Jurisdiction(s):
United Kingdom

FCARs appropriation: no separate good faith duty; valuation in a commercially reasonable manner; defects lead to court substitution, not invalidity (ABT Auto v Aapico, High Court of England and Wales)

Published on: 18 November 2022

Published by a LexisNexis Restructuring & Insolvency expert

Legal News

Article summary

ABT Auto Investments Ltd v Aapico Investment Pte Ltd [2022] EWHC 2839 (Comm), 14 November 2022

What are the practical implications of this case?

The court confirmed that, when a collateral‑taker invokes appropriation, there is no distinct, freestanding duty to act in good faith. The only statutory requirement is that any valuation be carried out in line with the agreed terms and, in any event, in a commercially reasonable manner—no more and no less. That test is objective, operating as an impersonal benchmark rather than a subjective discretion. A collateral‑taker cannot proceed arbitrarily or unreasonably when selecting and applying a valuation methodology; the choice and application must be rational and defensible. What is commercially reasonable will always turn on the facts. Even if a valuation were not undertaken in a commercially reasonable way, the court stated it would not be void from the outset. The primary remedy would instead be for the court to set the valuation aside, substitute a compliant valuation, and make whatever consequential orders are required; the court would correct rather than nullify the result. Although cases concerning appropriation are uncommon, the valuation questions arising here may resonate more widely. In a precursor to the approach we...

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Popular documents

Using the Judicial College Guidelines to assess general damages in personal injury claims

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

Tomlin orders in England and Wales: CPR guidance on drafting, confidentiality, approval, variation, enforcement, limitation, CCA issues, court-specific requirements, sample wording and precedents

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Precedent: Deed of Surrender of Lease with Optional Premium, Settlement and Release, Landlord, Mortgagee and Guarantor Consents, Reimbursement and HM Land Registry Provisions (England and Wales)

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

Precedent Statutory Declaration: Standard Wording under the Statutory Declarations Act 1835

I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...