Lloyds Bank Plc v Lampert & Anor

Factual and Procedural Background

The Appellant, Mr Lampert, was Chairman of Company A, a customer of the Respondent bank from 1981. Over time, to secure overdraft facilities for Company A, Mr and Mrs Lampert granted the bank various charges over their home at 22 Main Street, The City. In 1983, a second charge was given to the bank, subject to a prior first charge by a building society.

In 1990, Mr Lampert provided a guarantee limited to £500,000 for monies owed by Company A to the bank, initially qualified by a side letter dated 2 October 1990. The bank contended that this side letter was set aside by agreement in 1991. In January 1994, the bank offered to release the earlier charge but took no further steps.

In August 1995, the bank limited Company A’s overdraft to £725,000. Mr Lampert obtained a bridging loan of £250,000 secured by a further charge over 22 Main Street involving Mrs Lampert. Partial repayments and further advances followed, raising the bridging loan back to £250,000 by March 1996.

On 10 July 1996, the bank demanded repayment of the overdraft, which Company A did not pay. The bank appointed joint administrative receivers shortly after. Mr Lampert was requested to pay under the guarantee and to repay the bridging loan, but payments were not made. The bank commenced proceedings in the Queen’s Bench Division on 10 December 1996 to enforce the guarantee. Judgment was given for the bank in November 1997, and Mr Lampert’s appeal was dismissed in December 1997.

Separately, the bank commenced proceedings in the Chancery Division against Mr and Mrs Lampert in January 1997 seeking repayment of the bridging loan and possession of 22 Main Street under the August 1995 charge. Orders were granted in December 1997, and an appeal by the Lamperts was dismissed in June 1998. Mr Lampert’s appeal from that dismissal is before this Court, while Mrs Lampert’s application for leave to appeal was refused.

Legal Issues Presented

1. Whether the bank’s demand for payment under the 1990 guarantee was premature, considering the side letter and subsequent agreements.
2. Whether the overdraft facility granted to Company A was payable on demand at the time the bank made its demand.
3. Whether the bank was required to allow Company A reasonable time beyond the mechanics of payment to arrange funds before appointing receivers.
4. Whether there were grounds to grant leave to defend based on alleged harsh or unconscionable conduct by the bank.
5. Whether the bank breached any contractual duty by reducing the overdraft facility and thereby undermining the repayment of the bridging loan.
6. Whether the bank was entitled to call in the bridging loan on demand despite expectations of repayment in tranches.
7. Whether Mrs Lampert had grounds for appeal based on alleged misrepresentation regarding the existence of the earlier charge.

Arguments of the Parties

Appellant's Arguments

• The demand under the 1990 guarantee was premature because the side letter of 2 October 1990 qualified the guarantee, requiring the bank to pursue Company A for three months before calling on the guarantee, unless Mr Lampert’s financial position was deteriorating.
• The facility letter’s terms and circumstances indicated the overdraft was not truly payable on demand, but rather intended as a longer-term arrangement with an expected expiry date.
• The bank acted with unjustifiable haste in appointing receivers without allowing Company A a reasonable time to raise funds beyond the mechanics of payment.
• The bank’s conduct was harsh and unconscionable, warranting leave to defend the claim.
• The bank breached its contractual duty by prematurely reducing the overdraft facility during the bridging loan period, frustrating repayment.
• The bridging loan was expected to be repaid in tranches, and the bank’s right to demand immediate repayment was inconsistent with this expectation.
• Mrs Lampert contended she was unaware of the earlier 1983 charge and would not have agreed to the further charge if aware, implying misrepresentation by the bank.

Respondent's Arguments

• The side letter of 2 October 1990 was effectively cancelled by agreement in March 1991, confirmed by a letter of 22 March 1991 signed by Mr and Mrs Lampert, removing restrictions on the guarantee.
• The bank’s right to demand payment on the guarantee was unconditional and could be exercised immediately without pursuing other remedies first.
• The overdraft facility was expressly repayable on demand, and no circumstances altered this contractual right.
• The bank was entitled to appoint receivers promptly after non-payment; the law requires only the time necessary for the mechanics of payment, not additional time to raise funds.
• The bank did not act harshly or unconscionably; the identity of the receivers was irrelevant to the issue of judgment.
• The bank did not reduce the overdraft prematurely and did not breach any contractual duty relating to the bridging loan.
• The bridging loan facility expressly allowed repayment on demand, notwithstanding the bank’s stated intentions as to timing.
• There was no material misrepresentation regarding the earlier charge; Mrs Lampert’s appeal lacked merit.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court carefully examined the contractual documents and correspondence relating to the guarantee and side letter. It found that the side letter of 2 October 1990 was effectively cancelled by agreement in March 1991, as evidenced by the letter of 22 March 1991 signed by Mr and Mrs Lampert, and subsequent correspondence. The Court rejected the argument that any contractual restriction remained on the bank’s right to demand payment under the guarantee.

On the overdraft facility, the Court held that the express terms stating "repayable on demand" were clear and unambiguous. The Court found no inconsistency between the bank’s stated intention to keep the facility open until a certain date and its contractual right to demand repayment at any time.

Regarding the timing of appointment of receivers, the Court accepted established English law that the debtor is entitled only to the time necessary for the mechanics of payment, not for raising funds if unavailable. Even considering more liberal Commonwealth approaches, the evidence showed no prospect that Company A could have raised the funds in a short extension.

The Court found no merit in allegations of harsh or unconscionable conduct by the bank or in objections based on the identity of the receivers.

On the Chancery action, the Court rejected the argument that the bank breached any duty by reducing the overdraft or that the bridging loan’s repayment terms limited the bank’s right to demand repayment on notice. The Court found the bank’s rights under the facility letters were clear and lawful.

Finally, the Court found no material misrepresentation concerning the earlier charge to support Mrs Lampert’s appeal.

Holding and Implications

The Court DISMISSED the appeals by Mr and Mrs Lampert and refused Mrs Lampert’s renewed application for leave to appeal.

The direct effect is that the bank’s judgments enforcing the guarantee and recovering possession under the charge stand, and possession is to be given within 56 days. No new legal precedent was established as the Court applied settled principles of contract interpretation and enforcement of guarantees and security interests.