The claimant used P, a company of which he was a director, as the vehicle to acquire another business. P and the defendant entered into a loan facility agreement to enable the purchase to go ahead. The loan agreement provided that in the event of a “major default” by P within a certain period, the defendant could demand immediate repayment of the amounts already drawn. The defendant subsequently served notice of default regarding a breach of a particular undertaking, but the grounds upon which that notice was served were found, at trial, to be invalid. The court did find however that a bribe had been made by the claimant to one of the defendant’s directors to enable the acquisition to proceed. It found that knowledge of that payment could be attributed to P from the claimant as one of its directors, and that P’s failure to advise the defendant of the bribe was of itself a “major default” under the agreement.

The Court of Appeal agreed. Information that came to the attention of a director, however that might occur, could properly be regarded as information in the possession of the company itself. The knowledge of the bribe could be attributed to P and P was required to disclose that information under the terms of the loan agreement. The failure to do so was a “major default” entitling the defendant to serve the default notice.

Mohammad Jafari-Fini v Skillglass Ltd & Ors