Summary

A district judge had not erred in refusing to set aside a statutory demand issued following a guarantor's failure to comply with his repayment obligations, as the guarantor had not demonstrated that there was a genuine issue to try.

Facts

The appellant (F) appealed against a decision of a district judge refusing to set aside a statutory demand served on him by the respondent firm of solicitors (S).

S had entered into a deed of guarantee with F in December 2010 in which it agreed to continue to provide legal services to a group of clients (X) and agreed to defer demanding immediate payment of their guaranteed liabilities. In return, F personally agreed to repay the guaranteed liabilities by February 2011, which included all present and future monies X owed to S. A schedule of invoices up to that point was attached to the guarantee. In December 2011, S issued a statutory demand claiming the unpaid balance of sums invoiced under the schedule and in a subsequent invoice. F applied to set aside the statutory demand disputing the extent of liability and claiming that S had breached a condition precedent which had induced him to enter into the personal guarantee, namely, that S would continue to provide legal services to X and would take a flexible approach to the February payment date. The judge refused F's application.

F submitted that the judge had erred in refusing to set aside the statutory demand as (1) there was an agreed collateral warranty that S would be flexible in respect of the payment deadline; (2) the fees claimed were unliquidated sums which could not be the subject of a bankruptcy petition.

Held

(1) Even if on F's case that there was a collateral warranty whereby S had agreed that the February repayment date was wholly flexible provided that the indebtedness was reduced prior to that date, he had failed to comply with his obligations under it as evidenced by a document F produced which showed that there was no reduction in indebtedness between the date of the guarantee and the February deadline. There was no triable issue in relation to an alleged collateral warranty (see paras 17-18 of judgment). (2) Where an agreement to pay a fixed sum was made at the outset, or where further work was only undertaken on condition that a client agreed to pay outstanding invoices, there was consideration for the agreement and the client could not resile from it, Truex v Toll [2009] EWHC 396 (Ch), [2009] 1 W.L.R. 2121 applied. In the instant case, the guarantee was clearly an agreement to pay the sums set out in the schedule by February 2011 under which S only agreed to undertake further work on the condition that F agreed to pay the outstanding invoices set out in the schedule, Truex applied. F was correct in that the guarantee did refer to moneys owed in the future which were unliquidated debts, but that did not make the sums in the detailed invoices unliquidated. The debt was a liquidated debt in so far as it had not been paid and F could not resile from his agreement. The instant argument did not provide a triable issue. Accordingly, a stay on the petition was lifted (paras.21-22, 25).

Appeal dismissed