This is an extract of our Banque Financiere V. Parc document, which we sell as part of our Restitution of Unjust Enrichment BCL Notes collection written by the top tier of Oxford students.
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BANQUE FINANCIERE V. PARC
FACTS Parc is an English company owning development land in Battersea and O.O.L. is registered in the British Virgin Islands. They belonged to the Omni Group, based in Switzerland, where the ultimate holding company, Omni Holding A.G., was incorporated. Parc acquired the Battersea land in 1988 with the aid of a PS30m. bridging loan from Royal Trust Bank (Switzerland) ("R.T.B."), secured by a first charge, and additional finance from O.O.L., in respect of which it subsequently obtained a second charge. The R.T.B. loan was partially repaid in 1989 but PS20m. was extended until 28 September 1990. Parc was unable to refinance its borrowing on the London market and turned to Mr. Herzig for help. He approached B.F.C. which had previously lent to the Omni Group. On 14 September 1990 it agreed in principle to advance DM30m. for two months and the necessary arrangements were concluded in haste. A difficulty was that a further loan to a member of the Omni Group would have had to be reported to the Swiss banking authorities. To avoid this, B.F.C. agreed to make the loan to Mr. Herzig personally on the basis that he would pass it on to Parc, which would issue him with a promissory note which he would assign to B.F.C. as security. The principal security was to be the pledge of 35,000 bearer shares in Holding, which B.F.C. valued at DM40m. and, in addition, B.F.C. required the "postponement letter" in respect of the claims of other group companies. This read as follows: "This is to confirm that we and all companies of our group will not demand any repayment of loans granted to Parc (Battersea) Ltd., London, until the full repayment of your loan of DM30m. granted to Mr. M. Herzig, which is secured by a deep discount promissory note amounting to PS10m. issued by Parc (Battersea) Ltd." Mr. Herzig defaulted on repayment of the loan and in April 1991 the Omni Group collapsed. B.F.C. had realised some of the pledged shares before they became worthless and repaid itself about DM5m. but the rest of the advance remains unpaid. HOLDING LORD HOFFMANN Distinction between contractual subrogation and subrogation in restitution
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