“To meet that argument I think that it is necessary to see what in fact the appellant did undertake to do. I would not proceed by saying this is a contract of guarantee and there is a general rule applicable to all guarantees. Parties are free to make any agreement they like and we must I think determine just what this agreement means. With regard to making good to the creditor payments of instalments by the principal debtor there are at least two possible forms of agreement. A person might undertake no more than if the principal debtor fails to pay any instalment he will pay it. That would be a conditional agreement. There would be no prestable obligation unless and until the debtor failed to pay. There would then on the debtor's failure arise an obligation to pay. If for any reason the debtor ceased to have any obligation to pay the instalment on the due date then he could not fail to pay it on that date. The condition attached to the undertaking would never be purified and the subsidiary obligation would never arise. On the other hand, the guarantor's obligation might be of a different kind. He might undertake that the principal debtor will carry out his contract. Then if at any time and for any reason the principal debtor acts or fails to act as required by his contract, he not only breaks his own contract but he also puts the guarantor in breach of his contract of guarantee. Then the creditor can sue the guarantor, not for the unpaid instalment but for damages. His contract being that the principal debtor would carry out the principal contract, the damages payable by the guarantor must then be the loss suffered by the creditor due to the principal debtor having failed to do what the guarantor undertook that he would do. In my view, the appellant's contract is of the latter type. He “personally guaranteed the performance” by the company of its obligation to make the payments at the rate of£6,000 per week'. The rest of the clause does not alter that obligation. So he was in breach of his contract as soon as the company fell into arrears with its payment of the instalments. The guarantor, the appellant, then became liable to the creditor, the respondents, in damages. Those damages were the loss suffered by the respondents by reason of the company's breach. It is not and could not be suggested that by accepting the company's repudiation the respondents in any way increased their loss. The respondents lost more than the maximum which the appellant guaranteed and it appears to me that the whole loss was caused by the company having failed to carry out its contract. That being so, the appellant became liable to pay as damages for his breach of contract of guarantee the whole loss up to the maximum of£40,000 .”
“It follows from the legal nature of the obligation of the guarantor to which a contract of guarantee gives rise that it is not an obligation himself to pay a sum of money to the creditor, but an obligation to see to it that another person, the debtor, does something; and that the creditor's remedy for the guarantor's failure to perform it lies in damages for breach of contract only. That this was so, even where the debtor's own obligation that was the subject of the guarantee was to pay a sum of money, is clear from the fact that formerly the form of action against the guarantor which was available to the creditor was in special assumpsit and not in indebitatus assumpsit (Mines v Sculthorpe).”
“(1) "Bankruptcy debt", in relation to a bankrupt, means (subject to the next subsection) any of the following - (a) any debt or liability to which he is subject at the commencement of the bankruptcy. (b) any debt or liability to which he may become subject after the commencement of the bankruptcy (including after his discharge from bankruptcy) by reason of any obligation incurred before the commencement of the bankruptcy, (c) any amount specified in pursuance ofsection 39(3)(c) of the Powers of Criminal Courts Act 1973 in any criminal bankruptcy order made against him before the commencement of the bankruptcy, and (d) any interest provable as mentioned in section 322(2) in Chapter IV of Part IX. (2) In determining for the purpose of any provision in this Group of Parts whether any liability in tort is a bankruptcy debt, the bankrupt is deemed to because subject to that liability by reason of an obligation incurred at the time when the cause of action accrued. (3) For the purposes of references in this Group of Parts to a debt or liability, it is immaterial whether the debt or liability is present or future , whether it is certain or contingent or whether the amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion; and references in this Group of Parts to owing a debt are to be read accordingly. (4) In this Group of Parts, except in so far as the context otherwise requires, "liability" means (subject to subsection (3) above) a liability to pay money or money's worth, including any liability under an enactment, any liability for breach of trust, any liability in contract, tort or bailment and any liability arising out of an obligation to make restitution.”
“Subject as follows, in both winding up and bankruptcy, all claims by creditors are provable as debts against the company or, as the case may be, the bankrupt, whether they are present or future, certain or contingent, ascertained or sounding only in damages.”
“(1) A creditor's petition must be in respect of one or more debts owed by the debtor, and the petitioning creditor or each of the petitioning creditors must be a person to whom the debt or (as the case may be) at least one of the debts is owed. (2) Subject to the next three sections, a creditor's petition may be presented to the court in respect of a debt or debts only if, at the time the petition is presented - (a) the amount of the debt, or the aggregate amount of the debts, is equal to or exceeds the bankruptcy level, (b) the debt, or each of the debts, is for a liquidated sum payable to the petitioning creditor, or one or more of the petitioning creditors, either immediately or at some certain, future time, and is unsecured. (c) the debt, or each of the debts, is a debt which the debtor appears to be unable to pay or to have no reasonable prospect of being able to pay, and (d) there is no outstanding application to set aside a statutory demand served (under section 268 below) in respect of the debt or any of the debts. ……..”
“The question now before the Court is, whether the debt or alleged debt or demand asserted to be due is one which will be sufficient, as a petitioning creditor’s debt, to support an adjudication in bankruptcy. I am of opinion that it is not. It is clear from the recitals in the deed of partnership which contains the covenant in question, that the engagement entered into was one entered into for the benefit of Mr Walker. The covenant was with Mr Walker for the benefit of Mr Walker, and was not a covenant with Mr Walker for the benefit and on behalf of Walker, Perry & Broadhurst. They had, in fact, no interest in it, but Mr Walker was alone interested; it was a covenant to pay the difference between the debts due from the old firm stated in the schedule and any further debts; it was to pay the excess of one set of debts–over the amount of debts due to the firm. That being so, it seems to me impossible to turn the covenant into a covenant to pay a liquidated sum, or any sum, to Walker. The covenant could not be performed by doing that; the object of the parties was to put the firm in the same position in which they would be if the debts, active and passive, were to the amount stated in the covenant, and there is no specific sum engaged to be paid to Walker. It cannot be treated at law as a specific sum of money to be received, for the right to receive would be co-extensive only with the demand sustained; and this cannot be so made the subject of computation as to be a fit ground for a petitioning creditor’s debt. No action could be framed upon it. I do not mean to say that a covenant to pay to A. for the benefit of A, B. and C. may not make a good petitioning creditor’s debt. In the present case there might not be a sufficient damage to constitute the debt; or, even suppose that damage to the amount of 100l, was shewn, still it does not follow that the money could have been recovered, as anything to be recovered must be in the shape of damage, and such damage is not of a character to amount to a petitioning creditor’s debt.”
“The question in this case depends on a simple principle of law, which cannot be doubted. It is clear, that where one person, previous to his bankruptcy, is indebted to another in a precise sum which is ascertained, the latter may prove his debt under the commission: but it is as clear, that where there is only a cause of action existing, where the debt is to arise on a stipulation which has not been broken previous to the time of the bankruptcy, and where the debt remains to be inquired into, there the creditor cannot prove his debt under the commission, and the demand will remain undischarged by the certificate.”
“The question really is, what is meant by an "unliquidated debt" in the 3rd sub-section. The fair construction of the clause seems to me this: "a contingent debt" refers to a case where there is a doubt if there will be any debt at all; "a debt, the value of which is not ascertained," means a debt the amount of which cannot be estimated until the happening of some future event; and "an unliquidated debt" includes not only all cases of damages to be ascertained by a jury, but beyond that, extends to any debt where the creditor fairly admits that he cannot state the amount. In that case there must be some further inquiry before he can vote.”
“Rule 170 in the case of a defaulter really alters the original contract, and provides a new contract as between the defaulter and his creditor, and then the amount of the liability is fixed and ascertained in accordance with that altered contract.”
“[36] In my judgment whether a sum is liquidated and whether there is a defence to the claim are separate issues and the first must be determined before the second is addressed. Accordingly any admission, acknowledgment or agreement converting the amount claimed from an unliquidated to a liquidated sum must be one from which the client has bound himself not to resile. A mere acknowledgment would be insufficient to bind him to forego judicial assessment or determination. [37] On this basis it was not possible to say that any part of the work done by Mr Truex had been quantified, or was quantifiable by the bankruptcy court as a mere matter of arithmetic. It seems to me that the Chief Registrar conflated the issue of whether there was a genuine dispute about a liquidated debt with that of whether the sum claimed was liquidated in the first place. The bill as a whole was capable of challenge as to quantum, was thus for an unliquidated sum and did not fulfil the requirement of s 267. The same point applies to the Chief Registrar's alternative finding that there could not be a genuine dispute as to at least£750 of the costs.”
“Mr Rainey submits that it follows that none of the company's claims for a remedy is in the nature of an order for payment of a liquidated sum. It is irrelevant that the company claims to be able to identify its claim down to the last penny. It is still faced with the difficulty that its range of alternative claims against the debtor are claims for damages or for an account and payment. A claim for damages is not a claim for a liquidated sum; and nor is a claim whose remedy is that of an account, even though it may be that the taking of the account so ordered could be dealt with in a summary way and a judgment there and then given for a specific sum. I accept that submission.”
“Robinson owes the Plaintiffs money. The Defendant does not become a surety for that debt; but Robinson having agreed, by way of security, to pay the premium upon a policy of insurance, the Defendant undertakes to guarantee, not the payment of Robinson's debt to the Plaintiffs, but of that premium. There was, therefore, no debt due from the Defendant to the Plaintiffs, contingent or otherwise. Upon Robinson's failing to pay the premium the Plaintiffs were entitled to recover from the Defendant unliquidated damages, the amount of which might have varied, according to circumstances. If Robinson continued alive, as was found by the jury, the amount would have been the premium paid by the Plaintiffs. If Robinson had died, it might have been the whole sum insured. How is it possible, then, to say that this was a debt due from the Defendant.”
“I never knew it doubted that a debt on a guarantee when the contingency had happened could be proved. I recollect fifty of such cases: it was the constant practice of the commissioners to admit such proofs. In all the cases, from ex parte Adney and ex parte Minett, no man ever thought of objecting that a guarantee was not a debt; but the difficulty was as to its being a contingency. Suppose the common case of an engagement to replace stock: that engagement is not a debt; yet it was always proveable, and why is it? Because it was a fair equitable engagement, which would be available against assets.”
“In ex parte Myers I said, that “I never knew it doubted that a debt on a guarantee, when the contingency had happened, could be proved, and that I recollected fifty of such cases”
“Where a demand rests merely in damages, and is not capable of a clear certain liquidation, it cannot be proved under a commission of bankrupt: but I consider this as a contract to do a specific act, which the bankrupt is rendered utterly incapable of performing by the bankruptcy; and his incapacity to perform it is attended with a certain damage to the plaintiff. The value of the stock is mixed in the general mass of the bankrupt's property, of which the assignees and the other creditors are possessed; and there is no reason why in substantial justice the plaintiff should not have the same advantage which the rest of the creditors have, especially as the amount of his demand is capable of being ascertained. Several cases have been mentioned, the principles of which fully warrant us in deciding in favour of the plaintiff. I perfectly concur with my Lord Chief Justice in the observations which he has made on the case of Dutch and Warren, and in those made by my brother Buller on 53. that of Goodtitle v. North. Much has been said respecting the form of the action: but I do not by any means think it collusive; it may illustrate, but cannot decide, the question. On the whole I am of opinion that this being a case of clear liquidated damages for the not performing a specific act, which the bankruptcy has rendered impossible to be done, the plaintiff may come in under the commission, and the time of the bankruptcy is the time when the amount of is to be ascertained by the price of the stock on that day.”
“THE MAXIMUM AMOUNT WHICH YOU ARE LIABLE TO PAY UNDER THIS GUARANTEE IS£1,115,653.00 (One million, one hundred and fifteen thousand, six hundred and fifty three pounds – the “Maximum Amount”) PLUS THE OTHER AMOUNTS SET OUT IN CLAUSE 3.”
"the rules which the law has laid down as to cases in which a demand is or is not necessary, must be considered. One of these rules I take to be this, that where a man engages to pay upon demand what is to be considered his own debt, he is liable to be sued upon that engagement, without any previous demand; …"
“but … if he engage to pay upon demand what was not his debt, what he is under no obligation to pay, what but for such engagement he would never be liable to pay any one, a demand is essential, and part of the plaintiff's title.”
“In my judgment the "principal debtor" clauses have the effect of creating primary liability for the purposes of the rule that the debt is not contingent upon demand. This was the provisional view of Walton J. in Esso Petroleum Co. Ltd. v. Alstonbridge Properties Ltd. [1975] 1 W.L.R. 1474, 1483, and I think it was correct. It is true that for some purposes the courts will look to the underlying reality of the suretyship relationship rather than the formal agreement that liability is to be as principal debtor. But this is only for the purpose of protecting the surety's equitable rights against the principal debtor and giving effect to such consequences as may affect the creditor, such as the surety's right to take over securities and the rule against double proof. Otherwise there is no reason why creditor and surety should not make whatever terms they choose. The right to a demand before liability can accrue is not inherent in the nature of suretyship and will not be implied unless expressly provided. There seems accordingly no reason why the parties should not modify the effect of such a provision.”
“In the present case in the letters of charge signed by Mr. Amir in respect of Impexbond Ltd. and Tucan Investments Plc. he has expressly agreed that his liabilities thereunder - namely the companies' liabilities charged on his deposits - shall be as that of a principal debtor. Similarly in the forms setting out the cash deposit security terms which Mr. Ahmed signed in respect of High Street Services Ltd. and its associated companies he accepted that the liabilities of those companies should be recoverable from him as principal debtor and they were thus within the definition of his indebtedness; he also authorised the appropriation of the deposited moneys in satisfaction of his indebtedness without further notice to him. The effect of that must be to dispense with any need for a demand in the case of Mr. Amir since he has made the companies' debts to B.C.C.I. his own debts and thus immediately payable out of the deposit without demand. In the case of Mr. Ahmed there must be immediate liability even though the word "demand" was used, because he accepted liability as a principal debtor and his deposit can be appropriated without further notice.”