Levin v Tannenbaum

MR JUSTICE NUGEE: I have before me an application by the defendant, Mr Michael Tannenbaum for summary judgment against the claimant, Mr Meir Levin under CPR Part 24 which is sometimes called, “Reverse summary judgment” and to various other relief in the alternative. The claim is brought by Mr Levin on five guarantees, each expressed to be made between Mr Michael Tannenbaum and Mr Levin between 13 November 2006 and 1 December 2006. Each purports to guarantee the liability of Michael Tannenbaum’s brother, Barry Tannenbaum under loan agreements made between him and Mr Levin. These loan agreements are five out of a much longer series of loan agreements made between Mr Levin and Mr Barry Tannenbaum over the period from 2004 to 2008 under which many, many millions of US dollars were advanced by Mr Levin to Mr Barry Tannenbaum. Each loan came to be numbered and the particular loans which are the subject of the guarantees sued on in this action are deals 40 to 44.

The details of each loan are set out in the evidence and can be summarised as follows: Deal 40, date of agreement 13 November 2006, date of advance 26 September 2006, capital sum advanced US$36,600,000. Deal 41, date of loan agreement 13 November, (all these are 2006 dates) date of advance October, capital advanced US$1 million. Deal 42, 13 November, date of advance 25 October, capital advanced US$4.4 million. Deal 43, 24 November, date of advance 10 November, capital advanced US$830,000 and deal 44, 1 December, date advanced 22 December, capital advanced US$3.6 million. The total amount being the same as the total capital advanced, US$47,470,000.

Each guarantee is expressed to be executed as a deed and bears a signature which purports to be that of the defendant, Mr Michael Tannenbaum and a signature which purports to be that of a witness to his signature, Ms Kim Moran with her address given in London. The defendant however denies signing any of these guarantees and says the signatures are not his. Ms Moran denies signing them as well and says the signatures are not hers. Mr Michael Tannenbaum has obtained an expert report from a Mr Kim Hughes, a forensic document examiner, which has been put before me, dated 28 May of this year. He was asked to examine the signatures on the five guarantees and compare them to various sample signatures, both of Mr Michael Tannenbaum and of Mr Kim Moran.

The conclusions in relation to the purported signatures of Mr Michael Tannenbaum were as follows:

“(6.2.1)

The specimen signatures of Michael Tannenbaum have been written on a number of occasions over a period from early in 2004 to 2013 showing a large degree of consistency. They are likely to show much of the range of variation that is found in his signature. In addition, they have been written both before and after the questioned signatures and thus will show how he was signing the signature at the time that the questioned signatures were written, therefore they are a good population of signatures for comparison purposes. Each of the questioned documents A to E (those are the five guarantees in question) bear a signature Tannenbaum on their final page and the odd pages were initialled “MT”. I have found that these items are clearly written and correspond closely one to another and form a group such that I can accept that they were written by the same person. The signatures and initials on items A to E differ significantly from the specimen signatures of Michael Tannenbaum and in my opinion there is conclusive evidence that he was not the writer.”

“In relation to the signatures of Kim Moran he again … (and I will not read it out) considered that the sample signatures were a good population of signatures for comparison purposes. Each of the question documents bears a signature of Kim Moran on their final page along with the name and address and the other pages bear initials ‘KM’. The initials on each of the guarantees are similar to the signatures on them and the signatures show a number of similarities to the main entries below them. Overall, in my opinion the initials, signatures and names and addresses form a proof of handwritten which has been written by one person and its conclusion is that the question as to the handwriting, signatures and initials show significant differences to the specimens of Kim Moran and in my opinion, there is conclusive evidence that she was not the writer.”

He explains what he means by the phrase, “Conclusive evidence” which is the strongest of the opinions that he expresses in such reports, there being a hierarchy of different opinions. To say that “in my opinion there is conclusive evidence” that someone is not the writer means that the expert is of the definite opinion but the questioned and the specimen handwriting have been written by different persons. There is no forensic evidence from the claimant to the contrary. It appears the claimant has attempted to obtain his own handwriting evidence but without success to date.

Mr Hornet who appears for the claimant for the purposes of this application does not challenge the expert handwriting evidence. He cautioned me against reaching any final and definite conclusion that the defendant, Mr Michael Tannenbaum, did not sign the guarantees in question but he does accept that the evidence suggests that they were not properly witnessed. I will proceed on the basis that as matters stand, the evidence is all one way, namely that Mr Michael Tannenbaum did not sign the guarantees and Ms Moran did not witness them while not purporting to reach any final definite conclusion on those matters.

Two main points are in effect made by Mr Richmond who appears for the defendant. The first is that if these guarantees are not deeds there is an unanswerable limitation defence and that by itself is a reason to grant reverse summary judgment. Secondly, if they are not signed by the defendant, there is no legal basis on which he can be made liable in the light of the evidence before the court. I will deal with the limitation point first; before doing so, I will remind myself of the principles applicable to applications for summary judgment under Part 24. Rule 24.2 provides:

“The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if –

(a)

it considers that –

(i)

that claimant has no real prospect of succeeding on the claim or issue; or

(ii)

that defendant has no real prospect of successfully defending the claim or issue; and

(b)

there is no other compelling reason why the case or issue should be disposed of at a trial.”

As I say, those principles were not disputed before me. I also have in mind that there is high authority, which I was not referred to but is well known, in the Three Rivers case that the normal mode of trial in this country is by oral evidence with discovery, disclosure and cross-examination. Part 24 is not designed to enable cases to be tried on application, it is there to enable cases to be disposed of which are not fit for trial at all.

Those being the principles, the limitation point turn on the relevant dates which are as follows. The underlying loans were entered into, as I have said, on various dates between 13 November 2006 and 1 December 2006. Each loan agreement contained an express stipulation for repayment on a specific date. I will take by way of example the first in issue in these proceedings which is deal 40. They are all in similar form mutatis mutandis and deal 40 contains a definition of advance date which in this case is 26 September 2006. It defines the borrower as Mr Barry Tannenbaum, it defines the capital sum, in this case US$36,600,000. It defines the lender, Mr Levin and it gives a prescribed rate of 46.25 percent which is the rate of interest applicable not per annum but for the period of the loans which becomes apparent when one looks at the amount of interest repayable on the repayment date. It furthermore defines the repayment date, in this case 26 January 2007. Clause 2 provides that the agreement is subject to Mr Michael Tannenbaum providing a guarantee. Clause 4.1 provides that the balance of the capital outstanding from time to time shall bear interest at the prescribed rate specified up to the repayment date and totals US$17,390. Then it says:

“Interest as aforesaid shall be paid by the borrower to the lender on the repayment date simultaneously with the repayment of the capital sum.”

(5.1)

On the repayment date, the borrower shall repay the whole of the capital sum together with all interest thereon to the lender.”

While I am looking at this document I note that clause 1.2 provides that,

“No cancellation of this agreement or variation, modification or any provision therefore nor consent to any departure by the lender therefrom should be of any force or effect unless the same shall be confirmed in writing and signed by the lender. Any such variation, modification, waiver or consent which is so given or nature restricted, construed as relating strictly to the matter in respect whereof it was made or given.”

The loan agreements are governed by the laws of South Africa but nobody has suggested to me that the laws of South Africa in relation to any point are different from what they would be in England. There is no doubt that under the terms of the loan agreements all capital and interest was repayable on the repayment date, in that case as I say 26 January 2007. The dates for the other loans are 41, 12 December 2006; 42, 26 January 2007; 43, 15 January 2007; 44, 29 January 2007. It can be seen that the last of those is 29 January 2007 which as will become apparent is more than six years before the issue of the claim form in this action.

Each guarantee was also in the same form and by way of example, I can take the guarantee for deal 40 which is a guarantee in this case made on 13 November 2006 between Mr Michael Tannenbaum and Mr Meir Levin, or at any rate is expressed to be. It defines the debtor as Mr Barry Tannenbaum and the guarantor as Mr Michael Tannenbaum. It defines the BT loan agreement as the particular loan agreement to which the guarantee relates, in this case the loan agreement between the creditor and debtor dated 13 November 2006, as the same may be amended or modified from time to time. The substantive obligations are contained in clause 2 which I will have to read in its entirety:

“(2.1)

In consideration of the creditor lending and advancing a capital sum to the debtor, the guarantor has agreed to guarantee the obligations and liabilities of the debtor to the creditor on the terms set out below.

(2.2)

The guarantor irrevocably and unconditionally guarantees to pay to the creditor within 14 days of receipt of written demand and in the currency in which same falls due to payment, all monies and liabilities which at any time hereafter shall become due, owing and payable by the debtor to the creditor under and in terms of the BT loan agreement.

(2.3)

The guarantor’s liability under this guarantee is limited to and shall not exceed in the aggregate the sum of US$37,600,000.

That was the principal sum advanced under deal 40 and in relation to each of these five guarantees, although not in relation to all the guarantees which Mr Michael Tannenbaum was expressed to enter into, the amount of his liability under the guarantee was capped at the principal sum. On 12 May 2009 Pitmans who were then acting for Mr Levin sent two letters and the first was sent to Mr Barry Tannenbaum. This letter explained that they were acting for Mr Levin in relation to 69 deals referred to as the investments. It stated that Mr Levin now considered that the investments were induced on the basis of fraudulent misrepresentations by Mr Barry Tannenbaum which gave him a right to set aside such investments as he chooses. He therefore rescinded such investments as was set out in schedule 1 hereto and those were deals 45 to 69 inclusive. He did not rescind deals 1 to 44. It appears that the reason that he chose to rescind deals 45 to 69 and not 1 to 44 is that he did not have any guarantees in relation to deals 45 onwards but does hold what at any rate purport to be guarantees from Mr Michael Tannenbaum in relation to deals 40 to 44.

On the same day Pitman’s wrote a second letter to Mr Michael Tannenbaum again referring to the 69 investments and said this:

“Further, you are of course aware that by a series of guarantees entered into by you between August 2004 and December 2006, (the guarantees) you personally guaranteed certain sums in respect of the investments…”

It then explained that Mr Levin considered that he had been induced into the investments on the basis of fraudulent misrepresentations made by Mr Barry Tannenbaum and that he was entitled to rescind and had rescinded deals 45 to 69 but not deals 1 to 44. They then referred to the five guarantees in this action giving the total amount which I have already indicated was US$47,470 and said:

“In each case, the amounts due to our client under the respective agreement as between our client and Barry, (a) have fallen due for payment, (b) have not been received by our client and (c) each exceed the amount of the respective guarantee given by you. By paragraph 4.1 of the guarantees, your obligation thereunder is that of a primary obligor and not merely of a surety. This letter is a written demand for payment by you of the sum of US$47,470 m under the five abovementioned guarantees made pursuant to paragraph 2.2 of those guarantees. Under the terms of the guarantees, payment is due within 14 days of this written demand. Further, by paragraph 9 of the guarantees, this demand is conclusive and binding as to the amounts due and payable by you.”

Incidentally, under the headings, “Suspicion of fraud or deceit” it also suggested that the investments which Mr Levin discovered were tainted by fraud and dishonesty on the part of Mr Barry Tannenbaum that:

“Our client is gravely concerned in the light of certain matters there set out that you too knew or should have known that the investments are not genuine and as such are equally culpable. Our investigations in this regard are on-going. Accordingly, our client’s rights to pursue tortious claims against you and/or Barry remain fully reserved. We look forward to hearing from you within 14 days.”

I do not think I had very clear evidence as to precisely what day that was delivered but it was sent by recorded delivery as well as by post and email and on the face of it, 14 days had expired on 26 May 2009. The claim form in this action was issued on 13 March 2013 in other words, the claim form was issued more than six years after the repayment date specified in each loan agreement, but less than six years after the demand made on the guarantees that I have just referred to.

I should have when referring to the terms of the guarantees gone on. Paragraph 3.2 contains various creditors’ protections which I will not read out at this stage. At 4.1 under the heading, “Guarantor’s obligations” it reads:

“The obligations of the guarantor under this guarantee is that of a primary obligor and not merely of a surety.

(4.2)

The creditor shall not be required before taking steps to enforce its rights under this guarantee to take any action or obtain judgment against the debtor or any other person.”

Mr Richmond’s argument can be expressed in two propositions; firstly, although expressed to be a deed the guarantee in each case is not in fact a deed. That is because sub-section 3(a)(1) of the Law of Property (Miscellaneous Provisions) Act, 1989 provides as follows:

“An instrument is validly executed as a deed by an individual, if and only if –

“(a)

it is signed –

“(i)

by him in the presence of a witness who attests the signature; or

“(ii)

[which has no application].”

He says I should conclude that the signature of Ms Kim Moran was forged and not affixed in anybody’s presence and therefore, these documents cannot take effect as deeds. They take effect (if at all) as mere contracts to which a six-year limitation period applies under section 5 of the Limitation Act, 1980 rather than the 12-year limitation period which would be applicable to an action on a specialty. Proposition 2; although the guarantees are expressed to be payable on demand, each guarantee contains in clause 4.1 a primary obligor clause. The submission is that the effect of this is, “To obviate the need for a written demand” and he relies on the decision of the Court of Appeal in MS Fashions v BCCI [1993] Ch 425.

Mr Hornet as I understood it had four possible answers to these submissions. Firstly, even if the guarantee was not in fact a deed, Mr Michael Tannenbaum had allowed the guarantee to be put forward as a deed and was estopped from denying it was valid as a deed (see Shah v Shah [2002] QB [35]. Secondly, time did not start running until deals 45 to 69 had been rescinded, i.e. in May 2009. The basis of this submission was that there is some evidence, although not at this stage as precise as it might be, that the practice of Mr Levin and Mr Barry Tannenbaum was to roll all the earlier deals into the later ones. As I understand it, this means that if for example deal 40 was due to be repaid instead of there being actual repayment in cash, the amount due on repayment would be treated by the parties as lent again on a new deal, say deal 45. As a matter of law, this would discharge deal 40. If therefore deals 40 to 44 had been rolled into deals 45 to 69, they would no longer subsist to be sued upon: they would have been discharged. Assuming Mr Levin is right that deals 45 and following had been induced by fraud, that did not mean that deals 45 onwards were void; it only meant they were voidable. Therefore, unless and until they had been avoided, deals 40 to 44 were discharged and could not be sued upon. When deals 45 to 69 were rescinded, this also set aside the discharge of deals 40 to 44 and hence revived the cause of action but only from that date. That is the argument for saying that time did not start running until the rescission of the later deals. Thirdly, he disputed that the case of MS Fashions v BCCI had the effect which was contended for and fourthly and finally, he relied on section 32(1)(b) of the Limitation Act, 1980 which provides for: an extension or postponement of a limitation period in the case of concealment in these terms:

“... where in the case of any action for which a period of limitation is prescribed by this Act, either ... (b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant … the period of limitation shall not begin to run until the plaintiff has discovered the ... concealment ... or could with reasonable diligence have discovered it. References in this sub-section to the defendant include references to the defendant’s agent...”

The argument here was that certain facts, namely the facts entitling Mr Levin to rescind deals 45 onwards, had been deliberately concealed from him by Mr Barry Tannenbaum and that for these purposes Mr Barry Tannenbaum was the defendant’s agent. In my judgment, the claimant, Mr Levin, has reasonable prospects of success on the MS Fashions point which I have numbered 3 above. It is not therefore necessary for me to consider the strengths of the other points and is probably unhelpful for me to do so.

The relevant question is whether time started nearing under the guarantee (i) when the demand has been made, (2) as soon as the underlying debt under the loan agreement has become due in accordance with the terms of the loan agreement. This must ultimately be a question of construction of the particular guarantee in question but certain principles of construction which have in effect hardened into rules have long been established. In particular, cases dating back for at least 200 years, and I believe very much longer, have laid down that as between creditor and debtor, an agreement by the debtor to pay on demand does not make it necessary for there to be a demand before the cause of action arises and before the writ can be issued. It is sufficient to cite from the way Dillon LJ put the law in MS Fashions at page 447:

“It is accepted by BCCI that the liabilities of the principal debtors, the various companies, to BCCI were at all times presently enforced by BCCI without any need for a demand before the issue of a writ even if the indebtedness was described in the relevant documents as ‘repayable on demand’. That is in accordance with many authorities and it is sufficient to take the statement by Bayley J in Rowe v Young [1820] where he said, ‘The rules which the law has laid down as to cases in which a demand is or is not necessary must be considered. One of these rules I take to be this, that where a man engages to pay upon demand what is to be considered his own debt, he is liable to be sued upon that engagement, without any previous demand; ... but ... if he engaged to pay upon demand what was not his debt. What he is under no obligation to pay what but for such an engagement he would never be liable to pay anyone, a demand is essential, and part of the plaintiff’s title.’ Consequently, it has been held in various contexts that to enforce liability against a mere surety there must be a demand before action brought: see the decision of Chitty J in In Re J Brown’s Estate; Brown v Brown [1893] 2 Ch. 300 and the decision of his court in Bradford Old Bank Ltd v Sutcliffe [1918] 2 KB 833.”

The basis of that decision is very clear. Hoffman LJ’s view was that the provision that the party was liable as primary obligor on demand brings into play the old rule of construction that that does not impute a contingency in the case where what is at issue is a primary obligation as opposed to a secondary obligation such as a guarantee. The Court of Appeal in the same case came to the same conclusion. Dillon LJ expressed it in these terms having set out at 447G the letters of charge signed by Mr Amir in respect of Impex Bond Limited v Another he had expressly agreed its liabilities thereunder, namely the company’s liability as charger to deposit should be that of a principal debtor. Then in relation to the other case which was appealed, High Street Services, (the third case, MS Fashions was not appealed) he said:

“Similarly in the forms setting out the cash deposit security terms which Mr. Ahmed signed in respect of High Street Services Ltd. and its associated companies he accepted that the liabilities of those companies should be recoverable from him as principal debtor and they were thus within the definition of his indebtedness; he also authorised the appropriation of the deposited moneys in satisfaction of his indebtedness without further notice to him.

“The effect of that must be to dispense with any need for a demand in the case of Mr. Amir since he has made the companies' debts to BCCI his own debts and thus immediately payable out of the deposit without demand. In the case of Mr. Ahmed there must be immediate liability even though the word ‘demand’ was used, because he accepted liability as a principal debtor and his deposit can be appropriated without further notice.”

It is not entirely clear to me if the basis of Dillon LJ’s decision is precisely the same as that of Hoffman LJ. In a subsequent case, TS & S Global Limited v Franks [2007] EWHC 1402 Ch, David Richards J certainly treated it as authority for the proposition as expressed by him at paragraph [23] that the Court of Appeal affirming the decision of Hoffman LJ at first instance held that:

“As the sureties have governed him to pay as principal debtors, a demand was unnecessary and there shall therefore be a set-off under Rule 4.10.

“(26)

It is clear I think from the judgment of Dillon LJ because Mr Amir and Mr Ahmed had to pay principal debtors, their position was equated with that of a primary debtor who was under an immediate obligation to pay without the need for a demand, even though the contract demands for payment on demand.”

That was undoubtedly as I have said the clear basis of Hoffman LJ’s decision. It is not obvious to me that David Richards J is right in saying that that is the basis of Dillon LJ’s decision. A careful analysis of the facts which can only be collected from reading both the facts as recited at first instance and in the Court of Appeal in the MS Fashions case, indicates that in relation to one of the two cases which was appealed, the Impex Bond case, there was or were letters of charge which had been signed by the director and which were said by Hoffman LJ to be in the same form as the letter of charge in the MS Fashions case and which provided that, “The liability hereunder should be that of principal debtor” and one gets that from page 431A. Going back there is a description of the facts in the MS Fashions case at 430F and one can see there that Hoffman LJ indicates that the letter of charge in that case agreed that:

“The bank could at any time without notice apply a deposit towards satisfaction of a company’s indebtedness and that the liabilities hereunder should be that of principal debtor”

There is no reference in his statement of the facts to there being any requirement for a demand in the letter of charge and the significant point is that it does provide not only that the liabilities should be that of a principal debtor, but that the bank could at any time apply the deposit without notice towards satisfaction of the company’s indebtedness. In the High Street Securities case, it appears from the recital of the facts in the Court of Appeal at 447G which I have already read, that the cash deposit security terms which Mr Ahmed signed again not only provided that the liabilities of the companies should be recoverable from him as principal debtor and hence, that they were in the definition of indebtedness, he also authorised the appropriation of the deposited monies in satisfaction of his indebtedness without further notice to him. It seems to me that the way in which Dillon LJ expresses it, it may have been that consideration, the ability for the bank to have recourse to the deposits without notice that was the decisive consideration in his decision that no notice and hence no demand was required.

However, the guarantees in this case do not provide that they are payable on demand. Instead, what clause 2.2 of each guarantee provides is that the guarantor guarantees to pay to the creditor within 14 days of receipt of written demand. Those are noticeably different words and it seems to me that they cannot be ignored as mere surplusage as in effect saying the same as the words “to pay to the creditor on demand” are regarded by the law as saying. Those words were obviously intended to give a period of 14 days before the guarantor’s liability arose. They were intended to give the guarantor time to pay.

Mr Richmond this morning submitted to me that they were intended to give the creditor the option of allowing the surety 14 days to pay, but that seems to me to be plainly inconsistent, both with the commercial purpose of this clause - a creditor can always give a surety as much time to pay as he wants to, whether 14 days, 28 or whatever - and with the wording which imposes the obligation on the guarantor to pay within 14 days of receipt of written demand. As a matter of plain construction of the words, it seems to me that it would be entirely wrong to ignore those words as if they just were not there. Nor do I think there could be any warrant for reading those words as meaning 14 days after the underlying debt became due. I do not see that it is possible to give the phrase, “within 14 days of receipt of written demand” the meaning “within 14 days of the underlying debt becoming due”. That is simply not what it says.

In my judgment it seems to me these words must be interpreted as meaning what they say, namely that once the underlying debt has become due owing and payable by the debtor to the creditor under and in terms of the BT loan agreement, the creditor can then make a written demand on the guarantor and the guarantor is given 14 days to pay.

In the course of preparing this part of the judgment I happened to come across a decision of Vice Chancellor Hall in a case called In Re Rutherford [1814] Ch Div 687. This was not cited to me but I did provide copies to counsel this morning to enable them to make any submissions on it that they wished to. This was not a guarantee case, it was a promissory note, in other words a primary obligation. The primary obligation was (in its entirety) in these terms:

“Three months after demand I promise to pay to Mr Robert Rutherford the sum of £150 of value received in book debts. John Rutherford.”

One envies the brevity with which our ancestors could draft contracts. Counsel for the plaintiff said in argument at page 688, “The note in this case is not payable on demand but three months after demand. When that is the case, as is well settled, the statute of limitations does not begin to run until a demand for the payment of the principal has been actually made.” The judgment of the Vice Chancellor was in these terms:

“I am of the opinion first that this being a note payable three months after demand, time does not run under the statute of limitations until demand has actually been made.”

If that is the case in the case of a primary obligation, it seems to me that it cannot be any different in the case of a guarantee which expresses the liability of the guarantor to be that of primary obligor. I regard this as authority that even if not binding on me, it is very persuasive that time does not start running in an obligation expressed to be payable a certain time after demand until the demand has actually been made and that time has elapsed. Vice Chancellor Hall’s decision was appealed to the Court of Appeal in Re Rutherford but this particular point does not seem to have featured in the argument or judgments in the Court of Appeal. It was however referred to with approval by Scrutton LJ in what is the leading case of the Court of Appeal in this area, namely, Bradford Old Bank Limited v Sutcliffe which has already been referred to by reference to its citation in MS Fashions. At page 848 Scrutton LJ said this:

“Was it necessary for the plaintiff to prove a demand?  Generally, a request for the payment of a debt is quite immaterial, unless the parties to the contract have stipulated it should be made:  per Parke B. in Walton v. Mascall.  Even if the word ‘demand’ is used in the case of a present debt, it is meaningless, and express demand is not necessary, as in the case of a promissory note payable on demand:  Norton v. Ellam.  But it is otherwise where the debt is not present but to accrue, as in the case of a note payable three months after demand.  In re Rutherford; or where the debt is not a present debt, but a collateral promise:  Birks v. Trippet In re Brown’s Estate. The promise of a surety to pay on demand if his principal does not appears to me to be a collateral promise within the authorities: and I entertain no doubt that in this guarantee the provisions about demand are a real stipulation, and not mere words.”

The importance of that passage is obvious. He is drawing there on two different circumstances in which a demand is necessary. One is if it is a collateral promise, i.e. a secondary obligation; the second (in Re Rutherford) is if the obligation only arises in the case of a note payable three months after demand, a time certain after demand.

I have reached the view that as a matter of construction clause 2.2 has the effect that time does not start running under these guarantees until 14 days after the written demand. I should say that Mr Richmond this morning made two further submissions. One was that clause 4.1 of the guarantees which is the primary obligor clause, as a matter of authority had the effect of overriding clause 2.2 and that if they were inconsistent primacy should be given to clause 4.1. For the reasons I have tried to express, that in my submission is not borne out by the authorities on which he relies. The other was that clause 4.2 which provides that:

“The creditor shall not be required before taking steps to enforce his rights under this guarantee to take any action or obtain judgment against the debtor or any other person…”

has the effect that the creditor was not obliged to serve a demand on the surety. That is not how I read this clause; this clause is what Sir Bernard Rix in the recent case of CIMC Raffles (Singapore) Limited v Schahin Holding SA [2013] EWCA Civ 644 described as a clause which was a fairly standard recognition that, “There never is any need for the creditor to sue the principal obligor first before proceeding against a guarantor”. That of course was in relation to the particular clause in that case (at paragraph [31] of his judgment) but I read clause 4.2 in the current case as having the same purpose and effect. I do not regard the words at the end, “Or any other person” as intended to include the guarantor which would make no sense at all, and in any event I would regard the specific provisions of clause 2.2 as overriding the general provisions in clause 4.2.

In my judgment, for those reasons time did not start running until 14 days after a written demand. It is not suggested that any written demand was made until 12 May 2009. That means that time did not start running until at the earliest, 26 May 2009, and these claims are not statute barred.

Having regard to the view I have reached on this aspect of the limitation defence, there is at the lowest a reasonable prospect of the claimant defeating any limitation defence regardless of the other arguments on which Mr Hornet sought to rely. As I have said, it is neither necessary nor I think particularly helpful to anybody for me to express any views on the other points which were raised by Mr Hornet in answer to the limitation question and I do not propose to do so.