Lovett & Anor v Carson Country Homes Ltd & Ors

On 21 January 2009, the applicant in these proceedings appointed, or reportedly appointed, joint administrators in respect of a company called Carson Country Homes Limited, which I will call “CCH”. Such appointment was made by Barclays Bank plc (“the Bank”) pursuant to the powers conferred by a debenture dated 10 June 2008 and purportedly made by CCH in favour of the Bank.

Following their appointment, it has been asserted by Mr Edward Carter, a director and shareholder of CCH, that a signature on the debenture purporting to be his is not his signature and was forged. It is alleged by Mr Carter that his purported signature was forged by Mr Andrew Jewson, also a director and shareholder of CCH. It is common ground that Mr Jewson’s signature, which also appears on the debenture, is a valid and genuine signature.

By reason of this allegation of forgery, it is said on behalf of Mr Carter that the debenture was and is a nullity, and in consequence that the administrators have not been validly appointed. The administrators thus started these proceedings by application notice issued on 11 March 2009 in order that the validity or otherwise of their appointment may be declared. In the event that it was decided that they were not validly appointed, they sought consequential relief, including an indemnity from the Bank against all liabilities incurred by them by reason of aborted appointment.

In the nature of things, the matter has had to come on before the Court with some speed. Various directions have been given at preliminary hearings by various judges in that regard. Extensive evidence has been filed. However, no directions were given for statements of case, understandably no doubt given time constraints but, with hindsight at least, rather unfortunately given that the allegations variously include forgery, oral agreements, estoppel and so on.

At the conclusion of the three-day hearing before me, on 8 April 2009 I announced my decision, which was to the effect that the appointment of the applicants as administrators of CCH was valid and stood. I gave a consequential direction for extending time to the administrators for sending out proposals for the purposes of schedule B1 of the Insolvency Act 1986. I indicated that I would give my reasons for my decision at a later date, and these are those reasons.

In essence, the issues as summarised by Mr Allison, counsel on behalf of the applicants, were these. First, did Mr Jewson forge the purported signature of Mr Carter to the debenture? Second, if the debenture was not validly executed, nevertheless is it still valid in favour of the Bank by reason of section 44 of the Companies Act 2006? Third, had Mr Carter given authority to Mr Jewson to enter into the debenture on behalf of CCH? Fourth, was Mr Jewson held out by CCH as having authority to submit the executed debenture to the Bank as complying with all due formalities? Fifth, is Mr Carter, in any event, precluded by acquiesence or estoppel from, as against the Bank, challenging the validity of the debenture and the validity of the applicants’ appointment as administrators?

In reality, there is a pronounced overlap between a number of these issues as so formulated. Further, the reality is that, whilst these proceedings are indeed concerned with the validity or invalidity of the appointment of the administrators, nevertheless these proceedings are a part of a much wider dispute between Mr Carter and Mr Jewson as shareholders in CCH and may well have a bearing on any prospective proceedings that may hereafter arise whether under section 994 of the Companies Act 2006 or by some other route: unless, in the meantime, some sensible compromise between Mr Jewson and Mr Carter is concluded.

At the hearing before me, aside from the representation of the administrators by Mr Allison, the Bank was represented by Miss Stonefrost, Mr Jewson was represented by Mr Prentis, and Mr Carter was represented by Mr Hill-Smith. CCH itself and the Registrar of Companies, which had also been joined as parties, were not represented. I am grateful to all counsel for their arguments.

I turn to the background. CCH was incorporated on 21 August 2003 as a property development company. Its principal assets were to become The Chapel, Tower Hill, Witney, comprising two offices held on commercial leases, and a property at Chinnor, Oxfordshire, comprising a number of flats and retail units. The company at the relevant times had two directors, Mr Andrew Jewson and Mr Carter: the company name is, in fact, an amalgam of their two surnames. Mr Jewson was also the company secretary. The shareholders were three, a company called SGJ Limited, which I will call “SGJ”, which owned 100 ordinary shares, Mr Jewson, who owned 32 ordinary shares, and Mr Carter, who owned 68 ordinary shares and, I think, also an A share. As to SGJ, that was a company owned by the Jewson family. Its directors were Mr Andrew Jewson and Mr Stanley Jewson, his father. Its shareholders were Mr Andrew Jewson, who had 46,014 shares; Mrs Long, his sister, also with 46,014 shares; and Mr Stanley Jewson, with 16,235 shares. SGJ itself had varying substantial commercial interests including, in particular, property holdings and developments. SGJ had a long-standing banking connection with the Bank, and the Bank were also CCH’s principal bankers from its incorporation.

There were other connected companies, in particular a company called Carson International Limited, which was involved with property development in Turkey. 94 percent of the shares of Carson International Limited were legally registered in the name of Mr Carter, who was also a director. But, by written declaration of trust dated 5 May 2006, he acknowledged that he held 70.2 percent of those shares on trust for SGJ. It was common ground that Mr Carter devoted much of his time to Carson International, involving himself in its various villa developments in Turkey. Another company again was Jewson Europe Limited, with which Mr Andrew Jewson was more concerned, being a director and 75 percent shareholder, another individual holding the remaining 25 percent of the shares. That company, it would appear, was focused on property development in Spain and, in particular, a development in Ibiza. In addition, Mr Andrew Jewson had an active involvement in the running of SGJ itself, albeit his father, a very experienced businessman, interested himself closely in that company.

The evidence before me clearly showed that Mr Andrew Jewson was, from inception, entrusted with the handling of all administrative and financial matters relating to CCH and, indeed, was styled its finance director. Mr Carter concerned himself more with the practicalities and operational aspects of the property developments themselves and with the operations in Turkey of Carson International. He frequently, along with his son, who was also a director of Carson International, visited Turkey for that purpose. Mr Andrew Jewson, I should add, has some background training in accountancy matters. Mr Jewson also, by mutual consent, conducted all dealings with the Bank on behalf of CCH as well as on behalf of SGJ. Indeed, the evidence showed that Mr Carter at no stage during CCH’s operations had any meeting, even though on occasion invited, with anyone from the Bank, which thus, in effect, only knew him as a name. Mr Carter was, throughout, content to leave all dealings on behalf of CCH with the Bank to Mr Jewson.

In this regard, it is important to note that CCH and, thence, Carson International were, to a significant extent, dependent for its funding on SGJ itself. CCH did have direct borrowings from the Bank. In particular, it had by 2008 some £300,000 outstanding in total borrowed from the Bank, £200,000 relating to The Chapel and £100,000 relating to the Chinnor property. There were development loans from the Bank and security given to the Bank by way of legal charges on these properties. It appeared, all the same, to be common ground before me that, even with current adverse market conditions, there was and is a reasonably significant equity in both property developments.

In addition, however, CCH borrowed on an unsecured basis very substantial sums on inter-company loan account from SGJ. Thus the unaudited accounts of CCH for the year end 31 December 2007 showed a debt due to SGJ of £1,765,891. The amount outstanding varied from time to time; at one stage, in October 2008, it had exceeded £2 million. At 14 January 2009, it stood at £1,611,876. CCH in turn had lent on money to Carson International and Jewson Europe: these sums stood at £737,130 and £546,757 respectively as at January 2009.

The evidence indicates that, until October 2008, the relationship between Mr Andrew Jewson and Mr Carter worked relatively well, each placing trust in the other. In around February 2008, there had been discussions about splitting up CCH and dividing the assets or proceeds of the assets between the shareholders. Mr Carter, who was at that time receiving a salary of £40,000 per annum from CCH - Mr Jewson, I add, received no salary as such - was looking for greater rewards, and this seems to have triggered the discussions. In discussions in May 2008, the company, CCH, was being talked of as being worth in the region of £1 million to £1.2 million subject to important caveats about cash flow and property values holding up. But, as I understand it, those discussions did not disrupt the essentially friendly and trusting relations between Mr Jewson and Mr Carter.

By spring 2008, however, the Bank was evidently becoming very concerned. By April 2008, the Bank had lent some £8.7 million to SGJ. It had no debenture over the undertaking of SGJ although it did, as I understand, have four separate legal charges over various properties belonging to SGJ. At that time, SGJ had two particularly large developments, in Cheltenham and in Westonbirt, Gloucestershire. Because of market conditions, both were struggling, and overall SGJ was not, at that time, able to service the interest due on its debt to the bank. Mr Glenn Taylor, an associate director of the business support division of the Bank based in London, thus became involved. He had a number of discussions with Mr Andrew Jewson. Mr Taylor was particularly concerned to learn that, out of the funding provided by the Bank to SGJ, some £1.9 million had at that time been lent on by SGJ without any security to CCH, which in turn had lent on significant sums, again on an unsecured basis, to Carson International and to Jewson Europe.

The Bank thus discussed this position on a number of occasions with Mr Andrew Jewson. Mr Taylor agreed with him that the moneys lent to Carson International by CCH should be repatriated to CCH as and when properties under construction in Turkey were completed and sold in order to reduce the indebtedness of Carson International to CCH and, in turn, of CCH to the Bank. Other proposals to reduce SGJ’s debt by sale of the Cheltenham and Westonbirt ventures and otherwise were also made. Mr Taylor’s most particular concern, however, at that time related to the indebtedness of Carson International and Jewson Europe to CCH over which, as he put it in his first witness statement, the Bank had the “least control”.

There was, in the event, a meeting at the Bank’s Borehamwood offices on 5 June 2008. Present were Mr Andrew Jewson, Mr Taylor and Mr Trevor French, the Bank’s relationship director for SGJ and CCH. At that meeting, Mr Taylor, as he explains in his unchallenged first witness statement, informed Mr Jewson in his capacity as director of CCH that he required a guarantee of £1.9 million in respect of the indebtedness of SGJ to the Bank, that being a sum representing the then inter-company account position as between CCH and SGJ. He also requested a debenture over the assets and undertaking of CCH. Mr Andrew Jewson, in his capacity as director of CCH, agreed to this proposal.

The Bank was clearly quite pressing in its demands. It immediately instructed its own legal department to prepare the necessary forms of guarantee and debenture. This was done. By letter dated 6 June 2008 addressed to the directors of CCH at an address that was both Mr Andrew Jewson’s home address and also the company’s offices (and invariably used for company correspondence, as Mr Carter knew) the Bank said this:

Various other formal requirements were made. In addition, the return of an insurance policy was also requested.

Subsequently, on 10 June 2008, an email was sent by Mr Taylor to Mr Andrew Jewson and copied also to others including Mr French. It was headed, “SGJ Limited: ‘Revised strategy and way forward’.” It referred to the meeting at Borehamwood the previous week, and then went on, amongst other things, to say this:

At all events, by letter of 11 June 2008, Mr Jewson wrote on behalf of CCH enclosing signed copies of the guarantee and debenture, and also of a board minute of CCH, which had been requested, authorising the making of the guarantee. The board minute, which had itself been drafted by or on behalf of the Bank, was in these terms:

And then various other matters are set out. The document then certified it to be a true extract from the minutes of the meeting of the board held on the date aforesaid and then follow the signatures, one purporting to be the signature of Mr Carter as chairman of the meeting and the other being the signature of Mr Andrew Jewson as secretary of the meeting.

It is not necessary for me to set out the details of the guarantee or debenture, which were in standard Barclays form for this kind of documentation. The guarantee was limited to a maximum of £1.9 million.

Each of the guarantee and the debenture was signed by Mr Jewson in his capacity as director or secretary of CCH. Each of the guarantee and debenture also purports to be signed by Mr Carter as a director. Each of the guarantee and debenture purports to be executed as a deed.

It is the case of Mr Carter that not only did he not sign any of these documents but also that he knew nothing about them or of the proposal that a guarantee and debenture be given at all. He says that he never would have agreed, especially when discussions were at this time going on between the shareholders with a view to a parting of the ways. It is the case of Mr Jewson that Mr Carter had agreed that a guarantee and debenture be given.

It is clear that Mr Carter had for some time in broad terms been aware that the Bank was keenly interested at the time in the progress with regard to the completion of the works and the sale of the Turkish villas. In March 2008, in fact, he had been told by Mr Jewson that the Bank was applying pressure, and that sales of the Turkish properties were needed to help repay the debt due to the Bank. That also is shown by, for an example, an email sent by Mr Jewson to a Turkish director of Carson International, which was copied to Mr Carter and dated 2 June 2008. That amongst other things said, “I’m renegotiating all my loans with our bank”, and indicating that the Bank wanted someone to look at the development sites in Turkey. This was followed up by an email of 30 June 2008 to similar effect.

Mr Carter says, and I accept, that he knew that the Bank was anxious as to the position in Turkey, and his understanding was that it wanted to check on the progress of the villa development because it was wanting moneys to be remitted to CCH in order to, in turn, help reduce the debt of CCH to SGJ and then ultimately to the Bank. But that, he said, was quite different from his knowing that CCH was to give a guarantee and debenture in favour of the Bank.

At all events, matters thereafter continued. Then, in October 2008, there was a serous falling out between Mr Jewson and Mr Carter. It was prompted by a lengthy email from Mr Jewson among other things proposing, as Mr Carter understood it, that Mr Carter forego his salary of £40,000 per annum from CCH. Mr Carter wrote to Mr Stanley Jewson protesting at Mr Andrew Jewson’s conduct. He complained about Mr Andrew Jewson that he:

Mr Carter indicated that he was going to withhold further payments to CCH from Turkey, and would pay his salary out of Turkish bank account moneys. He made demand for a substantial payment, and indicated that he would be taking legal advice. He wrote at the same time to Mr Andrew Jewson, amongst other things saying this:

Lawyers were soon involved. A lengthy letter was sent by Mr Carter’s solicitors on 28 October 2008.

The Bank became aware of the problems between Mr Jewson and Mr Carter. In due course, on 5 November 2008 and 7 November 2008, letters of demand were served by the Bank on CCH for repayment of just over £200,000 and just over £100,000, being the total sums then outstanding on The Chapel and Chinnor developments.

On 8 November 2008, Mr Carter emailed to the Bank in the following terms:

This email had been preceded by a meeting between Mr Carter and Mr French on 6 November 2008, arranged at Mr Carter’s request. Mr Carter wanted to propose a schedule for payment of CCH’s debts the Bank, Mr Carter taking the view, as he indicated in his subsequent email, that Mr Jewson had deliberately engineered the calling in of the loan. At that meeting, Mr French made reference to the guarantee in favour of SGJ. According to Mr Carter, this was the first he had heard of it.

In his first witness statement date 26 March 2009, he said this at paragraph 22:

Mr French, on the other hand, in his witness statement says this by reference to Mr Carter’s statement:

No application to cross-examine Mr French on his witness statement was made.

In oral evidence, Mr Carter sought to say that he had indeed denied to Mr French that he had signed the guarantee. But I think that his evidence was not convincing on this, and it is also to be noted that on other occasions, as I will come on to explain, Mr Carter had not, understandably perhaps, been prepared in subsequent correspondence with the Bank to be categoric about whether or not he had signed any such document. Thus I find that his stated position as to the guarantee was as Mr French says.

I accept, however, that no reference to the debenture was made at that time. This is further borne out by the fact that Mr Carter was sent a copy of the guarantee and board minute by email on 10 November 2008 but not a copy of the debenture. Indeed, Mr Carter and his solicitors were not supplied with a copy of the debenture until after the administrators had been appointed.

There was then extensive further correspondence both between Mr Jewson’s solicitors and Mr Carter’s solicitors, and latterly between those solicitors and the Bank’s solicitors. It is clear that an overall arrangement between Mr Andrew Jewson and Mr Carter by way of compromise was being sought. Equally, the Bank itself was hoping that such an arrangement would be achieved. Most unfortunately, it did not happen. The Bank accordingly proceeded to appoint the administrators pursuant to the powers contained in the debenture on 21 January 2009, as I have said.

In the meantime, on 8 December 2008 Mr Carter’s solicitors had written to Mr Jewson’s solicitors a very long letter. In the course of it, they plainly and expressly said that the signatures appended to the guarantee and board minute bearing date 10 June 2008 did not belong to Mr Carter.

On 22 December 2008, the Bank’s solicitors wrote to both parties’ solicitors to say that, in the absence of an agreed solution, “Barclays will have no option but to take steps to enforce its security”. On that day and the next day, Mr Carter’s solicitors wrote to ask, amongst other things, the Bank to clarify, “precisely what security you say the bank holds”. By email of 29 December 2008, although received only after the New Year holiday, the Bank’s solicitors responded that:

On 6 January 2009, Mr Carter’s solicitors wrote to Mr Jewson’s solicitors reiterating that Mr Carter denied that the signature on the guarantee or board minute was that of Mr Carter. The letter also referred to the Bank having said that the guarantee was supported by a debenture, the solicitors commenting “which we have not had sight of”.

On the 9 January 2009, Mr Jewson’s solicitors responded in these terms amongst others:

On 14 January 2009, Mr Carter’s solicitors sent an email to the Bank’s solicitors. They enclosed a redacted version of their letter to Mr Jewson’s solicitors dated 8 December 2008. The redacted parts included the allegations that the guarantee and the board minute had not been signed by Mr Carter. Mr Carter told me in evidence that this redaction was done because he did not at that stage wish to expose Mr Jewson to an allegation of forgery made to the Bank. The letter to the Bank’s solicitors also, in fact, asked for the original of the guarantee to be released by the bank to Mr Carter’s solicitors to be held to their order, and further asked for a copy of the debenture as being “a document we have not had sight of”.

In the event, on 21 January 2009 the Bank appointed the administrators. On 22 January 2009 when interviewed by the administrators, Mr Carter said that he did not sign the guarantee and could not remember signing any debenture. On 9 February 2009, the administrators sent a copy of the debenture to Mr Carter’s solicitors, who on 11 February 2009, after Mr Carter had had an opportunity of examining that debenture, stated that Mr Carter did not believe that it contained his signature.

In the meantime, Mr Andrew Jewson had himself been discussing with the Bank the fact that Mr Carter had denied signing the guarantee. At one stage, Mr Jewson seems to have acknowledged to the administrators that he (Mr Jewson) may have signed Mr Carter’s signature, as noted in an email of 2 February 2009. Subsequently, according to a file note of one of the staff of the administrators dated 4 February 2009, the essential accuracy of which I have no reason to doubt in spite of Mr Jewson’s prevarication in evidence about it, he admitted as much, saying, nevertheless, it was, “done with Eddy’s knowledge” but, “looking back, it was a silly thing to do”. However, by letter dated 10 February 2009, Mr Jewson’s solicitors were writing to Mr Carter’s solicitors in these terms:

In the event, these proceedings then ensued.

The first question, then, is whether the signatures on the guarantee, the debenture and the board minute bearing date 10 June 2008 purporting to be the signatures of Mr Carter were indeed his signatures.

I have no hesitation in concluding on the evidence that they were not.

The first point is that the administrators obtained the report of a handwriting expert, Mr David Browne. He was provided with the guarantee, the debenture and the board minute, and also with other reference documents undoubtedly signed by Mr Carter. Mr Browne’s conclusion with regard to the three questioned signatures (that is to say the debenture, the guarantee and the minute) was that there was “strong evidence” that they were not made by the author of the reference signatures (that is to say Mr Carter). “Strong evidence” he styled as not satisfying the criminal standard of proof and needing corroborative evidence to meet that standard, albeit meeting of itself the civil standard of the balance of probabilities. He also gave his opinion that the element of fluency in the three questioned signatures indicated that the author was accustomed to make the questioned signatures. No competing expert report has been put in on behalf of Mr Jewson, and Mr Jewson also has not sought to challenge Mr Browne’s report by way of cross-examination.

Second, and this is one of the most unusual features of this case, the evidence showed clearly that Mr Jewson had in the past indeed been in the habit of himself signing Mr Carter’s purported signature on bank documentation relating to CCH.

In paragraph 16 of his first witness statement, Mr Carter had said:

This statement was shown to be incorrect. Exhibited to Mr Jewson’s further witness statements were a number of CCH’s documents in which, was common ground, the purported signature of Mr Carter had in truth been signed by Mr Jewson. Thus, an initial facility letter from the Bank relating to The Chapel dated 6 June 2006 required two signatures. Those were indeed of Mr Jewson and of Mr Carter. But thereafter, a number of further facility letters or amending facility letters from the Bank relating to that property or the other property and requiring two signatures, although purporting to be signed by Mr Carter as well as by Mr Jewson, were in truth, as accepted, signed by Mr Jewson alone, both in his own name and in the name of Mr Carter.

By way of further example, a legal charge dated 16 April 2007 between CCH and the Bank and relating to a property at Mirfield purports to be signed both by Mr Carter and by Mr Jewson. Here, too, in truth both signatures were made by Mr Jewson. Mr Jewson also recalls other purchase and sale documents which had been so signed by him, although these are no longer available to be exhibited. Furthermore, various instructions sent by CCH to Denizbank in Turkey purporting to be signed by Mr Carter were, in fact, signed in Mr Carter’s name by Mr Jewson. Mr Carter in the course of his evidence conceded that he knew that this was being done in the communications with Denizbank, this apparently being considered convenient.

My view, having regard to the evidence, was that in reality Mr Carter did not mind and was perfectly prepared to accept that Mr Jewson could sign documents in the name of Mr Carter provided that Mr Carter knew in general terms of the underlying transaction. It seems to me that Mr Carter must, for example, have known of the need of countersigned facility letters and other formal documents with regard to Barclays Bank. After all, he had initially signed one such for The Chapel property and he was content thereafter for Mr Jewson to do so on his behalf if that proved to be convenient. Likewise, for example, Mr Carter knew, as he accepted, of the need for a legal charge requiring two signatures in respect of the Mirfield transaction. I did not find his evidence that he assumed a solicitor had signed on his behalf convincing. I think that as before he simply was content, for the purposes of dealing with the Bank, to leave the mechanics of signature entirely to Mr Jewson.

Third, ultimately Mr Jewson himself did not really seek to maintain in his oral evidence (notwithstanding his unequivocal assertions to the contrary in prior correspondence) that Mr Carter had signed these three documents. Indeed, he eventually conceded in the course of his cross-examination that he probably had done so himself, adopting the procedure that he had used on previous occasions, to ensure that the Bank had the documents returned to it quickly as it wanted. His recollection was that the documents had arrived in the afternoon post on 10 June 2008 and he sent them back to the Bank on 11 June 2008.

The next question, which it is convenient to take at this stage, is whether Mr Carter had authorised the execution of these documents. This in truth as it seems to me breaks down into two related questions. First, did Mr Carter actually authorise Mr Jewson to sign these documents using Mr Carter’s purported signature? Second, had Mr Carter agreed in principle that CCH should enter into a guarantee and debenture in favour of the Bank? Clearly, these two questions are closely linked.

I much preferred Mr Carter’s evidence on this. Indeed, it was a necessary part of Mr Jewson’s case that, in denying that he knew anything at the time of the guarantee and debenture, Mr Carter was lying. Having observed Mr Carter giving evidence, and whilst Mr Carter’s evidence was to some extent marred by his strong sense of grievance, I do not think that he was lying at all on this.

In one paragraph of his first witness statement, Mr Jewson had said:

The question then is: when was this agreed, if it was agreed?

The evidence, based on entries from Mr Jewson’s Palm Pilot, shows that he had two meetings in Oxfordshire with Mr Carter on 9 and 10 June 2008. What Mr Jewson says about this in his first witness statement is this:

Mr Carter, for his part, agrees that there were meetings on these dates but says that nothing was discussed about the guarantee or debenture at all. For example, he says on 10 June they simply discussed the position with regard to Turkish properties and he produced photographs relating to them.

In the event, in the course of his oral evidence Mr Jewson then disclaimed that any such agreement was reached on either of those dates. Reconstructing events, he now said that he now thought (although he did not claim to have any direct recollection) that the debenture and guarantee were agreed at some time before 28 May 2008, being a date on which Mr Carter and Mr Jewson had a meeting with their accountant. I think that Mr Jewson in part was basing this reconstruction - and his evidence was very much of the “we would have” variety - on the emails to the Turkish director which I have mentioned and the first of which is dated 2 June 2008. In my view, it is evidence I should reject. For one thing, one may query why this dating never before had been mentioned by Mr Jewson either in pre-action correspondence or in his witness statements, which witness statements clearly are designed to give the impression that the relevant date of agreement was 9 or 10 June 2008 and which, indeed, would not be implausible given the dates affixed to the various documents (a point which Mr Prentis understandably emphasised in his written skeleton argument before Mr Prentis had any chance to appreciate what Mr Andrew Jewson was going to go on to say in his oral evidence). For another thing, the unchallenged witness statements of Mr Taylor of the Bank clearly would indicate that the actual proposal for the guarantee and debenture was first made by the Bank at the meeting of 5 June 2008 at the Borehamwood offices and after which meeting the Bank immediately caused the relevant documents to be prepared. Yet further, this latest evidence of Mr Jewson is of itself severely undermined by the fact that he cannot purport to recollect a time or place when such agreement was made. It is, as I see it, a case of “we would have” maturing into “we did”.

To enter into this guarantee and debenture was quite an important step for CCH, especially at a time when the shareholders were contemplating going their separate ways. There is force in Mr Carter’s point that he would have objected had he known of the proposal. It may be that ultimately SGJ and Mr Jewson, because of their ultimate control as majority shareholders and as dominant lender, could and would have carried the day on this issue. But at the very least there would have been debate had the point been raised. If so, that debate surely would be remembered. It is not because, as I find, there was no such debate; and there was no debate, in turn, just because Mr Jewson had not told Mr Carter of the proposal. I accept Mr Carter’s evidence that he knew nothing of this proposal and that it was not discussed on 9 or 10 June or at all. I can accept that Mr Carter knew, as the emails relating to Turkey show, that the Bank was putting pressure on SGJ to reduce its debts and in turn CCH and Carson International were under pressure to reduce the inter-company loan accounts; but that is not the same thing as his knowing about CCH entering into a guarantee and debenture.

As to the email of Mr Carter of 8 November 2008 and its reference to “debenture loan”, that does not indicate that he already knew of the debenture dated 10 June 2008. On the contrary, as he explained to me in the course of his evidence and I accept, he was there intending to refer to one of the legal charges, that relating to Chinnor, which was in place. That is borne out by the email referring to a total debt of around £300,000 which was, indeed, roughly what CCH owed the Bank at that time.

I also find, accepting Mr Carter’s evidence, that Mr Jewson did not subsequently inform Mr Carter of the fact of the guarantee and the debenture and that Mr Carter only discovered about the existence of the guarantee when it was mentioned by Mr French in November 2008.

As to Mr Jewson signing documents in Mr Carter’s name, Mr Carter’s evidence really was to the effect that he accepted such a situation if it was a transaction to which he had agreed - see my earlier observations on the evidence - but not otherwise. Mr Jewson, for his part, in effect accepted so much in the course of his evidence. He told me in the course of his evidence that he did not think that this transaction with the Bank concerning the guarantee and debenture was something he could do “off my own bat”. He said that as between him and Mr Carter he could not do it without Mr Carter first knowing of it and agreeing to it. Thus, whilst he said (and I accept) that Mr Carter left all the financial and administrative side of things to him and frequently left it to him to handle the signature processes, this particular transaction needed, as he accepted, Mr Carter’s consent. Thus I conclude that the making of this debenture and guarantee did not have the actual authority, whether express or implied, of Mr Carter.

For the purposes of the issues immediately before me, it is perhaps not necessary for me to resolve just with what motive Mr Jewson acted as he did. It was not, for the purposes of these particular proceedings before me, in terms put to him that he was acting dishonestly and in fraud of Mr Carter or of CCH, although the distinct impression I got from Mr Carter is that that is now his view. What certainly was in terms put to Mr Jewson was that he was not acting in the interests of CCH but was acting only in the interests of SGJ and, in effect, entirely subordinated the interests of CCH to those of SGJ.

I have to say that I found Mr Andrew Jewson in some ways a rather difficult witness to assess. A person of some charm and seeming openness in some ways and with a preparedness on occasion to admit points against him, but at the same time someone prone to prevarication and to changing his story and to reconstructing events to meet what he has already decided should be the position. I do not all the same think it right to say that he entirely subordinated the interests of CCH to SGJ. On the contrary, there was a respectable case for saying that the two companies had a degree of concurrency of interest given the inter-company loan position and the bank pressure. The giving of the debenture and guarantee was by no means self-evidently contrary to the interests of CCH. My impression was that Mr Jewson’s perception was that the Bank had been pressing to reduce the debt for some time and now was pressing for a debenture and guarantee from CCH. Therefore, his view was that they should have it since it was in SGJ’s and CCH’s interests not to rock the boat with the Bank. Mr Jewson also, I consider, reckoned in any case that the debt could soon be reduced and the debenture then released. He did not trouble to tell Mr Carter because his view was that Mr Carter knew in general terms of the pressure the Bank was exerting and that it was for him, Mr Jewson, to sort things out. He used the thoroughly reprehensible device of signing in Mr Carter’s name, counterfeiting the signature, because it was convenient to him and because he had done so regularly in the past. All the same, given that Mr Carter was available in the United Kingdom at the time, I can only conclude that Mr Jewson did not tell Mr Carter exactly what he was doing because he wanted to forestall a possible row and thus possible delay in placating the Bank and so did not inform Mr Carter or get his approval to the signing of the debenture and guarantee. In fact, the impression I got was that Mr Jewson at the time in essence somehow regarded all this as something of a technicality.

Against those primary findings of fact, I turn to the provisions of section 44 of the Companies Act 2006, an Act which was introduced to restate and reform company law. Section 44 is in these terms:

Its immediate predecessor was section 36A of the Companies Act 1985 introduced by amendment in July 1990, which was itself amended and supplemented in September 2005 by the Regulatory Reform (Execution of Deeds and Documents) Order 2005. The current version of section 44 is similar in effect, though not identical in wording, to section 36A as so amended. I add that no counsel before me sought to place any separate reliance on the provisions of section 46 relating to the execution of deeds, the parties proceeding on the footing that a floating charge may be created by an “instrument” under schedule B1 of the Insolvency Act 1986.

As I have found, Mr Jewson had no actual authority to sign the debenture or guarantee using the purported signature of Mr Carter as one of the two signatures required by the bank on its documentation. But for the purposes of section 44, each of Mr Jewson and Mr Carter, being directors of CCH, are to be taken as an “authorised signatory”. Mr Jewson was indeed one of the signatories to the debenture. Mr Carter was not, as I have found; but it is the submission on behalf of Mr Jewson and the Bank that the document “purports” to be signed in accordance with section 44. Accordingly, in favour of a purchaser as defined, it is deemed under section 44(5) to have been “duly” executed (which seems to be intended to be coterminous with “validly” executed as contained in subsection (2)). Therefore, it is submitted, the debenture is in favour of the bank valid and the appointment of the administrators is likewise valid.

It is necessary, therefore, for the purposes of section 44 to assess whether the Bank was a “purchaser” as defined in section 44(5). It is clear that under the debenture the Bank acquired an interest in property. It is also clear that the Bank throughout acted in good faith. Mr Hill-Smith accepted as much. He did at one stage query whether it was put on inquiry. But, as I have held, there was clear commercial justification in view of the unsecured inter-company loan arrangements for CCH agreeing to enter into the debenture and guarantee. Further, throughout the Bank’s dealings had always been with Mr Jewson. In any event, no request to cross-examine the Bank on this was made.

Mr Hill-Smith, however, queried whether the Bank was a purchaser for valuable consideration. He accepted, rightly, that forbearance may be valuable consideration; but for it to be so there must, he said, be a request, express or implied, for such forbearance: which proposition Ms Stonefrost in turn accepted. Here, Mr Hill-Smith submitted, there was no such request by CCH.

I reject that submission. It is true that there is no specific evidence from the Bank that such a request was made by CCH; but it seems to me that it is clearly to be inferred. The practical reality was that there was a pressure from the Bank on SGJ and also pressure from the Bank on CCH because CCH’s funding depended on the loan from SGJ which in turn depended on the Bank for finance. At the meeting of 5 June 2008, as is the unchallenged evidence, Mr Jewson attended not simply in his capacity as a director of SGJ but as director and secretary of CCH. The Bank was expressing its concern at the position concerning the inter-company loan accounts. CCH plainly agreed through Mr Jewson to enter into the debenture and guarantee to persuade the Bank to hold off from taking steps with regard to the indebtedness. This was not simply a request by SGJ; it was a request also by CCH. Moreover, if the Bank had taken steps with regard to SGJ - and, of course, the Bank also had options with regard to its direct lending to CCH itself - that would of itself have had an impact on CCH because SGJ might then have called in the loan to CCH.

Mr Carter asserted that the inter-company loan was not repayable on demand. But there was no written agreement to the contrary, the money was shown in the company accounts as falling due within one year and at the least the prospect of SGJ claiming the money back on demand was there.

Mr Taylor put the position this way in his third witness statement:

That suffices. There was here an implied, if not express, request from CCH to the Bank for it to forbear from taking enforcement steps whether as against SGJ or as against CCH.

Thus I conclude that the Bank was a purchaser for the purpose of section 44(5). Moreover, the word “purports” is on its face a wide word which is not defined in the section. In my view, such a word operates to refer to the impression a document conveys. Indeed, it is self-evidently focusing on what appears to be the case rather than on what actually is the case. As it seems to me, if one were to pose as a matter of impression the question here “Does the debenture purport to be signed on behalf of CCH by two authorised signatories?” the answer would be in the affirmative.

It was not disputed before me that such a statutory provision would operate to validate (in favour, of course, only of a purchaser) a document which has, for example, been erroneously signed by someone styled a director when, in fact, that person is not a director. Clearly, for example, it could potentially overcome in favour of a purchaser any defect by reference to the internal management rule. But on the face of the wording there is no such restriction simply as to those kinds of case, and the wording, unless glossed, would at first sight seem to be (in favour of a purchaser) capable of validating also a document where there has been fraud or forgery if the document purports to be signed in accordance with subsection (2). Nor would such a conclusion be without purpose or sense: for notoriously where fraud or forgery is concerned in a company context the innocent suffer: the shareholders and creditors on the one hand if the transaction is held binding; the innocent third party purchaser on the other hand if it is not. To favour the latter, provided and crucially he acts in good faith and is not put on inquiry as to wrongdoing, is not unprincipled. Indeed, it means that the company has to take the consequence of employing a dishonest director or servant and it is for the company to look for redress from that individual.

Mr Hill-Smith, however, submitted that the subsection does not operate to validate documents which are forgeries. At the heart of Mr Hill-Smith’s argument is the proposition that a forgery is a nullity. Indeed, as a general rule, a person whose signature on a document has been forged is entitled to say, “This is not my document”. Mr Hill-Smith goes on to say that there is, as it were, nothing which can be deemed to be “duly executed” for the purposes of section 44(5). Mr Hill-Smith submitted that this was established by authority. It is to be noted, however, that all counsel before me were agreed that there was no direct authority for this proposition for the actual purposes of section 44(5) itself or its immediate statutory predecessor: although certainly it can be said that such an approach as advanced by Mr Hill-Smith would manifest itself under some of the earlier cases by reference to, for example, section 74(1) of the Law of Property Act 1925, at all events in its original, unamended form.

The first authority in point of time cited to me so far from assisting Mr Hill-Smith was against him. It is the case of Shaw v The Port Phillip and Colonial Gold Mining Company Ltd [1884] 34 QB 103. In that case, the secretary of a company was under a duty to procure the execution of certificates of shares in accordance with prescribed formalities. A certificate was issued and presented by the secretary in favour of a purchaser in the usual form with signature of director and secretary and bearing the company’s seal. But the signature of the director appended was, in fact, a forgery made by the secretary (although on the face of the report it does not appear that there was any personal gain to the secretary in his so doing). Further, the seal had been affixed without authority of the board. The purchaser in due course lodged with the plaintiff the share certificates as security and executed a transfer in favour of the plaintiff. Both purchaser and plaintiff acted throughout in good faith. One argument on behalf of the company, as recorded in the report, was that the signature of the director being forged, the whole document was a nullity. In the course of his judgment, Steven J said this at pages 107 to 108 of the report:

Further, Matthew J made the following comments:

Shaw was considered in the House of Lords decision in the case of Ruben v Great Fingall Consolidated [1906] 1 AC 439, a case which was at the centre of Mr Hill-Smith’s submissions. One argument which clearly had appealed to the Divisional Court in Shaw - to the effect that it would be very difficult for a third party as a matter of practical business dealing to enquire as to whether the signatures were genuine - cut little ice in the House of Lords, being a point only really discussed in the speech of Lord James, Lord James in effect acknowledging that the safeguard of inquiry to third parties was more theoretical than practical. The House of Lords nevertheless dealt with the issue in forthright terms.

In Ruben, it has to be said, the facts were very strong. In cases of counterfeiting a signature, there can be various degrees of culpability; see, for example, Salsbury v The Law Society [2009] 2 All ER 437. The Ruben case was at the very highest end of culpability. There the company secretary, to pursue a fraudulent objective of his own, presented to innocent lenders a share certificate appearing to be that of the company and appearing to be signed by two directors as well as by the secretary. However, the seal had been affixed by the secretary fraudulently and the secretary had forged the two signatures of the directors. The position thus is in point of fact different from the present case in that here Mr Jewson did indeed himself sign as director and secretary and, further, entered into the transaction considering it to be, as I find, in the interests of CCH, albeit without the authority of Mr Carter and having falsely signed Mr Carter’s signature on the debenture and other documents.

In the Ruben case, Lord Loreburn in the course of his speech said this:

Lord Macnaghten in the course of his speech said this:

In the course of his speech, Lord Davey said this at page 445:

The decision and approach in Ruben has, as it seems to me, to be set in the context of the subsequent well-known decision of the House of Lords in Lloyd v Grace, Smith & Company [1912] AC 722 to which, indeed, Lord Loreburn and Lord Macnaghten were themselves party. But whilst aspects of the comments of Lord Davey in his speech in Ruben were expressly disapproved in Lloyd v Grace, Smith, the decision itself was not; see also the comments of Diplock LJ in Morris v Martin [1966] QB 718 at page 737. Since that time, it seems to be the case that by and large Ruben has, nevertheless, been represented as setting out the general position that a forgery is a nullity which cannot be validated, albeit there may be circumstances in which a party may be estopped from disputing the validity of a forged document; see Halsbury’s Laws, 4th Edition, volume 13, paragraph 72. A particularly extreme version of the purported application of the decision in Ruben can be found in the case of South London Greyhound Racecourses Ltd v Wake [1931] Ch 496. There, even though the signatures of director and secretary on the certificate were valid and they had affixed the seal, and even though they had done so in order to defer proceedings threatened against the company, it was held that the fact that the board had not authorised the affixing of the seal rendered the certificate a forgery and a nullity: a decision which to my mind is very hard to sustain.

No doubt a forged corporate document is a nullity in the sense that no one has actual authority on the part of a company to issue a forged document. But as the exception of estoppel shows, that does not mean that the forged document can in no circumstances have any effect whatsoever: just because circumstances can arise whereby the company may be estopped from disputing its validity. But once one accepts that, then, in my opinion, that immediately opens up the prospect that such a document cannot be sidelined as a nullity for all purposes in the case of apparent authority. Indeed, the principles of apparent authority are a broad reflection of the general principles of estoppel. That that may be so is borne out by Ruben itself in my view: for, admittedly in somewhat grudging terms, Shaw was not formally disapproved as a decision but instead was distinguished as being capable on its facts as connoting that the secretary was held out as having authority to warrant the genuineness of a certificate. That clearly was the understanding also of the Court of Appeal in the case of Uxbridge Permanent Building Society v Pickard [1939] 1 KB 248, a case where a solicitor principal was held liable not only for the frauds but also for the forgeries on the part of his employee clerk. In the course of his judgment, Sir Wilfred Greene MR, said this at page 256:

Thus Ruben was to be distinguished, not in point of principle, of course, but in point of fact. In Ruben there was no ostensible authority vested in the secretary.

The position is also dealt with in Gore Browne on Companies in its latest edition in chapter 8, paragraph 28, where amongst other things this is said:

The paragraph then turns to deal with the case of Ruben and then this is said:

In my view, that approach is the correct approach and gives the answer to the present case on the facts, finding as I do that the Bank was a bona fide purchaser for valuable consideration. The question of the authority, both actual and ostensible, of a company secretary has unquestionably moved on since the days of Ruben, as a number of authorities show. Moreover, there may well be cases where an officer or employee of a company can in any event be authorised actually or ostensibly by the company to warrant that procedures have been properly complied with and that documents are genuine. Indeed, the realities of modern commerce can sometimes require as much. An example can be found in the Court of Appeal decision in First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194.

Moreover, in general agreement with the comments in Gore Browne, I can see no reason in principle why some special approach should be grafted on in the case of forgery by reciting the mantra that a forgery is a nullity which is not to be grafted on in the case of fraud. After all, while not all frauds involve forgeries, all forgeries in their own way involve a fraud. No officer or servant has actual authority to commit a fraud any more than he has actual authority to commit a forgery. But it is clear ever since the decision in Lloyd v Grace, Smith that a principal may in appropriate circumstances be bound by the fraudulent acts of his agent in circumstances where there is ostensible authority. True it is that in contractual terms fraud may make a contract voidable, not void, but the general point still remains that something which is done with authority, actual or apparent, is capable of binding the principal. Indeed, were that not so, I do not see how the House of Lords in Ruben could have approached the case of Shaw as they did or made the comments that they made on authority. Nor, were that not so, do I see how Sir Wilfred Greene MR, could have stated the position as he did in the Uxbridge Building Society case.

On the facts here, Mr Jewson was both director and secretary of CCH, as well as a shareholder in CCH both directly and indirectly through SGJ. But more than that, through the years of the company’s incorporation, and by consent of Mr Carter, he and he alone had had on behalf of CCH all dealings with the Bank. This was not merely a self-appointed role on his part; this was the way he and Mr Carter, the other director, had on behalf of CCH agreed that things should be done. As Mr Jewson said and I accept, Mr Carter left all the Bank dealings and documentation to him and was happy for him to look after it all. The Bank itself had no reason to think otherwise. In matters of documentation, therefore, it was to Mr Jewson on behalf of the directors of CCH that Barclays Bank looked in its dealings with CCH, and Mr Carter had throughout been content that that should be so. Further, as I have said, on a significant number of occasions - not just with a separate bank, Denizbank, but also with the Bank itself - Mr Carter had been content to leave it to Mr Jewson to communicate the appropriate signed formal documents to the Bank when Mr Carter must have known that two signatories were required and that he himself had not signed and when he knew that Mr Jewson had been wont to sign bank documents using Mr Carter’s purported signature. In such circumstances, I conclude that Mr Jewson had been clothed by CCH with ostensible authority to warrant to the Bank that all formalities relating to approval and execution of the debenture and guarantee had been duly complied with and that the signatures could be relied upon as genuine.

Having so concluded on the facts, it seems to me that on any view of section 44 the debenture must be taken to be valid vis-à-vis the Bank. Indeed, Mr Hill-Smith himself accepted in the course of argument that section 44 can at least be taken as reflecting the common law principles; and so would extend (in favour of a purchaser) to a document purporting to be signed by the two directors in circumstances of apparent authority on the part of Mr Jewson.

That conclusion makes it unnecessary to reach a conclusion on the issue of whether the Bank could still rely on section 44(5) even if there were neither actual nor ostensible authority conferred by CCH on Mr Jewson. It seems to me that so to conclude would undoubtedly be a departure from the principles established by Ruben. The question thus is whether Parliament has by section 44(5), reflecting broadly section 36A of the Companies Act 1985 before it, made such departure.

As may be gathered from some of my earlier comments, I see much force in the submission that it has. Such a conclusion would by no means be lacking in purpose or sense. On the contrary, it might be said in modern times to be promotional of the interests of commerce – notwithstanding, for example, the current position with regard to bills of exchange - and to be an acknowledgement of the difficulties for banks and other third parties (provided, crucially, they are purchasers as defined) realistically making enquiries as to the validity of signatures and so would be a further protection in addition to those offered by, for example, section 161 of the 2006 Act. Further, such a conclusion at least reflects the actual wording used and would give rise to a degree of certainty. “Purport” is a word of wide ambit and it is rather difficult to see why as a matter of language it should, for example, extend to the genuine signature of a person having no authority as director but not extend to the forged signature in the name of a person who is a director. In other words, why, as a matter of language, “purport” should be taken to cover some defects but not others is not obvious. Putting it another way again, the argument that section 44(5) does not extend to forgeries in effect requires a starting presumption that the decision in Ruben is taken as still to be intended to apply and thus then requires a notional writing in of such an exception into section 44(5). But it is not at all obvious why or how such a proviso could or should be so written in as a matter of statutory implication: and that is so even assuming, which itself may be a matter of debate, that the word “forgery” is itself sufficiently precise.

Mr Hill-Smith relied heavily on the Consultation Paper and 33rd Law Commission Report No. 258 (1998) on the Execution of Deeds and Documents by or on behalf of Bodies Corporate as negating that conclusion. Of course, whether the views there expressed by the Law Commission reflect the ultimate intention of Parliament in enacting section 44 is not a given. The intention of Parliament is to be taken from the words used in the statute. Moreover, with great respect, I have reservations about a number of the observations contained in the Consultation Paper and Report. For example, Ruben is more or less uncritically assessed as establishing that a forged document is a nullity: there is limited regard in the Consultation Paper or Report to principles of ostensible authority or to the impact of the actual wording of section 36A of the Companies Act 1985. By way of another example, there is to my way of thinking at least a query as to whether, as the Consultation Paper assumes, it is correct to state that the words “document signed by a person purporting to be an officer” are to be equated in meaning with the words “document purporting to be signed by an officer”. By way of another example again, the Consultation Paper seems to think in places that the same asserted principle may extend to cases of fraud as much as it does to cases of forgery.

All the same, and in fairness, the Consultation Paper and Report acknowledge that the position is not clear-cut. Indeed, it considered redrafting section 36A to make matters clearer, but then (perhaps unfortunately in hindsight) the Report recommended against such clarification. At all events, Gore Browne on Companies in chapter 8, paragraph 31, expressly states the view that the matter remains open to argument.

Since any view I express on this point would necessarily be obiter in the light of my prior conclusions, I think on the whole it would be better if I did not express any concluded view on this particular point. All I would say is that having regard to the actual wording of section 44(5), the matter is to my way of thinking by no means concluded by the points advanced in the Law Commission Consultation Paper or the Report itself.

Furthermore, in the light of my conclusion, the remaining issue of estoppel also falls away. However, I think here I should briefly record my findings on this, since it involves an assessment of the evidence and it also may have implications on questions of costs.

The first time a claim of estoppel clearly surfaced was in Ms Stonefrost’s written skeleton argument served on 29 March 2009, a week before the hearing. In that skeleton argument, she referred to the general legal principles and to the decision in Greenwood v Martin’s Bank Ltd [1933] AC 51. She put her case in this way:

This is a very terse way of advancing an estoppel argument and, of course, as I have said, no points of claim or defence have ever been directed. But as it developed in evidence and argument, what it apparently came to was this. At no stage prior to the administrators’ appointment did Mr Carter positively deny to the Bank, as opposed to Mr Jewson’s solicitors, that he had signed the guarantee. At most, and as I accept on the evidence, he had indicated to Mr French on 6 December 2008 and later on the telephone that he was not accepting that he had. Further, at no stage prior to the administrators’ appointment did Mr Carter ever challenge the validity of the debenture itself. Yet further, in communication with the Bank’s solicitors, Mr Carter’s solicitors had redacted the passages in the enclosed letters to Mr Jewson’s solicitors which had asserted that Mr Carter had not signed the guarantee. It was, so the argument went on, known at this time that the Bank was threatening to “enforce its security” (although I would observe that what that means is not necessarily clear cut). Consequently, so the argument goes, Mr Carter cannot be heard to say after the Bank had appointed the administrators that the appointment was invalid, the Bank having by then committed itself to the appointment. Reliance is placed on the case of Fung Kai Sun v Chan Fui Hing [1951] AC 489 as connoting a duty on Mr Carter to raise his objections at a prior stage.

I would have rejected this estoppel argument. True it is, as I find, that Mr Carter did not in his dealings with the Bank expressly disclaim the validity of the guarantee. But on 6 November 2008 he had at least raised with the Bank a query as to whether he had signed it and he never withdrew that. Further, at no stage did Mr Carter or his solicitors accept that he had signed the debenture. It is I think understandable that Mr Carter would not wish to commit to a positive assertion that he had not, especially in the light of Mr Jewson’s own assertions, until he had himself at least seen it. But at that time he was making it clear, and quite correctly, that he had not even seen a copy of the debenture. Indeed, he was not provided with one until after the administrators had been appointed. On 14 January 2009 he had expressly asked the Bank’s solicitors for a copy of the debenture as well as for the original of the guarantee, but the Bank then proceeded to appoint administrators even before such a copy was provided. I doubt if an estoppel can fairly arise in such circumstances so as to preclude him from challenging the debenture as against the Bank. Nor was there acquiescence such as would debar him from challenging the appointment of the administrators.

In any case, things go further even than that. For there to be an estoppel, the Bank must show that it acted to its detriment in reliance on Mr Carter’s conduct or silence. There is no evidence of any kind filed by the Bank to indicate that it did. Indeed, it may be observed that in his own evidence Mr Taylor indicated that he was contemplating appointing administrators by 21 November 2008, even though this was only shortly after Mr Carter’s equivocation as to whether he had signed the guarantee. The correspondence at all events indicates that the Bank was hoping that Mr Jewson and Mr Carter would then settle their differences and that acceptable proposals be made to the Bank. When that did not happen, the Bank appointed the administrators. Further, I refused to permit Ms Stonefrost on her application made during the course of her closing speech on the last day of the hearing to reopen the evidence and to adduce further evidence on the part of the Bank to cover this issue of reliance and detriment. She nevertheless submitted that it was a “clear inference” that the Bank would not have appointed administrators had it known that Mr Carter was challenging the validity of the debenture and she says that the Bank would have acted differently had it known, whether by enforcing its other securities against SGJ and CCH or otherwise. I do not think that can be left to inference. The Bank still had its options and may well have elected to accept the then assertions of Mr Jewson, with whom it had had longstanding dealings, and not to accept any assertions made by Mr Carter and so have proceeded to enforce the debenture to protect the inter-company loan account position: especially when the Bank may have calculated that it would potentially have had ultimate recourse against Mr Jewson had Mr Carter’s assertions subsequently proved to be true. Thus, having regard to the evidence before me, I would have held against the Bank on the estoppel and acquiescence issue.

My conclusion, however, for the reasons now given is that the appointment of the administrators under the debenture was valid.