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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Argo Capital Investors Fund Spc v Essar Steel Ltd [2005] EWHC 2587 (Comm) (18 November 2005) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2005/2587.html Cite as: [2005] EWHC 2587 (Comm)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/11/2005

MR JUSTICE CHRISTOPHER CLARKE:

1. By an Agreement dated 7^th March 1997 ("the facility agreement") a syndicate of 9 banks, listed in Schedule 1 to the Agreement, agreed to extend to Essar Steel Ltd ("Essar") a loan facility of $ 40,000,000 to be drawn down in one advance. One of those banks was KDLC Leasing Singapore Pte. Ltd ("KDLC") whose commitment was $2,000,000. The Banks appointed Bayerische Landesbank Girozentrale, Singapore Branch ("Bayerische") as their agent. The advance was drawn down on 20^th March 1997.

The terms of the facility agreement

2. By clause 3.2 of the facility agreement the rights and obligations of each Bank under the agreement were to be several. By clause 3.3 the outstanding amount owed to each Bank at any given date was to be a separate and independent debt and each Bank had the right to protect and enforce its rights under the agreement without joining any other Bank or the Agent. Under the agreement the advance was to be repaid 24 months later (clause 9). Interest was to be paid at 1% above LIBOR at six monthly intervals.
3. Clause 20.1 provided that payment of principal and interest was to be made to the Agent. Clause 20.2 of the Agreement provided:

"Subject to Clause 20.4 each payment received by the Agent for the account of another person pursuant to clause 20.1 shall:

…

(ii) in the case of any other payment [i.e. a payment other than one for the account of the Borrower], be made available by the Agent to the person for whose account such payment was received (in the case of a Bank for the account of its Lending Office) for value the same day by transfer to such account of such person with such bank as such person shall have previously notified to the Agent"

4. Clause 27 provided as follows:

"27 BENEFIT OF THE AGREEMENT

27.1. This Agreement shall be binding upon, and inure to the benefit of each party hereto and their respective successors, Transferees and assigns. The Borrower shall not be entitled to assign, transfer or otherwise deal in any way with all or any of its rights, benefits and obligations under this Agreement. Any Bank may, subject to the execution and completion of such documents as the Agent may specify and with notice to the Borrower, assign all or any of its rights and benefits hereunder or, subject to the payment to the Agent of a transfer fee of $ 250, transfer in accordance with Clause 27.2 all or any of its rights, benefits and obligations hereunder.

27.2. If any Bank wishes to transfer all or any of its rights, benefits and/or obligations hereunder, then such transfer may be effected by the delivery to the Agent of a duly completed and duly executed Transfer Certificate in which event, on the later of the effective date of transfer (the "Transfer Date") specified in such Transfer Certificate and the third business day after the date of delivery of such Transfer Certificate to the Agent:

(i) to the extent that in such Transfer Certificate the Bank party thereto seeks to transfer its rights and obligations hereunder, the Borrower and such Bank shall be released from further obligations towards one another hereunder and their respective rights against one another shall be cancelled (such rights and obligations being referred to in this Clause 27.2 as "discharged rights and obligations");

(ii) the Borrower and the Transferee party thereto shall assume obligations towards one another and/or acquire rights against one another which differ from the discharged rights and obligation only insofar as the Borrower and the Transferee have assumed and/or acquired the same in place of the Borrower and such Bank; and

(iii) the Agent, the Arrangers, the Co-Arrangers, the Transferee and the other Banks shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the Transferee been an original party hereto as a Bank with the rights and/or obligations acquired or assumed by it as a result of such transfer."

5. As can be seen that clause makes a clear distinction between an assignment of a Bank's rights and benefits under the agreement, which does not effect a novation of the agreement, and a transfer which does.
6. Under the agreement "Transferee" has a defined meaning namely a "bank or other financial institution to which a Bank seeks to transfer all or part of such Bank's rights and obligations hereunder in accordance with the provisions of this Agreement". In The Argo Fund v Essar Steel Ltd [2004] EWHC 128 Steel, J, at an interlocutory stage, doubted whether the then claimant, a fund managed by the same manager as the claimant ("Argo"), was a "bank or other financial institution". At trial Aikens J held that it was; [2005] 2 Lloyd's Rep 203.
7. The facility agreement was subject to English law. By clause 32.5 it was:

"..irrevocably agreed for the exclusive benefit of each of the Agent …and the Banks that the courts of England are to have non exclusive jurisdiction to hear and determine any suit, action or proceedings, and to settle any disputes, which may arise out of or in connection with this Agreement and that accordingly, any suit, action or proceeding arising out of or in connection with this Agreement may be brought in such courts."

8. By clause 32.5 of the facility agreement the Borrower agreed:

"…that the process by which any suit, action or proceedings is begun may be served on it by being delivered in connection with any suit, action or proceedings in England, to the Law Debenture Trust Corporation p.l.c. at Princes House, 95 Gresham Street, London EC2V 7LY or otherwise to its principal place of business in London for the time being. The parties agree that the provisions of this Clause 32.5. shall be without prejudice to service of process in any other manner permitted by the applicable law".

Essar

9. Essar is an Indian company registered in the State of Gujarat and listed on the National Stock Exchange. Its business is the manufacture of hot briquetted iron, hot rolled steel coils and other similar products. On 22^nd March 1999 it was due to repay the amount advanced under the facility. By then the price of steel had collapsed dramatically and Essar could not, and did not, repay. By March 2003 a restructuring had been proposed in which Essar's unsecured creditors would receive, at their election, either an immediate payment of 25% of the face value of the principal of their debt or in March 2018 full payment with interest at 0.25% per annum payable semi annually.

KDLC assigns to Dresdner

10. On 16^th August 2004 KDLC entered into an Assignment Agreement ("the First Assignment Agreement") with Dresdner Kleinwort Wasserstein Ltd ("Dresdner"). The Agreement contained the following recitals:

"WHEREAS, the Transferor is the legal and beneficial owner with full title guarantee of the Assigned Asset and has the right to receive certain amounts of principal and interest with respect thereto pursuant to the agreements with various third parties.

WHEREAS, the Transferor desires to transfer the Assigned Asset to the Transferee, together with Accrued Interest (as hereinafter defined)"

11. The terms in capital letters, together with other terms were defined in clause 1. Thus:

(a) "Assigned Asset" means "all right, title and interests in the principal amount of the loan, deposit, advance, security, guarantee or other extension of credit described in the Asset Schedule attached hereto";

(b) "Asset Documentation" means "the agreement and/or instrument described in the Asset Schedule under which the Assigned Asset is outstanding or evidenced, as such agreements may from time to time be amended, supplemented or replaced";

(c) "Asset Schedules" means "with respect to the Assigned Asset the schedules attached hereto relating to the Assigned Asset and setting forth the characteristics of the Assigned Asset…"

12. Clause 2 was headed "Assignment" and provided:

"Subject to payment by the Transferor of the consideration specified in the Asset Schedule…the Transferor agrees to assign and the Transferee agrees to take, with effect from 25^th August 2004.. an assignment of the Assigned Amount, together with Accrued Interest, without recourse to the Transferor save as provided herein ….

13. Schedule A is headed "The Asset Schedule". It had the following definitions:

"Assigned Asset" US$ 40 Million Facility signed on 07.03.1997 with [the parties thereto]….

Obligor Essar Steel Limited

Assigned Amount US $ 2,000,000."

14. Clause 4 of the First Assignment Agreement provided:

"(a) If and when any payment of principal is made under the Asset Documentation in respect of the Assigned Asset, and such payment is made by the obligor or borrower under the Asset Documentation (the "Obligor") or the applicable agent or servicing bank under the Asset Documentation (the "Agent") or the guarantor names in the Asset Documentation (the "Guarantor") to the Transferor, then the Transferor will promptly pay to the Transferee an amount equal to such principal payment pro rated in respect of the Assigned Asset together with interest thereon from (and including) the seventh Business Day after the date such payment is made by the Obligor or the Agent or the Guarantor to (but excluding) the date paid hereunder at Default Rate.

(b) All interest on and fees and other payments in respect of the Assignment Amount which have accrued and are unpaid as of, and which will accrue on and after, the Effective Date and all other amounts recoverable in respect of the Assignment ("Accrued Interest") are for the account of the Transferee. If and when any payment of Accrued Interest is made under the Asset Documentation in respect of the Assigned Asset and such Accrued Interest is paid by the Agent, or by the Obligor, or by the Guarantor to the Transferor, the Transferor will promptly pay to the Transferee an amount equal to such Accrued Interest so paid together with interest thereon from (and including) the seventh Business day after the date such payment is made by the Obligor or the Agent or the Guarantor to (but excluding) the date paid hereunder at Default Rate.

(c) If pursuant to any restructuring, rescheduling or other general arrangement in respect of assets of the same type as the Assigned Asset, any retroactive interest adjustment is applied in respect of the Assigned Asset (including, without limitation, any retroactive adjustment to the principal amount of the Assigned Asset which results in the effective reduction of the amount of interest receivable), such adjustment will be solely for the account of the Transferee, pro rated to the extent of the Assigned Asset."

15. Under clause 7 of the First Assignment Agreement the Transferor agreed if so requested by the Transferee prior to the Effective Date, to deliver to the Transferee a copy of the Asset Documentation.
16. By clause 9 (a) :

"The Transferor, as at the Effective Date, represents and warrants to the Transferee, which representations may be relied upon by the Transferee that:

(i) the Transferor is the legal and beneficial owner with full title guarantee of the Assigned Asset.

…..

(xiv) this Assignment Agreement constitutes a legally valid and effective assignment of the Transferor's right, title and interest in the Assigned Asset; and …"

17. Clause 10 provided that:

"As contemplated in Chapter SE (Securitisation and Loan Transfer) of the Banking Supervisory Policy Guide of the Financial Service Authority, the Transferor and Transferee hereby acknowledge and agree that ….

(a) upon the Effective Date the Transferor has no residual beneficial interest in the Assigned Asset…"

18. By clause 21 it was agreed that the First Assignment Agreement should be governed by English law.

Dresdner's Participation Agreement with Argo

19. On the same date as the First Assignment Agreement – 16^th August 2004 – Dresdner and Argo entered into a Participation Agreement whereby Dresdner granted to Argo "a participation in the Participated Asset". The "Participated Asset" was defined as meaning the loan described in the Asset Schedule and that Schedule defines the Participated Asset as the $ 40,000,000 facility. The Participation Amount was the amount specified in the Asset Schedule as the amount of the participation, which was $ 2,000,000. Dresdner was the "Grantor". Under Clause 6:

"(b) The Grantor agrees that it will use the same care and prudence as it exercises with respect to loans and assets owned or beneficially held by it and administered by third party agents in which no participations are sold;

(c) The Grantor shall not, without prior notice to and consultation with the Participant, take any action or refrain from taking any action or exercise or refrain from exercising any rights or powers under the Asset Documentation, which would result in a change in the character, nature or value of the Participation. No action taken by the Grantor with respect to the Asset Documentation shall, without the Participant's prior written consent, cause the Participant to incur any obligations not expressly assumed by the Participant hereunder"

20. According to the Witness Statement of Mr Andreas Rialas the First Assignment Agreement and the Participation Agreement came about in this way. In 2004 KDLC decided to accept an offer by Argo, which they had previously refused, to buy the debt owed by Essar to it under the facility agreement. At that time, as I have indicated, David Steel, J had strongly inclined to the view that The Argo Fund was not a "financial institution" within the meaning of the facility agreement and that argument, if good, would apply to other funds such as Argo. In order to counter that argument Argo's fund manager arranged for the debt owed by Essar to KDLC to be "transferred" to Dresdner, which is both a bank and a financial institution, and for Dresdner to enter into a participation agreement with Argo in consideration for Argo funding the purchase of the debt by Dresdner.
21. This explanation is puzzling in the terms in which it is expressed. Under the First Assignment Agreement the debt was not transferred to Dresdner, if by that is meant a transfer as provided for in the facility agreement. If the First Assignment Agreement assigned the debt, as Argo now contends, but did not transfer it, the question as to whether Argo was a "financial institution" would not arise. That complication applies only to a "Transferee".

The proceedings

22. On 28^th June 2005 Argo issued the present proceedings against Essar claiming $ 2,000,000 together with interest. On 1^st July 2005 the Claim Form was purportedly served on the Law Debenture Trust Corporation, Essar's agents for service under clause 32.5 of the facility agreement. Particulars of Claim followed on 13^th July 2005. An acknowledgement of service was filed on 15^th July 2005 indicating an intention to contest the jurisdiction.
23. Essar now applies for an order that service of the claim form be set aside and that the action be dismissed on the grounds that the Court has no jurisdiction over the claim. The basis for the application is that, on the true construction of the assignment agreement in favour of Dresdner, Dresdner never became an assignee of the debt owed to KDLC or of KDLC's rights under the facility agreement, but only of the proceeds of the debt once recovered. Since Dresdner never became an assignee of the debt it could not assign the debt on to Argo. In any event, the assignment from Dresdner to Argo was, for all practical purposes in the same form and assigned only the proceeds of the debt and not the debt itself. In short Argo is not an assignee of rights under the facility agreement and cannot, therefore, take advantage of the provisions of clause 32.5.

CPR 6.15.

24. CPR 6.15 provides that:

"(1) Where –

1. A contract contains a term providing that, in the event of a claim being issued in relation to the contract, the claim form may be served by a method specified in the contract; and

2. A claim form containing only a claim in respect of that contract is issued

The claim form shall, subject to paragraph (2), be deemed to be served on the defendant if it is served by a method specified in the contract."

25. Mr Jonathan Nash for Argo submits that CPR 6.15(1) does not require the court to be satisfied that the claimant is a party to the contract or entitled to exercise rights under the contract. Provided that the court is satisfied that the claim form only contains a claim in respect of the contract containing the service of suit clause, the claim form is deemed to have been served. Whether or not the claimant does have such rights will then fall to be determined in the action commenced by the claim form which will, by virtue of CPR 6.15, be deemed to have been properly served. A distinction must be made between jurisdiction to determine a claim in respect of the contract, which arises if the claim form is served in the manner provided for by the contract, and the claim itself i.e. the claim in respect of the contract. He accepts that, in order to be able to invoke CPR 6.15, the claimant must show that the defendant is a party to the contract, because it must be shown that he has agreed to this method of deemed service. The same is not, however, true of the claimant. The focus of the rule is on the subject matter of the claim ("a claim … in relation to the contract"), and not, at this stage, on the claimant's status as a contracting party.
26. I cannot accept this submission. Service under CPR 6.15 is permitted where the contract contains a term providing that a claim in relation to the contract may be served by the method specified in the contract. The agreement contained in paragraph 32.5 was an agreement between the Borrower and the other parties by which the Borrower agreed with those parties that they could effect service on its agent. It cannot be construed as an agreement by the Borrower that it could be served under the contractually agreed method by someone who was neither a party to the contract nor a transferee nor an assignee. The contract did not specify that service on Law Debenture was a method by which someone who was neither party, assignee or transferee could effect service.
27. I note that Mr Justice David Steel proceeded upon the same basis in the Argo Fund case when he said at paragraph 29:

"My conclusion that the claimants have failed to establish that they have a good arguable case that they are legitimate transferees is not just fatal to their summary judgement application. It also follows that the claimants cannot pray in aid the provision of CPR 6.15 whereby a claim form is deemed to be served on a defendant if served by a method specified in the contract. Put another way, this court has no jurisdiction to entertain the claim since it is not sufficiently established that the defendant have thereby submitted to the jurisdiction".

It is right, however, to point out that the point that Mr Nash has raised was not made before David Steel, J.

28. It is common ground that, if it is necessary for Argo to establish that they are assignees of the debt owed to KDLC under the facility agreement for the purpose of relying on CPR 6.15, what they have to do is to establish that they have a good arguable case to that effect: Crescent Oil and Shipping Services Ltd v Importang U.E.E. [1998] 1 W.L.R. 919.931.

Essar's submissions

29. Mr Wolfson, for Essar, submits that under the First Assignment Agreement KDLC never assigned the debt due to it from Essar ("the debt") at all for the following reasons:

a the assignment was of the "Assigned Amount" which was defined in Schedule A as $ 2,000,000 together with "Accrued Interest" which was defined in clause 4 (b) as "All interest on and fees and other payments in respect of the Assignment Amount which have accrued and are unpaid as of, and which will accrue on and after, the Effective Date and all other amounts recoverable in respect of the Assignment". In other words the assignment was of a sum of money.

b The assignment does not say that what was assigned was KDLC's claim

against Essar or even KDLC's interest in the $ 40,000,000 due. True it is that there is a reference to the "Assigned Asset" defined as "all rights etc …in the principal amount of the loan ….described in the Asset Schedules"". But it is not the Assigned Asset which is described by the assigning clause as being assigned.

c In any event the Assigned Asset could not be the subject of the assignment because that is defined in Schedule A as the $ 40 million facility. KDLC could not have assigned that facility since it only had an interest in $ 2,000,000 thereof.

d Clause 4 contemplates that payments under the facility agreement will

continue to be made through the Agent to KDLC and that Dresdner will receive from the Agent any payment received by KDLC. The agreement does not contemplate that Essar will make payment to Dresdner. Rather KDLC will receive funds and pass them on to Dresdner. Clause 4 is largely redundant if there is an assignment of the debt.

e If the parties had intended that Dresdner should acquire the right to be

paid directly by Essar there would be no need for these elaborate provisions in respect of payments between KDLC and Dresdner.

f No assistance is to be gained, so far as Argo is concerned, from the

recitals, or clauses 9 (a) (i) and (xiv) or 10 (a) because they refer to the Assigned Asset i.e. all rights in the loan, and not a $ 2 million tranche of it; and the Assigned Asset is not what was assigned. KDLC did not, and could not, have assigned the whole loan. Further, as appears from the words at the beginning of it, clause 10 is concerned with whether, in economic terms, there is any beneficial interest remaining in the Transferor.

30. Mr Wolfson further submits (a) that there is no reason why the court should be in any way inclined to hold that the First Assignment Agreement constitutes an assignment of the debt rather than its proceeds and (b) that there is good reason why the court should confine its attention to the words of the assignment clause (clause 2) and not be inclined to adopt a purposive approach to construction.
31. As to (b) he suggests that what has happened is that, in the light of the judgment of Steel, J., given in early 2004, the parties to the First Assignment Agreement and Participation Agreement of 16^th August 2004 intended to effect a transfer to Dresdner, coupled with a participation agreement in favour of Argo, because at that stage Argo was regarded as likely to be held not to be a "bank or other financial institution" and, thus, not a permitted "Transferee". When Aikens J had delivered judgment in April 2005 it was realised that Argo was a bank or other financial institution, so that there could be a transfer to it. The Second Assignment Agreement was then made on 10^th May 2005, and it included, attached to it but not described as "Schedule C" (as had been the case with the First Assignment Agreement) nor referred to in the body of the agreement, the form of transfer specified in the facility agreement. Then it dawned on those concerned that Aikens J might be overruled, and the decision was made to treat the First and Second Assignment Agreements not as transfers but as assignments. He relies in support of this argument on the fact that, in paragraph 6 of his witness statement of 12^th September 2005, Mr Rialas referred to the judgment of Steel, J and said that "in order to counter the argument of [Essar], when KDLC accepted the offer, the Claimant's fund manager arranged for the debt owed to KDLC to be transferred to Dresdner, which is a bank and certainly a financial institution. A participation agreement between Dresdner and the Claimant was entered into …" In such circumstances, he submits, where Argo manipulates the meaning of words for their advantage, the Court should not adopt anything other than a strict construction.
32. I do not accept that what the First Assignment Agreement does is to assign to Dresdner the proceeds of KDLC's loan once they have been received. I say that for the following reasons:

(i) it is plain from the recitals to the Assignment Agreement that KDLC is treated as the owner of the Assigned Asset (and thus as having the right to receive principal and interest with respect thereto) and intends to transfer that asset to the Transferee. The Assigned Asset means "all rights title and interest in the principal of the loan … described in the Asset Schedules attached". That principal is the $40,000,000 facility referred to in the Schedule. In effect, therefore, KDLC is to transfer its rights in respect of the $40,000,000 loan. Those rights were its rights in respect of $2,000,000 of the loan.

(ii) Accordingly Schedule A describes the Assigned Amount as $2,000,000. That is the amount of the loan which is to be assigned. By clause 3.3 of the facility that amount is a separate and independent debt owed by Essar to KDLC.

(iii) In those circumstances there is no difficulty in treating the Assigned Amount as the $2,000,000 portion of the Loan and that appear to me to be the natural reading. There is no need to regard it as $2,000,000 once it has been received by KDLC. The parties may reasonably be supposed to have contemplated that they were assigning the debt owed to the assigning bank under the facility letter in accordance with the provisions for assignment contained in that agreement.

(iv) Clause 2 assigns the Assigned Amount and not the Assigned Asset. But the parties must surely have intended that what they described as the Assigned Asset, and by their recital declared that they desired to transfer, was in fact transferred. Such will be the case if the subject matter of the assignment is KDLC's share in the facility. If that is so, the Assigned Amount and the Assigned Asset are one namely the $2,000,000 loan which constitutes KDLC's right, title and interest in the facility. That that is so is underscored by the definition of "Asset Schedules" as meaning the schedules attached to the agreement setting forth "the characteristics of the Assigned Asset". Schedule A does that by defining the Assigned Asset as the facility and the Assigned Amount as $2,000,000. This must, in context, signify that what was being assigned was a $2,000,000 tranche of the Facility. The words "Assigned Asset" and "Assigned Amount" combine to indicate that what are to be transferred are Argo's rights under the facility agreement in respect of $ 2,000,000 of the advance.

(v) This conclusion gives sense to the warranties in clause 9 (xiv) and 10 (a). If all that is transferred is the proceeds of the loan, when received by KDLC, warranty 9 (xiv) which promises that the Assignment Agreement constitutes an effective assignment of KDLC's rights in the Assigned Asset, i.e. its rights in the loan, is automatically breached. No such rights are transferred at all. Moreover the parties' agreement in clause 10 (a) that upon the Effective Date Dresdner shall have no residual beneficial interest in the Assigned Asset is meaningless. If all that was assigned was the proceeds of the loan Dresdner would retain a beneficial interest in the loan itself.

(vi) Clause 4 is not inconsistent with this conclusion. It provides for what is to happen "if and when", after the assignment, payment is made to KDLC, namely that KDLC will pay over to the assignee the assignee's share. Such payments could well be made if the assignee failed to give notice of the assignment, or if Essar paid the Agent, who paid KDLC, notwithstanding that notice. The agreement needed to provide for this. The existence of such clauses is not only consistent with Dresdner purchasing only the proceeds of the debt. Mr Wolfson suggested that, if this was an assignment, there would be a danger for the assignee in that, in the event of a mistaken payment to the assignor, the assignee might, by virtue of clause 4, be met with the argument that his only remedy was against the assignor. I find it difficult to see how, if notice of the assignment had been given to Essar, this argument could be run, but, even if it could, it does not appear to me to make any difference.

(vii) If all that was intended was that only the proceeds of the loan should be assigned it would have been easy to use wording that made that clear.

(viii) Further, if that was intended, one could expect, in a professionally drawn agreement such as this, to see some provision as to what steps the assignor should be obliged to take in respect of the debt and as to how the assignment of the proceeds was to dovetail with the provisions in clause 24 about the redistribution or sharing of recoveries.

(ix) I am not persuaded that the submissions of Mr Wolfson to which I have referred in paragraph 31 above alter the position. Why Schedule C was attached to the First Assignment Agreement, and to the Second (although not described as "Schedule C") is something of a mystery; nor is it entirely clear what exactly Mr Rialas meant by "transfer" in paragraph 6 of his witness statement. But whatever the answer to these questions, the task of the Court is to interpret the language of the contract taken as a whole, to see what it is that the parties have thereby agreed to do.

33. Mr Wolfson also submits that his construction of the First Assignment Agreement is supported by the fact that an assignment of the debt owed to KDLC would give rise to certain awkward consequences which the parties to the First Assignment Agreement may reasonably be supposed to have wished to avoid. Thus Clause 24.1 of the facility agreement provides that if at any time the proportion received by any Bank in respect of any amount payable by the Borrower for the account of that Bank and at least one other is greater than the proportion received by the Bank or Banks receiving the smallest proportion, the Bank is to pay the Agent the excess which the Agent is to redistribute. Clause 24.4 indicates that a Bank may be required to share with other Banks the fruits of litigation. Under clause 26.4 (iii) the majority of the Syndicate is entitled to issue binding instructions to each Bank. It might follow, suggests Mr Wolfson, that if KDLC were to assign the debt to Dresdner, and Dresdner were to ignore any such instruction KDLC, or even Dresdner, might be liable to the Syndicate. Further, under clause 20.1 payment had to be made by the Borrower to the Agent. So even if there was an assignment Argo would still have looked to the Agent for payment. In those circumstances it is entirely reasonable that the parties to the two assignment agreements should have wished to effect an assignment of the proceeds.
34. Whilst I accept that there may be reasons for proceeding by way of an assignment of the proceeds rather than an assignment of the debt, I do not see that that fact assists me in determining which route the parties have in this case chosen. Clause 27.1 provides in terms that any Bank "may assign all or any of its rights and benefits hereunder" and whilst I note that Mr Wolfson reserves the right to contend at trial that clause 27.1 cannot extend to the assignment of a debt due under the facility agreement, on the face of the instrument that would appear to be contemplated.
35. Mr Wolfson also submitted that clause 15 of the Assignment Agreements assisted him. That provides that:

"the Transferor and the Transferee further agree to the terms set forth in the Additional Clauses, if any, in the relevant Asset Schedule. To the extent of any inconsistency between the term of this Assignment Agreement and any Additional Clause, the terms of such Additional Clause shall prevail."

"Additional Clauses" with respect to the Assigned Asset, means:

" any provision identified as such in the Asset Schedule that the parties hereto have agreed shall apply in respect of the assignment of the relevant Assigned Asset".

36. I do not regard Schedule A as containing Additional Clauses. Nothing in the Schedule is identified as such. In any event there is, in my view, no inconsistency between the Schedule and the body of the agreement.

Result

37. Accordingly, as I hold, the First Assignment Agreement assigned to Dresdner KDLC's interest in the loan, and the Second Assignment Agreement assigned Dresdner's interest in it to Argo. A fortiori there is a good arguable case to that effect. In those circumstances I decline to set aside service of the claim form or to order that the action be dismissed.