We Have Some Issues: Summary Judgment Under CPR 24.2

• Published date: 09 September 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Trials & Appeals & Compensation
• Law Firm: Gatehouse Chambers
• Author: Mr Simon Kerry

ADL Advanced Contractors Ltd v Patel [2021] EWHC 2200 (Comm)

Background

This case concerned an application for the summary determination of three issues relating to the joint liability of co-guarantors in circumstances where some, but not all, were later discharged from the obligation.

The Claimant was a company to whom various debts were owed by a third-party Company ('the Company') pursuant to sub-contracts for building works carried out by the Claimant between 2016 and 2019. The Company, however, did not pay promptly, stating that the Company itself had not been paid by the head contractors, several third-party SPVs.

Accordingly, on 10 November 2017, the Defendant Director of the Company entered into a Guarantee Agreement jointly with two of those who had set up the SPVs, Messrs P, and I ('the Co-Guarantors'), to discharge the Company's outstanding liabilities ('the 2017 Guarantee').

In January 2019, the Claimant entered into further agreements with the SPVs to restructure the Company's debts ('the 2019 Agreements'); and two further Guarantee Agreements with the Co-Guarantors ('the 2019 Guarantees'). The first of the 2019 Guarantees released and discharged Messrs P and I from the 2017 Guarantee, but expressly held that the Defendant was not so released. The second of the 2019 Guarantees released Mr I's liability under the 2017 Guarantee but did not contain an express reservation in respect of the Defendant's liability under the 2017 Guarantee.

The Claim, Defence, and Summary Judgment Application

By letters before action dated 25 February 2020 and 1 April 2020, the Claimant made written demand under the 2017 Guarantee for payment in the total sum of '826,869.78. The present proceedings were subsequently issued.

Amongst the points taken by the Defendant in his Defence was that the effect in law of releasing the Co-Guarantors to the 2017 Guarantee under the 2019 Guarantees was to discharge the Defendant of liability under the 2017 Guarantee.

The Claimant disputed that this was the legal effect of the 2019 Guarantees. It initially issued an application for summary judgment on the entire claim, but by the time of the hearing had refined its position so as to seek summary determination of the following three issues:

1. whether the effect of the 2019 Guarantees was to release the Defendant from the 2017 Guarantee;
2. the effect of the 2019 Agreements on provisions relating to caps on the Guarantor's liability contained in the 2017 Guarantee;
3. the effect of a clause of the 2017 Guarantee relating to raising a dispute as to...