The BVI court recently handed down its judgment in Strong Fort Global v Solar Achiever Limited, Concept Pioneer Limited and Harkom Corporate Services. This matter revolved around the central issue of whether an alleged oral agreement not to enforce security was sufficient to prevent the bank enforcing certain security documents. CNCB bank had appointed receivers pursuant to various security pledges entered into following a previous default caused by the collapse of Goldin Financial, owned by property developer Mr Pan Sutong.
Following a 4-day trial, Justice Mangatal rejected the Defendant's arguments and upheld the appointment of receivers. In particular, she was asked to determine whether an alleged verbal assurance was sufficient to infer the existence of either a collateral contract or form the basis of an estoppel by convention or that the mortgages were subject to a condition precedent and therefore unenforceable. Each argument rested on the claim that Mr Pan asked a visiting bank employee to confirm that the grant of the additional security would signal CNCB's agreement to an extension of time for repayment. The bank employee allegedly replied "Of course, of course".
The Judge identified two overarching questions:
- did the alleged meeting take place at all, and was the oral agreement entered into at that meeting; and
- even if the oral agreement was entered into, does it override the express terms of the mortgages?
In deciding these questions, the Judge accepted the claimant's submission that, while a holistic approach to the evidence is required, the starting point is the importance of contemporaneous documents. The carefully drafted agreements by parties who had instructed lawyers should reflect the bargain made by the parties.
After analysing the documentary record, the Judge found that the defendant's account of a meeting was wholly inconsistent with the mortgages and ancillary documents. In addition, the alleged assurance, if made at all, (which was doubtful), could not possibly give rise to enough certainty as to terms and conditions to sustain any of the defendant's pleadings.
This decision underlines the importance of keeping careful records as to the negotiation process and that strong evidence will be required to overturn the bargains reflected in carefully drafted agreements.
Harneys represented the claimant in this matter.