15 November 2018 - Post by:Georgina Thomson
In Vannin Capital v RBOS Shareholders Action Group the court held, by way of summary judgment, that Vannin’s termination notice extended to both the litigation funding agreements in place with the shareholders and not just one as Vannin contended.
Litigation funder Vannin Capital had entered two funding agreements with the RBOS shareholders: one for GBP 1.5m and one for GPB 2m. If the underlying claim was won or settled, Vannin said it was entitled to GPB 14m. However, Vannin and the shareholders had parted ways in 2015 when, because the shareholders failed to maintain the required after-the-event insurance policy, Vannin served a termination notice on the shareholders.
The shareholders sought summary judgment on the issue of whether the notice terminated both or only one of the agreements. This mattered because of the inconsistent termination provisions: the GBP 2m agreement provided that if Vannin terminated the agreement it could still recover the funding premium from its clients if they won, but the GBP 1.5m agreement provided that Vannin could only recover the premium if the shareholders – not Vannin – terminated.
The Court asked itself whether the termination notice amounted to ‘clear and unequivocal’ acceptance by Vannin of the shareholders’ repudiatory breach. This is an objective test, by reference to the words or conduct by which the acceptance was said to be communicated. The Court found that a reasonable recipient of the termination notice (which used the plural ‘agreements’), knowing that Vannin was already unhappy about the lack of insurance policy, would have considered that Vannin intended to terminate the GBP 1.5m agreement as well as the GBP 2m agreement.
Update: appeal set for 4 July 2019.