Valla PTC Ltd v Faiman

The claimant sought permission to issue and an order for summary judgment under CPR Part 24 in respect of a loan consolidation agreement (LCA). The court considered jurisdiction under CPR 24.4(1) and the merits of the summary judgment application. The defendant had failed to execute agreed security by the contractual deadline, the claimant accelerated the debt on an event of default and valid service was proved (including service at addresses provided under section 1140 of the Companies Act 2006). The defendant had not filed an acknowledgement of service or defence but had in correspondence and a reply form accepted that he owed the debt; he also executed a subsequent security agreement acknowledging the sums due. The court held there was no realistic defence and no compelling reason to require a trial and therefore granted summary judgment.

Background and parties: The claim arises from a Loan Consolidation Agreement (LCA) dated 3 September 2019 under which the claimant agreed to consolidate prior indebtedness and the defendant agreed to repay EUR 29,763,040 by 31 January 2020. The LCA contained English law and English jurisdiction clauses and required the defendant to pledge specified security (shares in Energicon) by 3 October 2019. The defendant failed to execute the security documentation, the claimant declared an event of default and accelerated the loan, and no payment has been made.

Nature of the application: The claimant applied for permission to issue an application for summary judgment and for summary judgment on the merits under CPR Part 24 because the defendant had not filed an acknowledgment of service or a defence. The claimant sought a reasoned judgment which would be more readily enforceable internationally.

Issues framed by the court:

• whether permission should be given under CPR 24.4(1) to apply for summary judgment without an acknowledgment of service, and
• whether summary judgment on the merits should be granted under the ordinary Part 24 test (i.e. whether the defendant had no real prospect of defending the claim and whether there was any other compelling reason for a trial).

Court's reasoning and conclusion: The court found valid service had been effected (including under section 1140 of the Companies Act 2006), the defendant was plainly aware of the proceedings, and PD24 requirements for a Part 24 application were met. Authorities dealing with permission to bring combined applications were applied to permit the application to proceed. The documentary evidence included the defendant's partial Reply Form acknowledging the debt, correspondence accepting service and owing the debt, and a security agreement executed about 2 July 2020 expressly acknowledging the sums outstanding. The defendant's oral contention that entry of judgment would destroy his company and so be counterproductive was unsupported by evidence and did not engage CPR 24.2(b) as a reason for trial. On the merits the claimant established the debt and interest owing and the defendant had no arguable defence. The court therefore granted summary judgment for the claimant. The judgment recorded the principal and interest sums due as at the date of hearing and directed figures be updated for exchange-rate changes when ordering the judgment amount.

Summary judgment was granted for the claimant. The court gave permission under CPR 24.4(1) to proceed without an acknowledgement of service because service was valid, the defendant was aware of the proceedings and there was a legitimate purpose in seeking a reasoned judgment. On the merits the claimant proved the debt, interest and default; the defendant had no real prospect of defending the claim and his assertion that judgment would destroy his company was unsupported by evidence and did not justify a trial.