McKillen v Misland (Cyprus) Investments Ltd & Ors

Statutory powers permitting NAMA to dispose of acquired bank assets do not, without clear contractual language, remove contractual restrictions governing the class of permitted transferee. The expression “at law or in equity” does not ordinarily include contractual restrictions. A statutory provision disapplying requirements for consent, notice or documents does not thereby disapply a contractual restriction on the identity of a transferee.

Where a finance agreement disapplies transfer provisions for transfers to NAMA and for the exercise of rights by NAMA in place of a lender, that language does not necessarily extend to transfers by NAMA. The precise contractual language, read in its commercial and statutory context, remains decisive.

The claimant, a minority shareholder in Coroin Limited, brought a petition under section 994 of the Companies Act 2006 and an associated action concerning the transfer of secured loan facilities to Maybourne Finance Limited, a company within the Barclay interests.

The facilities had been acquired beneficially by NAMA and were governed by a Facilities Agreement. The claimant alleged that the transfer breached clauses 24.2 and 24.3, which restricted the class of permitted transferee and required NAMA’s consent and consultation with the borrower. The defendants relied on clause 40.3, which contained special provisions concerning transfers to NAMA and the exercise of rights by NAMA.

The court tried as a preliminary issue whether clause 40.3 applied to the transfer and whether the restrictions in clauses 24.2 and 24.3 consequently applied. An earlier judgment on other preliminary issues was given in [2011] EWHC 3466 (Ch), and was under appeal.

The court answered “No” to whether clause 40.3 applied to the transfer to Maybourne Finance Limited and “Yes” to whether the restrictions in clauses 24.2 and 24.3 applied.

1. The National Asset Management Agency Act 2009 formed part of the admissible background to construing the Facilities Agreement. NAMA’s statutory purposes and powers explained its involvement, but did not determine the contractual construction.

2. Section 139 of the National Asset Management Agency Act 2009 is a composite provision. The words permitting disposal of an acquired bank asset “to any person” do not create an unrestricted freedom from all contractual restrictions. Section 139(a) concerns restrictions at law or in equity and does not ordinarily include contractual restrictions. Section 139(b) concerns contractual requirements for consent, notice or documents, not contractual limits on the categories of permitted transferee.

3. Clause 40.3(b), read with clause 40.3(a), was directed principally to the period in which NAMA was the beneficial but not the legal holder of the facilities. Clause 40.3(b)(i) dealt with transfer to NAMA. Clause 40.3(b)(ii) enabled NAMA to exercise rights, powers and discretions in place of a lender or agent. The words “in place of” were not apt to describe NAMA exercising its own rights after becoming legal owner through novation, nor did they clearly cover a transfer by NAMA.

4. The contrary construction made clause 40.3(b)(i) unnecessary, conflicted with the restricted definition of “Lender”, and failed to provide a sensible regime for the Knightsbridge Acquisition Facility. If the parties intended to exempt transfers by NAMA from clause 24, they could readily have said so.

5. NAMA possessed statutory power to transfer acquired facilities by novation, including under section 139, but that power did not disapply the contractual restrictions in clauses 24.2 and 24.3. The transfer was therefore subject to those restrictions. The remaining factual issues concerning compliance with them were left for the full trial.

The judgment described an earlier decision on other preliminary issues in [2011] EWHC 3466 (Ch), which was under appeal. The present decision determined a separate preliminary issue at first instance.