[2025] EWHC 2107 (Comm)

Under the Facility Agreement, the Claimant advanced a term loan facility in the sum of US$33,410,000 to the Borrower, who is the son of the Second Defendant and is an art dealer and collector and film producer based in the United Kingdom.

The First and Second Defendants are Australian nationals who travel between residences in Miami Beach, New York City, and Long Island, New York.

The Claimant contends that the First and Second Defendants provided personal guarantees under the Facility Agreement, each limited to a maximum amount of US$2,500,000.

The Borrower entered into the Facility Agreement in order to borrow funds to settle legal proceedings before the Royal Court of Jersey involving a former business partner. The Borrower (and one of his companies) agreed to a settlement requiring him to pay US$20,500,000 by 14th June 2021. This followed a trial in May 2021 and before judgment was delivered. As it happened, notwithstanding the settlement, in September 2021, the Jersey Court stated that it would issue a judgment because it would be in the public interest to have the Borrower’s dealings exposed. In its final judgment handed down on 30th September 2022 ([2022] JRC 202), the Jersey Court recorded its finding that the Borrower was a “deliberately dishonest witness” (para. 185).

In his negotiations with the Claimant, the Borrower was advised by Mr Conrad Purcell of Bird & Bird LLP.

Under the Facility Agreement, the Borrower provided security for his obligations to repay the loan by pledging in favour of the Claimant artworks of significant value, together with certain intellectual property and other assets. On about 9th June 2021, the Claimant indicated that in addition to the security to be provided by the Borrower, it required a personal guarantee from each of the First and Second Defendants.

On 10th June 2021, the First and Second Defendants applied their signatures. However, the accounts relating to the signing of the Facility Agreement given by the First and Second Defendants on the one hand and by the Claimant on the other hand are strikingly different.

According to the First and Second Defendants,

According to the Claimant, whilst Mr Chadowitz does recall having a discussion with the Borrower and the First and Second Defendants in their bedroom at the Connaught Hotel, he was not present when they signed the execution pages on 10th June 2021, nor did he witness the First and Second Defendants sign any other document; Mr Chadowitz did not provide any signature pages to the Defendants, nor did he pressurise them; the Borrower, not Mr Chadowitz, brought the execution pages to the Connaught Hotel to be signed by the First and Second Defendants on 10th June 2021 (Mr Khatoun’s second witness statement, para. 4-6).

On 10th June 2021, Katz & Co (London) LLP sent to the Claimant a Statement of High Net Worth.

During the weekend of 11th to 14th June 2021, Mr Andrew Hallgarth of Bird & Bird LLP interacted with the First and Second Defendants by telephone (Ms Ho’s third witness statement, para. 15). The First and Second Defendants deny having formally engaged Mr Hallgarth to advise them and deny that they received adequate advice from Mr Hallgarth (Ms Ho’s second witness statement, at para. 19-20). By contrast, Mr Khatoun maintained in his first witness statement (para. 30) that the First and Second Defendants “received independent legal advice before the Facility Agreement was executed” and that on 13th June 2021, Mr Hallgarth, described as “an independent partner at Bird & Bird LLP”, “provided a letter to Regera by which it was confirmed that Mr Hallgarth had discussed and explained to the Defendants the practical and legal implications of entering into their respective Guarantees …”.

There followed correspondence involving the Borrower, Mr Purcell, Mr Hallgarth and others, but not the First and Second Defendants. For example, on 11th June 2021, Mr Hallgarth wrote:

“I have spoken at length with Mr Cohen and more briefly with Ms Valmorbida [the First and Second Defendants]. It has proved a more iterative process than might be expected as Mr Cohen has become more familiar with the terms of the document.

It is now clear that:

A.

termination of the Guarantee after 30 months rather than 24 months could be accepted.

B.

leaving the Events of Default alone could also be accepted as this goes to acceleration of the loan and not immediate recourse to the Personal Guarantors.

However, the instructions now are that the Personal Guarantors should neither make any representations nor give any undertakings.

In short, the Lender is expected to take its own view on the entry into of the documents and the credit of the Personal Guarantors and their ability to perform and cannot rely on representations or undertakings from the Personal Guarantors.

This therefore means that there are two approaches:

1.

execute a Facility Agreement that omits the Personal Guarantors and execute a separate short guarantee agreement consisting of little more than Clause 19 and the Boiler Plate; or

2.

amend or replace the Facility Agreement such that the definition of Obligors only includes the Personal Guarantors when used in Clause 19 (Guarantee and Indemnity), Clause 28 (Events of Default) and in essential boiler plate,

either way, I think all parties will need to sign.

It will also be necessary to also deal with the limit on the duration of the Guarantee and the references to Hamptons Property and the related Hamptons First Ranking Debt and related Permitted Security will need revision. On balance, the Personal Guarantors’ position is not unreasonable. They gratuitously assume a risk for the benefit of a well-rewards commercial party. They will not however assume burdens in excess of the assumption of that risk.”

The terms of the draft Facility Agreement were then the subject of proposed amendments, culminating in an email from Mr William Jones of Beaumont (on behalf of the Claimant) and dated 13th June 2021 (the day before completion of the Facility Agreement), which email circulated on behalf of the Claimant to Mr Purcell, Mr Hallgarth, and the Second Defendant, amongst others, stated that:

“Each of the sender of this e-mail and the addressees of this e-mail is a party to a Facility Agreement relating to a loan by Regera S.a r.l. (the “Lender”) to Andrew Valmorbida (the “FA”).

Further to conversations between the parties and the counsel, each party sending or acknowledging this e-mail, acknowledges that a number of provisions of the FA relating to the Mr Cohen and MV (as defined in the FA) do not reflect the nature of the arrangements whereby Mr Cohen and MV, by reason of familial ties, have agreed on a non-fee paying basis to (i) give certain limited guarantees (in full knowledge and acceptance that such guarantees may be called up to agreed limits in the event of default by the Borrower in respect of his obligations) without having knowledge of the status or commercial activities of the other parties and (ii) security over certain of their assets to secure such guarantee obligations. Accordingly, each party sending or acknowledging this e-mail agrees that this e-mail constitutes a collateral contract to the FA whereby:

1.

that within 14 days they shall execute an amendment to the FA to perfect the changes raised below and such consequential changes as shall be necessary (and the FA as so amended the “Revised FA”); and

2.

to the extent that there is any conflict between the FA and the terms of the Revised FA, the terms of the Revised FA shall prevail and until the Revised FA is executed, for this purpose, there shall, as between the Lender, Mr Cohen and MV be deemed to be in place a Revised FA reflecting the terms below …”

The Cohen email then detailed further changes to the Facility Agreement in relation to the terms of the personal guarantees required from each of the First and Second Defendants, including a provision that “Clause 31.2 communications relating to Mr Cohen or MV [the First and Second Defendants] shall be sent to an appropriate address they provide to the Lender and monitor with cc. to the Borrower [To be confirmed - but should include both the Miami Beach Property and the New York address plus [specified emails addresses]”. The email concluded by stating that “The below parties will provide their agreement to the foregoing by email confirmation”, and then named amongst others the First and Second Defendants.

As the Cohen email states, it proceeds on the basis that it acted as a collateral contract amending the terms of the Facility Agreement. The parties proceeded in this application on the same assumption.

Later, on 13th June 2021, Mr Hallgarth replied to Mr Jones’s email stating that:

“Further to a lengthy call connected with the provision of independent legal advice, it appears that the address of the Miami Beach stated in the ‘Cohen E-mail’ is incorrect. For all purposes it should be treated as being "100 South Pointe Drive, Town House No. 10, Miami Beach, Florida 33139, USA …”

The above exchange between Mr Jones and Mr Hallgarth on 13th June 2021 was described by the parties as “the Cohen Email”.

At 1651 hours, on 13th June 2021, Mr Hallgarth sent an email to Mr Jones (on behalf of the Claimant) and the Borrower, and others, stating that:

“On the instructions of, and on behalf of, Maria Valmorbida and Phillip Cohen, I issue the following confirmation:

Maria Valmorbida and Phillip Cohen refer to the facility agreement between Andrew Valmorbida, ourselves, Regera S.a.r.l. and others in connection with a loan of US$32,960,000 (as attached to the letter confirming our receipt of independent legal advice from Bird & Bird LLP) (the “Facility Agreement”).

Conditional upon:

1.

all parties to that Facility Agreement acknowledging and agreeing to the e-mail of William Jones dated 13 June 2021 timed at 00.31 BST as corrected with respect to an address by the e-mail of Andrew Hallgarth on 13 June 2021 (the “Cohen E-mail”) (the text of which was attached to to the letter confirming our receipt of independent legal advice from Bird & Bird LLP);

2.

the satisfaction of all other conditions precedent to the utilisation of the loan in full; and

3.

the utilisation of the loan in full occurring as contemplated on the morning of 14 June 2021,

Maria Valmorbida and Phillip Cohen release their signatures to the Facility Agreement.

Maria Valmorbida and Phillip Cohen understand that in addition to the signatures to the Facility Agreement referred to above, the other parties to the Facility Agreement (or their counsel) may hold the signatures of Maria Valmorbida and/or Phillip Cohen in respect of other documents that it was contemplated might be needed (the “Other Signatures”). The Other Signatures are not released and should be delivered to Andrew Hallgarth immediately since the Facility Agreement as supplemented by the Cohen E-mail sets out and governs any guarantee given to Regera S.ar.l. by Maria Valmorbida and Phillip Cohen.

I trust that this concludes the involvement of my Clients and me today.

We look forward to confirmation that the utilisation will occur and the draft of agreement that will more fully document the provisions of the Cohen E-Mail.”

Upon receipt of this email, the Claimant (by Mr Jamie Liew of Fidera Ltd) queried whether the conditional release of the signatures depended on the satisfaction of a condition precedent which the Claimant had waived. Mr Hallgarth replied that he was happy to modify the language of the above email so that it read:

“Conditional upon:

…

2.

the satisfaction of all other conditions precedent to the utilisation of the loan (each a “CP”) in full (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) …

Maria Valmorbida and Phillip Cohen release their signatures to the Facility Agreement …”

On 14th June 2021, the Facility Agreement was finalised and the loan was advanced to the Borrower placing him in funds to pay the settlement sum due in the Jersey proceedings. The signature page signed by each of the First and Second Defendants was released by Mr Hallgarth and attached to the concluded Facility Agreement, subject to certain conditions.