Close Brothers Ltd v Ridsdale & Ors

In these proceedings the Claimant (“Close”), a well known merchant bank, seeks to recover on guarantees given by each of the Defendants in respect of sums advanced by Close to St Georges Keep (Southern) Limited (“Southern”), a subsidiary of the Third Defendant.

The Third Defendant has taken no part in these proceedings - accordingly this judgment is solely concerned with what, if any, liability each of the First and Second Defendants has to Close.

The First and Second Defendants are wife and husband.

The Third Defendant company is a company set up by Mr. Ridsdale for his personal development projects. It is either wholly owned or majority owned by him. Mrs. Ridsdale was the company secretary.

Mr. Ridsdale is in his early fifties. Early in his career he worked in pubs and restaurants before becoming an insurance broker. He started acting as a developer in the late 1980’s. He had a track record of success which impressed Close, as I explain further below. He gave evidence before me. He struck me as intelligent and shrewd. I also formed the view that he was substantially honest, although as I set out below, his witness statement went somewhat further than was accurate.

Mrs. Ridsdale has been married to Mr. Ridsdale for about 9 years and had been together with him for a number of years prior to that. She also was patently honest, and it was clear that in business matters she deferred to his judgment without questioning him as to the details of those matters or being given much information about them. Before giving up work to devote herself to her husband and children as wife and mother, she had worked as a counter clerk in a building society. Nothing in that employment trained her to understand the intricacies of the transactions with which this case is concerned.

Close is, as I have said, a well-known merchant bank. It is independent of the High Street banks which found themselves in difficulty in late 2008.

I had the benefit of a witness statement and oral evidence from Mr. Robert Orr, who was until 31^st July 2012 a Director of Close Brothers Property Finance, which is a trading division of Close. He also was an honest witness.

In his witness statement he set out this record of the relationship between the Defendants and Close, which I accept as accurate:

Mr. Jason Haigh, who was involved with at least two of the earlier transactions as subordinate to Mr. Orr, left Close and joined a “mezzanine” financier, Shelly Oak. When Mr. Haigh was at Close, he was assisted by Mr. Fergus O’Connell. When Mr. Haigh left Close, Mr. O’Connell worked directly with Mr. Orr.

Mr. O’Connell still works for Close, but did not provide a witness statement and was not called to give evidence.

In January 2009 Mr. Christopher Birch joined Close. In May 2010 he took over responsibility for the accounts held by Mr. Ridsdale’s companies with Close.

Puddletown is a small rural village just under 6 miles from Dorchester in Dorset. It has now been by-passed by the A35. This resulted in withdrawal of business from a garage in the village, Olds Garage.

By the beginning of 2008 planning permission had been obtained to redevelop the garage site. The development project with which I am concerned was for the redevelopment of the garage site and for works to three semi-detached cottages adjacent to the garage site.

The proposed development is shown on a plan dated September 2008 which was placed before me. The site fronts onto a road known as the Moor which runs roughly from South West to North East along the side of the site. Alongside the road, and forming one boundary to the site, is the River Piddle.

Standing on the road and looking in a North Westerly direction, the river would run from right to left in front of the viewer. A bridge crossed the small river. Over the bridge an access road was to be constructed running directly across the site leaving the garage site to the left and an area which had been covered in a hardstanding to the right. This area on the right was described at times as “the brownfield site”. The planning authorities wanted it to remain as open, grassed space. Mr. Ridsdale was hopeful that at some point in the future permission would be obtained to develop that space.

At the end of the new access road it was to turn rightwards in front of the first two of three semi-detached cottages. The first two cottages were described in later documents as plots 3 and 4. The access road went in front of these two cottages in order to give access to garages to be built between plots 3 and 4 and the third cottage, plot 5. Plot 5’s partner cottage, to the North of the northern boundary of the development, remained outside the scheme at all times.

The three cottages were all Grade II listed. One, plot 3, had already been extended to provide 4 bedrooms. The intention was that the other two would be similarly extended, which would require listed building consent and planning permission. Plot 4 had a sitting tenant. All three were in need of extensive refurbishment.

Returning to the view of a person standing on the road, the area to the left of the site was what had been occupied by the garage premises. Permission was obtained to build 6 houses - two semi-detached and the rest detached. In addition to these there was permission to construct B1 commercial premises on part of the site fronting the road. In a rural location such as this, the demand for such premises was limited if non-existent. Mr. Ridsdale’s hope was that eventually a consent for a substitute residential development would be obtained. The garage site came to be referred to as the “newbuild site”.

Because of the previous use of the newbuild site, it was known that the site might be contaminated to a greater or lesser extent by leakage of petroleum products. It was also anticipated that specialist foundation works might be necessary. A further problem was environmental sensitivity associated with the River Piddle which was and is the home of a protected species, white- clawed crayfish.

After the owners of the proposed site had obtained planning permission for the development of the scheme, Mr. Ridsdale on behalf of St Georges Keep Ltd had obtained an option to purchase the site. The option was to expire at the end of March 2008. The purchase price of the site was £1,300,000 of which Close agreed to lend £850,000. The balance of £450,000 was to be lent by Shelly Oak.

In paragraph 7 of his witness statement, Mr. Ridsdale says:

I return below to the legal analysis of Close’s commitment (if any) as to completion of the project, but it is to be noted that Mr. Ridsdale’s oral evidence did not fully support his written evidence. In cross-examination he accepted that he had understood at the time that the facility agreement was made that any extension of the period of the agreement would be at Close’s absolute discretion. He said that he understood that that was the legal effect of the agreement but that in his previous experience Close would extend. He said that an initial period of 12 months for a facility was what Close normally provided - Close did not normally go above 12 months. In answer to questions from me, he emphasised not only Close’s past track record in extending the periods of its facilities, but also that Close knew that unless the project went to completion as a whole, the developer would not earn the profit expected from the project. He did not suggest that Close had expressly agreed to keep the facility monies available until the project was complete, but pointed out that Close did not say anything to suggest that the monies would not be available until completion of the project.

Close carried out the normal range of checks and research into the proposed transaction, which included obtaining a report from a firm of Chartered Quantity Surveyors, Hills, which reported amongst other matters (Footnote: ⁶):

Mr. Ridsdale had estimated the construction cost as £1,310,000. Hills cast some doubt upon this, but in the event this was the figure upon which lender and borrower proceeded.

On the 9^th June 2008, Close sent a revised Facility Letter (Footnote: ⁷). The material differences between this and that sent in March were:

This Facility Letter was signed by Mr. and Mrs. Ridsdale on their own behalves as guarantors and by Mrs. Ridsdale as company secretary of Southern and the Third Defendant.

By a Guarantee dated 1^st July 2008 (Footnote: ⁸), the Ridsdales entered into a Guarantee as required by the facility agreement. I refer to certain of the terms of that Guarantee in respect of Issue 3 below.

In her witness statement, Mrs. Ridsdale describes the advice given to her, and her reaction:

In cross-examination, Mrs. Ridsdale accepted that she was aware that she was exposing herself to a substantial liability. As I have already said, Mrs. Ridsdale was a patently honest witness, and I accept her evidence.

Although the period of the facility was in effect for twelve months, Mr. Ridsdale said in evidence that he thought the project might take between 14 and 17 months. Close appointed Mr. Dodge of Hills as monitoring surveyor. He operated on the assumption that 14 months was reasonable and should be achievable (Footnote: ⁹).

In his witness statement at paragraphs 5 and 8, Mr. Ridsdale says that Close was aware that the building works would take a period of at least 17 months. On the basis of the contemporaneous documents, particularly Hills’ reports, I am satisfied that this overstates the position. In my judgment Close and its advisers were operating on the basis that 14 months was a reasonable period, but I am also sure that as experienced lenders in respect of development projects it would have come as no surprise to Mr. Orr or his team that the construction period might be as long as 17 months.

On the basis of a 14 month construction period, and with an estimated construction cost of £1,310,000, the average monthly expenditure would have been about £93,500. On the basis of a 17 month period, the average monthly expenditure would have been about £77,000. Of course, such average figures are misleading as any construction project starts with preliminary works and then moves into full construction phase before the work tapers off towards the end. However, in my judgment, on a project as short as this, it is reasonable to have regard to the total expenditure after some months have passed.

In paragraph 3 of his witness statement, Mr. Ridsdale explains that of the £1,310,000, £954,000 related to the newbuild part of the project, and £356,000 to refurbishment of the cottages and for contingencies.

In a report dated the 24^th December 2008, Hills reported that cumulative expenditure was £160,719.07 (Footnote: ¹⁰). A report dated 4^th February 2009 showed cumulative expenditure of £181,979.50 as at 28^th January 2009 (Footnote: ¹¹). Hills summarised the position as follows (Footnote: ¹²):

Thus half way through a 14 month construction period, only 14% of the expected value of work had been carried out. Even if a period of 17 months is taken, something approaching a third of the expenditure might reasonably be expected to have been incurred. These figures suggest that the project was falling behind, and in cross-examination Mr. Ridsdale confirmed that this was so. So far as the refurbishment works were concerned the explanations included that there were delays in obtaining planning permission and listed building consent for the extensions to plots 4 and 5. So far as the newbuild part of the project was concerned, contamination beyond that anticipated was discovered causing delays because of additional ground investigations and removal of contaminated soil. There were also environmental problems associated with the river works necessitating consultation with a number of governmental authorities.

None of these problems were the “fault” of the developer, but rather were the sort of problems which can afflict a development project. However delay of this nature is liable to cause cost overruns, not least in respect of financing costs, but also in this instance because of additional professional fees being incurred.

In order to understand the significance of this meeting, it is convenient to set out paragraphs 8 to 12 and 16 of the Defence of the First and Second Defendants:

Accordingly, what was said at this meeting on the 24^th March 2009 is of great significance to one of the defences to Close’s claims against the Ridsdales.

Between June 2008 and March 2009 the world economic climate, and the English economic climate, had changed dramatically. In the Autumn of 2008 not only had some of the principal Icelandic Banks collapsed, and some of the biggest names in the U.S. banking industry gone under or been rescued by the Federal Government of the USA, but a number of the biggest names in the United Kingdom banking system had been bailed out by the British taxpayer.

The result of this, as confirmed to me by Mr. Julian Wood, who was called as a witness by the Ridsdales, and to whose evidence I refer farther below, was that in the early months of 2009 there were few lenders willing to take on financing a project such as the Puddletown project with which I am concerned.

The evidence before me, from Mr. Orr and Mr. Birch in particular, reveals that Close was not as badly affected by the “credit crunch” as the High Street banks. However it was not unaffected. The Loan to Value ratio on which it was willing to lend money fell from 60-65% to 50-55%. The market conditions also meant that the value of real estate in many cases had fallen from the levels of a year earlier, so that the gross development value of projects to which the Loan to Value Ratio was applied was likely to be less than a year previously.

Mr. Ridsdale was suffering problems not only because of delays to the Puddletown project, but also with the project being carried out by Inntown Properties, which was the first project which Close had agreed to finance - Inntown had been the recipient of a winding up petition.

There is no dispute as to the attendees at the meeting on the 24^th March. I have heard evidence from Mr. Ridsdale and Mr. Orr. Mr. O’Connell, as I have said, has not given written or oral evidence. The fourth attendee was Mr. Julian Wood, a friend of Mr. Ridsdale’s who had long experience in business including corporate recovery, although the precise nature of his experience in corporate recovery was not explored in the written or oral evidence before me.

Mr. Orr gave no evidence as to how or why the meeting was convened, but both Mr. Ridsdale and Mr. Wood did. In paragraph 10 of his witness statement, Mr. Ridsdale said:

Mr. Wood gave evidence of his memory of the background to the meeting. I do not have a transcript of his evidence, but my note is as follows:

As I have said, Mr. Ridsdale and Mr. Wood challenge the accuracy of this note, and in particular Mr. Ridsdale denies that anything was said about selling the new build site. As to that, I am satisfied that such a sale was mentioned: I find it improbable that the note of the meeting produced for the bank’s internal records within days of the meeting would record this were it not so.

I have already set out at paragraph 43 above the parts of the Points of Defence relating to this meeting. The assurances said to have been given are in paragraphs 12.1 to 12.3 of the Defence. I refer to these below as assurances 12.1, 12.2 and 12.3.

The pleaded case was supported by Mr. Ridsdale’s witness statement in paragraph 10 of which he said:

Mr. Orr in his witness statement accepted “assurance” 12.1 was given (although it is not an assurance), but denied that assurances 12.2 or 12.3 were given.

In the course of oral evidence the parties’ positions moved significantly closer. In his oral evidence, Mr. Orr firmly and consistently denied giving any assurance in the terms of assurance 12.3, but he did say that the bank was a supportive bank (in contrast to other banks at that time) and that the bank was prepared to bear with Mr. Ridsdale despite the delays and cost overruns. He said that Mr. Ridsdale would not have left the meeting upset.

In his oral evidence Mr. Ridsdale told me:

For his part, Mr. Wood told me:

In my judgment Mr. Wood’s oral evidence accurately reflects the essence of what was said and implied by the Close representatives at the meeting. I do not believe for a moment that Mr. Orr or Mr. O’Connell would have gone as far as to give assurance 12.3. For his part, with all his experience, Mr. Wood knew that no such assurance was likely to be given - his aim was to move Close as far in that direction as he could without producing a counterproductive response. However, Close was being supportive to its clients, and my assessment was that Mr. Orr was keen to assist Mr. Ridsdale (for whom he clearly had a high regard, as evidenced by his reports to the Credit Committee) in difficult circumstances - if he could, he would persuade the bank to support the Puddletown project through to completion. That said, it was also sensible financially (and sensible politics within Close) to take things one step at a time. If the borrowing could be reduced by relatively early sales of the cottages, this would be to everyone’s advantage. Accordingly, even if assurance 12.2 was not given expressly, I am sure that Mr. Ridsdale and Mr. Wood came away with the well-based impression that that was the bank’s intent - as at that date. Importantly, the bank had not committed itself as to what would happen if circumstances changed.

Even had an assurance in terms of assurance 12.3 been given on the 24^th March, Mr. Orr’s response would have set out Close’s reservations in respect

On the 20^th May 2009 Hills reported to Close in one of its regular monitoring reports. This recorded that progress had been hampered by contractors leaving site and that Building Regulation approval for the new build works had not yet been received (Footnote: ¹⁷).

Having received that report, on the 21^st May Mr. Orr spoke to Mr. Ridsdale on the telephone. His note includes this (Footnote: ¹⁸):

On the 10^th July 2009 Close wrote to Southern offering to extend the Facility (Footnote: ¹⁹). The letter included the following:

...

Expiry and Repayment

The letter was signed by way of acceptance by Mr. and Mrs. Ridsdale. Mrs. Ridsdale said (and Mr. Ridsdale confirmed) that she simply signed where indicated by Mr. Ridsdale, without asking about or being told anything about the significance of what she was signing.

By early September 2009, the refurbishment of the cottages was still not complete, and therefore the cottages were not on the market (it had been hoped that they would have been on the market by the end of June).

The expiry of the extended facility was approaching. This led to discussions between Close and Mr. Ridsdale, culminating in a meeting at the Ridsdales’ home on the 6^th October. This was the subject of a file note produced by Mr. Orr (Footnote: ²⁰). During the meeting Mr. Ridsdale asked Mr. Orr to consider taking forward part of the new build scheme. Mr. Orr set out his view in the file note:

In two e mails on the 9^th October Mr. Orr made clear to Mr. Ridsdale that there was no facility in place for the new build at that time (Footnote: ²¹).

I should also make it clear that Mr. Hamilton expressly disavowed any case of misrepresentation or estoppel based upon the assurances said to have been given at the meeting on the 24^th March 2009. There is an extant case of estoppel raised in respect of Mr. Pennal’s letter of the 15^th October 2010.

The authorities since Holme v Brunskill have recently been reviewed by Edwards-Stuart J. in Hackney Empire Ltd. v Aviva Insurance UK Ltd (Footnote: ⁴³).

The principle is clear and of long authority, that a surety will be released from liability under a guarantee if there is a material (or “not unsubstantial”) change to the underlying or primary agreement in respect of which the guarantee has been given, unless the surety has had notice of the change and has consented to it.

Issue 1 raises the question, was there a material change to the agreement between Close and Southern as a result of the first extended facility letter? Issue 2 encompasses the question, if there was such a change, did the Ridsdales consent to it?

On behalf of the Ridsdales, Mr. Hamilton says that the extended facility was very different from the original facility. Under the extended facility, Close only committed itself to funding Phase 1 of the project, whereas under the original facility Close committed itself to funding the whole of the project. The changed facility, it is said, was fundamentally different because unless the project was completed Southern lost the possibility of making a profit, committed itself to expenditure not related to refurbishment of the cottages (expenditure which might or might not be recovered depending upon the amount for which the newbuild site might be sold for if sold separately) and, most importantly of all, might not realise a large enough sum from the project to discharge all of Southern’s liability to Close, thus exposing the Ridsdales to an increased chance of being liable under their guarantees.

On behalf of Close, Mr. Thorowgood denies that there was any material or substantial change: the original facility would have expired in any event before the project could be completed (the original facility being for 12 months, and the projected construction period being between 14 and 17 months); the original facility could be cancelled by Close at any time at its absolute discretion; and the work was already concentrating on the three cottages by the 24^th March 2009 and/or by the date of the first extended facility letter.

In my judgment there was a material change in the facility for the reasons given by Mr. Hamilton. However that is not an end of the matter: in the passage from the judgment of Cotton L.J. set out above, it is clear that a surety would not be discharged from liability if the change, whilst material, “cannot be otherwise than beneficial to the surety”.

I do not understand Close to base its case upon this part of the authorities, but it seems to me at least well arguable that the change was beneficial to the Ridsdales since the alternative would be to allow the facility to expire in a market where it was improbable that the same facility would be available elsewhere, or, if available, only on less favourable terms. However, for the reasons given below, it is not necessary for me to reach a settled conclusion on this matter.

There is a fundamental divide between the parties as to whether this issue as formulated by Mr. Hamilton raises a legally relevant question.

Mr. Hamilton contends that the power of the court to relieve a surety from liability under a guarantee is an equitable remedy and therefore subject to the court’s discretion as to whether it should be exercised. That submission is supported by express authority, starting from Rees v Berrington (Footnote: ⁴⁴) and most recently in the judgment of Buxton L.J. in Wittmann (UK) Limited v Willdav Engineering S.A. (Footnote: ⁴⁵):

For his part, Mr. Thorowgood says that there is no separate equitable doctrine in play. He says this is a simple matter of contract: he refers to L’Estrange v F. Graucob Ltd (Footnote: ⁴⁷) for the proposition that absent any plea of misrepresentation (or, in the light of the case law since 1934, any plea of estoppel) the Ridsdales are bound by the agreements which they signed, namely the first extended facility letter and its two successors, by each of which the Ridsdales affirmed their agreement to guarantee Southern’s liabilities to Close.

It is not necessary for me to resolve this interesting debate. It is clear on the authorities that if the surety consents to the change to the underlying transaction to which the guarantee relates then the surety remains bound by his guarantee.

In this case there is no doubt that the Ridsdales consented to the change to the facility - the evidence of that is their respective signatures on each of the extended facility letters. This is not denied on behalf of the Ridsdales - what is contended is that they did not give informed consent, since they relied upon the assurance said to have been given by Mr. Orr at the meeting on the 24^th March - namely assurance 12.3 that Close would support the continuation of the development and would not call in the loan until the development was completed. On this basis, it is said, there would have been no material difference between the original facility and the first extended facility, and that was what the Ridsdales believed to be the position.

When I refer to “the Ridsdales”, I should make it clear that it is not suggested by Mr. Hamilton that Mrs. Ridsdale herself applied her mind to, or understood, the contents of the extended facility letter, but he accepts on behalf of both husband and wife that Mrs. Ridsdale is bound by the knowledge and understanding of her husband.

As I have set out above, when the oral evidence unfolded, it was clear that no assurance to the extent relied upon in assurance 12.3 was given by Mr. Orr, and I have so held. Accordingly, the factual basis for the suggestion that no informed consent was given falls away. In any event, on Mr. Wood’s evidence, Mr. Ridsdale had been told by him before the meeting of the 24^th March of the risk that the bank would cease to fund beyond Phase 1, and that risk was spelled out by Mr. Orr’s e mail of the 8^th May 2009 (Footnote: ⁴⁸), which made the position clear. Moreover the position was very clear from the terms of the first extended facility letter itself, which I am sure Mr. Ridsdale read and clearly understood.

In so far as it is suggested that Mr. Ridsdale needed legal advice at this stage (i.e. when agreeing to the extended facility), I reject the suggestion. At the time that the original facility was negotiated, Mr. Lawrenson made clear to Mr. Ridsdale that the facility had a flaw in that it was limited to a shorter period than the projected construction period, and Mr. Ridsdale knowingly took the risk presented thereby - a perfectly realistic risk to take given his past relationship with Close. There was no need for any further advice now that, the original facility period having come to an end, Close was only willing to extend the facility on a restricted basis.

In so far as this issue raises issues of equity, I would resolve those in Close’s favour. It was overwhelmingly in the Ridsdales’ interests for the facility to continue even if on more restricted terms. Without Close’s support, the likelihood was that the whole project would have been the subject of LPA receivership in June 2009. The extended facility kept open the possibility of the project proceeding to a full conclusion with both the cottages being refurbished and the newbuild site being completed as a housing development. Thus the extended facility was, as I have said above, in the Ridsdales’ interests. To hold that they were relieved from the continuance of the guarantee which was an important part of the transaction from Close’s viewpoint would be inequitable.

There is also a further point: each of the second and third extended facility letters was accompanied by correspondence spelling out Close’s position. Thus the Ridsdales’ agreement to the last two extensions was informed by Close. It would be very odd if an attack upon the first extended facility agreement vitiated the last two agreements to which consent was given.

Accordingly, I hold that the Ridsdales did consent to the change to the facility afforded by Close to Southern, and (subject to issue 6 below) remain bound by their guarantees.

The Guarantee entered into by the Ridsdales provides by Clause 3.2 as follows (Footnote: ⁴⁹):

A provision such as this is standard in guarantees drafted by or on behalf of banks, and will usually be effective to avoid a guarantee being held to have been rendered ineffective by a change in the agreement between the parties to the underlying transaction guaranteed.

Issue 3 reflects the argument upon behalf of the Ridsdales that the above provisions of the Guarantee are ineffective to preserve the validity of their guarantees in the face of the change represented by the first extended facility agreement. Mr. Hamilton relies upon the decision of the Court of Appeal in Triodos Bank NV v Dobbs (Footnote: ⁵⁰). In that case the Court of Appeal held that if a change was not in substance a variation or amendment to the original underlying transaction but was on the contrary a new agreement outside the general purview of the original guarantee then the guarantor would not be liable in respect of that new agreement.

In my view the extended facility was not outside the purview of the original guarantees given by the Ridsdales. Whilst I am required to look at the substance of the change, I am entitled to take into account that in form each of the extended facilities was a variation or amendment of what had gone before. It seems to me impossible to hold that the mere fact of extending the period of the facility would take the altered arrangement outside the purview of the original guarantee. Whilst I have held that the introduction of phasing was a material change to the underlying transaction such as to require the Ridsdales’ consent, it was not such a fundamental change as to make the extended facility a new agreement. On the contrary, it remained in substance a facility to enable the Puddletown development to continue, if possible to a full conclusion in all its aspects, but in any event so far as was economically viable in the prevailing circumstances.

I have no hesitation in coming to this conclusion, since the extension to the facility and the introduction of phasing appear to me to be precisely the sort of changes to the facility which Clause 3 of the Guarantee was intended to anticipate.

This issue only arises if I am wrong in the conclusions reached thus far. Mr. Thorowgood says that even if the Ridsdales did not consent to the changes to the facility, or even if the extended facility was outside the purview of the original guarantee, there was fresh consideration flowing to the Ridsdales for each of the extended facility arrangements so that the Ridsdales remain liable under each of them. On this analysis, Close only has to establish the validity of the last in time.

This appears to be a novel argument not addressed in any authority. Whilst it is not necessary for my decision to decide this, having regard to the conclusions which I have reached on the other issues, it seems to me to be logically right, and also commercially right. Addressing the last extension, it was in the Ridsdales’ interests for the facility to continue for as long as possible in order to see if the development could be rescued. The last extension was agreed with the full knowledge and informed consent of the Ridsdales. In those circumstances the argument that the Ridsdales agreed for good consideration to the continuance of the validity of their guarantees has much to commend it.

Very little money turns on issue 5. When Close agreed to the second extended facility, it charged Southern for the “release fee” in the sum of £78,700. This was the fee provided for in Clause 7 .b) of the original facility letter. That clause allows Close to charge the release fee upon, inter alia, the expiry of the facility. Close’s argument is that when the original facility expired, it could have charged the release fee then, but chose not to do so; it says it had a fresh opportunity to do so when the first extension ended, the facility then expiring a second time.

The Ridsdales contend that the facility did not then expire, but was extended, only expiring on the 30^th April 2010. The difference goes to the date at which interest starts to run on the release fee. The interest figure in dispute is £2,817.62 in respect of the period between the 20^th November 2009 and the 1^st May 2010.

On this issue I find in favour of the Ridsdales. By agreeing to extend the facility, Close agreed that the facility would not and had not expired.

The final issue relates to a claim by the Ridsdales that Close is estopped from enforcing the guarantees. Reliance is placed upon Mr. Pennal’s letter of the 15^th October 2010 (set out at paragraph 85 above), Mr. Birch’s e mail of 15^th December 2010 (set out at paragraph 88 above), and Mr. Birch’s e-mail of the 4^th March 2011 (set out at paragraph 91 above).

It is said that by these communications, Close represented that it would not enforce the personal guarantees. This does not stand up to scrutiny.

In the letter of the 15^th October, Mr. Pennal offered to consider release of the personal guarantees on certain conditions - it may be that those conditions were unrealistic, but the conditions were clear. They were not complied with, and therefore the basis upon which Close was willing to consider release of the guarantees fell away. In any event, an offer to “consider release” is a fragile basis for founding an estoppel.

The e mail of the 15^th December is similarly highly conditional, and those conditions again were not satisfied. Nor do I think that the terms of the “offer” made in that communication were sufficiently certain to found an estoppel.

As to the e mail of the 4^th March, what was sought was agreement to the inclusion in an agreement yet to be finalised of an express release. Whilst Mr. Birch’s response did not expressly reject the idea of a release of the personal guarantees, nothing in it held out any such hope - and in the event no agreement of any sort was concluded.

Even were there not those various difficulties in the estoppel case, in order for the case to succeed, the Ridsdales would have to establish that they acted to their detriment in reliance upon the representations said to have been made. Pressed on this point, Mr. Hamilton was unable to point to any detriment, nor do I think there was any. The Ridsdales were in a difficult position. The development project was in serious difficulties, and the call on the personal guarantees was highly likely. It was in their interests to do everything they could to achieve sales of the elements of the Puddletown site and also to assist in reducing liabilities to Close of the other companies with which each of them was associated. Whatever the Ridsdales did between October 2010 and the eventual sale of the site to Bellacre would have been done by them in any event as a matter of self-preservation regardless of what was said in the communications relied upon.

For these reasons, in answer to issue 6 I hold that there was no estoppel as claimed.