The claimant, Nearfield Ltd was one of six parties to a joint venture agreement dated April 2002. Other parties to the agreement included Lincoln Trust Co (Jersey) Ltd (LTC) and LTC’s offshore nominee, Lincoln Nominees Ltd (LNL); second and first defendants respectively.

The agreement was entered into for the purposes of redeveloping a property with 97,00 ft2 of office building and a self-contained wine bar and restaurant. A special purpose vehicle was used to purchase the property. The bank agreed to provide £31m of the purchase price. Nearfield agreed to advance the balance of £3m; the mechanism for which was set out in the agreement. Essentially, Nearfield advanced the £3m to LNL, who then lent it to the special purpose vehicle.

The redevelopment was not a success. It was sold in April 2005 at a shortfall. The bank was repaid, however Nearfield was left with more than £3m owed to it in principal and interest.

Nearfield sought to enforce clause 5.1.3 of the joint venture agreement, which provided that upon written demand by Nearfield, LTC would procure the payment of the £3m loan together with interest. Nearfield argued that the word “procure” placed an obligation upon LTC to see to it that LNL repaid the £3m together with outstanding interest upon written demand by Nearfield and, significantly, that should LNL fail to make such a payment, LTC would be liable to pay damages equal to the amount payable (but not paid) by LNL. LTC on the other hand argued that the clause merely placed an administrative function upon it; in keeping with its non-participatory role in the joint venture and also in keeping with its other administrative functions under the agreement. Further, LTC argued that the judge was required to look beyond the agreement itself and into the surrounding circumstances in order to ascertain what was intended by clause 5.1.3.

Whether the obligation on LTC to “procure” that the loan was repaid by LNL imposed an obligation on LTC to see to it that LNL repaid the loan or, in the event that LNL defaulted, to pay damages equal to the amount payable but not repaid.