[2025] EWHC 2107 (Comm)

Are the First and Second Defendants parties to the Facility Agreement?

The First and Second Defendants contend that they are not parties to the Facility Agreement having regard to (a) the circumstances of how they signed the Facility Agreement and (b) the basis on which they agreed to “release” their signatures, namely that the release was conditional upon “the satisfaction of all other conditions precedent to the utilisation of the loan in full (each a “CP”) or if a CP is not satisfied, such CP has been either (a) waived unconditionally or (b) waived on conditions that allow for such conditions to be satisfied in a time frame that is reasonable for such CP and conditions”.

As regards the circumstances of how they signed the Facility Agreement, the First and Second Defendants’ account surrounding their purported execution of the Facility Agreement are set out in Ms Ho’s second witness statement (para. 11-17) and third witness statement (para. 9-10). The First and Second Defendants’ case is that they did not intend legally to be bound by the Facility Agreement as the agreement was still subject to amendment and there was no single, authoritative version of the Facility Agreement existing at the point of signature (R (on the application of Mercury Tax Group & Anor) v. HM Revenue & Customs Commissioners [2008] EWHC 2721 (Admin); [2009] STC 743, para. 38-39; Bioconstruct GmbH v Winspear [2020] EWHC 0007 QB, para. 126.6-126.7).

The First and Second Defendants contend that if they did not sign the Facility Agreement, then in any event, the requirements of section 4 of the Statute of Frauds Act 1677 pertaining to the guarantee were not satisfied.

The Claimant’s evidence offers a different version of events (Mr Khatoun’s second witness statement, para. 4-6).

As regards the basis on which their signatures were released, the First and Second Defendants’ case is that the conditions for the release of the signatures were not satisfied, because the relevant conditions precedent were not satisfied or were not waived unconditionally or waived on condition that they would be satisfied within a reasonable time frame. Indeed, as I understand it, the Claimant’s case is that the conditions precedent were not satisfied (see the letters dated 14th June 2021 and 5th July 2021). Therefore, it is argued, the First and Second Defendants did not agree to nor execute the Facility Agreement and are therefore not liable under any purported personal guarantees.

In answer to this argument, the Claimant maintains that the conversion of the conditions precedent into conditions subsequent fell within one of the exceptions and moreover Mr Hallgarth in his email dated 12th July 2021 accepted that the signatures had been released.

I am unable to dismiss the First and Second Defendants’ arguments given the nature of their allegations and the evidence provided. I do not consider that I am in any position to resolve these issues based on the evidence currently available other than to conclude that the Claimant has not satisfied me that the Facility Agreement is binding on the First and Second Defendants so that service on Law Debenture is to be treated as service on the First and Second Defendants.

In these circumstances, based on the evidence currently available, I find that the Claimant has not discharged the burden of proof on the balance of probabilities that the Facility Agreement is binding on the First and Second Defendants. This is an issue which should be tried.