England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand London WC2
		20th November 1998

JUDGE LLOYD:

1. This is an application by the plaintiffs, Try Build Ltd ("Try"), for final judgment under RSC Order 14 for the amount claimed in the writ, which was issued on 17 August 1998 against Blue Star Garages Ltd, in which it claims a total of £465,919.83. The money is claimed pursuant to a guarantee that was entered into on 21 January 1998. That guarantee was in turn supplementary to an agreement by way of a deed of the same date, made between the plaintiff, Portsmouth Football Club Ltd ("the Club") and the defendant, Blue Star Garages Ltd ("Blue Star"). In order to deal with this application it is necessary to consider the background to these two documents. The facts are to found in the affidavits and the key stages have been conveniently summarised by Mr Taverner, who appeared for Try, in his skeleton and in the course of his argument. They are not, for present purposes, much in dispute.
2. In June 1997 Try entered into a building contract with the Club for the construction of a new North stand and terrace at its ground at Fratton Park. The contract was in the standard JCT form with Contractor's Design, 1981 edition, with amendments 1-10. In clause 30 Alternative A was adopted. Under that contract Try made applications for the amounts which it considered to be due to it. The Club was then obliged pursuant to clause 30.3.3 to pay the amount stated as due, unless it notified Try to the contrary in accordance with clause 30.3.4. In August 1997 the Club found itself unable to pay the amounts due (and indeed by the end of 1997 was in serious financial difficulties). Apparently the Club had not received money from the Football Trust. In addition its bankers, Co-Operative Bank plc, was reducing its overdraft arrangements from £2 million to £750,000 on receipt of transfer money for the sale of Mr Deo Burton and Mr Lee Bradbury. Mr Burton had been sold to Derby County FC for £1,175,000 of which £500,000 was payable in two instalments in 1998. Mr Bradbury was transferred to Manchester City FC for £3,525,000, of which £1,500,000 was similarly payable in two instalments in 1998. Try sought some of the transfer money to meet the Club's indebtedness to it, but the Club did not reduce its liability to Try. Try nevertheless continued to carry out the work so that the stand was able to be used from 31 October 1997 and thus to generate revenue. By that time, although the Club had failed to meet Try's expectations about money becoming available to pay it, Try did however believe that it had secured £1,500,000 in the form of a lien on the amounts which Manchester City was to pay for Mr Bradbury. However as the money did not come through and as the Club's financial position was apparently getting worse (Customs & Excise were threatening to wind up the Club) Try was obliged to withdraw from the site in December 1997. In January 1998 there were changes in the directors of the Club. Accordingly, the agreements were made in order to establish a mechanism by which, first, Try would be paid the amounts due to it and which had been the subject of applications under clause 30 of the building contract, and secondly, there would be a background by which the works, which by then had not been fully completed, might be completed under new arrangements and the Club given its new stand and terrace canopy.
3. The first was the tripartite agreement, executed under seal between the Club and Try to which Blue Star was also a party ("the Deed"). Like the Club, Blue Star also had its registered office at Fratton Park. It and the Club had directors in common. The Deed related to the building contract. The recitals recorded:

"(B)The Club has failed to pay sums due under the Building Contract as set out in clause 3 of this deed.

(C)Notwithstanding the failure by the Club to pay sums due and owing under the Building Contract, Try and the Club have agreed to restructure their respective obligations to each other by the terms of this Agreement."

4. Clause 2 stated:

"2.1In consideration of the mutual covenants contained herein Try and the Club hereby agree that the Building Contract shall hereafter be treated as terminated by mutual consent such termination being deemed to be a determination of the Building Contract in accordance with clause 28. The provisions of clause 28.4 of the Building Contract shall apply forthwith and the contractual payment obligation under the Building Contract shall be replaced by the obligation of the Club to discharge the Amounts Owing contained in this agreement.

2.2Try hereby agree with the Club to negotiate in good faith to agree the terms and conditions upon which Try would be prepared to complete the Works.

2.3Until such time as the Building Contract is reinstated or a new contract for the Works is agreed between Try and the Club, the terms of this deed shall supersede those contained in the Building Contract as hereinafter provided."

5. The "Amounts Owing" had been defined in clause 1 of the Deed as:

"... all monies and liabilities whether certain or contingent which now are or at any time hereafter may be due owing or incurred by the Club to Try pursuant to the Building Contract (the "Debt") together with interest, legal, administrative and other costs, charges and expenses incurred by Try in relation to any of the aforesaid monies and liabilities or any agreement or transaction in respect of which the same arise (including, without limitation, those incurred in relation to and in enforcing this Deed) on a full and unqualified indemnity basis the amounts which are now or at any time hereafter may be due, owing or incurred by the Club to Try pursuant to the building contract."

6. Clause 3 of the Deed stated the Club's principal obligations:

"3.1The Club hereby acknowledges the Amounts Owing to Try and in particular that as at 19th January 1998 the aggregate amount of £1,659,140.31 (the "Debt") is presently due and payable to Try in respect of works carried out under the Building Contact, which sum is calculated as follows:

	Amounts	VAT
Principal debt	£1,232,041	£215,609
Retention under Building Contract	70,468	12,332
Interest @ 3% over base rate	41,446.56	-
Try's Legal Costs	8,250	1,443.75
Disruption and Claim Costs	66,000	11,550
	___________	___________
SUB TOTALS:	£1,418,205.56	£240,934,75
TOTAL		£1,659,140.31

Interest shall be payable by the Club on all amounts outstanding hereunder from time to time at the rate of 3% above the base rate from time to time of National Westminster Bank plc.

3.2The Club hereby agrees to reduce the Debt by way of a payment of £750,000 on the signing hereof. The balance of the Debt shall be paid by the Club to Try as to £350,000 on or before 31st March 1997 and the remainder in full on or before 31st May 1998. The Club anticipates receiving £350,000 from the Football Trust on or before 31st March 1998 which sum shall be paid to Try in reduction of the Debt and in addition the Club hereby agrees to use its best endeavours to discharge the Debt in full in the ordinary course of business from cash flow receipts.

......"

7. Clause 3.1 thereby provided both an admission and a statement of what had otherwise been defined in clause 1. The acknowledgment was of an aggregate amount of £1,659,140.31, described as "the Debt". The Deed set out how the Club might be able to pay the debt. It also dealt with Try's existing hold over Mr Bradbury's transfer fee from Manchester City. Clause 5 set out Try's obligations:

"5.1It is a condition precedent to Try's obligations hereunder that Try receives the payment of £750,000 in cleared funds as referred to in clause 3.2 above, the legal mortgage referred to in clause 3.3 and the guarantee referred to in clause 4.

5.2Try hereby agrees to release its rights in respect of the sum of £1,500,000 due to the Club representing the proceeds of sale of Lee Bradbury to Manchester City Football Club as set out in a letter of undertaking dated 13th November 1997 in receipt of the payment of £750,000 in cleared funds as referred to in clause 3.2 above. For the avoidance of doubt Try's consent to the discounting by the Club of the said proceeds of sale is conditional upon receipt by Try of the £750,000 referred to above."

8. It was therefore thought that the debt would be cleared by 31 May. That did not prove to be the case. However in order to ensure that the Club paid, the second agreement provided a form of Deed of Guarantee by Blue Star in favour of the Club. That Guarantee was made on the same day and was naturally linked to the Deed to which I have just referred. One of its recitals read:

"The Board of Directors of the Guarantor is satisfied that the giving of this Guarantee is in the interests of the Guarantor and has passed a resolution to that effect."

9. The Guarantee included the following provisions. Clause 1.2.1 defined the obligations which were to be the subject of the Deed, meaning:

"...all or any indebtedness, monies, obligations and liabilities whether actual or contingent, present or future, which may be now or at any time hereafter due, owing or incurred from or by the Obligor [that is Portsmouth] or to the Lender [that is Try] under or in connection with the Agreement (whether alone or jointly with any other person, firm or corporation and in whatever style, name or form and whether as principal or surety)."

10. Clause 1.2.1 stated: "any discretion or power which may be exercised or any determination which may be made hereunder by the Lender may (save as otherwise provided herein) be exercised or made in its absolute and unfettered discretion and it shall not be obliged to give reasons therefor".
11. The operative part of the Guarantee was:

"The Guarantee

2.1The Guarantor irrevocably and unconditionally:-

2.1.1covenants with and guarantees to the Lender that it will on demand pay to the Lender and discharge the Obligations; and

2.1.2agrees with the Lender as a primary obligation, to indemnify and keep indemnified the Lender on demand from and against all and any losses, damages, costs and expenses incurred by the Lender arising from any failure by the Obligor to carry out, perform or meet any Obligation or as a result of any of the Obligations being or becoming void, voidable, unenforceable or ineffective as against the Obligor for any reason whatsoever, whether or not known to the Lender or any other person, and the amount of such losses, damages, costs and expenses is the amount which the person suffering it would otherwise have been entitled to recover from the Obligor."

There were provisions for the payment of interest in default.

12. Clause 3.1 said:

"This Guarantee shall be irrevocable and a continuing security which shall be and continue in full force and effect irrespective of the legality, validity or enforceability of any provision of the Agreement and until all the Obligations have been repaid, discharged or satisfied in full notwithstanding the liquidation, administration or other incapacity or any change in the constitution, status or function of the Guarantor or the Obligor or in the name or style thereof or any settlement of account or other matter whatsoever.

13. This was supplemented by clause 4.1:

"The liability of the Guarantor shall not be affected nor shall this Guarantee be discharged or diminished by reason of:-

4.1.1any right or remedy held by or available to the Lender being or becoming wholly or in part void, voidable or unenforceable on any ground whatsoever; ...

14. Clause 6.1 stated that:

"All sums received by the Lender under this Guarantee shall be received in full without any set-off or counter-claim by the Guarantor free and clear of and without any deduction or withholding".

15. Clause 9.3 said:

"A certificate delivered by the Lender to the Guarantor certifying as to the amount due to it from the Obligor at the date of such certificate shall (in the absence of manifest error) be conclusive evidence of the amount due"

16. Following the execution of these documents payments were made, but not in their entirety. By the early part of August 1998, Try had not received about £436,947.31 of the principal debt of £1.659 million referred to in the Deed. On 18 June 1998 Try had had to serve statutory demands on both the Club and Blue Star. The Club's solicitors replied challenging the accuracy of the principal Debt and alleging that there were defective works totalling £70,000. In addition they claimed that the Deed should be rescinded for reasons which became the subject of a later action. The Club is evidently insolvent for Try took no further action against it but instead wrote to Blue Star on 7 August 1998, referring to the Guarantee and stating:

"In accordance with clause 9.3 of the Guarantee we hereby certify that the amount due to Try Build from Portsmouth at the date hereof is as follows: ..."

17. Try's certificate started with the principal sum of £559,113.31, i.e. after some of the payments that had been made, deducted a payment that had been made on 9 July 1998, added interest and arrived at the total claimed in the writ of £465,919.83.
18. Although Blue Star was duly was served with that document, which was a certificate for the purposes of clause 9.3 of the Guarantee, no payments were made by it. The writ was therefore issued, and the summons under Order 14 for final judgment was also issued and served.
19. The defendant's affidavits in opposition to the summons under Order 14 raise a number of arguments, primarily that the amounts claimed by Try are not truly due by the Club as the work was over-valued or was defective. Blue Star admit liability for £30,688.50. I am going to deal only with certain points, which are essentially of law, since if Try is successful on these points, it seemed to me that Blue Star would have no other arguable defences, since its other defences are contingent upon the success of these points of law. Blue Star has also asked for further time in order to deal with some of the residual arguments raised by Try in response to the defendants' original affidavits but these do not concern the points of law upon which Blue star's case depends. Mr John McDonald, in the course of a most clear, helpful and careful argument, has raised three principal points upon which he says that Blue Star is entitled to leave to defend. They are simple points of law and I deal with them under the three heads that he put forward. It is well established that judgment under Order 14 may be given if the points of law are on analysis unarguable.
20. The first point is, essentially, this: the Club has, and it is to be assumed that it does have, arguments to the effect that the applications or valuations made by Try, culminating in valuation no. 7 of December 1997 which was the basis of the agreement made in January 1998, are incorrect (because the work carried out by Try was, for example, defective and therefore the valuations were over-valuations, or the valuations were themselves incorrect because the assessments and estimates made were overgenerous in favour of Try); would such arguments, if they were to avail the Club as defences to the present claim by Try under the terms of the Deed, also not avail Blue Star under the terms of the Guarantee?
21. The basis for Mr McDonald's first proposition is the normal one. One would ordinarily expect that a party in the position of Blue Star was entitled to avail itself of all rights and remedies that might be available to the person whose obligations were being guaranteed, namely the Club, and that any provision in the Deed which sought to restrict those rights, or limited them, would have to be construed strictly contra proferentem (see Andrews & Miller: Law of Guarantees page 64). The contract of suretyship or guarantee is an onerous one and one would not ordinarily construe it to restrict the rights available to the guarantor. In addition the Club had not lost its rights or at least all its rights against Try and could raise cross-claims against it. Mr McDonald referred to Keating on Building Contracts, 6th ed at page 500 and to Dole Dried Fruit v Trustin Kerwood [1990] 2 Lloyd's Rep. 309. I do not have to decide either point but I shall assume if need be that Try may at least have some continuing liability to the Club for defects not apparent at the date of the Deed since for present purposes I accept, first, Mr McDonald's argument that a termination under clause 28.4 of the building contract does relieve a contractor of liability for defective work and, secondly, that he has an arguable case that clause 2.3 of the Deed in providing "the terms of this deed shall supersede those contained in the Building Contract as hereinafter provided" do not by virtue of the last three words affect that liability since the Deed does not deal with it "hereinafter". However clause 2.3 expressly applies only between Try and the Club.
22. His first proposition was that the Deed did not actually cover the possibility that there might be rights of set-off or counterclaim available to the Club which would, in turn, be available to Blue Star and did not therefore exclude the right which I have set out. (Mr McDonald also referred to Trafalgar House v General Surety [1996] AC 199 and Andrews & Miller at page 324.) His argument requires me to look at the terms of the Guarantee. There are a number of major difficulties with that argument.
23. The first is the nature of the transaction. As I have already indicated, the terms of the Deed to which the Guarantee was supplementary, show that in January 1998 the Club had defaulted under the terms of the building contract. It thought that it was in its own best interests to enter into the Deed. It was a term of the Deed that the amounts owing to Try were acknowledged as presently due and payable to Try. Accordingly, as the Club has acknowledged and admitted that debt, it would not ordinarily be open to it then to say that the amounts owing were not those stated in clause 3.1 of the agreement, because of some grounds which might otherwise have entitled it to have questioned and not to have paid the disputed part of the December 1997 application as provided by clause 30.3.4 of the building contract or to set-off or counterclaim sums from Try. There is however the additional important reason that acknowledgement of the amount owing is the acknowledgement of the amount applied for by Try under the provisions of the building contract, which was an interim application. The contemplation that the building contract might be re-instated, therefore, on the face of it, provided the Club with the opportunity to recoup any money which it might establish would have been overpaid under the terms of clause 30 of the building contract. When Blue Star guaranteed the performance of the Club's obligations to repay the £1.659 million, or the parts that may be unpaid, it was therefore guaranteeing the payment of sum which, although, originally an interim valuation under the building contract, became an amount which the parties to that contract then agreed was the sum due and payable. Try's valuations were accepted by the Club under the Deed as (or as part of) the Amounts Owing and the sum due on the deemed termination of the building contract, ie, the amount which was agreed to be that due on that basis. Accordingly I do not consider that in the circumstances of this Deed the Club has or had a right thereafter to question the amount which it had admitted on grounds such as those which Blue Star now wish to put forward. If it is now permissible to look at the events leading up to the Deed as a means of construing it, I do not believe that Try, having waited so long to be paid, agreed that the Club, once it had executed the Deed, could nevertheless then have questioned the valuations for which it had just accepted liability.
24. Furthermore, the Guarantee itself on the face of it has been carefully and comprehensively drawn up and it deals, in my view, conclusively and clearly with the argument advanced by Mr McDonald. Clause 6.1 states that:

"The amounts received by the Lender under this Guarantee shall be received in full, without any set-off or counterclaim by the Guarantor, free and clear of and without any deduction or withholding."

25. These words alone, irrespective of any other provisions of the Deed (or the Guarantee) in my judgment preclude Blue Star raising any arguments which might otherwise have been available to a party in its position, standing in the shoes of the Club, to defeat Try's claims.
26. First, it is true that, as Mr McDonald submitted, clause 6.1 refers to "a set-off or counterclaim by the Guarantor", and that what I have to consider at this stage is a possible set-off or counterclaim by the Club. But what would be such a set-off or counterclaim by the Guarantor? Mr McDonald suggested that it might arise by reason of other transactions or claims, and the object of clause 6.1 was to try and avoid Blue Star dragging in extraneous matters, in order to prevent it paying sums due under the contract. Whilst I see in theory that possibility I cannot at the moment see what other claims there might have been. Mr McDonald found it difficult to give me an example of a claim which Blue Star might have against Try which it could have operated as a set-off or counterclaim in its own right against the amounts due under the Deed. I think that the only natural meaning to be given to clause 6.1 is that it is referring to those set-offs or counterclaims which Blue Star Guarantor is entitled to raise in its capacity as guarantor of the Club's liabilities, i.e. the Club's set-offs or counterclaims. That is consistent with other parts of the Guarantee. In any event if the Guarantor cannot raise its own cross-claims independent of the liabilities under the Deed then a fortiori it cannot raise cross-claims against those liabilities.
27. Secondly, of course, the latter words, on which Mr Taverner particularly relies, "free and clear of, and without any deduction or withholding" in my judgment underline the point that the whole object is that the payments will be made without any deduction whatsoever, on any ground whatsoever. They plainly cover the Club's rights under clause 30.3.4 of the JCT form to deduct or withhold any sum which it does not consider to be due to Try. Thus even if the Club still has rights to do so on account of alleged over-valuations (which I doubt) they are not available to Blue Star by the express terms of the Guarantee.
28. Finally, as I have already indicated, that the guarantee given is of an acknowledged and existing debt. This is not, as happens, the type of case where the performance of one party to a contract is guaranteed, i.e. the future performance is guaranteed. In that situation the arguments advanced by Mr McDonald might be relevant, because otherwise a person in the position of the guarantor might find itself liable to pay, and to overpay, amounts due, notwithstanding the existence of a perfectly valid and bona fide set-off and counterclaim which impeached the debt guaranteed. But that is clearly not the case here. In my judgment the parties here plainly envisaged that if the circumstances postulated by Blue Star were to arise then either the Club would, under a re-instated contract or otherwise, have sufficient protection to recover from Try, or Blue Star, no doubt by means of some counter-indemnity, would be able to recover from the Club and the Club in turn might be able to recover from Try under the terms of the relevant agreement. Nevertheless, payment would have to be made by Blue Star to Try and the money recovered by it by some other mechanism.
29. The second main point advanced by Mr McDonald is that there is or may be, for the purposes of an Order 14 application, an arguable defence that the amount certified by Try, pursuant to clause 9.3 has a manifest error; i.e. that when one stands back and looks at the amount claimed it proves to be erroneous, because the work is not of the value assumed or that the value assumed turns out to have been incorrectly assessed by Try. It is not really necessary to conduct a lengthy inquiry in order to demonstrate that, according to Blue Star, that an erroneous valuation can easily be demonstrated and it therefore would constitute a manifest error.
30. So the next question that I have to deal with is what, therefore, is meant by a "manifest error": does it cover those matters of the kind that Blue Star wishes to raise? Mr Taverner points out - but this does not go to the question of law, but largely to the merits - that the argument as to manifest error has only just manifested itself. It certainly was not advanced, as it might have been, by Blue Star or by the Club in correspondence immediately after the certificate had been issued last August, or indeed until very, very recently indeed. But that does not mean that the argument may not be right as a matter of law.
31. Clause 9.3 is clearly intended to provide a firm evidential basis for determining the amount due by Blue Star which cannot be questioned by Blue Star. Try's certificate is to be conclusive which normally mean, as Mr Taverner submitted, that it is as binding as an award (see for example Goodyear v Weymouth Corp (1865) 35 LJCP 12 at page 17 and P & M Kaye v Hosier & Dickinson [1972] 1 WLR 146 at page 169, amongst other cases cited by Mr Taverner). The amount due is not, as is sometimes the case, and as I have just indicated, an amount that is going to become due as a result of, for example, work being done by Try after the date of the Guarantee. What clause 9.3 is concerned with is determining how much remains outstanding of the principal acknowledged debt of £1.59 million. On the face of it, clause 9.3 is about ensuring that Try do their sums properly and take into account all the amounts that may have been paid on account and deal with the question of interest. Indeed, it is obviously concerned that there are no quibbles over the amount certified by Try, because the error must be one which is a manifest error.
32. For the purposes of defining what is meant by the words "manifest error", Mr Taverner has relied upon a recent decision of His Honour Judge Bowsher QC in the case of Dixons Group plc v Murray-Oboynski (1997) 86 BLR 16, a decision given just over a year ago. In that case Judge Bowsher QC had to consider what the words "manifest error" might mean in the context of an agreement whereby accountants were to act as experts and not as arbitrators and to give a decision which was to be final and binding on the parties, save in the case of manifest error. As Mr McDonald rightly points out, the context of that agreement is not the same as the present agreement. Here we have an independent third party giving a decision, whereas in the present case the decision is made by one of the parties to the contract. However such wording is now commonly used in a variety of situations.
33. Judge Bowsher said (at page 32):

"A `manifest error' is an error: `that may be easily seen by the eye or perceived by the mind.' (Chambers Twentieth Century Dictionary). "There is no great difference between the defendants' arguments regarding failure to comply with obligations and their submissions regarding manifest error."

"As a matter of first impression, I find that on the true construction of the words of the agreement taken as a whole ..., for an error on the part of Mr Jackson to be manifest it must be plain and obvious on the face of his written decision. The error must be manifest; the terms of the agreement do not contemplate an error which after a lengthy enquiry may be made manifest. No such manifest error appears and accordingly the decision of Mr Jackson is final and binding and cannot be reopened either directly or by the back door of a set-off.

That approach is consistent with the approach of Potter J in the words I have cited above:

"By the use of the word 'manifest', it is plain that [the parties] do not thereby intend to widen the area of the court's investigation beyond the ambit of the determination itself any reasoning within it or discernible on its face."

34. That is a quotation from Heald Foods v Hyde Dairies, QBD, unreported, 1 December 1994, referred to by Judge Bowsher QC at 86 BLR 28, in which Potter J had in turn referred back to what Dillon LJ had said in Jones v Sherwood Computer Services Plc [1992] 1 WLR 277.
35. These two decisions are helpful, particularly that of Potter J. Again one has to look at the circumstances of this Deed and to decide whether the words "manifest error" are effectively to be read as meaning an error on the part of the Club and Blue Star in accepting the amounts alleged to have been due by Try in December 1997 as the foundation of the January 1998 agreement; or whether they also extend to matters which may have become apparent since that time, namely, defects of the work or possibly the discovery that Try's valuations were incorrect.
36. In my view, the words of clause 9.3 are very clear. The "manifest error" must be an error in the calculation of the amount due. That is the subject matter of this Guarantee. The agreement is not concerned with a manifest error in the original assessment, admitted by the Club and accepted by Blue Star, of the sum of £1.65 million. Furthermore, I adopt the dicta in the two authorities referred to by Mr Taverner. The manifest error must be an error which is plain and obvious on the face of the decision - here the certificate - or which might be shown to be plain and obvious by looking at what the decision or the certificate was supposed to represent. In other words, there might for example be a manifest error if the amount stated as due was shown to be outside the scope of the certificate, and therefore not authorised by the agreement (alluded to by Lord Hoffman in Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd [1998] 2 All 778 at page 784).
37. Furthermore clause 1.2.2 of the Deed states in terms that:

"Any discretion which may be exercised by Try may be exercised or made in its absolute and unfettered discretion and it shall not be obliged to give reasons for it..."

38. The words "manifest error" thus cannot deal with matters which Try is entitled to decide. For example, if Try decided that it wanted to be paid only part of the total amounts owing and issued a certificate under clause 9.3 to that effect, Blue Star could not complain that Try ought not have exercised its discretion in that way and ought to have claimed an even lower sum than the amount which it then claimed. clause 9.3 entitles Try to act as it thinks fit in its own best interests. The manifest error must, in my judgment, be an error by Try in the certificate itself and not an error in the ascertainment of the totality of the Obligations under the Guarantee or thereby in the Amounts Owing under the Deed, eg in the calculation of the valuation, or an error which has been established subsequently to vitiate that valuation, even assuming that valuation to have been made at a later date than December 1997 or whenever the Amounts Owing were established. Accordingly, I therefore reject this part of the defendant's case.
39. Finally, the defendant says that it wishes to rely upon the fact that the Club, on 30 October 1998, issued a writ (1998 TCC 500) to have the underlying agreement rescinded on the grounds of negligent representations made by Try prior to the agreement; i.e. as to the amount which was due. I am not concerned with whether those representations were made or whether they can be said to have been made, or to whom they were made (although I necessarily make no assumption adverse to Blue Star). I am only concerned with whether that defence, if available to the Club, is also available to Blue Star under the terms of the Guarantee.
40. In my judgment, it is not. In my judgment, it is clear that the whole object of the Guarantee was to ensure that Try was paid the amounts which were accepted to be due in the underlying Deed. The Guarantee contains a significant number of provisions designed to ensure that Blue Star has no room to wriggle out of its obligations. By clause 2.1 "the Guarantor irrevocably and unconditionally" undertakes its obligations. These two adverbs are important in reading understanding the remainder of the Deed. There is an absolute obligation to pay. I have already referred to clause 6 about payments being made without deduction. The unequivocal nature of this obligation is then spelt out in what might be the consequences as between Try and Blue Star even if the underlying obligations of the Club proved to be capable of being vitiated. Clause 2.1.2 says that Blue Star:

"... agrees with the Lender as a primary obligation, to indemnify and keep indemnified the Lender on demand from and against all and any losses, damages, costs and expenses incurred by the Lender arising from any failure by the Obligor to carry out, perform or meet any Obligation or as a result of any of the Obligations being or becoming void, voidable, unenforceable or ineffective as against the Obligor for any reason whatsoever, whether or not known to the Lender or any other person, and the amount of such losses, damages, costs and expenses is the amount which the person suffering it would otherwise have been entitled to recover from the Obligor."

41. Clause 3.1 states again that:

"This Guarantee shall be irrevocable and a continuing security which shall be and continue in full force and effect irrespective of the legality, validity or enforceability of any provision of the Agreement..."

42. Clause 4.1 says that:

"The liability of the Guarantor shall not be affected, nor shall this agreement be discharged or diminished by reason of-

4.1.1 any right or remedy held by or available to the Lender being or becoming wholly or in part void, voidable or unenforceable on any ground whatsoever."

43. Clause 4.1.1 therefore refers to the rights of Try against the Club which, if the Club's action is well-founded, would mean that Try cannot or may not be able to recover the Amounts Owing from the Club as the agreement will be or may be void or voidable by reason of the misrepresentations. It thus expressly negatives Blue Star's suggested defence.
44. Mr McDonald, however, says that those words are, although clear, are not clear enough. He prays in aid the approach set out originally in the leading case of Canada Steamship Lines v R. [1952] AC 192, as usefully and helpfully applied by Colman J in Toomey v Eagle Star Insurance [1995] 2 Lloyd's Rep 88 (as well as Chitty on Contracts, 27th ed paras 14-005 to 14-017). In Toomey the words in question were:

"This contract is neither cancellable nor voidable by either party."

45. Applying Canada Steamship Lines Colman J came to the conclusion that those words did have the effect of excluding the right to avoid the contract for innocent material misrepresentation and innocent material non-disclosure, but not for negligent misrepresentation or non-disclosure because the words "being capable of covering non-negligent matters" are therefore treated on the authority of Canada Steamship Lines not to cover an exemption on the grounds of negligence. But every contract has to be considered in the light of its own language. The rationale of Canada Steamship Lines is that when contemplating future performance it is presumed that the parties to a contract intended in an exclusion clause only to deal with non-negligent rather than negligent performance so that where the words used are capable of covering both. As Colman J said in Toomey (at page 93, col 1) "... the Court must ask itself whether the contractual intention was that the exclusion should cover both the possible negligent grounds of liability as well as the non-negligent grounds." (See also Chitty at para 14-012; in para 14-014, which was particularly relied on, the editors say "The scope of the indemnity will therefore depend upon the wording of the particular clause and the intentions of the parties regarding it to be collected from the whole of their agreement".)
46. There are in my judgment two key factors which "distinguish" the contract in Toomey from the present contract, but I pause to emphasise that every contract has to be looked at in its own context. The inference that it was intended by the parties to include negligence may be drawn without the necessity of an express reference to negligence, if otherwise the words are clear.
47. The two grounds which convince me why this Deed is in this way clear are first, that the words in clause 2.1.2 refer to the "result of any of the Obligations being or becoming void, voidable, unenforceable or ineffective as against the Obligor for any reason whatsoever, whether or not known to the Lender or any other person". The words are essentially repeated in clause 4.1.1 "void, voidable or unenforceable on any ground whatsoever". In clause 3.1 we find the words "irrespective of the legality, validity or enforceability of any provision of the agreement". It seems to me that those words are about as clear as they could possibly be. To have said "whether by reason of negligence or not" would, in my view have been unnecessary and unduly pleonastic because "any ground whatsoever" in the context of an agreement becoming void, voidable, unenforceable or ineffective must mean every possible ground that would render an agreement void, voidable, unenforceable or ineffective. It includes therefore negligence or negligent misstatement or mis-representation. Furthermore if Blue Star's obligations are to survive even if the legality of the Deed is impeached then they must survive if the Deed is avoided or voidable on the grounds of negligent mis-representation.
48. Secondly, one of the factors which Colman J bore in mind was the right to damages. This is of course dealt with in clause 2.1.2 in express terms, almost as if the Guarantee was drafted with Toomey in mind (which may not be so). If the Club were to avoid its obligations Try would or might suffer loss in consequence in being unable to recover from the Club (assuming that it is not in reality insolvent) which it would then be entitled to recover from Blue Star pursuant to clause 2.1.2. Such circularity in my judgment tightens the net around Blue Star still further.
49. I am therefore fully satisfied that, although the application is under Order 14, and although Mr McDonald has advanced the defendant's case so ably and well, there comes a time when, even under Order 14, it becomes plain that matters of interpretation which are effectively of first impression brook of no further argument. I am quite satisfied from the arguments advanced by both parties that no more can usefully be said in support of any of the three main heads submitted for the defendant, and that each of them fail. Accordingly, since none of those points afford the defendant an arguable defence to the plaintiff's claim, there must be judgment for the plaintiff for the amount claimed less the admitted sum of £30,688.50.
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