. 17.3. The projection does not include any selling and marketing or general and administration expenses, nor does it include any allowance for the costs of this litigation. In the profit and loss account for the seven-month period ended 31 July, 2024, EHC’s sales and marketing and general and administration expenses averaged$1.23 million per month. At that rate, these expenses will be greater than EHC’s forecasted cash increase of$3.36 million in the quarter to December 2024. 17.4. There has been no update to those projected cashflows to reflect developments in [sic.] since31 July 2024 .” 13.1. EHC’s pleaded case against Baker Botts is that it had “special vulnerability” in early 2019 as a result of its serious financial difficulties with numerous creditors pressing for payment. [footnote EHC’s Part 20 Particulars of Claim section D]. 13.2. EHC’s 2022 and 2023 financial statements record that EHC was unable to meet principal and interest instalment payments owed to its lenders (TW2/16 and 60). EHC therefore had to negotiate a settlement with its (unidentified) lenders, which was recorded in an agreement dated20 June 2023 (the “Settlement”) (TW2/107). 13.3. EHC then defaulted on its obligations under the Settlement, and so had to renegotiate terms with the lenders. Those revised terms were recorded in an annex to the Settlement dated31 July 2024 (the “Annex”) (TW2/119). 14.1. EHC’s net loss was$18,848,000 , compared to a budget showing a net profit of$5,676,000 ; 14.2. EHC’s ammonium nitrate sales were$55,918,000 , compared to a budget of$114,089,000 ; and 14.3. as at31 July 2024 , EHC’s current liabilities exceeded its current assets by$343,557,000 . 17.1. EHC’s actual monthly average ammonium nitrate sales were only$7,988,000 during the seven-month period ending31 July 2024 . That is just 60% of the figure which it suggests it can achieve in November 2024. 17.2. Its cost of sales as a percentage of the sales for the same period ended31 July 2024 was 59.4% - a substantially greater proportion than the 39.5% provided for in EHC’s cashflow projection. 17.3. The projection does not include any selling and marketing or general and administration expenses, nor does it include any allowance for the costs of this litigation. In the profit and loss account for the seven-month period ended 31 July, 2024, EHC’s sales and marketing and general and administration expenses averaged$1.23 million per month. At that rate, these expenses will be greater than EHC’s forecasted cash increase of$3.36 million in the quarter to December 2024. 17.4. There has been no update to those projected cashflows to reflect developments in [sic.] since31 July 2024 .”
“Emphasis of matter We draw attention to Note (2) of the notes to the financial statements that Company has accumulated losses balance amounting to USD 384 313 103 as of31 December 2023 (2022: 368 809 262) and a negative working capital balance amounted to USD 677 391 355 (2022: 683 666 348). Further the Company has outstanding debt of USD 648 772 427 as of31 December 2023 (2022: 678 917 208) The Company has been unable to meet the principal and interest instalment payments and is in breach of financial covenants. These conditions, along with other matters set forth in Note (2) indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Notwithstanding the above facts, the financial statements have been prepared under the going concern basis as the management of the Company has initiated certain actions, including signing a recovery and debt settlement agreement dated June 20, 2023 and signing an annex to settlement agreement dated July 31, 2024 detailed in Note (2), to meet the obligations, as they fall due within the coming twelve months from audit report date and also enhance the Company's ability to generate cash flows. Our Opinion is not modified in respect of this matter.”
“In March 2019, the Company was unable to make the payment of loan installments according to the repayment schedule as per the latest amendment dated8 October 2018 . Therefore, on the 25th of May 2019, the lenders decided to cancel the facility amendments and started to apply the previously agreed contract dated4 December 2014 using the average rate of the facility applied by the bank is 6-month LIBOR plus an applicable margin of 6.25% per annum result on average of 8.78% during 2019. On the 21st of May 2020, the Company entered into a Working Capital Facility Agreement "WCF" with Banque Misr S.A.E. Commercial International Bank (Egypt) S.A.E. and Banque du Caire S.A.E. for an amount of USD 30 million over three tranches: - Tranche A: L.C. facility for local and forging raw material suppliers for an amount of USD 15 million for 120 days with 1.5% commission and quarterly commission of 0.5%. - Tranche B: Credit Facility for an amount of USD 10 million to finance the Company's operating expenses to be paid within 180 days from the date of withdrawal. - Tranche C: Short term loan for an amount of USD 5 million to be paid over three installments; 1st installment amounting to USD 1.2 million after eight months from the agreement signature date, 2nd installment amounting to USD 1.2 million after ten months from the agreement signature date and 3rd and last installment amounting to USD.2.6 million after 10 months from the agreement signature. For Tranches B will be C, in case of utilization in USD an interest rate of LIBOR three months plus a margin of 4. 75% applied and in case of utilization in EGP, an interest of lending corridor plus a margin of 3% in addition to a monthly commission of 0.5% for the highest debit balance. On2 September 2020 , the Company signed a Standstill Agreement with the lenders in which the Lenders will temporarily suspend the application of clause (17.2) of the existing loan facility (events of default). Based on the agreement, the lenders agree not to, and not to instruct the Facility Agent and the Security Agent to, take or progress any Enforcement Action against any or all of the Obligors provided that before the occurrence of the Standstill Termination Date (31 December 2020 ) to allow the Borrower to undertake a restructuring of the project through securing funds through new financing or an increase of its capital from Potential Financing Parties. The new lenders' who are planning to refinance current debt and financing expansion of EHC have requested that the Company sends the existing lenders a request for extension for the standstill agreement until30 June 2021 the company signed with existing bank a debt settlement agreement dated June 20, 2023 (refer to Note (2-c.6)”
“The lending banks have agreed to settle the debt owed by the company and a debt settlement contract dated7/19/2023 was drawn up between them, in accordance with the terms and conditions detailed in the aforementioned settlement contract. Due to the company's failure to fulfil its obligations contained in the settlement contract drawn up on7/19/2023 , it submitted a request on2/25/2024 to re-settle the debt owed by it, the value of which is referred to in the aforementioned settlement contract, after deducting all the funds paid by the company in 2023, in addition to any new and emerging returns and commissions from that date until full payment. The content of the re-settlement request is summarized as follows: - Capitalization (converting part of the debt into capital): - Capitalization of$150,000,000 (one hundred and fifty million US dollars) of accrued revenue - Capitalization of US$50,000,000 (fifty million US dollars) of the loan principal. The total amount to be capitalized is 200,000,000 US dollars (two hundred million US dollars) in exchange for the banks obtaining a share of 45.68% of the company's capital, after increasing the company's capital and the entry of lending banks as new shareholders. • The company shall be evaluated within one year from the date of issuing the new shares (completion of capitalization) and a maximum of one year and three months from the date of signing this contract, by an accredited financial evaluator, and accepted by the lending banks. • Rescheduling the remaining of the principal loan after capitalization, amounting to US$335,600,000 over eight years.”
“AN Sales January 24 = 17,830 tons vs 25,740 in the budget. AN Sales February 24 = 11,000 tons vs 27,230 in the budget. AN Sales March 24 = 15,000 tons vs 29,280 in the budget. AN Sales April 24 = 20,800 tons vs 27,750 in the budget. AN Sales May 24 = 23,240 tons vs 29,740 in the budget. AN Sales June 24 = 13,980 tons vs 27,770 in the budget. AN Sales July 24 = 30,095 tons vs 31,530 in the budget. YTD Actual July 24 = 131,945 tons vs 199,040 tons in the budget.”
“This agreement on the part of EHC's old shareholders to underwrite any liability arising out of the proceedings (comprised of the Main Claim, and Part 20 Claim) necessarily extends to coverage of reasonable ancillary costs arising out of the same. This includes (but is not limited to) an adverse costs order, should such be made against EHC in the Part 20 Claim.”
“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] 1 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 .”
“'…, as Three Rivers District Council shows, where the application in such complex cases relies on inferences of fact, the overriding objective may well require the claim to go to trial in the interest of a fair trial. That is because the relevant inference could not be safely drawn without further discovery and oral evidence at the trial. It is thus necessary, where such inferences are relevant, to guard against the temptation of drawing them as a matter of probability, because the achievement of the over-riding object requires a much higher degree of certitude. Where in a complex case, as may often be the situation, the frontier between what is merely improbable and what is clearly fanciful is blurred, the case or issue should be left to trial.'”
“It may be difficult to treat a statement made in the course of negotiations for a contract as a term of the contract itself, because the statement was clearly prior to and outside the contract, the incorporation of the statement is excluded by an entire agreement clause in the contract itself or because the existence of the parol evidence rule prevents its inclusion. Nevertheless, the courts are prepared in some circumstances to treat a statement intended to have contractual effect as a separate contract or warranty, collateral to the main transaction. In particular, they will do so where one party refuses to enter into the contract unless the other gives him an assurance on a certain point or unless the other promises not to enforce a term of the written agreement”
“Consideration for the collateral contract is normally provided by entering into the main contract, but a collateral contract may also be actionable even if the main contract is unenforceable, e.g. for illegality. Breach of the collateral contract will give rise to an action for damages for its breach, but not as a general rule to a right to treat the main contract as repudiated. However, the effect of a collateral contract may be to vary the terms of the main contract or to estop a party from acting inconsistently with it if it would be inequitable for him to do so”
“As a matter of logic, it appears to me that a collateral agreement concluded at about the time of the Commercial Contract and Prepayment Supplement, and intended to run parallel to them, with a common intention, which continues in existence at the execution of those agreements, cannot be ruled out because of the terms of the written contracts, either on the basis that it is inconsistent with those terms, or because the terms of the written contract, on their face, preclude reference to material which lies outside those written documents, whether it be by reference to negotiations, or representations, or other instruments, materials or oral exchanges between the parties. Of course, questions of construction arise, and, of course, questions of fact arise, as to how these materials can be viewed together. If, however, it can be established that the parties only concluded the written agreements on the basis of an oral contract, whatever the evidential difficulties that may be presented by virtue of the entire agreement clause or the alterations clause, as a matter of logic, effect must be given to the collateral contract. An application for summary judgment cannot succeed if there is disputed evidence as to such a contract unless one party's evidence is so incredible as not to be susceptible of belief as opposed to merely improbable. The defendants' evidence here does not fall to be so characterised. It is credible and is supported not just by the affidavit of the third defendant but by the documentary evidence…”
“32. On the other hand, a statement as to the law will not always be just a statement of opinion. If, for example, a lawyer said that there is no requirement for a deed to be signed, he would surely be misstating the law rather than just voicing an erroneous opinion. Further, it is not difficult to think of circumstances in which it might be reasonable for a representee to rely on such a statement. That could be the case if, say, the lawyer made his remark in unequivocal terms to an unrepresented lay person whose interests were aligned with those of the lawyer's client. In such a case, moreover, it could not be said that “each party is in as good a position as the other to satisfy himself on what the law is” (to quote from Lyle-Meller v A Lewis & Co (Westminster) Ltd[1956] 1 WLR 29 , 41): the lawyer would clearly be better placed than the representee to know the law. 33. To my mind, it is hard to see why the mere fact that a statement purely concerns law should invariably mean that it cannot give rise to an estoppel by representation…”
“The Claimant strongly denies any liability to EHC for the reasons set out in its Defence and Counterclaim in respect of the Part 20 Claim. The Part 20 Claim was intimated only for the first time after the Claimant issued its claim for fees. The Part 20 Claim is riddled with factual and legal misstatements and is totally without merit. However, the Claimant accepts that it is not suitable for summary determination at this stage.”
“38 Common sense dictates that the points of dispute must be drafted in a way which enables the parties and the court to determine precisely what is in dispute and why. That is the very purposes of such a document. It is necessary in order to enable the receiving party, the solicitor in this case, to be able to reply to the complaints. It is also necessary in order to enable the court to deal with the issues raised in a manner which is fair, just and proportionate. 39 As I have already mentioned, the complaint should be short, to the point and focused. As paragraph 8.2(b) ofPractice Direction 47 indicates, that requires the draftsman not only to identify general points and matters of principle but to identify specific points stating concisely the nature and grounds of the dispute. In the case of a solicitor and own client assessment, it seems to me, therefore, that in order to specify the nature and grounds of the dispute it is necessary to formulate specific points by reference to the presumptions containedCPR r 46.9 (3) which would otherwise apply, to specify the specific items in the bill to which they relate and to make clear in each case why the item is disputed. This need not be a lengthy process. Having explained the nature and grounds of dispute succinctly, the draftsman should insert the numbers of the items disputed on that ground in the relevant box. The principle is very simple. In order to deal with matters of this kind fairly, justly and proportionately, it is necessary that both the recipient and the court can tell why an item is disputed. The recipient must be placed in a position in which it can seek to justify the items which are in dispute.”
“The Act of 1843 introduced a taxation procedure, because it was regarded as more convenient and advantageous for the client, and perhaps for both parties, than the existing procedures were. Nothing in the Act, or its successors, takes away the need for the solicitor to prove that his fees are reasonable, if they are challenged, absent any express agreement as to what they should be. The Court of Appeal has held, three times, that the common law or "ordinary jurisdiction" of the court is not excluded, and these judgments are not in any way inconsistent, in our view, with the decision of the House of Lords in Harrison v. Tew [1990] 2 A.C. 523. Nor do we consider that the solicitor is disadvantaged by the possibility that the client is entitled to have the reasonableness of the charges assessed by the court after the statutory periods for taxation have expired. He can himself claim an order for taxation under section 70(2), without any time limit, and obtain a form of summary judgment when the taxation certificate is issued: section 72(4). The present issue arises only when that is not done. … Mr. Morgan submits that the legal basis for the solicitor's claim is found insection 15 of the Supply of Goods and Services Act 1982 in any case where a contract exists between the solicitor and client. The contract contains a statutory implied term "that the party contracting with the supplier will pay a reasonable charge," and what is a reasonable charge is a question of fact. This has to be read, in the case of a solicitor, subject to the terms of the retainer in the particular case and subject also to the statutory provisions which give the solicitor, as well as the client, certain additional rights. But we do not see any difficulty in holding that the solicitor's claim is for a reasonable sum, whether by statute or at common law, and not for a liquidated sum. Again in accordance with general principles, the burden of proving that the sum is reasonable rests upon him. This is supported, if authority is needed, by the judgments in In re Park, 41 Ch.D. 326 and Jones & Son v. Whitehouse [1918] 2 K.B. 61 which I have quoted above.”
“In Stockers v IG Markets[2012] EWCA Civ 1706 the Court of Appeal noted that Steel J at first instance had ordered security for costs in a sum which represented 60% of the amount sought. That was of course merely one example of a security order. It is commonly said that recoveries on detailed assessments of costs frequently turn out in the region of 60–70% of claimed costs, but that too must at best be a rough rule of thumb.”
“ii) I note that the claimants have not produced, for comparison purposes, a schedule of their own estimated costs. Although they were under no obligation to do so, a possible inference is that such a schedule would not have supported the criticisms they make of the defendants’ schedule (see Popplewell J’s remarks in Excalibur at §§16–17).”
“The costs claimed in this case far exceed what is reasonable or proportionate for a debt recovery matter with a counterclaim for professional negligence. They reflect an inflated approach that does not align with the principles of proportionality or the Court’s broader objective of ensuring fairness in costs assessments. The involvement of multiple Grade A fee earners, the inappropriate application of "London 1" rates, the excessive reliance on leading counsel, and the disproportionate allocation of costs to witness statements, expert fees, and hearings further highlight the unreasonableness of the Claimant’s schedule. The Defendant invites the Claimant to revise their costs schedule, applying appropriate reductions to reflect the proportionality principles outlined in B J Crabtree and the established practices of the Commercial Court. An annexed counter-proposal Schedule is provided, offering a more reasonable and proportionate assessment of the anticipated costs, including reductions to the incurred costs which will likely be applied on assessment, in light of the nature of the matter and the principles established in relevant case law.”