A director of two companies (one a subsidiary of the other) had given the bank a written guarantee of the liability of the holding company (only); but under an ‘interavailable’ facility backed by cross-guarantees (by the companies) the holding company was liable for the subsidiary’s indebtedness to the bank. When the bank sued the individual guarantor for the whole of the corporate indebtedness there were two issues, the construction of the guarantee and (if the bank failed on that point) estoppel by convention.
Held: The court decided the first point in favour of the bank, and said cautiously on the second (after referring to what Viscount Radcliffe said in Kok Hoong and to Humphries v Humphries [1910] 2 KB 531): ‘In the light of these authorities I would not exclude the possibility that circumstances might arise in which a guarantor might have acted in such a way as to create or influence the other party’s mistaken belief in the effectiveness of his guarantee so that it would be unconscionable to allow him to rely on the Statute of Frauds. Such a finding would depend very much on the court’s views, on the facts of any particular case, of the personalities and attributes of the two parties between whom the alleged estoppel was alleged to have arisen’
Judges:
Brooke J
Citations:
[1991] BCLC 244
Jurisdiction:
England and Wales
Citing:
Cited – Kok Hoong v Leong Cheong Kweng Mines Ltd PC 1964
A clear public policy underlying a statute (for instance, the need to protect vulnerable persons dealing with moneylenders or landlords) prevents an estoppel arising: ‘To ask whether the law that confronts the estoppel can be seen to represent a . .
Cited – Humphries v Humphries CA 1910
The plaintiff began an action against the defendant for arrears of rent, and succeeded. Arrears developed again, and the plaintiff began this second action. The defendant now pleaded that the action was barred as having no sufficient memorandum to . .
Cited by:
Cited – Actionstrength Limited v International Glass Engineering In Gl En SpA and others HL 3-Apr-2003
Actionstrength agreed with Inglen to provide construction staff to build a factory for St-Gobain. Inglen failed to pay. Actionstrength claimed against for the amount due. Inglen went into liquidation. The claim was now against St-Gobain. The claim . .
Lists of cited by and citing cases may be incomplete.
Estoppel
Updated: 17 July 2022; Ref: scu.180432
