EULER HERMES SA (NV) v MACKAYS STORES GROUP LIMITED & oRS.

A guarantee which covers liabilities arising during its currency may continue to respond to contingent liabilities accrued before termination, even where the creditor’s demand is made later. The result depends on the wording of the guarantee. Express wording requiring a demand before termination will produce a different outcome. A contractual clause making a written demand conclusive evidence of liability is generally subject to an implied qualification for manifest error or fraud. Where the validity of the demand is seriously arguable, it is not obviously wrong and remains conclusive. In a Part 8 claim, a claimant cannot introduce an unpleaded restitutionary basis without amending the claim form.

Euler Hermes provided a guarantee to HM Revenue and Customs in respect of deferred tax owed by Mackays Stores Limited. The guarantee limited Euler’s liability and permitted termination on seven days’ written notice, subject to liability arising before termination. Euler gave notice expiring on 30 June 2020.

HMRC later demanded payment for sums deferred before and during June 2020. Euler paid £551,147.36 and sought recovery from the defendant companies under a counter-indemnity. The defendants disputed liability, contending that Euler’s liability arose only when HMRC made its demand after termination. Euler also advanced an alternative restitutionary claim, which had not been pleaded. The issues were the construction of the guarantee and, alternatively, the effect of the indemnity’s conclusive-evidence clause.

1. Claim succeeded. The court entered judgment for Euler in respect of the principal amount sought, stated in the conclusion as £551,146.36. Consequential matters, including interest and any remaining costs issues, were reserved.
2. The termination clause did not extinguish liability for deferred sums arising during the guarantee period. The term “liability” included contingent liability in respect of sums which had been deferred and could later be demanded by HMRC. The guarantee’s liability limits and its treatment of unpaid deferred sums supported that construction.
3. National Westminster Bank v Hardman [1988] FLR 302 was distinguished. Its conclusion depended on express wording preserving liability only for amounts due at the expiry of the notice. That wording was absent here.
4. The reasoning in Bank of Credit and Commerce International S.A. v Simjee [1997] CLC 135 confirmed that differently worded guarantees may operate in different ways. The present guarantee covered contingent liabilities existing before termination, with the later demand remaining valid.
5. The alternative restitutionary claim was impermissible under rule 8.2 of the Civil Procedure Rules because the claim form did not identify restitution, the remedy, or the Mercantile Law Amendment Act 1856 as its legal basis. No amendment application had been made.
6. Even if the HMRC demand had been invalid, clause 6 of the indemnity made Euler’s written demand conclusive evidence of liability. The clause was subject to an implied qualification for manifest error or fraud, consistent with Bache v Banques Vernes [1973] 2 Lloyd’s Rep. 437. The demand was at least seriously arguable and therefore was not obviously wrong. The guidance in AXA Sun Life Services Plc v Campbell Martin Ltd. [2011] EWCA Civ 133, Veba Oil Supply & Trading GmbH v Petrotrade Inc. [2001] EWCA Civ 1832 and Flowgroup Plc v Co-operative Energy Ltd. [2021] EWHC 344 (Comm) was applied or treated as supportive.