[2025] EWHC 2107 (Comm)

The original draft Defence and Counterclaim raises at least eight separate defences to what is, in reality, a simple claim under a loan agreement to enforce personal guarantees in circumstances where the Borrower has admitted the liability in full and has not paid the sums due. The First and Second Defendants then serve an amended draft Defence and Counterclaim pleading entirely new defences (bringing the total to at least eleven). Their aim is clearly to introduce as much complication, and further delay, as possible. Their approach reveals a lack of confidence in their defences, particularly given the First and Second Defendants have been considering their defences since at least May 2023.

The First and Second Defendants rely on the allegations made by the Borrower in his own defence. The Borrower no longer maintains these allegations, having admitted his liability in full and discontinued his counterclaim.

In order to make good most of the factual allegations on which they rely, the First and Second Defendants would need evidence from the Borrower; that is untenable in circumstances where the Borrower no longer maintains these allegation and has undertaken not to assist the First and Second Defendants by clauses 3.4 and 3.5 of the Settlement Deed agreed between the Borrower and the Claimant.

Many of the defences rely on the proposition that the First and Second Defendants were unsophisticated individuals who did not receive proper legal advice, did not understand the Facility Agreement, and were pressured into providing the Guarantees, and are not computer literate. This is not supported by the documents and is implausible, especially as the First Defendant describes himself as a “private equity investor” with more than “40 years of investment banking and financial advisory experience” (Mr Khatoun’s first witness statement, para. 126).

The weakness of the First and Second Defendants’ position is underscored by the fact that the Third Defendant admitted her liability, then filed a defence putting the Claimant to proof as to quantum but did not raise the points made by the First and Second Defendants, and then accepted a Part 36 offer pursuant to which judgment was entered in favour of the Claimant in 90% of the sum claimed.

They were plainly parties to the Facility Agreement. The Claimant takes issue with the factual account as to the First and Second Defendants’ signature of the Facility Agreement. Further, the conditions for the release of the signature were satisfied.

The HNW Exemption under article 60H of the 2001 Order is applicable so that the Facility Agreement and the guarantees are enforceable.

As regards the defence that the First and Second Defendants were discharged by reason of the amendment of the Facility Agreement, the amendment said to have been made on 18th June 2021 was never made (Mr Khatoun’s second witness statement, para. 23-25). In any case, clause 19.5 of the Facility Agreement provides that “The obligations of each Guarantor under this Clause 19 will not be affected by an act, omission, matter or thing which, but for this Clause 19, would reduce, release or prejudice any of its obligations under this Clause 19 … including … any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of a Finance Document or any other document or security …”.

As regards the defence based upon misrepresentation, this defence has no real prospect of success, because (i) it relies on representations allegedly made to the Borrower which he no longer maintains, (ii) it is vague and embarrassing for want of particulars and no details are pleaded as to when, by which individual, and in what terms these representations were made by the Claimant to the Borrower or as to when, and in what terms these representations were conveyed by the Borrower to the First and Second Defendants, (iii) the pleaded representations are not representations of present fact, (iv) the Borrower and the First and Second Defendants are estopped (by agreement and/or by representation by clauses 4, 20 and 35 of the Facility Agreement) from contending that the alleged representations were made and/or that they relied upon them.

As regards the defence based on economic duress, this defence is not properly pleaded, not least because it is unclear which party is said to have been subject to economic duress (the Borrower and/or the First and Second Defendants); there is no particularisation of the demands allegedly made; there is no real prospect of establishing that the demands were illegitimate (Pakistan International Airline Corp v Times Travel (UK) Ltd [2021] UKSC 40; [2023] AC 101). The evidence shows that this was a case of a straightforward commercial negotiation.

As to the defence based on a failure to comply with clause 19.7.2 of the Facility Agreement, the evidence is that the Claimant enforced its rights prior to making the demands on the First and Second Defendants, the Claimant did not obtain any security over the properties and, as such, had no such rights to enforce (Mr Khatoun’s first witness statement, para. 186-195).

As to the alleged cap on the First Defendant’s liability, the applicable limit is US$2,500,000 pursuant to clause 19.3 of the Facility Agreement and the lesser limit does not apply on the facts.

The factual basis underpinning the defence relating to the Clarendon Road property is incorrect.

The defence based on alleged breaches of duty by the Claimant in dealing with the Borrower’s assets suffer from three problems: (i) the pleas suffered from a want of particulars, (ii) there is no real prospect of success in the case that the Claimant sold any assets at an undervalue, and (iii) these defences to go quantum, not liability.

The claims for an account and orders under section 140B of the Consumer Credit Act 1974 are repetitions of defences advanced by the Borrower.