Jersey Unreported Judgments

Loan - application for summary judgment

[2022]JRC115

Royal Court

(Samedi)

24 May 2022

Before     :

Advocate Matthew John Thompson, Master of the Royal Court.

 

Advocate F. Littler for the Plaintiff.

Advocate A. P. Begg for the Defendants.

CONTENTS

		Paras
1.	Introduction	1
2.	Background	2-13
3.	Procedural objectives	14-24
4.	The substantive defences	25-50

judgment

the MASTER:

1.        This judgment contains my decision in respect of the plaintiff's application for summary judgment against each of the defendants for repayment of a capital sum of £200,000 lent by the plaintiff to the first defendant.  Summary judgment was sought against the second and third defendants as guarantors of the borrowing by the first defendant.

Background and Procedural History

2.        The Loan Agreement between the plaintiff and the first defendant (an English company) was entered into on 6^th November 2020.  The amount of the loan was £200,000.  The figure for interest inserted was also £200,000.  The loan provided for sixteen monthly payments of £25,000 each to cover repayments of capital and interest commencing on 6^th December 2020.  The agreement was governed by the law of Jersey.  The annual interest rate was therefore 75%.

3.        The Loan Agreement was signed by the second defendant as a director of the first defendant and witnessed before English Solicitors.

4.        Both the second and the third defendants also signed guarantees in identical terms.  The second defendant was a director of the first defendant at the time the loan agreement was entered into.  The third defendant was a director of the first defendant from 1^st February 2019 to 20^th March 2021.  He is currently recorded as having control of 75% or more of the shares of the first defendant based on a form PSC01 filed with Companies' House on 22^nd March 2022.

5.        The terms of the guarantees contained the following provisions: -

"To abandon any right to insist that recourse is first had against the assets of the Customer or any other person before any liability hereunder is enforced or to require that the Guarantor or the Customer or any other person be made a party to any proceedings against the Guarantor or the Customer or any other person (whether by "droit de discussion" or otherwise).

To abandon any right that its liability hereunder be divided or apportioned with any other person or reduced in any manner whatsoever (whether by "droit de division" or otherwise)."

6.        The plaintiff's application as noted above was for repayment of capital only.  The plaintiff had accepted that there was an argument for trial about what rate of interest any of the defendants might be obliged to pay.  In my judgment the plaintiff was right to make that concession because it is extremely arguable that the rate of interest claimed is penal and therefore might well be reduced by reference to Doorstop Limited v Gillman & Ors [2012] JRC 199.

7.        The plaintiff's application for summary judgment for repayment of the capital sum was issued on 15^th March 2022 after the plaintiff had filed particulars of claim but before the defendants had filed answers.

8.        A plaintiff is entitled under Rule 7/2(1) of the Royal Court Rules 2004, as amended, to make an application for summary judgment under Rule 7 after the matter has been placed on the pending list.  Rule 7/2(2) also provides that where such an application is made a defendant need not file an answer.

9.        The application in this case was supported by an affidavit sworn by Richard Harrop, a director of the plaintiff, which affidavit was sworn on 15^th March 2022 the same day as the summons was issued.  Paragraphs 29 and 30 of the affidavit of Mr Harrop contained the following statements -

"29. I understand that Advocate Begg, on behalf of the Defendants, has submitted in Court that the Loan Agreement has been frustrated due to force majeure prompted by the Covid pandemic, which impacted the construction industry. In my view, this defence has no merit.

30. The Loan Agreement was entered into during the pandemic and all discussions which led to the parties' entry into the Loan Agreement occurred during the pandemic (in the period October - November 2021). Moreover, the Second Defendant made no mention of financial difficulties arising from the pandemic in his communications to me in January - October 2021 ["RH5"]."

10.      The affidavit also stated the following at paragraph 31: -

"31. In all the circumstances, therefore, in my view there is no real prospect of the Defendants successfully defending the Capital Claim. The Plaintiff transferred the sum of £200,000 to the First Defendant and the First Defendant has failed to make any repayment instalments, either as they fell due under the Loan Agreement or at all. The Second and Third Defendants have guaranteed payment of the First Defendant's obligations under the Loan Agreement on demand, regardless of whether the Plaintiff has first pursued the First Defendant Such demand was made by claim letter dated 19 November 2021."

11.      In terms of the defences raised, the answer of the first and second defendants contains the following averments: -

"7......Had the First Defendant been aware that the interest rate was usurious and therefor [sic] illegal and unenforceable the First Defendant would not have agreed to the terms or entered into the Loan Agreement.

10......However, it was a term of the Loan Agreement, insisted on by the Plaintiff, that the Second and Third Defendants should personally guarantee the terms of the Loan, as defined in paragraph 8 of the Particulars of Claim. Accordingly, the Second Defendant had no option but to accept the said terms.

12......Had the Second and Third Defendants been aware that the rate of interest provided in the Loan Agreement was usurious and that accordingly it was illegal and / or void and / or voidable and / or unenforceable, the Second and Third Defendants would not have agreed to sign the Guarantee and Indemnity.

13.......The Second Defendant signed the Guarantee (as defined in paragraph 15 of the Particulars of Claim) in England in the presence of a witness who was an English Solicitor. The Second Defendant did not have the benefit of legal advice on the Guarantee and was not advised that it would be prudent for him to take independent Jersey legal advice as to the legal, or other, implications of the Guarantee. Consequently, the Second Defendant did not understand the legal, or other, implications of the proposed abandonment of his liability under the terms of the Guarantee in terms of it being divided or apportioned with any person or reduced in any manner, as alleged in paragraph 16 of the Particulars or Claim, or at all. In the circumstances, the Second Defendant will say that the terms of the Guarantee are invalid and / or unenforceable.

14......THAT paragraph 17 of the Particulars of Claim is admitted. The First Defendant was unable to pay any instalments in accordance with the terms of the Loan Agreement because Irish Legislation made it illegal for any commercial building work to be carried out or for any commercial properties to be sold.

16......As to the reason for the failure of the First Defendant to make any payment to the Plaintiff, the First and Second Defendant repeats paragraph 14 hereof and will say that the First Defendant's obligations under the terms of the Loan Agreement were terminated or, alternatively, suspended or, alternatively frustrated by the effect of the Covid pandemic which meant that the Second and Third Defendant's obligations thereunder were also terminated and / or suspended and / or frustrated. It is admitted that the Second Defendant did not respond to the claim letters allegedly address [sic] to his [sic] by Voisin Law LLP. The Second Defendant repeats paragraph 15 hereof and will say that no admissions are made as to whether such claim letters were received by him, as alleged or at all."

12.      The answer of the third defendant who was also represented by Advocate Begg in essence contained the same defences as those raised in the answer of the first and second defendants. 

13.      The defences raised can therefore be therefore summarised as follows: -

(i)        As the interest rate was usurious and therefore illegal and unenforceable the first defendant, had it appreciated this, would not have agreed to the terms or entered into the Loan Agreement.

(ii)       The contract had been frustrated either because of the COVID pandemic or because of Irish Legislation.

(iii)      The second and third defendants had no option but to agree to the terms of the guarantees.

(iv)      The second and third defendants did not understand the terms of the guarantees they signed.

(v)       The second and third defendants should have been told to take independent legal advice.

Procedural objections

14.      In terms of the substantive issues raised by Advocate Begg I address these later in this judgment.  However, he also raised procedural objections that the application should be refused because no affidavit in support of the application had been filed following the defendants' answers and that Mr Harrop had not expressly deposed that he was authorised to swear his affidavit on behalf of the plaintiff.

15.      In relation to the first complaint that there was no affidavit responding to the answers filed and so the application should not be permitted, although Advocate Begg did not cite any authority in support of this proposition, in de Bourbon des Deux Siciles v Strang and Ors [2021] JRC 180 the Royal Court held that an affidavit in support of an application for a summary judgment application was a mandatory requirement.  I am of course bound by that decision.

16.      However, in my judgment in the present case the plaintiff has filed such an affidavit.  Mr Harrop at paragraph 31 deposes that the defendants have no real prospect of succeeding on the claim for repayment of capital, and therefore the requirements of Rule 7/2(4) are met.

17.      In reaching this conclusion I accept that answers were subsequently filed.  In appropriate cases it may be that where an answer is filed following a summary judgment application a further affidavit may have to be filed to address issues raised in the answer.  However, the Rules do not say that a further affidavit is required where an answer is filed.  Rather it is simply said that the defendant need not file an answer before the hearing.

18.      What the Rules do contemplate, in Rule 7/3, is that any respondent to an application for summary judgment may file affidavit evidence in response.  In this case the defendants have not done so.

19.      In the absence of any affidavit evidence from the defendants, I consider I am entitled in response to Advocate Begg's first procedural objection to consider the defences raised and to evaluate whether they give rise to a factual dispute or whether as a matter of law they are capable of amounting to a defence to the plaintiff's claim.  If an answer filed does not give rise to a relevant factual dispute or raises matters which are not capable amounting in law to defences, where an affidavit has been filed in respect of a summary judgment application brought before the answer was filed, I do not consider that a further affidavit is required.  The basic requirements of Rule 7/2(4) had been met at the time the application was made.  If the answer does not show a defence in law or an arguable factual dispute, then the court can pronounce judgment without requiring a further affidavit.  To hold otherwise would require a further affidavit at extra cost even if the points of law raised were bad in law or facts averred were not relevant to the application.  Affidavits are also to file evidence and should not contain submissions on points of law.  Whether therefore Advocate Begg's first objection succeeds depends on consideration of the substantive defences as a matter of law raised in the answer which I address later in this judgment.

20.      In relation to the second procedural objection, Mr Harrop in his affidavit describes himself as a director of the plaintiff and deposes at paragraph 4 that the affidavit is made in support of the plaintiff's application for summary judgment.  Paragraph 3 of the particulars of claim filed also states: -

"The Second Defendant has been known to Mr Richard Harrop ("Mr Harrop"), director of the Plaintiff, in a personal capacity since December 2015. The Plaintiff considers the Second Defendant to be a sophisticated borrower."

21.      Paragraph 3 of the particulars of claim is admitted in the answer of the first and second defendant apart from whether the second defendant was a sophisticated borrower.  In other words, the second defendant's knowledge of Mr Harrop's position as a director of the plaintiff is admitted.

22.      Paragraph 5 of the particulars of claim also pleads that the second defendant approached Mr Harrop to request the plaintiff's loan to the first defendant the sum of £200,000.  This paragraph is also admitted. 

23.      In light of these admissions, I do not consider that the second objection raised by Advocate Begg has any force.  The defendants admit at all times that they were dealing with Mr Harrop on behalf of the plaintiff.  It does not therefore lie in their mouth to suggest that the lack of an express statement in his affidavit that he does not have authority to represent the plaintiff and to challenge the statement in his affidavit that he swore his affidavit on behalf of the plaintiff.

24.      In addition, Rule 7(2) of the Royal Court rules simply requires the application to be supported by an affidavit "verifying the facts to which the application relates and stating that, in the deponent's belief, the other party has no real prospect of succeeding on the claim or issue or of defending the claim or issue set out in the application as the case may be".  The rules do not require the affidavit to state expressly that the deponent is authorised to swear the affidavit on behalf of the applicant.  While a respondent to a summary judgment is of course entitled to challenge the authority of a deponent to swear an affidavit including the absence of an express statement that the deponent has such authority, such a challenge is a matter of evidence.  In this case given the matters referred to in the preceding paragraph and the lack of any affidavit from any defendant I consider that, on the facts of this case, this challenge fails.

The substantive defences

25.      In relation to the substantive defences summarised at paragraph 13 above I deal with each of these in turn.

As the interest rate was usurious and therefore illegal and unenforceable the first defendant, had it appreciated this, would not have agreed to the terms or entered into the Loan Agreement.

26.      Advocate Begg's first oral submission was that the capital was not repayable because the interest rate was penal/usurious and so the loan agreement was unenforceable as it was tainted by illegality.  This submission was not pleaded and not supported by any affidavit. Nor did Advocate Begg cite any authority in support of this part of his submission.  Advocate Littler could not assist as the defendants' skeleton was only filed some 50 minutes before the hearing was due to start.  I have therefore had to fill in the gaps in terms of relevant legal authorities. Paragraph 55 of Barclays Wealth Trustees (Jersey) Limited v Equity Trust (Jersey) Limited [2013] (2) JLR 22 appears to assist, and states as follows: -

"55-ƒI have carefully considered Advocate Pallot's submissions, but I remain of the view expressed in Valetta (14). I would summarize these as follows, acknowledging that I am repeating to some extent what was said in Valetta:

    (i) Jersey law recognizes the ability of the court to hold an agreement to be unenforceable if it is contrary to public policy (see Sarum Hotel Ltd. v. Select Agencies (Jersey) Ltd. (12) (1987-88 JLR at 353, per Tomes, Deputy Bailiff)).

    (ii) This is consistent with Pothier, who is often regarded as a helpful guide as to the law of Jersey in relation to matters of contract. Thus, his Traité des Obligations, vol. 1, para. 43, at 42 (1821 ed.) provides:

"Lorsque la cause pour laquelle l'engagement a été contracté est une cause qui blesse la justice, la bonne foi ou les bonnes mœurs, cet engagement est nul, ainsi que le contrat qui le renferme."

27.      Pothier, following on the principle cited by Birt Bailiff in the Barclays case gives the example of a contract requiring a soldier to engage in a duel with another soldier leading Pothier Traité des Obligations volume 1 to suggest at page 43 "la cause de cette engagement blesse les bonnes moeurs".  More modern examples might be providing money to engage in some form of criminal activity such as importation of drugs, prostitution or money laundering.

28.      The position under English law was reviewed in Patel v Mirza [2017] AC 467 and takes a fact-based approach.  I have referred to this approach not because it is binding as a precedent but because it is a helpful way of evaluating how the principle set out by Pothier might be applied and analysed in the 21st century.  The decision was summarised at chapter 18 paragraphs 18-025 and 18-026 of Chitty on Contract as follows: -

"18-025 In Patel v Mirza119 the Supreme Court fundamentally recast the doctrine of illegality in contract. The law remains that the court will not order performance or grant damages for breach of a contract if the claim should not be enforced because of illegality. A minority of the court did not adopt the "factors based" majority approach but adopted a rules-based approach, holding in particular that a party is entitled to restitutionary relief where an illegal contract is entered into but not carried out. The minority argued that such an application of the rules "does not require any balancing of a series of different factors" which is a significant requirement of the factors based approach. The majority, in contrast, held that the question is to be decided on a "factors-based approach", though agreeing that the court will normally order restitution of any money or property transferred under an illegal contract. The result is that much of the previous law on judicial remedies with respect to illegal contracts is mainly of historical interest.

18-026 In effect, in Patel v Mirza the Supreme Court, by a majority, has adopted the flexible approach advocated by the Law Commission. Lord Toulson (with whom Baroness Hale, Lord Kerr, Lord Wilson and Lord Hodge agreed; Lord Neuberger appears also to have supported Lord Toulson's approach) considered that the doctrine of illegality was:

"... not a matter which can be determined mechanistically. So how is the court to determine the matter if not by some mechanistic process? In answer to that question I would say that one cannot judge whether allowing a claim which is in some way tainted by illegality would be contrary to the public interest, because it would be harmful to the integrity of the legal system, without (a) considering the underlying purpose of the prohibition which has been transgressed, (b) considering conversely any other relevant public policies which may be rendered ineffective or less effective by denial of the claim, and (c) keeping in mind the possibility of overkill unless the law is applied with a due sense of proportionality. We are, after all, in the area of public policy. That trio of necessary considerations can be found in the case law."

Lord Toulson added that the primary question was whether the "relief claimed should be granted" rather than "whether the contract should be regarded as tainted with illegality". A minority of the Justices of the Supreme Court (Lords Mance, Clarke and Sumption) disagreed with this approach. Lord Clarke, for example, considered that there was "no support in any of the authorities for this approach" and was contrary to Hall v Herbert and Tinsley v Milligan which had been cited by other members of the court. Subsequently, in Mohammad Saeed v Mohammad Ibrahim the court considered that in the light of Patel v Mirza:

"... the question was whether consideration of the policy factors and of the nature and circumstances of the illegality should result, given the public interest in preserving the integrity of the justice system, in the denial of the relief claimed. Thus, the focus was on whether relief should be granted rather than whether the contract was tainted by illegality."

This is undoubtedly an accurate reading of Lord Toulson's judgment.

29.      In respect of a loan agreement, lending and borrowing money is not of itself contrary to any public purpose.  Nor is the charging of interest of itself usurious (see paragraph 29 of Doorstop Limited [2012] JRC 199).  Lending money of itself is not therefore contrary to bonne moeurs.

30.      The approach also taken in Doorstop is that the charging of interest must be moderate or reasonable and therefore if interest is penal or excessive the court has the power to reduce the same.  The fact that Doorstop allows for the court to reduce interest that is not moderate or reasonable is therefore inconsistent with Advocate Begg's submission that seeking excessive interest therefore renders the original loan agreement as contrary to public policy and unenforceable.  A different approach to excessive interest so that capital sums advanced could not be recovered might also be said to be "overkill" applying Mirza. I have therefore concluded that such an argument in law would not have any reasonable prospect of success and is not a defence that justifies a trial.

31.      The other way that Advocate Begg relied upon the rate of interest charged was that the first defendant would not have agreed to the terms or entered into a loan agreement.  However, that is not a defence in law either.  Assuming in the first defendant's favour that it could establish at trial that it would not have entered into any agreement had it appreciated that the interest rate was not one that the Royal Court would allow to be enforced, such an argument would lead to the loan agreement being set aside on the basis of some form of erreur.  However, the setting aside of an agreement means that parties are put back in the position prior to the contract being entered into.  In other words, setting aside the agreement on the basis that the first defendant did not appreciate that the interest rate was usurious or excessive would still lead to the first defendant having to repay the capital unless a change of position of defence was asserted.  No such defence has been raised in the answers filed or in any affidavit.  This argument is again not therefore a defence to the claim for the return of capital.

32.      I also do not consider in any event that the first defendant could rely on such a mistake, because it appears to be an argument that he did not understand that the interest charged was excessive.  That in effect is a misunderstanding as to the nature of the agreement signed which is not a basis upon which a contract can be set aside on the basis of erreur - see Home Farm Developments Limited v Strata Developments Limited [2015] JCA 242.  The first defendant in this case knew it was borrowing money and knew it was paying interest and understood the rate of interest payable.  What the first defendant did not understand was that the court possesses a power to reduce any excessive rate of interest.  That lack of understanding of a legal power vested in the court is not sufficient to set aside a contract.

The contract had been frustrated either because of the COVID pandemic or because of Irish legislation

33.      In relation to this argument, effectively two different reasons were relied on to assert why the contract had been frustrated on the basis of "force majeure".  However, no authority was advanced by Advocate Begg explaining the principles of "force majeure".  While it is not helpful for a judge having to make a decision in the absence of authority, fortunately in the Jersey & Guernsey Law Review 2020 at page 142 an extensive article on Frustration and Hardship in Commercial Contracts was published by Mr Duncan Fairgrieve and Advocate Nicole Langlois addressing the effect of the Coronavirus pandemic and how different legal systems have grappled with the question when a supervening event will excuse the non-performance of or a delay in performance of a party's contractual obligations.  The Article explores the position both under French Law, English Law and analyses the current position under Jersey Law (paragraphs 67 to 78).

34.      In relation to the COVID pandemic, however the simple answer to the defendants' objections is that the loan agreement was entered into some eight months after the pandemic began.  The existence of the pandemic of itself cannot therefore be a reason to frustrate a contract entered into when the parties knew of the pandemic.  Putting it simply the pandemic was not a supervening event frustrating performance of the contract.  Rather it was an event already known to the parties, and which the parties are presumed to have factored into their thinking as to whether to borrow or lend money.

35.      In relation to the Irish legislation, this was referred to at paragraph 14 of the answer of the first and second defendants which stated that: -

"...Irish legislation made it illegal for any commercial building work to be carried out or for any commercial properties to be sold."

36.      This pleading is wholly unsatisfactory because it fails to plead all material facts.  Firstly, it does not plead when the Irish legislation came into force.  If the Irish legislation was already in force when the loan agreement was entered into, it cannot be a supervening event frustrating a contract for the same reasons that the COVID pandemic could not be a supervening event.

37.      Secondly, the Irish legislation is not identified.  Advocate Begg suggested that the plaintiff could have asked for clarification on what the Irish legislation was.  However, although particulars of claim were filed on 18^th February 2022, he still could not, by the time of the summary judgment application, identify the legislation.  This was a clear breach of the Royal Court Rules, which require all material facts to be pleaded (See Rule 6/8).  When relying on foreign legislation the name of the legislation, the relevant terms and when they applied are all material facts which have to be pleaded at the outset, so the other party knows the case it has to meet.  No-one reading this pleading could understand the case they had to meet.

38.      For an advocate to plead the effect of legislation without knowing what that legislation was, or having any sight of its terms, is also a material failure on the part of that advocate to satisfy himself that the legislation does indeed raise an arguable defence appropriate to plead.

39.      These failings are also not just a question of semantics.  The pleaded case suggests that the Irish legislation prevented any form of commercial building work or the sale of any commercial property.  For the legislation to have that effect is surprising.  I accept that for a time the COVID pandemic prevented organisations or individuals from working because of the risk of transmission.  I am also aware that in Jersey individuals were protected from eviction for a period of time.  However, the suggested effect of the Irish legislation relied upon goes much further.  This suggested effect of legislation should have put Advocate Begg on enquiry to ascertain precisely what the legislation said and to obtain appropriate advice which could have been put before the court as evidence to suggest there was an arguable defence.  None of these things happened.

40.      Nor was Advocate Begg at the hearing able to explain whether the legislation was still in force or whether it had come to an end.  Even if some form of legislation restricting commercial development was in force, if it had come to an end, any frustration of the contract had ceased which would mean that the capital was now repayable.

41.      Advocate Begg suggested that I could allow him to go away and make enquiries to obtain the appropriate information and plead a case based on Irish legislation.  However, he has had an opportunity to do so because he has known of this application for some weeks.  Furthermore, for the reasons set out above the case he contends applies is extremely surprising and, in my judgment, fanciful in the absence of any evidence identifying the legislation, when it applied, what it covered and whether it is still in force.  He has not therefore in respect of this argument met the threshold to justify a trial.  Nor has he taken any steps which indicate that such a defence might be pleadable because of his inability to answer any of the questions posed to him.  As a matter of discretion, I am not therefore willing to allow the defendants more time to plead a case based on Irish legislation in the absence of any information whatsoever about what that legislation might be and in the absence of any affidavit evidence that any such legislation gives rise to a defence that is real rather than fanciful.  An affidavit with the requisite information could well have led to a different outcome and allowing time to amend the answer but that was not the situation I faced.  This conclusion applies to both the loan agreement entered into by the first defendant and the guarantee signed by the second and third defendants.

42.      I now turn to consider the remaining defences which relate to the terms of guarantees.

The guarantee defence

43.      Insofar as the second and the third defendants contend that they did not understand the terms of the guarantees they signed, I have set out above the terms of the guarantees.  These are clear on their face and are understandable.  In that regard the second and the third defendants are directors of a company engaged in commercial property development and the third defendant is the controlling shareholder.  In any event, this defence is a failure to understand the meaning of an agreement which is not a defence following Home Farm referred to above.

44.      There is also no affidavit from either defendant explaining why, when they executed the agreement before an English Solicitor, they did not ask the English Solicitor about the terms of the guarantee if they did not understand the same.  Advocate Begg suggested this was because the guarantee was a Jersey law agreement.  While that is true, the express wording of the agreement is clear, and any qualified lawyer could draw that to the attention of the party giving the guarantee.

45.      Insofar as the second and the third defendants had no option but to agree to the terms of the guarantee, this is also not a defence to the repayment of capital.  A lack of consent on the part of the second and third defendants can only lead to a contract being set aside where there has either been "dol" or "violence".  Neither is pleaded.  There was also no trickery in the terms of the guarantee.  It is not an artificial device or designed to mislead.  Rather, as noted above, it is clear on its face.

46.      Nor is there any threat or coercive force pleaded said to have been applied by the plaintiff against the second and third defendants.  Rather the plaintiff's position was that if the first defendant wanted to borrow money, the borrowing had to be guaranteed by the second and third defendants.  Such a position is part of normal commercial negotiations and is not capable of amounting to dol or violence without something more.  Something more however is not pleaded.  Even then any arguable defence based on dol or violence would simply lead to the contract being set aside and the position reversed absent any change of position defence.  No such defence is pleaded.

47.      What the second and the third defendants appear to be suggesting is that there was some form of undue influence.  The starting point for any allegation of undue influence is that generally a lending bank or equivalent does not owe any duty to advise a borrower and is entitled to have regard solely to its own interests (see Mirpuri v Bank of India [2010] JLR Note 39).

48.      However, there was no assertion in the answers filed or in any affidavit from any defendant that the plaintiff, as a lender, should have been on enquiry of any undue influence.  The best that is said is that the second and third defendants had no option but to sign the guarantees. That is not enough to plead undue influence.

49.      In any event any assertion of undue influence cannot apply to the second defendant because he admits that he negotiated the borrowing in the first place at paragraph 7 of his answer.  Any undue influence can therefore only be between the second defendant and the third defendant.  In relation to the third defendant, he does not make such an assertion in his answer and there is no affidavit from him making such an assertion.  An assertion of undue influence by the third defendant would also require separate representation because it would involve a dispute between the second defendant and the third defendant.  The plaintiff as lender was not therefore under any legal responsibility or on inquiry to require independent legal advice to be taken.  The matter was solely a commercial decision for each of the defendants.

50.      Accordingly, for all these reasons, none of the defences raised amount to defences in law.  It is therefore appropriate that summary judgment is given in favour of the plaintiff for the amount of capital advanced against all three defendants.  The fact that the issues raised by Advocate Begg are not capable of amounting to defences in law also means that no further affidavit is required, an affidavit having been filed in support of the original application as set out above.  Summary judgment is therefore granted against each of the defendants on a joint and several basis in the sum of £200,000.

Authorities

Doorstop Limited v Gillman & Ors [2012] JRC 199. 

Royal Court Rules 2004. 

De Bourbon des Deux Siciles v Strang and Ors [2021] JRC 180. 

Barclays Wealth Trustees (Jersey) Limited v Equity Trust (Jersey) Limited [2013] (2) JLR 22. 

Pothier Traité des Obligations volume 1. 

Patel v Mirza [2017] AC 467. 

Chitty on Contract

Home Farm Developments Limited v Strata Developments Limited [2015] JCA 242. 

Jersey & Guernsey Law Review 2020

Mirpuri v Bank of India [2010] JLR Note 39.