Crestline Direct Finance LP v Insurance Company Euroins AD

By Particulars of Claim dated 8 October 2024 the Claimant, Crestline Direct Finance LP (“Crestline”) a company incorporated in Delaware, claims £3,690,296 pursuant to a bond issued by the Defendant insurance company, Euroins AD (“Euroins”). In the alternative, the same sum is claimed as damages for breach of the obligation to make payment under the bond.

A Defence was served on 19 December 2024. There have been no further statements of case.

By an Application Notice dated 3 June 2025 Crestline seeks to strike out Euroins Defence on the grounds it discloses no reasonable grounds for defending the claim alternatively seeks summary judgment on the basis that Euroins has no real prospect of successfully defending the claim and there is no other compelling reason why the case should be disposed of at trial.

An alternative application is made that the Defence is struck out in its entirety save for paragraph 72 thereof. As I set out below, paragraph 72 of the Defence is a wholesale denial of Crestline’s entitlement to payment under the Bond for reasons set out elsewhere in the Defence, alternatively that Crestline has failed to prove its entitlements to the sums claimed under the Bond for the reasons set out in the Defence.

An alternative application for summary judgment is made in respect of Euroins liability under the bond with directions to a hearing to assess the quantum of that liability.

I have a witness statement of Aaron Emmett in support of the applications. The statement is dated 3 June 2025 and Mr Emmett was at the material time Managing Director of Click Group Holdings Ltd. As noted below, Click Hershel Ltd was the Employer under the Building Contract to which the bond relates.

In opposition to the applications, I have a witness statement dated 23 October 2025 from Yoanna Tsvetanova Tsoneva. Ms Tsoneva is the Chairman of the Board of Directors of Euroins and signed the Statement of Truth to the Defence in that capacity. In addition to foreshadowing a number of points made in submission, Ms Tsoneva’sevidence, which I accept on this point, is that despite making efforts Euroins has not had access to the full project documentation or to personnel and so is not only unable to confirm the factual position as to receipt of documents and notices but also that a number of documents relied on in the applications had not previously been supplied and were seen for the first time when exhibited to Mr Emmett’s statement.

Finally, in response, I have a statement from Martin Williams dated 28 November 2025. Mr Williams is a director of Click Hershell Ltd.

Beyond the evidential difficulties explained by Ms Tsoneva to which I have referred, the witness evidence was, in large part, little more than a vehicle for exhibiting documentation, commenting on the same and foreshadowing submissions made at greater length in the parties’ skeleton arguments.

Finally by way of introduction, in the course of argument Mr Cheung who appears for Crestline conceded, correctly, that there was an issue to be tried in respect of quantum on the basis of the defences available to Euroins under the bond. It follows that the Court is concerned only with the applications made in the alternative and I do not deal with the issues on quantum in any detail in this judgment.

Given the numerous defences to the claim made, I start with a consideration of the procedural framework. Both Mr Thorne, who appears for Euroins and Mr Cheung referred to the relevant parts of the Civil Procedure Rules applicable to the applications. Beyond differences of emphasis, there was no difference between them as to the principles I set out below.

Firstly, it is clear from the Civil Procedure Rules that there is nothing inherently objectionable with a party proceeding by way of both summary judgment and a strike out application. Paragraph 1.5 to Practice Direction 3A provides:

“1.5

A party may believe they can show without a trial that an opponent's case has no real prospect of success on the facts, or that the case is bound to succeed or fail, as the case may be, because of a point of law (including the interpretation of a document). In such a case the party concerned may make an application under rule 3.4 or apply for summary judgment under Part 24 (or both) as they think appropriate.”

When considering the application for summary judgment, I note the principles applicable to such applications as formulated by Lewison J in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [50] and set out in the Notes at 24.3.2:

Given the issues raised before me, I note the “Micawberism” argument set out at (vii) in the previous paragraph has been considered in a number of authorities, some of which were referred to in the parties’ written and oral submissions. Whether the likelihood of further relevant documentation goes beyond a mere hope that something might turn up is, of course, a decision on the facts of each case.

As Cockerill J held in King v Stiefel [2021] EWHC 1045 (Comm) having reviewed the authorities:

“21.

The authorities therefore make clear that in the context of summary judgment the court is by no means barred from evaluating the evidence and concluding that on the evidence there is no real (as opposed to fanciful) prospect of success. It will of course be cautious in doing so. It will bear in mind the clarity of the evidence available and the potential for other evidence to be available at trial which is likely to bear on the issues. It will draw a line and say that -even bearing well in mind all of those points – it would be contrary to principle for a case to proceed at trial.”

(the Notes at 24.3.2.3 refer)

A good illustration of where the Court properly grasped the nettle is Pinewood Technologies Asia Pacific Ltd v Pinewood Technologies Plc [2023] EWHC 2506 (TCC). In that case Joanna Smith J, in rejecting the submission that an issue of construction should await trial, concluded on an issue of construction that where there was little between the parties on the law, the absence of factual complexities or intention to rely on any factual matrix evidence at trial meant that that the Court should grasp the nettle. In Pinewood, the party resisting summary judgment was unable to substantiate its assertion that there would be a need for the Court to consider further relevant factual evidence at trial. It followed the Court concluded it had before it all the evidence necessary for the proper determination of the point of construction and so proceeded, given there was no reason to believe a fuller investigation into the facts of the case would materially add to or alter the evidence available to the trial judge, and so affect the outcome of the case.

Mr Thorne emphasised by reference to the Notes at 24.3.2.4 that there may be some points that the Court is capable of grappling with as a short point of law or construction but nevertheless, due to the context in which they arise or other factors, are best left to be dealt with at a trial. He did so in particular relying on the comments of Chief Master Marsh to that effect in Commerz Real Investmentgesellschaft MBH v TFS Stores Ltd [2021] EWHC 863 (Ch).

When considering whether there are other compelling reasons why the case or issue should be disposed of at trial, reliance is placed on the judgment of Etherton LJ in AC Ward & Sons Ltd v Catlin (Five) Ltd & Ors [2009] EWCA Civ 715 where the Court of Appeal upheld a refusal to rule upon a short point of construction of the terms of an insurance contract where those terms were said to be standard terms which were widely used in the insurance market. That case was an appeal against a refusal to grant summary judgment under a commercial contract of insurance. The defendant’s application for summary judgment was refused on the basis that the claimant had an arguable case as to the construction. In considering the judgment, the Court of Appeal concluded that as the Judge had not articulated clearly any evidence relevant to interpretation which was likely to exist and, although not available at the hearing of the application, could be expected at trial, that would not have been sufficient to refuse summary judgment. However, the appeal was dismissed given that the Court of Appeal accepted the claimant’s submissions on interpretation was arguable. Particular reliance is placed on the observations at paragraph 35 that:

“Furthermore, I bear in mind that the warranties are standard terms of the Defendants’ Multiline Commercial Combined Policy, which may affect many other policyholders, and that provisions in the Warranties such as “be in full and effective operation at all times” and “put into full and effective operation at all times” are said to have even wider currency in the insurance market. In those particular circumstances, combined with the arguability of the Claimant’s points on interpretation, I can understand why the Judge considered it would also be appropriate to give the Claimant the opportunity to seek and adduce any relevant and admissible factual material available by the date of the trial.”

Put in context, it can be seen that the authority is not support for the proposition to which Mr Thorne contends that where the dispute relates to standard terms which are widely used in the market, that in itself is a good reason to proceed to trial rather than disposing of the matter summarily. Indeed, it is clear that the contrary may well have applied in that case but for the arguable case on construction.

Finally on this point, I was referred to Lord Browne-Wilkinson’s speech in Barratt v Enfield London Borough Council, noting his speech in the Bedfordshire case [1995] 2 AC 633, 740-741, that:

“I further said that in an area of the law which was uncertain and developing (such as the circumstances in which a person can be held liable in negligence for the exercise of a statutory duty or power) it is not normally appropriate to strike out. In my judgment it is of great importance that such development should be on the basis of actual facts found at trial not on hypothetical facts assumed (possibly wrongly) to be true for the purpose of the strike out.

As to the approach to striking out parts of the Defence, I was also referred to the decision of Simon Browne QC (sitting as a Deputy Judge of the High Court) in Zayo Group International Limited v Ainger (& Ors) [2017] EWHC 2542, noting at paragraph 32 that:

“An application to strike out a statement of case under CPR 3.4(2)(a) should not be granted unless the court is certain that the claim is bound to fail – Hughes v Collin Richards & Co [2004] EWCA Civ 266 at [22] per Peter Gibson LJ; Barrett v Enfield LBC [2001] 2 All 550 at 557 per Lord Browne-Wilkinson.”

Unless stated otherwise, when setting out the background facts below and elsewhere in the judgment I am not making any findings as to whether and when any particular documents were received. This is due to the evidential difficulties under which Euroins is operating and to which I have already referred.

The bond in issue in these proceedings was provided in relation to Works which were the subject of a Building Contract in an amended JCT Design & Build 2016 form dated 3 February 2020. The Works comprised the design and construction of two residential blocks in Slough. The contract sum was £37,806,446.78.

On 9 March 2020, Mid Holding Co UK Ltd as Contractor under the Building Contract obtained a bond from Euroins for the benefit of Click Herschel Ltd, who, as I have noted above, was the Employer under the Building Contract. It follows that the parties to the Building Contract are not the parties before the Court.

On 29 April 2020 Euroins provided its written consent to the assignment of the Employer’s interest in the bond to Crestline pursuant to the provisions of the bond.

On 21 July 2022 the Contractor entered into administration having on 8 July filed a Notice of Intention to appoint an administrator. Prior to that date, on 30 June 2022 the Employer had issued a notice of default to the Contractor contending the Contractor was failing to proceed regularly and diligently. The following day, on 1 July 2022, the Contractor issued the first notice of suspension to the Employer for alleged non-payment of a certified interim payment pursuant to payment notice No 28 (“The First Notice of Default”).It is not in dispute that the Employer was in breach of contract for failing to make payment however there is an issue as to the effectiveness of the First Notice of Default, and the Contractor issued a Second Notice of Default under clause 8.9.1 of the Building Contract on 8 July 2022.

On 8 July 2022 the Contractor filed an application - Notice of Intention to Appoint an Administrator. On 20 July 2022 the Contractor issued a Notice of Termination pursuant to clause 8.9.3 of Building Contract. This related to the non-payment first identified in the Contractor’s letter of 1 July 2025. The letter of 20 July also purported to accept the non-payment of sums due as a repudiatory breach of contract. The following day, the Employer issued a Payless Notice to the Contractor showing a negative sum due.

By separate letter on the same date the Employer also purported to accept the Contractor’s repudiatory breach on the ground that the Contractor had wrongfully terminated its employment. The basis of this was the contention that the First Notice of Default served on 1 July 2022 was sent to the incorrect address and that the purported termination by the Contractor on 20 July 2020 was less than the required 14 days from the Second Notice of Default dated 8 July 2022. The Employer also contended that a failure to notify insolvency proceedings despite a specific request was a repudiatory breach of contract which was also accepted.

From the above chronology and as set out in greater detail in the Defence it can be seen that the issues of termination and repudiation of the Building Contract (referred to generally as termination save where the context requires the same to be distinguished) raise questions of construction as to the validity of notices, questions of evidence as to whether notices were received (for example changes of address for service) and whether the Employer has waived or is estopped from asserting any breach of contract in respect of the mode of delivery of notices. There are also evidential enquiries as to whether the conduct relied on by either party to the Building Contract can be regarded as repudiatory of the Building Contract.

In his 68-page skeleton argument, Mr Thorne addresses the issues under five headings: (1) Termination and/or Breach by the Contractor, (2) whether the Employer validly terminated and/or accepted a repudiatoty breach by the Contractor, (3) the basis for recovery and the quantum of any actionable loss thereby suffered by the Employer, (4) the Claim under the Bond, and (5) whether the Claimant took valid assignment from the Employer. He reflected those issues in a High-Level Flowchart.

In his 32-page skeleton argument, Mr Cheung identifies eight defences to the claim. I will adopt these as necessary for the purposes of this judgment.

The eight defences are as follows:

Whilst each of those defences highlighted were cross-referenced to paragraphs of the Defence, on analysis it was clear that those paragraphs cannot stand as the paragraphs sought to be struck out should the Court consider it appropriate to strike out individual elements of the Defence. As I have noted, whilst the application did not seek paragraphs being struck out on an issue-by-issue basis Mr Cheung contended for this approach in his oral submissions.

In order to assist my consideration of this approach, at the close of the oral hearing, I asked if the parties could agree the paragraphs relevant to each of the Defences. This took some time and it was only on 10 February 2026 when such a list was provided.

Having reviewed the list I have come to the clear conclusion that it would not be appropriate to delete individual paragraphs on an issue-by-issue basis. My reasons are twofold. Firstly, the application already specifically considered an alternative position where Crestline failed to have the Defence struck out in its entirety. That alternative position was (in effect) to strike out the claim save for any defence on quantum. As I have observed above, that would not be the effect of retaining paragraph 72 of the Defence, but the intention was tolerably clear given it would be consistent with the alternative case under summary judgment.

My second reason is that, so far as material to this application, CPR rule 3.4 is directed to a statement of case that discloses no reasonable grounds for bringing or defending a claim. Examples of such cases are well recognised and as noted in the Practice Direction at 3APD.1 paragraph 1.4, include a bare denial or otherwise setting out no coherent statement of facts or the facts set out, while coherent, would not amount to a defence to the clam in law even if true. The provisions are not directed to striking out elements of a Defence more in the manner of preliminary issues unless it can be shown that as a consequence, the Defence is bound to fail (paragraph 1.5 noted above, refers).

Given that Crestline’s claim proceeds as an assignee, the first question to consider is whether Crestline took a valid assignment, and if so, on what terms?

As set out above, the bond was executed on 9 March 2020 between the Contractor as principal, Euroins as guarantor and the Employer (and their successors and assignees under the Contract).

So far as material, the bond provided:

“WHEREAS

(1)

By a contract (the “Contract”) entered into or to be entered into between the Employer and the Contractor particulars of which are set out in the Schedule the Contractor has agreed with the Employer to execute works (the “Works”) upon and subject to the terms and conidiations therein set out.

(2)

The Guarantor has agreed with the Employer at the request of the Contractor to guarantee the performance of the obligations of the Contractor under the Contract upon the terms and conditions of this Guarantee Bond subject to the limitations set out in clause 2.

NOW THIS DEED WITNESSES as follows:

(1)

The Guarantor guarantees to the Employer that in the event of a breach of the Contract by the Contractor the Guarantor shall subject to the provisions of this Guarantee Bond satisfy and discharge the damages sustained by the Employer as established and ascertained pursuant to and in accordance with the provisions of or by reference to the Contract and taking into account all sums due or to become due to the Contractor.

(2)

The maximum aggregate liability of the Guarantor and the Contractor under this Guarantee Bond shall not exceed the sum set out in the Scheduled (the “Bond Amount”) but subject to such limitation and to clause 4 the liability of the Guarantor should be co-extensive with the liability of the Contractor under the Contract.

(3)

The Guarantor shall not be discharged or released by any alteration of any of the terms, conditions or provisions of the Contract or in the extent or nature of the Works and no allowance for time by the Employer under or in respect of the Contract or the Works shall in any way release, reduce or affect the liability of the Guarantor under this Guarantee Bond.

(4)

Whether or not this Guarantee Bond shall be returned the Guarantor the obligations of the Guarantor under this Guarantee Bond shall be released and discharged upon Expiry (as defined in the Schedule) save in respect of any breach of the Contract which has occurred and in respect of which a claim in writing containing particulars of such breach has been made upon the Guarantor before Expiry.

(5)

The Contractor having requested the execution of this Guarantee Bond by the Guarantor undertakes to the Guarantor (without limitation of any other rights and remedies of the Employer or the Guarantor against the Contractor) to perform and discharge the obligations on its part set out in the Contract.

(6)

The Guarantor is therefore entitled to replace the Contractor with another one in case of breach of the contract or any delays accumulated on the schedule of execution, in order to perform the obligations undertaken by the Contractor with the Employer.

(7)

The Employer may assign this Guarantee Bond and the benefits of it, to any party to whom it assigns its interest under the Contract at any time, upon prior written consent expressed by the Guarantor References to the Employer shall include its assigns. The assignees should be the next listed:

-

Crestline Direct Finance L.P. as agent for the Secured Parties

…

…

(8)

The Guarantee Bond and the benefits thereof may be assigned to any party that has taken a valid assignment of the Contract but otherwise shall not be assigned without the prior consent of the Guarantor and the Contractor.

(9)

The parties to this Guarantee Bond do not intend that any of its terms will be enforceable, by virtue of The Contracts (Rights of Third Parties) Act 1999 or otherwise, by any person not a party to it.

(10)

This Guarantee Bond shall be governed by and construed in accordance with the law of England and only the courts of England shall have jurisdiction hereunder.”

In addition to defining the parties’ contract, the Schedule provided:

“The Bond Amount: the sum of three million six hundred and ninety thousand two hundred and ninety six pounds sterling (£3,690,296.00)

Expiry: Upon issue of the Practical Completion Certificate in respect of Section 2 or Section 1 if later for which the agreed date for completion is 28^th February 2022.”

By letter dated 29 April 2020, Euroins provided its written consent to the assignment of the Employer’s interest in the bond to Crestline. That letter recorded:

“The Employer has assigned its interest in the Contract to Crestline Direct Finance LP (as security trustee for the Secured Parties) and now intends to assign its interest in the Bond to the same party.” (emphasis added)

By a Deed of Assignment dated 28 May 2024, the Employer assigned to Crestline all rights, titles, benefits and interests of the Employer, whether present and future as set out in more detail at Clause 3.1 thereof.

On 5 June 2024, the Employer served on Euroins a written notice of assignment.

By letter dated 13 March 2024 Crestline (identified as the assignee) and the Contractor jointly wrote to Euroins seeking to make a formal claim and demand under the bond. That letter stated, at paragraph 2:

“By the captioned Assignment, the Employer assigned its interest in the Bond to the Assignee by way of security. The said Assignment was notified to Euroins contemporaneously, and Euroins expressly consented to the Assignment in writing by its letter dated 29 April 2020. The Assignment was therefore valid pursuant to clauses 7 and/or 8 of the Bond.”

It can be seen that the date of the assignment on which reliance is placed must, as a matter of chronology, pre-date the Deed of Assignment of 28 May 2024 on which Crestline relies at paragraph 10 of the Statement of Case. This prompted an exchange between the parties in which clarification was sought.

In the context of a demand being notified under the bond on 13 March 2024, by email of 22 March 2024 to Brecher LLP (“Brecher”), Preston Turnbull solicitors instructed on behalf of Euroins stated that they do not have a copy of the assignment and sought a copy of the same. I note this was a repeat of a request made by Preston Turnbull directly to Crestline by letter dated 19 March 2024. A request for a copy of the assignment document, alternatively confirmation that Brecher do not have a copy, was made again on 28 March 2024.

By email sent on 11 April 2024, Brecher responded to recent correspondence stating, amongst other matters:

“Moreover, we see any debate as regards assignment as an attempted side-show. Since the demand is being made by both Crestline and Click jointly and severally, it does not matter what the status of the assignment is because: (i) if the assignment is invalid, Click would be entitled to make the call and be paid, (ii) if the assignment is valid either legally or equitably, then Crestline would be entitled to make the call and to nominate Click as an agent to receive the payment from Euroins.

For this reason, we shall not perpetuate the assignment side-show by providing copies of documents relating to it.”

As already set out, a Deed of Assignment was subsequently executed on 28 May 2024. On 10 June 2024, and having been chased for a substantive response to the underlying claim, Preston Turnbull confirmed they were “still instructed and will take instructions on the remainder of [the Assignment Deed] andrevert as soon as we are able”.

From the above brief exchanges, it can be seen that the history to the assignment relied on by Crestline in these proceedings is unclear. It is not in issue between the parties that an assignee can only assign those rights which it has. It follows if some, or all, of those rights were subject to an earlier assignment, this will affect the scope of any purported subsequent assignment on which Crestline relies in these proceedings. At this stage the Court does not have the full picture and it is not suggested that there was no earlier assignment. Such documentation as has been seen suggests the contrary.

Crestline’s refusal to provide documents or further evidence clarifying the position at any date thereafter to the date of the application over a year later is, in my judgement, fatal to the summary judgment application. This is not a case of hopeful speculation by Euroins that something may turn up. The issue on which documentary, or other evidence, bears is clear from the correspondence.

It follows that I do not consider the requests for the earlier assignment document to be a “side-show”, and the Deed of Assignment executed shortly thereafter may well suggest that there were indeed concerns as to the nature and effect of any earlier assignment.

The refusal to provide the documentation requested is not addressed by Crestline in its written submissions on Defence 7. Mr Cheung submits that Euroins’ Defence does not advance any positive case to challenge the validity of the assignment as Euroins seeks to argue that the Employer has sustained no loss for the purposes of making a demand under the Bond because of the assignment of its interest in the Building Contract and an assignee cannot recover more than what an assignor could have recovered. It is further submitted that the question of the the nature and effect of a previous assignment has never been raised in Euroins correspondence prior to the Defence.

I cannot accept that submission. A fair reading of paragraph 67 of the Defence is that Euroins is unable to admit the assignment of 28 May 2024 as it is outside its direct knowledge. However, Euroins repeats the plea (at paragraph 17 of the Defence) requiring Crestline to prove the existence and validity of that assignment noting that, by its letter of 13 March 2024, Crestline had previously suggested that an assignment had already taken place.

In turn paragraph 68 of Euroins Defence sets out an understanding that the Employer had on or before 29 April 2020 assigned its interest in the Building Contract to Crestline. That is precisely the issue on which documentation had been sought and declined.

Euroins further sets out:

“68.2

Any claim made under the Bond on that date would lead to a £nil recovery under the Bond since, by clause 1, the Employer would only be entitled to damages “sustained by the Employer” and, as a result of the alleged assignment, the Employer would have sustained no loss.

68.3

An assignee can recover no more than an assignor could have recovered. As such, any claim by Crestline made under, and as assignee, of, the Bond would suffer from the same deficiencies and fail for the same reason as identified in paragraph 68.2 above.”

Whilst by Clause 1 of the Bond, the guarantee extends to satisfying and discharging “the damages sustained by the Employer as established and ascertained pursuant to and in accordance with the provisions of or by reference to the Contract and taking into account all sums due or to become due to the Contract”, the correctness or otherwise of the plea at paragraph 68.2 is a separate issue from the underlying lack of clarity as to what may have previously been assigned and on what terms.

Crestline rely on Brecher’s letter of 5 June 2024. However, that encloses the Notice and Assignment dated 28 May 2024. The response to this from Preston Turnbull sent by email of 5 July 2024 states, so far as material:

“Thank you for your recent correspondence which we acknowledge receipt of.

Please accept our apologies for the delay in reverting. We are taking our client’s instructions and will respond substantially. Please bear in mind that we are seeking instructions from a client in Bulgaria on quite technical legal points and this is not matter where it is possible to get an instantaneous response. We are also grateful to you for providing a copy of the Assignment document of 28/5/24, which we are considering.

You of course must do as you see fit in order to protect your client’s best interest. However, we would urge you to withhold taking any action in this matter until you hear from us and have an opportunity to consider our client’s response.”

I am unable to accept Mr Cheung’s characterisation of that exchange as the assignment, whilst being in issue in the beginning, having fallen away once Crestline provided what was said to be valid. As I observed in argument, and Mr Cheung accepted, the lack of a full picture as to any assignments was an issue on the pleadings. Further, on the summary judgment application it does not assist Crestline to submit that if there was indeed an earlier assignment which was valid so as to assign the Employer’s rights, then it will be effective anyway and Crestline could still enforce the bond. It is the apparently later assignment on which proceedings are brought.

In a summary judgment application such points are more than “academic”, and as such I reject that submission and the related submission that the point does not go anywhere in substance. At this stage, one simply does not know what precisely was assigned on 28 May 2024. Clearly all that could be assigned was whatever rights the Employer retained at that date. It is not even known if the earlier assignment on a proper construction was effective to assign rights to Crestline. It is clear that the bond anticipated assignment to a number of parties of which Crestline Direct Finance LP was one of seven listed in the bond.

Given the nature of a summary judgment application and that the nature of the assignments had been raised both in correspondence and by way of Defence, it is surprising that it has not been answered. If matters are indeed as simple and straightforward as was submitted, it is difficult to understand why the documentation sought was refused. As a minimum there would appear to be a recognition of some difficulty given the further assignment executed on 28 May 2024.

It follows that Crestline has failed to establish that Euroins has no real prospect of successfully defending the claim, and so the application for summary judgment must be dismissed.

It similarly follows that in questioning the validity and effect of the assignment relied on by Crestline, it cannot be said that the Defence discloses no reasonable grounds for defending the claim.

The alternative applications advanced by Crestline do not meet this difficulty as they assume that there is no defence to a claim under the bond other than as to quantum. As already observed, I could not understand how the Defence can be struck out save for paragraph 72 given paragraph 72 cross-refers to other parts of the Defence as follows:

“72.1

Crestline is not entitled to payment under the Bond for the reasons set out in this Defence. Further or alternatively, Crestline has failed to prove entitlement to sums claimed under the Bond for the reasons set out in this Defence. As such, it is denied that Euroins is in breach of the Bond (whether as alleged or at all).

72.2

It is denied that Euroins has caused Crestline to suffer loss and/or damage.

72.3

The basis of calculation of the losses said to have been sustained by Crestline are not admitted and Crestline is required to prove all losses.

72.4

Save as set out above, paragraph 29 sets out the basis of Crestline’s claim and is accordingly denied.”

Given my findings on the assignment the balance of the Defences does not strictly call for determination. The question arises whether I should nevertheless determine the same.

As I have already observed, it is no part of the formal application that specific paragraphs of the Defence should be struck out if one or more, but not all, of the Defences are successful. For the reasons set out above, I do not consider that is an appropriate course to take on this application.

In summary, whilst Defences 3 to 6 inclusive also concern the bond, the issues arise in the context of the circumstances in which the Building Contract came to an end. This comprises Defences 1 and 2. As noted above, those Defences raise issues of fact and interpretation which, having refused summary judgment, are not appropriate to address in the context of such applications. Further and by way of example only, it was not in issue that either party may rely on matters of which it is currently unaware in support of a plea of repudiatory breach of contract (see for example Stocznia Gdanska SA v Latvian Shipping Company & Others (No 2) [2002] EWHC Civ 889 at [32].)” It is not in issue in this case, as was properly accepted by Mr Cheung, that the Employer had been paying sub-contractors directly without the agreement of the Contractor. That is not something permitted under the Building Contract. It may be that disclosure reveals further conduct that either party may wish to rely on as supporting a case on repudiatory breach of contract.

I reach this conclusion that it would not be appropriate to determine Defences 1 and 2 recognising Mr Cheung’s submission that the manner of termination (whether by termination under the terms of the Building Contract or by acceptance of repudiatory breach) and by whom is irrelevant given the provisions of Building Contract relating to insolvency. It is to this I now turn.

The contractual rights of termination under the Building Contract provide, so far as material:

“Clause 1.7.3

Subject to clauses 1.7.2 and 1.7.4 any notice, communication or document may be given or served by any effective means and shall be duly given or served if delivered by hand or sent by pre-paid post to […] the recipient’s address stated in the Contract Particulars, or to such other address as the recipient from time to time notify to the sender.

Clause 1.7.4

[a]ny notice expressly required by this Contract to be given in accordance with this clause 1.7.4 shall be delivered by hand or sent by Recorded Signed for or Special Delivery post. Where sent by post in that manner, it shall, subject to proof to the contrary, be deemed to have been received on the second Business Day after the date of posting.

Clause 8.2.3

[e]ach notice referred to in this section shall be given in accordance with clause 1.7.4. .

Clause 8.1

For the purposes of these Conditions:

.1 the company becomes Insolvent:

.1 when it enters administration within the meaning of Schedule B1 to the Insolvency Act 1986;

…

Clause 8.5

.1 If the Contractor is Insolvent, the Employer may at any time by notice to the Contractor terminate the Contractor’s employment under this Contract

.2 The Contractor shall immediately notify the Employer if he makes any proposal, gives notice of any meeting or becomes the subject of any proceedings or appointment relating to any of the matters referred to in clause 8.1.

.3 As from the date the Contractor becomes Insolvent, whether or not the Employer has given such notice of termination:

.1 clauses 8.7.3 to 8.7.5 and (if relevant) clause 8.8 shall apply as if such notice had been given;

.2 the Contractor’s obligations under Article 1 and these Conditions to carry out and complete the Works shall be suspended; and

.3 the Employer may take reasonable measures to ensure that the site, the works and site materials are adequately protected and that such Site Materials are retained on Site; the Contractor shall ensure and shall not hinder or delay the taking of those measures.

Clause 8.7

If the Contractor’s employment is terminated under clause 8.4, 8.5 or 8.6;

.1 the Employer may employ and pay other persons to carry out and complete the Works and to make good any defects of the kind referred to in clause 2.35 and he and they may enter upon and take possession of the site and Works and (subject to obtaining any necessary third party consents) may use all temporary buildings, plant, tools, equipment and Site Materials for those purposes;

…

.3 no further sum shall become due to the Contractor under this Contract other than any amount that may become due to him under clause 8.7.5 or 8.8.2 and the Employer need not pay any sum that has already become due either:

.1 insofar as the Employer has given or gives a Pay Less Notice under clause 4.9.5; or

.2 if the Contractor, after the last date upon which such notice could have been given by the Employer in respect of that sum, has become insolvent within the meaning clauses 8.1.1 to 8.1.3;

…

.4 following the completion of the Works and the making good of defect in them (or of instruction otherwise, as referred to in clause 2.35), and account of the following shall within three months thereafter set out in a statement prepared by the Employer

.1 the amount of expenses properly incurred by the Employer, including those incurred pursuant to clause 8.7.1 and where applicable, clause 8.5.3.3, and of any direct loss and/or damage caused to the Employer and for which the Contractor is liable, whether arising as a result of the termination or otherwise;

.2 the amount of payments made to the Contractor; and

.3 the total amount which would have been payable for the Works in accordance with this Contract;

.5 if this sum of the amount stated under clauses 8.7.4.1 and 8.7.4.2 exceeds the amount stated under clause 8.7.4.3, the difference shall be a debt payable by the Contractor to the Employer or, if that sum is less, by the Employer to the Contractor.

Termination by Contractor

Clause 8.9

.1 If the Employer:

.1 does not pay by the final date for payment the amount due to the Contractor in accordance with clause 4.9 and/or any VAT properly chargeable on that amount; or

.2 fails to comply with clause 7.1; or

.3 fails to comply with clause 3.16

the Contractor may give to the Employer a notice specifying the default or defaults (a “specified” default or defaults).

…

.3 If a specified default or a specified suspension event continues for 14 days from the receipt of notice under clause 8.9.1 or 8.9.2 the Contractor may on, or within 21 days from, the expiry of that 14 day period by a further notice to the Employer terminate the Contractor’s employment under this Contract.

.4 If the Contractor for any reason does not give the further notice referred to in clause 8.9.3, but (whether previously repeated or not):

.1 the Employer repeats a specified default; or

.2 a specified suspension event is repeated for any period such that the regular progress of the Works is or is likely to be materially affected thereby

then upon or within a reasonable time after such repetition, the Contractor may by notice to the Employer terminate the Contractor’s employment under this Contract.

As already observed, the issues raised by Defences 1 and 2 concern (1) the validity of Contractor’s Notices, (2) the consequence of any wrongful exercise of a contractual right to termination and (3) whether the actions of the Employer place it in repudiatory breach of contract. However, both Defences are directed to the same question which is whether clauses 8.5.3 and 8.7.3 to 8.7.5 of the Building Contract apply.

For the purposes of addressing that question I will assume that a statement of account has been provided within 3 months of completion of the Works pursuant to Clause 8.7.3.4. This in itself is in issue as whilst Crestline’s evidence and pleaded case is that the Works were completed by the date of the issue of the statement of account on 5 February 2024, there is no evidence as to when it was actually completed. Further, the limited documents before me include a letter from Crestline dated 13 March 2024 (being after the statement of account) which states that no Practical Completion certificate has been issued to any substitute contractor carrying out and completing the works. This raises further evidential issues for consideration at trial.

As to whether clauses 8.5.3 and 8.7.3 to 8.7.5 of the Building Contract apply regardless of the manner in which the Building Contract came to be terminated, Crestline relies on Wilson & Sharp Investments Ltd v Harbour View Developments Ltd [2015] EWCA Civ 1030. In that case, considering similar accounting provisions on insolvency, Gloster LJ held, so far as material, as follows:

“48.

It was common ground that, in approaching the construction of the contracts, the court is required to determine the objective, natural and ordinary meaning of the relevant provisions against the background knowledge which would have been reasonably available to both parties and which may have affected the language used: see e.g. per Lord Hoffmann in Investors Compensation Scheme v West Bromwich BS [1998] 1 WLR 896 at 912H-913F. Adopting this approach, I have no doubt that, on the true construction of the contracts, the judge was wrong to conclude that clauses 8.5.3 and 8.7.3 could have no application if the contracts had already been terminated prior to the insolvency. My reasons may be summarised as follows.

49.

First, it is clear that the provisions of clause 8.7.3 are intended to operate after termination of the contract. Indeed the entire scheme of clauses 8.7 and 8.8 are directed at setting out the respective rights and obligations of both parties after the contractor's employment under the contract has been terminated by the employer and necessarily the contract has come to an end: see the opening words of clause 8.7 – "if the Contractor's employment is terminated under clause 8.4, 8.5 or 8.6". To similar effect is clause 8.12 which addresses the consequences of termination by the contractor under clause 8.9 or by either party under clause 8.11 upon the happening of certain specified events. There is no wording in clause 8 which in any way suggests that the consequential provisions are not to apply after termination, or are not to apply after a termination by the contractor (pursuant to the saving provisions of clause 8.3.1) on the grounds of repudiatory breach (as opposed to pursuant to the express termination provisions contained in 8.4, 8.5 or 8.6).

50.

Second, clause 8.5 ("Insolvency of Contractor") has a wider ambit than simply conferring a right of termination on the employer in the event of the contractor's insolvency. Thus clause 8.5.2 imposes an obligation on the contractor immediately to notify the employer if the contractor makes any proposal, gives notice of any meeting, or becomes the subject of any proceedings or appointment relating to insolvency, to enable the employer to decide on its options. And, most importantly, clause 8.5.3 expressly states that clause 8.7.3 applies as from the date when the contractor becomes insolvent "whether or not the Employer has given such notice of termination" – i.e. a termination notice under clause 8.5 based on the contractor's insolvency. Contrary to the judge's view, therefore, I see no necessity, or basis, for the implication of what would have to be an implied term that clauses 8.5.3 and 8.7.3 have no operation in circumstances where the employer has already terminated the contractor's employment, as it is entitled to do (pursuant to the saving provisions of clause 8.3.1), on the grounds of repudiatory breach (as opposed to pursuant to the express termination provisions contained in 8.4, 8.5 or 8.6), but do apply in circumstances where either:

i)

the employer has not served any notice of termination; or

ii)

the employer has already served a notice of termination under clauses 8.4, 8.5 or 8.6.

In other words, given that clause 8.7.3 necessarily applies after termination in circumstances where the contractor's employment has already been terminated under clause 8.4 or 8.6, and can apply irrespective of whether the contract has already been terminated on the grounds of the contractor's insolvency under clause 8.5, I see no logical basis for the implication of a term that clauses 8.5.3 and 8.7.3 are not operative in circumstances where the contract has already been terminated by the employer on the grounds of repudiatory breach on the part of the contractor.”

….

53.

Fifth, contrary to the submissions of Mr Darton, the obligation to pay under an interim certificate is a payment obligation. The fact that an employer is not obliged, in the event of the contractor’s insolvency, to make an instalment payment does not mean that the employer is discharged from all liability to make such payments as may be due upon the taking of the final account. All that clause 8.7.3, as applied by 8.5.3.1, does is to excuse the contractor from its interim payment obligations under the terms of cll 4.7 and 4.8. The contractor nonetheless remains liable to pay the sums which may be due under cll 8.7.4-8.7.5 and 8.8, if any, once an account has been taken. As Lord Hoffmann explained in Melville Dundas, instalment payments are “in their nature provisional liabilities”…”

The applicability of the contractual insolvency provisions was specifically considered in the context of an ABI bond in Ziggurat (Claremont Place) LLP v CC International Insurance Company Plc [2017] EWHC 3286 (TCC). In that case it was said that the Claimant employer had repudiated the contract before the insolvency event. Addressing that submission, Coulson J (as he then was) observed:

“49.

As part of his argument, Mr Oram submitted that… the fact that they had asserted that the claimant had repudiated the contract by serving a notice two days early, and that this had happened a few days before the insolvency event, meant that the contract had come to an end and there was no obligation on the part of County to pay the clause 8.7.5 debt. In my view, that argument fails for two reasons.

50.

First, I consider that this argument is contrary to the scheme provided for in clauses 8.5 and 8.7 of the JCT Standard Form. Those provisions are designed – amongst other things – to ensure that, no matter what could be argued about prior events, the insolvency of the contractor gave rise to a clear and certain process which culminates in the notification of a debt pursuant to clause 8.7.5. This process was designed to prevent a contractor in the position of County from avoiding the consequences of their insolvency by seeking to argue, long after the event, that the contract had come to an end prior to their insolvency and that, in consequence, these clauses no longer applied.

51.

Secondly, I am confirmed in that approach by the decision of the Court of Appeal (which is of course binding on me) in Wilson and Sharp Investments. In the passages identified at paragraph 31 above, Gloster LJ expressly rejected the argument that clauses 8.5.3 and 8.7.3 have no operation in circumstances where the employment had already been terminated on other grounds. Although the facts were different, the Court of Appeal made it plain that these clauses were intended to operate after the termination of the contract, without qualification. Indeed, at paragraph 49 of her judgment, Gloster LJ expressly identifies one such situation: "after a termination by the contractor…on the grounds of repudiatory breach." I respectfully agree with those conclusions.

52.

Thus, the arguments belatedly raised by County's solicitors as to the validity or otherwise of the termination notice go nowhere. As from the date that County became insolvent, whether or not the employer had given notice of termination, and regardless of belated arguments as to repudiation, clauses 8.7.3-8.7.5 applied in any event. CAG certified that the debt had been calculated in accordance with those clauses, so County were in breach because they failed to pay it. Thus, subject to what I say about Declaration 2, the defendant is liable to pay the debt (subject to the cap introduced by the maximum amount recoverable) as damages under the Bond.”

A substantial part of Mr Thorne’s oral submissions was directed to these two authorities. Firstly, he submitted that Wilson v Sharpe is distinguishable in that paragraph 50 refers to the applicability of the insolvency accountancy provisions where the contract has been terminated by the employer on the grounds of repudiatory breach on the part of the contractor. Here, Euroins seeks to contend on the facts that the Employer was in repudiatory breach which repudiatory breach was accepted. Mr Thorne submits that if the accounting provisions apply in that case, then the Contractor loses all the rights it would otherwise have because of the repudiatory actions of the Employer and that cannot be the intention of such clauses. I am not sure that necessarily follows. As noted in Wilson and Sharp (paragraph 53 refers), accrued rights are part of the accounting process. In this case the sums which the Contractor would otherwise claim may arguably fall within clause 8.7.4.3 as part of the total amount that would have been payable for the Works in accordance with the Contract.

Mr Thorne explains the reference at paragraph 49 to the provisions applying to termination by the contractor on the grounds of repudiatory breach as being a mistaken reference which should refer to the employer. In support of this he notes that paragraph 53 is clearly in error in referring to interim payment obligations of the contractor (rather than the employer). It is also submitted that, in context, the reference at paragraph 49 to the saving provisions pursuant to which a repudiatory breach may be accepted appear more directed to the employer rather than the contractor, thereby further suggesting an error may have been made.

To the extent Mr Thorne also submitted that on repudiation the primary obligations (including the provisions taking account under Clause 8.7) fall away to be replaced by an obligation to pay damages I am bound by the decision in Wilson and Sharp where such a submission was rejected. It is nonetheless submitted that the decision was per incuriam as Moschi vLep Air Services [1973] AC 331 was not cited.

As Mr Thorne accepted, that was a bold submission. Moschi vLep Air Services is authority for the proposition that the acceptance of repudiation does not alter the terms of a contract in any way, it merely transmutes the primary obligation of the promisor to perform the terms contractually into a secondary obligation, imposed by law, to pay for damages for breach (see the speech of Lord Simon at 355A). As such, it was submitted, the accounting provisions fall away.

I can see no basis for that submission given the question of the original contractual rights surviving repudiation was expressly addressed by Gloster LJ. It is ultimately a question of construction whether contractual rights survive termination or repudiation of the underlying contract. By way of example, there can be no doubt that arbitration clauses survive repudiation, thereby demonstrating that the repudiation of a contract does not automatically bring to an end all the contractual rights contained in that contract.

Mr Thorne further submits that the observations of Coulson J in Ziggurat were obiter. On my reading of the authority the Learned Judge was addressing a submission that the accounting provisions did not apply in that case because as a matter of fact, the Claimant employer had committed a repudiatory breach which was accepted 2 days before the insolvency event. That is the context to the passage at paragraph 51 of the judgment set out above. Mr Thorne submits that as there is no evidence that the repudiatory breach was accepted, the contract continued until insolvency and the observations of Coulson J on the effect of repudiatory breach must be obiter.

Whether strictly obiter or not, it is clear that Coulson J reached the same conclusion as that in Wilson and Sharp as well as considering himself bound by the same. As such, even if the reference at paragraph 51 to “termination by the contractor… on the grounds of repudiatory breach” should be read as referring to the employer, it is difficult to see a different conclusion would have followed in Ziggurat given the stated agreement with the conclusions as set out at paragraph 51.

Given my decision on the assignment, the proper construction of Cause 8.7 and the effect on the same, if any, of a repudiatory breach by the Employer accepted by the Contractor prior to the event of Insolvency is not something which calls for a determination in this application. Further, as the Court is dealing with a standard form and given the question of quantum is going to trial, it is not appropriate to consider the issue of construction at this stage. In this regard I bear in mind both the observations of the Court of Appeal in AC Ward & Sons Ltd v Catlin (Five) Ltd & Ors [2009] EWCA Civ 715 and also that any decision will not alter my decision that the applications should be dismissed.

It follows from my conclusions above that Defences 3 to 7 do not fall for decision and that it would not be appropriate to determine them at this stage as part of the present applications. It follows that I say no more on these Defences.

For the reasons set out above, I dismiss Crestline’s applications. I ask the parties to agree the terms of the proposed Order including, if possible, costs. In the absence of agreement, I anticipate that any outstanding issues can be addressed on paper and I will give directions to that effect as necessary in due course.