No. CL-2017-000055

Neutral Citation Number: [2017] EWHC 2765 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
QUEEN’S BENCH DIVISION 
COMMERCIAL COURT

Rolls Building
Fetter Lane, London, EC3A 1NL
Thursday, 19th October 2017

Before:

MR JUSTICE BRYAN

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B E T W E E N :

                                                                HARCAP LIMITED  	Claimant

-  and  -

	F.K. GENERATORS & EQUIPMENT LIMITED	Defendant

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MR T. LEECH QC (of Herbert Smith Freehills LLP) appeared on behalf of the Claimant.

MISS S. CHENG QC (instructed by Pinsent Masons LLP) appeared on behalf of the Defendants.

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J U D G M E N T
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MR JUSTICE BRYAN:

A. INTRODUCTION

1	The parties appear before the court today on the hearing of four applications for summary judgment by the Claimant, HarCap Limited (“HarCap”), alternatively to strike out the relevant parts of the Defendants’ defence.  

2	I take the background facts in relation to the action and the current applications largely from para.12 of the witness statement of Gary Milner-Moore of 15th June 2017 made in support of HarCap’s applications.  I do so because it is confirmed at paragraph 17 of the Defendants’ skeleton for this hearing that the facts summarised at paragraph 12 of Mr Milner-Moore’s witness statement are agreed.

3	HarCap is a private equity and asset management company.  The Defendants are builders and operators of power stations and the sole shareholders in GenRent del Peru S.A.C. (“GenRent”).  

4	By a Concession Contract granted in or around September 2013, the Republic of Peru engaged the Defendants and GenRent to design, finance and build a 79-megawatt power plant in Iquitos, Peru (the “Power Plant”) and permitted them to exploit that plant for 20 years after its commercial operational date.  

5	During 2015 and 2016, the Defendants explored funding options to facilitate their completion of the Power Plant, and that is set out, in particular, in pages 4 to 7 of the Amended Particulars of Claim and the relevant paragraphs are largely admitted in the Defence.

6	In relation to the completion of the project, there was a need to find some finance and, on 29th November 2016, HarCap and the Defendants concluded a legally binding agreement entitled, “Project Titan – Head of Terms”, (the “Agreement”).  Under the terms of the Agreement, the Claimant was to arrange the provision of a one-year bridge finance facility for US$22m to the Project Company in order to enable it to complete construction of the Power Plant and to meet the delivery targets defined in the concession agreements.  The Agreement provided for an “Exclusivity Period” of eight weeks from the date of the Agreement, consisting of six weeks for the completion of the commercial, operational, financial and legal due diligence and an additional two weeks for the structuring and documentation of the Transaction.  

7	In consideration for HarCap committing resources to the Transaction, the Defendants provided a “Exclusivity and Confidentiality Undertaking” in the Agreement to HarCap which includes a number of elements referred to by the parties as undertakings (a) to (d).  Of these separate undertakings, undertaking (c) is of principal relevance for this application, albeit that it has to be construed in the context of the Exclusivity and Confidentiality Provision as a whole, which will necessitate consideration of the opening words of the undertaking and undertaking (a) and, indeed, in the light of oral submissions today, undertaking (b) as well, given the submissions that have been made by the Defendants.

8	By undertaking (c), the Defendants agreed not to “enter into any agreement or arrangement with any other party relating to, substituting or competing with the Transaction” during the Exclusivity Period.  In the event that, during a period of three months following the signing of the Agreement, the Defendants either:
(a) unilaterally cancelled or aborted the transaction, other than as a result of a failure to agree on finally legally binding terms for the transaction; or 
(b) breached the Exclusivity and Confidentiality Undertaking, an “Abort Fee” of US$500,000 would be payable to HarCap.  

9	The Agreement also provided for a payment of US$150,000 to HarCap by no later than 15th December 2016, being the first of two instalments towards expenses incurred, or that would be incurred, by HarCap or any funding provider.

10	On 12th December 2016, the First Defendant entered into an agreement or arrangement with a company, V-Power, the terms of which are contained in a Letter of Intent, in relation to V-Power’s potential investment in the Power Plant by way of a loan which was convertible into 51% to 60% of the shares in GenRent.  On the same day, (12th December 2016), by an email sent to Mr Effi Shaken (acting on behalf of HarCap) from Amir Kurz of the Defendants, under the title, “Iquitos Project - cancellation of HoT” (that is the Agreement), the Defendants unilaterally cancelled the Transaction.  More specifically in this regard, the email provided:

“As per our signed HoT documents and the agreed exclusivity and confidentiality Undertaking, we have achieved a binding term sheet with Vpower.  Therefore, we ask you to stop immediately regarding the bridging facility.”

11	On 13th December 2016, HarCap wrote to the Defendants demanding payment of the full Abort Fee of US$500,000 within ten business days, but that Abort Fee has not been paid.  As I have mentioned, most of the above facts, which are uncontroversial, are set out at para.12 of Mr Milner-Moore’s witness statement.  The Defendants, at paragraph 18 of their Skeleton Argument, identify a number of further matters, which they say were known or assumed by the parties when the Agreement was entered into, based on the Defendants’ knowledge.  It is said that these are not challenged in the responsive statement of Mr Shaked for the purpose of this application only, albeit that the Claimant does not accept that such matters impact upon the applications, which it says turn on the proper construction of particular provisions of the Agreement.  

12	The matters that the Defendants rely upon are as follows. First, it is said that the Defendants’ aim was to find an investor or strategic partner for the Power Plant project, with a loan as an alternative; secondly, it is said the Defendants were investigating the sale or disposal of part, as well as the whole, of their interest in the Power Plant; third, it is said that any disposal or sale of the Defendants’ interest in the Power Plant would have been undertaken by way of a convertible loan; fourthly, it is said that the Defendants, from the outset, drew a distinction in discussions with the Claimant between: (a) a strategic partnership and working together on the one hand; and (b) “just” the provision of a loan or bridging facility on the other (which the Claimant objects to on the basis that it is said to be inadmissible as an aid to construction on the basis that it is evidence of negotiations); fifth, it is said that, by early to mid-November 2016, the Defendants’ discussions with third party counterparties were at an advanced stage; sixth, even if a conversation took place between Amir Kurz of the Defendants and Mr Shaked of the Claimant, on 27th November 2016, as alleged by the latter, the parties did not discuss whether or not the Defendants would be free to conclude a deal with a named third party during the Exclusivity Period envisaged in the draft Heads of Terms (and, again, the Claimants submits that that point is inadmissible as an aid to construction); and, seventhly, it is said that, by 27th and 28th November 2016, those negotiations had gained momentum following V-Power’s IPO on 24th November 2016 and it is said the Defendants were possibly only days away from successfully concluding their arrangements with Arroyo and/or V-Power (the point that is  made in relation to that, by HarCap, is that HarCap was never involved in any of those negotiations and it is said they are not part of the objective factual matrix, albeit that there was an obligation under the Agreement that the Defendants give some visibility to what was going on).  

13	So, overall, HarCap’s riposte to these points is that some of them are inadmissible, but, in any event, even if one takes them at face value, none of them matter because this is not, as they put it, a Rainy Sky-type issue, where there are two competing interpretations.  It is said that this is a classic Arnold v Britton-type situation where the document is clear on its face.

B. The Agreement

14	I will need to turn to the particular terms of the Agreement in more detail in due course, but, by way of overview, there are a number of provisions of the Agreement to which my attention was drawn.  The first one was the Preamble.  The Preamble states:

“HarCap Limited and the FK Group wish to document in these Heads of Terms (“HoT”) the key principles of the transaction (as defined below) relating to the HFO 79.5MW power plant and related 20 years concession currently being in advanced stage of construction by the FK Group and its relevant subsidiaries in the city of Iquitos, Peru, as outlined below:”  

15	Reference is also made to the following definitions:
“Transaction The provision of the Bridge Facility to the Project Company (or a related affiliated company within the FK Group in order to complete the construction of the power plant and meet the delivery targets defined in the Concession Contract.”

“Bridge Facility A senior secured lending facility to be provided by the Lender to the Project Company (and/or partially to the Sponsor) for the completion of the construction of the power plant in relation to the project under the indicative terms provided in Schedule A.”

“Exclusivity Period  a period of 8 (eight) weeks commencing on the date of these HoT, comprising of 6 (six) weeks to conduct the commercial, operational, financial and legal due diligence, and an additional 2 (two) weeks for the structuring and documentation of the Transaction.”
  
16	The next provision is the Exclusivity and Confidentiality Undertaking which I will address in due course, and which provides as follows:-

“Exclusivity & Confidentiality Undertaking” In consideration of HarCap (and any Finding Prover(s) committing resources to the potential Transaction, the Sponsor agrees that during the Exclusivity Period (including any agreed extensions thereof) the Borrower, Sponsor, FK Group and any of their affiliates shall not, and shall procure that its founders, shareholders, directors, employees, agents and advisers and any company in the group, and their respective directors, employees, agents and advisers shall not, either directly or indirectly (whether or not in conjunction with any third party):

a) continuing any discussions or negotiations with any other party relating to or competing with the Transaction save for the outstanding discussions regarding the potential disposal of the power plant between the Sponsor and (i) Arroyo Group (“Arroyo”), and (ii) VPOWER Group (“V-Power”) which shall conditionally continue during the Exclusivity Period (conditioned that these alternatives are relating to a sale or disposal only and do not include a loan structure competing to the one offered by HarCap in these HoT) until such time as HarCap and/or any Funding Provider is able to issue the Sponsor a legally binding term-sheet similar to the terms defined in Schedule A, subject to, inter-alia, the successful completion of the due diligence process (as determined by HarCap and/or any Funding Provider in its sole discretion) and the full satisfactory documentation of the facility (as determined by HarCap and/or any Funding Provider in its sole discretion) (the “Legally Binding Term-Sheet”); Following the issuance of the Legally Binding Term Sheet, the Sponsor shall promptly produce to HarCap the correspondence and communications with Arrayo and V-Power confirming the immediate termination of the discussions relating to the disposal of the Project (or the Project Company or the power plant (as applicable)) and will provide full visibility on these processes

b) enter into, facilitate or encourage, any discussions or negotiations with any other party relating to, substituting or competing with the Transaction;

c) enter into any agreement or arrangement with any other party relating to, substituting or competing with the Transaction; and

d) disclose the existence and terms of this HoT’”

17	There is then a definition of “Required Information”, “The Sponsor will be required to promptly provide such information deemed required by HarCap (and/or any other Funding Provider), which will include, inter-alia…” and then there is then a list of eight points, including the last one, (viii): “Full visibility of the discussions with Arroyo and V-Power including the ability to request a written confirmation from the Sponsor relating to the termination of current discussions with Arroyo and V-Power once legally binding term-sheet has been issued to the sponsor by HarCap and/or any funding provider.”  

18	There is then the definition of the Abort Fee, which I will set out in full at this point, and will return to address in due course in the context of the issues of construction that arisen,

“Abort Fee HarCap will entitled to an abort fee of USD 500,000 net of VAT (if applicable) of, during a period of 3 (three) months following the signing of this HoT, the Borrower and/or the Sponsor either (i)  unilaterally cancel or abort the Transaction (other than as a result of a failure to agree on final legally-binding terms for the Transaction (acting reasonably)), or (ii) has materially breached its obligations under this HoT, or (iii) has breached the Exclusivity & Confidentiality Undertaking, or (iv) has failed to confirm by close of business on 13th December 2016 the availability of the LOC (as defined below) with supporting documentation by a reputable financial institution (the “Abort Fee”).

The Abort Fee shall be reduced to USD 100,000 if the Transaction was aborted due, exclusively, to the inability of the Sponsor to procure or arrange the LOC, on the terms of this HoT, within the Exclusivity Period (such abort – a “Consensual Abort”). For the avoidance of doubt, the difference of USD 200,000 shall still be due and payable if the Sponsor entered into any agreement or arrangement with any other party relating to, substituting or competing with the Transaction including but not limited to a loan transaction that will not require to supply the LOC (and including a disposal of the power plant or the Project Company at a price reflecting a value for the power plant which is higher than USD 101,700,000) within a period of 12 months following the date in which the Consensual Abort occurred.

Notwithstanding anything to the contrary in these HoT, but subject to (i) below, no Abort Fee shall be payable if the actual terms of the Bridge Facility required by the Lender following the due diligence are materially and adversely (from the Borrower’s perspective) different to those outlined in the Schedules below. For this purpose, the Committed Notional being less than USD 22,000,000 as a result of the Loan to Value being below 60% and / or the requirement for the LOC to exceed USD 5,000,000 shall be deemed materially and adversely different to these HoT.

(i) Abort Fees of USD 500,000 shall be payable if during the due diligence process it transpires that any material information relating to the commercial, legal, financial or operational aspects of the Project had been omitted, misrepresented or misstated by any of the Sponsor’s entities prior to the date of these HoT.
The Abort Fee (including more than one instalment thereof (if applicable) that may result as a consequence of these HoT) is to be settled by the Sponsor, in clear funds, no later than 10 (ten) business days following a written demand to the Sponsor by Harcap (the “Abort Fee Notice”) highlighting or confirming any occurrence relating to the conditions above and the issuance by HarCap of a relevant invoice.”

19	There is then a provision as to Costs & Expenses, which provides:

“All legal advisory, valuation and any other third party professionals’ fees related to the due diligence and documentation process (including all out-of-pocket expenses), and applicable VAT, incurred in connection with the Bridge Facility, (including inter-alia, for the due diligence and document processes), will be for the account of the Borrower and the Sponsor (whether or not a credit agreement is signed but only to the extent that such costs were actually paid to the third parties)”.  

20	Then, in the third paragraph down in the same provision, it is provided: 

“The Sponsor shall make the first cost-cover payment of USD 150,000 to HarCap (or any Funding Provider assigned by HarCap), in respect of such costs no later than by the 15th December 2016 (and preferably before this date).”  

There is also provision for a second additional payment following notice and then a provision for any surplus being credited against payment of the upfront fee or the abort fee.

21	There follows a provision for “Default Interest on Outstanding Fees, Costs & Expenses”, which is relevant to the applications, in these terms:

“Any delay, in the settlement of any fee, cost or expense due to HarCap (as applicable under this HoT) by the Sponsor, of more than 20 business days, will entitle HarCap to charge, in its sole discretion, interest of 12% (twelve percent) per annum (calculated on an Actual/360 accrual basis) on the outstanding monies.”  

22	There is then a provision as to “Confidentiality”:
“this HoT is delivered to the Sponsor, and entered into on the condition that neither it, nor any of its terms or substance, nor the activities of HarCap or any of its affiliates or Funding Provider(s) pursuant hereto, shall be disclosed, directly or indirectly by the Sponsor or any of its group companies, to any other person, except (i) to its affiliates, officers, directors, employees, attorneys, accountants and advisers, in each case on a strictly confidential and need-to-know basis for the purpose of the Transaction, or (ii) as required by applicable law, regulation or compulsory legal process (in which case the Sponsor agree to inform HarCap promptly thereof to the extent reasonably practicable and to take reasonable efforts to limit any such disclosure.”

23	The provision as to Confidentiality continues, in terms which are of relevance to one of the issues that arises before me:

“In enforcing their rights hereunder for any breach of this HoT, the parties hereto acknowledge that damages are not an adequate remedy for the breach of their obligations and that the parties hereto will be entitled to any form of equitable relief including, without limitation, specific performance or other injunctive relief, as well as the right to pursue any and all other rights and remedies (and recover any and all damages) available at law or in equity.”  

24	There is also an Entire Agreement provision and a Law provision that the Heads of Terms, including any non-contractual obligations arising out of or in connection therewith, are governed by and shall be construed in accordance with English law, and there is an associated non-exclusive jurisdiction clause in favour of the courts of England. 

C. The Applications and Associated Issues

25	HarCap issued its Claim Form against the Defendants on 27th January 2017 and served Amended Particulars of Claim on 14th June 2017, in which it claims payment of the US$150,000 pursuant to the Costs & Expenses Provision, the Abort Fee of US$500,000, interest at the contractual rate that is identified at 12% per annum, damages for various alleged breaches of the Exclusivity & Confidentiality Undertaking, damages for alleged breaches of confidence, and on the basis of an alleged unlawful means conspiracy, and pleading various heads of loss and damage amounting to many millions of dollars, including up-front fees, an exit fee, a closing fee, the value of warrants put at at least US$13million, damages on various accounting bases including a licence fee basis in the sum of US$20million and substantial claims for alleged contractual interest.  The Defendants served their Re-Amended Defence on 31st July 2017 and HarCap its Re-Amended Reply on 21st August 2017.

26	Pursuant to its application notice of 15th June 2017, HarCap seeks determination by way of summary judgment and/or strike out of four parts of the case, namely: 

(1) 	The Abort Fee.  It is HarCap’s case it is entitled to an Abort Fee of $500,000 (plus interest at the contractual rate) following cancellation of the contract.  The Defendants deny HarCap’s entitlement to the Abort Fee.

(2) 	Costs & Expenses.  It is HarCap’s case that the Defendants were obliged, but failed to pay, US$150,000 by 15th December 2016.  The Defendants also deny this.  It is right to note that the Defendants have recently made part-payment, but without admission of liability. 

(3) 	Breach of Undertaking (c).  It is HarCap’s case that the Defendants breached one of the exclusivity undertakings, namely Undertaking (c), by entering into an arrangement with V-Power.  The Defendants deny breach, relying on points of construction.

(4) 	The “Exclusive Remedy” issue.  The Defendants submit that the Abort Fee is the exclusive remedy for any breach and that this constitutes a full answer to the claim (even though it also says that the Abort Fee is not due), whereas HarCap says that the Agreement does not so provide and indeed contains express provisions to the contrary.  

27	HarCap’s application is supported by a witness statement from Gary Milner-Moore, a partner at HarCap’s solicitors, Herbert Smith Freehills LLP, and two statements from Effi Shaked, which I will define as “Shaked 1” and “Shaked 2”, HarCap’s managing partner,. Much of that evidence goes to uncontroversial background, although the issues which are dealt with in HarCap’s skeleton argument are also foreshadowed and canvassed in that witness evidence.  

28	The Defendants rely upon three witness statements in opposition to HarCap’s applications, that of Amir Kurz, who is a senior manager of the First Defendant, Amos Kurz, the CEO of the FK Group, and Avner Kurz, the Chairman of the FK Group.  Whilst much of their evidence is uncontroversial background, it also strays into evidence of negotiations preceding the entering into of the Agreement and, as such, any such evidence is inadmissible as an aid to construction by reference to the parol evidence rule, though it might be of relevance to a claim for rectification that exists but which does not arise on the applications before me.  

29	I have read and borne in mind all the evidence that is before me, to the extent that it is admissible, as part of the surrounding factual matrix to the Agreement and the applications that are made. 

D. APPLICABLE PRINCIPLES

D.1 Strike Out

30	Turning then to the applicable legal principles on the application that is before me. In relation to strike out, the court may strike out parts of the Defence under r.3.4(2)(a) of the CPR if they disclose no reasonable grounds for defending the Claimant’s claim.  

31	The test imposed by r.3.4(2)(a) is supplemented by sub-paragraph, 1.6, of Practice Direction 3A.  By that Practice Direction, a defence may fall within that rule where: 
(1) 	 it consists of a bare denial or otherwise sets out no coherent statement of facts; or 
(2)	 the facts it sets out, while coherent, would not, even if true, amount in law to a defence to the claim.

D.2 Summary Judgment

32	In relation to summary judgment, r.24.2(a)(ii) of the CPR permits a Court summarily to enter judgment against a defendant on particular issues if it considers that:

(a)	the defendant has no real prospect of successfully defending that issue; and 

(b) there is no other compelling reason why the issue should be disposed of at trial.

33	The scope of the inquiry to be undertaken on a summary judgment application was confirmed by the House of Lords in Three Rivers District Council & Ors. v The Bank of England (No.3) [2001] UKHL/16:

(1) 	The question of whether a defence has no real prospect of succeeding at trial has to be answered having regard to the overriding objective of dealing with the case justly.

(2) 	The criterion which the judge has to apply under Part 24 of the CPR is not one of probability, it is the absence of reality, a defence which is fanciful or inconceivable, rather than a practical possibility;

(3) 	this exception to the normal method by which issues of fact are tried in the English courts is justified where, for example:

(a)	it is clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove, he will not be entitled to the remedy that he seeks; or

(b) 	it is possible to say with confidence that the factual basis of the claim is fanciful because it is entirely without substance or clear beyond question the statement of facts is contradicted by all the documents or other material on which it is based.

34	The relevant principles that apply where the issues before the court relate to the construction of a document have been helpfully summarised by Newey J in a recent decision, that is BNY Mellon Corporate Trustee Services Limited v Taberna Europe Cdo I Plc [2016] EWHC 781 (Ch), at [21] to [23]:

(1)	The defence must be better than merely arguable, it must “carry some degree of conviction” (see ED&F Man Liquid Products v Patel & Anor. [2003] CP Rep 51, para.8 per Gibson LJ).

(2)	The Court should not conduct a mini trial (see the case of Swain v Hillman [2001] All ER 91, at para.95).

(3)	The Court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case (see Easyair Limited v Opal Telecom Limited [2009] EWHC 339 (Ch), at para.15).

(4)	On the other hand, the Court should determine a short point of law or construction if it has before it all the necessary evidence.

(5) 	It is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction.

35	In support of propositions (4) and (5), Newey J, cited the statements of Moore-Bick LJ in ICI Chemicals and Polymers Limited v TTE Training Limited [2007] EWCA Civ 725, at paragraphs.12 and 14.  In this regard, Moore-Bick stated, at paragraph 12:

“It is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it.  The reason is quite simple: if the respondent’s case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be.  Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better.”

36	These sentiments are particularly apposite in the context of matters coming before the Business and Property Courts, including the Commercial Court.  It has long been the practice of the Commercial Court to grasp the nettle on points of construction that come before it on strike out or summary judgment applications, where the Court has before it the contract and any necessary evidence to determine the points of construction.  In the present case, the points are indeed points of construction and the parties have had adequate opportunity to adduce any admissible factual matrix evidence and debate the issues that arise in argument.  Indeed, detailed witness statements and accompanying exhibits have been lodged and I have heard full argument on the issues that arise before me.  Nevertheless, in each case, I will deal with matters by way of the application for summary judgment and strike out, but, in the course of that, as is inevitable, I will express views about the construction of the contract in relation to the issues that arise.

37	The issues that arise in the present case involve the construction of a contract, the Agreement of 29th November 2016.  The applicable principles of contractual construction are well-known and are, once again, common ground.

D. 3 Applicable Principles of Contractual Construction

38	Both parties refer me to the principles identified by Lord Neuberger JSC in Arnold v Britton [2015] UKSC 36, at para.15. When interpreting a written contract, the Court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. It does so by focussing on the meaning of the relevant words, in their documentary, factual and commercial context.  That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the contract, (iii) the overall purpose of the clause and the contract, (iv) the facts and circumstances known or assumed by the parties at the time that the contract was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions.

39	HarCap also referred me to the recent decision of O’Farrell J in Royal Devon and Exeter NHS Foundation Trust v ATOS IT Services UK Limited [2017] EWHC 2197 (TCC), where the relevant principles were re-stated in identical terms.  

40	For their part, the Defendants also drew attention to the fact that construction is an iterative process by which each of the rival meanings is checked against the provisions of the contract and its commercial consequences are investigated.  If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other (see Arnold v Britton, at paras.76-77, per Lord Hodge citing Lord Clarke in Rainy Sky & Ors. v Kookmin Bank [2011] 1 WLR, 2900, at para.21).  The Defendants also refer me expressly to paragraphs.28 to 30 in Rainy Sky and the reference to what was said in Barclays Bank v Luxembourg [2011] 1 BCLC 336, at paragraphs.25 and 26, which I bear well in mind.

41	The Defendants also submitted that there were particular principles of contractual construction of relevance to the specific issues of construction that arise in the present case:

(1) 	First, that, although the parties are not lightly to be taken to have intended to cut down the remedies which the law provides for breach of contract without using clear words, the Court must still use all its tools of linguistic, contextual, purposive and common-sense analysis to determine what the clause really means (see paragraphs.18 to 21 of the judgment of Briggs LJ (as he then was) in Oliver Nobahar-Cookson & Ors. v The Hut Group Limited [2016] EWCA Civ 128).

(2) 	The strength of any presumption that parties do not intend to give up their rights or claims under the general law is reduced in proportion to the degree of derogation from the common law position.  It is relevant that a clause is not a pure exclusion clause, but instead one which replaces common law rights with a different contractual remedy which may, in certain circumstances, be more valuable than a right to damages (see paragraphs 28 to 30 of the judgment of Christopher Clarke LJ in Scottish Power UK Plc v BP Exploration Operating Company Limited & Ors. [2016] EWCA Civ 1043).  What is required to displace that presumption is set out in that case.  In particular one looks to see if a contract only makes coherent sense if other remedies are excluded.  In the present case, although HarCap has no disagreement with the propositions set out Scottish Power, HarCap say that that is not this case.

(3) 	Parties are entitled expressly to stipulate not only the primary rights that they expect to receive under their contract, but also the secondary remedies to which one would have become entitled upon the other’s breach of that contract.  It accords with business common sense for contracting parties at the outset to agree a fair and easily ascertainable sum that will become payable as compensation for breach and the more difficult it is to prove loss the greater the advantage to both parties of contractually fixing an easily ascertainable sum to be paid in the event of such default (see pages 141H to 142F of the judgment of Diplock LJ, as he then was, in Robophone Facilities Limited v Blank [1966] 3 All ER 128).

E. CONSIDERATION OF THE ISSUES

42	Turning then to the issues that are before me for consideration on HarCap’s applications:

E.1 The Abort Fee

43	The Abort Fee provision provides that HarCap will be entitled to an Abort Fee in various specified circumstances of which it is the first, that is (i), that is the subject matter of the application.  It will be recalled that it provides:

“HarCap will be entitled to an abort fee of US$500,000 … if, during a period of 3 (three) months following the signing of this HoT, the Borrower and/or the Sponsor either"

And I interject there are four separate scenarios that are set out.  Continuing with the quotation:

“…(i) unilaterally cancel or abort the Transaction (other than as a result of failure to agree on finally legally binding terms of the Transaction (acting reasonably)) or … 
(ii) has materially breached its obligations under this HoT, or 
(iii) has breached the Exclusivity & Confidentiality Undertaking, or 
(iv) has failed to confirm by close of business on 13th December 2016 the availability of the LOC (as defined below), with supporting documentation by a reputable financial institution.”

44	It will be seen from the express language of the Abort Fee clause, the use of the word “either”, and the four separately numbered situations in which an Abort Fee is payable, that on the ordinary and natural meaning of the words used, a fee is payable in four different situations.  Thus, for the sum to be payable under (i), it is not necessary to show that the Defendants were in breach of the Agreement or breached the Exclusivity & Confidentiality Undertaking. The sum falls due and payable as a debt if the requirements set out in (i) are met.  

45	The “Sponsor” was defined to mean both Defendants.  The “Borrower” is the Project Company, as can be seen from the definitions in Schedule A.  It is common ground that the transaction was cancelled by the Defendants, as can be seen from paragraph.26 of the Amended Particulars of Claim, which is admitted at paragraph 32 of the Defence.  The starting point is therefore that the Defendants have unilaterally cancelled or aborted the Transaction.  On the face of the clause, the only circumstances in which the Defendants are absolved from paying the Abort Fee is in the bracketed carve-out, i.e. “other than as a result of a failure to agree on final legally-binding terms for the transaction (acting reasonably).”  

46	It is difficult to see how the Defendants could bring themselves within this carve-out on the facts.  What they plead in relation to their cancellation is at paragraph 32 of the Re-Amended Defence.  After admitting paragraph 26 of the Amended Particulars of Claim, it is pleaded as follows, 

“…It is averred that the Defendants cancelled and/or aborted the Transaction:

32.1 Upon entering into an agreement or arrangement with V-Power which (a) did not relate to, did not stand in substitution for and did not compete with the Transaction under the consideration by the Claimant, and/or (b) which did not include a loan structure competing with that offered by the Claimant, and/or 

“32.2 Alternatively, as a result of the parties’ failure, acting reasonably, to agree on final, legally binding terms for the Transaction.”

47	The point at paragraph 32.1 is most obviously directed at the issue as to whether the Defendants were in breach of the Exclusivity and Confidentiality Undertaking (and it will be addressed in more detail in that context), though it is also prayed in aid in rebuttal of the claim for the Abort Fee, as is apparent from the Defendants’ Skeleton Argument.  The point at paragraph 32.2 is an attempt to bring the Defendants within the carve-out. Thus the Defendants are arguing that the parties have failed, acting reasonably, to agree on finally legally binding terms – that is what is being asserted at para.32.2.  

48	They are also arguing that their construction of Confidentiality Undertaking (a) (which is addressed in due course in more detail below), in some way, shape or form renders the Abort Fee not due.  In this regard the Defendants plead, at paragraph 22.1 of the Re-Amended Defence as follows:

“… in the circumstances pleaded in section C2 above (Exclusivity and Confidentiality Undertaking and Confidentiality Clause), the Abort Fee provided for under item (i) of the Abort Fee provision was not payable if the Defendants entered into an agreement or arrangement with V-Power which (a) did not relate to, stand in substitution for or compete with the Transaction under consideration by the Claimant and/or which (b) did not include a loan-structure that competed with the one offered by the Claimant.”

49	I will deal with each of these points in turn.  As to the former, I do not consider that the Defendants’ argument stands any prospect of success whatsoever.  It is neither arguable, nor does it carry any degree of conviction and, indeed, it is rightly characterised as fanciful.  The Agreement provided for an “Exclusivity Period” as defined, namely:

 “A period of 8 (eight) weeks commencing on the date of these HoT comprising 6 (six) weeks to conduct commercial, operational, financial and legal due diligence, and an additional 2 (two) weeks for the structuring and documentation of the Transaction.”  

50	The cancellation occurred after two weeks, on 12th December 2016, within the period for conducting due diligence (10th January 2017).  It is readily apparent on the evidence before me that there was no contractual expectation that negotiations would even commence until six weeks had elapsed.  It is therefore fanciful to suggest that the parties had “failed” to agree legally binding terms.  

51	Mr Shaked has given evidence for the claimant explaining that there was a commercial reason for wishing to expedite the timing of a negotiation, but that a draft Term Sheet had not been provided to the defendants when they cancelled the Transaction (see paragraphs 4 to 6 of Mr Shaked’s first witness statement).  The Defendants do not suggest otherwise in their witness statements, or that they cancelled the Transaction as a result of a failure to agree on final legally binding terms.  Indeed, it is clear from the email in which they cancelled the Transaction that this was not the reason.  I also note that a subsequent paragraph in the Abort Fee clause (the third paragraph thereof) sets out circumstances where no Abort Fee will be payable.  If the contractual intention had been that no Abort Fee is payable if an arrangement or agreement was entered into with V-Power then one would have expected it to have been specified here.  There are a number of carefully drafted obligations setting out particular circumstances in which the Abort Fee is reduced or not payable at all, yet they do not address the situation where an agreement or arrangement is entered into with V-Power, as could easily have been done, and no doubt would have been done had that been the objective common intention of the parties..  

52	Equally, the second argument of the Defendants does not stand any prospect of success either.  It is not arguable, does not carry any degree of conviction and is, again, rightly characterised as fanciful.  The short and simple answer to that point is that, on its express language and the natural and ordinary meaning of the words used, the relevant part of the Abort Fee provision, which is sub-clause (i) above that I have quoted, contains no qualification by reference to the reasons for cancellation.  It does not depend upon breach.  So, as a matter of construction, there is no room for doubt or ambiguity that would lead one to an alternative construction which, in reality would require the implication of a term.  No implied term is suggested or necessary and the requirements for an implied term would not have been met in any event.

53	Additionally, as already noted, the parties also expressly thought about when no Abort Fee would be payable in the third paragraph of the Abort Fee provision as I have said, and it did not apply to this situation.  For this reason, it would matter not if the Defendants had been right in their assertions in the context of Confidentiality Undertaking (a) that the Defendants “entered into an agreement or arrangement with V-Power which (a) did not relate to, stand in substitution for or compete with a transaction under consideration by the claimant; and/or (b) did not include a loan structure that competed with the one offered by the claimants”.  That would simply not be in point.  There is no such qualification, limitation or carve-out in relation to item (i) in the Abort Fee provision.  In any event, and for the reasons I will give when addressing the issue concerning Confidentiality Undertaking (a), the Defendants’ construction of the Confidentiality Undertaking is itself not arguable and carries no degree of conviction in any event.

54	That the Abort Fee is payable if the Defendants unilaterally cancel or abort the Transaction, qualified only by a scenario where there is a failure to agree on final legally binding terms for the Transaction, where the parties were acting reasonably, is a perfectly business-like and commercial construction of the Abort Fee that makes perfect business sense.  In contrast, the Defendants’ interpretation does not make any business sense.  On the clear express provisions of the Abort Fee, the entitlement to a fee is not qualified by the need for there to be any breach of the Agreement, as the other items are.  Any reasonable person would have understood the language of the Abort Fee clause to be that the Abort Fee was payable if the Defendants unilaterally cancelled or aborted the Transaction for whatever reason, save only for the limited defined circumstances specified, which it cannot be reasonably argued apply in this case.

55	In such circumstances, I am satisfied that the Defendants have no real prospect of defending the claim for the Abort Fee and that there is no other compelling reason why the issue should be disposed of at trial. I accordingly grant summary judgment in HarCap’s favour in the amount of the Abort Fee.  HarCap also claim interest at a rate of 12% per annum from 30th January 2017, as set out in the “Default Interest on Outstanding Fees, Costs & Expenses” provision.  I do not understand the Defendants to dispute HarCap’s entitlement to interest at such rate and I find that HarCap are entitled to such interest as a matter of contract.  I will, if necessary, here the parties hereafter as to the applicable dates and the amount of interest due, in the unlikely event that that cannot be agreed between the parties.

E.2 Costs and Expenses

56	Turning then to the issue of costs and expenses. I have already set out the Costs and Expenses provision in full above, including the first paragraph thereof which I bear in mind, but will not repeat at this point in my judgment. It will be recalled that the third paragraph is on the following terms:-

 “The Sponsor [that is the Defendants] shall make the first cost-cover payment of USD 150,000 to HarCap (or any Funding Provider assigned by HarCap) in respect of such costs no later than by the 15th of December 2016 (and preferably before this date).”

57	The Defendants deny that there is any obligation to pay this amount on the basis (so it is said) that the contract was determined before payment fell due.  The Defendants out their case at paragraph 38 of the Re-Amended Defence.

58	The Defendants elaborate their submissions in relation to this at section D5 of their Skeleton Argument.  They say the Claimant’s entitlement to recover such costs and expenses (1) is limited to fees incurred, (2) is due only to the extent that such costs were actually paid to third parties, (3) in circumstances where such payment could only be made upon “the Claimant providing invoices for those costs to the Defendants” and (4) the Defendants’ obligation to make a first cost cover payment of US$150,000 did not arise until 15th December 2016 and, on a proper construction of the Heads of Terms, the Defendants terminated that agreement on 12th December 2016 and prior to that sum becoming payable.

59	The key and central aspect of that submission on the part of the Defendants is the final one, i.e. the allegation that, on a proper construction of the Heads of Terms, the Defendants terminated the agreement on 12th December, prior to the sum becoming payable. That submission is simply not arguable. The contract was not terminated, the Transaction was cancelled, as can be seen from paragraphs 12 and 17 to 18 of the Re-Amended Reply.  In this regard, the obligation to make payment remained.  Firstly, the contract provides no mechanism for the Defendants to terminate.  Secondly, the cancellation email itself, in terms of its text, simply refers to stopping immediately all activities regarding the bridge facility (although the heading does refer to “cancellation of HoT”).  Thirdly even if the Defendants were purporting, unilaterally, to terminate the Agreement, it is not possible to unilaterally terminate a contract and such conduct would, at most, be a repudiatory breach on the part of the Defendants (although it is notable that the Defendants do not allege that), and more fundamentally still, as I understand to be common ground and as us trite law, an unaccepted repudiation is “a thing writ in water”, and there is no suggestion from anybody, not least from the Defendants, that the Claimant ever accepted any repudiatory breach. In this regard, Mr Shaked has confirmed his understanding that the Transaction, but not the contract, was cancelled.  That is at paragraph 7 of his first witness statement and, again, I do not understand the Defendants to take issue with this aspect of his evidence.  

60	As I foreshadowed, and as I note at this point of my judgment, the Defendants have in fact recently paid $103,931.56 “on an interim basis” on or about 14th September 2017, without admitting liability, and that amount reflects the costs incurred to date.  Nevertheless, the Claimant pursues this application and in my view is entitled to do so, in order to establish liability on the part of the Defendants and to obtain a declaration in relation to their entitlement to payment of the balance, subject to the point that they make about any such payment being set off against the Abort Fee.

61	I have had regard to the points that have been made by each party, which I have considered carefully. Ultimately the provision is clear and unequivocal on its face, and is capable of only one meaning on the ordinary and natural meaning of the words used.  The Sponsor is to make a first cost-cover payment of US$150,000 to HarCap in respect of the costs which have been previously identified (see the reference to “such costs”). It is a fixed sum, which is a first cost-cover payment, and the obligation to make that payment does not depend on whether or not fees have already been incurred based on the express language of the clause which is unambiguous in its meaning.  The purpose of the clause is to make provision of an advanced payment of a fixed sum on account of fees (whether incurred or to be incurred), and such a construction makes perfect business sense.  In due course, as is clear from that clause, there will be an accounting exercise in terms of what sum is ultimately due, but, as at that date, the sum of US$150,000 is due. I am satisfied that the contrary is not arguable, and that the correct construction of this provision is that the contract requires payment of the $150,000 in respect of the amount ultimately incurred.  In this regard, any surplus is to be dealt with in accordance with the penultimate paragraph of the costs and expenses provision which reads, “Any surplus (if any), shall be credited against payment of the upfront fee or the abort fee, as applicable.”

62	In the above circumstances, I am satisfied that the Defendants have no real prospect of defending the claim for $150,000 in terms of the entitlement under the clause and that there is no other compelling reason why the issue should be disposed of at trial, and I grant summary judgment in that amount, less the amount that has already been paid. However, that net amount then has to be set off against the Abort Fee.  So, in essence, my findings in relation to this issue simply determine the point of principle and the financial consequences are then worked out in the manner that I have just identified.  If interest comes into that calculation it would be at the same rate, and the amount could be agreed, but if interest is not relevant then it would not be taken into account.

E.3 Breach of Exclusivity & Confidentiality Undertaking (c)

63	Turning then to the question of the Defendants’ alleged breach of Undertaking (c).  In the action, the Claimant seeks damages for various alleged breaches by the Defendants of the Exclusivity & Confidentiality Undertaking, including for breach of Undertaking (c).  For ease of reference I will repeat the entirety of the Exclusivity & Confidentiality Undertaking at this point in my judgment:-

“Exclusivity & Confidentiality Undertaking” In consideration of HarCap (and any Finding Prover(s) committing resources to the potential Transaction, the Sponsor agrees that during the Exclusivity Period (including any agreed extensions thereof) the Borrower, Sponsor, FK Group and any of their affiliates shall not, and shall procure that its founders, shareholders, directors, employees, agents and advisers and any company in the group, and their respective directors, employees, agents and advisers shall not, either directly or indirectly (whether or not in conjunction with any third party):

a) continuing any discussions or negotiations with any other party relating to or competing with the Transaction save for the outstanding discussions regarding the potential disposal of the power plant between the Sponsor and (i) Arroyo Group (“Arroyo”), and (ii) VPOWER Group (“V-Power”) which shall conditionally continue during the Exclusivity Period (conditioned that these alternatives are relating to a sale or disposal only and do not include a loan structure competing to the one offered by HarCap in these HoT) until such time as HarCap and/or any Funding Provider is able to issue the Sponsor a legally binding term-sheet similar to the terms defined in Schedule A, subject to, inter-alia, the successful completion of the due diligence process (as determined by HarCap and/or any Funding Provider in its sole discretion) and the full satisfactory documentation of the facility (as determined by HarCap and/or any Funding Provider in its sole discretion) (the “Legally Binding Term-Sheet”); Following the issuance of the Legally Binding Term Sheet, the Sponsor shall promptly produce to HarCap the correspondence and communications with Arrayo and V-Power confirming the immediate termination of the discussions relating to the disposal of the Project (or the Project Company or the power plant (as applicable)) and will provide full visibility on these processes

b) enter into, facilitate or encourage, any discussions or negotiations with any other party relating to, substituting or competing with the Transaction;

c) enter into any agreement or arrangement with any other party relating to, substituting or competing with the Transaction; and

d) disclose the existence and terms of this HoT’”
(emphasis added)

64	The Claimant relies primarily on sub-clause (c) (defined as “Undertaking (c)”) – see paragraph 17(6)(c) of the Amended Particulars of Claim.  The Defendants admit that they entered into an “agreement or arrangement” with V-Power – see paragraphs 33.3 and 33.4 of the Re-Amended Defence.  

65	The Claimant submits that the V-Power arrangement is one “relating to, substituting or competing with the Transaction” for two reasons:
 
(1) 	The conclusion of the V-Power arrangement led directly to the cancellation of the Transaction.  It is said that this, in itself, shows that it “related to”, “substituted” or “competed” with the Transaction. 

(2) 	The two transactions had many comparable features (see para.26 of Mr Milner-Moore’s statement).  The key feature, says the Claimant, is that it was a loan for $30m.  What was required was a loan of $19.7m to complete the Plant (although it appears that that amount may have increased from a document I was shown) and, as a consequence, there was no need for the HarCap bridging facility to complete the power plant due to the V-Power convertible loan.  HarCap, you will recall, had been offering US$22m and, in the event, the Defendants chose to go with VPower.  It is said that that agreement or arrangement with V-Power, therefore, is obviously a loan arrangement which is competing or substituting for the Transaction, which was itself a loan relationship.  V-Power, it is said, has a right to convert part of the loan into equity, but not an obligation, and it is said that it was only part of the loan and that part in question was, at least in the first instance, $11.22m, leaving the balance as a loan, although, again, it has been brought to my attention from that provision that the amount of equity that VPower would be taking could vary between 51% and 60% (which would obviously impact upon the figures), although I do not understand it to be suggested on the part of the Defendants that that would not still leave a substantial loan element.

66	In terms of the proviso and the carve-out, HarCap submits that if the parties intended the carve-out to apply to Undertaking (c), it would have said so.  By para.18.3 of the Re-Amended Defence, the Defendants contend that Undertaking (c) should be read, as a matter of construction, as precluding only those arrangements “with any party other than Arroyo and V-Power relating to, standing in substitution for or competing with the Transaction under consideration by the Claimant.”  This appears to assume that the whole of the proviso in Undertaking (a) (which I have highlighted above), was incorporated into Undertaking (c).  It is clear that that is indeed what the Defendants are submitting, because this was repeated by Miss Cheng QC, who appears on behalf of the Defendants, in her oral submissions made earlier this afternoon on behalf of the Defendants. 

67	HarCap submits that there is no basis for construing Undertaking (c) as though it incorporated the proviso.  They say the language of the contract is clear; the proviso is only included in Undertaking (a).  If it was intended to apply to the whole clause, and each undertaking contained therein, it should have been, and would have been, set out either at the very beginning of the whole clause, or repeated in each sub-clause in relation to the undertaking in that sub-clause.  In this regard, and as matter of the normal use of language, it is simply a carve-out in Undertaking (a).  It is also said that the carve-out only applies to discussions regarding the potential disposal of the power plant, and the condition on which those discussions were permitted, and it is relating to sale or disposal only, and does not include a loan structure competing with the one offered by HarCap.  

68	HarCap also submit that commercial common sense supports what is submits is the natural meaning of the language used.  They say there is a commercial difference between (i) allowing narrowly defined discussions to continue with two identified potential counterparties in relation to circumscribed matters (sale or disposal), as permitted by the proviso to Undertaking (a), essentially enabling the Defendants to develop an alternative outcome to their investment in case the Transaction failed (for example, on due diligence); and (ii) permitting a rival deal to be made during the exclusivity period (prevented by Undertaking (c). For example, allowing rival discussions to continue would enable the Defendants to exert commercial pressure on the Claimant since they might have an alternative at the end of the Exclusivity Period, whereas allowing a rival agreement or arrangement to be concluded would substantially undermine the exclusivity conferred on the Claimant by the contract.

69	In contrast, the Defendants submit, on what they say is the proper construction of the Exclusivity & Confidentiality Undertaking:
 
(a)	The term “any other party”, as used in sub-paragraph (a) of the Exclusivity & Confidentiality Undertaking does not include Arroyo and/or V-Power.

(b)	The term “any other party” as used in sub-paragraphs (b) and (c) of those Undertakings should be given the same meaning as the parties attributed to them in sub-paragraph (a). 

(c)	By sub-paragraph (a), the Defendants were permitted to “continue” the “outstanding discussions” upon which they had embarked with Arroyo and V-Power regarding the potential sale or disposal of the power plant.  Both the Claimant and the Defendants knew or understood (it is said) that those discussions (i) included the sale of part only of the shares in GenRent and  (ii) in all cases concerned a transaction to be put into effect by means of a convertible loan. 

(d)	By sub-paragraph (a) of the Exclusivity & Confidentiality Undertaking, the parties confirmed they did not consider a transaction of that nature to be one which “relat[ed] to or compet[ed] with the Transaction being evaluated by the Claimant. 

(e) 	The term “relating to, substituting or competing with”, as used in sub-paragraphs (b) and (c), should be given the same meaning as the parties attributed to them in sub-paragraph (a).  

70	I have no doubt that the construction of the Exclusivity & Confidentiality Undertaking proposed by HarCap is the correct one, and that the contrary construction is not arguable:

(1)  First, the words “with any other party” that appear in Undertakings (a), (b) and (c) do have the same meaning in each of (a), (b) and (c).  

(2) Secondly, in Undertaking (a), the prohibition upon either directly or indirectly continuing “any discussions or negotiations with any other party relating to or competing with the Transaction” (emphasis added), those words, on their face, apply to any party, including Arroyo and V-Power.  

(3) Thirdly, the carve-out that follows after the words “save” relate not to the parties, as was submitted on behalf of the Defendants, but to the nature of what the Sponsor (the Defendants) may do/the activity they are engaged upon.  Thus, the provisions in (a) only allow outstanding discussions regarding the optional disposal of the power plant between the Defendants, Arroyo and V-Power, and those discussions are only conditionally allowed to continue in relation to the sale or disposal only and do not extend to including “a loan structure competing to the one offered by HarCap in [the Agreement]”.  The consequence is that any other discussions or negotiations with Arroyo and V-Power are prohibited. Arroyo and V-Power are within the “any other party” in the opening words of Undertaking (a) and the defendants are prohibited from continuing “any discussions or negotiations with Arroyo and V-Power relating to or competing with the Transaction”.  

(4) Fourthly, I do not consider that it is necessary, or appropriate, to read the carve-out in (a) into (b) or (c).  As to (a) read together with (b), they would appear to have different subject matters.  (a) is concerned with continuing, i.e. the carrying on, of existing discussions with anyone, including Arroyo and V-Power.  (b) is concerned with entering into, that is starting, discussions with any party and, as such, is not directed at Arroyo and V-Power, although the words, on their face, would be wide enough, also to cover Arroyo and V-Power.  In this regard, I do not consider the words “facilitate or encourage” lead to any particular construction of (b) or that (b) has, as a consequence, to be read subject to the carve-out in (a).  The words of (b) are not directed at the same entities.  The carve-out in (a) concerns what may or may not be done in outstanding discussions with Arroyo and V-Power, whereas (b) is clearly intended to contemplate the entering into of new discussions with other parties.  That interpretation is not to be rejected simply by the fact that Arroyo and V-Power could fall within the definition of “any other party”, and accordingly I reject the submission that one has to imply a carve-out into (b) in that regard.  

(5) Fifthly, provision (c) is a freestanding provision on its face, as a matter of the ordinary and natural meaning of those words and, as such, it is to be construed as such.  It is concerned with the entering into of any agreement or arrangement, and not about discussions at all, which are the subject matter of (a) and (b).  So even if, contrary to the conclusions I have expressed as to the proper construction of the clause, and there is some correlation between (a) and (b), (a) and (b) are to do with discussions and (c) has got an entirely different subject matter, which is that of the entering into of any agreement or arrangement with any other party relating to, substituting or competing with the Transaction which is a separate and distinct matter, separately prohibited.

(6) Sixthly, when it is so construed, the Defendants are prohibited from entering into any agreement or arrangement “relating to, substituting or competing with the Transaction, and that is the ordinary and natural meaning of the words used.  
(7) Seventhly, on the facts, the Defendants were prohibited from entering into the agreement or arrangement with V-Power.  First, the conclusion of the V-Power arrangement led directly to the cancellation of the Transaction.  In itself, this shows that it is “related to”, “substituted” and “competed” with the Transaction.  Secondly, the two transactions had many comparable features as identified in paragraph 26 of Mr Milner-Moore’s witness statement.  The key feature is that the Letter of Intent envisaged a loan for $30m as compared to the $22 million loan that was a central feature of the Transaction.  What was required was a loan of, initially, $19.7m and, later, slightly more, it appears, to complete the plant and, as a consequence, the Defendants did not need the HarCap bridging facility.  HarCap had been offering a facility of $22 million and, instead, the Defendants chose to go with V-Power.  That was, obviously, a loan arrangement competing or substituting for the Transaction itself, i.e. a loan that was the subject matter of that.  It is described as a convertible loan and is described as such in the Defendants’ own witness evidence.  The fact that V-Power had a right to convert part of that loan into equity does not mean that it ceased to be, or is not to be regarded as, a loan arrangement competing or substituting with the Transaction itself.  The fact that it is only part of the loan and that part being variable is not a reason why it was not an “agreement or arrangement with any other party relating to, substituting or competing with the Transaction”.

71	HarCap submits that the point is, in any event, academic because even if the proviso were to be incorporated into Undertaking (c), the Defendants would still be in breach of Undertaking (c) because:

 (1) 	the proviso applies only to “the potential disposal of the power plant” and is “conditioned that [the alternatives] are relating to a sale or disposal only”; and 

(2) 	the proviso imposes a further condition that the alternatives must “not include a loan structure competing with the one offered” by the Claimant. 

72	HarCap is clearly right in its submissions in this regard based on the ordinary and natural meaning of the words used in Undertaking (a) in relation to the proviso and what falls within it. What is more, and for the reasons identified by Mr Milner-Moore at paragraphs 29 to 31 of his statement, neither condition is met.  In particular:
(1) 	The transaction with V-Power was not “a sale or disposal only” but involves investment for co-development (see the V-Power announcement that is in the bundle, and to which I was referred, as well as what is said by Mr Amir Kurz at paragraph 4.4 of his statement; 

(2) 	The defendants themselves admit that the transaction with V-Power was arranged as a “convertible loan”.  Those are indeed the very words of Mr Amir Kurz at paragraph 4.7 of his witness statement.  This is also confirmed by the V-Power press release that is also in the bundle, and to which I was also referred.  Again, as I have said, I do not consider the fact that part of that loan was convertible changes the position and nor do I consider the fact that an aspect of the Transaction involved the issue of warrants changes the position either.

73	Looking at both of the transactions, they are both agreements or arrangements which relate to the same or similar subject matter, with the result that the V-Power arrangements are indeed an agreement or arrangement with any other party relating to or substituting or competing with the Transaction within the meaning of Undertaking (c).  It is clear, and I regard the contrary as not arguable, that the V-Power convertible loan did compete with the Transaction.  I consider that it is not arguable that it did not compete or that it was not in substitution.  On the entirety of the clause and the points in relation thereto that I have already identified, on the ordinary and natural meaning of the words of Undertaking (c), and applying the agreed facts and common facts known to the parties, what happened was that the Defendants did enter into an agreement or arrangement with another party, i.e. VPower, which was relating to or substituting or competing with the Transaction.

74	In the above circumstances, I am satisfied that there is no prospect of the Court finding, if the matter had proceeded to a full trial, that the V-Power transaction was not an agreement or arrangement with any other party relating to, substituting or competing with the Transaction, and as such there is no real prospect of the Defendants’ successfully defending this issue.  I am also satisfied that there is no other compelling reason why the issue should be determined at trial.  Accordingly, I hereby grant HarCap summary judgment on this issue and find that the Defendants breached Undertaking (c) and, as such, are liable in damages to the Claimant in respect of the same

E.4 The Exclusive (or Exhaustive) Remedy Issue

75	The Claimant seeks damages for various breaches, including for breach of Undertaking (c).  A threshold issue is whether the Abort Fee operates as an exclusive remedy excluding any other remedies.  The Defendants, as I have already identified, say it does operate in this way.  I have already quoted paragraph 22.2 of the Re-Amended Defence in this regard.  

76	HarCap disagrees.  HarCap submits, and I agree, on the authorities, that parties are not likely to be taken to have intended to cut down the remedies which the law provides for breach of important contractual obligations without using clear words having that effect.  They rely upon, and I was also referred to, Nobahar-Cookson & Ors. v The Hut Group Limited  [2016] EWCA Civ 128 and the words of Briggs LJ, as he then was, at paragraph 19.  

77	There is no suggestion that the Abort Fee provision was intended to be an exclusive remedy and such an interpretation would be inconsistent with the following express term which is at the foot of page 12 of the Agreement:

“In enforcing their rights hereunder for any breach of this HoT, the parties hereto acknowledge that damages are not an adequate remedy for the breach of their obligations and that the parties hereto will be entitled to any form of equitable relief, including, without limitation, specific performance and other injunctive relief, as well as the right to pursue any and all other rights and remedies (and recover any and all damages) available at law or in equity.”
(emphasis added)

78	I do not consider this provision could have been any clearer.  Although it appears in the confidentiality section it is, on its face, a point of general application (referring, as it does, to “any” breach of the Agreement), and on the ordinary and natural meaning of the words, it is a provision of general application.  On the ordinary and natural meaning of the words, the objective common intention of the words is to make clear that all rights to damages are maintained.  It is “any and all damages” that are available in law and equity which may be pursued.  This is simply inconsistent with any construction of the Abort Fee provision which would prevent recovery of damages for breaches of the Agreement (and not even all Abort Fee situations necessarily involve a breach of contract as has already been noted). 

79	The Abort Fee provisions themselves do not even purport to limit the right to damages for breaches of the Agreement, and the words of Briggs LJ in the Nobahar-Cookson case, at paragraph 19, are apposite in this regard. There is no warrant whatsoever for considering that the parties had objectively intended to cut down the remedies provided at law for breach of important contractual obligations, and indeed the language of the clause addressing damages is to the contrary.  

80	In the above circumstances I do not consider that the Defendants’ case (that HarCap is limited to the Abort Fee) stands any real prospect of success. If that had been the parties’ intentions then there would, given the care with which this Agreement has been drafted, have been express provision for that, and any such contention is contradicted by the express language of the clause I have quoted above. I am satisfied that the Defendants have no real prospect of success on this issue, and it is not arguable in their favour that HarCap was limited to the Abort Fee.  Accordingly, I give summary judgment on this issue as well in HarCap’s favour, in circumstances where there is no compelling reason why the issue should be disposed of at trial.

81	I have endeavoured to identify and confirm, as I go through the various issues, that I do not consider, in relation to any of those issues, that there is any other compelling reason for trial on those claims and issues, but, standing back, as it were, at the end of a consideration of those matters, I equally consider that there is no wider or overarching or compelling reason for trial that would prevent this being an appropriate case for summary judgment and for giving summary judgment in the terms which I have.  I accordingly give summary judgment on the four issues before me in HarCap’s favour, and for the reasons that I have given.   

82	I hope that the parties will be able to agree an Order consequential upon the findings that I have made.  In the event that they are unable to do so, then I will hear argument on that, although I would hope that that will not be necessary.