AMC III Purple BV v Amethyst Radiotherapy Ltd

A contractual no-set-off clause may exclude both legal and equitable set-off where its wording and purpose support that construction. A lender’s alleged failure to facilitate refinancing does not ordinarily prevent enforcement of repayment obligations unless cooperation is an express or implied contractual condition. A clause postponing the application of recovered proceeds does not necessarily postpone the creditor’s right to recover them. A case-management stay in favour of related arbitration requires rare and compelling circumstances, particularly where the contract confers exclusive English jurisdiction and summary judgment is appropriate.

The claimant sought summary judgment against the defendant under a mezzanine facility agreement and a supplemental loan agreement. It sought declarations that failures to pay interest and principal constituted Events of Default, together with payment of outstanding interest, principal and contractual default interest.

The defendant relied on alleged equitable set-off, the claimant’s alleged obstruction of refinancing, and the asserted subordination of the supplemental loan. It also sought stays of the proceedings and enforcement pending an ICC arbitration involving related parties. The central issues were the construction and effect of the contractual no-set-off and subordination provisions, and whether the arbitration justified either form of stay.

1. Summary judgment. The claimant was entitled to summary judgment for declarations that the unpaid MFA interest and the unpaid principal and interest under the SLA constituted Events of Default. It was also entitled to judgment for the outstanding MFA interest and the principal and interest due under the SLA.
2. No set-off. Clause 27.6 of the MFA excluded equitable as well as legal set-off. Its wording applied to the calculation and making of payments under the Finance Documents and was not confined to sums technically due after any equitable set-off. The equivalent provision in clause 8.1 of the SLA likewise excluded equitable set-off. The conclusion was supported by Credit Suisse International v Ramot Plana OOD [2010] EWHC 2759 (Comm) and Caterpillar (NI) Ltd v John Holt & Co. (Liverpool) Ltd [2013] EWCA Civ 1232.
3. Refinancing. The principle associated with Mackay v Dick (1881) 6 HL 251 did not apply. Payment under either agreement was not expressly or impliedly dependent on the lender cooperating with alternative financing. The claimant’s alleged failure to facilitate refinancing therefore provided no defence.
4. SLA subordination. Clause 4.1 made the SLA principal repayable after 36 months. Clause 7.3 postponed the application of proceeds recovered from the defendant until the MFA had been repaid, but did not postpone the claimant’s right to recover sums due. The background materials did not justify a different construction.
5. Stays. A case-management stay was refused. Under CPR r. 3.1(2)(f) and section 49(3) of the Senior Courts Act 1981, the jurisdiction existed, but the required rare and compelling circumstances identified in Reichhold Norway ASA v Goldman Sachs International [2000] 1 WLR 173 were absent. The exclusive English jurisdiction clauses, the claimant’s entitlement to summary judgment, the early stage of the arbitration and the different parties were important considerations. A stay of enforcement under CPR r. 83.7 was also refused because no special circumstances made enforcement inexpedient. The declarations could not in any event be stayed.