Maple Leaf Macro Volatility Master Fund & Anor v Rouvroy & Anor

A signed term sheet can create a binding commercial contract where, assessed objectively, its wording, execution and surrounding exchanges show an intention to be bound. The parties may remain bound even though further documentation is contemplated and some implementation details are left for later agreement.

A contractual power to extend a transaction before automatic termination must be exercised within time and by all parties on whom the power is conferred. A stipulated 25% uplift was not a penalty where it was the agreed consideration for funding and not interest accruing by time.

Regulatory consumer protections did not apply to experienced business principals who entered the funding arrangement to retain control of their company. A claim in deceit also fails without both fraudulent intention and reliance causing loss.

The claimants alleged that the defendants signed a funding agreement under which Maple Leaf subscribed almost €30 million for warrants in Belvédère. The agreement required the defendants to establish a special purpose vehicle, provide collateral and repay the funding with a 25% uplift. Astin was to receive an arranging fee.

The defendants denied that the signed term sheet was binding. They challenged the English court’s jurisdiction, alleged that the termination and funding terms were unenforceable, and counterclaimed against Astin under Financial Services and Markets Act 2000 rules. Maple Leaf also alleged deceit.

The central issues were whether the term sheet was a binding agreement, whether it had automatically terminated, the resulting contractual remedies, and whether the defendants had regulatory or fraud-based defences.

1. Jurisdiction. The court had jurisdiction. The defendants were treated as having accepted jurisdiction under article 24 of Council Regulation No 44/2001 because they did not make a timely CPR Part 11 application after acknowledging service. Their later participation also accepted jurisdiction over Astin’s joined claims. The exclusive English jurisdiction clause was effective under article 23, covered both contractual and deceit claims, and was separable from disputes about the substantive agreement’s validity. The defendants were not consumers: they entered the arrangement to retain control and management of Belvédère. Maple Leaf’s deceit claim also fell within article 5(3).

2. Formation and variation. Version 9 was objectively a binding funding agreement. The signatures, express request for agreement and acceptance, the document’s substantive terms, and the communications describing the terms as final demonstrated contractual intention. The defendants’ subjective belief that a term sheet was non-binding did not displace the claimants’ reasonable belief that they intended to be bound. The agreement was sufficiently certain: the defendants had discretion as to the SPV’s form, but were obliged to establish a vehicle capable of giving effect to the agreement. It was consensually varied on 26 July 2007 in the terms of Version 10a. Lion Capital had accepted the arrangement and its later withdrawal did not affect the claimants’ agreed rights.

3. Termination and enforceability. The contractual extension power had to be exercised by both lenders before automatic termination. Astin’s first notice extended the agreement only until 2 August 2007; it then terminated automatically on 2 or 3 August. The 25% uplift was not a penalty. It was a fixed fee for the lenders’ assistance, not time-based interest. The defendants could not invoke the Unfair Terms in Consumer Contracts Regulations 1999 or the unfair-relationship provisions of the Consumer Credit Act 1974: they acted in the course of business, and the arrangement did not provide them, as individuals, with statutory credit.

4. Relief. Maple Leaf was entitled to €7,499,986.50 under the termination provision, its loss on sale of the warrants and relevant fees and expenses. It was also entitled to €2,730,000 for the lost call option. Astin was entitled to €2,503,500, provisionally as damages, subject to further submissions on whether it was recoverable as a debt.

5. Deceit and counterclaim. The deceit claims failed. The defendants were dishonest when allowing the revised subscription to proceed on 26 July, but Maple Leaf no longer relied on their intentions; there was also no loss additional to the contractual recovery. The counterclaim failed because Astin did not engage in stock-lending activity with the defendants, took reasonable steps to communicate clearly, and caused no proven loss.

not stated in the judgment.