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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> FBME Bank Ltd v Elwes & Anor [2012] EWHC 2209 (QB) (25 July 2012) URL: http://www.bailii.org/ew/cases/EWHC/QB/2012/2209.html Cite as: [2012] EWHC 2209 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		25/07/2012

His Honour Judge Richard Seymour Q.C. :

Introduction

1. On the second day of the trial of this action I gave judgment on a preliminary issue as between the claimant in this action, FBME Bank Ltd. ("FBME") and the first defendant, Mr. Jonathan Elwes, as to the proper construction of a guarantee. The second defendant, Mr. Kevin Aspin, who has acted in person throughout this litigation, had raised the same issue of construction in relation to a guarantee into which, on the face of it, he had entered in favour of FBME. Consequently he has the benefit of my conclusion in favour of Mr. Elwes on the construction point. However, Mr. Aspin raised a number of other points in support of his contention that he was not liable at all on his guarantee, so the trial continued as between FBME and Mr. Aspin after the delivery of my first judgment. This judgment is concerned with the issues which arose only as between FBME and Mr. Aspin. However, it is appropriate to recapitulate some of the findings in my first judgment in this action in order to explain the background to the issues which arose as between FBME and Mr. Aspin.
2. FBME is a company incorporated in the Republic of Tanzania, but carrying on business inter alia in the Republic of Cyprus, and, as its name suggests, carries on a banking business.
3. Mr. Elwes and Mr. Aspin, were directors of a company called Project-Pay (UK) Ltd. ("Project-Pay"). That company was incorporated on 15 October 2007 as Stonestream Ltd. ("Stonestream"), but in the period relevant to this action it carried on business in the field of mobile payment systems. The description of Project-Pay carrying on business is, perhaps, a rather loose one. The company had directors and employees, but it was a start-up company and it never proceeded to the point at which it sold anything to anyone.
4. By a facility agreement ("the First Facility Agreement") dated 5 February 2008 and made between FBME and Stonestream FBME agreed to provide to Stonestream a non revolving short term loan facility of £1,100,000.
5. Also on 5 February 2008 each of Mr. Elwes and Mr. Aspin entered into a guarantee (a"Guarantee"), mutatis mutandis in identical form, with FBME. Each Guarantee was in a standard form used by FBME to which had been allocated the reference "FBME 301 Guarantee". Taking the Guarantee into which Mr. Elwes entered as illustrative – that given by Mr. Aspin differed only in noting his name and passport details in place of those of Mr. Elwes, the operative part of each Guarantee for present purposes provided:-

"In consideration of FBME Bank Limited (the "Bank") giving time credit banking facilities and/or other accommodation to STONESTREAM LIMITED (the "Debtor")

Now Jonathan Elwes of BRITISH nationality with passport number 305454821 issued on 1/6/06 and expiring on 1/6/16 (the "Guarantor") hereby guarantees payment to the Bank on demand of:

(a) All present future actual and/or contingent liabilities of the Debtor to the Bank whether on account of moneys advanced, bills of exchange, promissory notes, guarantees or indemnities and whether incurred solely severally and/or jointly or as principal or surety Provided that the total amount of such liabilities recoverable under this Guarantee shall not exceed the sum of GBP 50,000 (Great Britain Pounds Fifty Thousand) (the "Limit") or such other sum or sums expressed in any currency as shall at the date of demand represent the liabilities of the Debtor to the Bank the total equivalent of which in the currency of the Limit did not when they were incurred exceed the amount of the Limit

And:

(b) All liabilities of the Debtor to the Bank on account of interest on such sum or sums up to the date of default in repayment thereof by the Debtor, commission and banking charges relating thereto and all legal and other expenses (on a full indemnity basis) howsoever incurred by the Bank in connection therewith and so that as against the Guarantor interest shall be deemed to continue to accrue and be a liability of the Debtor hereby secured notwithstanding that for any reason interest may have ceased to accrue against the Debtor (together with (a) above, the "Guaranteed Obligations")

Together with:

Interest on the amounts demanded under the Guaranteed Obligations above from the date of demand hereunder until full discharge, such interest to be chargeable at the rate of interest payable or deemed to be payable by the Debtor (whether before or after judgment) and calculated and compounded in accordance with the practice of the Bank from time to time together with all legal and other costs and expenses (on a full indemnity basis) howsoever incurred by the Bank in connection with this Guarantee."

6. By clause 8 of each Guarantee it was provided, so far as is presently material, that:-

"None of the events set out below shall discharge the liabilities or obligations of the Guarantor under this Guarantee or impair the rights, powers and remedies of the Bank under this Guarantee;

…

(d) the existence of any claim or set-off or other rights which the Guarantor may have against the Debtor, the Bank or any other person, or which the Debtor may have at any time against the Bank;"

7. Each Guarantee was signed by the person giving the Guarantee, but not on behalf of FBME. The giver of the Guarantee also initialled each page of the Guarantee.
8. Annexed to each Guarantee was an addendum (an "Addendum"), signed by the giver of the Guarantee in question, witnessed, and dated 5 February 2008, but not signed on behalf of FBME. The operative part of each Addendum was:-

"The Bank and Guarantor agree as follows:

Any liabilities arising under the Guarantee shall be discharged in full by the Guarantor making five equal instalments paid annually on each anniversary of and following the date of delivery of demand by the Bank to the Guarantor."

9. The issue with which my first judgment in this action was concerned was whether, on proper construction of an Addendum, the first instalment for which it provided was due within a reasonable time after demand, or twelve months after demand. I decided that the first instalment was due twelve months after demand.
10. After the making of the First Facility Agreement FBME lent further sums to Project-Pay. In particular, a further facility agreement ("the Second Facility Agreement") was made between FBME and Project-Pay dated 7 March 2010. Clause 3 of the Second Facility Agreement was entitled, "Purpose". Clause 3.1 was in these terms:-

"The Facility will be utilised as follows:

3.1.1 An amount of up to GBP 1,260,000 (Great Britain Pounds One Million Two Hundred Sixty Thousand0 will forthwith be used to repay in full the Borrower's outstanding obligations (including for the avoidance of doubt all outstanding interest thereon up until the date of first drawdown under this Facility) under the existing facility of GBP 1,150,000 (Great Britain Pounds One Million One Hundred Fifty Thousand) Non Revolving Term Loan Facility as per terms and conditions of the facility letter ref: FL1543/CK/MC dated 08 January 2009 and the extension letter ref: AL1759/CK/DJI thereto dated 24 February 2010 (together the "Existing Facility"). The Bank hereby acknowledges that this Facility Letter supersedes the Existing Facility and that the Existing Facility and the security agreement dated 8 January 2009, are hereby cancelled, released, and of no effect.

3.1.2 GBP 1,050,000 (Great Britain Pounds One Million Fifty Thousand) will be used as follows:

3.1.2.1 GBP 100,000 (Great Britain Pounds One Hundred Thousand) for the acquisition by the Borrower of such intellectual property rights as the Borrower shall decide, the license of which shall be held by the Borrower (the "Rights");

3.1.2.2 GBP 400,000 (Great Britain Pounds Four Hundred Thousand) for the upgrade of MTT 1581 units in stock;

3.1.2.3 GBP 550,000 (Great Britain Pounds Five Hundred Fifty Thousand) for operational expenses. "

11. Clause 4.3 of the Second Facility Agreement was in these terms:-

"Personal guarantee of Mr. Kevin Aspin (the "Guarantor B") for an amount of GBP 50,000 (Great Britain Pounds Fifty Thousand) on the Bank's Form 301 (on hand). This existing personal guarantee is to remain in full force and effect as security for the Facility and, for the avoidance of any ambiguity, the maximum cumulative liability of Guarantor B under their personal guarantee shall continue to be GBP 50,000 (Great Britain Pounds Fifty Thousand)."

12. That guarantee was one of those included in the definition of the expression "Security Documents" for the purposes of the Second Facility Letter.
13. The law governing the Second Facility Agreement and the Security Documents was prescribed by clause 18:-

"This Facility Letter, the Security Documents and all agreements entered into pursuant or supplemental hereto or thereto shall be governed by and construed in accordance with English law."

14. By clause 19 of the Second Facility Agreement it was provided that:-

"For the exclusive benefit of the Bank, the Borrower, the Guarantor A and Guarantor B and any other party (other than the Bank) to this Facility Letter hereby irrevocably submit to the jurisdiction of the English courts."

15. At the end of the Second Facility Agreement was a section, "To be completed by the Guarantor B". It was in these terms, signed and dated 7 March 2010 by Mr. Aspin:-

"I hereby accept the terms and conditions set out in this Facility Letter dated 07 March 2010 of which this is a true copy, as Guarantor B of PROJECT-PAY (UK) LIMITED and confirm for the avoidance of doubt that the existing guarantee shall continue in full force and shall apply to the Facility."

16. At the same time as the making of the Second Facility Agreement Project-Pay entered into a debenture ("the Debenture") dated 7 March 2010 in favour of FBME. By clause 8.1 of the Debenture it was provided that:-

"The security constituted by this debenture shall be immediately enforceable in any of the circumstances set out in paragraph 1 of Schedule 6. The parties to this debenture agree that the provisions of Schedule 6 shall apply to this debenture and shall be binding between them."

17. By clause 1.1 of the Debenture the expression "Enforcement Event" was defined as meaning, "any of the matters referred to in paragraph 1 of Schedule 6".
18. One of the matters in paragraph 1 of Schedule 6 to the Debenture was:-

"1.4 the Borrower or either or both of the Subsidiaries passes any resolution or takes any corporate action, or a petition is presented or proceedings are commenced, or any action is taken by any person for its winding-up, dissolution, administration or re-organisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of it or of any or all of its revenues or assets, save for, and subject to the express written approval of the Lender, solvent liquidation for the purposes of corporate reconstruction;"

19. As part of the arrangements made at the time of the making of the First Facility Agreement shareholdings in Stonestream were to be allocated to companies nominated by FBME. That was done. Further shareholdings were agreed in the context of the making of the Second Facility Agreement. About those further shareholdings Mr. Richard Clark, a solicitor and, at the time, a director of Project-Pay, wrote an e-mail dated 15 April 2010 to Mr. David Gardener, a lawyer acting for FBME, which included this:-

"The certificates for 102 new shares in PPUK [that is, Project-Pay] are now ready for issue on the agreed basis that new funding of £1.1m will be made available to the Company by FBME as part of the enlarged £2.3m facility. For the avoidance of doubt, it is understood that the new funds will be put to the best use of the Company as determined by management and that the use of funds from each drawdown will be pre-advised to the Bank. Please confirm that we are correct in assuming that, once the issue to FBME has been finalised, these new shares should be transferred on to Magena Limited and Namida Limited, on a 50/50 basis?"

20. There was no response to that e-mail on behalf of FBME.
21. Following the making of the Second Facility Agreement various sums were drawn down by Project-Pay from the funds promised by FBME. From July 2010 the sums drawn down included sums in respect of what was called a "Gateway". The detail of a "Gateway" is not presently material, but the expenditure was in the nature of the capital purchase of an asset.
22. By a letter dated 23 November 2010 Project-Pay sought to draw down an amount of £72,000 pursuant to the provisions of the Second Facility Agreement. However, by a letter dated 29 November 2010 FBME declined to permit that amount to be drawn down, contending that there was no availability under the Second Facility Agreement to permit that drawdown for the purposes for which it was said on behalf of Project-Pay that the drawdown was necessary. The funds sought to be drawn down did not relate to the acquisition of intellectual property rights or the upgrade of MTT 1581 units. The position of FBME was that the parts of the funds agreed to be advanced which were mentioned in clause 3.1.1 and in clause 3.1.2.3 had already been drawn down by this date.
23. At the beginning of February 2011 the directors of Project-Pay consulted Cork Gully for assistance in placing Project-Pay into Creditors Voluntary Liquidation. By a letter dated 9 February 2011 Cork Gully notified FBME, in its capacity as holder of the Debenture, pursuant to the provisions of Insolvency Act 1986 s.84(2)(a), of the intention to place Project-Pay into Creditors Voluntary Liquidation. The giving of that notification entitled FBME, under clause 8.1 of the Debenture, to demand repayment from Project-Pay of the sums which had been lent to it, which it did by a letter dated 10 February 2011. Project-Pay did not pay the sums demanded. It went into administration on 15 February 2011.
24. FBME wrote letters each dated 15 March 2011 to Mr. Elwes and Mr. Aspin which were in identical terms:-

"We refer to the terms of the guarantee dated 5 February 2008 (the "Guarantee") under which you agreed to indemnify FBME Bank Limited (the "Bank"), on demand, from and against any loss or liability of any kind incurred by the Bank as a result of Project-Pay (UK) Limited (the "Company") failing to perform its obligations to the Bank in respect of all present, future, actual and/or contingent liabilities due from the Company to the Bank; provided that the total amount recoverable from you as guarantor shall not exceed £50,000.

In accordance with an addendum to the Guarantee, you have agreed that "any liability arising under the Guarantee shall be discharged in full by [you] making five equal instalments paid annually on each anniversary of and following the date of delivery of demand by the Bank to the [you]".

Pursuant to a facility letter dated 7 March 2010 and a debenture dated 7 March 2010, and following the occurrence of an Enforcement Event as defined in the aforementioned debenture (being notice, given to the Bank, of the Company's intention to be wound-up), the Bank has now, by letter dated 10 February 2010, made demand to the Company for the immediate repayment of all outstanding indebtedness. The Company has failed to make such repayment.

In these circumstances, the Bank hereby gives you notice in accordance with paragraph 16 of the Guarantee, and makes immediate demand for indemnification in respect of the debts due by the Company, up to the value of £50,000, with the first payment of £10,000 due immediately, and thereafter on each anniversary of the date of this letter. Please arrange for the transfer of funds to the Bank within 7 days of the date of this letter."

25. Mr. Aspin did not pay the sum of £10,000 within seven days of the date of the letter or at all.

The claims made in this action

26. This action was commenced by a claim form issued on 27 May 2011. Particulars of Claim were served with the claim form. In the Particulars of Claim in their original form the way in which the claim was put against each of Mr. Elwes and Mr. Aspin was:-

"6. The Claimant made demand, by letter dated 15 March 2011, on the First and Second Defendant for the repayment of monies guaranteed and indemnified by the Defendants which is now due and owing in the total sum of £50,000 each.

7. In the alternative, of [sic] which is not admitted, under an alleged Addendum to the terms of the Guarantees, the first instalment of the sum of £10,000 was payable immediately by each of the Defendants upon demand. Payment has not been forthcoming from with [sic] Defendant.

8. Either pursuant to paragraphs 6 or 7 above, the entire balance of £50,000 from each the [sic] First and Second Defendant is now due and payable."

27. Those pleas were extremely difficult to understand. It appeared to be suggested, from how paragraph 6 was pleaded, that there was no Addendum to either Guarantee, such that no account needed to be taken of the terms of the Addendum, notwithstanding the terms of the letters dated 15 March 2011, which seemed to recognise that there was an Addendum to each Guarantee. Paragraph 7 was in terms which contemplated the existence of an Addendum to each Guarantee which limited the obligations of Mr. Elwes and Mr. Aspin, but appeared to contend that the consequence of the failure to make the payment of £10,000 demanded by the letters dated 15 March 2011 within the stated seven days was that the entire sum of £50,000 became due. That was not a consequence for which an Addendum, in terms, provided.
28. In Amended Particulars of Claim dated 13 February 2012 there was simply added a sentence at the end of paragraph 8 of the original Particulars of Claim, "Alternatively, the first instalment of £10,000 is due and payable from each of the Defendants".
29. Draft Re-Amended Particulars of Claim were put before me at the commencement of the trial and an application, which I granted, was then made on behalf of FBME by Mr. Peter Head to amend further the Particulars of Claim so as to add, to the existing Amended Particulars of Claim, so far as is presently material these allegations:-

"9. Alternatively, if, contrary to the foregoing, the first instalment was not payable until 15 March 2012, the said first instalment is due and payable from each of the Defendants.

10. …

11. Alternatively, by their failure to pay the first and/or second of the aforementioned instalments, the First and/or Second Defendants have repudiated the Guarantees. By these Re-Amended Particulars of Claim the Claimant accepts the said repudiation thereby terminating the Guarantees.

12. By reason of the said breach of contract the Claimant has suffered loss and damage.

PARTICULARS OF LOSS

(a) As against each Defendant, £50,000, being the sum which but for the said termination the Claimant would have recovered under the Guarantees."

The Defence of Mr. Aspin

30. Mr. Aspin served a Defence in this action dated 28 June 2011. The Defence was quite short. What he said in it was this:-

"1. The Defendant admits entering into a Facility Agreement "The Facility".

2. The Defendant admits guaranteeing £50,000 in relation to the company's indebtedness.

3. The Defendant admits receipt of the Administration Notice and Formal Demands. The Second Defendant disputes that the full amount of the guarantee becomes due by virtue of the first instalment not having been paid. The Claimants rely upon a guarantee under which nothing is due until one year from the demand being served on the Defendant, and that date has not been reached. "In accordance with an addendum to the Guarantee, you have agreed that "any liability arising under the Guarantee shall be discharged in full by [you] making five equal instalments paid annually on each anniversary of and following the date of delivery of demand by the Bank to [you]""

4. The Claimant can only rely upon the guarantee on the basis of a default, and the second defendant does not agree that any enforcement event has ever been triggered, other than one which was forced by the claimant.

PARTICULARS

a. The Claimant failed to advance to the company facility monies as agreed, causing it to fail.

b. The Claimant forced the company and its directors under duress several times to enter into fresh agreements and constantly kept "moving the goalpost".

c. The claimant has failed to engage with the defendant to rectify the damage caused by the claimant's actions over a period of many months.

d. The claimant instead has continued to demand money by duress through threatening emails, without ever offering any documentation to support any such claim, including across the Easter Holidays, Good Friday and Easter Sunday. Quite disgusting behaviour and it is denied that the Claimant is entitled to the relief sought in the Prayer, or any relief in this matter.

e. The claimant has failed to respond properly or at all on any matters raised by the second defendant with any particulars to support its claim that payment by way of a first instalment under the PG is due within 7 days from the demand.

f. The claimant has failed to respond properly or at all on any matter raised by the second defendant with any particulars to support its claim that the full amount under the PG becomes fully payable within 7 days in default of the first instalment not having been met within 7 days.

g. In the premises, the Claimant is not entitled to enforce the guarantee; these proceedings are an abuse of process and should be struck out!

h. Further, as a result of the unlawful actions of the Claimant, the Second Defendant's value shareholding in the company has become valueless. Not only this, the second defendant is left out of pocket by some £310,000.

i. Had the Claimant advanced monies to the company in accordance with the Facility Agreement, there is a reasonable prospect that the company would have prospered and the shares of the Second Defendant would be worth in the region of £2,700,000. Such monies were due to him without deduction of tax as a result of government incentives."

31. The issues raised in paragraph 3 of Mr. Aspin's Defence, and in particulars e and f under paragraph 4 have all been dealt with, to the benefit of Mr. Aspin, in my first judgment in this action.
32. Particular g under paragraph 4 of the Defence was simply a conclusion for which Mr. Aspin contended in the light of the other matters which he sought to raise. Particulars h and i seem to have been intended as in the nature of a counterclaim in respect of those matters.
33. Particular d under paragraph 4 of the Defence appeared, on investigation, to be complaining about the behaviour of the solicitors acting on behalf of FBME in seeking to obtain from Mr. Aspin payment of the sum of £50,000 demanded in this action. It seems that FBME's solicitors did, indeed, harass Mr. Aspin over the Easter holiday in 2011, but that is not relevant to the questions whether Mr. Aspin had any defence to his apparent liability to pay £10,000 on 15 March 2012 or whether he had any counterclaim against FBME.
34. As elaborated by Mr. Aspin at the trial, the focus of particulars a, b and c under paragraph 4 of his Defence was the assertion that FBME had not been entitled to refuse the drawdown requested by the letter dated 23 November 2011 to which I have referred. On the assumption that FBME had not been entitled to refuse that drawdown, Mr. Aspin contended that FBME had not been entitled to rely upon the indication that Project-Pay was intending to go into Creditors Voluntary Liquidation as an Enforcement Event entitling it to make demand for repayment under clause 8.1 of the Debenture.
35. A point which came more into focus in the light of the submissions made by Mr. Aspin at the trial was his contention that the Guarantee which he accepted that he had signed was not in the form in which he expected it to be. Associated with that point was the reliance by Mr. Aspin upon the fact that his Guarantee had not been signed on behalf of FBME. In an e-mail to which Mr. Aspin drew my attention the then Head of Credit of FBME indicated that the position of FBME was that it was not bound by any document unless and until that document had been signed on behalf of FBME.
36. From the material put before me it appeared that negotiations surrounding the execution of Mr. Aspin's Guarantee commenced with FBME's lawyers providing a standard form "FBME 301 Guarantee". Mr. Clark proposed modifications to that form and sent a modified version to the lawyers acting on behalf of FBME. An indication was given that those modifications would be acceptable, but in the event the modifications were not agreed, and the Guarantee which Mr. Aspin executed was in the form "FBME 301 Guarantee", with the proviso added to paragraph (a) from which I have quoted, and the Addendum. There was no claim for rectification of the Guarantee which Mr. Aspin had executed and every page of which he had initialled. It was not suggested that any of the modifications proposed by Mr. Clark which Mr. Aspin contended he expected would have been included in the Guarantee which he executed was relevant, or would otherwise have been relevant, to his liability under the Guarantee. The point made was the simple one that Mr. Aspin should not be bound by a guarantee which was in terms different from what he was expecting. The simple answer to that is that Mr. Aspin signed the Guarantee and he is bound by it. That is also the answer to the point that the Guarantee was not signed on behalf of FBME. Whatever views were expressed by the then Head of Credit of FBME, Mr. Aspin's Guarantee, to be enforceable as a matter of law, needed to be signed by him, but not on behalf of FBME.
37. The only other issue which Mr. Aspin raised which he contended had the consequence that he was not liable under his Guarantee at all was the contention focused on the issue of the refusal of the drawdown requested by the letter dated 23 November 2010, and to that I now turn.

The request dated 23 November 2010 to drawdown £72,000

38. There were, at least potentially, two aspects to the question whether FBME had been entitled to refuse to permit drawdown of a sum of £72,000 as requested by the letter dated 23 November 2010. The first was whether in fact FBME had been so entitled. The second was, if not, what consequences followed so far as the enforceability of Mr. Aspin's Guarantee was concerned.
39. I think that Mr. Aspin was clear as to the terms of clause 3 of the Second Facility Agreement. However, he contended that the effect of the e-mail of Mr. Clark dated 15 April 2010 and/or various other, rather vague, indications given at various times on behalf of FBME that it would, or might, be flexible in relation to the use of the funds for which the Second Facility Agreement provided, was, in effect, that FBME was bound to provide a total of £2,130,000, or at any rate that part of it the subject of clause 3.1.2, amounting to £1,050,000, to Project-Pay to use as it liked. As a matter of law the contention of Mr. Aspin was unsound. The terms of clause 3.1 of the Second Facility Agreement were plain. The various separate elements could only be drawn down for use for the specified purpose in each case. It was open to the parties, FBME and Project-Pay, to vary the provisions of clause 3.1, if they chose, by agreement between them. They did not do so. Thus FBME was entitled to rely upon the agreed terms and to refuse to permit drawdowns which did not fall within the terms of clause 3.1.
40. Mr. Aspin had a second argument to the effect that FBME had not been entitled to refuse the drawdown requested by the letter dated 23 November 2010, and that focused on the categorisation of the sums permitted to be drawn down in respect of the Gateway. Those sums, Mr. Aspin contended, should have been characterised as coming within clause 3.1.2.2 as relating to an upgrade of capital equipment, and not as coming within clause 3.1.2.3 as operational expenditure. The obvious problem with that argument was that the provisions of clause 3.1.2.2 were very specific and related only to upgrading MTT 1581 units. Mr. Aspin submitted that the expenditure on the "Gateway" was expenditure effectively in keeping pace with developing technology, which had overtaken MTT 1581 units. That may well be, but that did not have the consequence that Project-Pay was entitled to use money said to be devoted to upgrading MTT 1581 units on replacing those units, or taking steps to keep up to date with technological developments.
41. A more general argument advanced by Mr. Aspin was that the provisions of clause 3.1 of the Second Facility Agreement were unduly rigid and that it was not commercially sensible to have included the provisions in fact included in clause 3.1. From a legal point of view the questions were whether the provisions of clause 3.1 were clear, and, if so, what they meant. In my judgment the meaning and effect of clause 3.1 were clear and were those for which FBME contended. The parties could have agreed either that all of the funds to be advanced could have been spent however Project-Pay wished, or that the purposes for which the funds could be spent were rather more broadly expressed than was the case. Certainly the First Facility Agreement was considerably less specific as to what was to be done with the money to be advanced. Thus the parties agreed what they agreed in clause 3.1 of the Second Facility Agreement, and each party to the agreement was bound by what had been agreed unless and until the parties agreed to vary those provisions.
42. If I had reached the conclusion that FBME had been in breach of the Second Facility Agreement in refusing the request to drawdown £72,000 made in the letter dated 23 November 2010, that would not have had the consequence that Mr. Aspin was not liable under his Guarantee. Such a breach would not have given Mr. Aspin a cause of action against FBME, but it would have given Project-Pay a claim. In any event the terms of clause 8(d) of Mr. Aspin's Guarantee provided a complete answer to any suggestion that Mr. Aspin had ceased to be liable to FBME by reason of a breach on the part of FBME of the Second Facility Agreement.

Other matters

43. Although not raised in his Defence Mr. Aspin did draw to my attention that there had been a third guarantor of the liabilities of Project-Pay to FBME, a Mr. Peter Marks. It appeared that FBME had not taken proceedings against Mr. Marks on his Guarantee. It also appeared that, at least at one point, Mr. Marks had approached FBME through the administrators of Project-Pay, Grant Thornton UK LLP, with the suggestion that he might be able to provide evidence to found claims against Mr. Aspin and Mr. Elwes in return for an agreement on the part of FBME not to proceed against him on his Guarantee. The evidence did not reveal whether any such agreement had been made. However, it seemed unlikely, as no claims, other than those in this action, had ever been intimated on behalf of FBME against either Mr. Aspin or Mr. Elwes. In any event, the apparent failure of FBME to take proceedings against Mr. Marks on his Guarantee, assuming that he did not simply pay what was due from him, was not material to any issue in this action.
44. In the course of his cross-examination of the only witness called on behalf of FBME in this action, Mr. Constantinos Kyriakides, the current Head of Credit, Mr. Aspin asked questions which indicated that he felt a high level of dissatisfaction concerning the dealings between Project-Pay in general, and himself in particular, and various officials of FBME. It is neither necessary nor appropriate for me to express any view in this judgment as to whether there was any justification for that dissatisfaction. If it is thought appropriate, the matters which Mr. Aspin considered entitled him to his view of the commercial morality of FBME will be the subject of separate proceedings in which the trial judge will have to reach conclusions on the totality of the evidence put before the court. As I have indicated, only one witness was called at the trial before me on behalf of FBME. Although both Mr. Aspin and Mr. Elwes served witness statements which were adduced in evidence before me, neither was challenged on any part of his evidence, on the basis, as I understood it, that that evidence was simply irrelevant to the issues which I had to decide. That is certainly the conclusion to which I have come. This trial has raised issues in a very narrow compass and it would be quite wrong for me to express any view on any dispute falling outside that compass.

Conclusion

45. In the result my conclusion in the case of Mr. Aspin is that, following the permission to re-amend the Particulars of Claim which I gave on the second day of the trial, the claim of FBME for the sum of £10,000 which fell due for payment on 15 March 2012 succeeds, but the other bases of claim fail.
46. Thus there will be judgment for FBME against Mr. Aspin in the sum of £10,000.