Case 6

Maple Leaf Macro Volatility Master Fund and Another v Rouvroy and
Another
19 February 2009 (Queen’s Bench Division, Commercial Court)
Case No: [2009] EWHC 257 (Comm)

Claim: The claimants (Maple Leaf and Astin) sought damages for breach
of contract. The defendants counterclaimed that there was no effective
and enforceable contractual agreement. They also claimed that, even if
they did conclude a contract, some terms of it were not binding on them
because of the Unfair Terms in Consumer Contracts Regulations
(UTCCRs) and the provisions relating to unfair relationships in section
140A of the Consumer Credit Act.

Type of agreement: Funding agreement dated 25 July 2007 whereby

Maple Leaf (a Cayman hedge fund managed in London) agreed to provide
30 million Euro to the defendants, officers of a French company
Belvedere. The funding was to be used to finance the purchase of
warrants in Belvedere, which were then to be transferred to a special
purpose vehicle (SPV) as security for repayment of the funding.

Judgment: The judge concluded that the agreement was contractually

binding. He also concluded that the termination clause was not a penalty
clause and the terms of the Funding Agreement were not invalid under
the UTCCRs. The Funding Agreement was not a consumer credit
agreement within the meaning of the Act, and in any event there had
been no unfairness because:

• The defendants were experienced businessmen. They had

created the circumstances in which they had to resort to
expensive funding, and were warned explicitly that it would be
expensive.

• The borrowers’ personal undertakings were not unnecessary or

unfair. It was fair for the claimants to protect their position
before the SPV was effectively established and the collateral
transferred to it, and it was fair that the claimants should not
rely exclusively upon shares and warrants in Belvedere as
security, especially given that the request for funding was too
late for them to allow any real due diligence.

• The default provision was not unfair. The primary purpose of

putting assets into the SPV was to secure the payment to the
claimants, and the defendants faced no comparable exposure to
risk.

This case summary has been prepared for guidance only. It should not be relied upon as an accurate expression of the law.
 • The termination provision was not unfair. There was nothing
inherently unfair in a securities lending provision of this kind,
and the claimants did not exploit the provisions unfairly.

Result: The contract was found to be enforceable and Maple Leaf was
entitled to remedies for breach of contract.

This case summary has been prepared for guidance only. It should not be relied upon as an accurate expression of the law.