Patrick Leahy v Schneider Investment Associates LLP

CICC Judge Briggs:

1. By his Application dated 9 September 2024 Mr Leahy seeks to set aside a statutory demand dated 6 August 2024, which was served on him on 13 August 2024 (the ‘Demand), on the basis that the debt is disputed on genuine and substantial grounds. The Demand

2. The Demand relies upon a debt said to arise from an unlimited personal guarantee dated 21 September 2022. Mr Leahy is a director of Elva Wellbeing Limited (the “Company”). It was previously known as MyWagez Ltd, which partly describes its business. Mr Leahy explains that the business of the Company as providing: “earned wage access service to employers which is a financial service to enable employees access a percentage of their accrued wages before the end of the current payroll in return for a fee”. To provide those services the Company required finance and turned to Schneider Investment Associates LLP (“SIA”). SIA is a private company that carried on business in investments and lending to corporate entities.

3. The Company and SIA entered a revolving loan agreement on 25 June 2019. The loan agreement was varied by email on 1 June 2020 and varied by side letters respectively dated 20 October 2020 and 1 February 2022. Mr Schneider of SIA describes the varied arrangement as the “Facility Agreement”. He explains that the Facility Agreement as a non-obliged secured revolving loan facility where the sole purpose was to fund salary advances made by the Company in its usual course of business. Mr Leahy says: “[SIA] would place money into a holding account that would be used to advance wages to staff. During the payroll period, staff would ask for, and [the Company] would provide, salary advances from that account. At the end of the payroll period, the relevant employer would pay the staff wages in their entirety into this same account. [The Company] would deduct its advances and send the remainder to the employees. From those deductions, [the Company] would then hand those advanced funds back to the [SIA] and ask them to fund the next payroll run. This provided a regular cash cycle of funds back to [SIA].”

4. The Company merged with another company known as Money Concierge Ltd (“MCL”) in the latter part of 2020. After experiencing some financial difficulties in 2021, the board of MCL sold the Company and its business by way of a shareholder agreement to Mr Leahy. The consideration included an upfront payment of £10,000 and a one-year deferred payment of £85,000.

5. The financial troubles of MCL did not go away. The board resolved to place it into liquidation in April 2022, although a creditors meeting was not held until 21 October 2022.

6. On 10 May 2022 Mr Leahy informed SIA (by e-mail) that MCL wanted to secure the deferred sum by way of a debenture over the assets of the Company. The deferred sum was due for payment in full on 15 April 2023. A deed of priority was proposed by SIA which led to direct negotiations between SIA and MCL. At this point in time Mr Leahy had provided SIA with a guarantee to secure the Facility Agreement limited to £30,000. The limited guarantee is not before the court, however SIA wished to explore replacing it with an unlimited guarantee and indemnity.

7. There commenced a series of e-mail correspondence between SIA and Mr Leahy about the terms of an unlimited personal guarantee.

8. Prior to liquidation, the board of MCL agreed that the debt owed by the Company would be subordinated to the revolving finance facility provided by SIA. This was formalised in a deed of priority dated 15 September 2022.

9. On 21 September 2022 Mr Leahy executed an unlimited personal guarantee and indemnity in favour of SIA.

10. Following the voluntary liquidation of MCL in October 2022 the liquidators served a demand for payment under its security on 19 February 2024 (the “MCL Demand”. The demand, it is argued, permitted SIA to exercise its rights under the personal guarantee and demand payment from Mr Leahy of all sums due under the Facility Agreement.

11. The SIA demand letter is dated 24 June 2024. It demands payment of £310,923.86 (the “SIA Demand”).

12. The argument advanced by Mr Leahy is that SIA had no right to make the SIA Demand as the strict terms of the unlimited personal guarantee were either varied by agreement or there was an implicit promise that they would not be relied upon. He argues that it is inequitable to rely on the strict terms as the parties were agreed that the personal guarantee was capable of enforcement in only two circumstances: default or where the Company had paid MCL ahead of SIA.

13. Mr Leahy relies on correspondence between June and September 2022 and an unrecorded telephone conversation between himself and Mr Schnieder.

14. SIA argues that it can simply rely on the terms of the personal guarantee executed by Mr Leahy. Mr Leahy argues that the factual background, seen through the prism of the correspondence, gives rise to a defence of promissory estoppel, misrepresentation and creation of a collateral contract. The Deed of Priority

15. The Deed of Priority (the “Deed”) is made between the Company (defined as the “Borrower”, SIA (defined as the “Senior Creditor”) and MCL (defined as the “Junior Creditor”). The recital states that the Senior Creditor has agreed with the Junior Creditor that the Senior Creditor interests have priority over the Junior Creditor.

16. I do not intend the recite all the clauses in the Deed but highlight the protection afforded to SIA by reference to certain clauses such as clause 6 that provides priority for SIA over the deferred consideration owed to MCL.

17. Other contractual mechanisms, to ensure that the debt owed by the Company would not be jeopardised by a priority payment to MCL included firstly, that MCL agreed to provide notice of enforcement to SIA: “Written notice delivered to the Senior Creditor from the Junior Creditor of the Junior Creditor’s intention to demand payment from the Borrower of the Junior Debt such written notice not to expire before a minimum period of 45 days prior to 12 April 2023. For the avoidance of doubt no demand of the Junior Debt shall be made by Junior Creditor until on or after 12 April 2023.”

18. Secondly, an undertaking was provided by the Company (clause 4) which included the following: “Until the Senior Discharge Date or unless any repayment of the Junior Debt is permitted in accordance with clause 5.1 the Borrower covenants with a Senior Creditor that they shall not, without prior written consent of the Senior Creditor: 4.1.1 pay, prepay or repay, or make any distribution in respect of t, or purchase or acquire, any of the Junior Debt in cash or in kind; 4.1.2 discharge any of the Junior Debt by set-off or any right of combination of accounts…”

19. Thirdly, an undertaking (as well as a contractual obligation (clause 14)) in similar terms provided by MCL to the effect that it will not receive discharge of the deferred payment before SIA, without its written consent.

20. Fourthly, clause 7 obliged MCL to account to SIA for any payment it received before the debt owed to SIA had been repaid in full (known as the Senior Discharge Date): “If at any time before the Senior Discharge Date any person makes any payment or distribution in cash or in kind in respect of the Junior Debt any person makes any payment or distribution in cash or in kind in respect of the purchase or other acquisition of the Junior Debt or any of the Junior Debt is discharged by set off the Junior Creditor will hold any such payment or distribution or an amount equal to the amount discharged by any such set off on trust for the Senior Creditor and pay and distribute it as soon as possible to the Senior Creditor for application in or towards payment and/or discharge of the Senior Debt.”

21. Lastly, clause 8 provided a continuing subordination “irrespective of any intermediate payment or performance of the Senior Debt.”

22. The Deed excluded the ability of the contracting parties to amend or waive without the amendment or waiver being agreed in writing. However, there was no such clause contained in the unlimited personal guarantee executed by Mr Leahy. The unlimited personal guarantee

23. Clause 1.1 of the personal guarantee provides relevant definitions in the usual way. This includes the “Guaranteed Obligations” that defines all monies charge and the ‘Effective Date’: “The date when either: a) the Junior Lender or its successors in title, either directly or indirectly, request or demand the repayment of any monies owed from the Borrower, or in any way oblige the Borrower to make any payment or repayment, howsoever arising; or b) the Borrower, without the written consent of the Lender, makes any payment to the Junior Lender.”

24. I shall refer to clause 1.1 (a) as “limb 1” and clause 1.1(b) as “limb 2”.

25. There is no dispute that MCL through its liquidators demanded payment of the deferred consideration. No correspondence or other documents are before the court evincing notice of the MCL Demand (as required by the Deed) that was required to be provided to SIA by the MCL liquidators, or evidence of steps taken by SIA to enforce compliance with the Deed. It is not disputed that the “request or demand” for repayment by the liquidators is relied upon by SIA to seek payment under the personal guarantee. The June-September 2022 correspondence.

26. Before turning to the correspondence in detail, I mention that there are frequent references to the adjective “moot” where it appears that the meaning is different to its ordinary dictionary meaning. An example of its use giving the adjective its ordinary dictionary meaning is: “whether they had been successful or not was a moot point ”. The parties to the correspondence use the word to mean “academic” or “irrelevant” in the sense that the event under consideration will not occur. If it will not occur owing to a series of other events it is said to be “moot”.

27. Mr Schneider wrote to Mr Leahy on 23 June 2022: “Leanne and Cal noted to me about this DoP and, well, I am not up to date on all the information but I have been asked to note that you have limited PG’s with us, but if you accept to remove the limit then we can just sign the DoP as is. If you agree then I don’t have to do anything, Leanne will issue updated PG’s and do the DoP and all is done. If you don’t agree then I have to work out what the issue is and share my thoughts to they and you and … so ideally agree …? But I accept you may not wish to? Thoughts?”

28. The response from Mr Leahy was surprise: “Well, this is a bit left field. Can I ask how the two are related? I don’t mean that to sound rude, I’m sure there is a reasonable explanation/requirement. Just wasn’t expecting it. I haven’t spoken to Ron but I know he would be against it as it just puts too much of his life at risk, which is fair. I’m a bit more blasé, primarily because I’m sure we have an agreement now with Sonovate and therefore, your facility will not be required by the time this second debt becomes payable etc...”

29. I infer from the primacy placed on the agreement with Sonovate and later concerns expressed by Mr Leahy, that he was not “a bit more blasé” following the failure to reach agreement with Sonovate.

30. Mr Schneider responded on the same day: “I must admit I can’t answer the question…but I was asked to ask. So, well, I asked!”

31. Adam Lewin of SIA, who was copied into the response given by Mr Schneider, wrote to explain the rationale for an unlimited personal guarantee: “We are being asked to weaken our security by allowing a payment to be made out of the company while debt is still outstanding to us, on the proviso that the directors (ie you two) assure us that it won’t damage the company’s ability to repay our debt. By putting the directors jointly and severally responsible for covering the entirety of our debt in the event that in fact the company can’t repay us post making the payment to MC, we can have more confidence that the directors are very certain that said damage won’t occur (as they take on the risk themselves in that event),which enables us to allow the requested changes to the deed of priority…I note also from the below that you don’t expect to have any debt with us at the point the repayment to MC is going to be requested in any case, which means that the increase in the PGs is moot and thus I can see even less reason why it would be an issue.”

32. There are three comments that are worth raising at this point. First, Mr Lewin does not mention the numerous protections drafted into the Deed. Given the protections there was little or no risk of loss arising from a prior payment to MCL. Secondly, the limited personal guarantee (£30,000) was to be replaced with the unlimited personal guarantee. There was never any question of an “increase” in the limited personal guarantee in the event of a prior payment to MCL. Thirdly, the rationale related only to an unlimited personal guarantee related to a payment made to MCL ahead of SIA: a limb 2 event. It has no relevance to a demand under limb 1. These points were not lost on Mr Leahy. Nevertheless, Mr Lewin was correct to say that if there was no debt owed to SIA, the personal guarantee would not be called upon. Mr Leahy responded: “The primary security over your debt is the salary advance book. This is ringfenced in terms of the cash flow such that we do not use your cash for anything other than providing advances and then once the salary is received, this is repaid back. In order for the risk of your working capital facility to increase, we would need to divert salary repayments away from your debt prior to repaying you. This would be in breach of our agreement with you. I point this to highlight that there won’t be a increased risk as the only way we can repay this debt is through free cash generated from profits or equity investment…The reason I say this is because we cannot increase our PG’s… PG is really there to ensure Ron and I stick around and put the work in to ensuring we get salaries repaid. Eg, Suez goes bust and misses a payroll run we then need to negotiate with Administrators and reclaim from government schemes in order to ensure this money comes in… The DoP gives you the ability to stop the repayment if you deem it risking your own debt. In practical terms, we would have to show to you that the salary advances plus fees due were higher than the debt owed whilst at the same time showing we had free cash over and above our cash flow needs in order for you to approve the payment. I would have thought this was sufficient security for you…Hopefully the above makes sense and you guys are more comfortable moving forward without increased PG’s and the right to stop repayment unless you are happy it doesn’t cause financial stress to the business.”

33. The response from Mr Lewin was that SIA did not want to make checks to see if a repayment to MCL breached the terms of the Deed or placed SIA in a more precarious position than it bargained for. In other words a limb 2 event. Mr Leahy’s response to oversight of legitimate payments to MCL only was: “That’s fair enough. I’ll put my hand up.”

34. Leanne Van Vuuren, in-house counsel for SIA, wrote on 27 June with an attached unlimited guarantee saying that it “will supersede the previous limited guarantee.” Mr Leahy responded to the receipt of the unlimited guarantee on 19 June specifically challenging the need for the inclusion of limb 1 in the definition of an Effective Date: “Thanks for this. My one comment is that the guarantee should only commence once the second charge debt repayment commences (or one of the other events that requires your permission?) The Logic of the PG is that I will not permit the repayment of the Junior Debt unless I am absolutely sure it won’t impact your Senior Debt and our ability to repay that. Between now and the event there is no change in the risk profile from what it currently is and therefore the current PG’s are adequate.”

35. Mr Lewin seemed to agree with Mr Leahy in an e-mail dated 30 June but there is some confusion on his part: “. . . I think that is the intent, yes; your PG can remain limited while the situation re: junior debt repayment remains as it is. I will double check with the others that they are happy with that. Others, are you happyt ( sic )”

36. Mr Schneider confirmed “I am” and Leanne Van Vuuren responded that she: “will have to come up with a way to implement that but its fine.”

37. I conclude from this exchange that there is a genuine triable issue that SIA and Mr Leahy shared a mutual understanding that the Effective Date to be relied on related to limb 2 and not limb 1 as this reflected the express concern of SIA namely, that the Company will pay MCL ahead of SIA.

38. Mr Leahy and Schneider agree a phone call followed on 15 July 2022. The evidence of Mr Leahy is that Mr Schneider, explained that SIA would only call on the Guarantee if the Company repaid MCL, and the Company was left out of pocket as a result, but in no other circumstances.

39. Mr Schneider says in his witness statement [20]: “No representations, either verbal or written, were ever given to the Respondent by me suggesting that Guarantee 2 was only for the purpose of repaying the Junior Debt and would not be called upon. The intention was always clear that the trigger events of Guarantee 2 were aligned to the Effective Date (as above) and if a trigger event occurred, we would call for repayment. ”

40. The assertion that the intention was always to protect SIA from a demand served by MCL on the Company is not reflected in any of the correspondence. The only reason voiced in the correspondence for an unlimited guarantee was to safeguard against the Company making payment to MCL ahead of the Company. In this respect the statement given in paragraph 20 of Mr Scheider’s witness statement, when set against the background and all other admissible evidence, is without substance and inherently implausible.

41. For the purposes of the Application hearing, given that there is no cross-examination, and the evidence provided by Mr Leahy is not manifestly incredible, I accept Mr Leahy’s version of events: The Burden Group Limited [2017] BPIR 554; Long v Farrer & Co [2004] BPIR 1218.

42. The next relevant date is 15 September 2022 when Leanne Van Vuuren e-mailed Mr Leahy attaching the unlimited personal guarantee. She wrote: “Further to the below, please find attached the execution copy PG for your signature and witnessing please. Once signed, please date the document and scan a copy back to us.”

43. Mr Leahy did not have the benefit of legal advice but given the earlier representations that the guarantee will only be called upon if a payment is made to MCL (rather than a limb 1 event), responded on the hour: “I cannot see in this document where this only kicks in once the Junior Debt is paid. I’ve only scanned it so perhaps I’m blind. Can you point it out to me. Maybe it needs to be added in?”

44. The response from Leanne Van Vuuren was swift: “This is under the Effective Date definition – should already deal with your concerns but please shout if not.”

45. The response of Leanne Van Vuuren suggests that she was aware that only limb 2 would be relied upon as the Effective Date. Mr Leahy responded at 11:03: “Yes, one concern. My guarantee should only kick in if we actually pay it. Them making the demand should not trigger it. The point is if I agree to it being paid I am guaranteeing to you guys [the Company] can afford it. If they make the demand and [the Company] can’t afford it, I shouldn’t then be automatically on the hook with you guys. Can you change the wording on the effective date and then I am happy to sign it.”

46. The e-mail dated 11:03 from Mr Leahy was referred to Mr Schneider who himself responded. The response from Mr Schneider is confused, and not easy to follow: “Henry may or may not ask for the cash back in the future If he doesn’t then all is moot and your PG stays limited at 25k. If he does then he has to wait till a certain date before he can ask. My memory is that it is 3 months before the date it would then be due. So assuming he asks (he aka the administrator will I am sure), My Wages aka Elva will either consider it will be in a position to pay or not. If it (you therefore etc) considers it is / will be in a position to pay, then you confirm this to us, we leave our existing stuff working as it is, you then pay him; sorted, but your PG grows etc. If it considers it isn’t in a position to pay come due day then you will either ask to borrow it from us or not as you think is apt. If we are asked we may or may not lend; if we lend, then we leave our other existing stuff as it is, we lend this extra cash, you then pay him, sorted, but your PG grows etc. If you feel it isn’t sensible to borrow to repay him or we decline to lend if asked, then Schneider gets repaid at the end of that month, doesn’t relend, the business folds, you owe us nothing, doesn’t matter what lever the PG is at. Have I gotten that all right, in English at least? If yes, then does not LM’s drafting do this? She is rather reluctant to do more drafting and iterations etc and asked me to make you say “sorry, sorry, yeah, tis fine, I will sign!” LOL” Net net the PG only extends if we don’t pull out and you repay him; you will only extend the PG if you think all will be fine therefore. Checking?

47. Although counsel struggled to make submissions on the meaning of the e-mail it is possible to pick out some salient themes. First, Mr Schneider recognised that the repayment date for the deferred consideration was close. Secondly, as the date was close, it was likely that a demand for payment (“if he asks”) would be made. Thirdly, he recognises that the Company would either be able or not be able to satisfy any demand if made in the near future. Fourthly, SIA may lend the money to the Company to make the payment if the Company could not meet the MCL Demand. If it could make payment: “we leave our existing stuff working as it is” appears in the context to mean that the Company would be permitted to make payment without SIA calling in its debt. Fifth, if no payment is made to MCL on the relevant date the Company would repay the outstanding loan to SIA at the end of the working month in the usual way and “the business folds”. Lastly, the unlimited personal guarantee will only be enforced if: (i) SIA is not repaid, (ii) MCL is repaid.

48. Mr Leahy would have taken some comfort from Mr Schneider’s e-mail as it appears to, in large part, affirm his position. On the following day he wrote to Leanne Van Vuuren to suggest that limb 1 should be deleted from the Effective Date definition. He comments on 16 September 2022: “the effective date should be [limb 2 of the Effective Date] with or without your consent. How this is paid is kind of irrelevant.”

49. Mr Schneider responded at 14:21 on the same day: “I hear ya; two things really 1 – If (when) Havisham aka Henry aka MC aka an Administrator requests repayment, likely 3 months before it is due, the below wording says your PG goes up; you will then confirm if all is tickerty boo (i.e. in funds aka we do the loan if not and you say is sensible and we agree*) and a month or so later pay them back, where the PG is already increased so b) is moot as a) has happened. If however when Henry asks you do not have the funds and we don’t lend, although your PG will go up as they have requested, you will then pay us back at that month end, before cash is due to Henry. Schneider will then have no debt (assuming Ajay is resolved this month as per the master mail etc) so although you have an infinite PG, it isn’t securing anything and hence moot. I.e. the wording as is works; you are either happy to repay Henry and PG goes up or you are not; if the later albeit the PG goes up it is against zero debt so moot. Get me? 2 – I admit this structure was chatted through with Adam and you and I seem to get the fun of then moving it forward, but net net as agreed, but as time then flows forward, assuming Henry is made whole, I understand your point re it maintaining forever. As opposed to working through that now, can we not re-look at that in the future. I.e. when you feel the Henry element is behind Elva and thus you would like the PG to shrink again you can ask. If we agree then, well, that’s easy. If we decline you then either accept or put the cash back, removing the PG. Does that float?”

50. Mr Leahy may have understood the response from Mr Schneider to mean simply that the personal guarantee “isn’t securing anything” in the scenario where the MCL debt is repaid or the MCL debt is not repaid. It is not impossible to read the e-mail sent by Mr Schneider’s e-mail as giving a worked example whereby SIA does not enforce the personal guarantee on the basis of a limb 1 event: “…(when) … an Administrator requests repayment… a month or so later pay them back…[limb 1] has happened…[on a limb 1 event] you will then pay us back at that month end, before cash is due to [to the MCL]… Schneider will then have no debt… so although you have an infinite PG, it isn’t securing anything and hence moot. I.e. the wording as is works; you are either happy to repay Henry and PG goes up or you are not; if the later albeit the PG goes up it is against zero debt so moot. Get me?”

51. This interpretation of the e-mail exchange is not inconsistent with the rationale given for an increase in Mr Leahy’s personal liability; the security given in favour of SIA over the Company; the terms of the Deed and Mr Schneider’s own written evidence [30]: “The entire premise of Guarantee 2 [the unlimited personal guarantee] was to rely on the Applicant for recovery if the Borrower failed to repay the Respondent”. (my emphasis)

52. This is consistent with Mr Schneider’s evidence that there would be no enforcement of the personal guarantee unless the Company failed to pay under limb 2 of the Effective Date, as this: “Aligned with the agreements and discussions held during the telephone conversations with the Applicant.”

53. It is also supported by the e-mail of 16 September 2022 from Mr Schneider where he said: “net net, as agreed”.

54. Written in the past tense, I infer that there was some sort of agreement reached in the June- July 2022 period. That being so, there is a genuine triable issue that “as agreed” referred to the 15 July 2022 telephone conversation. This may explain why Mr Leahy responded to the e-mail on 16 September 2025: “OK, I’ll sign.”

55. Having read the written evidence of Mr Schneider I am not entirely sure he understood the legal consequences of the Deed and the unlimited personal guarantee. Nevertheless, it was SIA that was legally represented and not Mr Leahy. A genuine and substantial argument

56. It is not in dispute that an individual (not a company) may apply to have a statutory demand set aside, as the Rules provide for such an application: Rule 10.5. The ground relied upon is genuine and substantial dispute. In Crossley-Cooke v Europanel (UK) Ltd [2010] EWHC 124 (Ch) ) the court gave some clarity of the test to be applied. The onus is on the party seeking to set aside the statutory demand: Dowling v Promontoria (Arrow) Ltd [2017] 9 WLUK 135. As regards the evidence, a witness statement supported by documents demonstrating a consistent case that is not inherently implausible, is generally sufficient: Collier v P & M J Wright (Holdings) Ltd [2008] 1 WLR 643 .

57. The parties are not in dispute as to the test for promissory estoppel. Chitty on Contracts (35th Ed.) explains at 7-031: “For promissory estoppel to operate there must be a legal relationship giving rise to rights and duties between the parties; a promise or a representation by one party that they will not enforce against the other their strict legal rights arising out of that relationship; an intention on the part of the former party that the latter will rely on the representation; and such reliance by the latter party. Even if these requirements are satisfied, the operation of the doctrine may be excluded if it is, nevertheless, not “inequitable” for the first party to go back on their promise.”

58. Again, the parties are not in dispute about the elements required to demonstrate an actionable misrepresentation. Chitty On Contracts 10-006: “‘(i) A must have entered the contract after a statement of fact or law has been made on which it was reasonable to believe A was intended to rely; (ii) the statement must have been at least substantially untrue; (iii) a statement of opinion or of intention will not amount to a misrepresentation unless the person making it does not in fact hold that opinion or intention, though a statement of opinion may carry the implication that the person making it has reasonable grounds for believing what is stated is true; … (viii) the statement must have induced A to enter the contract. It need not have been the sole cause of A entering the contract but in most cases A must show that it would not have entered the contract, or would not have entered it on the same terms, “but for” the misrepresentation…”

59. Lastly it is argued that in the alternative there was a collateral contract: see Chitty on Contracts at 16-018. Promissory Estoppel

60. I do not understand that there is any contest that there was a relationship giving rise to rights and duties between SIA and Mr Leahy. The relationship is governed by the unlimited guarantee.

61. The main issue is whether there was a promise or a representation by SIA that it would not enforce the personal guarantee unless there was repayment to MCL. To put it another way, SIA would not rely on its strict legal rights to enforce under limb 1 of the Effective Date.

62. In answer to this question, I am persuaded that a combination of the following events is sufficient to raise a substantial and genuine dispute: i) Mr Leahy raised the issue of limb 1 early in the negotiations for an unlimited guarantee. ii) The rationale for the unlimited guarantee did not suffer for want of enforceability under limb 1. iii) I conclude from the exchange of e-mails to 30 June 2022 that there is a genuine and substantial dispute that SIA and Mr Leahy shared a mutual understanding that limb 1 was not necessary or desirable to meet the requirements of SIA. iv) In my judgment there is a genuine triable issue that Mr Leahy will adduce sufficient evidence at trial to demonstrate there was an agreement that limb 1 would not be relied upon as the “Effective Date”. v) There is a genuine triable issue that Mr Leahy will succeed in demonstrating that there was further agreement during a telephone conversation held on 15 July 2022. vi) There is a genuine and substantial dispute that the exchanges in September 2022 support Mr Leahy’s version of events.

63. In my judgment the response from Leanne Van Vuuren on 15 September to the query about deleting limb 1 of the Effective Date makes it inherently plausible that she understood that limb 1 was not to be relied upon by SIA. She does not express surprise that Mr Leahy has raised the issue but thinks it is resolved: “This is under the Effective Date definition”.

64. There is a genuine triable issue that her evidence will support Mr Leahy’s evidence (she provided no evidence on the Application), since she wrote: “will have to come up with a way to implement that …” meaning, to implement the exclusion of limb 1 of the Effective Date.

65. The response from Mr Schneider on 15 September 2022 to the query made by Mr Leahy provides a springboard for evidence to be given in relation to reliance. He said: “Net net the PG only extends if we don’t pull out and you repay him”.

66. Mr Leahy says in his written evidence that he relied on the 15 July 2022 phone call that there was an agreement. He says [31]: “On the represented basis that the personal guarantee would only be relied upon by the Respondent if the Junior Debt was repaid to MCL as confirmed by the written and verbal assurances provided by the Respondent to me (including during the call with Sonny Schneider on 15th July 2022) and on which I reasonably relied upon, I signed the personal guarantee in late September 2022.”

67. I was not addressed as to how the evidence of Mr Leahy (on the issue of reliance) is inherently implausible. In my judgment it is not appropriate at this hearing to go behind his sworn evidence.

68. There is a genuine triable issue that the e-mail at 14:21 on 16 September from Mr Schneider can be read as focussing on limb 2 only. This is a matter that requires cross-examination, but for the purposes of the Application it is not inherently implausible that Mr Schneider intended enforcement only if payment was made to MCL: a limb 2 Effective Date event.

69. In my judgment there is a genuine and substantial dispute as to reliance on the representations made during the phone call and the later statement of Mr Schneider in September 2022. Mr Leahy responded directly after the e-mail sent by Mr Schneider on 16 September. There is no evidence he conceded the issue of limb 1, but following the September exchange Mr Leahy was prepared to execute the unlimited personal guarantee and said so in response.

70. I find there is a genuine and substantial dispute of whether it would be inequitable to resile from the representations made. If a court were to find that as a fact (on the balance of probabilities) that Mr Leahy did rely on the representations made there is a genuine triable issue that it will find it inequitable to allow SIA to resile.

71. SIA has not sought to argue the issues of reliance or inequitable behaviour, as it relies on “inherent implausibility” that that there were representations to the effect that limb 1 was not to be relied upon: see paragraphs 40-41 above. This will require SIA demonstrating that the reasons given for the execution of an unlimited guarantee when SIA had the benefit of a limited guarantee did not, given all the circumstances, relate to a risk that MCL would be repaid ahead of SIA only.

72. For reasons I have given there is sufficient evidence to raise a substantial and genuine dispute on all elements of a promissory estoppel defence. Misrepresentation

73. The same facts and conclusions I reach in respect of the Misrepresentation argument.

74. There is a genuine and substantial dispute as to whether it was reasonable to believe that Mr Leahy intended to rely on the representations made by SIA through its directors or agents; whether the representations were substantially untrue and amount to misrepresentations; and if, as a matter of fact Mr Leahy was induced execute the unlimited personal guarantee.

75. These findings make it unnecessary to consider whether there is a genuine and substantial dispute that the representations created a collateral contract. Conclusion

76. The approach I have taken is to conduct a proportionate investigation of the points advanced at the hearing and the legal submissions made.

77. I have taken the view that the written evidence given by Mr Leahy should not be disbelieved without cross-examination. This is particularly so in respect of his evidence that there was agreement between SIA and himself that limb 1 of the Effective Date would not be enforced or otherwise relied upon by SIA.

78. In considering the inherent plausibility of the evidence I have had regard to the evidence of Mr Schneider who accepts that there was a phone call in July 2015, although he denies he agreed that limb 1 would not be relied upon.

79. In my judgment the e-mail exchanges I have referred to in some detail above do not undermine the evidence of Mr Leahy to the extent necessary to dismiss the Application. The opposite is true. They support his evidence.

80. In conclusion given the consistent and continued flow of correspondence over a four-month period I find that the defences raised by Mr Leahy are not inherently implausible and raise a genuine and substantial dispute not suitable for determination in this court.

81. I shall set aside the Demand.

82. I invite counsel to agree an order.