BR-2024-000761 - [2025] EWHC 2900 (Ch)

The Demand relies upon a debt said to arise from an unlimited personal guarantee dated 21 September 2022. Mr Leahy is a director of Elva Wellbeing Limited (the “Company”). It was previously known as MyWagez Ltd, which partly describes its business. Mr Leahy explains that the business of the Company as providing: “earned wage access service to employers which is a financial service to enable employees access a percentage of their accrued wages before the end of the current payroll in return for a fee”. To provide those services the Company required finance and turned to Schneider Investment Associates LLP (“SIA”). SIA is a private company that carried on business in investments and lending to corporate entities.

The Company and SIA entered a revolving loan agreement on 25 June 2019. The loan agreement was varied by email on 1 June 2020 and varied by side letters respectively dated 20 October 2020 and 1 February 2022. Mr Schneider of SIA describes the varied arrangement as the “Facility Agreement”. He explains that the Facility Agreement as a non-obliged secured revolving loan facility where the sole purpose was to fund salary advances made by the Company in its usual course of business. Mr Leahy says:

“[SIA] would place money into a holding account that would be used to advance wages to staff. During the payroll period, staff would ask for, and [the Company] would provide, salary advances from that account. At the end of the payroll period, the relevant employer would pay the staff wages in their entirety into this same account. [The Company] would deduct its advances and send the remainder to the employees. From those deductions, [the Company] would then hand those advanced funds back to the [SIA] and ask them to fund the next payroll run. This provided a regular cash cycle of funds back to [SIA].”

The Company merged with another company known as Money Concierge Ltd (“MCL”) in the latter part of 2020. After experiencing some financial difficulties in 2021, the board of MCL sold the Company and its business by way of a shareholder agreement to Mr Leahy. The consideration included an upfront payment of £10,000 and a one-year deferred payment of £85,000.

The financial troubles of MCL did not go away. The board resolved to place it into liquidation in April 2022, although a creditors meeting was not held until 21 October 2022.

On 10 May 2022 Mr Leahy informed SIA (by e-mail) that MCL wanted to secure the deferred sum by way of a debenture over the assets of the Company. The deferred sum was due for payment in full on 15 April 2023. A deed of priority was proposed by SIA which led to direct negotiations between SIA and MCL. At this point in time Mr Leahy had provided SIA with a guarantee to secure the Facility Agreement limited to £30,000. The limited guarantee is not before the court, however SIA wished to explore replacing it with an unlimited guarantee and indemnity.

There commenced a series of e-mail correspondence between SIA and Mr Leahy about the terms of an unlimited personal guarantee.

Prior to liquidation, the board of MCL agreed that the debt owed by the Company would be subordinated to the revolving finance facility provided by SIA. This was formalised in a deed of priority dated 15 September 2022.

On 21 September 2022 Mr Leahy executed an unlimited personal guarantee and indemnity in favour of SIA.

Following the voluntary liquidation of MCL in October 2022 the liquidators served a demand for payment under its security on 19 February 2024 (the “MCL Demand”. The demand, it is argued, permitted SIA to exercise its rights under the personal guarantee and demand payment from Mr Leahy of all sums due under the Facility Agreement.

The SIA demand letter is dated 24 June 2024. It demands payment of £310,923.86 (the “SIA Demand”).

The argument advanced by Mr Leahy is that SIA had no right to make the SIA Demand as the strict terms of the unlimited personal guarantee were either varied by agreement or there was an implicit promise that they would not be relied upon. He argues that it is inequitable to rely on the strict terms as the parties were agreed that the personal guarantee was capable of enforcement in only two circumstances: default or where the Company had paid MCL ahead of SIA.

Mr Leahy relies on correspondence between June and September 2022 and an unrecorded telephone conversation between himself and Mr Schnieder.

SIA argues that it can simply rely on the terms of the personal guarantee executed by Mr Leahy. Mr Leahy argues that the factual background, seen through the prism of the correspondence, gives rise to a defence of promissory estoppel, misrepresentation and creation of a collateral contract.