Downing LLP vs Evan Lauretz Maindonald

This case concerned a bankruptcy petition presented by Downing LLP against Evan Lauretz Maindonald, a property developer, based on a substantial debt arising from a loan guarantee.

TLDR:

• Downing LLP filed a bankruptcy petition against Evan Lauretz Maindonald.
• The petition was based on a debt of £835,959.12 under a loan guarantee.
• The court examined the validity of the loan guarantee and the alleged default.
• The court found that the guarantee was valid and enforceable.
• The bankruptcy order was made against the respondent.

The petitioner, Downing LLP, acted as the security agent for Downing Development Lending Ltd, which had provided loan facilities to Lime Grove Tuffley Ltd, a property development company controlled by the respondent, Evan Lauretz Maindonald. The loan facilities, up to a limit of £5.3 million, were provided under a facility letter dated 31 July 2019.

The borrower failed to make a required repayment of £400,000 by 29 October 2021, leading the lender to demand repayment of the entire outstanding loan amounting to £4,617,299.38 on 22 February 2023. Subsequently, the borrower was put into administration on 10 March 2023.

The respondent had guaranteed the borrower's liabilities under a written guarantee dated 31 July 2019. When the borrower defaulted, the respondent's liability under the guarantee was triggered, leading to a statutory demand for £771,493.56 served on 24 May 2023. The respondent did not comply with the statutory demand, and the amount claimed increased to £835,959.12 by the date of the petition.

The respondent opposed the petition on several grounds, including the argument that the guarantee had been discharged due to subsequent changes to the borrower's liability and that there was a counterclaim reducing his liability. Additionally, the respondent sought to adjourn the hearing to prepare a proposal for an Individual Voluntary Arrangement (IVA), which was refused.

The court examined the facility letter and its amendments, concluding that the borrower had defaulted by failing to repay £400,000 by the specified date. The court also found that the third amendment to the facility letter did not discharge the respondent's liability under the guarantee, as the amendments did not fundamentally alter the original agreement.

The court further held that the respondent's consent to the third amendment was implicit, given his involvement in negotiating and signing the amendment as the sole director of the borrower. Additionally, the guarantee contained a waiver of defenses clause, which the court found to be effective in this case.

The respondent's counterclaim was deemed to have no real prospect of success, as it was unparticularized and unsupported by evidence. Furthermore, the facility letter contained a 'no set-off' clause, preventing the borrower from setting off any counterclaim against its liability, which also applied to the respondent as guarantor.

In conclusion, the court found that none of the respondent's defenses had a real prospect of success, and the bankruptcy petition succeeded. A bankruptcy order was made against the respondent on 19 April 2024.

Legal representatives: James Davies (instructed by Brecher Llp LLP) for the Petitioner, John Churchill (instructed by Keystone Law) for the Respondent.

Judicial Panel: HHJ Paul Matthews

Case Citation Reference: [2024] EW Misc 16 (CC)