This is the latest instalment in litigation involving a guarantor and a lender. The lender served a statutory demand on the guarantor in 2011. The guarantor applied to the County Court to set it aside on the basis that he had been induced to enter into the guarantee by a manager at the lender. That application failed.
The debtor then discovered that another co-guarantor had succeeded in setting aside a statutory demand served on him by the lender on the grounds that his signature was a forgery. The guarantor therefore applied to the District Judge to review his decision in light of this new development and the fact that the guarantee was not valid as not all parties had agreed to be bound by it. The District Judge refused that application, but he did grant permission to appeal.
The guarantor therefore appealed on that ground, not the inducement ground. The appeal was dismissed by the High Court, but granted by the Court of Appeal. However, at the subsequent trial of the co-guarantor’s action, it was found that the signature was not a forgery.
The lender therefore served a further statutory demand in 2014. The guarantor again applied to set it aside on the inducement ground. The same District Judge who heard the original set aside application dismissed this application. The High Court granted permission to appeal and then dismissed the appeal and the guarantor appealed to the Court of Appeal.
The Court of Appeal dismissed the appeal as an abuse of process and reaffirmed the principle that where there has been a previous hearing on the merits in the bankruptcy court, absent a change of circumstances or some other special or good reason, the debtor cannot re-argue or reiterate arguments presented earlier or ones on which there was the opportunity to present. Whilst not strictly necessary, the Court of Appeal determined the inducement point and held that it had no realistic prospect of success, referring to the “inherent implausibility” of the guarantor’s case.