Sawiris & Ors v Marwan

Where a contract provides security for repayment if contemplated transactions are not completed, the security should not be realised before the secured party has tendered its return and requested simultaneous repayment, unless the contract provides otherwise. A term requiring interest will not be implied merely because one party has had the use of money. The absence of an express interest provision, particularly where the contract specifies the repayment obligation, may indicate that the parties intended interest not to be payable. Statutory interest is discretionary and compensatory. The court may refuse interest for a period when the claimant’s own decision, rather than the defendant’s conduct, predominantly caused the claimant to remain out of the money.

The proceedings arose from a memorandum of understanding for an Egyptian media and entertainment joint venture. The principal dispute was resolved by a consent order declaring the memorandum at an end and requiring repayment of sums advanced. The trial concerned ancillary issues: the effect of Egyptian and Lebanese proceedings, damages and costs, interest, and the costs of the main action. The central questions were whether presenting security cheques breached the memorandum, whether related legal costs were recoverable, whether interest was payable or should be implied, and from what date statutory interest should run.

1. Egyptian proceedings. Clause 14(b) of the memorandum applied to all the security cheques. On the true construction of that provision, or by necessary implication, the claimants had first to tender return of the cheques and request simultaneous repayment. Only if repayment was then not made could the cheques be presented. Presenting them earlier, in order to pressure the defendant into performing the joint venture, was a breach of contract.
2. The claimants could not deduct their Egyptian litigation costs from the credit due for sums repaid. Those proceedings were brought to exert pressure to complete the transaction, rather than to recover the advances. The defendant was entitled to damages for the reasonable costs of defending the Egyptian criminal proceedings. In the absence of evidence that the defence was hopeless or unreasonable, the recoverable amount was assessed at US$85,000. Appeal costs were not recoverable on the evidence.
3. The claim for the costs of the Lebanese proceedings failed. The applicable test for conspiracy was predominant intention to injure, specifically in relation to the conduct complained of. The Lebanese proceedings were intended to procure performance of the memorandum, not predominantly to cause loss by imposing legal costs.
4. Interest. Applying the approach to implied terms stated in AG of Belize v Belize Telecom [2009] 1 WLR 1988, no term requiring commercial-rate compound interest could fairly be implied. Clause 14(b) expressly dealt with repayment but made no provision for interest. It was therefore consistent with the agreement that the defendant should have the benefit of interest-free finance if the contemplated transactions were not completed.
5. Interest under section 35A of the Supreme Court Act 1981 was discretionary and compensatory. The claimant had deliberately pursued performance rather than repayment and had not sought repayment when it was offered in principle. His conduct was the predominant cause of the delay until the case management conference on 7 April 2008. Simple interest at LIBOR plus 1% was therefore awarded from that date until the consent order of 26 June 2008.
6. The defendant was awarded 50% of his costs up to and including 7 April 2008. Thereafter each party was to bear its own costs.