IIG Capital LLC v Van Der Merwe
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waller:,Lord Justice Lawrence Collins,Lord Justice Rimer |
| Judgment Date | 22 May 2008 |
| Neutral Citation | [2008] EWCA Civ 542 |
| Docket Number | Case No: A3/2007/2698 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 May 2008 |
[2008] EWCA Civ 542
Lord Justice Waller
Vice-president Of The Court Of Appeal, Civil Division
Lord Justice Lawrence Collins And
Lord Justice Rimer
Case No: A3/2007/2698
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
Chancery Division
Mr Justice Lewison
Paul McGrath (instructed by Messrs Jones Day) for the Respondents
Matthew Collings QC and Adam Smith (instructed by Messrs H L Miller & Co) for the Appellants
Introduction
This is an appeal from the judgment of Lewison J dated 13 th November 2007 by which he dismissed an appeal from a judgment of Master Teverson dated 19 th September 2007. Master Teverson had given summary judgment in the sum of $31,882,541.96 against the appellants (the Van Der Merwes) in favour of the respondents (IIG).
IIG had entered into a loan agreement with Hurst Parnell Imports and Exports Ltd (HPIE). The Van Der Merwes were directors of HPIE and executed “deeds of guarantee” in favour of IIG. Before the Master the Van Der Merwes, in reliance on such authorities as Holme v Brunskill (1878) 3 QBD 495 and Marubeni Hong Kong and South China Limited v Mongolian Government [2005] 1 WLR 2497, sought to rely on defences available to HPIE, in particular they sought to rely on expert evidence of New York law (the law by which the loan agreement was governed) to the effect that by that law there would be implied a covenant of good faith and fair dealing which would require IIG to have given reasonable notice of its demand and that such notice had not been given thereby providing HPIE a complete answer to the claim.
IIG's case was however that on the true construction of the “deeds of guarantee” they excluded the forms of defence available to a guarantor where his liability is secondary i.e. the defences available to the primary obligor and thus that the above authorities had no application. They submitted that on the true wording of the guarantees executed by the Van Der Merwes, the Van Der Merwes were obliged to pay as principal obligor moneys certified as due by duly authorised officers of IIG.
The Master concluded that IIG were right as did Lewison J. Chadwick LJ granted permission to appeal despite it being a second appeal because the “security instrument which [the judge] had construed contained common form provisions, such that his decision might give rise to “ramifications”.”
The loan and demand
The judge describes the matter in this way:-
“2. In 2004 Mrs Van Der Merwe came across IIG Capital LLC (“IIG”), a company registered in New York and carrying on business there. She understood that it was interested in financing business start ups by trade finance and invoice discounting. IIG began affording finance to HPIE. However, the relationship had its ups and downs and Mr and Mrs Van Der Merwe transferred HPIE's business to Barclays. But in 2006 IIG recaptured HPIE's financing and a series of documents were entered into. All the documents were executed on the same day: 30 June 2006. One of those documents is at the heart of this dispute.
3. The first of the relevant documents is a loan agreement made between IIG and HPIE. The loan agreement contains a number of warranties given and obligations undertaken by HPIE. These include (for example) warranties about the accuracy of HPIE's accounts and financial statements (clause 8); obligations to provide regular accounts (clause 10.1); obligations to maintain insurance (clause 10.1.9); obligations not to enter into transactions otherwise than in the normal course of business (clause 11.4) and not to make loans to affiliates (clause 11.6). Clause 27.1 of that agreement said that the agreement was to be governed by New York Law. The second of the relevant documents was a debenture granted over the assets of HPIE. The third was a document described as a guarantee and signed by Mrs Van Der Merwe. I will refer to it as the guarantee, without prejudice to the contention of either party. Mr Van Der Merwe signed an identical document, although it was not in evidence.
4. On 12 January 2007 IIG demanded US$30,303,576 from HPIE said to be due under the loan agreement; and on the same day appointed administrators over HPIE. HPIE did not pay the amount demanded; and on 16 January 2007 IIG sent letters to Mr and Mrs Van Der Merwe reciting the failure of HPIE to pay and certifying that the amount due and payable by each of them under the guarantee was US$30,303,576. The letter demanded payment within 2 days. Mr and Mrs Van Der Merwe have not paid.”
The terms of the guarantee
I can again take the description and relevant terms from the judge's judgment. He describes Mrs Van Der Merwe's guarantee but it is common ground that Mr Van Der Merwe's was in identical terms:—
“6. The guarantee begins by describing itself as “THIS GUARANTEE” and Mrs Van Der Merwe is described as “the Guarantor”. Recital (A) records the grant of the facility to HPIE (described as “the Borrower”) of US$23,000,000. Recital (B) says that it was a condition precedent to the grant of the facility that the “Guarantor enters into this Guarantee of the obligations of the Borrower to the Lender under the [Loan] Agreement”. Recital (C) says that the guarantee is an “all monies” guarantee.
7. The document contains a single definition in clause 1.2. The defined term is “Guaranteed Monies” and the definition is:
“(i) all moneys and liabilities (whether actual or contingent) which are now or may at any time hereafter be due, owing, payable, or expressed to be due, owing or payable, to the Lender from or by the Borrower (ii) all interest…costs, commissions, fees and other charges and expenses which the Lender may charge against the Borrower; and (iii) all legal and other costs, charges and expenses which the Lender may incur in enforcing or obtaining, or attempting to enforce or obtain, payment of any such moneys…”
8. Clause 2 contains the main payment obligation and reads:
“In consideration of the Lender agreeing to enter into the Agreement, the Guarantor as principal obligor and not merely as surety unconditionally and irrevocably:
2.1 guarantees to the Lender the due and punctual payment of the Guaranteed Moneys and agrees that, if at any time or from time to time any of the Guaranteed Moneys are not paid in full on their due date … it will immediately upon demand unconditionally pay to the Lender the Guaranteed Moneys which have not been so paid
2.2 As an original and independent obligation under this Deed, the Guarantor shall
2.2.1 indemnify the Lender and keep the Lender indemnified against any loss … incurred by the Lender as a result of a failure by the Borrower to make due and punctual payment of any of the Guaranteed Monies …”
9. Clause 3 is headed “Preservation of Guarantee” and provides:
“3.1 The Lender shall be at liberty without thereby affecting its rights hereunder at any time at its absolute discretion and with or without the consent or knowledge of or notice to the Guarantor:
3.1.1 to give time to any Obligor for the payment of all or any sums due or payable under the Agreement or any other Finance Document;
3.1.2 to neglect or forbear to enforce payment of all or any sums due or payable under the Agreement or any other Finance Document and (without prejudice to the foregoing) to grant any indulgence or forbearance to and fail to assert or pursue or delay in asserting or pursuing any right or remedy against any Obligor thereunder;
3.1.3 to accept, vary, exchange, renew, abstain from perfecting, or release any other security now held or to be held by it for or on account of the Financial Indebtedness;
3.1.4 to amend, add to or vary the terms of the Finance Documents;
3.1.5 to compound with, accept compositions from and make any other arrangements with any other Obligor.
3.2 This Guarantee and the rights of the Lender hereunder shall not be affected by:
3.2.1 the appointment of a receiver, trustee or similar officer of any other Obligor, its undertaking or all or any of its or his asset.
3.2.2 Any alteration of the status of any other Obligor or any defective or irregular exercise of the powers of the Borrower to raise finance
3.2.3 The insolvency, bankruptcy, death, incapacity, winding up, liquidation or dissolution of any other Obligor;
3.2.3 Any failure by the Lender to take any other security for all or any part of the indebtedness agreed to be taken by the Lender pursuant to the Finance Documents or any total or partial invalidity, voidability or unenforceability of any such security;
3.2.4 The doing by the Lender of anything referred to in clause 3.1 above; or
3.2.5 Any other act or circumstance which (apart from this provision) would or might constitute a legal or equitable defence for or discharge of a surety or guarantor,
and this Guarantee may be called and/or enforced without steps or proceedings first being taken against any other Obligor.”
10. Clause 4.2 provided that:
“A certificate in writing signed by a duly authorised officer or officers of the Lender stating the amount at any particular time due and payable by the Guarantor under this Guarantee shall, save for manifest error, be conclusive and binding on the Guarantor for the purposes hereof.”
11. Clause 5 said that the guarantee was “a continuing guarantee” and would remain in force until all sums “due from the Borrower under the Finance Documents have been paid in full”. Clause 7.3 prevented the Guarantor from asserting any set-off against the Borrower. Finally, clause 14 said...
To continue reading
Request your trial
-
North Shore Ventures Ltd v Anstead Holdings Inc. and Others
...bond precluding the Guarantors from relying on any defence available to the debtor. He relied on the decision of this court in IIG Capital llc v Van der Merwe [2008] 2 AER (Comm) 1173. Further, he contended that any error in the certificate was certainly not 'manifest' within the meaning of......
-
Carey Value Added SL v Grupo urvasco SA
...the principal debtor's defences are unavailable for set off. 18 In support of its case, Carey places considerable reliance on IIG Capital LLC v van der Merwe [2008] 2 Lloyd's Rep. 187, [2008] 2 All E.R. (Comm) 1173. In that case, the directors of a company executed “deeds of guarantee” in ......
-
Tatiana Akhmedova v Farkhad Teimur Ogly Akhmedov
...Mr Gourgey QC's second contention was that Mr Levy QC's submission was contrary to binding precedent. In Hill v Spread Trustee Co Ltd [2008] EWCA Civ 542, Arden LJ stated that the scheme of s.423 was unusual (at [101]). In that paragraph, she considered each subsection one after the other ......
-
North Shore Ventures Ltd v Anstead Holdings, Inc. and Others
...the Guarantors unless manifestly incorrect.” 184 A provision in comparable terms was considered by the Court of Appeal in IIG Capital Llc v Van Der Merwe [2008] EWCA Civ 542. There, clause 4.2 of the relevant guarantees provided that: “A certificate in writing signed by a duly authorised of......
-
Conclusive Evidence Clauses And Failure To Mitigate
...error" as being an error which is "obvious or easily demonstrable without extensive investigation" (IIG Capital LLC v Van Der Merwe [2008] EWCA Civ 542; [2008] 2 Lloyd's Rep 187 and North Shore Ventures Ltd v Anstead Holdings Inc [2011] EWCA Civ 230; [2012] Ch 31 The defendants argued that ......
-
IFI Update London, August/Octber 2008 - Part 1
...of India [2006] 1 Lloyd's Rep 216. There has also been recent discussion on the right to refunds in Van Der Merwe v. IIG Capital LLC [2008] EWCA Civ 542. The fact that it was not pursuing the buyer for a refund in this case because it was insolvent did not affect this analysis. The independ......
-
Parent company guarantees cannot circumvent arbitration because they are not as good as cash
...or dispute by the relevant party to the underlying contract. Footnote 1 [2005] 1 WLR 2497. See also IIG Capital LLC v Van De Merwe [2008] EWCA Civ 542; Vossloh Aktiengesellschaft v Alpha Trains (UK) Ltd [2011] 2 All ER (Comm) The content of this article is intended to provide a general guid......
-
NAV And Other Financial Determinations: Implications Of Fairfield Sentry Limited (In Liquidation) V Migani And Others
...1674 (Comm) (23 May 2014). 3 North Shore Ventures Ltd v Anstead Holdings Inc [2011] EWCA Civ 230. 4 IIG Capital LLC v Van Der Merwe [2008] EWCA Civ 542; [2008] 2 Lloyd's Rep The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be......
-
Security for performance
...of the work: the Miller Act 40 USC §§270a–270f. 63 Smith v Rudhall (1862) 3 F&F 143 [176 Er 64]. 64 IIG Capital LLC v Van der Merwe [2008] EWCa Civ 542 at [7], per Waller LJ. See also Autoridad del Canal de Panamá v Sacyr SA [2017] EWhC 2228 (Comm) at [89], per Blair J. 65 See, eg, Guyana &......