Summary judgment – Entitlement to summary judgment
Aston Hill Financial Inc and others v African Minerals Finance Ltd: Queen's Bench Division, Commercial Court (Mr Justice Eder): 31 July 2012
The claimants as the lenders and the defendant company as the borrower entered into a facility agreement (the facility). Clause 8.3 of the facility imposed an obligation on the defendant to prepay loans in an amount equal to the amount of, inter alia, finance proceeds. Clause 8.5 of the facility conferred on the defendant the right voluntarily to repay the whole or part of the loan on giving notice. Clause 8.8 of the facility required the payment of a 6% fee on the amount prepaid (the prepayment fee). The defendant subsequently obtained refinancing from another source and prepaid the outstanding loan to the claimants. The claimants issued proceedings contending that they were entitled to recover from the defendant the prepayment fee on the basis that the defendant had made a voluntary prepayment. The defendant submitted that no prepayment fee was payable on the basis that the prepayment was not a voluntary prepayment under clause 8.5 but had been made pursuant to clause 8.3 and was, therefore, mandatory. Both parties sought summary judgment. The principal issue for determination was whether the prepayment fee was payable.
The court ruled: In the circumstances, as a matter of construction, there had been no obligation to pay the prepayment fee. The main fallacy in the claimants’ submission was the failure to distinguish between, on the one hand, the refinancing, and, on the other hand, the prepayment. There were, or at least might be, difficulties in characterising what conduct had or had not been ‘voluntary’ but the court was content to assume that the refinancing carried out by the defendant was properly to be characterised as ‘voluntary’. However, the proceeds of such refinancing fell within the definition of ‘finance proceeds’ and, accordingly, the defendant had thereby come under an obligation to prepay the loan by virtue of clause 8.3 of the facility. In other words, although the refinancing had been ‘voluntary’, the prepayment had not been (see  of the judgment).
The defendant’s application for summary judgment would be allowed (see  of the judgment). Rainy Sky SA v Kookmin Bank  1 All ER 1137 applied.
Anthony Boswood QC and James Cutress (instructed by Proskauer Rose LLP) for the claimant; Adrian Beltrami QC and Laura John (instructed by Cleary Gottlieb Steen & Hamilton LLP) for the defendant.