John Spencer Harvey v Dunbar Assets Plc

JurisdictionEngland & Wales
JudgeLady Justice Gloster,Black Lj,Longmore Lj
Judgment Date30 July 2013
Neutral Citation[2013] EWCA Civ 952
Docket NumberCase No: A3/2012/2505
CourtCourt of Appeal (Civil Division)
Date30 July 2013

[2013] EWCA Civ 952

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE, CHANCERY DIVISION

HIS HONOUR JUDGE KAYE QC

1NE21056

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Longmore

Lady Justice Black

and

Lady Justice Gloster

Case No: A3/2012/2505

Between:
John Spencer Harvey
Appellant
and
Dunbar Assets Plc
Respondent

Mr David Schmitz (instructed by Hindle Campbell Law) for the Appellant

Mr Peter Arden QC and Mr Joseph Curl (instructed by DLA Piper UK LLP) for the Respondent

Lady Justice Gloster

Introduction

1

The issue in this case is whether, on the construction of a composite joint and several guarantee, one of four intended guarantors who signed the guarantee was liable, in circumstances where one of the other intended guarantors had not signed the instrument.

Background

2

This is an appeal by the appellant, John Spencer Harvey ("Mr Harvey") from an order dated 7 September 2012 made by HHJ Kaye QC, sitting as a deputy High Court judge of the Chancery Division. By that order HHJ Kaye QC dismissed Mr Harvey's appeal against an order made by DJ Pescod on 20 March 2012 refusing Mr Harvey's application to set aside a statutory demand dated 16 June 2011 made by the respondent Dunbar Assets Plc (formerly known as Dunbar Bank Plc) ("the Bank") pursuant to section 268 (1)(a) of the Insolvency Act 1986 ("the 1986 Act").

3

The statutory demand was founded upon what the Bank claims was Mr Harvey's liability under a joint and several guarantee dated 10 March 2008 ("the Guarantee") which was actually signed by Neil Trueman ("Mr Trueman"), John Edward Bradley ("Mr Bradley") and Mr Harvey and which appeared to have been signed by Darren John Lenney ("Mr Lenney"), whereby the liabilities of Vision Development Ashbrooke Limited ("the Company") to the Bank were purportedly guaranteed. Permission to appeal against the judgment of HHJ Kaye QC was granted by Kitchin LJ at an oral hearing on 1 March 2013.

4

For the purposes of this appeal the relevant background facts may be summarised as follows. Although not a director or shareholder of the Company, Mr Harvey's case is that he was persuaded to sign the Guarantee at the request of the Company and of the Bank. The Guarantee was provided as part of a transaction pursuant to which the Bank was to make loan facilities of £3,535,000 available to the Company to enable it to refinance the cost of a development site at 12–14 Gray Road, Ashbrooke, Sunderland ("the Property") and to finance the costs of completing the development. The terms of the loan facility were set out in a letter from the Bank to the Company dated 29 January 2008 ("the Facility Letter"). Paragraph 5 of the Facility Letter provided that the security for the Company's indebtedness would consist of various items of security, including a joint and several guarantee from the four men in the principal sum of £720,000, plus interest, charges, costs and expenses. That figure had been calculated by taking 20.3% of the total amount of the facility to be made available to the Company.

5

The development project was not successful and on the 22 March 2011 the Bank demanded repayment from the Company in a sum in excess of £4.8 million. The Company did not meet the demand and on 4 April 2011 the Bank served a written demand upon Mr Harvey and the three other men for payment of the guaranteed sum of £720,000 plus interest.

6

As I have already said, on 16 June 2011 the Bank served its statutory demand on Mr Harvey. On 7 July 2011 Mr Harvey applied to set aside the statutory demand on the grounds that he disputed liability under the Guarantee. The matter initially came before DJ Hardy on 5 August 2011. It appears that, at that hearing, the principal defence advanced by Mr Harvey was one of promissory estoppel, namely that a representation had been made by the Bank, prior to execution of the Guarantee, to the effect that the Bank had no intention of enforcing it. By a draft judgment circulated on 9 February 2012, DJ Pescod dismissed Mr Harvey's application to set aside the statutory demand on the grounds that the Bank was estopped from making a demand.

7

By letter dated 15 March 2012 Mr Harvey's solicitors wrote to DJ Pescod asking him to reconsider his decision in light of the fact that, on 8 March 2012, DJ Stapely, sitting at the Sunderland County Court, had set aside a statutory demand served by the Bank against Mr Lenney, also based on alleged liability under the Guarantee. The ground upon which DJ Stapeley had set aside the statutory demand as against Mr Lenney was that Mr Lenney had alleged in his evidence that he had never signed the Guarantee and that the purported signature appearing on the instrument was in fact a forgery.

8

DJ Pescod took the view that, in the circumstances, the appropriate course was not to re-hear Mr Harvey's application, but rather to grant permission to appeal his judgment on the basis that the issue relating to the consequences in relation to Mr Harvey's liability, if Mr Lenney's signature were indeed a forgery, was not something that had ever been argued before him. Notice of Appeal by Mr Harvey was lodged on 12 April 2012.

9

His appeal came before HHJ Kaye QC at which the only issue argued on behalf of Mr Harvey was the point that he had never became bound under the terms of the Guarantee, because one of the intended guarantors, namely Mr Lenney, had never signed it. As already stated, HHJ Kaye QC dismissed the appeal, holding that, on the construction of the relevant provisions in the Guarantee, Mr Harvey was liable to pay the Bank notwithstanding the fact that, arguably, the purported signature of Mr Lenney was a forgery.

10

The factual issue as to whether Mr Lenney's signature is genuine or is a forgery has yet to be determined in an action between the Bank and Mr Lenney, and indeed the other intended guarantors. It was common ground before us that if, on the correct construction of the Guarantee, Mr Harvey would not be liable under it, in circumstances where Mr Lenney never in fact signed the Guarantee, then the statutory demand should be set aside and the matter should be resolved at a trial of the relevant factual issues.

11

At the hearing of the appeal, and after having heard full argument, this Court indicated that it would allow the appeal, set aside the statutory demand against Mr Harvey and provide its reasons later. These are my reasons for allowing the appeal.

The relevant terms of the Guarantee

12

For the purposes of this appeal it is necessary to set out the material provisions of the Guarantee. The Guarantee was a composite joint and several guarantee expressed to be made between Mr Trueman, Mr Lenney, Mr Harvey and Mr Bradley (defined as "the Guarantor") of the one part and the Bank of the other part.

13

Clause 1 of the Guarantee contained a standard form guarantee whereby:

"the Guarantor hereby:

(a) guarantees the payment or discharge to the Bank and undertakes that it will on first demand in writing made on it pay or discharge to the Bank all monies and liabilities which shall for the time being be due owing or incurred by the Principal Debtor to the Bank …… together also with

(i) such further sum for interest…. and banking charges; and

(ii) all costs and expenses recoverable by the Bank from the Principal Debtor; and

(b) agrees as a primary obligor and not merely as surety to indemnify the Bank on demand by the Bank from and against all losses incurred by the Bank as a result of the Principal Debtor failing to perform any obligation due to the Bank or any such obligation of the Principal Debtor being or becoming void voidable unenforceable or ineffective for any reason whatsoever …"

subject to a proviso that the total amount recoverable under the Guarantee should not exceed £720,000, in addition to interest, charges, costs and expenses.

14

Clause 2 contained a standard provision relating to costs. In so far as material, the remaining clauses of the Guarantee provided as follows:

"3. CONTINUING SECURITY

(a) This deed is to be a continuing security to the Bank notwithstanding any settlement of account or other matter or thing whatsoever and shall extend to cover the ultimate balance due from time to time from the Principal Debtor to the Bank and until payment of such balance the Guarantor shall not be entitled to participate in any security held or money relieved by the Bank on account of such balance or to stand in the Bank's place in respect of any such security or money.

(b) This Deed is to be in addition to and is not to prejudice or be prejudiced by any other securities or guarantees (including any guarantees signed by the Guarantor) which the Bank may now or hereafter hold from or on account of the Principal Debtor and is to be binding on the Guarantor as a continuing security notwithstanding any payments from time to time made to the Bank or any settlement of account or disability or incapacity affecting the Guarantor or the death of Guarantor or any other thing whatsoever……..

4 INVALIDITY AND INDULGENCE

(a) Neither the obligations of the Guarantor herein contained nor the rights powers and remedies conferred in respect of the Guarantor upon the Bank by any agreement this Deed or by law shall be discharged impaired or otherwise affected by:

(i) the Bankruptcy winding-up administration or dissolution of the Guarantor or the Principal Debtor or any change in the control or ownership of the Guarantor or the Principal Debtor;

(ii) any obligations of the Guarantor or the Principal Debtor to the Bank being or becoming illegal invalid or unenforceable in any respect or any incapacity or...

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6 cases
  • John Spencer Harvey v Dunbar Assets Plc
    • United Kingdom
    • Chancery Division
    • 26 Noviembre 2015
    ...principle that if one of the co-obligors of the Guarantee had not signed it, then none were bound unless and until they all had (see [2013] EWCA Civ 952). Accordingly the (first) statutory demand was set aside. 16 Following the Court of Appeal's ruling, the Bank launched proceedings agains......
  • Mr John Spencer Harvey v Dunbar Assets Plc and Another
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 13 Febrero 2017
    ...point was heard, and dismissed, by His Honour Judge Roger Kaye QC, sitting as a judge of the High Court, on 7 September 2012: see Harvey v Dunbar Assets Plc [2012] EWHC 2890 (Ch), [2013] BPIR 66. Permission for a further appeal to this court was granted at an oral hearing by Kitchin LJ on 1......
  • Bryce Brougham v Christine Anna Elizabeth Regan and Mark Jefferey Tuffin
    • New Zealand
    • Supreme Court
    • 30 Octubre 2020
    ...on Principal and Surety (6th ed, Sweet & Maxwell, London, 2011) at 201 (footnote omitted), approved in Harvey v Dunbar Assets plc [2013] EWCA Civ 952, [2013] BPIR 722 at [20] and [22]. See also James Graham and Co (Timber) Ltd v Southgate-Sands [1986] QB 80 (CA) at 86 per O’Connor LJ and 93......
  • Bryce Brougham v Christine Anna Elizabeth Regan and Mark Jefferey Tuffin
    • New Zealand
    • Supreme Court
    • 30 Octubre 2020
    ...on Principal and Surety (6th ed, Sweet & Maxwell, London, 2011) at 201 (footnote omitted), approved in Harvey v Dunbar Assets plc [2013] EWCA Civ 952, [2013] BPIR 722 at [20] and [22]. See also James Graham and Co (Timber) Ltd v Southgate-Sands [1986] QB 80 (CA) at 86 per O’Connor LJ and 93......
  • Request a trial to view additional results
3 firm's commentaries
  • Commercial Bulletin No. 100 - September 2013
    • United Kingdom
    • Mondaq United Kingdom
    • 1 Octubre 2013
    ...Comment. Be careful that recitals are accurate. Guarantee not in effect until all guarantors sign Harvey v Dunbar Assets Plc [2013] EWCA Civ 952 A guarantee which was a single composite document prepared for signature by several persons as joint and several guarantors had to be signed by al......
  • If Another Party Doesn't Sign The Composite Joint-And-Several Guarantee, Are You Bound By It?
    • Canada
    • Mondaq Canada
    • 19 Agosto 2013
    ...depends, said the English Court of Appeal in Harvey v Dunbar Assets plc, [2013] EWCA Civ 952. Harvey and three others agreed to guarantee the obligations of Vision Development Ashbrooke Ltd to its bank. Harvey disputed liability when the bank came calling to enforce the guarantee, arguing t......
  • Guarantee Not In Effect Until All Guarantors Sign
    • United Kingdom
    • Mondaq United Kingdom
    • 25 Septiembre 2013
    ...v Dunbar Assets Plc [2013] EWCA Civ 952 Harvey and three other individuals entered into a guarantee with Dunbar to secure the liabilities of a company to which Dunbar was loaning money in relation to a property finance project. The project was unsuccessful and Dunbar demanded repayment of t......

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