McKillen v Maybourne Finance Ltd & Anor

The Court of Appeal allowed the appellants' appeal and held that, properly construed, clause 40.3(b) of the Facilities Agreement disapplied the transfer restrictions in clause 24 (including the consultation/notification requirement in clause 24.3(a)(ii)) insofar as NAMA (and its affiliate NALM) were exercising rights, powers or discretions under the Finance Documents in place of a lender. The court adopted a purposive approach to the National Asset Management Agency Act 2009, in particular section 139, which it read as intended to remove impediments to NAMA's ability to dispose of acquired bank assets. The court also concluded that the Knightsbridge Acquisition Facility was to be treated in the same way as the other Facilities for these purposes.

This appeal arose from a preliminary issue in proceedings brought by Mr McKillen (a petition under section 994 Companies Act 2006 and a related Part 7 claim) challenging the effectiveness of a novation/transfer on 27 September 2011 by which NALM, Anglo Irish Bank and Bank of Ireland purported to transfer rights under a consolidated Facilities Agreement to Maybourne Finance Limited. The Facilities Agreement (1 April 2011) had consolidated existing loans to Coroin Limited and created a Knightsbridge Acquisition Facility provided by NAMA (through NALM). The preliminary issues were whether clause 40.3 of the Facilities Agreement applied to the Transfer and whether the transfer restrictions in clauses 24.2 and/or 24.3 applied.

The Court set out the statutory context: NAMA had acquired the loans under the National Asset Management Agency Act 2009 (the Act). The Act contains provisions (notably sections 90, 99, 110 and 139) dealing with acquisition and the effect of acquisition and expressly contemplated NAMA's power to dispose of acquired assets notwithstanding contractual restrictions.

The issues framed were (i) whether clause 40.3 applied to the Transfer and (ii) whether clauses 24.2/24.3 applied. The judge below had held clause 40.3 did not apply and that clauses 24.2/24.3 did apply. The Court of Appeal disagreed. It adopted a purposive interpretation of section 139 of the Act as intended to remove impediments to NAMA disposals and treated the Act as admissible context for interpreting the Facilities Agreement. The Master of the Rolls concluded that clause 40.3(b)(1)(ii) should be read to permit NAMA to exercise any rights, powers or discretions under the Finance Documents in place of a lender, and thereby disapply clause 24 transfer restrictions in respect of NAMA disposals. The Knightsbridge Acquisition Facility was treated consistently with the other Facilities. The court noted drafting infelicities but gave weight to commercial and statutory purpose.

Relief sought: declaration/argument by Mr McKillen that the Transfer was ineffective because Maybourne was not a permitted transferee and consultation with Coroin had not occurred; the appellants sought to uphold the Transfer. The court allowed the appeal, holding the transfer restrictions did not prevent the Transfer.

Appeal allowed. The court held that clause 40.3(b) disapplied the transfer restrictions in clause 24 so that NAMA (and its affiliate) could exercise rights, powers or discretions under the Finance Documents in place of a Lender and effect the Transfer without compliance with clause 24.3(a)(ii). The court also interpreted section 139 of the National Asset Management Agency Act 2009 purposively as aimed at removing impediments to NAMA's disposals and concluded the Knightsbridge Acquisition Facility was to be treated the same as the other Facilities.

Appeal from the High Court of Justice, Chancery Division (David Richards J) (Claim No HC11C03437). The judge below handed down reasons at [2012] EWHC 129 (Ch); this Court allowed the appeal in [2012] EWCA Civ 864.