Natwest Bank Manager Signing as witness on personal guarentee ????

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Just to clear this up. There is no legal requirement for a guarantee to be in the form of a deed. A guarantee can take the form of a simple contract but must be in writing How? By virtue of s.4 of the Statute of Frauds Act 1677 (yes it is really this old). Therefore, if the guarantee provided the following clause:


Will amount to a legally binding guarantee in the form of a simple contract, providing that both parties sign - there is no need for a witness to attest.

Now, regarding the limitation period I was pondering this over the weekend and I think we might have strayed off the path a little bit. Whatever FlamingParrot is referring to, I personally don't think it applies nor does The Council of Mortgage Lenders or any reference to mortgages (maybe FCA MCOB rules may apply somewhere but haven't looked into this).

From a legal perspective, this guarantee or alleged deed of guarantee and correct me if I am wrong, does not refer anywhere within the Agreement about mortgages or any other agreement in which the principal debtor has signed. This in my eyes is a standalone agreement as no agreement has been incorporated into it (which would usually be annexed as an exhibit or schedule). I believe my theory is further backed up by clause 10 of the guarantee in which the bank shall send a certificate of the amount owed should the debtor fail to make the payments. Therefore Jarvis cannot be bound by any terms of any other agreement that may have been signed by the debtor - How can you enforce a terms when someone is not a party to the agreement? The simple answer is you can't.

Going back to my previous posts, the issue therefore lies in whether or not this is actually a guarantee by way of a simple contract or it is in fact an executed deed. This will therefore determine the limitation period, either 6 years or 12.

I've noted a few things in the contract:

Guarantee & Indemnity Clause:
The bank has essentially incorporated both a guarantee and indemnity clause.

severance clause:
surprisingly there appears to be no severance clause in this guarantee. A severance clause tends to say that in the event that a particular clause becomes unenforceable then the rest of the agreement shall continue to be in force. A severance clause helps to mitigate the issue that the contract will continue. Arguably, if you were to be successful on grounds of unfair contract term/s then you could also state that as a result of the term being unfair the whole contract is therefore void and unenforceable, relieving you of any obligations.

Guarantors do have rights against the debtor but banks have become wise to this and seek to exclude them as outlined in clause 6.

Variation of the agreement:
another way in which a guarantor may relieve himself of his obligations is where there has been a variation of of the guarantee/deed without the guarantor's consent. Again this can also be excluded which has been done in the agreement under clause 4.

The key issues I see for challenging the guarantee is:
- whether any defences are available
- has the bank proceeded dcorrectly against the guarantor
- does the debtor have any claims against the bank which can reduce the liability of the gurantor
- is there any documented evidence which provides a defence to one of the above

Certainly you could argue some of the terms are unfair under the Unfair Contract Terms Act, dispute that the bank manager signed on behalf of bank and whom have an interested and potentially misrepresenation/undue influence.

If you have strong enough arguments against the bank they may agree to settle or not take it any further forward, depending on how much money is at stake. What you have to realise is that banks do not wish to go to court and have their guarantees scrutinised where there is a grey area or something that hasn't been litigated on before. The reason for this is that should their guarantee be struck down by the court this will obviously set a precedent and affect thousands of other guarantees in which may be held.

My head is rattling with other things that you could say or argue but it probably requires some thought but these are just a few things i've picked up on.

Do you have an actual signed copy of the guarantee as that would be the first thing I'd be asking for.

As anything with law, you will always have conflicting discussions so I'm so there'll be others out there who agree/disagree with me :heh:


Thank you.

Defences?

The information you have provided has taken a while to digest and I am still trying to see if I can defend this as the bank are after everything.The deed was for 40k now they are going for 80k including costs, interest etc.

Firstly we can agree this is a deed which has 12 years limitation as it has been signed and delivered as one albeit witnessed by the bank manager - ( is this grounds for defence ) ?

Secondly

You do question if the bank have proceeded correctly against the guarantor ( they sent a formal demand to me back in 2008 then didn't hear from them until 2014 and they even sent a cheque for a couple of hundred pounds to compensate as they had a system error which caused the delay in contacting me for 6 years)

They used the right of set off which they claim re set the 6 year time bar as they have themselves thought and proceeded to act as it was 6 years.Then looked at the document and decided as it was a deed 12 years.

So originally with their argument and action with the right of set off and claiming it is within the 6 year time limitation I have looked at applying for a summary discharge on the statute time barred, but they have thrown it back with the deed and 12 year.

So totally misled in all directions and need to get a plan together with some clarity about where I stand before the courts.

Thank you for your help

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Also the main argument as there were the business then my partner whom had the security then myself my liability was unsecured ( so nearly everyone from business debtline to citizens advice have said as I had no security it should come under the 6 year rule , even the bank did what they did thinking the time was running out) so as you can imagine I don't know what to do what defences I can rely on as concrete.Thinking laterally it is a deed and 12 years would the judge keep it simple and say the same????

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Defences?

The information you have provided has taken a while to digest and I am still trying to see if I can defend this as the bank are after everything.The deed was for 40k now they are going for 80k including costs, interest etc.

Firstly we can agree this is a deed which has 12 years limitation as it has been signed and delivered as one albeit witnessed by the bank manager - ( is this grounds for defence ) ?

Secondly

You do question if the bank have proceeded correctly against the guarantor ( they sent a formal demand to me back in 2008 then didn't hear from them until 2014 and they even sent a cheque for a couple of hundred pounds to compensate as they had a system error which caused the delay in contacting me for 6 years)

They used the right of set off which they claim re set the 6 year time bar as they have themselves thought and proceeded to act as it was 6 years.Then looked at the document and decided as it was a deed 12 years.

So originally with their argument and action with the right of set off and claiming it is within the 6 year time limitation I have looked at applying for a summary discharge on the statute time barred, but they have thrown it back with the deed and 12 year.

So totally misled in all directions and need to get a plan together with some clarity about where I stand before the courts.

The things I've highlighted are of interest, on the face of things, not sure they can rely on a set-off of compensation as reinstating the time barred claim - potentially this could be statute barred, regardless of what the bank says an error on the system I don't think warrants good enough defence to bring a claim out of time.

i'll post up later tonight in more detail

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Jarvis, might I ask if you are aware of when your business defaulted on the payments? or when the bank gave a demand for the loan before they called it in from you? was this earlier than the date they sent you a formal demand?

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Jarvis, might I ask if you are aware of when your business defaulted on the payments? or when the bank gave a demand for the loan before they called it in from you? was this earlier than the date they sent you a formal demand?

Thank you for your help,

Last business payment Dec 2007

June 2008 formal demand notice regarding the business defaulting

Guarantee call up notice Aug 2008

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Thank you for your help,

Last business payment Dec 2007

June 2008 formal demand notice regarding the business defaulting

Guarantee call up notice Aug 2008

Thank you for your help and support 😊
If there is a 6 year limitation then I can defend this but the crux of the matter which I need a yes or no on even as a unsecured liability on a deed is it 6 or 12 and on what basis can I defend this to the court ?

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Jarvis, I am not able to provide all the answers for you and I don’t think anyone here can, we can only provide guidance and is up to you to decide your next moves. The question of whether this is a deed or a simple contract and whether the limitation period of 6 or 12 years apply will depend on the arguments put forward and how strong they are.

Apologies for the longwinded post, but I’ve provided some possible defences below based on my own research and knowledge and if anyone can add to it great – read at your own peril

1.Deed is not validly executed
Common law suggests that a party to the deed cannot attest as a witness. However, there is nothing preventing someone who is an employee or a friend or family to sign as a witness. Now there is no legal requirement that a person must put their address and occupation although in practice this usually happens as to trace the person should a dispute arise.

Your first and foremost argument is that the deed is not valid as the employee of the bank was a witness whom signed the deed referring his address as the banks. You could quite rightly argue that as the employee signed as a witness and address as the bank, he was not in fact signing as the capacity of an individual but as the bank (who is party to the deed) and as such the deed is therefore not valid.

This is probably a moot point as there is no case law on employees signing as a witness but not those who insert their address as their employers. Therefore it would be for a judge to interpret whichever way he sees fit. The second point on this argument is that the purpose of requiring a witness’s signature is to provide unbiased evidence to confirm what was signed by whom. As the employee of the bank had acted as a witness, it cannot be said for certainty that he would not be unbiased. Finally, if this person is no longer with the bank, could his whereabouts be traced?

If it is found that the deed is not valid, the limitation period would fall from 12 years to 6 and thus be statute barred as the demand notice from the bank was in 2008 (arguably could be 2007) and therefore have failed to bring a claim within the allotted time. Furthermore, if the deed is invalid = no consideration = unenforceable contract.

2.The deed is not a deed on ‘the face of it’
One of the requirements for a deed to be valid is it must be clear on its face that it is a deed. Words such as “signed, executed and delivered as a deed …” would usually indicate this as well as the title of the document starting with “deed of …” or “This deed is made on …” Although the execution clause states signed as a deed the face of the document is quite clearly titled as “a limited guarantee by individual …” This could be a weak point as the execution clause (signature) says signed as a deed but arguably on the face of it, it appears to be a limited guarantee. The fact that the bank originally acknowledged that it was a guarantee and not a deed which was statute barred (if you have evidence in writing?) and then changed their minds to state that it was in fact a deed backs up this theory that it is not clear on the face of the document that it was a deed.

3.Misrepresentation
A guarantee may be set aside if it was procured by misrepresentation or undue influence by the lender or borrower. A bank is put on inquiry where the relationship between the debtor and guarantor is non-commercial. So as to avoid a potential undue influence of misrepresentation, the lender should:

a) Insist that a the guarantor attend a private meeting with th lender and explain the full extent of their liabilities and urged to take legal advice; or

b) For the lenders protection, advise the guarantor will be required to take legal advice and provide confirmation that the advice is given.

c) The bank should not proceed further until it has received the appropriate confirmation from the solicitor.

The above is partly taken form the House of Lords in Royal Bank of Scotland v Etridge 2002 (known as the Etridge principles) provided guidance as to what banks and solicitors should do in regards to a deed. It’s too long to insert so have attached as a document for your reading.

Did the bank follow these guidelines? If not there may be good cause for the court to set aside the deed. Similarly, you mentioned previously that you asked about legal advice and the bank manager had said that you did not need to seek any advice? There is another argument which could be grounds for misrepresentation if you were advised not to seek legal advice.
Undue influence may also apply where you have referred to the bank manager saying that you might have an interest in the property, if he pressured you into signing a guarantee?

4.Unfair contract terms
The Unfair Terms in Consumer Contract Regulations 1999 provides that terms may be unfair where a consumer entered into an agreement. A consumer is defined as a person who is acting for purposes which are outside his trade, business or profession. As the deed is on the standard terms of the bank and that they are in a much stronger bargaining position, there is cause to argue that certain terms of the deed are unfair.

For example, the variation clause which enables the bank to change the term of the agreement to its own advantage without the consent of the guarantor could be deemed as unfair as it is forcing the guarantor to accept the increased liability thus causing a significant imbalance of the parties. Similarly, you could also make an argument for the fact that they have restricted your ability to take legal action against the debtor before they have recovered any sums, the indemnity clause and possible other clauses.

As a note: the right to set-off does not restart the limitation period however if you bank with this particular bank and have funds in there, then they may have a right to take those monies to offset the balance – therefore suggest you move your funds out of there asap. As I previously stated if you acknowledge your liability that you owe them money then that could restart the clock which is certainly something you do not wish to do.
This information is guidance only, and looking at some of your posts it appears to be slightly confusing, in the sense that you said that you received legal advice but were then told that you didn’t need it. Did the bank send your solicitor any information or did the solicitor sign that slip at the end of the deed confirming you received advice? Also that there appear to be two deeds that you’ve signed in the space of 3 weeks, so why was there a need for 2 deeds? Did one vary the other terms or did this create something else? You also refer to your business partner, I’m wondering if you were part of this transaction for business purposes in which case UTCCR 1999 does not apply – so many questions, not enough information!

Guarantees and deeds are complex stuff and as always would advise you to get some advice on this as it’s not just a straightforward contract. These are potential arguments which could form your defence however an expert is more likely to supply better advice than we can. Best to shop around and maybe get a few free opinions on this.

You best bet is to gather all documents that the bank may have against you in order to consider your position. You’ve shown us the blank copy of the deed but would be interesting to see if the bank has a signed and executed copy of this given that it was some time ago.

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Jarvis, I am not able to provide all the answers for you and I don’t think anyone here can, we can only provide guidance and is up to you to decide your next moves. The question of whether this is a deed or a simple contract and whether the limitation period of 6 or 12 years apply will depend on the arguments put forward and how strong they are.

Apologies for the longwinded post, but I’ve provided some possible defences below based on my own research and knowledge and if anyone can add to it great – read at your own peril

1.Deed is not validly executed
Common law suggests that a party to the deed cannot attest as a witness. However, there is nothing preventing someone who is an employee or a friend or family to sign as a witness. Now there is no legal requirement that a person must put their address and occupation although in practice this usually happens as to trace the person should a dispute arise.

Your first and foremost argument is that the deed is not valid as the employee of the bank was a witness whom signed the deed referring his address as the banks. You could quite rightly argue that as the employee signed as a witness and address as the bank, he was not in fact signing as the capacity of an individual but as the bank (who is party to the deed) and as such the deed is therefore not valid.

This is probably a moot point as there is no case law on employees signing as a witness but not those who insert their address as their employers. Therefore it would be for a judge to interpret whichever way he sees fit. The second point on this argument is that the purpose of requiring a witness’s signature is to provide unbiased evidence to confirm what was signed by whom. As the employee of the bank had acted as a witness, it cannot be said for certainty that he would not be unbiased. Finally, if this person is no longer with the bank, could his whereabouts be traced?

If it is found that the deed is not valid, the limitation period would fall from 12 years to 6 and thus be statute barred as the demand notice from the bank was in 2008 (arguably could be 2007) and therefore have failed to bring a claim within the allotted time. Furthermore, if the deed is invalid = no consideration = unenforceable contract.

2.The deed is not a deed on ‘the face of it’
One of the requirements for a deed to be valid is it must be clear on its face that it is a deed. Words such as “signed, executed and delivered as a deed …” would usually indicate this as well as the title of the document starting with “deed of …” or “This deed is made on …” Although the execution clause states signed as a deed the face of the document is quite clearly titled as “a limited guarantee by individual …” This could be a weak point as the execution clause (signature) says signed as a deed but arguably on the face of it, it appears to be a limited guarantee. The fact that the bank originally acknowledged that it was a guarantee and not a deed which was statute barred (if you have evidence in writing?) and then changed their minds to state that it was in fact a deed backs up this theory that it is not clear on the face of the document that it was a deed.

3.Misrepresentation
A guarantee may be set aside if it was procured by misrepresentation or undue influence by the lender or borrower. A bank is put on inquiry where the relationship between the debtor and guarantor is non-commercial. So as to avoid a potential undue influence of misrepresentation, the lender should:

a) Insist that a the guarantor attend a private meeting with th lender and explain the full extent of their liabilities and urged to take legal advice; or

b) For the lenders protection, advise the guarantor will be required to take legal advice and provide confirmation that the advice is given.

c) The bank should not proceed further until it has received the appropriate confirmation from the solicitor.

The above is partly taken form the House of Lords in Royal Bank of Scotland v Etridge 2002 (known as the Etridge principles) provided guidance as to what banks and solicitors should do in regards to a deed. It’s too long to insert so have attached as a document for your reading.

Did the bank follow these guidelines? If not there may be good cause for the court to set aside the deed. Similarly, you mentioned previously that you asked about legal advice and the bank manager had said that you did not need to seek any advice? There is another argument which could be grounds for misrepresentation if you were advised not to seek legal advice.
Undue influence may also apply where you have referred to the bank manager saying that you might have an interest in the property, if he pressured you into signing a guarantee?

4.Unfair contract terms
The Unfair Terms in Consumer Contract Regulations 1999 provides that terms may be unfair where a consumer entered into an agreement. A consumer is defined as a person who is acting for purposes which are outside his trade, business or profession. As the deed is on the standard terms of the bank and that they are in a much stronger bargaining position, there is cause to argue that certain terms of the deed are unfair.

For example, the variation clause which enables the bank to change the term of the agreement to its own advantage without the consent of the guarantor could be deemed as unfair as it is forcing the guarantor to accept the increased liability thus causing a significant imbalance of the parties. Similarly, you could also make an argument for the fact that they have restricted your ability to take legal action against the debtor before they have recovered any sums, the indemnity clause and possible other clauses.

As a note: the right to set-off does not restart the limitation period however if you bank with this particular bank and have funds in there, then they may have a right to take those monies to offset the balance – therefore suggest you move your funds out of there asap. As I previously stated if you acknowledge your liability that you owe them money then that could restart the clock which is certainly something you do not wish to do.
This information is guidance only, and looking at some of your posts it appears to be slightly confusing, in the sense that you said that you received legal advice but were then told that you didn’t need it. Did the bank send your solicitor any information or did the solicitor sign that slip at the end of the deed confirming you received advice? Also that there appear to be two deeds that you’ve signed in the space of 3 weeks, so why was there a need for 2 deeds? Did one vary the other terms or did this create something else? You also refer to your business partner, I’m wondering if you were part of this transaction for business purposes in which case UTCCR 1999 does not apply – so many questions, not enough information!

Guarantees and deeds are complex stuff and as always would advise you to get some advice on this as it’s not just a straightforward contract. These are potential arguments which could form your defence however an expert is more likely to supply better advice than we can. Best to shop around and maybe get a few free opinions on this.

You best bet is to gather all documents that the bank may have against you in order to consider your position. You’ve shown us the blank copy of the deed but would be interesting to see if the bank has a signed and executed copy of this given that it was some time ago.

Thank you very much for your help.

The exactly the same deed was executed 3 weeks before hand for a figure of 20,000 it was just the amount that was different and we got legal advice then which the solicitor just run through the charge , searches etc and never discussed my liability I was told I had to sign as I lived at the property and had an interest ( I have letter and invoice of summary of advice ) this deed was signed and witnessed by a independent person and 3 weeks later we wanted to employ additional staff we approached the bank and they got us to sign another exactly the same deed with the amount for 35,000 of which we were told to waiver the legal advice as we had it 3 weeks ago and the bank manager witnessed it.

The borrower was my company, the third party security provider was my business partner whom they took a charge on the property and I was co guarantor for 35,000 for the obligation of the company as highlighted in the waiver of legal advice so I maybe part of the transaction for business purpose but again I have had no advice on this I have just been advised that as my liability is unsecured it would come under the 6 year rule.

[MissFM]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Just want to reiterate what has been said above - that in this particularly tricky area a clever specialist lawyer can make the difference between winning by a whisker and losing by the same.

Even if you only use a qualified professional to assess your situation, identify any argument with a real prospect of success, close any loopholes and advise on how to present your case it would seem well worth seeking such advice given the sum of money at stake. I think that's the only way you can get a definitive answer to your question, one that is more likely than not to hold water in a court of law (or to startle the horses sufficiently for the bank to back off).

It's also worth looking at the advice lawyers give to the other side on how to enforce and obstacles to enforcement of a directors's PG. For example:

http://www.fieldfisher.com/media/178...a-Personal.pdf

[ohitsonlyme]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Very interesting thread and very similar to my situation can we have an update? [MENTION=71533]Jarvis31[/MENTION]
Onlyme

[LUCKYMAN]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????


Hi, I have a similar situation where the PG signed asa deed is witnessed by a bank manager. Does anyone know the outcome of JARVIS31's feed? Was the deed valid having been signed by the party to the deed?