QUEST 4 FINANCE LIMITED V (1) JOHN MAXFIELD, (2) JOHN CARTER, (3) MICHAEL JOHN CHESNEY

[2007] EWHC 2313, QBD, Teare J, 12 October 2007

Finance – Loan – Directors’ guarantee – Whether statements in promotional brochure affected a signed declaration of non-reliance

Quest 4 Finance was a finance company providing so-called “wageroller” loans and the defendants were directors of Hilmax, a company. The directors had each signed a document entitled “warranty” and containing a declaration of non-reliance in connection with a loan from Quest 4 Finance to Hilmax. Mr Maxfield had previously been provided with a brochure stating that the directors would not be providing any personal guarantee except in the case of fraud. Quest 4 Finance claimed an indemnity pursuant to the warranty. Teare J held that while normally, one would expect a contracting party who has required the other to make a declaration of non-reliance to believe the declaration to be true and rely upon it, in this case Quest 4 Finance has made clear and unequivocal statements in its brochure, calculated to be relied upon by the directors of companies seeking finance, that a personal guarantee was not required, and that the warranty was to cover only fraudulent acts knowingly committed. Quest 4 Finance were estopped by reason of the statements in the brochure from relying upon the warranty. The warranty was set aside on the grounds of a material misrepresentation.