Four Marketing Ltd v David Frederick Bradshaw

JurisdictionEngland & Wales
CourtQueen's Bench Division
JudgeAkhlaq Choudhury
Judgment Date20 Dec 2016
Neutral Citation[2016] EWHC 3292 (QB)
Docket NumberCase No: HQ15X03168

[2016] EWHC 3292 (QB)



Royal Courts of Justice

Strand, London, WC2A 2LL


Mr Akhlaq Choudhury QC

(sitting as a Judge of the High Court)

Case No: HQ15X03168

Four Marketing Limited
David Frederick Bradshaw

Mr Peter Susman QC for the Claimant

Mr James Stuart for the Defendant

Hearing dates: 7 and 8 December 2016

Judgment Approved

Akhlaq Choudhury QC:



The Claimant, Four Marketing Limited (" FML"), seeks to enforce the terms of a personal guarantee (" PG") dated 5 February 2014 against the Defendant, Mr David Bradshaw (" Mr Bradshaw"), in the sum of £302,980.11. Mr Bradshaw asserts that the PG does not extend to the sums claimed and that, in any event, the PG was discharged by or following an agreement reached on 9 June 2014.


Evidence for the Claimant was given by Mr Charles Perez, CEO of FML. His evidence was subject to detailed cross-examination by Mr James Stuart, appearing for the Defendant. Oral evidence for the Defendant came from Mr Bradshaw, Mr Neville Newman and Mr Simon Powell. There was also a written statement for the Defendant from Mr Mark Loy who was not available to give evidence. The Defendant's oral evidence was subject to very limited cross-examination by Mr Peter Susman QC appearing for the Claimant. This was said to be on the basis that the issues were mainly ones of law or objective interpretation of documents and that oral evidence of subjective motives, intentions or belief is largely irrelevant.


Although the main issues are essentially ones of construction, the limited oral evidence which I heard was helpful in understanding the context in which the two key agreements were reached.


Initial Relationship between FML and Urbohemia


FML is a provider of wholesale distribution and other services to the fashion industry. The Defendant, Mr Bradshaw, is a creative consultant in the fashion house, Versace. Mr Bradshaw is also the founder of Urbohemia Limited (" Urbohemia"), a supplier of men's fashion, which was incorporated in 2011 and trades in the name of "Hunter Gather" (" HG"). By 2012, Urbohemia had established a presence in the market having opened a store on Wigmore Street and acquired a concession in Selfridges.


Relations between FML and Urbohemia commenced in late 2013. FML considered that there was great potential in the HG brand and it was interested in eventually becoming a partner in the business. However, the first agreement between FML and Urbohemia was a Distribution Agreement entered into on 31 October 2013. There were no formal discussions about FML acquiring any equity stake in Urbohemia at this stage.


By mid to late 2013, Urbohemia was running very short on finance and there were difficulties in paying suppliers and other creditors. Urbohemia looked to FML to provide funding to meet some urgent debts. Urbohemia was at the time also looking to develop a commercial relationship with Spring Studios Limited (" SSL"), a media solutions group providing " strategic, creative and digital services" to clients in the fashion industry. A draft shareholding agreement between SSL, Mr Bradshaw and others was subsequently prepared but this was never completed. At any rate, it was Mr Perez's understanding that Urbohemia and SSL would at some point enter into a larger partnership thereby giving some stability to the Urbohemia venture. In order to ensure that, in the meantime, the brand and reputation of HG was not damaged by Urbohemia's inability to pay suppliers, Mr Perez agreed that FML would provide funding. From about September 2013 to the end of the year FML provided Urbohemia with sums totalling just over £23,000. There was no formal loan agreement in place for these loans.

Personal Guarantee


On 20 January 2014, Mr Perez wrote to Mr Bradshaw and Mr Chris Bailey (another founding participant in Urbohemia) stating that FML would need some security if it was to provide further financial support. Mr Perez mentioned that FML's current exposure was " circa £23K" and that FML would be " happy to increase [this] in the short term (say for 3-months) to £50K on the condition that we receive a personal guarantee from either you or David". It was agreed that a loan agreement should be drawn up on this basis and, on 30 January 2014, a draft loan agreement, prepared by FML's solicitors, was sent to Mr Bradshaw and Mr Bailey. This draft loan agreement referred to the loan "Facility" as being for an amount not exceeding £50,000 and including the £23,148 that had " already been drawn down" by Urbohemia. It also included Mr Bradshaw as a Guarantor. However, Mr Bradshaw considered the loan agreement to be complex and suggested a simpler arrangement instead whereby there was just a personal guarantee from him in respect of Urbohemia's borrowings. A draft PG was then drawn up by FML's Solicitors.


The draft PG included a warning that Mr Bradshaw should seek independent legal advice before entering into the agreement. It seems that Mr Bradshaw did not take formal legal advice but did discuss the PG informally with a lawyer who did assist him in making some red-line amendments to the draft. At any rate, the final version of the PG was signed as a deed on or around 5 February 2014. It seems that Mr Bradshaw mistakenly signed the Termination Notice in respect of the PG at the same time. This necessitated the re-execution of the PG, which Mr Bradshaw willingly did on 3 April 2014. The re-executed PG was backdated to 5 February 2014. There are thus two versions of the PG in the papers, but it is accepted that nothing turns on this.


The PG sets out as Background that, "(A) The Lender has agreed to provide the Borrower with the On-demand Loan Facility…".


I do not set out all of the PG here, although I have considered it in its entirety. The principal terms of the PG for present purposes are as follows:

"2.1 In consideration of the Lender providing the On-demand Loan Facility to the Borrower, the Guarantor guarantees to the Lender, whenever the Borrower does not pay any of the Guaranteed Obligations (all of which are repayable on demand), to pay on demand the Guaranteed Obligations.

3.1 This guarantee is and shall at all times be a continuing security and shall cover the ultimate balance from time to time owing to the Lender by the Borrower in respect of the Guaranteed Obligations.

3.3 The Lender shall not be obliged before taking steps to enforce any of its rights and remedies under this Guarantee:

3.3.3 to make demand, enforce or seek to enforce any claim, right or remedy against the Borrower or any other person.

"Guaranteed Obligations" are defined as "all present and future payment obligations and liabilities of the Borrower due, owing or incurred under the On-demand Loan Facility to the Lender (including, without limitation, under an amendment, supplement or restatement of the On-demand Loan Facility, or in relation to any new or increased advances or utilisations)".

"On-demand Loan Facility" is defined as "the amounts, all being repayable on demand, made available by way of loan to the Borrower by the Lender from time to time."


It was understood by both parties that the PG was intended to provide short term finance only and that the liability was not expected at that stage to exceed £50,000. This is evident from an email from Ms Grace Bailey of Urbohemia who wrote to Mr Perez on 10 February 2014 requesting confirmation of " how much of the £50K we have used." Mr Bradshaw believed that he was guaranteeing up to approximately £60,000 although he does not contend that the PG was subject to any specified limit.


By 20 March 2014, it was clear that the expected £50,000 (or £60,000) liability was not going to suffice. Mr Perez therefore wrote to Mr Bradshaw asking whether he was content " that any additional monies during this 'transitional' period that we spend over and above the £50K guarantee, we can then increase the guarantee accordingly?" Mr Bradshaw did not respond to this email but it is clear from the continued injection of funds by FML thereafter that no express objection was raised to Mr Perez's request. By 23 April 2014, the total amount advanced by FML to Urbohemia had reached £151,983.16.

The Term Sheet and meeting on 9 June 2014


On 25 April 2014, there was a meeting between Mr Perez, Mr Neville Newman, Urbohemia's (and Mr Bradshaw's) accountant, and Mr Simon Powell of SSL, to discuss Urbohemia's need for further funding and a potential future shareholding structure. Following the meeting, Mr Newman prepared a note of the points discussed and circulated it to Mr Powell and Mr Perez for their comments. The key points to emerge from that meeting relevant for present purposes are as follows:

a. Interim funding requirements for Urbohemia were estimated to be " up to £150K each", for each of SS, FML and Mr Bradshaw;

b. Mr Bradshaw was not in a position to advance further funds in the short term but would be able to do so over a longer (two-year) period;

c. That FML " has previously lent the business £160K which is being supported by a personal guarantee given by [Mr Bradshaw]. [Mr Perez] will speak to his colleagues at FM to confirm that this £160K will also be capitalised and will agree to invest a further £150K." Mr Perez inserted a comment after Mr Newman's note in the following terms: " The actual amount is £150K lent so far (my mistake). This is the amount that we can turn into equity providing all agreed to proposed way forward.";

d. " Subject to the agreement by SS, FM and DB all of the funds invested by FM of £150K to date will be capitalised, the sum of £560K plus invested by SS will be capitalised and all the intercompany loans with DB's companies will be capitalised";

e. It was suggested that the shareholding to be agreed would " possibly" be...

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