Bank Leumi (UK) Plc v Philip Robert Akrill
| Jurisdiction | England & Wales |
| Judge | Lord Justice Kitchin,Lord Justice McFarlane,Lord Justice Maurice Kay |
| Judgment Date | 17 July 2014 |
| Neutral Citation | [2014] EWCA Civ 907 |
| Docket Number | Case No: A3/2013/3334 & 3334(A) |
| Court | Court of Appeal (Civil Division) |
| Date | 17 July 2014 |
[2014] EWCA Civ 907
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
His Honour Judge Jarman QC
HC13CO1238
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Maurice Kay
Lord Justice McFarlane
and
Lord Justice Kitchin
Case No: A3/2013/3334 & 3334(A)
Gregory Pipe (instructed by Clarion Solicitors Ltd) for the Appellant
Paul Casey (instructed by Addleshaw Goddard LLP) for the Respondent
Hearing date: 10 June 2014
Introduction
This is an appeal against the decision of HHJ Jarman QC dated 29 October 2013 and his consequential order granting the respondent ("the Bank") summary judgment against the appellant ("Mr Akrill") on two personal guarantee claims in the total sum of £3,840,493.83 including interest together with costs to be assessed if not agreed. The judge refused Mr Akrill permission to appeal.
On 19 November 2013 Mr Akrill applied to this court for permission to appeal and for a stay of execution. The application was supported by Mr Akrill's fourth witness statement dated 21 November 2013. By order 30 December 2013 Lewison LJ granted permission to appeal on the basis that it was arguable that the judge had fallen into error in conducting what was, in effect, a mini trial. He also granted a stay of execution.
Mr Akrill's evidence was not served on the Bank until 8 January 2014. Having reviewed that evidence, the Bank formed the view that it was misleading, opaque and incomplete and so issued an application for an order that the appeal be struck out or conditions imposed on its continuation, or that the stay of execution be set aside. Unfortunately but through no fault on the part of the Bank, it proved impossible for that application to be heard before the substantive appeal. In these circumstances the Bank accepts that its application cannot achieve its objectives and does not invite this court to grant it any of the relief that it sought. Nonetheless it submits that this court may properly take into account Mr Akrill's misrepresentations to Lewison LJ in deciding what order to make on this appeal.
The background
Mr Akrill is a property developer and carries on business through a group of companies known as the Manor Group. At all times material to these proceedings, he was the sole beneficial owner of each of the companies within the group.
Mr Akrill first made contact with the Bank in the summer of 2009 in connection with a development site in Salford (the "Salford site"). Mr Akrill had heard that this site was being developed with the benefit of loans from the Bank but that the borrower was in financial difficulty. Believing this presented him with a business opportunity, Mr Akrill travelled to the Bank's London offices where he met Mr Alastair Houghton and Mr David Griffiths who were, respectively, the Bank's deputy head and head of property finance. Mr Akrill maintains that at this meeting these individuals made to him a significant representation about the Bank's policy in relation to the enforcement of personal guarantees. He puts it this way in paragraph 38 of his first witness statement dated 27 June 2013:
"The Bank Leumi representatives made me aware that the Bank had guarantees in place to support the borrowing. They also made me aware that their policy was to recover outstanding sums from the borrower and by realising the security over the property. They were reluctant to call upon the personal guarantees and their expressed strategy was to recover from the security on property and from the borrower before calling upon the personal guarantor."
Mr Akrill understood from this that the Bank was looking to find a buyer for the Salford site so as to recover the monies which it was owed.
In the course of the ensuing discussions Mr Akrill raised the possibility of the Bank providing a loan to the Manor Group to fund the purchase and development of another property in Hull then known as Clarence Flour Mill ("Manor Mill"). Mr Akrill was told that a personal guarantee would be necessary and he maintains that he said that he would be prepared to offer such a guarantee but limited to £250,000. At about this time Mr Akrill was put in touch with a Mr Stephen Cooper, a regional manager with responsibility for the north east of the country and thereafter he became Mr Akrill's principal contact. Mr Akrill knew that Mr Cooper was not a member of the Bank's credit committee and that any lending proposal would require the approval of that committee.
In November 2009 Mr Cooper prepared a written request to the credit committee for authorisation to lend £3,370,000 to Manor Asset Limited ("Manor Asset"), a new single purpose vehicle formed for the purpose of acquiring and developing Manor Mill. Important aspects of this proposal were that the Bank would take a charge over the assets of Manor Asset and that Mr Akrill would provide a personal guarantee in respect of the whole facility. Mr Akrill claims that Mr Cooper told him that he was in "no danger" because the loan would be no more than 60% of the value of the property and that the Bank would seek to recover any monies owing in the first instance from the borrower and by enforcing its security over the assets of Manor Asset, and would only look to enforce the personal guarantee in the event of a shortfall. Mr Akrill explains the position in these terms in paragraph 54 of his first witness statement:
"Steve Cooper stated that on the basis that the loan was only up to 60% of the value of the site I was in no danger as regards the proposed personal guarantee as Bank Leumi was an old fashioned bank that looked after its customers, and that if I provided the personal guarantee requested then any redress would be sought in the first instance from the borrower and by enforcing the security over the property and not under the guarantee (ie. in the first instance), that Bank Leumi would have more than adequate security with a charge over Manor Mill and as a result there would not be a shortfall and they would not (ie. in the absence of a shortfall) look to enforce the personal guarantee. He said they would work any problems out with Manor, just as they were doing with the existing customer in relation to the Salford site and had instead enforced their security over the property by the appointment of an LPA Receiver."
Mr Akrill continues that this assurance was important to him, and that without it he would not have been prepared to offer a guarantee for the full amount of the loan. He also says that, with hindsight, he should have ensured that the documents were drafted to reflect the assurance and further, that he should have been sceptical about Mr Cooper's motives because he knew that Mr Cooper was "incentivised" by the Bank and received a bonus reflecting "the transactions he concluded". For his part, Mr Cooper denies having any such conversation with Mr Akrill and denies that he made the representation which Mr Akrill attributes to him.
In early December 2009 the credit committee approved the proposal and the Bank issued a facility letter to Manor Asset permitting it to draw down by way of a loan the sum of £3,370,000. The facility letter provided that the Bank would take a legal charge over the assets of Manor Asset and required Mr Akrill to provide a personal guarantee limited to £3,370,000 on the Bank's standard terms. Shortly afterwards and before any monies had been drawn down, the Bank reviewed this facility in the light of various matters which had come to its attention and in January 2010 a revised proposal was put to the credit committee. Following approval, a new facility letter was issued to Manor Asset on 29 January 2010 permitting it to draw down a slightly reduced maximum sum of £3,162,500 in three tranches, the first to assist Manor Asset to purchase Manor Mill; the second to assist it with development costs; and the third to assist it to service its interest obligations under the facility. As before, the facility letter provided that the Bank would take a legal charge over the assets of Manor Asset and required Mr Akrill to provide a personal guarantee on the Bank's standard terms.
The Bank duly took that legal charge and on 29 January 2010 Mr Akrill signed the personal guarantee. He says that he did so because Mr Cooper had given him the assurance to which I have referred. In the event the Bank advanced funding to Manor Asset under a series of facility letters, the last of which was dated 15 July 2011 and provided that the total sum, then amounting to £3,662,500, was repayable on demand but in any event by 30 November 2011.
Mr Akrill maintains that during the course of 2010 and 2011 he met Mr Cooper on various occasions and at a meeting in late 2010 they considered the possibility of the Manor Group of companies transferring all of their banking arrangements to the Bank. These companies had overdrafts amounting to a total of around £325,000 and so Mr Akrill and Mr Cooper discussed the possibility of Manor Property Limited ("Manor Property"), the company serving as the administrative hub of the group, being provided with an overdraft facility in the sum of £400,000 to replace the existing arrangements. Once again, it was envisaged that the Bank would be provided with a personal guarantee from Mr Akrill to cover the facility together with a debenture and a charge over the residual credit balances across the Manor Group.
On 18 January 2011 the Bank issued a facility letter to Manor Property on terms that...
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