Dyer v Piclux SA & Anor

For contractual purposes, a guarantee is issued when it is signed, sealed and delivered to the relevant third party in accordance with the commercial agreement, even if it remains in escrow and has not yet been released to the beneficiary. The court should construe the condition in its commercial context, including whether performance thereafter lies within a party’s control. A party’s entitlement to payment should not ordinarily depend on the timing or completion of an underlying transaction where that party has no control over it. Allegations of forgery must show a real prospect of success to prevent summary judgment. An attachment order affecting enforcement does not ordinarily suspend the underlying debt or prevent judgment.

The claimant sold his shares in Medrom SA to Piclux SA under a Share Sale Agreement. The second defendant guaranteed Piclux’s obligations. The balance of the price was recorded in a promissory note, with payments conditional on the issue of Romanian sovereign guarantees relating to parts of a medical-equipment supply contract.

The defendants disputed when the guarantees had been issued, challenged the authenticity and effect of an addendum concerning security cheques, and relied on Luxembourg attachment orders. Both sides sought summary judgment. The central issues were whether the contractual conditions had been satisfied and whether the defendants had any defence with a real prospect of success.

1. Construction of the payment condition. The guarantees were issued when they were signed and sealed by the Romanian Government and delivered to Raiffeisen Bank as escrow agent. The contractual wording had to be construed in the commercial context existing when the Share Sale Agreement was made. The guarantees brought the underlying deal into force, could not be cancelled or withdrawn, and performance thereafter lay with Medrom. It would be commercially absurd for payment for the claimant’s shares to depend on the timing or completion of the deal by a company over which he had no influence.
2. The defendants’ reliance on principles concerning delivery in escrow and stamp duty was misplaced. The issue was contractual construction, not whether the instruments were executed or effective for stamp-duty purposes.
3. Addendum. Even assuming that forgery could constitute a compelling reason for refusing summary judgment, the defendants had no real prospect of establishing it. The evidence supported the claimant’s account, showed that the second defendant had agreed to the terms and had signed for Piclux, and materially undermined the defendants’ evidence. Further time was not justified.
4. Luxembourg orders. The attachment orders did not suspend or extinguish the alleged debts, nor make the sums non-payable. At most, they affected execution of any judgment obtained in England. They did not prevent the court from entering judgment.
5. Disposition. The claimant was entitled to summary judgment against Piclux for the principal sum claimed and contractual interest. He was also entitled to judgment against the second defendant under the guarantee and in respect of the obligation to provide personal cheques. The precise order and ancillary matters were left for agreement or determination when the judgment was handed down.