Alfano & Ors v National Westminster Bank Plc

An appellate court should not interfere with findings of fact unless they are plainly wrong. A trial judge need make only the findings necessary to decide the real issues. Peripheral discrepancies need not be resolved where they cannot affect the legal result. A guarantee said to be conditional on collateral security is enforceable on its terms unless the guarantor proves that the condition formed part of the contract and was accepted by the lender. An undated deed does not itself establish conditional delivery or escrow. If the alleged condition is rejected on the evidence, later dating may be immaterial and connected misrepresentation arguments fail.

National Westminster Bank plc claimed £100,000 under personal guarantees given by each of four members of the Alfano family in support of banking facilities provided to Ciborio Ltd. Cranston J entered judgment for the Bank in the High Court, Queen’s Bench Division, under [2012] EWHC 1020 (QB).

The appellants advanced 17 grounds, principally challenging the judge’s factual findings. They argued that the guarantees were conditional on the Bank taking a second debenture, had not been delivered as binding deeds, had been materially altered by later insertion of the date, or had been procured by misrepresentation or undue influence. The central issue was whether the judge’s findings were plainly wrong or inadequately reasoned.

The appeal was dismissed.

1. On an appeal against findings of fact, the appellants bore the burden of showing that the judge was plainly wrong. The judge was required to make necessary findings, but the appellate court could substitute its own decision if the reasoning was at fault. The court applied the approach in Assicurazioni Generali v Arab Insurance Group [2002] EWCA Civ 1642, English v Emery Reimbold and Strick Ltd [2002] EWCA Civ 605 and Watt or Thomas v Thomas [1964] AC 484.
2. The legal framework concerning a guarantee conditional on collateral security was correctly stated. Under TCB Limited v Gray [1988] 1 All ER 108 and Byblos Bank SAL v Al-Khudhairy [1987] BCLC 232, the guarantor had to establish that the condition formed part of the contract and was brought home to and accepted by the lender. The guarantees’ terms, including their preservation-of-rights clause, were inconsistent with the alleged conditionality.
3. The judge was entitled to rely on commercial reality, contemporaneous documents and subsequent conduct. The late emergence of the conditionality defence, after demands and legal advice, supported an adverse inference. He was not required to resolve inconsequential disputes about the precise details of the signing meeting.
4. The absence of dates from the guarantees did not require a finding that they were held in escrow or conditionally delivered. The judge was entitled to find that dating had been omitted for convenience and that later insertion of the date was an immaterial formality. Under section 1(3)(b) of the Law of Property (Miscellaneous Provisions) Act 1989, the alternative delivery argument depended on proof of the alleged basis for delivery, which had not been established.
5. Once the factual basis for conditionality was rejected, the related misrepresentation arguments, including reliance on the Etridge principle, necessarily failed. All grounds of appeal were unmeritorious.

1. Court of Appeal (Civil Division): under [2013] EWCA Civ 1703, the appeal was dismissed.
2. High Court, Queen’s Bench Division: Cranston J entered judgment for National Westminster Bank plc on the personal guarantees under [2012] EWHC 1020 (QB).