Untitled

Our alert readers may recall the 2013 Court of Appeal case[1], about an application to set aside a statutory demand based on a debt under a personal guarantee.  Mr Harvey contested that the execution of the guarantee by one of the guarantors was either forged or otherwise invalid. The Court examined the guarantee and decided that, on a proper construction of its specific wording, the liabilities of the various guarantors could not be separated. The Court therefore decided there was a genuine issue as to the validity of the guarantee and the statutory demand was set aside.

This argument was run rather late in the day by Mr Harvey. Prior to this, he had attempted to assert that the relationship manager of Dunbar Assets Plc (the Bank) had made a representation that the personal guarantee was just a formality and would not be relied upon.  Mr Harvey claimed that the Bank was therefore prevented from enforcing the guarantee under the principles of “promissory estoppel” (the legal principle that a promise is enforceable by law when a person relies on it to his or her detriment, as set out by Lord Denning in the classic High Trees case[2]).

However, before the matter reached the Court of Appeal, the Judge decided that this argument was insufficiently evidenced to be successful. When Mr Harvey made his appeal, any attempt to rely on the promissory estoppel argument was dropped.

The matter rumbled on…

Following expert handwriting evidence, the Court was eventually satisfied that the guarantee had been properly executed by all parties. The Bank continued its proceedings against Mr Harvey and issued a second statutory demand. Mr Harvey applied for this to also be set aside.

In this second application[3], Mr Harvey again attempted to rely upon the promissory estoppel argument, repeating his previous assertions and presenting some further evidence.  The question for the Court, on appeal by Mr Harvey, was whether Mr Harvey was entitled to rely on this argument having already raised it, been unsuccessful and dropped it once before.

Surprisingly, there is no previous precedent as to whether the same argument can be repeated at the hearing of an application to set aside a second statutory demand based on the same debt.  The Judge considered the Turner principle[4] that, in the absence of a change of circumstances or other special circumstances, a debtor ought not to be permitted to raise the same point again. In this case, the Judge was satisfied that there were no special circumstances and the further evidence presented was insufficient to constitute a change of circumstances.

The Judge also noted that the outcome would be the same whether the issue was decided on the Turner principle, res judicata (the legal doctrine preventing multiple litigation of the same claims or issues) or issue estoppel.  It is in the public interest to avoid repeat litigation on the same point and same or similar material. The appeal was dismissed.

The judgment is clear – in an application to set aside a subsequent statutory demand, the Court will not consider arguments that have been made in respect of previous statutory demands for the same debt and which the Court considers to have been satisfactorily dealt with. As the Judge succinctly put it, to do otherwise would be a “waste of time and money”.

(Nb – Given he had already looked at the matter and in the event of subsequent bankruptcy proceedings, the Judge did then go on to consider the promissory estoppel point anyway and decided that, in his view, the further evidence presented by Mr Harvey was insufficient to demonstrate the clear and unequivocal representation required for promissory estoppel to arise.)

[1] Harvey v Dunbar Assets Plc [2013] EWCA CIV952 [2013] BPIR 722

[2] Central London Property Trust Limited v High Trees House Limited [1947] KB130

[3] Harvey v Dunbar Assets Plc [2015] EWHC 3355 [CH]

[4] Turner v Royal Bank of Scotland Plc [2000] BPIR 683


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.