Following a failure to comply with a personal guarantee, the Defendant successfully appealed against a first instance decision granting the Claimant summary judgment.


The Defendant was a property developer and the sole beneficial owner of a group of companies known as the Manor Group.

The Manor Group applied for finance to fund the purchase and development of Manor Hill. For the purpose of acquiring and developing Manor Hill, the Defendant set up a special purpose vehicle. It was a condition of the finance that the Claimant would take a charge over the assets of the SPV and the Defendant would provide a personal guarantee. The Claimant called in the loan, but both the Manor Group and the Defendant, under his personal guarantee, failed to pay. The Claimant issued proceedings and sought summary judgment.

On the Claimant’s application for summary judgment, the Defendant argued that the Claimant advised that it would seek to recover any money owed by enforcing the security over the SPV and would only enforce the personal guarantee in the event of a shortfall, which given the LTV was unlikely to occur. The Defendant argued that without this assurance he would not have offered to guarantee the full amount of the finance. The Defendant argued that the representations made at the time of entering into the facility gave rise to collateral warranties and had constituted fraudulent representations of the bank’s approach to the enforcement of personal guarantees. The Claimant contended that this was implausible and argued it was entitled to summary judgment as the Defendant’s factual case fell short of the minimum level of credibility required to defeat its application. The Defendant also argued that a relationship had developed between Manor Group and the Claimant such that reasonable notice was required before the Claimant could demand repayment, which was never given.

At first instance, the Judge granted the Claimant’s application for summary judgment. He thought it was telling that there was a lack of contemporaneous documentation supporting the Defendant’s position and on the facts it was unlikely that the bank was required to give reasonable notice.

The Court of Appeal held that, when considering an application for summary judgment, the Court should not conduct a mini trial to resolve significant factual disputes between the parties. In contrast to the first instance Judge, the Appeal Court was not concerned at the lack of contemporaneous documentation supporting the Defendant’s position, focusing on the fact that the representations made were oral. Further, it was held that the Court must consider all the circumstances of the case. In this context, it referred to the witness statement of the Defendant’s wife which, although it conflicted with the Claimant’s evidence, appeared to corroborate the Defendant’s position. It was held that this conflict could not be resolved without cross-examination. On this basis, although the Court of Appeal considered the Defendant’s position was improbable, it was not wholly implausible. Accordingly, it was held that although the Defendant’s defence was unlikely to succeed, the Judge erred in finding that the Defendant had no real prospect of success. The Court ordered the Defendant be given conditional leave to defend and remitted the case to the High Court.


This case highlights the uncertainty of summary judgment applications. It makes it clear that the decision to grant summary judgment is likely to depend on the Court’s analysis of the factual scenario. It is clear that, even if there is a small although improbable chance of a defence to a claim being successful, then a summary judgment application is unlikely to be successful.
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