Property development company St John Spencer Estates & Development Ltd today lost an appeal against an administration order granted by the high court earlier this month.
Leveson LJ refused it permission to appeal Deputy Judge Robert Ham QC’s decision to appoint administrators sought by the AIB Group, which claims to be owed £11,459,211 and a further £1,951,223 in interest by the company.
St John Spencer argued that administrators should not be appointed because the bank is not a current creditor of the company; the bank released its debt in a facility letter in July 2009 in return for a profit share agreement relating to the sale of properties. It claimed that the bank later repudiated that agreement, it accepted the repudiation, and so the company was discharged from any liability to the bank.
However, Leveson LJ ruled that, even if repudiation of the later agreement had taken place, that did not mean that the debt had “disappeared into thin air”.
He found that the appeal had no prospect of success.
In his ruling, the deputy judge said that St John Spencer, whose directors are Alan Deville and Nigel Lewis, entered into a CVA in January 2011. He said that the company’s relationship with the bank began in 2005 when it was looking for a “risk funder” who would provide investment in connection with its portfolio of properties in return for a profit share.
The bank sought to appoint administrators as the holder of a floating charge created by a November 2005 mortgage debenture granted by St John Spencer in return for an initial loan of £9.25m, later increased to £15.91m.
However, he said that the company complained that the bank’s failure to make facilities available on a risk funding basis, which made it unable to expand its development programme, had led to it being unable to commit to the purchase of 300 plots and costing it losses of up to £23m.
The deputy judge ruled: “I find nothing in the letter to release the debt owed to the bank, either expressly or by implication. On the contrary, it is plain from the facility letter that the bank’s debt is maintained.”
In the Matter of St John Spencer Estates & Development Ltd Court of Appeal (Leveson LJ) 31 August 2012
Adam Al–Attar (instructed by Kennedys Law LLP) for the applicant (AIB Group (UK) plc)
Lexa Hillard QC (instructed by Harris Cartier LLP) for the respondent (St John Spencer)
Court of Appeal backs appointment of administrators for St John Spencer Estates & Development
Property development company St John Spencer Estates & Development Ltd today lost an appeal against an administration order granted by the high court earlier this month. Leveson LJ refused it permission to appeal Deputy Judge Robert Ham QC’s decision to appoint administrators sought by the AIB Group, which claims to be owed £11,459,211 and a further £1,951,223 in interest by the company. St John Spencer argued that administrators should not be appointed because the bank is not a current creditor of the company; the bank released its debt in a facility letter in July 2009 in return for a profit share agreement relating to the sale of properties. It claimed that the bank later repudiated that agreement, it accepted the repudiation, and so the company was discharged from any liability to the bank. However, Leveson LJ ruled that, even if repudiation of the later agreement had taken place, that did not mean that the debt had “disappeared into thin air”. He found that the appeal had no prospect of success. In his ruling, the deputy judge said that St John Spencer, whose directors are Alan Deville and Nigel Lewis, entered into a CVA in January 2011. He said that the company’s relationship with the bank began in 2005 when it was looking for a “risk funder” who would provide investment in connection with its portfolio of properties in return for a profit share. The bank sought to appoint administrators as the holder of a floating charge created by a November 2005 mortgage debenture granted by St John Spencer in return for an initial loan of £9.25m, later increased to £15.91m. However, he said that the company complained that the bank’s failure to make facilities available on a risk funding basis, which made it unable to expand its development programme, had led to it being unable to commit to the purchase of 300 plots and costing it losses of up to £23m. The deputy judge ruled: “I find nothing in the letter to release the debt owed to the bank, either expressly or by implication. On the contrary, it is plain from the facility letter that the bank’s debt is maintained.” In the Matter of St John Spencer Estates & Development Ltd Court of Appeal (Leveson LJ) 31 August 2012Adam Al–Attar (instructed by Kennedys Law LLP) for the applicant (AIB Group (UK) plc)Lexa Hillard QC (instructed by Harris Cartier LLP) for the respondent (St John Spencer)
