Haresign v Clydesdale Bank Plc (t/a Yorkshire Bank) [2011] EWCA Civ 344

Case No B2/2010/1664[2011] EWCA Civ 344
IN THE COURT OF APPEAL (CIVIL DIVISION)
Venue ON APPEAL FROM LEEDS COUNTY COURTCase No 9LS04476
His Honour Judge Behrens
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 01/04/2011
Before
LORD JUSTICE RIMER
Between
SIMON HARESIGNAppellantCLYDESDALE BANK PLC (t/a YORKSHIRE BANK)Respondent
The Applicant, Simon Haresign, appeared in person for in person for The Respondent was not representedHearing Hearing date: 7 March 2011
JudgmentLord Justice Rimer :
[1]This is a renewed application for permission for a second appeal. Longmore LJ refused permission on the papers on 21 December 2010 on the grounds that the proposed appeal did not surmount either of the CPR Part 52.13 hurdles and that, for the reasons given by both judges below, an appeal would anyway have no prospect of success. Undaunted, Mr Simon Haresign, the second defendant and applicant, has renewed his application. He has appeared in person. The order challenged is that of His Honour Judge Behrens made on 16 June 2010 in Leeds County County dismissing Mr Haresign’s appeal against the order made on 15 February 2010 by District Judge Saffman giving summary judgment to the claimant, Clydesdale Bank PLC, on its claim against Mr Haresign and his co-defendant, Mr Moti Stephens, under a guarantee they had given the Bank on 19 October 2006. Mr Stephens was not represented before either judge below, nor did he attend either hearing. Mr Haresign was represented before Judge Saffman by a solicitor but before Judge Behrens he appeared in person, as before me.[2]The story is as follows. Mr Haresign and Mr Stephens were directors of LK (SB) Limited, a company whose sole commercial purpose was the purchase, residential development and sale of a former filling station at Sowerby Bridge in West Yorkshire. The development was to comprise 28 flats. The company needed finance for all stages of this enterprise and in 2006 it approached the Bank. The Bank provided finance. The first tranche was by way of a £720,000 overdraft facility offered on 19 June 2006 expressly stated to be to assist with the purchase of the filling station. Clause 4.1 provided that the Bank could withdraw the facility at any time on (amongst other things) reasonable notice.[3]On 27 September 2006 Mr Johnston of the Bank wrote to the company to say that he had received an agreement in principle from his credit partner to increase the overdraft facility to enable the clearance of the site and then advance funds in stages to build the flats. On 18 October 2006 the Bank offered, and the company accepted, an increased facility of £940,000 (an increase of £220,000) expressed to be only for the purpose of assisting with the clearance of the site. The terms provided that it could be withdrawn at any time on the same basis as the prior facility. On 19 October 2006 Mr Stephens and Mr Haresign each signed a guarantee of the company’s obligations towards the Bank, the limit of their liability being £200,000 plus interest and other sums referred to in paragraph 3.1.[4]In 2007 the company was looking for an increase of the facility to finance the building costs but the Bank explained by its letter of 6 February 2007 that the information it had about such costs were insufficient to enable an increase in the facility at that stage. On 9 March 2007 the Bank provided a modest further facility increase, taking it to £960,000, clause 5.4 of the facility letter requiring the company to ‘provide all necessary information required by the Bank, no later than the 30th April 2007, with regard to the Bank providing increased facilities to complete the site.’[5]The terms of the facility letter of 9 March 2007 were agreed to by Mr Stephens and Mr Haresign, who signed it on behalf of the company. The purpose of the increased facility was only to assist with ‘the purchase and site clearance costs … and to cover accruing debit interest until the end of April 2007.’ It was described on the front page, in bold, as an important document upon which the directors should take independent advice before signing. I refer to three of its provisions. Clauses 3.1 and 3.2, in a section headed ‘Repayment and Cancellation’, provide:
‘3.1 All amounts outstanding under or in respect of the Facilities are repayable on demand. If the Bank makes a demand for any Facility, all Facilities will be immediately cancelled. The Bank may also, at any time, cancel all or any part of any Facility by notice to the Borrower. 3.2 Subject to clause 3.1, each Facility will be available until the expiry date for such Facility specified in clause 1 when it will be cancelled in full unless the Bank has agreed in writing to extend or renew such Facility in which case it will, subject to clause 3.1 and the terms and conditions of any letter extending or renewing such Facility, be available until the date in such letter when it will be cancelled in full.’
Clause 9.1, in a section headed ‘Signing and Law’, provides:
‘9.1 From the date of receipt by the Bank [of] all of the items under clause 4, this letter will replace all previous letters, agreements or arrangements between the Bank and the Borrower in relation to the provision of the Facilities.’
[6]In relation to clause 9.1, Mr Haresign raised no point before Judge Behrens or me that the Bank did not receive all the clause 4 items. Following 30 April 2007, the company did not satisfy the terms upon which the Bank might make an extended or renewed facility available so as to fund the building costs and the Bank offered no further facilities. By a letter of 2 May 2007, the Bank agreed to defer the review of the facility until 30 June 2007 but warned the company that if by then it was unable to establish the facilities that the company needed in order to complete the site, it would have to advise the company to seek finance elsewhere. Further correspondence from the Bank followed, all inconsistent with any suggestion that it was or ever had been under a commitment to finance the entire project. On 26 September 2007 the Bank wrote to Mr Stephens saying that the company’s account was in excess of its agreed facility and asking for the clearance of the excess within seven days. In his reply of the same day, Mr Stephens acknowledged that the Bank could not assist the company ‘in view of the figures quoted by the tender documents’ and said that the company would now take steps to clear the facility, saying that the company expected this to take up to six weeks. His letter thanked the Bank ‘for all [its] support and the assistance in at least allowing us to buy in the site.’ He made no suggestion that the Bank had reneged on any promise to the company.[7]On 3 April 2008 the Bank demanded repayment by the company of the money owing to it, something over £1m; and on 30 April 2008 it made demands of Mr Haresign and Mr Stephens under the guarantee. The demands were not met, the company has entered an insolvency regime and in 2009 the Bank sued the guarantors in the county court for payment under the guarantee.[8]Mr Haresign’s Defence to the claim started with the inaccurate assertion that the company approached the Bank for finance in the autumn of 2006 when it is plain that it did so much earlier in 2006 and was given its first facility on 19 June 2006. His Defence is to the effect that the Bank agreed with the company to finance the entire development and that its refusal to fund the third (building) stage of the development cost the company the opportunity of a £1.2m profit. The Defence asserts that he gave his guarantee in reliance on the Bank’s promise to fund the development.[9]The assertion that the Bank agreed from the outset to finance the whole development finds no support in any of the documents before me. They show that the Bank was taking it stage by stage. That is what one would expect and the case that in May 2006 the Bank orally assumed a contractual obligation to finance the development through to the end is, I suspect, one that would be unlikely to succeed. That is not what banks ordinarily do and it is improbable that the Bank would have done any such thing in this case either. It may well have expressed encouraging support for the project and have given indications that it would in principle be willing to support it. That, however, is very different from the assumption of a binding oral commitment that it would in fact do so. What, if it did, were the terms of its commitment? What was the amount of the facility to be? What was the interest rate to be? On what basis could the bank demand repayment? Were the arrangements sufficiently certain to constitute a contract that was binding upon the Bank?[10]Mr Haresign’s evidence in his witness statement of 12 February 2010 did not attempt to answer these questions. He asserted in it that during a conference call in about May 2006 Mr Johnston of the Bank:
‘… stated that funding was in place but that we needed planning permission and once planning permission was obtained, all the funds were set aside for the Development. He then stated that the Bank would not give full funding until planning permission had been obtained, but that on the granting of planning permission the full facility would be available.’
The case is, therefore, that the key assurance was given in about May 2006 – one expressed in only the most general terms and, perhaps a little remarkably, during a conference call. Any such assurance can anyway only have been in favour of the company, which was the Bank’s customer, as Mr Haresign recognised in his address to me. It was not an assurance to Mr Haresign personally, with whom the Bank had no commercial relationship. Mr Haresign asserted, however, that he relied on that statement and believed that funding would be there from the beginning to the end of the development. If so, he would only have been relying upon it as agent for the company.[11]Mr Haresign referred in paragraphs 31 to 36 of his statement to the signing of the guarantee in October 2006. If he believed that the company alreadyhad the benefit of a binding agreement from the Bank for the full financing of the development, the Bank was, one might think, in no position to require such a guarantee; and, for corresponding reasons, Mr Haresign and Mr Stephens could have declined to give it. On Mr Haresign’s case, the company’s facility was, after all, already irreversibly in the bag. Its giving was therefore inconsistent with Mr Haresign’s case but consistent with the Bank’s. Something has gone wrong with the drafting of the first sentence of paragraph 36 of Mr Haresign’s statement, but I read it as providing at least part of the reason why the guarantee was signed, namely that ‘we knew that the funding was in place to see the Development through to conclusion ...’ (a reference to the May 2006 conference call). One might think, however that that was a reason for not signing the guarantee, a guarantee normally being signed in order to obtain or maintain facilities whose provision or maintenance is at risk, not by way of thanks for facilities that have been contractually promised and from which, in the present case, so Mr Harsign claims, the Bank had no escape.[12]Judge Behrens noted in paragraph 6 of his judgment that in argument to him Mr Haresign also ‘made a number of other assertions or promises of the funding’; and Mr Haresign made like assertions to me, albeit very generalised ones. Why, if the Bank had committed itself in May 2006, did it need to keep repeating its commitment? His written evidence included the assertion that the ‘conclusion of [a] meeting [on 30 March 2007, after the giving of the increased 9 March 2007 facility] was that provided that Cyril Sweet give a satisfactory initial report then the Bank would release funds to complete Phase 3 of the Development.’ That was yet another assertion of an oral agreement.[13]The legal basis of Mr Haresign’s case is unclear but I understand it to be to the general effect that he was induced to sign his guarantee on the basis of a contractual promise or representation to the company that the Bank would fund the whole development (Defence, paragraph 6). The ‘representation’ assertion might run into difficulties as to whether it was as to future conduct or present fact but there is no need to go into that. The case is conceptually difficult since it is not easy to follow how Mr Haresign can claim to place personal reliance on promises or representations made only to the company.[14]Before Judge Saffman, the Bank’s counsel proceeded on the basis that all disputed issues of fact – including the assertions that the Bank gave oral assurances that it would fund the whole development – were to be resolved (but only for the purposes of the Part 24 application) in favour of the defendants. The Bank’s point was that, even so, none of it helped the defendants:(i) because clause 9.1 of facility letter of 9 March 2007 showed that the terms of that letter superseded all prior arrangements (including any alleged oral promises to fund the development to the end); and(ii) clause 3.2 showed that the facility would be cancelled on 30 April 2007 unless it was earlier extended or renewed in writing; and that insofar as it was asserted that there was an oral promise of further finance on 30 March 2007, that was ineffective for want of the writing required by clause 3.2. Those provisions were said to preclude the setting up of any pre- or (purely oral) post- 9 March 2007 agreements that the Bank would finance the whole development. Judge Saffman agreed and found against the defendants. Judge Behrens agreed with Judge Saffman. Longmore LJ agreed as well.[15]I consider that all three judges were right about the effects of clauses 9.1 and 3.2, which was to prevent the company from asserting the breach of any alleged oralagreement to fund the development. Mr Haresign’s argument to me focused not on the oral agreement said to have been made on 30 March 2007 so much as on the alleged agreements, arrangements and discussions said to have been made and held before the facility letter of 9 March 2007, and I infer from Judge Behrens’s judgment that that was also the focus of the argument below. To that end, he submitted that as clause 9.1 was not described as an ‘entire agreement’ clause it could not work as such and was inadequate to supersede all such prior oral exchanges.[16]I do not accept that. It is obvious that clause 9.1 was expressly spelling out that the terms of the new facility letter superseded all prior agreements or arrangements between Bank and the company with regard to the provision of finance for the company; and its efficacy was not diminished because it was not described as an ‘entire agreement’ clause. Its words were clear and it meant what it said. Its whole point was to avoid the setting up of just the sort of case that Mr Haresign has sought to erect, one that is in my experience of a familiar nature. Their effect was that, even if there had been any binding prior agreements or arrangements such as Mr Haresign asserts, they were wiped out by the terms of the facility letter to which the company agreed.[17]That, in my view, is all that there is to it. Mr Haresign is not asserting that any separate collateral promise was made to him personally as guarantor. His case is simply that(i) the Bank promised the company that it would fund the development to the end,(ii) it breached that promise and(iii) therefore it is not entitled to sue him on the guarantee. The problem with that is that, by clause 9.1, of the facility letter Mr Haresign was, on behalf of the company, releasing the Bank from any continuing obligation it may have assumed under the prior promise; and that, by clause 3.2, nothing other than a written agreement would commit the Bank to an extension or renewal of the facility. Mr Haresign’s three-stage argument is therefore fatally undermined. If he and Mr Stephens really believed that the company had a binding agreement from the Bank that it would finance the development to the end, they might perhaps have considered that their better course was to decline to sign the March 2007 facility letter and instead to sue the Bank on its alleged prior promise. Mr Haresign does, if I may say so, appear to want it both ways. He appears to consider that the company was entitled to take the money on offer in the March facility on the terms of that facility; and then, when no further funds were offered, claim that clause 9.1 was worthless verbiage presenting no obstacle to the company’s bid to resurrect agreements or arrangements allegedly made earlier. That is an uncommercial approach to the clear terms of a commercial transaction to which the company, by Mr Haresign, willingly signed up.[18]In agreement with Longmore LJ, I consider that Mr Haresign has no real prospect of success on an appeal and that this is not a case in which he should be given permission to appeal. Mr Haresign placed reliance on the decision of Lord Glennie in the Court of Session decision in Royal Bank of Scotland plc v. Carlyle [2010] CSOH 3. That decision is of no present relevance. It concerned a commercial arrangement between the bank and an individual, in which the individual was acting for himself (no company was involved) and in which there was no provision such as clause 9.1. What Mr Haresign wants is a trial of the claim so that he can prove the making of alleged oral agreements and arrangements prior to and after the March 2007 facility. But what is the point? The case against Mr Haresign below assumed that he would be able to prove all that he asserts in this respect but that clauses 3.2 and 9.1 knocked them out of relevant consideration. I add, for the avoidance of doubt, that although I have expressed my doubts about whether Mr Haresign could prove at any trial that the Bank entered into the oral commitment that he asserts, I have not decided this application on the basis that he would fail to do so. I have expressed my doubts in the hope that Mr Haresign may perhaps recognise that his factual case is unlikely to be anything like as strong as he plainly believes it to be, a recognition that may perhaps lessen his disappointment at my refusal of his application.[19]There is also no substance in Mr Haresign’s claim that the summary disposal of the case below involved an infringement of his rights under Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms. Article 6 does not entitle a defendant to a trial when the only case he wants to make at it is one that, if made, can anyway raise no defence as a matter of law.[20]There is, as Longmore LJ pointed out, also the significant further problem in Mr Haresign’s path that as any appeal would be a second appeal, it is necessary for me, before giving permission, to be satisfied that it would raise a question of general principle or importance or that there is otherwise a compelling reason for the appeal to be heard. It is not enough to justify a second appeal merely to show that an appeal against the decision on the first appeal would have a real prospect of success. As it is, I am not satisfied that a second appeal in this case wouldhave a real prospect of success. Nor am I satisfied that the appeal would surmount either hurdle just mentioned since I cannot identify any such general question or reason. Mr Haresign has exercised his right of appeal (to Judge Behrens) and his appeal failed. There is no justification for a second appeal.[21]I consider that the conclusions of all three judges who have previously dealt with this case were correct. I refuse Mr Haresign permission to appeal.