RHG raised money from a German bank, and BNY was the security trustee. BNY alleged that there had been an Event of Default and RHG sought a declaration that there had been no Event of Default or alternatively sought relief against forfeiture. The judge criticized RHG’s argument as to what arrears meant, noting that it was reminiscent of an argument made by Humpty Dumpty in Lewis Carol’s ‘Through the Looking Glass’. His Honour preferred the Oxford dictionary definition of arrears being “an amount still outstanding or uncompleted, especially… a debt unpaid”. Pursuant to that definition the court found there were Events of Default in each of the months of October and December 2008 and January 2009 and that the trustee was entitled to enforce the security. As to the relief against forfeiture claim the court noted:
The first is that it cannot sensibly be said that there is any “forfeiture” involved in the triggering of the respondent’s rights immediately to recover the principal sum. The principal sum was owed to the respondent by the appellant, but it was not repayable while the appellant was not in default in respect of the facility. That the debt became repayable on the occurrence of default by the appellant is neither a forfeiture nor a penalty. As to penalty, there is strong authority for the proposition the mere fact that a principal sum becomes payable “upon a failure by a borrower to comply with the conditions on which credit was extended” cannot constitute a penalty.