ING Lease (UK) Ltd. v Harwood

This is an appeal from that part of a judgment of Michael Harvey QC, sitting as a Deputy High Court Judge, handed down on 10^th October 2007, by which he gave judgment against the appellant (Mr Harwood) for £337,984.68, together with interest. He found that Mr Harwood was liable under a personal guarantee dated 31^st March 2003 but signed in about September 2003 for what remained of a debt known as “the Coin TV debt”. That debt was originally in the sum of £1,510,830.41 and owed by Coin TV Limited to the respondent Bank (ING), but taken over by a company in the Group of which Mr Harwood was Chief Executive and majority shareholder. There was an issue relating to the construction of the guarantee in relation to a different sum on which the Deputy Judge found in Mr Harwood’s favour, with which we are not concerned. As regards the Coin TV debt, the position of Mr Harwood before the judge was that this was originally a debt owed to the Bank by Coin TV, that it was always clear as between ING and himself that, although he was prepared for one of his companies to take over the business of Coin TV including the debt, there would be no requirement for a personal guarantee, and that the personal guarantee which he accepted he signed did not cover the Coin TV debt.

Before the Deputy Judge he put that case in a number of ways, as spelled out by the judge in paragraph 7 as follows:-

“(1)

that the guarantee on its proper construction does not cover any monies owing in respect of the Coin TV debt;

(2)

alternatively that the guarantee contains an implied term that it does not cover any monies owing in respect of the Coin TV Debt.

(3)

that there was a collateral contract whereby ING agreed that, in consideration of Mr Harwood procuring HDUK to enter into 1 August 2002 agreement, Mr Harwood would not be personally liable in respect of the Coin TV debt;

(4)

that the guarantee should be rectified so that it provides that there shall be no guarantee in respect of monies owing in respect of the Coin TV debt. The precise wording sought is set out later in this judgment;

(5)

alternatively, that there is an estoppel by representation and/or a promissory estoppel whereby ING are estopped from claiming under the guarantee in respect of monies owing in respect of the Coin TV debt;

(6)

alternatively, that there is an estoppel by convention such that ING are estopped from claiming under the guarantee in respect of monies owing in respect of the Coin TV debt.”

The Deputy Judge found that in the original negotiations in the period May to July 2001 Mr Harwood did make clear that he was not prepared to give a personal guarantee, and that ING, represented by Mr Tagg and Mr Dramby, indicated they were prepared to proceed with the negotiations on that basis but he found that these negotiations were tentative and did not lead to any binding agreement, and (putting it shortly) that things had moved on by the time he signed the guarantee in September 2003, and ruled against Mr Harwood on all grounds.

On Mr Harwood’s application for permission to appeal, Rix LJ refused to grant leave to argue construction, implied term or rectification. He gave permission to appeal, and indeed granted leave to amend if necessary the grounds of appeal, to raise arguments contained in Mr Harwood’s skeleton. In granting permission he said this:-

“12.

Looking at this case in an overall way, it contains a small number of critical facts. The first is that, in the 2001 conversations, there was clarity on the part of Mr Harwood as to the terms upon which he would undertake to take over the Coin TV debt and evidence of an agreement that the absence of any personal guarantee would be a condition of successful negotiations leading to such a deal. But there is uncertainty reflected by the judge’s adverse findings as to what those conversations amount to in law. The second clear matter is that in August 2002 the Coin TV debt was taken over under the ING Agreement and that there was, at that time, no personal guarantee required of Mr Harwood. Interesting enough, as I have mentioned, that was despite the fact that the internal ING documents seemed to require a personal guarantee. The judge relied upon those internal documents as supporting ING’s case, but I can see the argument that, since they were unknown to Mr Harwood, those documents are at best equivocal or a double-edged sword or might even, given the facts of the ING Agreement and the absence of any personal guarantee, assist Mr Harwood.

13.

The third plain matter is that in September 2003 Mr Harwood did enter into a bank guarantee which included the Coin TV debt; but fourthly there is the judge’s finding that nothing was said by ING at that time save that this was a tidying up exercise.

14.

Those essential facts raise, to my mind, interesting and important questions of law as to the effect of the guarantee – admittedly under Mr Harwood’s signature – and ING’s ability to enforce it against the defences raised by Mr Harwood. If the bank guarantee had been an insurance contract under the doctrine of good faith, then one could well understand that there would be a duty to speak on the part of the presenter of the guarantee, to indicate that, contrary to previous circumstances and discussions, the bank was now requiring a guarantee which encompassed the Coin TV debt itself. One could well understand that argument. So the question arises as to whether, in the absence of an insurance contract duty of good faith, there is nevertheless a duty to speak in the merest circumstances, against the background of the alleged estoppel; and indeed whether, even in the absence of a duty to speak, the presence of the alleged estoppel would succeed in providing a defence for Mr Harwood. . . .”

Mr Moriarty QC, appearing for Mr Harwood, made the critical facts set out by Rix LJ his starting point in his arguments before us. Mr Howe QC’s starting point for ING was to seek to demonstrate that the critical facts emphasised by Rix LJ and by Mr Moriarty, on a full analysis of the judge’s judgment, simply miss the effect of other critical findings particularly as to the continued potency of any understanding reached in 2001 and Mr Harwood’s own state of mind when he signed the guarantee.

It is convenient to adopt the judge’s description of Mr Harwood and his Group and its relationship with ING:-

“2.

Mr Harwood is the former Chief Executive Officer of Homebuy Group Plc. In 1995 he started a business called Peoples Choice Rentals Limited (“PCR”) which was engaged in renting domestic appliances (washing machines, televisions etc) to customers in the “sub-prime market”, that is to say to customers who tended to have a low income, and were unlikely to have bank accounts or access to bank credit facilities. The business expanded, through the acquisition of other companies and internal reorganisation, and became known as the Value Rentals Group, and more recently the Homebuy Group. In August 2004 Homebuy Group Plc was admitted to the Alternative Investment Market. Unfortunately on 29 September 2006 the company was placed in administration.

3.

ING is a finance house which has over the years provided finance to PCR and many of the companies in the Value Rentals Group and/or the Homebuy Group. Generally the finance was provided pursuant to Block Discounting Agreements whereunder ING would purchase from the company concerned blocks of contractual rights (i.e. the contractual rights of the company pursuant to its rental contracts with its individual customers).”

The judge describes the background to the guarantee from paragraphs 9 to 30 of the judgment. He then considers in different sections and in great detail the evidence as to what was said in May to July 2001 (paragraphs 31 to 42), and what was said about a personal guarantee in any subsequent discussions (paragraphs 43 to 64). Between paragraphs 65 and 69 he deals with whether there was any contract concluded in 2001. Since his conclusions on the facts in those paragraphs are not challenged I can I think fairly summarise the important matters in this way.

ING initially provided a block discounting facility of £500,000 to PCR. Mr Harwood’s main point of contact at ING was Mr Tagg, assistant director of Block Discounting, and he also had contact with Mr Tom Dramby, head of risk, and Tracey Thurstons, who was a credit manager. On 10^th January 1999 Mr Harwood gave a personal guarantee in respect of money owing by PCR.

Business expanded, VRG was formed in May 2000. The facility was probably some £1.5m and Mr Harwood was wishing to expand into the hire purchase of domestic equipment and not simply the rental of such equipment.

In May 2001, one of ING’s customers, Coin TV, was experiencing difficulty, owing ING some £500,000 under block discounting agreements. Coin TV provided TVs to customers who paid rental via coin meters, and the rental agreements should have been provided to ING by way of security. ING’s security was in doubt because many rental/HP agreements intended to have been assigned to ING had also been assigned elsewhere. ING were advised by a Mr Rendle of Baker Tilly to place Coin TV in provisional liquidation but that there was no point in that, unless there was someone to run Coin TV during a provisional liquidation and someone who would buy Coin TV at the conclusion of the same.

Discussions took place in May/June 2001 between ING and Mr Harwood with a view to one of Mr Harwood’s companies assisting. It should be noted, as held by the judge, “that the discussions in May and June were necessarily tentative because of the considerable uncertainty that existed” [see paragraph 13]. It was in relation to these discussions that the judge was to find, after a detailed consideration of the evidence, that he was satisfied:-

“42.

I am satisfied on all the evidence that there were one or more discussions in the period May to July 2001 during which Mr Harwood made it clear that if one of his companies acquired the Coin TV business and took over the Coin TV debt he was not prepared to give a personal guarantee in respect of that debt, and that Mr Dramby and Mr Tagg indicated that they were prepared to proceed with the negotiations on that basis. The gist of the discussion was along the lines Mr Harwood described to me, namely that he had said to ING that “there was no way I would personally guarantee this”. Whether these discussions amount to a contractual agreement is a matter which I shall have to consider below.”

The discussions bore fruit in that Coin TV was placed in provisional liquidation in July 2001. Approval was given by the court to a transfer of assets from Coin TV’s affiliate companies to Coin TV, so that all the business and assets were in the one company. Shortly after July 2001 one of Mr Harwood’s companies was appointed to run the Coin TV business.

In October 2001 ING increased the credit limit of the Value Rental Group from £1.5m to £3.5m to enable the Group to acquire certain TV rental companies and also “to buy the business of Coin TV and take over the Coin TV debt”. PCR (one of the Group) it seems also purchased in October 2001 for £20,000 a debt due from Coin TV to Hitachi Credit (UK) plc of £623,995.35.

By January 2002 the Coin TV debt owed to ING had increased to £1.4m. In January 2002 Mr Harwood sought an increase in the facility available to the Value Rental Group to £4.9m. This was pursued further in April for a slightly larger amount and the facility was raised to £5m to enable the Coin TV business to be purchased and the Coin TV debt to be taken over.

Also in about April 2002 Mr Harwood gave further personal guarantees in respect of all monies owing by VRG and three other group companies.

At the end of July, beginning of August 2002, three agreements were entered into in relation to the purchase by a recently formed Group company, then named Etchco 1133 Ltd, of the business of Coin TV. That company became Homebuy Direct (UK) Ltd, and I shall refer to it hereafter as HDUK. By one of the agreements, dated 1^st August 2002, HDUK took an assignment from ING of the debt due to it from Coin TV (at that time about £1,510,830.41) on terms that it would undertake to pay the same to ING on the terms provided for in the agreement. The terms are important. First, it provided for payment of interest at 1.5% above base rate which was a preferential rate. Second, it provided by clause 3.2.1 for no repayment of capital before 31^st March 2004; by 3.2.2, that before that date ING and HDUK might agree to extend that date; by 3.2.3 that if no agreement could be reached the repayment of capital would be by 36 monthly instalments, and by 3.2.4 that on any due date for payment HDUK could, instead of paying an instalment, provide security in the form of rental contracts reasonably acceptable to ING. By clause 4.2 HDUK was required to procure that each of the companies within the VRG Group guarantee the obligations of HDUK under the agreement.

Mr Moriarty places great emphasis on the fact that no personal guarantee from Mr Harwood was required under this agreement. Mr Harwood’s evidence was that there were discussions at this time about a personal guarantee, but the judge rejected that evidence [see paragraph 64] and found that between July 2001 and the making of this agreement, and indeed right up to September 2003, there were no relevant discussions between Mr Harwood and the representatives of ING about Mr Harwood not being required to provide a personal guarantee in respect of the Coin TV debt.

Mr Moriarty challenges that conclusion and submits that the fact that a personal guarantee of the Coin TV debt was not sought at this time supports the conclusion that further discussions did take place, to the effect that Mr Harwood was not prepared to provide a personal guarantee or supports the conclusion that whatever was said in July 2001 was still the effective basis on which agreements to take over the Coin TV business were being made. I will return to this point.

During the latter part of 2002 and early 2003 the Value Rentals Group underwent reorganisation. The details do not matter. By the end of March 2003 it would seem that HDUK had entered into its own Block Discounting Agreement. It was, furthermore, making profits. It had a turnover of £488,000 and pre-tax profit of £197,000 for the 9 months ending 31 December 2002.

In 2003 composite guarantees were entered into between the various companies in the Group including HDUK. This had been foreseen by the 1^st August 2002 Agreement. The effect would appear to be that, by virtue of Mr Harwood’s personal guarantee of companies other than HDUK, he became in any event indirectly liable for the Coin TV debt. This seems to me to have been likely to have been in the judge’s mind, since he records the making of the composite guarantee. But it does not seem to have been a point raised expressly at the trial. When raised in the Court of Appeal with Mr Moriarty his reaction was to submit that, since the understanding between ING and Mr Harwood was that the Coin TV debt would not be covered by Mr Harwood personally, that would have included an exclusion of that liability via the composite guarantees. This might be putting the cart before the horse because a possible question is what impact the giving of composite guarantees, backed by Mr Harwood’s personal guarantee, would have on the likelihood of there being any common understanding that he would not give a personal guarantee.

In September 2003, at the request of Mr Tagg, Mr Harwood signed the all monies guarantee on which ING brought their claim. The judge found it was common ground that there were no discussions about excluding from its ambit any liability in respect of the Coin TV debt. Mr Tagg, who came to give evidence for Mr Harwood at the trial, in his evidence “said that the conversation would have been along the lines of needing to tidy up the documentation. He effectively agreed in cross examination that there were no relevant discussions at this time.”

Mr Tagg furthermore had considerable difficulty in explaining how, in ING’s internal documentation relating to Mr Harwood’s companies seeking finance, including finance to enable the Group to take over the Coin TV debt, there were consistently references to a requirement for Mr Harwood’s personal guarantee.

The Guarantee was an all monies guarantee which provided, so far as material, as follows:-

“IN FAVOUR OF:- ING LEASE (UK) LIMITED, as above (“ING”)

“NOW IT IS AGREED as follows:-

1.1

In this Guarantee (a) “the Company” means”

1)

Value Rentals Group Limited

2)

Homebuy Direct Limited

3)

Blackfriar Finance Limited

4)

Homebuy Direct (UK) Limited

. . .

2.1

In consideration of ING agreeing to make available facilities or other accommodation for so long as it may think fit to the Company the Guarantor hereby unconditionally and irrevocably guarantees to ING the due and punctual payment and discharge by the Company of, and, if for any reason the Company does not make such payment or discharge, promises to pay or discharge or cause to be paid or discharged on demand of ING, all monies, obligations and liabilities whether actual or contingent now or hereafter due, owing or incurred to ING by the Company in whatever currency denominated whether alone or jointly and in whatever style, name or form and whether as principal or surety including all liabilities under guarantees or indemnities or any instruments whatsoever from time to time entered into by ING for or at the request of the Company, together with interest (as well after as before judgment) to the date of payment at such rates and upon such terms as may from time to time be payable by the Company (or which would have been so payable but for the liquidation or other incapacity of the Company) commission, fees and other charges and all legal and other costs, charges and expenses incurred by ING in relation to the Company or this Guarantee on a full indemnity basis (all such sums together, the “Guaranteed Amounts” which expression shall include any part therefore).”

The reference at the trial by Mr Tagg to tidying up led Mr Harwood to adopt that description in his evidence. In final speeches before the judge that led Counsel for Mr Harwood to suggest that at the time Mr Tagg represented that it was “a tidying up exercise” and to rely on that additional point as assisting an argument that there was a duty to speak. In his judgment the judge does not deal with any separate argument resting on the use of the words “tidying up” or with any argument about a duty to speak. This is perhaps not surprising since there was no pleaded allegation in relation to use of the words “tidying up” or any pleading that ING had been under a duty to speak. It was not pleaded, for example, that Mr Harwood was put off reading the document carefully in reliance on some representation that it was simply to “tidy up” and not to extend liability.

Rix LJ, when granting permission, may also have been under the misapprehension that some reliance could be placed by Mr Harwood on a representation about tidying up as appears from the passages from his ruling quoted above. In the result some reliance is placed on a representation from Mr Tagg about tidying up in the amended grounds.

Since there was no allegation in the pleadings that a representation was made about “tidying up” and since indeed I am doubtful whether the evidence actually went as far as Mr Harwood saying there was a representation to that effect on which he relied, I would not allow reliance on such a representation as having in any event any independent life of its own. It may go to Mr Tagg’s state of mind as to what he thought he was doing, and indeed to Mr Harwood’s state of mind as to what he thought he was doing, but no more.

If Mr Moriarty’s case on behalf of Mr Harwood, resting as it does on one or other of estoppel by convention, promissory estoppel, collateral contract or duty to speak, is to have any chance of success he must establish that the state of mind of Mr Harwood, at least when he signed the guarantee, was that he was relying on there being an understanding that no personal guarantee was intended to cover the Coin TV debt.

In considering what the evidence was as to that state of mind there are points which occurred after September 2003 which have an influence. In particular when, in September 2005, Mr Harwood negotiated new finance from Royal Bank of Scotland, the Group sought the release of the security retained by ING in respect of the borrowings of the companies including HDUK. As part of that exercise they sought the return of security which had been supplied under 1^st August 2002 Agreement in relation to the Coin TV debt. The result of the refinancing was to be that the only outstanding debt remaining due to ING was about £755,000 of the Coin TV debt due from HDUK [see minutes of 8^th September 2005]. Some five further instalments were paid reducing the sum to that ultimately claimed under the Guarantee. ING wished to be sure that the composite guarantees and Mr Harwood’s personal guarantee remained effective, even though security had been released by ING. They wrote to Mr Harwood in the following terms:-

“As you will be aware, we are releasing the security that we retained in respect of our agreement with Value Rentals Group Limited, Homebuy Direct Limited and Blackfriar Finance Limited (the “Companies”) and also re-assigning to the Companies all leases, hire purchase and conditional sale agreements that have previously been assigned to us by the Companies. In consideration of our agreeing to do so, by signing this letter you agree that notwithstanding the aforementioned release of security and re-assignment, the Guarantee shall remain in full force and effect and shall not be affected or discharged by the transaction mentioned.”

Mr Harwood undoubtedly read the letter because he wished a paragraph to be added to the effect that an acceptance by him signing would not extend the guarantee. ING would not add the paragraph and Mr Harwood signed. He thus appeared to accept that the guarantee covered the Coin TV debt, that being the only debt to which the guarantee could by that time apply.

Mr Howe QC for ING accepts that ING have not argued that this letter amounts to an independent acceptance of liability. They rely on the letter simply to rebut any suggestion that it was Mr Harwood’s understanding at the time of signing the guarantee in September 2003 that it did not include the Coin TV debt.

As I have indicated, Mr Moriarty submits that Mr Harwood is entitled to succeed on one or other of the following legal bases - promissory estoppel, estoppel by representation, estoppel by convention, collateral contract and/or duty to speak. I hope I shall be forgiven for not exploring each possible way in which Mr Moriarty would seek to fit his case into one or other of the above pigeon holes but I do not do so because his submissions on the law are entirely dependant on certain findings of fact, and in truth the issues between the parties relate to the facts.

Mr Moriarty submits that the critical facts are a common understanding reached in mid-2001 that, if one of Mr Harwood’s companies took over the Coin TV debt, Mr Harwood would not be required to give a personal guarantee; that whether or not some binding contract was reached in mid-2001, that was the understanding on which the agreement of 1^st August 2002, under which his company HDUK took over the Coin TV debt, was made (as exemplified by the fact that no personal guarantee was sought or given); that was still the understanding of both ING and himself, or would have been their understanding, if either Mr Tagg or Mr Harwood had thought about it when he signed the guarantee in September 2003. So, he submits, the understanding reached in 2001 was potent right up until September 2003. He does not submit that Mr Tagg, on behalf of ING, was attempting to get a personal guarantee knowing that if it was explained what was being sought Mr Harwood would not sign it. He submits that Mr Tagg was under the same assumption as Mr Harwood or would have been if either had thought about it, i.e. that there was no intention that the guarantee would cover the Coin TV debt.

Mr Howe accepted that if Mr Moriarty could make good his case, that it was the common understanding of ING and Mr Harwood at the time the guarantee was signed in September 2003 that the Coin TV debt should not be included, or indeed if it was not actually present in their minds that, if either had applied their mind to it, it would have been their common understanding that the guarantee was not intended to cover the Coin TV debt, that the law would be likely to provide a remedy so as to exclude liability for the Coin TV debt. He would accept that if Mr Tagg’s intention was to obtain a guarantee knowing that Mr Harwood would not sign it if he knew that might provide a duty to speak, but that was not the case he had to meet. He submitted it was unnecessary to get into any complex legal analysis because, on the judge’s findings of fact, Mr Moriarty simply cannot establish the common assumption (or indeed a common assumption if Mr Tagg and Mr Harwood had thought about it), and he submits that this court is in no position to reverse those findings of fact.

The findings on which Mr Howe relies are that any discussions in May to July 2001 were tentative; and that there were no relevant discussions after July 2001. The judge’s reasons for reaching this last conclusion I ought to set out:-

“(1)

the weakness and lack of particularity of any evidence of such representations;

(2)

the numerous references in the credit applications and associated documents to a requirement for a personal guarantee including (a) the absence of any references to an exclusion in respect of the Coin TV debt; and (b) the express references to the inclusion of the Coin TV debt (see paragraphs 49 and 50 above). These references point to the strong likelihood that no such representations were made.

(3)

The different commercial context from the period May – July 2001. Whereas the viability of the Coin TV business was very doubtful in the initial period (May – July 2001), thereafter the position steadily improved. By October 2001 Mr Harwood was confident that he could turn Coin TV into a viable business in 3 years. Hitachi had surrendered its debt for a nominal sum of £20,000. By March 2002 most of the legal hurdles had been overcome. Although I have not been given full financial details it is apparent that by June 2003 HDUK had a turnover of about £488,000 (for the 9 months ending 31 December 2002) and a pre-tax profit of £197,000 (page 469).

(4)

Mr Harwood's wish to expand the Group. I am satisfied that this was one of his major aims. In the space of some 3 years (from August 2001 to August 2004) he succeeded in acquiring other businesses, reorganising his Group, further reorganising his Group under a public limited liability company (Homebuy Group Plc) and gaining admission to the Alternative Investment Market. He undoubtedly wished to retain the goodwill and confidence of ING (and indeed his other lenders) and as HDUK started to prosper would have had little concern about giving a personal guarantee.”

I would myself add that to agree to an inter-company composite guarantee and a personal guarantee of the companies which are parties to that composite guarantee is inconsistent with some understanding that no personal liability will be undertaken and inconsistent with ING having any understanding that Mr Harwood was not prepared to take on any personal liability. Mr Moriarty complained that no-one had taken the point at the trial that there was some significance in the inter-company composite guarantee which would itself give rise to a personal liability on Mr Harwood through such personal guarantees of the companies which already existed. But when faced with the point in the Court of Appeal he suggested that the understanding would be that the Coin TV debt would somehow be excluded from Mr Harwood’s personal liability through this route.

Mr Harwood in his evidence always accepted that inter-company guarantees would be given, but he did not explain how that did not have an impact on any personal guarantee he gave of a company which itself guaranteed HDUK’s liabilities and it was not part of his evidence that he thought there was some understanding which would carve out liability for the Coin TV debt via this route. It seems to me that the giving of a composite guarantee and the existence of a personal guarantee of a company that was guaranteeing HDUK casts serious doubt on the existence of any suggested common understanding and if there was any understanding as to the certainty of what it was.

What about the continued potency of any understanding on which Mr Moriarty’s argument depends? In my view the judge has not overlooked (as Mr Moriarty suggested) the possibility that a common understanding reached in May to July 2001 might still be potent as at 1^st August 2002 or, more relevantly, in September 2003, even if no contract was concluded. His findings that the discussions were “tentative” in May to July 2001 and that from October 2001 there was a different commercial context, as compared with May to July 2001, go to that very point. Indeed in the paragraphs I am about to quote he says that “they [the May to July discussions] had become past history”. He clearly had the point in mind.

Mr Moriarty’s critical facts assume the continued potency of any understanding and it is an important aspect of the facts found by the judge that such tentative understanding as there may have been did not continue up to August 2002 and, more particularly, up to September 2003. Those findings by the judge are difficult for Mr Moriarty to attack in the Court of Appeal, founded as they are to a large extent on the impression given by witnesses and founded as they are on contemporaneous documents which do nothing to negate the findings.

The judge’s ultimate assessment as to the state of mind of Mr Tagg and others at ING and the state of mind of Mr Harwood are key. They are contained in paragraphs 82 to 84. They were findings made in the context of rectification but nonetheless they are significant:-

“82.

Mr Harwood has failed to prove that Mr Tagg had an intention, at the time when the guarantee was prepared in about March 2003 and/or signed in September 2003, that such a term should be a term of the guarantee, or to put the matter more generally, that the guarantee should not apply to the Coin TV debt. There are essentially 3 reasons:

(1)

the application forms prepared by Mr Tagg are inconsistent with any such intention. I have considered these in detail in the earlier paragraphs of this judgment.

(2)

There is a complete absence of any documentary evidence suggesting that this had been his intention.

(3)

The discussions in mid 2001 had taken place 2 years previously. They had become a matter of past history.

83.

If I am wrong in concentrating upon the intention of Mr Tagg then Mr Harwood has equally failed to prove that any other relevant representative of ING had the necessary intention. There is no evidence that Mr Dramby, Miss Thurstans or Mr Derby (who was also a member of the UK Credit Committee) had such an intention. I cannot infer that any intention they had in mid 2001 remained their intention 2 years later. The Dutch Credit Committee was presumably comprised of representatives of ING's parent company. If the Dutch Credit Committee can properly be regarded as an agent of ING then it is clear that they intended that there should be a personal guarantee, and there is nothing to indicate that they intended it to exclude liability in respect of the Coin TV debt.

84.

For completeness I should add that I am not satisfied that Mr Harwood had an intention, during the period from about March 2003 until the signing of the guarantee in September 2003, to exclude liability in respect of the Coin TV debt. I think that the truth is that events had moved on since mid 2001, his Group had undergone substantial reorganisation, and he was happy to give a personal guarantee without pausing to consider whether he could or should seek to have it limited in any respect.”

Is there any basis on which the above assessments by the judge can be attacked? As regards his assessment of Mr Tagg’s state of mind apart from Mr Tagg’s own evidence in the witness box there is nothing to contradict the judge’s assessment. As regards his view of Mr Harwood’s state of mind there is one matter not emphasised by the judge which supports the judge’s conclusion, relied on by Mr Howe. I am referring to the letter dated 10^th March 2006 signed by Mr Harwood confirming the guarantee. Mr Moriarty submitted that that letter cannot be taken as evidence of Mr Harwood’s state of mind in September 2003. If, he submitted, one assumes that by March 2006 different personnel within ING thought the guarantee covered the Coin TV debt, and if one assumes Mr Harwood appreciated that fact but did not want to put in jeopardy his refinancing arrangements, he was entitled to sign the letter, hoping that no one would rely on it as bringing about some independent confirmation of liability under the guarantee or hoping that, if they did, he would succeed in arguing that the guarantee could not change its character by his confirmation. In fact no-one has relied on the letter as providing an independent confirmation of liability and it has not been necessary to argue out what would have been the result if they had. But, submits Mr Moriarty, the letter simply does not provide evidence of Mr Harwood’s state of mind in September 2003 when the guarantee was signed.

Mr Moriarty’s point is comprehensible as a possibility as to what happened and he can add that the judge did not place great reliance on the letter of 10^th March 2006 in considering what Mr Harwood’s state of mind was when he signed the guarantee. But, in my view, if Mr Harwood’s state of mind was at all times that it was understood that the guarantee was never intended to cover the Coin TV debt and that ING representatives knew this, it seems to me very strange that, at the moment when the only matter on which ING were seeking confirmation that the guarantee applied was the Coin TV debt, he did not say that.

In my view, the finding by the judge as to Mr Harwood’s state of mind when he signed the Guarantee in September 2003, which, in effect, holds that Mr Harwood did not establish that he relied on the existence of an understanding between himself and Mr Tagg that no personal guarantee would cover the Coin TV debt, is unassailable.

It follows that in my view the Guarantee is enforceable in accordance with its terms and I would dismiss the appeal.

I agree.

I also agree.