Bernard Hampton, a former director of the now-dissolved property development company Banonbury Homes Ltd, has won a High Court ruling that fellow director Denis Minns must indemnify him for half of a £478,400 payment he made to Barclays Bank in settlement of the companys debts.
When Hampton and Minns set up the company in 1987 they signed a joint guarantee in favour of the bank to secure its indebtedness. The business did not prosper and was later wound up owing substantial sums to the bank, which Barclays subsequently recovered from Hampton.
Hampton claimed that he was entitled, under the joint guarantee, to a contribution from Minns equal to one-half of the amount he had had to pay out.
However, Minns argued that although that was the general rule for joint sureties, an implicit arrangement existed in this case that he would only be called upon to make a 20% contribution at most. He also claimed that even if the court found against him on that point, it should still not require him to pay up, since Hampton had delayed for so long before taking action to recover the sums that it would now be unjust to expect Minns to settle them.
Upholding Hamptons claim, Deputy High Court Judge Kevin Garnett QC said there was no evidence to support the existence of an implied agreement to vary the normal 50/50 rule.
Although he found that there had been lengthy delay in taking proceedings, he held that Hampton had never indicated that he would not claim a contribution from Minns. Since Hampton had risked a great deal of his money in the joint venture and had born the brunt of the banks claim under the guarantee alone, the judge ruled that it was not unreasonable for him to recover the sums found owing from Minns.
Hampton v Minns Chancery Division (Mr Kevin Garnett QC, sitting as a deputy judge of the division) 7 March 2001
John Dagnall (instructed by Royds Treadwell) appeared for the claimant; Murray Shanks (instructed by Clarkson Wright & Jakes) appeared for the defendant.
PLS News 7/3/01
