This is a Wragge & Co case, when we acted for the successful claimant on its appeal to the Court of Appeal. The hearing was in Birmingham, when the Court of Appeal was on one of its rare travels out of London in March for a week.

The case turned on the interpretation of a guarantee. The customer sought a novation of six hire purchase agreements from oldco to newco. With oldco, one of the six agreements had been guaranteed by the second and third defendants, as directors of the customer. For the novation, the claimant wanted all six agreements guaranteed, and the guarantee document sent out to the defendants was an all monies guarantee. However, it referred on its face to the agreement to be guaranteed, as identified within a box in the body of the guarantee document. That box was, unfortunately, left blank.

The claimant sought to rely on extrinsic evidence - the letters and attendance notes of telephone calls made in the lead up to the novation of the agreements. The claimant argued that the extrinsic evidence confirmed that all parties understood and intended the guarantee to reach across all six novated agreements. The defendants argued that either the guarantee was void in its entirety for uncertainty, given the missing information; or, if not, at most carried over simply the prior guarantee of the one agreement only.

The court agreed with the claimant. The extrinsic evidence was allowed to explain the meaning of the guarantees. The court accepted that it was clear that at least the second defendant was well aware of the claimant’s intention to obtain a guarantee across all six agreements, and that he had acknowledged that that had to happen. As he acted as agent in the negotiations for his wife also, she also was bound by a guarantee to all six agreements. This is a helpful case supporting that extrinsic evidence can be used to explain the ambit of a guarantee where the guarantee on its face may be less clear than might have been wished.

Caterpillar Financial Services Limited v Goldcrest Plant and Groundworks Limited & Others