United Trust Bank Ltd v Diamantopoulos

Summary judgment may be granted where the pleaded facts, taken at their highest, cannot establish a legally effective defence. An alleged assurance must be construed objectively. A statement explaining why additional security is required does not, without clear language, promise that enforcement of a guarantee will await sale of secured property and the emergence of a shortfall. A possible assurance about the timing of enforcement against collateral assets is distinct and does not answer a claim to enforce the guarantee itself.

The claimant sought summary judgment for sums due under the defendant’s personal guarantee of lending to a property development company. The defendant alleged that, before executing an increased guarantee, the claimant had assured him that the property would be sold before the guarantee was enforced. He relied on estoppel, waiver, collateral contract and fraud.

The claimant accepted that a factual dispute existed about what was said at the relevant site meeting. The central issue was whether the alleged words, construed objectively, gave rise to an assurance capable of founding a defence with a real prospect of success.

1. Summary judgment granted. The claimant was entitled to judgment for the entire sum claimed under the personal guarantee.
2. The relevant question was whether the defendant had a real prospect of proving at trial that the claimant’s representative made an objectively effective assurance, and that the defendant reasonably relied on it when executing the increased guarantee.
3. The alleged conversation did not clearly promise that the claimant would refrain from suing on, or obtaining judgment under, the guarantee until the property had been sold and a net shortfall remained. The discussion was equally, and more naturally, directed to why additional security was required for the increased guarantee, rather than to the chronological order of enforcement steps.
4. Even on an interpretation more favourable to the defendant, the alleged words at most concerned enforcement against the collateral properties. That would not provide a defence to the present claim for judgment on the guarantee, although it might be relevant to a later application for a stay of execution pending sale of the property.
5. The fraud allegation added nothing. It depended on establishing an assurance that was not objectively arguable on the pleaded facts, and introduced additional difficulties concerning proof and whether any defence would be complete or partial.