Bank & Clients Plc v King & Anor

Signed guarantees impose the obligations stated in them unless fraud or misrepresentation is established. A defendant cannot rely on an inconsistent prior oral understanding where the signed guarantee clearly records different obligations and the defendant had an opportunity to read it. Summary judgment is appropriate where the defence has no realistic prospect of success and no fuller trial is required.

A worldwide freezing injunction requires solid evidence of a real risk that a judgment will go unsatisfied. Relevant matters include asset mobility, financial defaults, incurring liabilities beyond means, and dishonesty or unacceptably low commercial morality. Pending or actual bankruptcy does not automatically prevent relief, but the order must protect creditors generally.

The Bank advanced funds to Ve Interactive Ltd under a facility guaranteed personally by the two defendants. Following defaults, the Bank demanded payment under the guarantees and claimed approximately £3.54 million. It applied for summary judgment and a worldwide freezing injunction.

The defendants relied principally on alleged oral representations that the guarantees were merely secondary security and that the Bank would first enforce security over Ve or its shares. They also challenged the work fee and opposed injunctive relief on the basis of limited assets and actual or pending bankruptcies. The central issues were whether those matters disclosed a realistic defence and whether there was a sufficient risk of dissipation.

1. Under CPR Part 24.2, the defendants had no realistic prospect of successfully defending the claims and there was no compelling reason for a trial. The court applied the principles summarised in Easyair Ltd v Opal Telecom [2009] EWHC 339.
2. The defendants were principal obligors under the guarantees. In the absence of fraud or misrepresentation, they were bound by the signed documents, whether or not they had read them: L’Estrange v F. Graucob Ltd. [1934] 2 K.B. 394. The guarantees permitted enforcement without prior recourse against Ve.
3. The alleged representations were inconsistent with the guarantees, contemporary documents, legal advice and the amended facility agreement. Applying Peekay Intermark Ltd v Australia & New Zealand Banking Group [2006] EWCA Civ 386, any inducement arose from the defendants’ assumption that the signed documents reflected the earlier discussion. The related defence therefore failed. The court also agreed with Gaind v Dunbar Assets Plc [2016] EWCH (Ch) that reliance on informal assurances about guarantee enforcement was commercially implausible.
4. The work fee fell within the definition of Guaranteed Obligations. Judgment was entered against each defendant for £3,540,304.77.
5. The Bank established a real risk of dissipation by solid evidence, including diversion of loan funds, misleading asset information and unacceptably low commercial morality. The court applied the principles in Candy v Holyoake [2017] EWCA Civ 92, Thane Investments v Tomlinson [2003] EWCA Civ 1272 and AH Baldwin & Sons v Al-Thani [2012] EWHC 3156.
6. Limited assets did not justify refusing relief: Antonio Gramsci v Recoletos [2011] EWHC 2242 QB. Bankruptcy was relevant but did not preclude an injunction. The order was framed to preserve assets for creditors generally and permit trustees to perform their duties.

Not an appeal. No prior appellate history is stated in the judgment.