Neutral Citation Number: [2012] EWHC 3383 (Comm)
Case No: 2012 Folio 180
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

7 Rolls Buildings
Fetter Lane
London, EC4A 1NL

Date: 28/11/2012

Before :

MR JUSTICE BURTON
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Between :

	NAKANISHI MARINE CO LTD	
Claimant	
	- and -		
	
(1) GORA SHIPPING LTD
(2) MFS GROUP SA
(3) ATTICA FINANCE INC	

Defendants	

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Ms Vasanti Selvaratnam QC and Mr Andrew Leung (instructed by Bentleys Stokes & Lowless) for the Claimant
Mr Socrates Papadopoulos (instructed by Hill Dickinson International) for the Third Defendant
The First and Second Defendants were not represented and did not appear.

Hearing dates: 25 October & 1 November 2012
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Judgment

Mr Justice Burton: 

1.	Nakanishi Marine Co Ltd (“the Claimant”) brings before the Court pursuant to Part 24 a number of issues for summary determination, and it is now common ground, and results from an order of Hamblen J dated 17 October 2012, that not all such issues can be dealt with on that basis. Before me, Ms Vasanti Selvaratnam QC and Mr Andrew Leung have appeared for the Claimant, and Mr Socrates Papadopoulos for the Third Defendant (“Attica”). There was a hearing lasting one and a half days, and subsequently with my permission certain further evidence and submissions were supplied by counsel. 
2.	Although the First Defendant (“Gora”) and the Second Defendant (“MFS”) have been served with the relevant summonses for this hearing, they have not attended or been represented before me, and, at the instance of the Claimant, but without opposition from Attica, I have made an order that they should be bound by the result of this hearing if they did not take within a fixed period, which has now expired, any opportunity to seek to take part in it. 
3.	The context can be shortly set out. The Claimant’s claim is for sums loaned to Gora, guaranteed by MFS, by virtue of a series of agreements dated 8 September 2011: the most material agreements for my purposes being the Nakanishi Loan Agreement (“NLA”) and the MFS Corporate Guarantee (“the Guarantee”). The Claimant was informed at the time that there was a prior loan by Attica to Gora, to which the Nakanishi Loan was to be subordinated. On the same day, 8 September 2011, a Deed of Co-ordination (“DOC”) was signed between Gora, Attica and the Claimant. By Clause 2 of that Deed, Attica consented to the execution of the “Second Finance Documents” (defined so as to include the NLA and the Guarantee) on the terms and conditions contained in the Deed. Those terms and conditions, to which I shall refer, made provision for subordination of the Junior Indebtedness (the indebtedness of Gora to the Claimant) to the Senior Indebtedness (the indebtedness of Gora to Attica).
4.	The Claimant asserts that it was entitled  on 17 January 2012 to treat a non-payment by Gora of an instalment due on 9 January 2012 under the NLA as an event of default triggering Gora’s liability to repay in full (by way of ‘accelerated liability’) the sums due under that Agreement (and accordingly also MFS’s liability under the Guarantee). Attica asserts that, by virtue of the subordination of the Junior Indebtedness, the Claimant is not entitled to the relief it seeks, and that it has itself been entitled, by virtue of non-payment by Gora of an instalment due on 7 December 2011, as of 10 February 2012, to exercise its right to demand repayment from Gora under the Attica Loan Agreement, of which it asserts it gave notice to the Claimant, sufficiently in accordance with the provisions of the DOC. 
5.	Attica also sought summary judgment in these proceedings in respect of Gora’s indebtedness to it under the Attica Loan Agreement, but, in the light of a challenge by the Claimant to the genuineness of that agreement, and as to whether there is in fact anything owed by Gora to Attica, it has been agreed that that question cannot be decided summarily. Hence the first six issues formulated on an indicative basis by the Claimant have not been pursued before me. It is common ground that these issues are not suitable for determination by way of summary judgment. There is also a seventh issue, as to whether an event of default has occurred under the Attica Loan Agreement, as to which Hamblen J left it to me to decide whether it should be heard, but, in the light of the dispute as to whether anything in fact was owing under the Attica Loan Agreement, I have, without material opposition from the parties, concluded that that issue too cannot presently be resolved. 
6.	The balance of the issues, to which I shall make reference after setting out the clauses in issue in the various agreements, has been contested, in accordance with the directions of Hamblen J, on the basis that it is assumed for the purposes of the arguments, which have related only to the Claimant’s claim in respect of the Junior Indebtedness, that the Attica Loan Agreement was genuine, that sums were owed under it, and that an event of default under that agreement did occur on 7 December 2011. 
7.	I set out the relevant clauses of the 8 September 2011 agreements in issue before me:
i)	The NAKANISHI LOAN AGREEMENT
“3.1 Interest Rate
The Borrower shall pay interest on the Loan in respect of the Interest Period on each Interest Payment Date in arrears…
…
4.1 Repayment
The Borrower shall and it is expressly undertaken by the Borrower to repay the Loan by 120 equal consecutive monthly instalments … to be repaid on each of the Repayment Dates …
4.2 Voluntary Repayment
The Borrower shall have the right, upon giving the Lender… notice in writing, to prepay, without any penalty or fee, part or all of the Loan…provided that…
4.3 Compulsory Prepayment in case of Total Loss of the Mortgage Vessel
…
6. REPRESENTATIONS AND WARRANTIES
This Agreement is entered into by the Lender in reliance upon the following representations and warranties made by the Borrower and it is hereby represented and warranted by the Borrower that the following matters are true at the date of this Agreement, and covenant that they shall remain true so long as there is any Outstanding Indebtedness.
…
6.2 …
(e) Validity and Binding effect
The Security Documents [defined so as not to include the Deed of Co-ordination] are (or upon their execution – and in the case of any mortgage upon its registration at the appropriate registry – will be) valid and binding and enforceable against the Borrower and all the other Security Parties in accordance with their respective terms and conditions, and that there are no other agreements or arrangements which may adversely affect or conflict with the Security Documents [defined as above] or the security they create.
…
6.3 …
(c) Representations Correct
The representations and warranties in this Clause 6 shall be deemed to be repeated by the Borrower on and as of each day from the date of this Agreement until all moneys due or owing by the Borrower and or the Security Parties under this Agreement and the Security Documents [defined as above] have been repaid in full as if made with reference to the facts and circumstances existing on each such day.
7. EVENTS OF DEFAULT
There shall be an Event of Default whenever an event described in Clauses 7.1 to 7.7 occurs:
7.1 Non-Performance of Obligations
(a) failure by the Borrower to pay any sum due from the Lender under this Agreement and/or any of the other Security Documents [defined as above] when due, or, in the case of any sum payable on demand, within three (3) banking days of such demand;
(b) failure by the Borrower to observe and perform any one or more of the covenants, terms or obligations contained in this Agreement and/or any other Security Document; and which failure cannot be remedied; or
(c) any breach or omission of Borrower to observe any of the covenants, terms, obligations or undertakings under this Agreement and/or any of the other Security Documents and, in respect of any such breach or omission which practically is capable of remedy, such action as the Lender may require shall not have been taken within ten (10) banking days of the Lender notifying the Borrower of such required action to remedy the breach of omission;
(d) The Borrower commits an Event of Default under the First Mortgage and/or under the Loan Agreement with the Buyer’s Financier.
7.7 Consequences of Default
The Lender may without prejudice to any other of its rights, at any time after the happening of an Event of Default:
(a) by notice to the Borrower declare a period of time within which this default has to be remedied (the “Period of Notice”).
(b) put into force and exercise all or any of the rights, powers and remedies possessed by it under this Agreement and/or under the Corporate Guarantee and/or under any other Security Document and/or as mortgagee of the Mortgaged Vessel, by virtue of any of the Security Documents or otherwise), but always in subordination of the rights of the Borrowers’ Financier.
(c) Declare the whole of the Loan immediately due and repayable
…
7.9 Proof of Default
It is agreed that (i) the non-payment of any sum of money in time has to be proved conclusively by simply the passage of time upon lapse of the Period of Notice and (ii) the occurrence of this (non-payment) and any other Event of Default shall be proved conclusively by a written statement of the Lender.
…
10.7 Inconsistency of Terms
In the event of any inconsistency between the provisions of this Agreement and the provisions of a Security Document [defined as above] the provisions of this Agreement shall prevail.”
ii)	The CORPORATE GUARANTEE
“3. GUARANTEE
3.1 In consideration of the Lender advancing funds to the Borrower pursuant to the Agreement or otherwise providing or continuing to make banking facilities available for so long as the Lender may think fit, or granting time to the Borrower, the Guarantor hereby irrevocably and unconditionally:
(a) guarantees to the Lender the due and punctual performance by the Borrower of all its obligations under or pursuant to the Agreement and the other Security Documents and the due payment and discharge of the Outstanding Indebtedness; and
(b) undertakes as primary obligor and not as surety only that, if and whenever the Borrower fails to pay on the due date any sum whatsoever due and payable under or pursuant to the Agreement and the other Security Documents (or any of them), the Guarantor shall pay such sum on demand by the Lender.
3.2 As a separate and independent stipulation, the Guarantor hereby irrevocably and unconditionally agrees that, if any amounts hereby guaranteed are not recoverable on the footing of a guarantee, whether by reason of any legal limitation, disability or incapacity on or of the Borrower or any other fact or circumstance, whether known to the Lender or the Guarantor or not, then such amounts shall nevertheless be recoverable from the Guarantor as sole or principal debtor and shall be payable by the Guarantor on demand.”
iii)	The DEED OF CO-ORDINATION 
“2. CONSENT OF [ATTICA]
On the terms and subject to the conditions contained in this Deed [Attica] consents to the execution and, where appropriate, registration of the Second Finance Documents [see my paragraph 3 above]
3. SUBORDINATION
3.1 In consideration of the consent of [Attica] contained in Clause 2, [the Claimant] agrees with [Attica] that, at all times during the Facility Period, all rights and powers of [the Claimant] in respect of the Junior Indebtedness and all rights and powers of [the Claimant] against [Gora], the Vessel and the Assigned Property (whether pursuant to the Second Finance Documents [viz. above] or otherwise) shall be subordinated to all rights and powers of [Attica] in respect of the Senior Indebtedness and all rights, powers, discretions and remedies of [Attica] under or pursuant to the First Finance Documents.
3.2 [Gora] agrees that its obligations in respect of the Junior Indebtedness are, and shall throughout the Facility Period be, subordinated to its obligations in respect of the Senior Indebtedness. 
3.3 [Gora] and [the Claimant] agree that no repayments of principal or payments of interest may be made in respect of the Junior Indebtedness during the Facility Period [defined as the period until the Attica Loan is repaid in full], other than in the amounts and on the dates set out in clause 4 of the [Nakanishi] Loan Agreement, and that no repayments of principal or payments of interest may be made in respect of the Junior Indebtedness at any time after [Attica] has given notice to [the Claimant] of the occurrence of an Event of Default (as defined in the [Attica] Loan Agreement). 
…
3.5 [The Claimant] undertakes to hold all sums received by it under or pursuant to the Second Finance Documents [viz. above] (other than sums payable to it, or which it is permitted to receive, pursuant to this Deed) on trust for [Attica] to be applied by [Attica] first in or towards payment of the Senior Indebtedness and secondly by way of payment to [the Claimant] for application in or towards payment of the Junior Indebtedness.
3.6 If an Event of Default (as defined in the [Attica] Loan Agreement) shall occur, [Attica] shall, as soon as is reasonably practicable after becoming aware of the same, advise [the Claimant] of the same.
…
5. Covenants of [the Claimant]
5.1 [The Claimant] covenants with [Attica] that during the Facility Period
5.1.1 irrespective of its legal rights, and subject to Clause 5.2, it will not arrest, take possession of, appoint any receiver in respect of, manage or sell the Vessel with or without judicial proceedings, or take any steps to enforce any of its rights under or pursuant to the Second Finance Documents [viz. above] without having first either paid to [Attica] the whole of the Senior Indebtedness or obtained the prior written consent of [Attica]. On receipt of payment in full of the Senior Indebtedness [Attica] will at the expense of [the Claimant] assign or transfer to or to the order of [the Claimant] its rights under the First Finance Documents.
PROVIDED THAT nothing in this Clause 5.1 shall prevent [the Claimant] from filing any action or proceedings necessary for the preservation of its rights, or to avoid the loss of or extinction of any of its rights, nor from demanding payment of any of the Junior Indebtedness or supporting any proceedings arising from or relating to the arrest or detention of either of the Vessels (whether at the instigation of [Attica] or any other person) with a view (in each case) to substantiating, preserving or protecting its interest as third mortgagee of the Vessels and/or third priority assignee of the Assigned Property, but in any such case [the Claimant] shall give the earliest possible notice to [Attica] of its intention to take such action and shall comply with all requirements of [Attica] with respect to the preservation of [the Claimant]’s rights as first mortgagee of the Vessels and as first and second priority assignee of the Assigned Property (which shall include the cessation of, or withdrawal by [the Claimant] from, any proceedings in the event that [Attica] so requires).
…
7.5 The proceeds of any sale of the Vessel by [Attica] or by [Gora] shall be held in trust by [Attica] to be applied as follows…
…
15 Notices 
15.1 Any communication to be made under or in connection with this Deed shall be made in writing in the English language and sent by fax or letter addressed:
…
15.1.2 in the case of [the Claimant] to [the Claimant] at its address at the head of this Deed (fax no: +81 6 6573 4656 marked for the attention of: Hirakawa Yoshihiro) …
…
or to such other address and/or fax number as any party to this Deed may designate for itself by written notice to the others.”
8.	I have drawn together the fifteen live issues as follows:
i)	Did Attica serve a valid and timeous notice of event of default (“EOD”) on the Claimant of an EOD under the Attica Loan Agreement (relevant to Clauses 3.6 and 15 of the DOC)?
ii)	Is the Claimant entitled to rely on the non-payment by Gora of the instalment due on 9 January 2012, pursuant to which it served a declaration of acceleration on 17 January 2012, as an EOD (relevant to Clauses 7.1, 7.7 and 7.9 of the NLA)?
iii)	Is the effect of Clause 3.3 (and/or Clause 3.1) of the DOC that the Claimant is not entitled to rely upon the EOD by Gora to claim in respect of Gora’s accelerated indebtedness under the NLA, or such that it is not to be subordinated to Attica in respect of (i) any unpaid instalments or (ii) Gora’s total indebtedness to the Claimant under the NLA?
iv)	Is there any relevance of Clauses 6.2(e) and 6.3(c) in the light of my conclusions in (ii) and (iii) above?
v)	What is the effect of Clause 5.1 of the DOC on the Claimant’s claim against Gora?
vi)	Can the Claimant recover, in any event, under the Guarantee against MFS (relevant to Clause 3.1 and 3.2 of the Guarantee and Clause 3.3 of the DOC)?
vii)	What is the effect of Clauses 5.1 and 3.5 of the DOC on the Claimant’s claim against MFS under the Guarantee?
viii)	What is the Claimant’s purpose in bringing or pursuing these proceedings, in so far as not resolved and apparent as a result of my conclusions under issues (i) to (vii) above?
9.	Much of the argument has depended upon construction, in particular of Clause 7 of the NLA and Clause 3.3 of the DOC. It is common ground that I am entitled, indeed obliged, to apply in relation to this commercial contract, entered into between commercial parties, in cases of ambiguity or where two constructions are possible, the approach which favours common sense and commerciality (The Antaios [1985] AC191, Rainy Sky v Kookmin Bank [2012] 1AER 1137 (SC). It is also apparent on the evidence that the NLA was drafted by the solicitors acting for Gora, such that in the event of ambiguity I am entitled where appropriate to adopt the approach of construing contra proferentem, Gora being the proferens. Finally, if a question of ambiguity arises in respect of a clause relied upon so as to deprive a party of a valuable right, Ms Selvaratnam relies upon the proposition (which Mr Papadopoulos does not contest) derived from Stocznia Gdynia SA v Gearbulk Holdings Ltd [2010] QB 27 that clear words are required before a court would so construe such a clause.
Issue (i): The Notice of EOD by Attica
10.	I have set out, in paragraph 7(iii) above, Clause 15, being the Notices provision contained in the DOC. Attica sent what it relies on as a notice of EOD on 16 February 2012 addressed to law@bentleys.co.uk “for the kind attention of Mr William Chetwood”, being a partner in Bentleys, Stokes and Lowless (“Bentleys”), the Claimant’s solicitors. It sent it again, but not till 15 June 2012, as an attachment to a fax of that date addressed to the Claimant (attention Mr Hirakawa Yoshihiro), which stated “for the sake of good order, we are attaching our email of 16 February 2012 notifying your solicitor Mr William Chetwood of Messers [Bentleys] of the occurrence of an event of default under the Senior Loan Agreement”. A further letter dated 26 June 2012 (sent by fax and by post) was sent “without prejudice to all previous notices”, in accordance with the terms of Clause 15.
11.	According to the evidence of Mr Chetwood, which has not been challenged, the email of 16 February did not reach him, and was not forwarded to the Claimant, in circumstances which he describes. The 15 June fax was sent to Mr Chetwood by Attica’s solicitors after he had told them, by email of 14 June, that the Claimant had no record of receiving a notice mentioned by the Claimant’s solicitors in their email to him of 7 June. The 15 June fax was passed on by him to the Claimant, who did not receive a notice in accordance with Clause 15 until 26 June, as above.
12.	The EOD under the Attica Agreement was thus only notified in accordance with Clause 15 on 26 June, but had come to the attention of the Claimant on 15 June. Although Attica puts forward a case as to the validity of the first and second notices, its fallback case is to rely on the third (26 June) notice. Although the Claimant does not admit the validity of the second notice, in the event there is no material difference in terms of timing, or impact on the dispute between the parties, in the effect of the notices as between 15 June and 26 June, and I do not reach, and have no reason to reach, any conclusion as to the effect of the 15 June fax, but shall concentrate on the dispute as to whether the 16 February email was valid notice, as opposed to notice having been given in June (whether on 15 or 26 June).
13.	By Clause 3.6 of the DOC, set out in paragraph 7(iii) above, Attica was obliged to serve a notice of EOD as soon as reasonably practicable after becoming aware of an EOD under the Attica Loan Agreement. I shall refer to this as the timeousness point. It is conceded by Attica that none of the three notices upon which they rely was timeous or complied with Clause 3.6, not those in June and also not that of 16 February (in respect of the default by Gora on 7 December 2011). The Claimant submits that such non-compliance with Clause 3.6 renders all the notices ineffective. Attica submits that there is no impact of such breach of obligation, save for a claim for damages (if any) and that the notice, once served, has retrospective effect. I shall return to this below.
14.	I deal then with the validity of the 16 February email as a notice. It obviously did not comply with the terms of Clause 15, and, insofar as such could have any relevance, I am satisfied that it did not come to the attention of the Claimant, as explained in the witness statement of Mr Chetwood, to which I have referred. Attica contends that Bentleys had express, implied and/or ostensible authority to receive the notice addressed to its generic email address, for reasons explained in the third witness statement of Ms Anastassiou. She refers to the fact that Attica had received on 24 January 2012 a fax from Mr Chetwood giving (in accordance with the terms relating to notices to Attica under Clause 15) notice of the EOD under the NLA, and then on 30 January 2012 a fax notifying Attica of the Claimant’s intention to issue High Court proceedings. Ms Anastassiou states in paragraph 20: “throughout this period, Bentleys did not object to receiving correspondence with respect to the Deed of Co-ordination directly, and, moreover, responded on matters relating to the Deed of Co-ordination on behalf of [the Claimant]. Attica presumed [the Claimant] had instructed Bentleys to (a) send notices on [the Claimant’s] behalf under the Deed of Co-ordination and (b) as would logically be expected, accept notices on [the Claimant’s] behalf in response. Bentleys’ messages of 24 January 2012 and 30 January 2012 gave the impression that Bentleys acted for [the Claimant] in respect of all matters relating to the Deed of Co-ordination”.
15.	The relevant authorities to which I have been referred are:
i)	Westway Homes Ltd v Moores [1991] 2 EGLR 193, 1992 63 P&CR 480 (Court of Appeal). The relevant clause in that case provided that the purchaser might exercise an option by giving notice to the vendor, provided that it was given in writing on or before July 20 1987, and the notice was given by a letter to the vendor’s solicitors. There was a lengthy course of correspondence between September 1987 and February 1988 from which Dillon LJ concluded that the vendor’s solicitors were “firmly in the saddle, instructed by [the vendor] to deal with all matters relating to the improvement of his title…or anything else which would enable the property to be developed…and to enable the option to be exercised”. Dillon LJ noted and approved, but distinguished on the facts, the dictum of Walton J in Re Munro [1981] 1 WLR 1358 at 1361d-e:
“It is, of course, a common fallacy to think that solicitors have an implied authority on behalf of their clients to receive notices. They may have express authority so as to receive them, but in general a solicitor does not have any authority to accept a notice on behalf of his client.”
ii)	Von Essen Hotels 5 Ltd v Vaughan [2007] EWCA Civ 1349, where the Court of Appeal upheld the trial Judge’s conclusion that notice was not given in accordance with the terms of an agreement, where Mummery LJ, giving the lead judgment, concluded (at paragraph 43) that no case for the implied authority of the solicitors to accept the notice of claim was made out. He continued:
“44. It is no doubt true that once PDT received the letter purporting to give notice, its limited retainer by the Vaughans created a duty to pass the letter on to them. But if that were enough to establish implied authority to accept service, every person acting for a limited purpose for a principal on any issue would have implied authority to accept service of any document on any topic. For the reasons explained in the decisions cited by the Judge [Munro and Westway Homes], and as is (or should be) well understood by business men and solicitors both, that is not the law.”
16.	I have no doubt whatever that the 16 February email did not constitute good notice:
i)	There was here, unlike in Westway Homes, an express detailed provision for the method of giving notice, intended to achieve commercial certainty (and indeed to avoid the kind of dispute, embryonic in this case, as to whether a notice, for example as here, sent to a generic email address did or did not reach its destination).
ii)	There was no waiver, express or implied, of the terms of Clause 15.
iii)	There was no express or implied authority of Bentleys that could be spelt out of any correspondence, particularly that referred to by Ms Anastassiou. Unlike the correspondence in Westway Homes, this correspondence was very short lived and very limited in its effect, and in particular it is difficult to see how the service by Bentleys of a notice which did comply with Clause 15 can be said to give rise to a conclusion that Attica could serve one which did not.
iv)	It does not need reference to authority (such as was made by Ms Selvaratnam) for the proposition that to establish ostensible authority there must be some act or representation by the alleged principal (in this case such as either to waive the provisions of Clause 15 or to accept service of a notice otherwise than in accordance with the provisions of Clause 15) and there was of course none such here even arguably at the summary judgment stage.
17.	There was no valid 16 February notice. There was valid, but non-timeous, notice in June 2012 (as I have said above, I need to make no differentiation between 15 and 26 June, although plainly only the latter was in formal compliance).
Issue (ii): Nakanishi’s acceleration of sums due under the NLA on 17 January 2012
18.	This issue depends on the construction of Clause 7 of the NLA, set out in paragraph 7(i) above. The Claimant submits that Clause 7.1 provides for an EOD in the event of non-payment on the due date pursuant to Clause 7.1(a). There was such a failure, which gave the option to the Claimant to follow one of the Consequences of Default set out in Clause 7.7, and the Claimant opted (as it “may without prejudice to any other of its rights” do), pursuant to Clause 7.7(c) to “declare the whole of the Loan immediately due and repayable”. Attica relies upon Clause 7.9, which provides that “the non-payment of any sum of money in time has to be proved conclusively by simply the passage of time upon lapse of the Period of Notice”. Such Period of Notice is a cross-reference to Clause 7.7(a), and Attica submits that the Claimant cannot therefore rely upon non-payment as an EOD entitling immediate acceleration, but must first give such a Period of Notice in accordance with Clause 7.7(a). The Claimant did not do so, and thus there was no valid declaration of acceleration, without its first having served a Clause 7.7(a) Notice.
19.	Clause 7.9 is not well drafted, and to the extent the Claimant needs to do so, Ms Selvaratnam relies upon all three of the principles of construction referred to in paragraph 9 above, namely contra proferentem (Gora being the proferens), commercial sense (the apparent overriding of a clear discretion in Clause 7.7) and the principles of Stocznia Gdynia, namely its right to terminate in accordance with Clause 7.1(a) needing clear words to be ousted.
20.	Mr Papadopoulos relies upon the wording of Clause 7.9, particularly that set out in paragraph 18 above in subparagraph (i) of the clause, but also the reference in subparagraph (ii) to the words providing for proof of “this (non-payment) and any other event of default”, suggesting, as he submits, a dichotomy between any non-payment and any other event of default not consisting of non-payment. Insofar as a commercial purpose is to be derived, he submits that it is an intention to alleviate the harshness of the otherwise well established principle of commercial law apparent from the Laconia [1977] AC 850 esp. at 867G per Lord Wilberforce, whereby, once a punctual payment of any instalment has not been made, a right of withdrawal accrues, such that (in that case) a charterer who had failed to make a punctual payment could not avoid the consequence of his failure by later tendering an unpunctual payment.
21.	I reach the following conclusions, assisted by the submissions of counsel for the parties:
i)	As Ms Selvaratnam forcibly points out, Clause 7.9 is, and is expressly described as, a Proof of Default clause. It does not purport to be one which either establishes the entitlement of the Claimant or amends the definition of an EOD, or amends or varies the Consequences of Default as per Clause 7.7. The words “proved conclusively” and (in particular) “simply” are plainly words relating to the manner of proof.
ii)	The EOD is established by Clause 7.1, and in this case it is a failure to pay on the due date. The consequences of default are set out in Clause 7.7, and the Claimant may then follow one of the following three options, the three clauses plainly being disjunctive. In relation to (a), the EOD has already happened (“after the happening”) and the Claimant then has an option to allow it to be remedied, but does not need to, and can in the alternative follow the course, after the happening of an EOD, pursuant to (c), of declaring acceleration. Time is ordinarily of the essence in a commercial contract (Bunge Corporation v Tradax Export SA [1981] 1 WLR 711 (HL)).
iii)	The option to declare acceleration under (c) is expressly (as with the other options) capable of being exercised “at any time” after an EOD.
iv)	Clause 7.9 does not in my judgment amend the Claimant’s right to terminate the agreement under Clause 7.7(c) at any time. It deals (in limb (i)) in my judgment, as Ms Selvaratnam has submitted, with the case where a notice, giving a Period of Notice for remedy, has been served, and it does not have any relevance to where there was non-payment on the due date and the Claimant has not elected to give any notice to remedy but has immediately determined. Although the principles underlying the Laconia and Bunge v Tradax are harsh, there was plainly in this case made available to the Claimant an express consequence of default, being an immediate termination/declaration of acceleration. Payment on the due date does not require to be evidenced in any other way than the statement (no doubt if necessary relying upon limb (ii) of Clause 7.9), that payment on the due date was not made. If there has been a notice giving a Period of Notice, then limb (i) of Clause 7.9 applies to the conclusive and simple evidence that is then required, relating to non-payment in compliance with that notice, and it is to this alone that Clause 7.9(i) applies.
22.	The declaration of 17 January 2012 was thus, pursuant to Clause 7.7(c), and unaffected by Clause 7.7(a) and 7.9(i), a valid declaration under the NLA that the whole of the loan was immediately due and repayable.
Issue (iii): The effect of Clause 3.3 (and/or Clause 3.1) of the DOC on the entitlement of the Claimant.
23.	Clause 3.1 recites in general terms that the Junior Indebtedness (under the NLA) is subordinated to the Senior Indebtedness (under the Attica Loan Agreement), but, other than as setting the scene for what follows, neither counsel relied in argument before me on this subclause as giving a separate or additional or different answer to the questions I have to resolve in respect of Clause 3.3.
24.	Clause 3.3 has what were described by both sides as two limbs, which I shall set out below, with the substitutions/clarifications which I made when setting out the clause in paragraph 7(iii) above:
Limb (i): Gora and the Claimant agree that no repayments of principal or payments of interest may be made in respect of the Junior Indebtedness, until the Attica Loan is repaid in full, other than in the amounts and on the dates set out in Clause 4 of the NLA;
Limb (ii): No repayments of principal or repayments of interest may be made in respect of the Junior Indebtedness [at all] at any time after Attica has given notice to the Claimant of the occurrence of an EOD (as defined in the Attica Loan Agreement).
I have added the words “at all” in limb (ii) to emphasise and clarify its meaning.
25.	Ms Selvaratnam submits that if, as I have found, the declaration of acceleration was valid as of 17 January 2012, the Claimant is entitled to payments of any unpaid instalments, and to payment of the accelerated sums, under limb (i), and as to limb (ii), while she accepts that a June notice by Attica would stand in the Claimant’s way as from June, if it is effective at all, that notice is not retrospective.
26.	Attica submits that the first limb prevents payment of all instalments of principal and interest other than the scheduled payments (Mr Papadopoulos accepts that it cannot have been intended to prevent payment of the regular instalments of interest under Clause 3, and that the reference to Clause 4 alone must have been in error). It prohibits any payment of any accelerated sums if (as I have found) such arose on 17 January: and that in any event the (as I have found) June notice prevents (on his case retrospectively) any payment at all, both in respect of the scheduled payments and in any event in respect of any accelerated sums.
27.	Once again the wording is not well drafted, and the various canons of constructions referred to in paragraph 9 above apply, in each case favourably to the Claimant, where appropriate.
28.	I deal first with the issue of the effect on limb (ii) of the valid June notice, as I have found it to be. As to the timeousness point, I am satisfied that the June notice was, while not timeous, effective. The existence of Clause 3.6 significantly imposes an obligation on Attica to serve its notice diligently, because of its effect (Clause 3.3 limb (ii)) once it is served. But although late it was, in my judgment, effective. The significance of Clause 3.6 is that it brings down the shutters, by virtue of limb (ii), and the sooner it does so, the more effective for Attica, but I do not conclude that it is of no effect once it is, belatedly, served. However, I am equally satisfied that it does not have retrospective effect once it is served, as that would or might deprive the Claimant of any accrued rights or entitlements. The effect is that if any payments permitted by limb (i), but which would otherwise have been prevented by limb (ii), were made prior to the June notice, they were valid and permitted. However it is clear to me that payments otherwise permitted under limb (i) cannot by virtue of limb (ii) be made, if they have not been made earlier, after the June notice. 
29.	I turn then to the construction of Clause 3.3:
i)	As to limb (i), the Claimant submits that it must be construed so as to permit not just scheduled payments but also any payments arising under Clause 4 – being voluntary prepayments (Clause 4.2) or compulsory prepayments in the case of the total loss of the mortgaged Vessel (Clause 4.3), or where payments falling under Clause 4 are triggered and brought forward by virtue of a breach of Clause 4 (and hence an EOD). Attica submits that (subject to acceptance of the error in relation to interest) limb (i) is on its face limited to scheduled payments – “in the amounts and on the dates set out in Clause 4”.
ii)	As to limb (ii), the Claimant submits that the same payments (i.e. not limited to scheduled payments) may be made, but only until the service of a valid notice (now found to be June) and then without retrospective effect. Attica submits that (although I have rejected the retrospectivity argument) once there is service of a valid notice – i.e. June, as found – no payments at all under the NLA may be made.
30.	The Claimant submits that Attica’s construction renders Gora’s obligation under Clause 7 nugatory, and that Clause 3.3 should be read so as not to override Gora’s obligations, at least until the service of a valid notice. Although the Claimant accepts that Clause 10.7 Inconsistency of Terms (set out in paragraph 7(i) above) does not apply as between the NLA and the DOC, nevertheless Attica consented, by Clause 2 of the DOC, to the terms of Clause 7, and so neither it nor Gora should be heard so to construe Clause 3.3 of the DOC as to oust the Claimant’s entitlement under Clause 7 of the NLA.
31.	Mr Papadopoulos submits that Attica’s consent in Clause 2 is expressly recited in Clause 3.1 in the context of agreed subordination of the Junior Indebtedness to the Senior Indebtedness, and that the provisions of Clause 3.3 do not oust Clause 7, but that they rather subject the entitlements of the Claimant under Clause 7 to the limitations of subordination during the period in which the Senior Loan remains outstanding. Mr Papadopoulos refers to the authoritative words in Wood: Project Finance, Securitisations, Subordinated Debt [2007] at paragraphs 12-015 to 12-029. Although these clauses are not identical to, they are certainly not in principle different from, those discussed by Wood under the headings of “restrictions on payment of junior debt” and “permitted payments of junior debt and payment blockages” and “restrictions on enforcement by junior creditor”. In particular Mr Papadopoulos refers to 12-015: “the agreement usually restricts direct or indirect payment of the junior debt except for permitted payments on the junior debt, which can be paid until a payment block event occurs”. As for acceleration of the junior debt, he refers to paragraph 12-029, where Wood recites a common clause providing that the junior creditor will not accelerate liability in respect of junior debt so long as any of the senior debt is or may become outstanding.
32.	Taking into account the various submissions, I reach the following conclusions:
i)	Limb (i). During the period prior to the service of a valid notice (in this case until June 2012) permitted payments were only the scheduled payments, being the instalments falling due on their various due dates in accordance with Clause 4 (or, relating to interest, Clause 3). I am satisfied that no repayments of principal or repayments of interest [could] be made other than [with the exception of] scheduled payments. Such payments continued to be made (with the exception of the late payment in January, which amounted to the EOD) until February 2012, but were not made thereafter.
ii)	Limb (ii). No payments at all could be made after June 2012, even those scheduled payments which had previously been permitted to be made: thus (in the same words as in limb (i) but without the “other than”) no repayments of principal or payments of interest [at all] could be made. Although the declaration of acceleration had effect to create liability to the Claimant on the part of Gora to make payment thereafter of all sums due under the NLA, no payments were made, and, as a result of the valid June notice, none could thereafter be made, and none can now be made, by Gora to the Claimant.
Issue (iv): Any relevance of Clauses 6.2(e) and 6.3(c)
33.	In the light of my conclusion that there was no requirement for a Period of Notice before the Claimant was entitled to enforce its EOD pursuant to Issue (ii), there is no need for the Claimant to rely on any additional EOD such as it seeks to establish by reference to Clause 6. However I shall deal briefly with the question, as it was argued before me.
34.	Ms Selvaratnam’s submissions are as follows. If (as I have found) Clause 3.3 prevents the Claimant from recovering, then Gora is in breach of the representation/warranty in Clause 6.2(e) (and hence 6.3 (c) of the NLA) set out in paragraph 7(i) above. That is a breach which constituted a default upon which the Claimant would have been and hence now is entitled to rely under Clause 7, and without any Period of Notice.
35.	Mr Papadopoulos submits that this is unarguable:
i)	I agree with him that, given that the DOC was contemporaneous with the NLA, and that both Gora and the Claimant were parties to it, the provisions of that contemporaneous agreement between the same parties is not the subject matter of the warranty, and it is not one of those “other agreements or arrangements” which may adversely effect or conflict.
ii)	Even if the DOC were relevant, there is no evidence that either of the parties to the NLA had at that stage any different view as to the meaning of Clause 3.3, which I have now found to be the correct one, or the effect and/or limitation of the admitted and agreed subordination of the Junior Indebtedness to the Senior Indebtedness. In my judgment neither side gave to the other any warranty as to the meaning of the DOC.
iii)	If there were a breach, there is at the very least an issue as to when that took place: when a position was taken by Attica (or surely by Gora) in accordance with the interpretation of Clause 3.3 which I have now found to be correct (whenever that was): or is it at the date of this judgment? In any event, even if there had been a breach by reference to the position being taken by Gora (if it was), and if that be found to have been prior to the acceleration of outstanding sums under the NLA in January 2012 (or perhaps prior to the later restatement of its entitlement by the Claimant, when the March instalment was not made), the Claimant did not rely upon that ground at the time. I am far from persuaded (nor was any authority produced by Ms Selvaratnam) that the principle of Boston Deep Sea Fishing and Ice Co. v Ansell [1888] L.R.39 Ch. D339 CA (entitlement for the innocent party to rely upon a repudiatory breach of contract unknown to it at the time) extends to a case where there is a requirement for an EOD, as here, in order to terminate a contract, with specified consequences, and where the Proof of Default clause provides that “any other Event of Default shall be proved conclusively by a written statement of the Lender”, of which there was none at the time or even, in the absence of pleading, as of now.
36.	In any event, in the light of my conclusions on Issue (iii), no reliance on any alternative EOD would avail the Claimant, so that at best it could pursue an (in any event in my judgment unarguable) claim for damages for breach of the warranty, but that would not avail it on this application.
Issue (v): The effect of Clause 5.1 of the DOC on the Claimant’s claim against Gora
37.	It is common ground that whatever claims can be brought by the Claimant against Gora (and I have found that in the circumstances above there are at present none), they cannot in any event now be enforced because of Clause 5.1 of the DOC, which I have set out in paragraph 7(iii) above. The Claimant has only brought proceedings for a declaration, and Ms Selvaratnam submits that, by making an application for declaration as to the Claimant’s entitlement, the Claimant is not taking a step to enforce any of its rights. In his Skeleton for the hearing, Mr Papadopoulos contended that it was a step towards enforcing, which Ms Selvaratnam relied upon as showing that Attica is only able to assert something short of a breach, but Mr Papadopoulos responds that this was simply an unwitting mistake, and, by amending the Skeleton, made it clear that he does contend that seeking a declaration is taking a step to enforce the Claimant’s rights. Ms Selvaratnam relies upon the dicta of Toulson LJ in The Front Comor [2012] EWCA Civ. 27:
“22. A declaratory judgment or award decides some question as to the respective rights and obligations of the parties. It is not “executory” in form in that it does not formally order either party to do or to refrain from doing anything. I include the words “in form” because the practical as distinct from the formal effect may be compulsive…
23. If authority were needed for this, Judge LJ said in Saint George’s Healthcare NHS Trust v S [1999] Fam 26, 60:
“Non-Compliance with a declaration cannot be punished as a contempt of court nor can a declaration be enforced by any normal form of execution, although exceptionally a writ of sequestration might be appropriate: see Webster v Southwark London Borough Council [1983] QB 698.”
…
25. Ordinarily speaking…a declaration cannot be enforced by the ordinary methods of execution provided under the CPR.”
She also relied upon Trimast Holding Sarl v Tele Columbus Gmbh [2010] EWHC (Ch) 1944, where Norris J granted a declaration which did not seek associated relief, which was opposed on the basis that there was no prospect of any payment being made, concluding that the Court could, and he would, make a binding declaration, whether or not any other remedy was claimed, in order to establish a position in law.
38.	Mr Papadopoulos submits that the Claimant here is, by claiming a declaration, taking a step to enforce its rights. Ms Selvaratnam submits to the contrary, that the Claimant is establishing whether or not it has a right, and then once that fact has been established (the subject matter of some legal dispute, as has been apparent on this hearing), then questions of enforcement may follow later. Her submission is supported as follows:
i)	She refers to the proviso to Clause 5.1 which states that nothing in Clause 5.1 shall prevent the Claimant from “filing any action or proceedings necessary for the preservation of its rights”, and submits that establishment and preservation are closely linked, if not analogous.
ii)	In particular she refers to the fact that Clause 5.1 prevents enforcement by the Claimant inter alia without its having obtained the prior written consent of Attica. She submits that if and when such rights were established, then, if the Claimant has such rights which cannot be enforced, at the next stage (and there are still matters outstanding in these proceedings) such issues will be considered as whether there is any impact of Clause 7.5 of the DOC (briefly set out in paragraph 7(iii) above, but not relevant in the light of my conclusions) and, in particular, whether there is an implied term that such consent could not be unreasonably withheld by Attica (a contention vigorously contested by Mr Papadopoulos).
39.	I am satisfied that, for the reasons Ms Selvaratnam gives, her claim for a declaration is not a step to enforce any rights, but an inquiry as to whether there are any rights, and if so a declaration to that effect, which cannot be enforced. I disagree with Mr Papadopoulos’ submission that it makes little commercial sense if the Claimant were entitled pursuant to Clause 5.1 to sue Gora for declaratory relief only. The establishment of the rights, if any, in my judgment serves a valid purpose: I shall return to this in relation to Issue (viii).
Issue (vi): Does the Claimant, even if it can make no claim against Gora, have rights against MFS?
40.	There are two areas of dispute between the parties:
i)	The first is limited. Mr Papadopoulos did not orally seek to answer the powerful and detailed submissions of Ms Selvaratnam by reference to the construction of the Guarantee, although he did not concede the point. I have set out in paragraph 7(ii) above Clause 3 of the Guarantee. The law is not in dispute – a guarantor can be liable even if the borrower is not if, on construction of the document, it is not (or not only) a guarantee but an indemnity, and/or if primary liability is accepted by the guarantor (as well as, or instead of, secondary). Ms Selvaratnam relied upon ‘Andrews and Millett: The Law of Guarantees’ 6th Edition 2012 esp. at paragraph 1-013, and by way of illustration the case of Sofaer v Anglo Irish Asset Finance Plc [2011] EWHC 1480 (Ch). There is no doubt that the clauses in this case were not limited to secondary/guarantee liability:
a)	Clause 3.1 MFS (a) “guarantees to the Lender the due and punctual performance either by the Borrower of all its obligations…and (b) undertakes as primary obligor and not as surety only that if and whenever the Borrower fails to pay on the due date…the Guarantor shall pay such sum on demand by the Lender”.
b)	Clause 3.2 “as a separate and independent stipulation the Guarantor…agrees, that if any amounts hereby guaranteed are not recoverable on the footing of a Guarantee, whether by reason of any legal limitation, disability or incapacity on or of the Borrower or any other fact or circumstance, whether known to the Lender or the Guarantor or not, then such amounts shall never the less be recoverable from the Guarantor as sole or principal debtor.”
I have no doubt that, even though the Claimant cannot recover by virtue of the legal limitation in, or fact or circumstance of, Clause 3.3, the instalments were due and unpaid, and the sum due under the NLA was duly accelerated, so that (but for Clause 3.3 and the subordination of the Secondary Indebtedness) the sums were due and payable by Gora, and are payable by MFS pursuant to Clause 3 of the Guarantee.
ii)	The second dispute is that Mr Papadopoulos submitted that the Claimant was prevented by Clause 3.3 of the DOC not only from claiming against Gora but also against MFS pursuant to the Guarantee. Clause 3.3 certainly does not say so in terms, and all three canons of construction set out in paragraph 9 above unite in favour of the Claimant in this regard. What Gora and the Claimant agree is that “no repayments of principal or payments of interest may be made in respect of the Junior Indebtedness”. Mr Papadopoulos submits that a claim under the Guarantee is wide enough to fall within the definition “in respect of the Junior Indebtedness”. But I am satisfied that a claim against MFS is not to be characterised as one for “repayments of principal or payments of interest”. As Ms Selvaratnam submitted in her Skeleton Argument (and not answered by Mr Papadopoulos):
“…even if this is wrong and the Deed is capable in principle of regulating Nakanishi’s rights vis-à-vis MFS, clause 3.3 does not do so as a matter of construction. MFS’s obligation under clause 3.1(a) is to see to it that Gora performs its obligations under the Nakanishi Loan. MFS’s liability under clause 3.1 (a) in the event that Gora fails to perform its obligations is therefore in damages: Vossloh AG v Alpha Trains (UK) Ltd [201] EWHC 2443 (Ch) at [23]. Further, MFS’s obligation under clauses 3.1(b) and 3.2 is to pay sums on demand as primary obligor and/or sole or principal debtor in certain circumstances.  This gives rise to a liability in debt independent of Gora’s liability. Clause 3.3 only prevents “repayments of principal or payments of interest” in respect of the Nakanishi Loan. But Nakanishi is not claiming such payments from MFS: MFS is not a party to the Nakanishi Loan and cannot be held liable to repay principal or interest under it. On the contrary, the declaratory relief sought by Nakanishi is in respect of damages under a guarantee and/or debt payable under an indemnity from MFS. The claim against MFS therefore falls outside the scope of clause 3.3 of the Deed, as payments under the Guarantee are by definition never inconsistent with clause 3.3 of the Deed.”
I agree.
Issue (vii): The effect of Clauses 5.1 and 3.5 of the DOC on the claim against MFS.
41.	I refer to my conclusions in respect to Issue (v), with regard to the effect of Clause 5.1 of the DOC. In accordance with the terms of that subclause, the rights which the Claimant cannot take “any steps to enforce” are “any of its rights under or pursuant to” not only the NLA but, by virtue of the definition, the Guarantee also. However in the light of my conclusions above, I am satisfied that it is permissible, notwithstanding that clause, for the Claimant to proceed with these proceedings for a declaration against MFS as to its liability to the Claimant pursuant to Clause 3 of the Guarantee. 
42.	In this regard, unlike my conclusions in respect of Issue (iii), I have resolved Issue (vi) such that the Claimant does have rights under the Guarantee against MFS. It cannot, upon this application before me, seek to enforce such rights, and only at this stage seeks a declaration. But, as adumbrated in paragraph 38(ii) above, the Claimant will wish to assert (over the opposition of Attica) that, if Attica refuses its consent to enforce the Guarantee against the third party, MFS, there is a contractual route to establish that such consent would be unreasonably withheld. The battleground is already laid out. First there must be resolved the question as to whether there is an implied term to that effect in Clause 5.1. If there is (and the factual context will obviously be relevant to such question in any event), then on the facts the Claimant will assert that, even if there could be some reasonable ground for Attica’s refusing to consent to enforcement against Gora, there could be no such reasonable ground for Attica’s refusing to consent to enforcement of a claim against the third party MFS. Attica has, subsequent to the hearing before me, produced evidence which suggests that MFS is the parent company of Gora, but I cannot resolve either that fact or what (if any) impact that fact, if such it be, would have on the issue, if it arises, of unreasonable refusal to consent to enforcement by the Claimant against MFS, particularly in the absence of any evidence that Attica itself has any remedy against MFS.
43.	I turn to consider Clause 3.5 of the DOC. This too is set out in paragraph 7(iii) above. It imposes an obligation on the Claimant to hold on trust for Attica all or any sums received by it under or pursuant not only to the NLA but also the Guarantee. However there is an exception for sums “payable to it, or which it is permitted to receive, pursuant to” the DOC. So far as concerns monies payable by MFS, they would not be payable to the Claimant pursuant to the DOC, but the Claimant would be permitted to receive such sums (not excluded by the provisions of Clause 3.3) if they were permitted to receive them pursuant to and in the light of Clause 5.1. If therefore at the end of the day it were found that the Claimant can enforce its rights pursuant to Clause 5.1 by obtaining, or dispensing with, Attica’s consent, then such monies would not be held on trust pursuant to Clause 3.5. The issue and the result would be the same in respect of Clauses 5.1 and 3.5.
Issue (viii): The Purpose of this Application
44.	It has become quite clear, by virtue of the argument before me, and in particular the terms of this judgment, that there was indeed a purpose in this application. In the result, and after considerable dispute, it has become clear as a result of my judgment that the Claimant has no rights against Gora, at least until all sums due under the Attica Loan Agreement have been paid or (see paragraph 5 above) the Attica Loan Agreement were found not to be genuine and/or nothing were found to be due thereunder. On the other hand, again after considerable argument, I have concluded that the Claimant does have rights against MFS (irrespective of the reserved issue just referred to) which cannot at present be enforced, but which may be capable of enforcement either if Attica consents or if it can be established in law that its consent should be dispensed with.
45.	I shall leave it to the parties to agree a form of order which reflects the conclusions to which I have come with regard to each of the eight issues, so far as that is necessary or appropriate.