India Infrastructure Finance Company (UK) Limited v Reliance Naval & Engineering Limited & Ors
[2023] EWHC 1612 (KB)
Decisive Capital Management SA v Les Geonnais Limited & Ors
25 October 2023
[2023] EWHC 2658 (Ch)
High Court
A company lent money, and someone guaranteed the loan. The borrower defaulted. The guarantor said the lender lied about the chances of getting the money back. The judge said the lender's words were just optimistic guesses, not lies, and the guarantor should pay.
Key Facts
- •Decisive Capital Management SA (Claimant) obtained judgment against Les Geonnais Limited and Seventy Eight St James Street London Limited (Borrowers) for a failed refinancing.
- •Dr Abdullah Abduljabbar Abdullah Alanizi (Third Defendant) provided personal guarantees for the loans.
- •Dr Alanizi's defense was that he was induced to provide the guarantees by misrepresentations from Decisive's representatives.
- •The alleged misrepresentations included assurances that Decisive would not enforce the guarantees, the refinancing was a 'done deal', and representations about Yunak Corporation's funding.
- •Three witnesses testified: Mr Chamat (Decisive CEO), Dr Alanizi, and Mr Salnikoff (Decisive employee). Evidence from Mr Nacos (Decisive employee) was not admitted.
Legal Principles
Pre-contractual misrepresentation (Misrepresentation Act 1967 or common law).
The Defence
Reliance on a statement of fact, not intention or opinion. Statements of opinion may imply a representation that the opinion has a reasonable basis, particularly where there's an imbalance of knowledge.
Chitty on Contracts, Misrepresentation, Mistake and Non-Disclosure, Smith v Land and House Property Corp
A continuing representation continues until the transaction is completed or abandoned or the representation ceases to be operative on the mind of the representee. If a representation becomes false, it must be corrected.
Spice Girls Ltd v Aprilia World Service BV, With v. O’Flanagan
Outcomes
The claim against Dr Alanizi was dismissed.
The court found that no actionable misrepresentations were made. Alleged representations were either not made, were statements of opinion or predictions about the future, or were not reasonably relied upon by Dr Alanizi.
The Original Guarantee and Amended Guarantee are valid and enforceable obligations.
Dr Alanizi’s reliance on the Low Risk Representation was deemed unreasonable given the changed circumstances in July 2020 and his knowledge of the risks involved.