National Westminster Bank Plc v Binney [2011] EWHC 694 (QB)

Case No HQ09X00274[2011] EWHC 694 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 23/03/2011
Before
THE HONOURABLE MR JUSTICE EDER
Between
NATIONAL WESTMINSTER BANK PLCClaimantDAVID BINNEYDefendant
David Nicholls (instructed by Isadore Goldman Solicitors) for ClaimantAndrew Spencer (instructed by Mercers Solicitors) for DefendantHearing Hearing dates: 16, 17 February and 7 March 2011
Judgment

Introduction

[1]In these proceedings, the Claimant, National Westminster Bank PLC (the “Bank”), claims against the Defendant, Mr David Binney, the sum of £100,000 allegedly due under a contract of guarantee by deed in writing signed by Mr Binney and dated 17 November 2006 (the “Guarantee”) plus interest and costs.[2]At all material times, Mr Binney was a director and minority shareholder of Kay Management Consultants Limited (“KMC”). Clause 1.1 of the Guarantee provided in effect that Mr Binney guaranteed to discharge on demand all of KMC’s liabilities to the Bank with interest from the date of demand. Clause 3.1 of the Guarantee provided as follows:- “This deed shall be a continuing security notwithstanding the death or disability of the Guarantor until the expiry of one month from the date of receipt by the Bank of written notice to the Bank by the Guarantor or his personal representatives to discontinue this deed.” It is common ground that Mr Binney signed the Guarantee on 17 November 2006 and that, pursuant to the Guarantee, the Bank demanded payment of the sum of £100,000 from Mr Binney on 20 May 2008. However, Mr Binney denies any liability to the Bank. In particular, he says that prior to the signing of the Guarantee on 17 November 2006, he had a meeting with Mr Ian Thomson who was employed by the Bank as a Relationship Manager and that Mr Thomson and he (i.e. Mr Binney) agreed at that meeting that the Guarantee would be in place only until(a) matching funds were deposited in KMC or(b) formal security was provided and that the Bank would then “tear up” the Guarantee. I take that summary from paragraph 6 of Mr Binney’s Defence. Further, Mr Binney says that in accordance with this agreement he did (at least in effect) deposit sums totalling £100,000 with KMC.

Mr Binney’s case

[3]Accordingly, Mr Binney says that the Bank is not entitled to enforce the Guarantee. That case is advanced in three main ways.[4]First, it is said that the agreement between Mr Thomson and Mr Binney was such as to be a term of the Guarantee and/or a condition subsequent. In that context, reliance is placed upon the passage in Chitty on Contracts Vol 1 paragraph 12-097 to the effect that the mere production of a written agreement does not render inadmissible evidence of other terms not included expressly or by reference in the document. On this basis, it is said that the court is entitled to consider whether or not the contract is a complete record of the agreement or not: if additional oral terms were agreed and intended to form part of the contract, then the court is entitled to find that the contract is partly oral and partly in writing. Further, on behalf of Mr Binney, it is submitted that the fact that the guarantee agreement is in a deed does not prevent there from being additional oral terms. There is no "entire agreement" clause or clause stating that no oral representations had been made. Equally, it is said that the provisions of the Statute of Frauds do not provide that there can be no oral terms to a contract of guarantee. Even if it did, the Statute would not prevent the parties from seeking to contract in a form that was partly in writing and partly oral. Whilst this might render the contract of guarantee unenforceable, this would not prevent it from being the contract intended by the parties.[5]Alternatively, on behalf of Mr Binney, it is said that the agreement was a collateral warranty relying in particular upon the passage in Chitty on Contracts Vol 1 paragraph 12-03, City & Westminster Properties (1934) Ltd v Mudd [1959] 1 Ch 129, Brikom Investments v Carr [1979] 1 QB 467 and the well-known dictum of Lord Denning in J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078 at p1081):
“When a person gives a promise or an assurance to another, intending that he should act on it by entering into a contract, and does act on it by entering into the contract, we should hold that it is binding.”
[6]In the further alternative, it is said that the Bank is estopped from enforcing its strict rights under the Guarantee. Again, reliance is placed upon Brikom Investments v Carr [1979] 1 QB 467.[7]For the sake of completeness, I should mention that Mr Binney originally advanced two further defences based upon(i) a separate express or implied agreement or representation giving rise to a further estoppel and(ii) what was said to be a notice of discontinuance under the Guarantee during or following a conversation between Miss Jennifer Hicks, the Finance Manager of KMC, and the Bank in August 2007. However, these further defences were abandoned at or just before the commencement of the trial.

The Bank’s case

[8]In response, the Bank makes three main points. First, whatever was or may have been agreed or represented at the meeting on 17 November 2006 is inadmissible or irrelevant as a matter of law. Second, the Bank in any event denies that there was any relevant agreement, warranty or representation at the meeting on 17 November 2006. Third, the Bank denies that Mr Binney paid any sufficient “matching funds” into KMC so as to comply with the terms of the agreement alleged by Mr Binney.

Inadmissibility/irrelevance of alleged oral agreement/representation?

[9]This first point is potentially a threshold issue said to arise as a matter of law and it is convenient to at least consider it at the outset. In support of its case, the Bank makes the following submissions.[10]First, as to the alleged oral agreement, the Bank submits: a) Where the court is satisfied that the terms of the parties’ agreement are wholly contained in a written document then the parol evidence rule applies so that oral evidence adding to or qualifying the written contract is not admissible: see Chitty on Contracts, Vol 1 paras 12-095 to 12-105. b) Here, the court should be satisfied that the parties intended their agreement to be wholly contained in the written guarantee for the following reasons: i) There is a strong presumption that where parties arrive at a definite written contract, they intend that contract to contain all the terms of their agreement: Gillespie Bros & Co v Cheney, Eggar & Co [1896] 2 QB 59. ii) The parties chose to make the Guarantee by deed which is a form of contract that can only be in writing. iii) Section 4 of the Statute of Frauds 1677 prevents a guarantee from being enforceable unless it is in writing or unless there is a written memorandum or note of the agreement. iv) Both parties intended the Guarantee to be enforceable. In particular, this was the intention of Mr Binney because should it have transpired that the Guarantee was unenforceable then the Bank’s continued support for the business was likely to have been vitiated, which was contrary to Mr Binney's objectives. c) Moreover, the alleged oral agreement should not be permitted to override the clear terms of the Guarantee for the following reasons: i) The alleged agreement contradicts the clear words of the Guarantee which provide for it to be a "continuing security" (clause 3.1) and was apparently antecedent to the signing of the Guarantee: Henderson v Arthur [1907] 1 KB 10. ii) The parties chose to make the Guarantee by deed which is a formal contract that requires a greater degree of formality than other written contracts and should not therefore be lightly overridden.[11]Second, as to the case based upon an alleged oral collateral warranty, the Bank submits that any such alleged warranty is unenforceable where it contradicts or is inconsistent with the terms of a written guarantee: see Andrews & Millett on “The Law of Guarantees” at para 3-018 and, in particular, the Canadian decision of Hawrish v Bank of Montreal [1969] SCR 515. Further, on behalf of the Bank, it is submitted that the cases relied upon by Mr Binney are all distinguishable having regard to three particular features in the present case viz (i) the representation is said to have been made at or very shortly before the time when the Guarantee was signed; (ii)the representation in effect required the alleged representee (i.e. Mr Binney) to do something; and (iii) the alleged representation contradicted the express terms of the Guarantee. All three features are said to be present here and in Hawrish but not in any of the other cases relied upon by Mr Binney.[12]Third, as to the case based upon a representation giving rise to an estoppel, the Bank submits that an estoppel by representation only arises where there is a representation of existing fact (Roebuck v Mungovin [1994] 2 AC 224) and it operates to bar the object of the estoppel (i.e. the Bank) from asserting some fact or facts (or some mixture of fact and law): Cobbe v Yeoman’s Row Management Limited [2008] 1 WLR 1752.[13]These points overlap to a certain extent and raise important issues concerning the scope of the so-called parol evidence rule. On behalf of Mr Binney, Mr Spencer submits that Hawrish is inconsistent with English authority and is either distinguishable or should not be followed. In particular, Mr Spencer submits that in Hawrish the Court relied in part on Heilbut Symons & Co v Buckleton [1913] AC 30 much of which was characterised by Lord Denning MR as “entirely out of date” in J Evans Ltd v Andrea Merzario [1976] 1 WLR 1078; that Hawrish turned on the particular term in the guarantee in that case which is not present here; and that there was no consideration in Hawrish of equity or estoppel.[14]The so-called parol evidence rule was, of course, considered by the Law Commission in 1986 (Law Com 154, 1986, Cmnd 9700). The general conclusion reached by the Commission was:- “…that there is no ruleof law that evidence is rendered inadmissible or is to be ignored soley because a document exists which looks like a complete contract. Whether it is a complete contract depends upon the intention of the parties, objectively judged, and not on any rule of law” The editors of Chitty agree with that conclusion: see Chitty on Contracts Vol 1 para 12-099. Having regard to this conclusion of the Law Commission, it is, in my judgment, difficult if not impossible to decide the points raised by the Bank as a matter of principle in the abstract and, in the circumstances of the present case, it seems both unnecessary and undesirable to do so. Even on the Bank’s case, any analysis depends, at least in part, on the precise facts. The Bank did not suggest that I should strike out any part of Mr Binney’s case; nor that I should not hear the evidence. In those circumstances, it seems to me that the best course is to consider the evidence and to state my conclusions with regard thereto. I will then revert, if necessary, to address any points of principle on the Bank’s case.

Summary of relevant events

[15]The relevant background is as follows. KMC was a company engaged in business providing personnel for, in particular, Government departments and higher education establishments. KMC had been trading since 1994. At the material time, KMC’s majority shareholder was Dr Elizabeth Haywood who was also a director. Dr Haywood was called as a witness and gave evidence. As I have said, Mr Binney was a minority shareholder and also a director at the material time. He also gave evidence at the trial. During the period between around 2001 and up to early 2006 KMC’s business had prospered. During this period KMC was already a customer of the Bank. KMC traded with a fully fluctuating overdraft facility from the Bank i.e. it fluctuated monthly from being in credit to being overdrawn. The limit of the overdraft was increased temporarily to £130,000 in 2004 following a request from Mr Binney and that revised limit then remained in place until 2005. This facility was secured by a mortgage debenture over KMC’s assets and was subject to what was referred to as a “debtor formula”. In effect, this meant that KMC’s borrowing was subject to a ceiling of 40% of KMC’s “Good Debtors”, defined as those debtors outstanding for less than 90 days and undisputed. By May 2005, the overdraft limit had been extended to £180,000 but subject still to the debtor formula. Until the early part of 2006, KMC generally traded well within these levels.[16]In July 2006, the existing facilities to KMC were extended for a further period until February 2007 as at that time trading performance and the Bank account operation were all considered satisfactory. However, shortly thereafter there was marked deterioration in the account profile; rather than fluctuating into credit each month, turnover had reduced and the account remained in overdraft during the period from July 2006 until October 2006.[17]During most of this period Mr Christopher Ladds was the Relationship Manager who managed the account of KMC on behalf of the Bank. Mr Ladds was called as a witness and gave evidence. Mr Binney acknowledged that he had an exceptionally good working relationship with Mr Ladds during this period.[18]Given the deterioration in the performance of KMC over the summer of 2006, Mr Binney began to have concerns in about September. This was discussed internally at KMC. It was decided that the situation needed to be addressed. Mr Binney considered that November was going to be the crunch time. Additional sums would be needed either from the Bank or other external funding or possibly by the directors injecting further cash funds.[19]In this regard, Mr Binney had a phone call with Mr Ladds in about September. He tried to set up a meeting with him regarding the possibility of a short term extension to KMC’s current overdraft facility.[20]On 25 October 2006, Mr Ladds wrote to Mr Binney advising him that he (i.e. Mr Ladds) was moving on to a new role within the Bank and that with effect from 30 October 2006 the new Relationship Manager for KMC would be Mr Ian Thomson. A few days later there was a telephone call (or meeting) between Mr Binney and Mr Ladds. In order to take matters forward a further meeting was arranged which, in the event, took place on or about 3 November 2006.[21]Meanwhile, Mr Ladds sent to Mr Binney as an attachment to an email, a form, referred to as the “Asset and Liability Statement”. Mr Ladds stated in that covering email:
“Can you (and Elizabeth?) please arrange to complete this and return it to me as soon as possible (or bring it to our next meeting)”
. It does not appear that the form was sent on or given to Dr Haywood. However, the form was duly completed and signed by Mr Binney dated 3 November 2006. As completed by Mr Binney, the form gave details of certain financial information including Mr Binney’s gross salary. Under the heading “ASSETS”, he gave details of his house with a present value of £1.25 – 1.5 million and stated that it was in the names of “joint with wife”. As Mr Binney accepted in evidence, the latter statement was untrue. In fact the house was in the sole name of Mr Binney’s wife. In cross examination, it was put to Mr Binney that this false statement was a deliberate lie intended by Mr Binney to persuade the Bank to increase the facilities afforded to KMC. Mr Binney’s answer was that although he accepted that the statement was not true, he had not lied consciously in answering the question as he did. Although Mr Binney could give no satisfactory explanation as to this false statement, he was adamant that he had not intended to lie and that it was no more than an error which he corrected shortly thereafter.[22]As planned, Mr Binney met Mr Ladds and Mr Thomson on or about 3 November 2006. The precise nature, scope and sequence of the discussions leading up to the meeting on 17 November are not entirely clear. However, at the very least, it seems common ground that Mr Binney wanted an increase of £120,000 over the existing overdraft of £180,000 i.e. a new proposed limit of £300,000. In order to support that increased overdraft limit, Mr Binney’s evidence was that he was told at that meeting that the Bank would require a personal guarantee of £100,000 from each of Mr Binney and Dr Haywood. Mr Binney’s evidence was that he did not say “yay or nay” to that and that he needed to go away and discuss it internally. Mr Thomson’s evidence was that it was agreed with Mr Binney at that meeting that he would make an application to the Bank’s Credit Sanctioning Unit (“CSU”) recommending that the Bank agree to extend KMC’s overdraft to £300,000 on the basis that Mr Binney would provide a personal guarantee for £200,000. The Bank’s internal documentation shows that Mr Thomson did indeed make such application. The application states that Mr Binney had offered a personal guarantee of £200,000. However, Mr Binney emphatically denied that he ever offered a personal guarantee for £200,000 or indeed any sum at that meeting. Rather, Mr Binney’s evidence was that matters were left totally open at that stage. In his own words, his evidence was that “we would have to offer something” either cash or a personal guarantee, that we “would play ball” providing £100,000 each either in cash or by way of a personal guarantee. His recollection was that he said something about “time limits” but he did not make this a big issue.[23]In any event, it is plain that matters remained relatively fluid at this stage. Mr Binney was speaking to Dr Haywood on a daily basis sometimes at considerable length. Dr Haywood’s position was that she would rather hold back from issuing a personal guarantee. In any event, in an email dated 10 November 2006, Mr Binney confirmed to Mr Thomson:
“you already have my undertaking to provide a personal guarantee.”
[24]The internal documents of the Bank dated 14 November 2006 continued to indicate that it was understood that Mr Binney had offered a personal guarantee for £200,000 and although this would be unsupported, nevertheless Mr Binney was considered good for this amount. However, as I have stated, Mr Binney’s evidence was that he had never offered any guarantee of £200,000.[25]In any event, by 15 November 2006 the position appears somewhat clearer viz that the personal guarantee from Mr Binney would be limited to £100,000. So far as Dr Haywood is concerned, her evidence (which I accept) was that by about this time she certainly had decided not to give any personal guarantee but that she was prepared to consider making some kind of cash injection. Nevertheless, on 16 November 2006, Mr Thomson told Mr Binney that he had gone back to his credit team with the revised guarantee structure i.e. 2 x £100,000.[26]According to Mr Binney’s evidence, he told Mr Thomson at some stage during the course of November (probably during a phone call) that it was his intention to introduce £100,000 into the company. In terms of the cash which he proposed to inject into the company, his evidence was that his only option was to source funds using his family home as security. However, he was then due to fly to Australia on the evening of 17 November for a family holiday returning on or about 29 November. Accordingly, he was not in a position to raise the required funds immediately. Mr Binney's evidence was that although he explained this to Mr Thomson, Mr Thomson's response was that, in the absence of new funds being provided immediately, the Bank would be unable to meet the company's payroll at the end of November and that Mr Thomson insisted therefore on a personal guarantee as a holding measure. Mr Binney's evidence was that as he was about to leave for Australia, he had little choice but to put arrangements in place in order that the November payroll would be met whilst he was away on holiday. According to Mr Binney, it was against this background that he arranged to meet Mr Thomson at the Bank's offices on 17 November.[27]As set out in his witness statement, Mr Binney’s evidence as to the course of the meeting on 17 November was as follows. Mr Binney requested of Mr Thomson that an expiry date be included in the guarantee document. However Mr Thomson responded that(1) the document had already been prepared and there was no time to reissue it and(2) as it might take Mr Binney some time to raise the necessary funds, it would save the cost to Mr Binney of issuing a guarantee on expiry of the original. However, he and Mr Thomson expressly agreed that the guarantee would only remain in place until Mr Binney was in a position to inject matching funds into KMC and that the Bank would then "tear up” the guarantee. If Mr Binney was not able to do this, then the alternative was that formal security in the form of a charge on the family home should be provided. Placing reliance upon the assurances given to him by Mr Thomson, Mr Binney proceeded to sign the pre-prepared guarantee document. In addition, Mr Binney was requested to sign a form confirming that he had not sought legal advice in relation to the guarantee document. According to Mr Binney, since he was due to fly out to Australia later that day, time was short and he had little option but to sign this form as well.[28]Mr Thomson's evidence was that once Mr Binney had agreed that he would provide a guarantee of £100,000 and the credit department had approved the new arrangements, he would have made a request to them to prepare the necessary documentation for signature by Mr Binney and that such documentation had indeed been prepared for Mr Binney to sign when Mr Binney came into the Bank on 17 November. In his witness statement dated 28th January 2010, Mr Thomson stated that Mr Binney read through the guarantee and the waiver of legal advice and signed them both in front of him. In that statement, he also stated as follows:
“I have no recollection of the Defendant stating that he was reluctant to sign “an open-ended guarantee”
. All bank guarantees are “open-ended guarantees”. There is no form of temporary guarantee that I have ever seen in my years of business banking. Had the Defendant informed me that he was not happy to sign the guarantee as drafted I would have informed him that such a decision would have necessitated an immediate review with CSU which may have lead the Bank to reducing or altering the facilities to the Company but that would have been a matter for him. I have had many years of experience of witnessing people’s signatures on guarantee documents and I also follow the same procedure when a director comes to the Bank to sign a guarantee. I always give the guarantee and the waiver form to the signatory to read and allow them sufficient time to read it through, I always highlight the nature of the document, the company for whom the guarantor is providing security, the limit of the guarantee and it is always my standard practice to highlight the clause within the guarantee which states that notice may be given in writing to discontinue it. I always make it clear that independent legal advice should be sought by the signatory if there is any uncertainty on their part about any aspect of the legal effect of the guarantee. I did not at any time suggest or agree with the Defendant that the Guarantee would only be in place until matching funds were deposited by the debtor or until formal security was provided. When the Guarantee was given it was anticipated that further security would be provided. But that was on the basis that the guarantee was to remain in place in any event. I reiterate that there was no express agreement between me and the Defendant in any way varying or limiting the extent of the Guarantee. I was and remain confident that the Defendant understood the Guarantee and its implications.”[29]Thereafter, Mr Binney went off on holiday to Australia. Meanwhile, KMC remained under considerable financial pressure. On 22 November, Dr Haywood sent an e-mail to Mr Thomson with regard to urgent immediate expenditure of KMC. As to salaries, she referred to the reduced amount of £51,500 which she said she would deposit as an interest-bearing loan the following weekend. She also referred to additional expenditure in the total sum of £80,000. As to this, she said that David (i.e. Mr Binney) had agreed to raise a large portion of this and make a deposit as a loan on his return.[30]On 27 November, Mr Binney sent an e-mail to Mr Thomson stating in material part: "As you know Elizabeth has now deposited a sum to cover November salaries and on my return I will be either depositing a sum of around £100,000 or alternatively offering security against my personal guarantee for that sum. Given the circumstances however it is very important that I understand the level of facility offered by the Bank following injection of funds and guarantee by directors.”[31]Following Mr Binney's return from Australia, he sent an e-mail to Mr Thomson on 2 December referring to certain new business plans and which then stated in material part as follows:
“Meanwhile Elizabeth and I will be looking to handle our commitments in different manners. Elizabeth is dealing in hard cash, I will be going the guarantee route. Hopefully the end result will be the same……”
[32]On 6 December, Mr Thomson sent an e-mail to Mr Binney suggesting that they should start the process for the support of his guarantee. According to Mr Binney, in addition to the possibility of providing security for his guarantee, there were also discussions to replace the guarantee with a cash injection into KMC during which it was agreed that the best way to achieve this was by way of an equity release mortgage whereby Mr Binney would raise funds by means of a remortgage of the family home in order to release sufficient funds to inject cash into KMC thereby removing what Mr Binney referred to in his statement as the “overhang of the personal guarantee”. This possibility was referred to in an internal note by Ms Jodie Friend (an employee of the Bank) dated 25 January 2007 which stated: “Guarantor is raising £100k on his mortgage to inject £100k cash into the business. We will most probably be asked to release the £100k PG once the capital injection is received."[33]Discussions continued between Mr Binney and the Bank with regard to financial arrangements going forward. For example, on 2 February 2007, Mr Binney sent an email to Mr Thomson referring to what he considered to be “quite a gulf” between what KMC and the Bank had been seeking to achieve in recent months. Mr Binney stated: “Our objective has been to secure additional funds, initially through banking facilities supported by guarantees, later by injection of new cash with which to support and grow the business. Natwest has been looking for the introduction of asset backed guarantees or alternatively new cash with which to reduce, and eventually eliminate its exposure to the business”.[34]Initially, Mr Binney’s intention was to try to utilise funds drawn down from his Natwest offset account to inject into KMC. However, after several weeks of discussion and towards the end of January 2007, he was told by the Bank that this would not be possible. Mr Thomson then arranged for the Bank to provide details of alternative mortgage products to Mr Binney in order to take the process forward. In the event, after some delay, the Bank declined to assist Mr Binney. Ultimately, Mr Binney’s evidence was that he obtained further funds through a remortgage with Woolwich which was completed in late May 2007.[35]Meanwhile, KMC’s financial position continued to deteriorate. As at June 2007, the projections for the following three months (i.e. July, August and September), showed a considerable shortfall on the Bank’s cover by reference to the debtor formula. According to a note by Mr Thomson contained in an internal document of the Bank entitled “Commercial Customer – Existing Credit Application” dated 27 June 2007, he thought this was a “difficult case” but he wanted to support KMC as a “long-standing customer”. The note stated:
“[Mr Binney] remortgage monies 100k are ready to be injected but he wants to understand our position in more detail.”
The recommendation in that document was that the Bank offer 100k on the following basis:
“1. External funder replaced or deferred and 2. 75k [Joint & Several] PG from Binney & Hayward with covering [asset & liability] statements confirming they are good and 3. [Mr Binney] remortgage monies are injected.”
There was a dispute before me as to the contents of this document. Unlike other similar internal documents of the Bank which existed from time to time, there was no heading referring in the body of the document to any personal guarantee nor any specific reference to the personal guarantee from Mr Binney. This was relied upon on behalf of Mr Binney in support of his case that once the remortgage monies were injected, there was a binding agreement that the original personal guarantee provided by Mr Binney would, in effect, be torn up. I deal with this point further below. But for present purposes, it is sufficient to state that I accept the Bank’s evidence that although there was no express reference to the original personal guarantee of Mr Binney in the main descriptive part of the document, nevertheless it was referred to on a separate sheet headed “Core Security Summary” which formed part of the same document. (Other internal Bank documents about this time also confirm that the Guarantee continued to be held as security by the Bank and that the Bank were awaiting the further injection of cash funds by Mr Binney. However, there is nothing in those documents to suggest that there was any agreement to release the Guarantee when those funds were injected.)[36]There was nothing in the evidence before me which suggested that there were any further specific discussions between the Bank and Mr Binney with regard to the recommendation contained in this document or the injection of funds by Mr Binney into KMC. However, there is no doubt (and it is common ground) that Mr Binney did make payments totalling £95,000 into KMC’s account in July and August 2007. These payments were made in two tranches viz. £42,000 on 16 July and £53,000 on 3 August.[37]Meanwhile, due to the continued deterioration of the business, it was perceived by the Bank that KMC required closer monitoring. Accordingly, sometime in July 2007, the KMC file was transferred to Mr Spence who had worked for the Bank since 1976. At the material time, he worked with commercial businesses and was responsible for a portfolio of clients considered to be in a stressed position. Mr Binney was duly notified of Mr Spence’s role and, at the end of July, a meeting was set up between the two of them for 16 August 2007.[38]Following the payment of the second tranche of £53,000, it was Mr Binney’s evidence that he instructed KMC's finance manager, Ms Jennifer Hicks, to contact the Bank to confirm that the full sum had now been deposited in full consideration for the release from the personal guarantee which he had signed in November 2006. Originally, a written statement signed Ms Hicks had been served on behalf of Mr Binney with the intention that she should give evidence at the trial. However, in the event, Ms Hicks was not called to give evidence and her written statement was not relied upon at trial or put in evidence. Mr Binney's evidence was nevertheless that he understood that Ms Hicks had spoken to a member of Mr Thomson's staff who both confirmed receipt of the funds that he had put into the company and that the need to put in train the release from the personal guarantee would be passed to Mr Thomson. In his written statement, Mr Binney stated:
“In the circumstances, I had no reason to doubt this or pursue the matter further" and “When I did inject cash as agreed into the company, the Bank confirmed that I would be released from the guarantee.”
I revert to this evidence below.[39]On 10 September 2007, Mr Spence sent to Mr Binney a letter attaching a 3 page facility agreement for Mr Binney to sign and to return. That document expressly referred to the Guarantee as security for the overdraft. On 12 September, Mr Binney confirmed that he had received this document and that he would deal with it. After being chased by Mr Spence, Mr Binney confirmed by email on 21 September that he had signed it – although in cross-examination, he expressed uncertainty as to whether or not he had signed it.[40]Mr Binney’s evidence was that during autumn 2007 he had a meeting with Mr Spence during which Mr Spence passed him an overdraft facility letter to sign which referred to the personal guarantee in an attached Schedule and that he (Mr Binney) queried this immediately. The facility letter referred to must be a reference to the document to which I have just referred. Mr Spence had no recollection of any query being raised by Mr Binney at this stage as to the Guarantee. Mr Binney’s evidence that he queried the reference to the Guarantee immediately is inconsistent with the contemporaneous documents which I have also just referred to; and I do not accept it.[41]However, there is no doubt there must have been some discussion between Mr Spence and Mr Binney concerning the Guarantee some time later and prior to 13 November 2007 which is the date of an internal document of the Bank headed “Commercial Customer – Existing Credit Application” containing a note made by Mr Spence referring to such a discussion. As set out in that note (the contents of which I accept), reference was made in that discussion to the Guarantee. Mr Binney told Mr Spence that that Guarantee had been provided strictly on the basis that it would be released once he had injected £100,000 cash. Mr Spence mentioned that he was not aware of that arrangement but made no further comment. On 20 November 2007, Mr Lynch of the Bank commented in a separate internal document of the Bank headed “Sanction Summary Sheet”:
“I suspect what was envisaged at the time the guarantee was taken was that the £100k injection would reduce the overdraft substantially to c£50k, a level we were at the time more comfortable funding. Deterioration in performance has, however, meant that even with £100k injection by [David Binney] (though was this all his, excess report 24/4/07 suggests 3rd party investor money of £50k?) the debt has not reduced hence we wish the guarantee to remain in place. Appreciate this may be an issue, dependent on outcome of Serco proposal etc”
[42]Throughout this period, the financial position of KMC continued to deteriorate further during which Mr Binney was in negotiation with other outside investors. In about mid-January 2008, a meeting took place between Mr Spence and Mr Binney to discuss the structure and strategy with regard to KMC in addition to the financial implications of these negotiations. Following that meeting, Mr Spence wrote to Mr Binney in a letter dated 21 January 2008 stating in material part as follows:
“The initial thought was to within the £100,000 level covered by your Guarantee. [sic] That said, I recall that you mentioned in an earlier meeting that you had intended the guarantee to be operative until you had completed a personal cash injection. I was not aware of that and it does emphasise the need for the Bank’s security position to be clarified.”
[43]Negotiations with outside investors continued and on 9 April 2008 Mr Binney sent an e-mail to Mr Spence which stated in material part as follows:
“Meanwhile, from looking through notes of meetings over the last six months I am not clear whether I sent you details of the capital that I introduced into the company. You will note from your records that it was agreed in October/November 2006 that the shareholders would introduce loans totalling £170,000; I would be introducing the sum of £100,000 and Elizabeth would be introducing £70,000. As I was about to depart for Australia and there was no possibility of raising my capital in a short time frame I provided a short term personal guarantee to cover for my share; Elizabeth put her loan into the company immediately. My capital was introduced in stages in 2007, and in August, having notified Ian by phone of the third and final stage of the transaction, the personal guarantee should have been returned to me. Details of the payments are as follows: 31/01/07 £5,000 17/07/07 £42,000 03/08/07 £53,000” 31/01/07 £5,000 17/07/07 £42,000 03/08/07 £53,000”
[44]On the following day i.e. 10 April 2008, Mr Spence wrote in an internal Bank document as follows:
“Guarantee: Unable to check on BO for the initial £5k but 2 credits totalling £42k were received on 17/07/07 with a credit for £53k on 03/08/07. I have tried to find correspondence that defines the agreement regarding the Guarantee but cannot find anything to support/counter this contention. Do we i) Acknowledge his further comments and make no further remarks. ii) Bite the bullet & lapse the guarantee iii) Start to contest his position.”
[45]On 15 April 2008, Mr Spence had a further telephone discussion with Mr Binney with regard in particular to a sale of KMC to a third party. There was no discussion with regard to the Guarantee but at the end of that discussion, Mr Spence wrote an internal note stating in material part: "We have the issue of his claim that his Guarantee should have been released and any [insolvency practitioner] worth his money should be telling him to press the issue to a conclusion before the business hits the buffers.”[46]On 30 April 2008, Mr Spence sent a letter to Mr Binney as follows:
“I write in response to your email of the 9th April, specifically with regard to the Guarantee of £100,000 given by you on 17th November 2006 in favour of KMC Management Consultants Ltd. I am addressing this letter to your home address as I am not sure whether correspondence addressed to the Company’s office will reach you safely. My response has been delayed by the need to research my records and confer with colleagues who were involved with the Company between that time and the 30th August 2007, when we first met. I can find nothing to support your understanding that the Guarantee would be released following your injection of £100,000. I understand that the outline circumstances of the future release of the Guarantee were discussed but solely on the basis that such a request could only be considered in the light of the Company’s position at the time of any subsequent discussion. My credit sanctioning colleagues advise me that they have given no agreement to the release of the Guarantee and, furthermore, as a matter of principle would only agree to the release of a Guarantee against a commensurate reduction in the Bank’s exposure.”
[47]On the following day i.e. 1 May 2008, KMC was placed into administration. Shortly thereafter, on 20 May, the Bank demanded payment of the sum of £100,000 from Mr Binney under the Guarantee.[48]On 6 July 2008, Mr Binney wrote to the Bank denying liability and stating that he had been assured in August 2007 that the Guarantee had been released after he put funds into KMC.

The meeting on 17 November 2006

[49]I now return to consider the central issue i.e. what, if anything, was said or represented at the meeting on 17 November 2006 so as to give rise to a binding agreement, collateral warranty or representation as alleged by Mr Binney. Despite the evidence of Mr Binney, I am unable to accept his version of what happened at that meeting or that there was any agreement, warranty or representation giving rise to any estoppel as Mr Binney now alleges. My reasons are as follows.[50]First, whatever may be the precise scope of the so-called parol evidence rule as applicable in the circumstances of the present case, it seems plain, as Mr Spencer rightly conceded, that at the very least, the burden of proof was on Mr Binney to establish any such agreement, warranty or representation giving rise to an estoppel. As to the standard of proof, it was submitted on behalf of the Bank that there was an inherent improbability in Mr Binney’s case (in particular because the oral agreement advanced by him contradicts the terms of the Guarantee which he signed) and that this must be taken into account when weighing the probability of Mr Binney’s allegations and deciding whether the events he alleges occurred: see In re H (Minors) [1996] AC 563 at 586-7. That may be. But for present purposes, I proceed on the basis most favourable to Mr Binney viz that the standard of proof is simply the balance of probabilities having regard to all the circumstances.[51]Second, so far as Mr Thomson’s evidence is concerned, he began his employment with the Bank in September 2006 (i.e. a few months before the meeting in question) having previously worked for Barclays Bank Plc for about 20 years and where he had been employed as a business manager for approximately 15 years. In my judgment, he was competent and an honest witness doing his best to recollect events some time ago. However, he accepted in evidence in chief that he could not remember much of what happened at that meeting. I have already quoted in full what he said in his written statement. In broad terms, his evidence was that he would generally follow a standard procedure when obtaining a guarantee: if anything had happened or been said at the meeting outside that standard procedure, he would have remembered it. I do not exclude the possibility that there may have been some discussion during the meeting about Mr Binney injecting further funds into the business at some stage in the future and the possible cancellation and return of the Guarantee. However, on the basis of Mr Thomson’s evidence, I accept that the overwhelming likelihood is that any specific request that the guarantee be limited in time or conditional upon future cash contributions to KMC would have been so unusual that Mr Thomson would have remembered it as an event falling outside the usual range of guarantees he dealt with and it would have necessitated both a review of the Bank’s lending to KMC and some authority higher than Mr Thomson to authorise the guarantee, neither of which happened.[52]Third, so far as Mr Binney is concerned, he was, in my judgment, a highly intelligent, articulate, confident, financially experienced and competent businessman. He had trained as an accountant and qualified as an economist. Moreover, he was used to dealing with banks and to signing financial documents; and had previously signed at least one personal guarantee. Mr Binney was the individual at KMC who had the main contact with the Bank over a number of years. In my view, it is improbable in the extreme that he would have been prepared to sign the present Guarantee as it stood without qualification if it had been subject to some special term, warranty or assurance amounting to a representation not contained in the Guarantee itself or otherwise confirmed in writing at the time. I do not accept Mr Binney’s evidence that he simply signed the Guarantee because he trusted Mr Thomson. He had only met Mr Thomson for the first time a few weeks before. For the avoidance of doubt, I should make it plain that that view is not based on some theoretical inherent probability but on my assessment of Mr Binney as an individual and the particular circumstances of the present case. Even if I were wrong in that view because, as Mr Spencer submitted, Mr Binney was under time pressure to go off on holiday and had no real alternative but to sign the Guarantee in the form presented to him for signature, I am even more certain that a person of Mr Binney’s considerable financial experience would have made sure as soon as possible after that meeting that he notified the Bank and confirmed what he now says was the position with regard to the Guarantee.[53]Fourth, quite apart from the meeting on 17 November 2006, there was, as submitted by Mr Nicholls, a number of other instances which showed that Mr Binney had a propensity to lie or was willing to deceive or to mislead. In particular: a) The Asset and Liability Statement dated 3 November 2006 which I have already referred to. b) Mr Binney’s attempt in cross-examination to explain his email dated 10th November 2006 where he stated:
“You already have my undertaking to provide a personal guarantee”; c) Mr Binney’s statements in his email dated dated 9 April 2008 (i) that he had spoken to Mr Thomson in August 2007 whereas (as Mr Binney accepted in cross-examination) this was not the case and (ii) that he had made a payment of £5000 in January 2007 whereas (again as he accepted in cross-examination) this was not a payment as such but represented in effect a waiver of one month’s salary in October, November or December 2006. d) The uncertainty he expressed in cross-examination with regard to the signing of the facility letter referred to in the email dated 21 September 2007. e) A number of apparent errors in Mr Binney’s Defence which he was unable satisfactorily to explain. To a greater or lesser extent, I accept that these points have some force particularly with regard to the false statement made by Mr Binney in the Asset & Liability Statement for which Mr Binney had, at the very least, no satisfactory explanation whatsoever. However, in my judgment, the most troubling example (and one which goes to the heart of the main issue in this case) is Mr Binney’s statement in his letter to the Bank dated 6 July 2008 that he had been assured in August 2007 that the Guarantee had been released after he put funds into KMC. In cross-examination, Mr Binney in effect accepted that this was untrue but, as he stated, he put that in the letter because he was very angry at the approach the Bank was taking. In my judgment, that is not a satisfactory explanation still less justification of what was nothing less than a blatant lie. In final submissions, Mr Spencer boldly submitted that this should not be held against Mr Binney because he (i.e. Mr Binney) was candid in accepting in cross-examination that what he had said in the email was untrue. However, that does not seem to assist in circumstances where Mr Binney had no alternative but to accept what was a blatant lie. Moreover, the thrust of the original lie was repeated in paragraph 40b of his statement dated 27th January 2010 when Mr Binney stated: “When I did inject cash as agreed into the company, the Bank confirmed that I would be released from the guarantee……”
. However, as Mr Binney accepted in cross-examination, the Bank had never given such confirmation and neither Mr Binney nor Ms Hicks had ever received any such confirmation. In final submissions, Mr Spencer submitted that even though the Bank had not in fact confirmed that he (i.e. Mr Binney) would be released from the Guarantee, nevertheless that is what Mr Binney thought. I do not accept that Mr Binney did think that would happen. But even if he did think that that would – or even might – happen, it provides no justification for Mr Binney saying that that is what the Bank confirmed would happen when the Bank had not do so – as Mr Binney was bound to and did accept.[54]Despite these observations, I bear well in mind that the fact that a witness may give unsatisfactory evidence or even lie with regard to certain matters does not necessarily mean that his evidence is untruthful with regard to other matters or generally. However, in my judgment, it is a matter which the Court is entitled to take into account in considering the rest of the evidence of that witness together with all other relevant circumstances. 55. Fifth, quite apart from the absence of any document in writing from Mr Binney immediately following the meeting or even shortly thereafter to suggest that the Guarantee was, in effect, qualified in any way as now alleged by Mr Binney, the events both before and after the meeting do not, in my judgment, suggest any different conclusion. In this context, it is necessary to consider various points relied upon by Mr Spencer. 56. First, at the forefront of Mr Spencer’s submissions was a general point that so far as Mr Binney and Dr Haywood were concerned the injections of cash funds into KMC, on the one hand, and the provision of a personal guarantee to the Bank, on the other hand, were alternatives ie they were mutually exclusive. In particular, it was a constant theme of Mr Spencer’s submissions that if the position were otherwise, Mr Binney would, in effect, be the victim of what he called “double-jeopardy” (i.e. liable under the Guarantee even though he had, on his case, invested £100,000) and that this would put him in a different position from Dr Haywood (who had put money into KMC but had not provided a guarantee) which cannot have been the intention of any of the parties. In this context, reliance was placed generally on the evidence of Mr Binney and Dr Haywood. In particular, the evidence of Dr Haywood was that it would be “crazy” for Mr Binney to provide both cash and a personal guarantee; that she had never been asked to give a personal guarantee and that she understood and believed Mr Binney was being treated in the same way. On behalf of Mr Binney, reliance was also placed on the email from Dr Haywood dated 22 November 2006 where Dr Haywood noted that Mr Binney was expecting to deposit a loan on his return and, much later, on what Dr Haywood said she had overheard from Ms Hick’s conversation with the Bank in August 2007 about payment of the final tranche and there being no need for the guarantee to continue. Additionally, reliance was placed on various emails including those dated 27 November 2006, 1 and 6 December 2006 and, in particular, the email dated 2 February 2007. 57. I do not consider that any of these emails and matters support what is now said by Mr Binney. I accept that as at the date of the meeting in November 2006, if Mr Binney had injected the sum of £100,000 into the business, the Bank probably would not have insisted at that stage on the provision by him of an additional guarantee; and that those additional funds might have been sufficient to keep the business in operation for at least a period of time. To that extent, I also accept that at least prior to the signing of the Guarantee on 17 November 2006, Mr Binney’s preference was to regard the injection of cash and the provision of a guarantee backed by some form of security as alternatives to keep the business going for the time being. However, this does not mean that the Bank necessarily would or did agree to release the Guarantee at any unspecified later date if Mr Binney injected further funds. (For example, even a few days after the meeting of 17 November, it appears from Dr Haywood’s email dated 22 November that quite apart from the Guarantee which Mr Binney had by then provided, both he and Dr Haywood were prepared to consider the injection of additional funds into the account to meet specific outgoings.) In the ordinary course, whether or not the Bank would be prepared to do this would depend on the circumstances prevailing at the relevant point in time. Moreover, unless Mr Binney gave the requisite notice of discontinuance under the terms of the Guarantee, any such release would necessarily be the subject of negotiation between the Bank and Mr Binney at such time. In my judgment, Mr Spencer’s submissions were founded on a number of flaws in particular(i) the fact that the provision of a personal guarantee or cash were considered as possible alternatives in November 2006 does not, of itself, necessarily mean that this would be or was the case in July or August 2007;(ii) ignoring the fact that KMC’s financial position continued to deteriorate as shown by the projections in June 2007; 58. Second, Mr Spencer relied on the note by Ms Friend dated 25 January 2007 that the Bank would “most probably be asked to release the £100k PG once the capital injection is received”. Mr Thomson had no recollection that he had discussed this with Ms Friend but, in any event, it does not seem to me that this supports Mr Binney’s case. At most, it indicates an expectation as to what Mr Binney might request. As such, if anything, it seems to me inconsistent with Mr Binney’s case that there had, in effect, been a binding agreement or assurance by the Bank which entitled him to the return of the Guarantee. 59. Third, Mr Spencer relied on the recommendation contained in Mr Thomson’s Existing Credit Application dated 27 June 2007 which I have already dealt with in part above. In my judgment, it does not assist Mr Binney’s case. On the contrary, it is, on its face, a new proposal for credit based upon the external funder being replaced or deferred, a new asset-backed joint and several guarantee of £75,000 from both Mr Binney and Dr Haywood and the injection by Mr Binney of remortgage monies of £100,000. There is nothing in that document to suggest the existence of any prior agreement or assurance by the Bank that the Bank would simply release the existing unsecured Guarantee on the injection of the £100,000 funds by Mr Binney. Indeed, in my judgment, it is inconsistent with such a suggestion. 60. Fourth, Mr Spencer relied on the note by Mr Lynch dated 20 November 2007 the material part of which I have quoted above. However, it seems to me at most that that note simply states Mr Lynch’s suspicion that what was envisaged in November 2006 was that the injection of funds of £100,000 would reduce the level of the overdraft. But it does not follow from this that there was any binding agreement or representation as to the release of the Guarantee. 61. Fifth, Mr Spencer relied on the discussion between Mr Spence and Mr Binney as reflected in Mr Spence’s note in the document dated 13 November 2007, the further note by Mr Lynch 20 November 2007 and the subsequent correspondence dated 21 January 2008 and 10, 15 and 30 April 2008. This correspondence (in particular the letter dated 30 April 2008) was explored at length in cross-examination of Mr Spence – and, to a lesser extent, with Mr Thomson. Mr Thomson had no clear recollection of these matters. Mr Spence confirmed that he had spoken to Mr Thomson before writing the letter dated 30 April 2008 and that the reference to Mr Spence having conferred with “colleagues” in the second paragraph of that letter included Mr Thomson. On this basis, Mr Spencer submitted that the letter is inconsistent with and undermines the Bank’s case in particular because there is nothing in it (or any other internal Bank document) constituting or evidencing a denial by Mr Thomson of the agreement alleged to have been made as referred to in the email dated 9 April 2008 from Mr Binney (to which the letter dated 30 April is a response) as one would expect. It is fair to say that in this regard, Mr Spence’s answers in cross-examination were somewhat confused and, at least in part, unsatisfactory. In particular, his evidence was that the second sentence of the third paragraph of the letter dated 30 April 2008 was not based upon what Mr Thomson said to him but came from Mr Binney. That explanation is difficult if not impossible to understand. In any event, Mr Spence explained that in carrying out his researches (as referred to in the second paragraph of that letter) his main purpose was to see what could be found in the Bank’s written records as to whether or not any agreement as alleged by Mr Binney had been made and that the first sentence of the third paragraph confirmed that position. I accept that evidence. In the event, I do not consider that there is anything in this later material to assist the case now advanced on behalf of Mr Binney. 62. Finally, Mr Spencer relies on the fact of the cash injection by Mr Binney. In particular, it is said that it would simply not make sense for Mr Binney to inject these funds whilst also remaining liable under the personal guarantee; that Mr Binney is an experienced businessman and his proceeding to inject matching funds having given a personal guarantee can only sensibly be explained on the basis of an agreement with the Bank that he would be released from the Guarantee on so doing. I do not agree. In particular and for the avoidance of any doubt, I am unable to accept the case advanced on behalf of Mr Binney that he made any payments into KMC in reliance upon any representation made at the meeting on 17 November 2006. I readily accept, indeed it seems to me pretty obvious, that Mr Binney would have preferred not to have to provide both a personal guarantee and the injection of funds; but the existence of such preference does not necessarily mean that it did not make “sense” to inject the funds whilst also remaining liable under the Guarantee. The fact is that throughout this period, KMC’s financial position continued to deteriorate. Although there was insufficient material before me to carry out a detailed analysis as to the financial position of KMC in July 2007, it seems plain that the company could not have survived much beyond that date without the injection of substantial additional cash funds. In my judgment, the decision by Mr Binney to inject funds in July and August 2007 is explicable simply by reference to the financial position of KMC at that time and a desire by Mr Binney to try to keep the company going for the time being. In that context, it is noteworthy that prior to the payment of the first tranche on 16 July 2007, KMC’s overdraft level fluctuated around £100,000. By 9 August 2007 (i.e. after payment of the second tranche), the overdraft continued to exceed £100,000 and it remained at that level for the remainder of the period covered by the available bank statements. Accordingly, the Bank’s exposure to KMC remained at approximately the same level despite Mr Binney’s cash contribution. 63. Further, if Mr Binney had seriously thought that by injecting those funds into the company he would automatically be entitled to the release of the Guarantee, it seems to me that he would have ensured that he obtained the Bank’s confirmation in advance or, once the funds had been injected, immediately written to the Bank demanding the return of the Guarantee. Mr Binney did neither. Moreover, the case now advanced by Mr Binney is inconsistent with the confirmation given by Mr Binney to the Bank on 21 September 2007 that he had signed the new facility letter which expressly referred to the Guarantee as security. 64. For all these reasons, I am unable to accept Mr Binney’s case that there was any agreement, warranty or representation as alleged by him on 17 November 2006 or any estoppel. In light of this conclusion, it seems to me that the points of principle raised by the Bank with regard to the so-called parol evidence rule are academic and I need say no more about them. 65. Equally, it is unnecessary for me to consider in any detail the third main point raised by the Bank viz that Mr Binney did not in any event make full payment of £100,000 into KMC. As I have stated, there is no doubt that payments totalling £95,000 were made by or on behalf of Mr Binney in July and August 2007. In this context, the only dispute concerns the balance of £5000. Mr Binney accepted that this was not a payment by him as such but said that he waived one month’s salary equivalent to an amount slightly in excess of £5000 and that such waiver was, in effect, to be regarded as a payment by him of this sum into the company. Even if I were to accept that such waiver could be regarded as a payment by him (which I would be inclined to do), the difficulty is that it was unclear if and when this was in fact done and there were no documents to support what Mr Binney said. Mr Binney’s evidence was that such waiver was “booked” in the company’s accounts for January 2007 but in fact related back to October, November or December 2006. This gave rise to the further point that if the waiver related to October, it might be said to pre-date the meeting in November and therefore be too early. At the end of the day, on the material before me, it seemed to me that I could not say on a balance of probability that any relevant waiver of salary had in fact taken place. On that basis, on the assumption that I had held in Mr Binney’s favour that there had been a relevant agreement, warranty or representation giving rise to an estoppel, I would have held that Mr Binney’s case failed in any event because, on a balance of probability, I was unable to say that the full sum of £100,000 had been paid by him into KMC. However, given my previous conclusion, this point does not arise. 66. For all these reasons, my conclusion is that the Bank is entitled to recover the sum of £100,000 under the Guarantee plus interest and, subject to any submissions to the contrary, costs. Counsel are requested to agree a draft order including the calculation of interest and costs failing which I will, of course, deal with any outstanding issues.