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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Caterpillar Financial Services Ltd v Goldcrest Plant & Groundworks Ltd & Ors [2007] EWCA Civ 272 (16 March 2007) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2007/272.html Cite as: [2007] EWCA Civ 272 |
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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
(HHJ ALTON)
Sitting at Birmingham Civil Justice Centre Birmingham B4 6DS |
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B e f o r e :
(Vice-President of the Court of Appeal, Civil Division)
LORD JUSTICE TUCKEY
LORD JUSTICE JACOB
____________________
CATERPILLAR FINANCIAL SERVICES LIMITED | Claimant/Appellant | |
-v- | ||
(1) GOLDCREST PLANT AND GROUNDWORKS LIMITED | ||
(2) JASPAL SINGH KHAIRA | ||
(3) PARAMJIT KHAIRA | Defendants/Respondents |
____________________
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
MR STEPHEN ROBINS (instructed by the Pro Bono Unit) appeared on behalf of the 2nd and 3rd Respondents
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Crown Copyright ©
"It is probable that Mr Hunt described the anticipated requirement as being for an all monies guarantee, that being the heading to the document which the claimant uses as an alternative to its single account form which the first and second defendants had previously signed, with the intent thereby of conveying that a guarantee of all novated agreements would be required. I am however left in doubt as how far he otherwise went to spell out what the claimant's likely requirements were. I bear in mind, in this context, that at that stage neither Mr Hunt (so far as I am aware) nor Mr Khaira had the existing or proposed document in front of them to refer to. Even if they had it is the case, for the reasons set out below, that the form would not have greatly assisted in establishing what the claimant meant by an all monies guarantee as it appears to use the phrase on the assumption that it is a term of art requiring no further explanation. I also bear in mind the claimant's apparent practice, when changes occur in the underlying operating agreements to require re-execution of guarantees in the same form as any pre-existing securities (see the variation proposal made in November 2002 and Mr Kirkham Evans' evidence about it) even if, in strict law, such re-execution is not required. I am satisfied that had there then or later at the time of signature been a clear discussion about the change in the scope of the guarantee requirement then Mr Khaira would have understood what was being said to him as he is, demonstrably, a resourceful and quick witted man who understands financial and restructuring matters. Nevertheless whilst I suspect that Mr Hunt did say something about the guarantee being required to cover all the agreements novated I am left in doubt, on the balance of probability, that a clear explanation was given at this early stage and conclude that it is possible that Mr Hunt may have simply referred to the requirement as being for an all monies guarantee assuming that that was self defining and without explaining precisely what he meant by it."
"Further to your letters dated 15 May 2002, we confirm we are prepared to novate the agreements from Excel [that is Old Co] ... to Goldcrest ... as detailed on the attached schedules. Our agreement to the revised terms is subject to the following conditions ... "
There then appear five bullet points:
"• Confirmation that our equipment remains insured. Please forward a copy of the Policy.
• We may wish to inspect our equipment and will advise you of this if necessary.
• All future payments are to be made by Direct Debit.
• The guarantee and indemnity of Mr Jaspal Singh Khaira & Mrs Parmajit Khaira.
• The arrears of £1,550.34 against contract [and then the number is given] £1,550.34 against contract [another number given] to be brought up to day immediately.
For the avoidance of doubt, with the exception of the above arrangements, all other terms and conditions of the original agreement remains in full force and effect.
Please sign both the attached Novation Agreements and Schedules where indicated and return to us together with the cheque for £150.00 Administrative Fee within the next seven days.
... "
"Whilst I note the reference to certain matters being required (including the provision of a guarantee and indemnity by Mr and Mrs Khaira) the letter continuing that '... with the exception of the above arrangements all other terms and conditions of the original agreement' would remain in full force and effect, that wording is insufficient to carry with it the clear positive implication that the terms of the new guarantee would differ from that previously given let alone convey to the reader what the differences would be."
76. The real problem here, unlike that arising in UYCF, is not whether the court can give any meaning to the contract where there are no agreements or specifications fitting the description set out in the contract but whether, where as here there are a number of agreements to which the contract sued upon is capable of applying, the court can permit the party suing to adduce evidence in order to identify which of those agreements were intended to be specified bearing in mind that the guarantee itself fails to incorporate any description of the agreement of agreements in question to aid in that task. This Guarantee before me gives no clue as to which of those agreements the parties intend to refer let alone point to the fact that the intended reference was to all six. In the absence of such clues the claimant is driven to reliance upon oral evidence in an attempt to establish, from that evidence, what the parties' intention was or must have been. That is an entirely different exercise from the production of extrinsic evidence simply to identify agreed documents, whether it be specification or further agreement, referred to but not attached to or specifically identified by reference in the agreement under consideration.
77. I agree with Mr Miller and Mr Butler that that is not the exercise which was being contemplated by Lord Hoffman when referring to the admissibility of evidence of the matrix of fact, the background against which the language of the document under consideration is to be construed. I find that the evidence relied upon by Mr Richmond in order to seek to supplement the written guarantee by establishing which agreement or agreements it is said the guarantee was intended to cover is not admissible as part of the factual matrix as Mr Richmond is not inviting the court, based on that evidence, to use it in interpreting the wording of the Guarantee in order to clarify an ambiguity or demonstrate a peculiar use of language.
78. It would be potentially admissible, not to alter vary or contradict the language of the Guarantee but to prove that the parties had agreed upon the identification of the Agreement or Agreements to be covered but had inadvertently omitted to insert into the written document the necessary information, in which event one might expect an application to rectify the Guarantee. Secondly and in any event for the reasons which I have set out elsewhere, I am not satisfied that the claimant has, on the facts shown that it was the common and agreed intention of the parties that the guarantee should be interpreted as referring to liabilities arising under all six agreements. I accept that this was almost certainly the intent of the claimant (the existence of which would negate any inference, even if such inference could otherwise properly be drawn, that the guarantee was simply intended to replace the existing guarantee of the Fourth Agreement); I am not however satisfied that that reflects the intention of the other parties. Certainly, on my findings, Mrs Khaira was not a party either to the discussion with Mr Hunt at the time the novations were proposed or to any discussions taking place at the time of signature - either by her or Mr Khaira. Such information was not reasonably available to her at the time of execution. Nor is there evidence that she was aware of the terms of the letter of 19 June 2002. How therefore could it be said that these matters formed part of any factual matrix available to the court to assist in the interpretation of the Guarantee as between her and the claimant let alone that they amounted to extrinsic evidence admissible against her to demonstrate agreement as to the Agreements to be guaranteed? If they were not and the Guarantee is not, as I have found, otherwise capable on the written terms of being interpreted as applying to all six agreements being novated how could the Guarantee Obligations vary as between the joint and several guarantors simply because the supposed factual matrix varies? That consideration reinforces my conclusion that the evidence sought to be relied upon by the claimant is not admissible as an aid to the construction and interpretation of the Guarantee but is in truth merely evidence of one or other party's belief or expectations expressed in the course of negotiation."
Order: appeal allowed. 2nd and 3rd respondents to pay appellant's costs, assessed at £12,000 including VAT within 14 days. Permission to appeal refused.