The High Court has allowed two Aktiv Kapital companies to defend a €2,158,652.45 claim by GE Capital over an unpaid March 2009 debt sale, after finding a credible basis for questioning how the sale agreement was operated.
Mr Justice Clarke gave Aktiv Kapital Asset Investment Limited and its Norwegian guarantor, Aktiv Kapital ASA, liberty to defend GE Capital Woodchester Limited and GE Capital Woodchester Finance Limited’s summary judgment application. He did not decide whether GE Capital breached the agreement or whether the defendants ultimately owe the purchase price.
The dispute concerns an agreement under which Asset Investment was to buy between 80% and 100% of qualifying debts owed to GE Capital by its customers. The debts arose from motor vehicle hire purchase, leasing and loan contracts. ASA guaranteed Asset Investment’s obligations. The agreement set the purchase rate at 20% at the time of the dispute.
A deed dated 3 March 2009 assigned debts with a stated total value of €10,793,256.76, for a purchase price of €2,158,652.45. Asset Investment did not pay. The defendants argued that the March volume was an extreme departure from previous months and could indicate that the selection criteria had changed or that GE Capital had diverted debts to a third party before they qualified for sale under the agreement.
The defendants also relied on an alleged attempt by GE Capital in May 2008 to sell a batch of debts outside the agreement. GE Capital disputed aspects of the defendants’ account. The judge said the agreement’s operation and the treatment of debts before they reached qualifying status raised construction questions that could not safely be resolved on the summary application alone. He considered that oral evidence might assist.
The court rejected the failure to give monthly written confirmation that the selection criteria had not changed as a defence to the claim: no evidence showed that the criteria had changed or that the omission caused loss. It also regarded a one-month shortfall in the 80% assignment threshold as marginal, though it could be pursued as a limited counterclaim or set-off.
The permitted defence is confined to the March increase, the possible earlier sale of debts before qualifying status, and the inferences those matters may support, together with the limited 80% threshold point. The defendants may explore relevant material through discovery and interrogatories. The judge said that if this process uncovers no evidential basis for the main allegation, apart from the threshold shortfall, judgment for all or a very significant part of the claim should be entered immediately.