McKillen v Maybourne Finance Ltd & Anor

The statutory scheme governing the National Asset Management Agency should be construed purposively. The National Asset Management Agency Act 2009 was directed to enabling NAMA and its affiliates to dispose of acquired loans efficiently. A contractual requirement to notify and consult a borrower is a restriction on disposal at law and, in any event, a contractual requirement for notice. In construing a detailed finance agreement, its commercial and statutory context and overall scheme may outweigh linguistic analysis of drafting infelicities or apparent redundancy. A clause disapplying transfer restrictions where NAMA exercises rights or powers under finance documents in place of a lender can cover assignment, transfer or novation by NAMA, whether its interest is legal or beneficial, and can apply to a replacement facility even where NAMA was the original lender.

Patrick McKillen brought a petition under section 994 of the Companies Act 2006 and a related Part 7 claim. The preliminary issue concerned the construction of a Facilities Agreement relating to loans made to Coroin Limited. NAMA had acquired a beneficial interest in the facilities under the National Asset Management Agency Act 2009. The agreement amended and consolidated those facilities and created the Knightsbridge Acquisition Facility. NAMA, Anglo Irish Bank Corporation Limited and the Bank of Ireland subsequently purported to transfer the facilities by novation to Maybourne Finance Limited.

David Richards J held, in [2012] EWHC 129 (Ch), that clause 40.3 did not apply and that restrictions in clauses 24.2 and 24.3 did apply. Permission to appeal was granted. The central issue was whether clause 40.3 disapplied the transfer restrictions, having regard to the statutory context and particularly section 139 of the National Asset Management Agency Act 2009.

Appeal allowed unanimously. The Master of the Rolls delivered the leading judgment. Lewison LJ agreed and added brief reasons; Toulson LJ agreed with both judgments.

1. Effect of the statutory scheme. Section 139 of the National Asset Management Agency Act 2009 had to be approached purposively. Its purpose was to remove impediments to NAMA and its affiliates disposing of acquired loans efficiently. A contractual requirement that the borrower be notified and consulted was a restriction on disposal at law within section 139(a). It was also a contractual requirement for notice within section 139(b). The statutory context therefore strongly indicated that NAMA had not intended to accept such a fetter, although the ultimate issue remained one of contractual construction.
2. Facilities. Clause 40.3(b)(1)(ii) disapplied clause 24 where NAMA exercised rights, powers or discretions under the Finance Documents in place of a lender. That wording naturally included the assignment, transfer or novation of the Facilities. The expression in place of any Lender described NAMA’s position and was not confined to cases in which NAMA held only an equitable interest. Clause 40.3 therefore applied whether NAMA was a legal or beneficial assignee.
3. The retention of clause 24.5(c)(i), the apparent redundancy of another limb of clause 40.3, and other drafting points did not justify a different construction. Detailed linguistic analysis could obscure the commercial scheme. The fact that NAMA purported to comply with clause 24, or that Anglo and the Bank of Ireland joined the Transfer, did not alter the result. If clause 40.3 applied, it disapplied clause 24 as the contractual transfer regime.
4. Knightsbridge Acquisition Facility. The same conclusion applied. Although NAMA was the original lender, the facility replaced an earlier Anglo loan. In a commercial sense, NAMA stood in place of Anglo, so clause 40.3(b)(1)(ii) applied.
5. The court was attracted by, but did not decide, an alternative argument that clause 24.3(a) did not include NAMA as transferee because it would require NAMA’s own consent and clause 1.2 contemplated a contrary indication. The point had not been fully argued. Lewison LJ relied on the importance of the agreement’s overall scheme, consistent with Lord Mance’s approach in Re Sigma Finance Corporation [2009] UKSC 2; [2010] 1 All ER 571. The appeals were accordingly allowed.

• Court of Appeal (Civil Division): In [2012] EWCA Civ 864, the appeals were allowed. Clause 40.3 disapplied the relevant transfer restrictions in relation to both the Facilities and the Knightsbridge Acquisition Facility.
• High Court of Justice, Chancery Division: In [2012] EWHC 129 (Ch), David Richards J held that clause 40.3 did not apply and that the restrictions in clauses 24.2 and 24.3 did apply. Permission to appeal was granted.