Mybarrister Ltd v Hewetson & Ors (Rev 1)

An oral promise by a company director to ensure that his company performs an obligation may constitute a guarantee, even if the word “guarantee” is not used. The court must construe the substance of the obligation in its factual and contractual context. A “see to it” obligation is a classic guarantee and falls within section 4 of the Statute of Frauds 1677. However, words such as “see to it” or “I’ve got your back” do not automatically create personal liability; a director may merely be communicating the company’s own obligation as its agent. An estoppel preventing reliance on section 4 ordinarily requires an express assurance, or equivalent conduct, beyond the unenforceable oral promise itself.

The claimant operated an online barrister-recruitment business. The defendants had entered into a written Recruitment Agreement under which shares were to be allotted upon achievement of recruitment targets. After the targets were not met, the defendants alleged that the agreement had been revised and that Ronald DeKoven, the claimant’s founder and director, had separately promised to ensure that they received the relevant shares.

The defendants advanced claims against Mr DeKoven for breach of an oral collateral contract and proprietary estoppel. Mr DeKoven applied to strike out or obtain summary judgment on the Additional Claim, contending that the alleged obligation was a guarantee within section 4 of the Statute of Frauds 1677 and was unenforceable because it was not evidenced in writing. The central issues were the proper characterisation of the alleged obligation and whether the defendants could plead an estoppel against reliance on the statute.

1. Summary judgment approach. The application was treated principally as one for summary determination. The court applied the established Part 24 approach: the claim had to have a realistic, rather than fanciful, prospect of success, without conducting a mini-trial. A short point of law or construction could properly be decided summarily where the court had the necessary material.
2. Characterisation of the obligation. The nature of a surety obligation depends on the true construction of the words used in their factual and contractual context. Labels are not decisive. A guarantee involves secondary liability for the principal’s default. A “see to it” obligation is a classic form of guarantee, under which the guarantor promises that the principal will perform and becomes liable in damages if the principal fails.
3. The alleged promise that Mr DeKoven would personally ensure that the defendants received shares was particularly apt to describe a “see to it” obligation. If Mr DeKoven assumed any personal obligation, it was therefore more properly characterised as a guarantee falling within section 4 of the Statute of Frauds 1677. The absence of the word “guarantee” did not prevent that conclusion.
4. The court nevertheless expressed considerable doubt that the pleaded facts created any personal obligation at all. The alleged words could represent Mr DeKoven acting as the claimant’s agent and communicating the claimant’s revised obligation. “I’ve got your back” might be colloquial reassurance rather than an assumption of personal responsibility. The question whether any obligation arose was left for trial.
5. Estoppel. The authorities established a high hurdle for an estoppel preventing reliance on section 4. The pleadings contained no express assurance that Mr DeKoven would not rely on the statute, and no such assurance could clearly be implied from the pleaded words or conduct. However, the defendants had not yet had a proper opportunity to plead a response to the statutory defence.
6. The court therefore did not finally strike out or determine the Additional Claim at that stage. A case management conference was directed, at which the defendants could seek permission to serve a Reply pleading estoppel. If no such application was made, the Additional Claim would be dismissed.

First-instance decision. The judgment itself records no earlier appellate decision in the same proceedings.