Neutral Citation Number: [2012] EWHC 1436 (QB)
Case No: HQ10X03478
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
HH Judge Anthony Thornton QC 
(sitting as a judge of the High Court)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 27 July 2012 

Before:

HIS HONOUR JUDGE ANTHONY THORNTON QC
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Between:

	 National Westminster Bank PLC    	Claimant	
	- and -		
	(1)	  Harinderpal Singh Lotay
(2)	  Inderpal Lotal	
Defendants	
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- - - - - - - - - - - - - - - - - - - - -

Mr James Barnard (instructed by Isadore Goldman) for the Claimant
Mr Mark Stephens (instructed by Aspect Law Limited) for the Defendants
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JUDGMENT

His Honour Judge Anthony Thornton QC: 

Introduction 
1.	National Westminster Bank (“NWB”) brings these proceedings against twin brothers, Harinderpal Singh Lotay (“HSL”) and Inderpal Lotay (“IL”) who, in 2005, were in their 20s. The claim arises from a guarantee that HSL and IL entered into for a sum of £100,000 that is dated 14 March 2005. The guarantee was given by HSL and IL as directors of their building company Twinbuild.com Ltd (“Twinbuild”) as partial security of that company’s liabilities to NWB. The demand for payment under the guarantee was made on 2 August 2006 after Twinbuild had got into terminal financial difficulties which culminated in the appointment of a liquidator on 30 August 2006. 
2.	The sole remaining defence to the claim is that Twinbuild’s relationship manager, Mr Surinder Summan (“SS”), whilst negotiating a loan of £200,000 and an overdraft facility of £75,000 in a new facility account and a credit card facility with a limit of £16,500 for Twinbuild gave HSL an assurance which was relied upon by HSL and IL in executing the guarantee. The trilogy of credit facilities provided by NWB were to be secured by the indemnity, a debenture over Twinbuild’s assets and a second charge over HSL and IL’s parents’ house. The alleged representation and assurance relied on was to the effect that the indemnity would only remain in force until the second charge was executed. In consequence, since that charge was executed, NWB may not now enforce the indemnity against them.
3.	The trial, therefore, was concerned with the evidential question of whether anything was said by SS that amounted to a collateral agreement, warranty or representation that was capable of giving rise to the discharge or nullification of the indemnity once the second charge was executed and, if that was found to have occurred, whether there was any basis by way of estoppel or otherwise enabling HSL and IL to defeat the demand. The claim is for £100,000 and interest from the date of the claim until trial and it is made against each twin who are jointly and severally liable under the guarantee.
4.	The trial involved a sustained attack on the integrity and veracity of SS and of HSL and IL. Two collateral issues arose in relation to the attack on SS’s veracity, namely as to when were certain documents lodged with NWB’s long-term documents storage facility known as Iron Mountain and whether SS had falsely denied that other claims had been made by other customers of NWB to the effect that he had made similar representations to those other customers when negotiating similar credit facilities for them.
5.	The trial was adjourned when it was first called on without the court hearing any evidence because HSL and IL’s counsel successfully applied for an order for further disclosure of documents held by NWB relating to other claims being made against it involving SS. The resulting disclosure order was complied with and the trial then took place over two days during which seven witnesses gave evidence. These were SS as NWB’s principal witness and four supporting witnesses and both HSL and IL. 
6.	 The brief background to the execution of the guarantee being sued upon was that HSL and IL were the only two directors of Twinbuild, a relatively recently formed building company trading in the Birmingham area. In 2003, that company had taken out a loan from HSBC supported by a guarantee provided by the twins. By late 2004, the company was expanding rapidly and the twins wanted to refinance and significantly increase its borrowing in order to finance that expansion and to assist it in its then intended move to larger premises. That led the company’s accountant to recommend moving the company’s loan to NWB and to him introducing the twins to SS. That led to Twinbuild obtaining a large loan and overdraft facility from NWB supported by security that included the guarantee now in issue. Unfortunately, Twinbuild did not prosper and, in mid-2006 only about a year later, it was no longer solvent and went into liquidation. 
7.	This claim arises from NWB’s attempts to enforce the guarantee for £100,000 against the twins, the guarantee being a joint and several liability. This claim follows two previous attempts by NWB to enforce its security. These were, firstly, an attempt to enforce the second charge taken over the twins’ parent’s home. This claim was settled on agreed terms that were recorded in a Tomlin order whose terms did not lead to a full recovery of Twinbuild’s outstanding indebtedness to NWB. Secondly, NWB issued a statutory demand against each twin and then served a bankruptcy petition against each of them. Each petition was dismissed on the grounds that each twin had a defence to the claim on the guarantee which should first be tried out in the normal way. 
8.	 That led to these proceedings in which each twin raised as his defence the contention that each was induced to sign the guarantee on the basis that it would be temporary in duration and had been discharged or had ceased to remain enforceable once the twins’ parents executed a second charge on their home.
9.	 The twins maintain in these proceedings that the warranty or assurance that each relies on was provided by SS to HSL during a telephone conversation on 14 March 2005 after SS had sent them the guarantee and the waiver forms to sign and that each was induced to sign these documents without first taking legal advice as a result of what SS said to HSL. SS, on behalf of the NWB, replied that no such telephone conversation took place and that he gave no such warranty or assurance. Instead, he contended that he had met both HSL and IL at a signing meeting at Twinbuild’s premises on 14 March 2005 and, having scrupulously followed NWB’s signing procedure, took away from the meeting a signed guarantee which both HSL and IL had executed and a signed waiver form from each twin. These documents were signed by both HSL and IL freely and both were fully informed when signing them.  It is against that background that this claim was tried.
Evidence - General 
10.	NWB’s evidence was contained in the relevant documents that it had disclosed and which were included in the trial bundle and the written and oral evidence of SS, Ms Elaine Berwick, Ms Jacqueline Buckley, Mr Simon Gill and Ms Anique Dublin. It was significant that neither HSL nor IL disclosed a single relevant document until the trial when each produced a small number of relevant documents and neither provided any explanation as to when their copies of the relevant agreements and other documents had been mislaid and why they were no longer available. I will first summarise the relevant evidence of SS and the supporting documents that were adduced and relied on by NWB and then summarise HSL and IL’s evidence. 
NWB’s Evidence
11.	SS stated that Twinbuild, through its two directors HSL and IL, had been introduced to NWB’s St Philip’s Place, Birmingham branch as a potential new customer in November 2004 by their accountant because they wanted additional funding. At that time, Twinbuild banked with HSBC but it was interested in transferring its business, its loan from HSBC and the security it had provided for that loan to NWB and in NWB providing it with substantial financing. The HSBC loan was for £50,000 and it needed to be renegotiated and the twins were looking for more favourable terms and a larger loan. It is relevant that the original loan from HSBC was supported by a joint and several guarantee provided by the twins that was dated 26 November 2003 and was for Twinbuild’s liabilities to HSBC up to a limit of £25,000. It is also relevant that, on that occasion, the twins had taken independent legal advice from Twinbuild’s solicitors Eyre & Co before each signed the guarantee. 
12.	When SS first met the twins, he had by then been in banking for 24 years and was an Associate Director. Once Twinbuild had made contact with his branch, SS met the twins with Twinbuild’s accountant and had then had a second meeting with them and Mr Nick Oakley, SS’s senior manager, at NWB’s Birmingham branch on 2 November 2004. These meetings resulted in SS becoming Twinbuild’s relationship manager and he was NWB’s point of contact for that company and for the twins in their capacity as Twinbuild’s two directors. As Twinbuild’s relationship manager, SS was not marketing financial products but was there to advise his customer as to those NWB products that were available to suit its particular requirements. He did not get a commission for arranging for a customer to use any of the products he advised could be made available but was paid a fixed salary with a bonus which he stated was calculated by reference to a balanced business score card which was calculated by reference to his customers’ income and not by reference to the financial products that he assisted in arranging.  SS described his approach to his customers’ needs as follows:
“I’m an old-school banker and I always treat the Bank’s money as my own when I’m actually looking at lending, lending applications. So I make sure that, as part of my assessment, the organisation that I lend to repays its, can afford to repay its, borrowing that I provide.”  
13.	SS’s first step on meeting the twins was to obtain details from them as to the current financial position of Twinbuild and its future trading prospects. He explained to them that they should provide him with Twinbuild’s financial statements and a business plan along with details of its business experience. The purpose of these documents, he explained, was to enable an assessment to be made as to whether Twinbuild was an appropriate source of NWB’s loan and credit facilities and as to whether NWB could and should provide Twinbuild with the financial support that it was seeking. These details were finalised and a business plan was prepared and SS met with HSL or both twins on a number of subsequent occasions to assist them in preparing the necessary documents and in finalising Twinbuild’s application for finance. Twinbuild’s business plan and application were submitted to SS in late February 2005. On receipt of the application and its supporting documents and after various discussions with the twins, SS concluded that, subject to authorisation from the NWB’s Commercial Credit Department (“CCD”), who would have to authorise Twinbuild’s application, Twinbuild should be offered a loan of £200,000, overdraft facilities of up to £75,000 and a company credit card facility of up to £16,500.  In return, and as a condition of the provision of these three types of financing, Twinbuild  would put in place and provide for the full period of the credit a guarantee provided by the two directors, a second charge that would be placed on their parents’ home and a debenture that would be placed over Twinbuild’s assets. SS was throughout these discussions always clear, and the internal evidence and the terms of the facility offer letters confirm, that NWB was looking for security in all three types discussed throughout the period of  the facility of all three types of financing, namely until all Twinbuild’s obligations to repay the facilities being provided had been discharged in full.
14.	 It was necessary pursuant to NWB’s internal procedures for Twinbuild’s financing proposal, which SS supported, to be put before and approved by the CCD, being NWB’s risk department. SS therefore submitted an application to the CCD on 22 February 2005 which analysed Twinbuild’s business plan in detail and which recommended that Twinbuild’s financing application for three separate types of finance totalling £291,500 should be accepted. However, SS also recommended that, if the full financing proposal was approved, it should be a condition precedent of an offer for that proposal taking effect that the full security suite he was also recommending was necessary should be in place in its entirety before any advance was made by NWB and that the entire suite should remain in place until all Twinbuild’s repayment liabilities arising from that financing package had been discharged. The security measures were fourfold and comprised Twinbuild’s grant of a debenture over its assets, the twins’ provision of a joint and several directors guarantee for £100,000, the twins’ parents provision of a second charge over their home and Twinbuild’s provision to NWB of relevant extracts from its management accounts and its balance sheet and profit and loss account on a quarterly basis during the currency of the financing. 
15.	SS’s evidence as to the core and essential feature of the guarantees being sought was supported by the terms of his application that he had drafted and which he submitted to the CCD. This stated, in its synopsis that:
“Synopsis
…
In addition, have negotiated good security cover 70% plus Directors Guarantees which leaves debt quantum comfortably asset covered.
…

Security
…

I understand from customers that [the twins’ parents’ home address] market value is £500/550k with first charge (Lambeth Bsoc) c£150k i.e. WDV deeds £200k i.e. fully supports funding. Additionally look for the provision of Directors’ guarantees £100k to cover OD + cards. Debenture … £145k @ 20% say £30k. 
…

Conditions Precedent 

1. Mortgage Debenture
2. Directors Guarantee £100k Mr Inderpal Lotay and Mr Harinderpal Lotay
3. 2nd LM over [parents’] property given by third parties … with Independent Legal Advice to be provided … .”

16.	SS explained in evidence how he had arrived at the suite of security measures that he had decided would need to be finalised and which should remain in place for the whole period that the proposed loan facilities would remain unredeemed. He had started by considering the proposed second charge. This he estimated as being capable of securing indebtedness of up to £200,000. He then added the directors’ guarantee which self-evidently secured £100,000 and the debenture which he estimated would only be sufficient to secure a maximum of £30,000. He therefore concluded that the guarantee, which provided up to £100,000 of security, was an essential ingredient of the overall financing package since the second charge was obviously wholly insufficient to cover Twinbuild’s proposed repayment obligations.
17.	SS explained that he would not have finally approved this financing package until he had seen a valuation of the twins’ parents’ house and an up to date mortgage statement since NWB would only take a maximum of 70% of the unencumbered value of a house as security. However, he thought at that time that a safe value for security purposes would be £200,000 so that the other component parts of the security suite were needed to enable NWB to have appropriate security for the full financing package and for any interest that would be added to it. He arrived at that figure by taking the property’s unencumbered value to be about £500,000, taking 70% of that value to be about £350,000 and the first charge was currently providing security for a mortgage figure of £150,000. That left a realistic figure secured by the second charge to be no more than £200,000. It followed that the guarantee was needed to provide security for the full sum guaranteed of £100,000. SS also stated that he regarded the directors’ personal joint and several guarantee to be an essential ingredient of the security for a further reason. This was that it placed personal responsibility on the twins as directors of Twinbuild to ensure that Twinbuild complied with its repayment obligations. 
18.	It was strongly suggested to SS in his cross-examination that he was very keen to obtain Twinbuild’s banking business, that he cut corners in order to obtain it and that he never intended to insist on personal guarantees from the twins. There was, however, no evidence that SS was unduly keen to obtain this business, that he cut any corners in recommending the proposed financing which the CCD independently considered and approved or that he was prepared to relax the requirement that the twins provided personal guarantees for the duration of the financing. Indeed, the evidence suggested that both SS and the CCD risk assessors considered that the guarantees were a central and core part of the security being provided by and on behalf of Twinbuild.
19.	A risk manager in the CCD sanctioned SS’s proposal that Twinbuild’s application for the provision of financing  should be approved and that sanction was itself confirmed by a sanctioner who was a more senior member of NWB within the CCD. The CCD was a totally separate department from SS’s department and worked independently from both SS’s department and SS. The approval for Twinbuild’s application was then set out in a Sanction Summary Sheet which the CCD sent to SS on 23 February 2005. This approval document made it clear that it was a condition of the approval, and hence of the provision of the entirety of the financing package that Twinbuild had applied for, that the directors’ guarantee, the second charge and the debenture should all be in place before any financing that had been applied for was provided. It also made it clear that the relevant parts of Twinbuild’s management accounts were to be provided to NWB on a quarterly basis once the financing had been provided.
20.	On 25 February 2005, SS wrote a detailed letter to both HSL and IL which stated as follows:
“We enclose the Bank’s formal letters in respect of refinancing in full the existing borrowing with HSBC and provision of additional loan monies to fund on-going working capital/copex etc.
…
For ease of reference the terms/conditions that will need to be satisfied prior to draw down are listed as follows:
•	Bank instructed professional valuation over [the twins’ parents’ house] confirming Market Value minimum £500,000.
•	Second legal charge by the Bank over [the twins’ parents’ house] with the security providers seeking independent legal advice.
•	Mortgage debenture by the company.
•	£100,000 Directors Guarantee.”
…
Accordingly we shall be grateful if you could check the AOBT letters to ensure that all the terms detailed correspond completely with your understanding of the agreement between us and let me know, as soon as possible, if there are any discrepancies.”
21.	An overdraft facility letter and a loan agreement were attached to the letter. Both were draft contracts between NWB and Twinbuild and both had been signed by SS on behalf of NWB and dated 22 February 2005. Both stipulated that three types of security including a directors’ guarantee had to be provided. The relevant passage in both stated that:
“The Bank will not be obliged to make the facility available until the following conditions have been met:
…
(c) 	The Bank has received and is satisfied with an executed Directors’ Guarantee for £100,000 given by Mr Interpal Lotay and Mr Harinderpal Lotay.” 
The agreement also provided in clause 8 that Twinbuild’s obligations to NWB were secured by the security detailed in the attached Schedule 1 which listed the three types of security being provided, the second charge, the directors’ guarantee for £100,000 and the debenture.
22.	The loan agreement was signed by HSL on behalf of Twinbuild on Wednesday 2 March 2005. From that date, therefore, Twinbuild had entered into an agreement with NWB that it would provide or procure all three types of security. HSL also signed a certificate that certified that the Board of Twinbuild had passed a resolution on 2 March 2005 authorising him to sign the agreement on behalf of Twinbuild. Both HSL and IL also signed a disclosure consent form dated 2 March 2005 authorising NWB to release to each of their parents information about their liabilities to NWB. These signed documents were returned to SS who, on receipt of them, submitted an internal request to NWB’s Credit Documentation Department (“CDD”) to produce the necessary guarantee documentation. This documentation, including a copy of the guarantee that was to be signed by HSL and IL, was sent to SS by the CDD under cover of a letter dated 8 March 2005. This covering letter was important since it provided advice to SS as to how he was to obtain the signed guarantee from the twins and made it clear that the procedure outlined in the letter had to be followed by any representative of NWB when obtaining personal guarantees to support borrowing or financing obligations entered into by a borrower from NWB. 
23.	This procedure contained these important and relevant passages:
“Security for £100,000 by Inderpal Singh Lotay and Harinderpal Singh Lotay for the obligations to Twinbuild
Guarantors: Inderpal Singh Lotay and Harinderpal Singh Lotay
We refer to the recent request relative to the above and now enclose the undernoted items for your attention.
Independent legal advice
It is Bank policy that all Guarantors be strongly recommended to obtain Independent Legal Advice. We understand however that in this transaction the Guarantors are fully involved directors of the Borrower and that the requirement for Independent Legal Advice has been waived.
What do I need to do?
The Relationship Manager for the Borrower should arrange a Signing Meeting between a Bank Representative (the Relationship Manager or another suitably briefed member of the Bank’s staff) and each Guarantor separately in order to have the Guarantee signed. On no account should the Guarantee (and/or waiver) be signed other than at a formal Signing Meeting with a Bank Representative present and the following procedures being followed. Failure to follow the procedures will result in fresh documentation being required and delays for your Customer. 
Each signing meeting shall be conducted as follows:
The Signing Meeting
•	The copy guarantee should be handed to the Guarantor at the start of the meeting for perusal, if it has not been provided to the Guarantor earlier. The Guarantor should be encouraged and given time to read the Guarantee.
•	The Bank Representative should re-affirm the Bank’s recommendation that all Guarantors obtain Independent Legal Advice in all cases.
•	The Waiver of Legal Advice should be handed to and read by the Guarantor.
•	[Relevant to guarantors who are not directors of the Borrower]
•	The Bank Representative may answer any general questions raised by the Guarantor but on no account should they discuss or answer any questions on the terms of the Guarantee. If the Bank Representative is asked to explain the meaning of or provide advice on the effect of specific clauses within the Guarantee then the Bank Representative should not respond, but instead immediately inform the Guarantor that the Bank will require them to obtain Independent Legal Advice from a Solicitor of their choice before the Guarantee is signed.
•	[Relevant to the situation when the Bank insists that the Guarantor should, or the Guarantor decides to, obtain independent legal advice]
•	If the Guarantor is happy to proceed without Independent Legal Advice and the Bank Representative is satisfied that the Guarantor fully understands the commitment being entered into:-
-	The Guarantor should sign both the Guarantee and the Waiver of Legal Advice in the presence of the Bank Representative. The Guarantee should then be dated unless there is another person(s) who has yet to sign the relevant Guarantee. The Guarantee should only be dated when ALL Guarantors have signed the document.
-	The Bank Representative should witness both the Guarantee and the Waiver of Legal Advice.
…
•	The Bank Representative should ensure that the Guarantors have copies of the Guarantee, the Waiver of Legal Advice and where applicable the Schedule of Liabilities/Security.
Once executed by the Guarantors the Guarantee and the Waivers of Legal Advice together with, where applicable, the Schedule of Liabilities/Security must be returned to this Office (i.e. the CDD).” 
24.	 These documents were sent to SS by the CDD office located in Manchester. The covering letter is dated 8 March 2005 which was a Tuesday. The request form submitted by SS to the CDD stated that the documents were required by him by 10 March 2005. The CDD’s internal documentation disclosed by NWB showed that the security documents were printed off late in the working day of 8 March 2005. In the light of this evidence, I conclude that the documents were received by SS’s PA, Ms Kerry Gaffney on Thursday 10 March 2005 having been sent off from Manchester on Wednesday 9 March 2005. The guarantee was dated as being executed on Monday 14 March 2005 so that, if a signing meeting took place and the guarantee was executed on the date it was dated, the signing meeting held on 14 March 2005 could only have been arranged on 10, 11 or early on 14 March 2005. 
25.	SS was clear, firm and consistent in the evidence he gave about the signing meeting he maintained he held with HSL and IL on 14 March 2005. Throughout, he has maintained that he only had a hazy recollection of the meeting but that he retained a clear recollection of its essential details. He was only first asked about the details of how, when and where he obtained HSL and IL’s signature to the guarantee when preparing his witness statement for this trial in May 2011. SS explained that he undertook a large number of signing meetings with customers and that although he always followed the required procedure, these meetings were sometimes held at NWB’s offices and sometimes at the customer’s offices or in the home of customer guarantors and they were sometimes arranged by his PA and sometimes by himself. The necessary appointment details were usually entered in his electronic diary but on occasion, particularly if the meeting was arranged at short notice, the details were not entered and he merely attended the meeting wherever it was held. On this occasion, once SS’s electronic diary entries for 14 March 2005 were finally tracked down not long before the trial, it emerged that the meeting details had not been electronically recorded there. 
26.	 However, despite the passage of time and the absence of a diary entry for the meeting, SS was able to recall it in outline. He remembered that he had gone to Twinbuild’s premises which he remembered, and the twins confirmed, was at that time located a short distance away from NWB’s Birmingham offices. He took with him a copy of NWB’s guarantee form on which the CDD had already filled in the details of the guarantors and other formal details and also two copies of the waiver of legal advice form with similar details already filled out. The meeting had been arranged at short notice because he was aware that the twins wanted to finalise the refinancing and extension of Twinbuild’s loan rapidly and because he always worked as efficiently as possible in providing for his customers’ needs, a working method that did not cut corners and which strictly followed NWB’s guidelines with regard to the signing of guarantees. SS thought that he had arranged the meeting by telephone and he couldn’t remember which twin he spoke to. It is likely, he thought, that he made the call on 14 March 2005 and arranged to call into see the twins at a time later that day that had been fixed around his two listed appointments which his diary suggested had occupied him between 10.30 - 11.30 and 14.00 – 15.00. These prior appointments were listed in his electronic diary and they had therefore already been fixed when he made his call to Twinbuild.
27.	SS remembers that when he arrived, the twins asked him to conduct the meeting with both of them. He accepted that that was strictly not in accordance with NWB’s directions for such meetings and that, had he followed these to the letter, he would have held two separate meetings. However, he had always met with the twins together, both wanted the meeting to be held with all three present throughout and both twins indicated firmly that they did not wish to have independent legal advice, an unsurprising decision since they had entered into a similar guarantee, albeit for a much smaller sum, only fifteen months earlier having taken legal advice from Twinbuild’s solicitor when the HSBC loan was entered into. SS did remember that one of the twins took about five minutes to read the guarantee in a meticulous and methodical manner. He couldn’t remember six years later which twin it was that did this. 
28.	Each twin then signed the guarantee and SS signed twice as a witness to each signature. The date was filled in as “14th March 2005” by SS. Each twin also signed the separate waiver form and each signature was witnessed by SS’s signature. Each waiver form signature was dated but not in an identical fashion. HSL’s signature and SS’s witness signature for his signature were dated “14\3\05” by SS, IL’s signature was dated “14/3/05” by IL and SS’s witness signature “14\3\05” by SS. All four dates were entered during the meeting and SS could not remember how it came about that he entered four of the five dates inserted on the documents and IL on one of those dates but he was sure that all five dates, and his four signatures and HSL and IS’s two signatures that were placed on these three documents had all been placed there during this signing meeting. It is probable, although there is no clear evidence of this, that each document was photocopied in Twinbuild’s offices before SS left and the photocopies left with the twins in conformity with NWB’s internal instructions that had been sent to SS that each guarantor was to be provided with a copy of the guarantee and waiver documents once these documents had been signed and witnessed.
29.	It is pertinent to note some of the terms set out in the waiver document that each twin signed to confirm that each had decided on his own free will that he did not wish to take independent legal advice before signing the guarantee. These terms included the following:
“1.	I am a director of the company named above as the Borrower. I confirm that I play an active role in the running of the company and as such have a full understanding of its financial affairs, including the liabilities to the Bank covered by the Security.
2.	I have been given the Security and have had adequate time to read and consider it.
3.	No one, whether the Borrower or from within the Bank or elsewhere, has placed me under any pressure to sign the Security and I am well aware of my right to take the risks associated with giving the Security.
4.	I have been told of my right to be provided by the Bank with details of the Borrower’s obligations and I have received all the information which I require.
5.	The Bank has advised me, in very clear terms, that I should take Independent Legal Advice and I am fully aware that I have to seek advice from my Solicitor regarding any matters about which I am uncertain.
6.         …
7.	Having considered all of this, I have decided I do NOT wish to seek independent legal advice nor to take the Security away for further consideration.”
30.	It is also to be noted that a guarantor providing that waiver was acknowledging having received clear advice directly from NWB’s representative, in this case SS, about certain matters, that he had been given a copy of the guarantee and had had adequate time to read it and had declined the opportunity to “take the Security away” for further consideration. IL could only have signed and acknowledged these matters once he had spoken to SS about them and since he did not assert that he had spoken to SS on the telephone before signing the guarantee, he could only have learnt of those matters at a meeting with SS. Similarly, both HSL and IL must have been given the guarantee at a face to face meeting with SS. This is because, in signing the document, both were accepting and asserting that they had had a signing meeting with SS. Moreover, SS’s clear evidence, which I accept, was that he went through the guarantee and the waiver form with both HSL and IL at the meeting and that he had followed the signing meeting procedures that he was under clear instructions from NWB to follow. 
31.	SS insisted in his evidence that he was very conscious of NWB’s policy which firmly required his compliance with NWB’s signing meeting procedure and that he had not sent any guarantee document to the twins but only provided these documents by his own hand at the signing meeting that both twins attended. At their insistence, the signing meeting that SS held was with both twins together. NWB did not disclose any document or letter that recorded the sending of the guarantee document to the twins and the twins did not disclose any document at all before the trial started and these did not include a copy of a covering letter. This absence of a covering letter in either NWB’s records or held by either of the twins supports and corroborates SS’s evidence that he held a signing meeting with the twins and handed to them a blank hard copy of the guarantee for them both to sign which they then did. 
32.	SS repeatedly denied that he had made any representation or assurance to either twin to the effect that the guarantee was only intended to last for a short period until the second charge was in place and that, when that occurred, the guarantee would lapse or cease to have effect. Such an assurance would have been contrary to his intention throughout his dealings with the twins that the financing provided to Twinbuild would be secured by all three forms of security, contrary to his clear instructions from the CDD and contrary to the clear instructions he had received with regard to the signing of the guarantee.   
33.	SS then returned to his office and made the necessary arrangements for these signed documents to be sent back to the CDD in Manchester. The following is a summary of the clear evidence from the four NWB employees and the one solicitor from NWB’s solicitors who gave evidence as to what occurred to the guarantee and waiver documents from the moment that SS returned to his office:
(1)	 On his return to his office, SS filled out the template memo form which he kept in the memory of his laptop. This was addressed to Ms Jacqueline Buckley who was a clerical documenter at the CDD and who gave what amounted to unchallenged evidence in both written and oral form. The memo was erroneously dated 21 March 2005 and it stated:
“Jacqueline
Please find attached:-
Dirctors Gtee & ILA wavier letter
Please ensure ‘back office’ is now updated as HELD [NWB’s internal reference number]
Thank you
Surinder Summan.”   
(2)	SS made an understandable and admitted error in dating the memo 21 March 2005, it should have been dated, and had been filled out on, 14 March 2005. The error arose because the memo template stored in his laptop was one that had been used previously and would often not be entirely blank but would still have some or all of the details on it from previous use. SS, in cleansing those earlier details, must have filled in “14” instead of “21” by mistake or have wrongly corrected the existing date with the date “21 March 2005” instead of the correct date “14 March 2005”.  
(3)	SS then pinned or stapled together four documents, namely the signed guarantee, the two waiver documents and this memo, and sent all four stapled together in that form to Ms Buckley in Manchester, dispatching them before the close of business in Birmingham on 14 March 2005.   
(4)	The four documents arrived in Ms Buckley’s hands on 15 March 2005 and she then sent them onto NWB’s storage facility known as Iron Mountain with a covering letter dated 15 March 2005. The documents that Ms Buckley received included the memo dated 21 March 2005 and the signed guarantee. The fact that she immediately forwarded them to Iron Mountain was confirmed as having occurred by Ms Buckley’s written and oral evidence and by the following further internal documents:
(a)	A “Checklist Guarantee” document filled out by Ms Buckley on 15 March 2005 which stated that the CDD had received the executed guarantee and waiver of legal advice documents on 15 March 2005;
(b)	The document entitled “Completed Security List”, which was in letter form, which Ms Buckley entered and printed off which was 15 March 2005 and which stated that the following were enclosed with it:
“Completed Security List
Guarantee
Borrowers’ Disclosure Consent form
Schedule of Liabilities/Security
Waiver of Legal Advice
A computerised security entry has been created.” 
(c)	 The Iron Mountain documents which showed that, on receipt by the Iron Mountain, the letter and enclosures were logged and placed together in an envelope in a storage box. No other documents were logged subsequently as having been added to or taken away from the documents lodged on that occasion. 
(5)	The Iron Mountain records showed that these documents remained untouched in the envelope placed in the storage box until at least 4 September 2006. Ms Dublin, the solicitor dealing with discovery for NWB, had arranged with Mr Nick Watson in the CDD to obtain the original security documents that had been deposited at the Iron Mountain storage facility and she was subsequently informed by a colleague of Mr Watson that the original security documents were all contained together in an envelope in the storage facility and that that envelope was being sent to Ms Dublin by special courier from Iron Mountain. When the envelope arrived, Ms Dublin found all the original security documents in the envelope including the memo dated 21 March 2005 which was stapled to Ms Buckley’s letter dated 15 March 2005 which she had sent to the Iron Mountain storage facility on 15 March 2005 and which had accompanied the guarantee and waiver documents.
   34.	Several other independently made internal documents and logs made by NWB employees and logged in NWB’s record-keeping system all showed that the documents sent by SS from Birmingham to Manchester on 14 March 2005 had then been sent by Manchester to Iron Mountain on 15 March 2005 and had arrived at Iron Mountain on 17 March 2005 intact and in the same form as SS had sent them out from Birmingham two days earlier.
 35.	The inevitable inference to be drawn from this evidence was that the memo had been received by Ms Buckley on 15 March 2005 from SS with the guarantee and waiver documents and she had sent it on to the Iron Mountain storage facility on the same day with the guarantee and waiver documents.  Thus, the memo had been created no later than 14 March 2005 even though it was dated 21 March 2005. 
36.	This evidence established beyond any doubt that the original guarantee in its signed form had been signed no later than 14 March 2005 and had travelled intact with other documents including the memo wrongly dated 21 March 2005, initially to the CDD in Manchester and then to the Iron Mountain storage facility where it had arrived on 17 March 2005. The original guarantee document and the other documents that had been sent with it from the CDD then lay untouched in, and without being disturbed or removed from, the relevant box in that storage until at least 4 September 2006. The sealed envelope in which they were stored was not removed from that box until this occurred in 2011 for disclosure purposes at the request of NWB’s solicitor who was dealing with disclosure in these proceedings.        
37.	On about 18 March 2005, SS prepared an internal document which listed the “Conditions of Sanction” (i.e. the conditions attached to the various facilities provided by NWB). This included the overdraft whose conditions included the Directors’ Guarantee for £100,000. One of the boxes attached to this and the other conditions that were listed was headed “Date Met” and, for the guarantee, that box had been filled in with the date of 18 March 2005. SS was questioned about this entry on the basis that it revealed that the guarantee had not been signed by the twins until 18 March 2005, thereby showing that there could not have been a signing meeting on 14 March 2005. However, SS explained that “Date Met” was not a reference to the date that the guarantee was signed or to the date that the condition that a guarantee should be provided was first complied with. It was instead the date from which, for internal purposes, NWB decided to treat that condition as having been fulfilled so that it could have been, as in this case, a date that was later than the date on which the guarantee had been executed. This document does not, therefore show or suggest that SS’s evidence as to the date and manner of the signing of the guarantee was erroneous.   
38.	It is only necessary to give a brief synopsis of relevant events following the signing of the guarantee on 14 March 2005. NWB issued and included in the relevant security documents a schedule of the securities that were being provided to support the loan and the overdraft facility. This schedule was issued on 22 April 2005 and it was provided to both HSL and IL and it listed the three component parts of the security being provided as being the guarantee, the debenture and the second charge. These details were included in a Disclosure Consent Form which was signed by HSL and which consented to the twins’ parents being supplied with details of the obligation that they were being asked to enter into in executing the second charge. These details included the schedule containing the three types of security being provided on behalf of Twinbuild. In other words, HSL was consenting to his parents being informed that their second charge was an essential ingredient of security comprising three different types of security which had equal status and which would remain in place until NWB’s financing had been fully repaid. HSL explained that he signed this document, which clearly contained erroneous information about the guarantee, because “I had no reason to question it, read it in detail”. This was a particularly unconvincing explanation since the document in question was a short one-page document.
39.	It was clear from the evidence adduced by NWB that although the new business account was opened in Twinbuild’s name prior to the execution of the second charge, no advance was made until the second charge was executed. The loan agreement had provided that no advance would be made by NWB until the second charge and the guarantee and the debenture were all in place and that the repayment and other obligations created by the guarantee would not arise until after the second charge had been executed. This is what actually happened – no advance was made until all three types of security had been executed and the entire loan was provided on the day that the last of the security documents, the second charge, was executed. It follows that the guarantee would have never have had any purpose if the twins’ evidence was correct.
40.	When Twinbuild got into financial difficulties, HSL telephoned Twinbuild’s relationship manager Mr Simon Gill, who had succeeded SS when SS had moved to a position of greater responsibility in NWB as part of his career progression. HSL had called to inform Mr Gill that Twinbuild had decided to cease trading and go into voluntary liquidation and that this decision had been taken by the twins, the two directors of the company, on insolvency advice. Mr Gill had made a full contemporaneous note of this telephone conversation between HSL and Mr Gill. The note was dated 31 July 2006 and the relevant part reads:
“Hari Lotay advises that both he, his brother and their family fully intend to honour all their obligations to the Bank in view of their PG and the legal charge we hold over their parents’ house. He tells me that their parents are very worried and remain closely involved. They are currently looking into the possibility of refinancing their house to repay the Bank. They are also involving several uncles who have property portfolios to see if they can help.”  
41.	The contents of this note were confirmed by Mr Gill in his witness statement and in his oral evidence in court. It was suggested to him that when his note stated that HSL had stated that the twins intended to honour their obligations to NWB in view of their PG and the legal charge NWB held over their parents’ house, he was making an inference from what HSL actually said which was along the lines of “we’ll do what we can”. Mr Gill could not, of course, remember the precise words that were said during a telephone call some six years previously but he relied on the contents of his note that had been made as soon as the call had ceased. HSL accepted that he had had the telephone conversation that the note summarises but insisted that he had not stated specifically what I have quoted from the note. His evidence continued:
“… we will as a family or brother, intend to do what we can to pay the Bank back or honour our obligations, again you can get caught up in the vocabulary. However, Mr Gill has chosen to write that paragraph in the way he understood, and that’s understandable.
Q.	You didn’t tell Mr Gill, did you, you didn’t tell Mr Gill that of course the personal guarantee no longer applied?
A.	No, because the personal guarantees weren’t talked about. … My mind firmly [inaudible, probably believed] there was no personal guarantee, so I had no reason to allude to it. Same with that conversation with Mr Gill, we didn’t individually speak about any types of security, whether it was the second charge, be it the personal guarantees, or be it the debenture, it was just a case of said we’ll do what we can with the help of my family, my brother, we will do what we can and that, in all fairness and I believe Mr Gill said it yesterday, it was his understanding in a summary of the conversation. There were no point he and I discussed individual security types, I just would not have said that at the time, I’ve got no reason to.”
42.	I do not accept HSL’s account of the telephone conversation or that he did not refer to the personal guarantee and his parents’ second charge. Mr Gill considered that his contemporaneous note was accurate and, moreover, it is inconceivable, given the nature of the call, that Mr Gill did not refer to NWB’s security following Twinbuild’s liquidation. He would have been able to call up the details of that security during the call on his screen and he had had a number of internal meetings in the previous weeks to discuss Twinbuild’s financial position, its outstanding indebtedness to NWB and NWB’s outstanding security. 
43.	I therefore accept that Mr Gill’s note provides an accurate summary of what HSL said to him on the telephone on 31 July 2006. Thus, during that conversation, HSL assured Mr Gill that he and his brother would honour their respective liabilities under the guarantee, thereby representing that he believed that the guarantee was still both enduring and effective. Furthermore, HSL said nothing to the effect that the guarantee was no longer effective in circumstances in which he would almost certainly have stated that during that conversation had he considered that that was the case. 
HSL and IL’s evidence
44.	Turning to HSL and IL’s evidence, I start with their pleaded case. This reads as follows:
“4.	   In or around March 2005, the defendants received the Bank’s standard form of personal guarantee. The document was undated. Upon querying the need to have a deed witnessed by a solicitor, and the need for independent legal advice, Mr Hariderpal Lotay was assured by Mr Summan by telephone:
a.   That the guarantee was “just a formality until [the Bank] gets a charge on your parents’ house” and
b.   That the guarantee “would then be released as [NWB] will then have its security”. 
11.	… the guarantee was subject to an oral collateral contract concluded in a telephone conversation in or about March 2005 between Mr Harinderpal Lotay on behalf of the defendants and Mr Summan on behalf of the Bank under which the parties agreed that the term of the guarantee would be limited by the date on which the Bank obtained security over the property.” 
HSL signed the statement of truth of this defence which stated that “I believe the facts stated in this defence are true”. 
45.	It was asserted by HSL that this telephone conversation took place after Twinbuild had received the unsigned guarantee and the two waiver documents in the post from SS. HSL could not remember whether there was an accompanying letter from SS but he accepted that there must have been one and that since no-one had a copy of it, both Twinbuild and SS must have mislaid the letter and that, for some unexplained reason it had not found its way onto NWB’s recording system. Since he dealt with the paperwork at Twinbuild, he had received these documents and, on receiving them, he telephoned SS and asked him: 
“Do I need to go and see a solicitor and take advice. Do I need to get it witnessed?” 
According to HSL, SS replied:
“Don’t worry about it. Just sign it and send it back and it will just fall away once we get the second charge.” 
46.	HSL in his oral evidence then summarised the effect of this brief exchange in this way:
“Q.	He didn’t say to you, I put it to you, that the guarantee would be released as the Bank will then have its security [when the second charge was executed]?
A.		It, it was, I mean, whether you – again with all due respect, you get hung up on certain words, whether it’s ‘release’, ‘temporary measure’, ‘fall away’.
Q. 		These are quotes.
A.		Yes. I have used the word ‘released’ and I stand by that, that. He said it was going to be released. It was going to be, it was going to fall away. ‘Don’t worry about it. I’m going through the motions.’ I mean, you know, that’s, that’s just, again, to be quite fair, that’s just [SS] and the way he operates.”	
47.	HSL contended that it was that exchange with SS in the brief telephone conversation that they had on 14 March 2005 that had induced him and IL to sign the guarantee without first taking the independent legal advice of Twinbuild’s solicitor who had acted for them in advising them before they had signed the guarantee provided to HSBC in November 2003 when Twinbuild had been loaned £50,000 and who acted for Twinbuild in the execution of the debenture and for the twin’s parents in executing a second charge on their home. 
48.	HSL accepted that this conversation must have taken place on Friday 11 but more likely or Monday 14 March. He stated that SS had asked him to arrange for both of them to sign the guarantee and the waiver and to leave the date blank and return all three documents. HSL could not explain why IL had dated his waiver document. He could not remember how the documents had been returned to NWB and suggested that it might have been by being sent back to SS by Twinbuild, by being hand delivered to SS’s offices in Birmingham or by being sent direct to the CDD in Manchester. This evidence was particularly surprising since there was no evidence of the documents having been sent to either Birmingham or Manchester. It was impossible for the documents to have been sent to the CDD since Twinbuild and HSL had no knowledge of that unit nor of its address and, if the documents had been signed on 14 March 2005, which HSL accepted as the most likely date since that was the date that IL had dated his waiver form, there would not have been sufficient time for the documents to travel by post or internal post from Twinbuild’s offices to SS’s office and then onto the Manchester CDD. This was because the date of the first posting would have been 14 March 2005 and the date of the second would have been 15 March 2005 so that the guarantee would have arrived in Manchester on 16 March 2005 one day later than it was recorded as having arrived there. Thus, on the timescale presented by the evidence, the signed documents must have been walked round to the Birmingham office on 14 March 2005 but HSL could not give any evidence as to who could or would have delivered them and both his and IL’s evidence was that neither of them had delivered them. This shows the improbability of the documents being signed following a telephone conversation rather than being signed at a signing meeting.
49.	Towards the end of his lengthy evidence in court, after his cross-examination and re-examination were complete, a significant exchange took place between HSL and myself. During that exchange, HSL accepted that SS had volunteered without being asked that the guarantee would just fall away when the second charge was executed in answer to HSL’s question as to whether the twins should see a solicitor before signing the guarantee. At that stage, they were prepared to enter into the guarantee and had SS advised that they should see a solicitor, they would have seen one and would have followed whatever advice they received. They only signed the guarantee without seeing a solicitor because of what SS had said. The exchange continued:
“Q.	Well now, did it, did you stop to think: well that is a bit strange because I am not going to, the company is not going to, get any, is not going to be able to change its Bank –
Hm-hmm.
Q.		-it is not going to get any advance from NatWest until the guarantee and the mortgage and the debenture are in place so this is not giving us very much because we are not going to get, the guarantee is not going to come into play at all until we have got the money?
A.		No, I didn’t think like that, Your Honour, at all.
Q.		In other words, what was it in reality, that you were going to get?
A.		A possibility, sorry, it was a possibility that [SS] could try and hurry the, I mean I don’t know what process it was, but the measure was, or the conversation was, that I will try and get you the money sooner-
Q.		What before, before the mortgage was in place?
A.		I meant that was just my understanding of it, I mean I appreciate now they needed all-
Q.		Were you so desperate for the money that you were looking for it that rapidly?
A.		To be fair, yes, because we’d highlighted this depot, this factory unit and that was being looked at, we were desperate in the sense that we didn’t want to let that opportunity go because of the location and where it was.
Q.		Well in those, in that case why after the 14th March did you not press Mr Summan for some of the facility even though your parents had not entered into the mortgage, because you were so keen to have the money and you understood it had been agreed that you provide a guarantee, which had done, to tide you, tide the Bank over until they got-
A.		I think some,  … I think some credit cards were sort of forwarded, I, admittedly it wasn’t several thousand of pounds but I think there about 15 or 16,000 worth of facility on just two credit cards. … It wasn’t the sums obviously we were looking at in, you know, in terms of 100,000 or what we were looking to borrow but some, I mean the account was opened and some monies in terms of the credit cards were released or forwarded to us on the basis that [SS] had-
Q.		But they were not covered by the guarantee or the, or the mortgage.
…
Q.		Yes but the credit card would not have been related to the security that you were providing, because they were credit cards.
A.		No. No.
Q.		Well it seems a bit strange does it not, that if you were so keen to get the money that you were prepared to give a temporary guarantee for £100,000 that having got the guarantee you then did not press for the-
A.		No, Sir, you’re probably right. I mean we didn’t press for it in that sense but we were assured by [SS] it wasn’t far away, but it was just, it’s a matter of time but in the meantime I can do with this …
Q.		Well as it turned out, from your point of view, no money was advanced by the Bank until after the 5th, until the 5th May when the, the mortgage was signed. … the reason why it was done on the 5th May was that was the first day the Bank had received notification that the mortgage had been signed.
A.		Second charge … yes.
Q.		So there was no need, as it turned out, to have this temporary guarantee arrangement because you did not actually get any money under the facility until the mortgage had been signed. 
A.		No I get, in that respect, Your Honour, I do agree with you but it doesn’t seem that way but with the way I was reassured by Surinder that we could get money sooner rather than later-
Q.		Alright. It did not turn out that way.
A.		-it’s just an impression, yes, yes, Your Honour, it didn’t turn out that way.
Q.		Why did you not, on 5th May, then say, well now please can we have the guarantee back?
A.		I’ll be completely; to be honest I didn’t think to do that Your Honour, at all. I mean in hindsight, yes I should have done and on numerous other occasions but I just, I didn’t think to do that Sir.” 		  
50.	 HSL then accepted that as soon as the loan was provided, a large part of it was spent on restocking the business and that, in the weeks prior to receiving the loan, he had been conscious of the need for the money. The questioning continued:
“Q.	And yet you didn’t press [SS] in the weeks before the 5th May to release you the money now that he had the guarantee?
 A.		Yes, no, no, not in that sense, it was, because it was, whenever I did speak to Kerry [SS’s PA] majority of the time, it was like, yes soon, soon, I wasn’t given an end date, I mean I can understand that, that, even they couldn’t give an exact date of when it was going to happen but it was just a case of it could be any day now, any week now, it was a case of, I wouldn’t say I was aggressive and hounding them every day as to why we haven’t had the funds, but it was a case of well what’s happening now, what’s happening now and that’s how it went on until then. I mean, I mean that was mainly my conversation with Kerry even after the paperwork had gone back to them and that’s all I can say on that matter, Your Honour.” 
51.	A summary of HSL’s evidence on these crucial matters was, therefore:
(1)	HSL accepted that the Twinbuild loan had been negotiated by HSL on the basis that the guarantee, the second charge and the debenture were all mutually securing the loan and that these three pieces of security were inter-dependent and would remain in place until the loan was fully repaid. HSL had applied for the loan on behalf of Twinbuild on that basis, had accepted the offer on behalf of Twinbuild on that basis and, on that basis, the guarantee would only first take effect once the second charge had been executed and the loan had then been advanced.  
(2)	HSL had not asked SS to agree that the guarantee would only be temporary and would fall away once his parents executed a second charge over their home in favour of NWB. SS out of the blue offered this as the reason for there being no need for the twins to take independent legal advice before signing the guarantee in answer to HSL’s question as to whether they should take such advice.
(3)	The only reason why the twins did not consult their solicitor, who they had consulted before in relation to the previous guarantee and who was acting for Twinbuild in executing the debenture and for the twins’ parents in executing the second charge, was because SS intimated that there was no need since the guarantee would fall away once the second charge was executed.
(4)	There was no question of NWB advancing Twinbuild any part of the loan until the second charge was in place and there had never been any suggestion by SS that NWB would advance any or all of the loan before the second charge was in place if the guarantee was signed before the second charge had been executed. 
(5)	Twinbuild was desperate to receive the loan but HSL never pressed SS for an advance on that advance once he had signed the guarantee. All that he had done was to ask SS’s PA on occasions, which he did not further particularise, when the advance would be coming through and was told that it would be coming soon. This part of his evidence was not put to SS in cross-examination and there was no other evidence of these conversations with the PA.
(6)	As soon as the second charge was executed on 5 May 2005, the loan was released in its entirety on the same day and much of it was immediately used to re-stock the business. Thus, on HSL’s evidence, the guarantee never took effect.
(7)	HSL never asked SS to return the guarantee and never raised the question of the guarantee no longer being in force once the second charge had been executed.  
When seen in this summary form, the improbability of HSL’s evidence is starkly revealed.
52.	HSL’s case that SS had induced the guarantee by misrepresenting that it was only to be effective until a second charge was executed by his parents during a telephone conversation and that no signing meeting ever took place, was only first raised by HSL in his answer to NWB’s solicitors’ letter before action. That response, set out in a letter dated 13 September 2007, stated:
“You’re wrong in saying we are liable for the guarantee you send (sic) with your letter. We signed the guarantee and other papers at the request of Surinder Summan, he told me it was just a formality until the Bank got a charge on our parent’s house for the £100k guarantee amount, and that we would then be released from it because the Bank would then have the security. When we got the guarantee papers and other documents I spoke to Surinder and I even asked him if I needed to go to a solicitor to get the guarantee witnessed. Surinder said it was just a formality and there was no need to have it witnessed and we should sign all the papers and return them to him for his file as quickly as possible so he could get things moving and get the money to us.
The guarantee was not signed in front of Surinder and we did not date it. We just signed and returned it as requested, because we just thought it was a temporary measure by Surinder.” 
53.	HSL was unable to provide any explanation as to why he had not put forward this explanation for the invalidity of the guarantee on any previous occasion save that he always considered in his own mind that the guarantee had ceased to have effect as soon as his parents executed the second charge on their home. 
54.	IL’s evidence was much shorter. He stated that he had not been present when his brother spoke to SS on the telephone and had not attended any meeting with his brother and SS at which the signing of the guarantee and the waivers had taken place. He denied that any signing meeting had taken place. It is necessary to compare IL’s evidence given in his witness statement served for this trial and his oral evidence at the trial with the evidence that he gave in a witness statement that had been served on an earlier occasion in support of his opposition to NWB’s bankruptcy petition which had been served as part of its earlier attempts to enforce the guarantee. The earlier statement, dated 20 December 2007, stated:
“At the time myself and my brother [HSL] provided the Bank with the personal guarantee, it was agreed between ourselves and [SS] on behalf of the Bank that we would be released from our guarantees as soon as the Bank obtained a second charge over our parents’ matrimonial home.” … “Accordingly, my dispute in respect of the claim brought against me by the Bank is absolutely fundamental in that it had been expressly agreed between myself and [SS] that my personal guarantee would only remain effective until such time as the Bank obtained a second charge over my parents’ property … .”
55.	IL’s witness statement served for this trial was dated 13 May 2011. In it, he stated that he didn’t recall signing either document, that he left the administrative side of the business to his brother and that he would often find on his desk a pile of documents that had been left there by HSL with post-it notes on the documents to show where he should sign and that he would sign the documents without reading them or ascertaining their contents. This is what must have happened with the guarantee and waiver documents. He also stated:
“The Bank are pursuing us pursuant to the Guarantee, and I believe that they are doing so because [SS] is withholding from them the discussions he had with [HSL] in March 2005 prior to us signing the Guarantee.
I recall [HSL] telling me [SS] had said that the Guarantee was just temporary until the charge over our parents’ home was in place.”
56.	The only explanation that IL gave for this significant change in his evidence between the witness statement that was served in opposition to the bankruptcy petition issued against him, which was dismissed partly as a result of this evidence, and the more recent witness statement served in support of his defence in this action was to repeat that his understanding was derived from HSL and that the earlier evidence was an error which should be corrected so as to delete the phrase “expressly agreed between myself and Mr Summan” and to replace it with the phrase “my understanding was that it was agreed between my brother and Mr Summan”. Otherwise, in his cross-examination, IL merely repeated his defence that he couldn’t remember signing the two documents and could only remember that HSL had told him that SS had told HSL that the guarantee would only be temporary. IL’s explanation for the difference was wholly unconvincing and the obvious inference was that his evidence in this trial had been adapted in an attempt to bolster the new defence that he and his brother were now advancing for the first time.
57.	It is relevant to recount a central part of the twins’ parents’ defence to NWB’s action to enforce the second charge. Both HSL and IL explained that their parents’ command of English was not good and that they had had to explain the nature of the obligation to them in Punjabi. That action was settled and the terms of settlement were recorded in a Tomlin Order. The defence document had been drafted on the instructions of the twins’ parents but the twins had provided their parents with considerable assistance in the formulation of those instructions. That defence read, in part, as follows:
“ At all material times [HSL] and [IL] informed Mr and Mrs Lotay [senior] that the security that was to be given to the [NWB] was limited to the sum of £100,000 and was there to support the personal guarantee of £100,000 which [HSL] and [IL] were providing to [NWB].” (italics added)
58.	This defence, which I am satisfied was drafted with the assistance of both HSL and IL and with their full knowledge of its contents, is clearly at odds with their defences in this action since the parents’ defence involved the assertion that the second charge was supporting the guarantee and that their understanding was that the second charge was limited to £100,000. Neither twin could provide a satisfactory explanation for this difference of approach to the guarantee save that they were not directly involved in their parents’ defence and that their parents must have misunderstood what they had been told by the twins in 2005 before they agreed to execute the second charge, possibly because Punjabi had no word corresponding with the word “support” so that their parents had obtained a mistaken understanding that the second charge was supporting the guarantee. It is obvious that the twins’ parents understanding of the transaction, as summarised in their defence, was in fact both clear and wholly accurate and that the twins’ present defences are in clear contradiction of that understanding.    
59.	I must finally deal with an unrelated matter that arose in evidence since it was strongly relied on by HSL and IL’s counsel as showing that SS was someone whose veracity was highly suspect and who was a relationship manager who was prone to cut corners, to induce customers to enter into financial transactions with NWB by misrepresenting the nature of the obligations that they were about to enter into and to persuade them not to take independent legal advice before committing themselves. 
60.	The matter in question was a complaint that a customer of NWB had made about SS in a letter that NWB received in February 2011 in reply to a letter claiming repayment of a guarantee given by that customer. The letter asserted that SS had failed to advise the customer to seek legal advice before he had executed the guarantee. SS stated in evidence that this was the first complaint about his conduct that he had ever received. HSL and IL’s solicitors had previously written to NWB’s solicitors about this complaint and the solicitors had replied in a letter dated 11 May 2011 that they had been advised by SS that there were no instances in the past nor suggestions nor adverse findings of any kind whatsoever so far as he could recall where it had been alleged that he had not followed NWB’s procedures. That statement was, in fact, inaccurate since it became clear in subsequent disclosure from NWB that NWB’s solicitors dealing with this complaint, who were a different firm from the solicitors dealing with this claim against the twins,  had taken a preliminary witness statement from SS on or immediately before 4 April 2011. 
61.	At the trial, HSL and IL’s counsel made it clear when cross-examining SS that they were not suggesting that the allegations contained in the customer’s letter had any substance. However, they were suggesting that SS had given instructions to NWB’s solicitors to the effect that he had not had any complaint made about him by an NWB customer knowing full well that that was not true and that this lie had been told because he wanted to cover up the fact that he was someone who was likely to have made similar serious breaches of NWB’s signing policy in order to induce Twinbuild to apply for a loan from NWB.   
62.	SS’s response to these allegations was two-fold. Firstly, a search of his personnel file showed that there was no reference to any complaint or possible complaint which suggested that he had breached NWB’s strict procedures in relation to the provision of loans and the obtaining of guarantees. Secondly, he had discussed that other customer’s complaint with Ms Dublin, the paralegal acting for NWB in relation to that other customer’s complaint, on the telephone on 11 May 2011. He could not explain how NWB’s solicitors dealing with that complaint had, on the same day, written in the terms they had stating that he was unaware of any other complaint about him. Ms Dublin, with the permission of NWB, disclosed a number of documents in the solicitors’ possession and gave a witness statement and was cross-examined at length. It was clear from this evidence that SS was correct in stating that he had discussed the complaint with Ms Dublin and that he had never stated to the solicitors that he had never had any other complaint made against him. I find that the statement in the letter was a mistake which could not be attributed to SS and, in so far as it is relevant, could not be attributed to Ms Dublin either since she had not written the letter. 
63.	It follows that there was no evidence that SS had breached NWB’s instructions with any other customer or that he had given any evidence or made any statement to the effect that he had never had a complaint made against him. Indeed, he accepted that there had been another complaint when asked about the solicitor’s letter and had always accepted that and had always denied that the complaint had any substance. I therefore find that there is nothing in this incident that adversely reflects in any way on SS or on his credibility or reliability.    
Discussion
64.	It was a crucial part of both parties’ respective cases to establish whether or not a signing meeting took place. If such a meeting took place, NWB’s case was that that finding would irrevocably dent HSL and IL’s credibility and reliability since they would have been giving untruthful evidence on the crucial issue by asserting that SS made the vital representation or assurance to HSL on the telephone as an inducement to both twins to sign the guarantee. On the other hand, if the signing meeting did not take place, HSL and IL’s case was that that finding would irrevocably dent SS’s credibility and reliability since he would have been giving untruthful evidence on that crucial issue by denying that he had made any representation or assurance to HSL.  It was, of course, theoretically possible that a signing meeting took place and, during it, SS provided the representation or assurance relied on by HSL and IL but I accept both parties’ submission that such a finding was not feasible, given the nature of the evidence and the respective answers provided by the three protagonists during their cross-examination.   
65.	HSL and IL stated repeatedly in their evidence that no meeting took place and that the documents were sent to them by SS, that a brief telephone conversation occurred between HSL and SS and that both then signed the documents on 14 March 2005 and sent them directly to the CDD office in Manchester to arrive on 15 March 2005 or sent them to SS who backdated the documents to 14 March 2005 and sent them off to the CDD office on Monday 21 March 2005.  
66.	  Turning first to the case advanced on behalf of HSL and IL. This case can be succinctly summarised in this way:
(1)	     SS was, as was demonstrated by his attempts to cover up the existence of the complaint about him made by another customer of NWB, someone whose evidence on the vital issue was lacking in credibility and should be disregarded. He was instead to be treated as someone who had given untruthful evidence on the vital issues in this case.  
(2)	In any event, SS’s recollection on the vital issues was vague and unreliable.
(3)	SS’s evidence about the meeting on 14 March 2005 was demonstrably false.
(4)	SS had broken NWB’s procedures because he was intent on obtaining Twinbuild’s custom in a hurry and had pressurised HSL into signing the guarantee by misrepresenting its nature and of the need to obtain legal advice in order achieve that objective. To that end, he had always regarded the second charge as the real security and the guarantee as a temporary makeweight.
(5)	HSL and IL’s evidence was inherently reliable and should be accepted and SS’s evidence inherently unreliable and should be rejected.
67.	 NWB’s case was that SS’s evidence should be accepted and HSL and IL’s evidence rejected as being untrue and demonstrably false. 
Conclusion 
68.	Having set out the evidence at such length, it is possible to reach and explain my conclusion shortly. I am clear, and so find, that a signing meeting took place on 14 March 2005, that that meeting was held between SS, HSL and IL at Twinbuild’s premises, that both HSL and IL freely and without any pressure signed the guarantee and the waiver documents, that SS never stated anything to HSL, whether at that meeting or on any other occasion by telephone or at any other meeting, about the guarantee being temporary or tied to the execution of the second charge. SS behaved with strict propriety throughout. He always intended that the three forms of security would be needed to support Twinbuild’s obligations to repay the financing in full and that all three would remain in place until the loan had been repaid in full. He was, throughout his evidence, honest, straightforward and accurate and his evidence was fully supported and corroborated at every point by a host of other written and oral evidence.
69.	It follows that NWB is entitled to judgment against both HSL and IL for £100,000 since their liability under the guarantee is both joint and several.
Interest 
70.	 NWB formally demanded payment under the guarantee by letters sent to each twin dated 30 August 2006. NWB is, therefore entitled to interest on £100,000 from that date until the date of judgment. NWB claims compound interest at 5% above its base rate. This claim arises by virtue of clause 13.6 of the executed guarantee which provides that:
“13.6	Interest will be calculated both before and after judgment on a daily basis and compounded according to agreement or in the absence of agreement monthly on such days as the Bank may select.” 
71.	It is to be noted that no rate of interest is provided for and NWB’s pleading does not identify what rests should apply to its claim for compound interest. In my judgment, NWB is entitled to compound interest on a reasonable basis both as to rests and as to rate. It is reasonable to award NWB compound interest at quarterly rests and at a rate of 2% above NWB’s base rate from time to time over the period from 1 September 2006 until judgment but not beyond on the sum of £100,000. Any interest after the date of judgment will arise under the Judgment Act.
HH Judge Anthony Thornton QC