Advance Global Capital Limited v Jeremy Howard Coombes

On a summary judgment application, the court may decide that a defence previously found arguable on an interlocutory application has no real prospect of success, particularly where different or fuller material is available. An interlocutory decision does not ordinarily create issue estoppel, although relitigation may amount to abuse of process following a merits-based assessment.

A comfort letter will not vary a guarantee or create an estoppel where the surrounding communications show that it was intended to be practical rather than legally binding. A certificate clause may conclusively establish the principal debtor’s liability for the purpose of determining the guarantor’s liability. However, a guarantor had a realistic prospect of establishing that interest should not be calculated in a way producing double recovery or an incentive to delay demand.

The claimant funded Castle Business Finance Ltd under a revolving credit facility. The defendant, its director and shareholder, gave a personal guarantee and indemnity limited to the lesser of 10 per cent of outstanding utilisations or US$600,000.

After demands were made under the guarantee, the claimant sought summary judgment, strike out and, alternatively, an interim payment. A statutory demand concerning earlier demands had previously been set aside by District Judge Wales. The defendant relied on alleged collateral contract and estoppel arising from a comfort letter, challenged the use of a certificate under the guarantee, and disputed the treatment of interest and payments.

The central issues were whether the defences had a real prospect of success, whether the earlier interlocutory decision prevented reconsideration, and whether the third demand was valid.

1. Summary judgment and strike out. The claimant established that the defendant had no real prospect of success on the collateral contract, estoppel, certificate and payment arguments. The strike-out application added nothing, and there was no basis for an interim payment because the defendant retained a real prospect of defending part of the claim.
2. Earlier interlocutory decision. The statutory-demand decision was interlocutory. It therefore created no issue estoppel preventing consideration of the issues again. Abuse of process required a merits-based assessment of private and public interests. Relitigation was permissible where the later court considered the earlier ruling wrong and the material or argument materially differed.
3. Comfort letter. The communications showed that the letter was intended as a practical assurance and did not vary the legal rights under the guarantee. In any event, the claimant had made reasonable efforts to recover the company’s debts for substantially longer than the three-month period contemplated in the communications.
4. Estoppel. The defendant could arguably show a representation sufficiently precise to found an estoppel, but his own communications contradicted reliance, detriment and causation. The entire agreement clause did not itself defeat the estoppel argument.
5. Certificate and interest. Clause 10 bound the defendant to the certified amount owed by the company for the purpose of determining his liability under the guarantee. No manifest error was shown. However, the defendant had a real prospect of establishing that the guaranteed interest liability should be limited to the Facility Interest Rate before demand, avoiding the potentially perverse result of double interest or delayed demand.
6. Judgment was entered for £161,063.72, representing 10 per cent of outstanding utilisations and facility-rate interest. The balance was stood over for trial.

Not an appeal. The judgment describes an earlier statutory-demand application before District Judge Wales in the County Court at Bristol, which was set aside on 8 November 2022.