Promontoria (ram) Limited Against John Moore
| Jurisdiction | Scotland |
| Judge | Lord Bannatyne |
| Neutral Citation | [2017] CSOH 88 |
| Date | 21 June 2017 |
| Docket Number | CA127/16 |
| Court | Court of Session |
| Published date | 21 June 2017 |
OUTER HOUSE, COURT OF SESSION
[2017] CSOH 88
CA127/16
OPINION OF LORD BANNATYNE
In the cause
PROMONTORIA (RAM) LIMITED
Pursuers
against
JOHN MOORE
Defender
Pursuers: Mr Barne; HBJ Gateley
Defender: Mr R Anderson; Burness Paull LLP
21 June 2017
Introduction
[1] This matter came before me for debate in terms of the defender’s first to third pleas in law. The defender sought dismissal of the pursuers’ case on the basis that the pursuers did not have title to sue and it was irrelevant and lacking in specification.
Background
[2] On 31 May 2007 the defender signed a personal guarantee (“the Guarantee”) addressed to the Ulster Bank Limited (“the Bank”).
[3] In terms of the Guarantee the defender irrevocably guaranteed payment and discharge of all sums due or to become due by Parker Moore (IOM) Limited (“the Debtor”) to the Bank in terms of banking facilities extended to the Debtor by the Bank.
[4] The Bank and Debtor entered into a facility agreement in around June 2007 in terms of which the Bank advanced the sum of £14.5 million to the Debtor and provided the Debtor with an overdraft facility of £600,140. The facility agreement was amended and restated on various occasions. On 9 December 2014 the Bank intimated to the Debtor and the defender an event of default under the amended facility agreement. The defender agreed to pay £1.4 million to the Bank, being the amount outstanding in terms of the Guarantee at that time. On 28 August 2015 the Bank and Ulster Bank Ireland Limited entered into an agreement with the pursuers (“the Global Deed of Transfer”). In terms of the Global Deed of Transfer the Bank sought to assign to the pursuers inter alia various debts, including the Bank’s rights under the amended facility agreement between the Bank and the Debtor. The Bank also sought to assign to the pursuers its rights under the Guarantee. Whether the Bank had assigned its rights under the Guarantee and properly intimated assignation to the defender was a matter of contention.
The Guarantee
[5] The following are the material provisions of the Guarantee:
“1. I, John Moore,… (including my heirs and successors (‘the Guarantor’) in consideration of the Bank granting loan facilities to the Principal pursuant to the terms of the Facility Agreement (as defined below) (i) hereby irrevocably guarantee payment and discharge of all sums due and to become due by Parker Moore (IOM) Limited (a company incorporated in the Isle of Man) (Company Number 110771C)… (‘the Principal’) to the Bank to be applied in repayment or cancellation (as applicable) of the facilities made available under the facility agreement entered into between the Principal and the Bank (‘the Facility Agreement’) on or around the date of this Guarantee (as such facility is amended, restated, supplemented, novated or replaced from time to time) (‘the Guaranteed Obligations’) and shall on demand in writing at any time once the same have fallen due (whether by acceleration or otherwise), pay or discharge the Guaranteed Obligations to the Bank with interest (at the rate specified in the said Facility Agreement) from the date of demand; and (ii) agree that any item or amount claimed by the Bank to be included in the Guaranteed Obligations which is not recoverable from the Guarantor under this Guarantee for any reason on the basis of a guarantee shall nevertheless be recoverable from the Guarantor as principal debtor by way of indemnity and the Guarantor agrees to discharge its liability in respect of that item or amount on demand with interest from the date of demand. The provisions of this Clause 1 are subject always to Clause 13 below.
2. This Guarantee shall be a continuing security, notwithstanding any intermediate payment to the Bank, or any settlement of account, or my death or mental incapacity, or any other matter whatever.
…
5. This Guarantee shall be in addition to, and shall not prejudice or be prejudiced by, any other security or guarantee at any time held from or on account of the Principal. This Guarantee may be enforced without the Bank first taking any steps or proceedings against the Principal or having recourse to any such security or guarantee.
…
7. The Bank may, at all times, in its absolute discretion, and without affecting my liability as Guarantor, (i) grant, continue, vary, renew, refuse, determine or increase any credit facilities provided to the Principal, (ii) grant any indulgence to, release, compound with or enter into any other arrangement whatever with, the Principal, me or any other person, (iii) deal with, renew vary, release, abstain from perfecting or enforcing, enforce or realise any security, guarantee or other rights held by the Bank from or on account of the Principal, or (iv) do or omit or neglect to do anything whatever which (but for this provision) might operate to discharge or reduce my liability.
…
9. A demand for payment or any other demand or notice under this Guarantee may be made by letter sent by post to or left at the address of the Guarantor specified in Clause 1 above or such other address as is notified to the Bank by not less than 5 business day’s prior notice. If sent by post it shall be deemed to have been given at noon on the third day following the day the letter was posted.
10. All payments falling to be made by me shall be made to the Bank without any set‑off or counterclaim and free from any deduction or withholding for or on account of any taxes.
11. A certificate by an officer of the Bank as to the money and liabilities for the time being due or incurred by the Principal to the Bank shall, in the absence of gross negligence, wilful default or manifest error, be conclusive and binding on me.
12. Notwithstanding any other provision of this Guarantee, my total aggregate liability to the Bank under this Guarantee shall be limited to the sum of £1,500,000 together with any interest accrued thereon from the date of demand in accordance with the terms of Clause 1 hereof and all associated costs in terms of the Facility Agreement.”
Issues
[6] The defender’s challenge to relevancy falls into two chapters:
1. Whether the Guarantee was such that it could not be assigned to the pursuers? With respect to this chapter there was a subsidiary argument advanced to the effect that there was no right for the Bank to assign.
2. Whether the assignation had been properly intimated to the defender?
The Submissions on behalf of the Defender
[7] Mr Anderson first argued that the Bank’s rights on a proper construction of the Guarantee were not assignable.
[8] In development of that position Mr Anderson contended that the question of whether rights arising in terms of modern finance documents are assignable is a question of construction.
[9] The first provision of the Guarantee which he submitted was of significance was Clause 1. He directed the court’s attention to this: the Guarantee is granted in respect of the Guaranteed Obligations. Those are to be found in the Facility Agreement between the Bank and the Debtor. The Facility Agreement is defined to permit amendment, restatement, supplement, novation or replacement. He observed, however, that there was no reference to assignation. The Guarantee requires payment to the Bank. The Bank is a defined term, it is not defined so as to include assignees. He submitted that the Bank had used defined terms and that such defined terms should be given their natural ordinary meaning. The ordinary meaning of bank is the Bank.
[10] The second point made by Mr Anderson was this: the Guarantee was addressed to a specific creditor ie the Bank. This is a material factor in considering whether the Guarantee is assignable. Said submission was made under reference to Waydale Limited v DHL Holdings (UK) Limited (No 2) 2001 SLT 224 per Lord Hamilton at paragraphs 22 and 23; Fortune v Young 1918 SC 1 and Royal Bank of Scotland v Brown 1982 SC 89.
[11] Mr Anderson went on to submit that reading the terms of the Guarantee as a whole, a reasonable person with all of the information available to the parties would understand the words chosen by the defender and the Bank to mean that the Guarantee was not assignable. In development of that submission he said as follows:
(a) The ordinary benefit of discussion, is waived by the Bank (clause 5); there is no agreement that any assignee shall be entitled to enforce the Guarantee without first discussing with the Principal;
(b) The ordinary privileges of the cautioner on various acts or omissions by the Bank in its dealings with the Principal (clause 7);
(c) the demand to be made under the Guarantee is to be made to a particular address and the Guarantor is obliged to notify the Bank of any change of address (clause 9);
(d) Payments are to be made by the Guarantor to the Bank, without set-off or counterclaim or deduction. That is not an argreement to which commercial sense can be given in a question with an assignee against whom a debtor may have a perfectly good counterclaim (clause 10);
(e) Clause 11 makes provision for the certificate of the liabilities due to be given by an officer of the Bank as to the money and liabilities for the time being due or incurred by the Principal to the Bank.
(f) Clause 12 caps the Guarantor’s liability to the Bank;
[12] What he took from consideration of the terms of the Guarantee as a whole was this: A reasonable person with all the information known to the parties would have understood the words used by the Bank and the defender to envisage that the Guarantee was for the benefit of the Bank and only the Bank, unless there was a subsequent agreement varying the position to permit assignation of the benefit of the Guarantee. No such agreement was ever reached.
[13] Taking matters in the round, therefore, the Guarantee is drafted, like the restated Facility Agreement, like any other banking document: capitalised terms are carefully defined. Banking documents...
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