Crowther v Arbuthnot Latham & Co Ltd: Difference between revisions

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-A case which doesn’t, despite appearances, row back on the excellent principles uncovered in {{casenote|Barclays|Unicredit}}, but rather validates them.
+{{cn}}A case which doesn’t, despite appearances, row back on the excellent principles uncovered in {{casenote|Barclays|Unicredit}}, but rather validates them.
-Crowther v Arbuthnot turned on whether private bankiers Arbuthnot, who had (rather cluelessly) lent Crowther €5.9m secured on a £4m property, could withhold its consent to the sale of that property.
+{{casenote|Crowther|Arbuthnot Latham & Co Ltd}} turned on whether private bankers Arbuthnot, who had (rather cluelessly) lent Crowther €5.9m secured on a £4m property, could withhold its consent to the sale of that property.
 The relevant clause provided:
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 :''“If with the prior approval of the bank ([[such approval not to be unreasonably withheld or delayed]]) the property is sold, you shall immediately repay to the bank the net proceeds of sale.”''
-Crowther received a fair market offer for the property of  €4.1m — and one with Arbuthnot even said was “agreeable” — but refused to approve the sale without Crowther providing further security. They relied on {{casenote|Barclays|Unicredit}}
+Crowther received a fair market offer for the property of  €4.1m — one which Arbuthnot even said was “agreeable” — but Arbuthnot still refused to approve the sale unless Crowther provided further security. To support this proposition they cited {{casenote|Barclays|Unicredit}}’s excellent musings as to whose interests a merchant was obliged to consider when behaving in a “[[commercially reasonable manner]]” (in short, its own).
-Crowther argued that reasonableness could only be determined by reference to the proposed sale price: if it was a fair market value and nothing else was likely to happen to materially affect the property's value between the sale and maturity of the loan, Arbuthnot could not reasonably withhold consent.
+Crowther argued that “reasonableness” in this case could only be determined by reference to the proposed sale price: if it was a fair market value, and nothing else was likely to happen to materially affect the property’s value between the sale and maturity of the loan, Arbuthnot could not reasonably withhold consent.
-Arbuthnot said it was seeking to protect its own commercial interests: If they had thought their loan was to be unsecured to the tune of 1.7m, they would have asked for a bigger spread on the interest. Arbuthnot’s problem here was that this is exactly what they ''had'' done: the property was agreed not to have been worth more than £4m even at the time of creation of the loan. {{t|Schoolboy error}} from the private bankers here. Nor was there evidence that the property value had slumped, or that there was much sign it was likely to rally.
+Arbuthnot said (per {{casenote|Barclays|Unicredit}}) it was seeking to protect its own commercial interests: if they had thought their loan would be unsecured to the tune of 1.7m, they would have not have made it without asking for a bigger spread on the interest.
-Waksman QC in Crowther v Arbuthnot decided that the bank had unreasonably withheld consent. It was hard to see why Arbuthnot should be able to insist on anything mroe than the sale of a property at a fair price and the bank’s stated reason for withholding  consent seemed to be aimed at securing more collateral than they has achieved at first — that is correcting a bad deal they had made.
+The problem with this argument was that this is exactly what Arbuthnot ''had'' done: By common agreement the property was never worth more than £4m, even when Arbuthnot advanced the loan. Schoolboy error from the [[Stupid banker|private bankers]] here. Nor did Arbuthnot have any evidence that the property value had slumped, nor that there was much sign it was likely to rally.
+Waksman QC decided that Arbuthnot ''had'' unreasonably withheld consent: why, he asked, should Arbuthnot be entitled to insist on anything more than the sale of a property at a fair price? Arbuthnot’s stated reason for withholding consent seemed to be to secure more collateral, thereby correcting the bad bargain they had made in the first place.
 Whether withholding consent is is reasonable will depend on the clause, the facts and the reasons given for withholding consent.
-{{seealso}}
+{{sa}}
 *{{casenote|Barclays|Unicredit}}
+*[[Commercially reasonable manner]]
 *[[such consent not to be unreasonably withheld]]