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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 | {{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: | The relevant clause provided: | ||
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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. | 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 (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 | 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. | ||
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. | 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. | ||
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Whether withholding consent is is reasonable will depend on the clause, the facts and the reasons given for withholding consent. | Whether withholding consent is is reasonable will depend on the clause, the facts and the reasons given for withholding consent. | ||
{{ | {{sa}} | ||
*{{casenote|Barclays|Unicredit}} | *{{casenote|Barclays|Unicredit}} | ||
*[[Commercially reasonable manner]] | *[[Commercially reasonable manner]] | ||
*[[such consent not to be unreasonably withheld]] | *[[such consent not to be unreasonably withheld]] |