NORTH SHORE VENTURES LTD V ANSTEAD HOLDINGS INC

[2011] EWCA Civ 230, Court of Appeal, Sir Andrew Morritt, Lady Justice Smith and Lord Justice Tomlinson, 9 March 2011

Loan - Guarantee - Liability of guarantor - Whether creditor had failed to disclose material facts to guarantor - Whether terms of loan agreement were valid or had been varied - Whether certificate of amount of liability was subject to manifest error by reason of the variation in the loan agreement

North Shore, a company associated with a well known Russian businessman, B, loaned the sum of US$50 million to Anstead, a company owned by F and P. As a condition for the loan, F and P personally guaranteed the loan. A substantial part of the loan was frozen by the Swiss authorities. The loan was repaid, but sums remained outstanding, and North Shore sought to enforce the guarantee. F and P argued that the guarantee could be set aside for non-disclosure by North Shore of the facts (which it admittedly knew) that: B, and companies with which he was associated, were the subject of investigations by the Swiss authorities, including into embezzlement and other matters relating to the Russian company Aeroflot; the Swiss authorities had frozen bank accounts of B and the companies with which he was associated and had supplied a substantial number of documents to the Russian authorities; and there was a very substantial risk that the loans might be frozen if they were paid to Switzerland. The Court of Appeal, reversing in part the judgment of Newey J, held that the amount payable under the guarantee was to be agreed. The principles were as follows.