Harvey v Dunbar Assets Plc

Factual and Procedural Background

This case concerns a renewed application by the Appellant for permission to appeal the dismissal of his application to set aside a statutory demand served by the Appellee, Company A. The statutory demand was based on the Appellant's liability under a joint and several guarantee dated 10 March 2008 ("the Guarantee"), signed by four guarantors in favor of Company A for a maximum sum of £720,000 plus interest, charges, and costs. The Guarantee was given as security for banking facilities provided to a company ("the Company") involved in a development project that ultimately failed.

The Appellant contended that he was induced to sign the Guarantee based on assurances from a representative of Company A that the guarantee was a mere formality and would never be enforced, invoking a promissory estoppel defense. The first statutory demand was issued in June 2011, and the Appellant applied to set it aside on the ground of promissory estoppel. The District Judge refused to set aside the demand, rejecting the promissory estoppel argument. Subsequently, the Appellant raised a new point alleging forgery of a co-guarantor's signature ("the Forgery Point"), which led to an appeal that succeeded on that ground, resulting in the first statutory demand being set aside.

Following this, Company A pursued the co-guarantor, and a court found that the co-guarantor had indeed signed the Guarantee. Company A then issued a second statutory demand against the Appellant based on the same Guarantee. The Appellant again applied to set aside the second statutory demand on the identical promissory estoppel grounds, abandoning the forgery point in light of the court's findings. The District Judge refused to set aside the second statutory demand, holding that the Appellant could not re-litigate the same issue that had been previously decided and abandoned on appeal. Permission to appeal was initially refused but later granted for the renewed application, which is the subject of this opinion.

Legal Issues Presented

1. Whether the Appellant can raise the same promissory estoppel argument in respect of a second statutory demand after it was dismissed on the first and not pursued on appeal.
2. If the Appellant can raise the argument, whether the statutory demand ought to be set aside on grounds that the debt is disputed on substantial grounds or other grounds under the Insolvency Rules 1986, rule 6.5(4)(b) and (d).

Arguments of the Parties

Appellant's Arguments

• The Appellant argued that there is no issue estoppel or res judicata preventing him from raising the promissory estoppel point again in relation to the second statutory demand because the first statutory demand was set aside on a different ground (the Forgery Point) and the promissory estoppel argument was never appealed.
• The Appellant relied on authorities concerning issue estoppel and res judicata to contend that the appeal on the Forgery Point did not bar re-raising the promissory estoppel argument.
• Additional evidence was presented to suggest a wider practice by Company A of making similar assurances to other guarantors, aiming to show that the Appellant's belief in the promise was reasonable.

Appellee's Arguments

• The Appellee contended that the Appellant was attempting to re-litigate the same promissory estoppel point that had already been decided against him on the merits and abandoned on appeal, which is impermissible.
• The new evidence presented added nothing material or substantive beyond what was previously considered.
• The Appellee relied on established legal principles and authorities that prevent a debtor from re-arguing points already decided, absent exceptional circumstances.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first considered whether the Appellant could raise the promissory estoppel argument a second time in relation to the second statutory demand. The District Judge had held that the Appellant could not do so because the point had been conclusively decided against him on the merits and was abandoned on appeal. The court agreed with this conclusion, relying on a well-established body of authority that prevents a debtor from re-litigating points already argued and decided in earlier stages of the bankruptcy process absent exceptional circumstances.

The court explained that the principle, often referred to as the Turner principle, is grounded not strictly in issue estoppel or res judicata but in public interest and the avoidance of abuse of process. It serves to prevent waste of court time, parties’ resources, and undue delay in the administration of justice. The court emphasized that the Appellant’s new evidence did not materially add to the prior evidence and that no special or exceptional circumstances justified re-opening the issue.

Regarding the promissory estoppel point itself, the court summarized the legal requirements for promissory estoppel: a clear and unequivocal promise or assurance, intended to affect legal relations, reliance on the promise, and detriment if the promise is withdrawn. The court found that the alleged assurances by the Bank’s representative were not clear and unequivocal promises but rather statements of future intention or expectation. It was not reasonable for the Appellant to rely on these assurances as binding promises that the Guarantee would never be enforced, especially given the commercial context and the Bank’s evident reliance on the Guarantee.

Accordingly, the court concurred with the District Judge’s conclusion that the promissory estoppel argument failed on its merits.

Finally, the court noted that its decision does not preclude the court hearing any subsequent bankruptcy petition from exercising its statutory discretion under the Insolvency Act 1986 and considering any arguments the Appellant might raise at that stage.

Holding and Implications

The court granted permission to appeal but DISMISSED THE APPEAL.

The holding confirms that a debtor cannot re-raise the same promissory estoppel argument on a second statutory demand once it has been finally decided against them and abandoned on appeal, absent special or exceptional circumstances. The decision enforces the principle that repeat litigation on identical points in bankruptcy proceedings is an abuse of process and contrary to public interest. The court also upheld the substantive rejection of the promissory estoppel defense on the merits.

The direct effect is that the Appellant’s application to set aside the second statutory demand is refused, and the statutory demand stands. The court did not establish any new legal precedent beyond reaffirming existing principles governing issue estoppel, abuse of process, and the application of promissory estoppel in the context of guarantees and statutory demands.