Opus Property Finance Ltd v Arca Homes Ltd & Anor

I have before me an application for summary judgment by Opus Property Finance Limited against Arca Homes Limited, the first defendant, and Stephen Charles Aggatt, the second defendant. The claim against the first defendant is for repayment of principal together with interest, fees and costs due under a loan agreement dated 26 September 2007 and the claim against the second defendant is in his capacity as guarantor of the first defendant’s obligations, the guarantee being limited to the sum of £300,000 plus default interest since the date of demand for payment.

The background facts, as the claimant avers them to be, are helpfully set out in the skeleton argument prepared by Mr Rothschild, who appeared for the claimant. The claimant lent £300,000 to the first defendant on 28 September 2007 for funding the purchase of property in Portugal. The loan was repayable on demand. The first defendant had indicated that the funds were required for not more than 90 days and this was reflected in clause 4.1 of the loan agreement which the claimant sent to the first defendant for signature. The agreement recorded that interest was at the rate of 3 per cent per month, with default interest on overdue sums of 3 per cent per annum above that rate. In addition there was a fee for the claimants of €100,000 due 18 months after drawdown and the claimant's costs and expenses were payable on demand. The default on repayment of this loan occurred when the first interest payment was due on 28 October 2007. In fact nothing has ever been paid with the result that very substantial sums became and remain outstanding from the first defendant and the second defendant, on the face of it, would be liable on his guarantee.

The action was started in October 2012 following a demand for payment and the first defendant and the second defendant put in defences which purported to suggest that there was some form of forbearance in relation to the loan, but that has not been pursued before me today by Mr Aggatt, the second defendant, who appeared to represent himself today and I also gave him permission to represent the first defendant as he is a director of the company. The defence for the first defendant also said that it would seek to have sight of the loan agreement and would question the amounts claimed by the claimant, but in the defence there was no suggestion that there was no signature on the loan agreement.

The claimant then applied for summary judgment and that application for summary judgment was supported by the first witness statement of Andrew Charles Lavery, the finance director of the claimant. He exhibited what he said was a faxed copy of the loan agreement and the guarantee, which had been faxed directly to the claimant. This prompted a statement signed by Mr Aggatt in which he made points about the loan agreement which had been exhibited by Mr Lavery and asserted that for various reasons the documents were not credible. This was responded to by Mr Lavery in his second witness statement and he produced copies of the original documents which had been sent by the first and second defendants to Taylor Wessing, solicitors acting for Opus at the time these agreements were entered into. The contemporary e-mails record that what happened was that versions of the two agreements were sent by fax to the claimant directly and then a hard copy was sent to Taylor Wessing - that appears from the documents and from Mr Lavery's witness statement.

Before me today Mr Aggatt has advanced as the only defence to this application that the fax exhibited by Mr Lavery and the original loan agreement produced have been tampered with. He has not challenged the genuineness of the guarantee or anything associated with it. What he says has happened is that a signature page has been concocted in that what he suggests has happened is that a signature page from some earlier loan agreement that he had with Opus (because he says he had a history of dealings with Opus) has been substituted for what was in fact an unsigned page of the loan agreement.

What he says is that on the faxed copy the first page exhibited to Mr Lavery's witness statement is recorded as being page 2 of the fax and he says that page 1 of the fax was in fact a letter explaining why the loan agreement was not being signed. He is not able to produce that letter, but he says that such a letter was sent and that after he returned the loan agreement and the guarantee (the guarantee of course having been signed) what must have happened is that the signature page was, for the purposes of this submission by him, dishonestly substituted for what was in fact a blank page. This substitution, I infer, must have been with the knowledge of Taylor Wessing because they were the party that had received a blank page and would therefore know that the document they had received was unsigned.

Although it is right to say that in the defence, as I have indicated, in addition to a statement that the figures would have to be checked, what was said was: "We seek to have sight of the loan agreement and will question the amounts claimed by the claimant.", there was never any suggestion that the loan agreement itself had not been signed. Even when the response to Mr Lavery's first witness statement was made by Mr Aggatt, he did no more than to question the credibility of the fax and did not assert that there was a positive reason why the loan agreement had not been signed and did not assert that the original copy sent to Taylor Wessing was unsigned. So it was very much for the first time at the hearing today that Mr Aggatt has advanced a positive case as to there being a reason why the loan agreement was not signed and that the explanation for the original appearing to be a signed document was that there had been some concoction.

Of course I take into account that this is an application for summary judgment and it is not a trial, but in dealing with an application for summary judgment one has to exercise some form of common sense and judgment and it seems to me on the material that I have that the explanation for the signed document which the claimant has produced which has been advanced by Mr Aggatt is so fanciful that I can reject it as having no real prospect of success at trial. There are a number of reasons for my reaching that conclusion. Firstly, it seems to me to be incredible in the true sense of that word, i.e. in the sense that it simply cannot have occurred, that Opus, the claimant, would have advanced the £300,000 which Mr Aggatt was seeking as a loan in circumstances where the loan agreement had not been signed. Mr Aggatt suggests that this would have happened due to the friendly relationship he had with Mr Lavery. That seems to me to be so far-fetched that I can reject it even on an application for summary judgment.

Secondly, the form of guarantee, which Mr Aggatt admits that he signed, was also countersigned by a solicitor who was there to ensure that Mr Aggatt understood the terms of the guarantee. That referred to the terms of a loan agreement "dated on or about the date of this deed made between the borrower and the lender" and at the end the solicitor certified that he had advised Mr Aggatt on the provisions of the guarantee and that he appeared to understand it fully. It seems to me that it would have been incredible if the solicitor had advised on the signature of the guarantee without having before him a copy of a signed loan agreement which recorded the obligation of the borrower for the purposes of the guarantee.

Further, there are a number of other points as well. The form of the loan agreement produced by the claimant as the original form of document has a reference number at the bottom and that reference number appears through the body of the terms of the agreement and it also appears as the same reference number on the signature page. Mr Aggatt suggested that this reference number is a generic reference number for loan agreements by Opus, but, as can be seen from examination of the loan agreement, although it may be based on standard terms, this one has been adapted in the sense that the particular loan amounts and the particular fee that has been charged and interest rates that have been imposed have been inserted, and this has been done not just as a space filling exercise, but a document has been produced so it looks as though it is a complete agreement. I do not find it credible at all that somehow this page with the same reference number could have been taken from some other agreement which would, on Mr Agat’s hypothesis, also bear the same reference number. Again I regard that suggestion as fanciful.

I should also say that it does seem to me to be a fairly ridiculous suggestion that a firm like Taylor Wessing would fabricate an agreement so as to advance this claim. I am sure that if there was no signed agreement in their possession they would say so. But the fact that that must be the case is supported, as I have indicated, by many other indications.

The e-mail exchanges between the parties leading up to the sending of this loan agreement by Mr Aggatt to Taylor Wessing also seems to me to demonstrate that the document must have been signed by Mr Aggatt. There is a series of e-mails. They start on 13 September 2007 where Mr Aggatt is saying that he would be happy to pay 3 per cent interest a month and a bonus after 18 months of, say, €100,000, and that was to encourage the claimants to lend him the £300,000, which he described as being a ‘black hole’ which they needed. That elicited a response from Mr Lavery saying: "Sounds fine to me", and saying that he would copy a colleague into the exchange so that the documentation could be produced. Mr Aggatt replied, still on 14 September, saying:

The documentation did come forward on the 24th and that was then sent by Mr Lavery to Mr Aggatt. In an e-mail on 13 September Mr Lavery had said that the original documentation needed a few tweaks, so this was now ten days later when the documentation was sent. The documentation was sent at 20.27 on the 24th. Mr Aggatt immediately responded, saying he would read through and organise signatures, etc. and that "I am sure all will be fine. I will contact you tomorrow." Indeed the next day, on the 25th at 14.46, Mr Aggatt said:

It was obvious that the documentation was faxed and posted because that is what happened. There was nothing in those e-mails to suggest that the documentation would not be signed. As I have indicated, Mr Aggatt has said that when he faxed the loan agreement there was a covering letter explaining why it would not be signed, but again I find that in the context to be so fanciful that it can be rejected.

Mr Aggatt has made some criticisms of the loan agreement in its faxed form. It is quite right that we do not seem to have a page 1 on the document produced, but that does not seem to me to be material unless I was to be satisfied that there was a real prospect of the first page of that document explaining why it was not signed. But when one comes to look at the document itself one finds in fact that the faxed documents support the hypothesis that the agreement was signed. Mr Aggatt refers to page 2 of the loan agreement in its faxed form and says it bears no fax read-out, which is correct, although the pages do seem to be out of order and one does not know whether that page was faxed and the faxed printout did not read on it. Maybe that was the page 1. But, even if one assumes that that page was not included in the fax, that is not material.

His critical point was on the signature page. When one looks at the fax printout it is apparent that a further fax was sent two minutes after the loan agreement had been sent because the last page of the loan agreement, other than the signature page, has as a fax printout 2.12pm on 26 September and the signature page is at 2.14pm and is said to be page 1. Further, it cannot be the guarantee that this fax formed part of because that fax did not start until 2.25pm. So what appears to have happened is that a single page was sent at 2.14pm.

Mr Aggatt said that what appears as a faxed copy of the signature page is in fact a cut and paste job that somebody has concocted to make it look as though it has been faxed. He says that there are square lines around the document and that, although the signature typescript is further down the page, somehow the reference number is at the bottom. None of those points seem to me to be valid points on the face of the document. It is quite apparent that the version of the signature page is a scaled down version of it, which explains why the reference number appears at the bottom. It is not unusual to have faxed pages appearing in various guises because what appears at the end, the claimant's end, will depend on what happens to the document when it is put through the machine at the other end, and there is nothing in the appearance of the document that causes me even to begin to suspect that this is a concocted document, but I am reinforced in that conclusion by the many surrounding factors which seem to me to make it obvious that Mr Aggatt did sign this document.

As I have indicated already, the most telling point is that it is only today for the first time that Mr Aggatt has asserted that the document was not signed and, with respect to him, I am not satisfied that he has even produced any reason that could begin to be persuasive as to why the document would not be signed.

For all the reasons I have given, I am quite satisfied that the claimant is entitled to summary judgment in this case and I am quite satisfied that Mr Aggatt did sign this loan agreement and that the suggestion that he did not sign it has no real prospect of success. I should finally also record, and this is part of my reasons for reaching my conclusion which I omitted to mention in the list, that in response to Mr Aggatt's assertion that the loan agreement was not signed, Mr Rothschild was able to produce a copy of minutes of a meeting of a board of directors of Arca Homes, held in 2007, and this is dated 10 October 2007. It is a form of minutes which Mr Aggatt says was drafted for Arca Homes, the first defendant, by Opus, and it does look as though it was as it has a reference number similar to the loan agreement on it. But, nonetheless, this document was signed by Mr Aggatt and it includes the following paragraph:

I find it again incredible that Mr Aggatt could have signed those minutes, or indeed that the claimant would have even attempted to get the company to sign and approved those minutes if everybody had known that the loan agreement had been returned unsigned and had been returned unsigned for some particular reason. So for that reason also I have reached the conclusion that there is no real prospect of the defendant successfully defending this action and the claimant is entitled to summary judgment.

As to the sums claimed by the claimant, I have considered the terms of the agreement and, although the interest rate seems very high, I was reminded by Mr Rothschild that the period of the loan was supposed to be for not more than 90 days and I am also comforted by the fact that the e-mail exchanges leading up to the agreement show that Mr Aggatt had expressly stated that he would be happy to pay 3 per cent interest a month and a bonus after 18 months of €100,000, no doubt because he was so desperate for the money. So, in my judgment, the claimant is entitled to the sums claimed and that can be recorded in a formal order.