Banque de Paris et des Pays-Bas (Suisse) S.A. v de Naray
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE O'CONNOR,LORD JUSTICE ACKNER |
| Judgment Date | 26 September 1983 |
| Judgment citation (vLex) | [1983] EWCA Civ J0926-1 |
| Docket Number | 83/0376 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 September 1983 |
[1983] EWCA Civ J0926-1
Lord Justice Ackner
and
Lord Justice O'Connor
83/0376
1983 B No. 622
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR. JUSTICE HOBHOUSE)
Royal Courts of Justice
MR. GORDON POLLOCK QC and MR. MICHAEL COLLINS (instructed by Messrs. Holman Fenwick & Willan, Solicitors, London EC3) appeared on behalf of the Defendants (Appellants)
MR. R.W. KIRK (instructed by Messrs. Charles Russell & Co, Solicitors, London EC2) appeared on behalf of the Plaintiffs (Respondents)
In January of 1981 the defendants in this action, who are the appellants before us, went to see the plaintiffs in the action, the respondents before us, who are a bank, in order to get finance for a number of vessels which comprise the Omega fleet. The bank had known the defendant Mr. Walters for some years in his capacity of chief financial officer of a substantial customer of the bank; he was also a half-brother of Mr. de Savary, who is well known on the financial and sporting scene. The defendants wished to borrow a sizeable sum on behalf of the company which they ran, which owned the fleet, and the bank were prepared to enter into an agreement, called "the Loan Agreement", with the company, but they also took as part of that arrangement a personal guarantee from the defendants and it is in relation to that guarantee that the action and this appeal arises.
The matter came before Mr. Justice Hobhouse in two stages, first of all on 17th June, when he dealt with the question as to whether or not there should be summary judgment under 0.14. On the material before him he concluded that although there should not be summary judgment, leave to defend should only be conditional and he had in mind the possibility of ordering the payment into court of at least $3m, which was the amount he reckoned was not open to argument on quantum. That is not an unknown course to adopt, where the judge, or master, is just about to sign judgment, but relents because of the vague prospect that there might be something which is worth the argument.
He adjourned the next aspect, which was to work out quantum, having dealt with the, so to speak, issue of liability so far as that related to 0.14 proceedings, conscious of the recent decision in Yorke Motors v. Edwards, reported in (1982) 1 Weekly Law Reports at p.444. He was well aware that it would be wrong to order the defendants, or either of them, to pay into court a sum which was impossible for them to pay, but on the other hand the fact that it was difficult for them to find whatever was the right sum that he thought appropriate, was no bar.
When the matter came before Mr. Justice Hobhouse on that second occasion he had before him two categories of affidavit; one was affidavits by the defendants saying that they were in an extremely difficult financial state, without any prospect of either employment or finances which would enable them to maintain their standard of living, or even a comfortable standard of living, and that so far as assets from other sources were concerned, there were none at all. But the bank, who had strong suspicions about the veracity of the appellants on all issues, had arranged for enquiry agents to watch them, and as a result of their affidavits it was apparent—and apparently this was not contradicted or criticised—that they were living at a standard of living which meant at least an income of many, many thousands a year to maintain.
The learned judge said this with regard to the position:
"The affidavits which were sworn by the defendants nominally and on their face appear to comply"—that is to say, with his order—"but when one reads them with the reports of the enquiry agents of which no criticism is made it is quite clear to me that the defendants have given a disingenuous and misleading picture".
He went on to say that he was quite satisfied that he could not place reliance on the affidavits which, he said, placed the court in a very difficult position, and he continued:
"I have no credible material to form a view as to the sum that they are able to pay. Under these circumstances I think that I must form a view as to the long-term figure which it would be reasonable to order and the timetable".
He then gave leave to defend on condition that $2m, or its sterling equivalent, be paid into court or to the account of the solicitors, as may be agreed, with a timetable providing in effect for this sum to be found within, I think, a year in the stages which he then set out. The defendants appeal against that order and the bank cross-appeals, saying that they ought to have obtained summary judgment.
In dealing with the first stage, summary judgment, the learned judge said this:
"I do not think this is a case for unconditional leave. The first and main point is almost but not quite strikeable out. The undue influence point is completely unarguable. As to continuing trading, the construction point is unarguable except conveivably as to the difference between $3m and $4m. The duty of care point is very shadowy indeed".
Before us Mr. Pollock, with his characteristic sense of reality and without any pressure—not that he would ever yield to pressure—conceded that there was no argument that he was going to raise on the aspect of undue influence or the bargain being unconscionable (another point which had been taken, both by correspondence and in the defence); nor was he going to raise any point on the alleged duty of care or its breach, or the damages which might result. He contended that the first and main point, as the learned judge described it, was a point which should have achieved for his clients unconditional leave to defend. There was some little discussion as to what the learned judge meant by the phrase "…..is almost but not quite strikeable out". Mr. Pollock at first thought that it was intended to mean that so far as the law stood there was but a remote prospect of success. It seemed to me that as the law stood, given that the plea on the factual side was a credible one, the defendants would have an arguable case. In a nutshell their contention was quite simply that Mr. Walters, when he became aware that a personal guarantee was required, queried the necessity for this with the two senior representatives of the bank, who had negotiated the loan; they assured him that it was only required for cosmetic purposes—a phrase which, as I understand it, was intended to mean that a branch of the bank required a guarantee on their records, but that there was no question of that guarantee ever being enforced against him or against Mr. de Naray, and that he could remain assured that it would involve neither him nor his co-defendant in any personal liability if he signed and, relying on that assurance, he signed. The plea which is set up is a plea of estoppel, or, perhaps better expressed, that there was a collateral agreement between the parties, under which the guarantee was not to be enforced. What I think the learned judge was expressing when he said "almost but not quite strikeable out" was that he was almost able to dismiss it as not a credible allegation in the circumstances of this case, but hesitated long enough to decide on conditional leave.
In view of the cross-appeal we have to consider that point again; we consider it with an advantage which the learned judge did not have. When the matter came back before him on 1st July he confirmed that he had already concluded that there, should be leave to defend, and therefore the affidavit material available before him was used, and only used, by him, quite intentionally, on the aspect of how much he should order to be paid into court. We have been asked by Mr. Kirk to avail ourselves of that material and another...
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