BL-2022-000438 - [2025] EWHC 2212 (Ch)

Fecha: 22-Ago-2025

The payment waterfall under the JVA

E.2.

The payment waterfall under the JVA

51.

There was also a dispute between the parties in relation to clause 5(e) of the JVA which provides, in material parts: “The Deemed Purchase Price shall not be repayable until the repayment of the PD Loan in full on a pari passu basis…”. The Claimant contended that the words “pari passu” should be ignored and the effect of this clause was that the PD Loan must be discharged first ahead of any payment to the Company. The Defendant argued that the clause provided for pari passu distribution.

52.

I disagree with the Claimant’s interpretation of this clause. I recognise that there is some difficulty with interpreting the language “The Deemed Purchase Price shall not be repayable until the repayment of the PD Loan in full on a pari passu basis” (emphasis added). This could be interpreted to mean that the Deemed Purchase Price was not repayable at all until the repayment of the PD Loan in full. However, such a construction would ignore the choice of the words “on a pari passu basis” and indeed would be inconsistent with that concept.

53.

As a matter of construction, I understand that I ought to seek to give meaning to all of the words used by the parties. I have reached the conclusion that the reference to “until the repayment of the PD Loan in full” (emphasis added) is intended to cover the fact that:

(1)

the PD Loan might vary in amount because it depended on the amount which the Company required to complete the development. If the Company reasonably required sums above CYP 800,000 to complete the development then, absent any triggering of the automatic repayment provisions under the JVA, Mr Dunn was required under clause 5(a) to lend it.

(2)

interest was being charged on the PD Loan.

54.

In the circumstances, I consider that the phrase “until the repayment of the PD Loan in full” means that the pari passu exercise was intended to bring into account all of the sums advanced by Mr Dunn including interest. I consider that clause 5(e) envisaged a pari passu repayment exercise where any repayments were made based on the relative contributions of the Deemed Purchase Price on the one hand and the entirety of the PD Loan (including interest) on the other.

55.

In any event, it seems to me that such an arrangement was subject to the overall profit and loss sharing provisions in clause 6(e). In the circumstances, however sums were distributed under clause 5(e), there was still a levelling-up process under the profit sharing arrangements.