Greene King Plc v Stanley & Ors [2001] EWCA Civ 1966 (30 November 2001)

Greene King Plc v Stanley & Ors [2001] EWCA Civ 1966 (30 November 2001)

The Court of Appeal held that a creditor may reserve its rights against a surety upon the release of the principal debtor, and such reservation need not be in the surety contract itself but may be established by the circumstances and communications leading to the arrangement. In this case, Greene King effectively reserved its rights against Mr and Mrs Stanley through correspondence and the IVA proposal. On the undue influence issue, the Court found that the Stanleys were subject to presumed undue influence by their son, the transaction was manifestly disadvantageous, and the independent legal advice was inadequate; thus, the charge was unenforceable against them.

Citation
[2001] EWCA Civ 1966
Parties
Claimant/appellant: Greene King Plc; First Defendant: David John Stanley; Second Defendant/respondent: Alan Edward Stanley; Third Defendant/respondent: Doris Rosabel Stanley
Jurisdiction
England and Wales
Judgment Date
30 November 2001
Procedural Posture
Civil Appeal / Appeal From County Court Judgment
Outcome
Appeal dismissed
Legal Topics
Guarantee and Suretyship, Individual Voluntary Arrangements (iva), Undue Influence, Misrepresentation, Enforcement of Security, Constructive Knowledge
Contract Law Insolvency Law Equity Guarantee and Suretyship Individual Voluntary Arrangements (iva) Undue Influence Misrepresentation Enforcement of Security +1 more

Case Brief

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Parties

Greene King Plc

Claimant/appellant

David John Stanley

First Defendant

Alan Edward Stanley

Second Defendant/respondent

Doris Rosabel Stanley

Third Defendant/respondent

Procedural Posture

Civil Appeal / Appeal From County Court Judgment

Legal Issues

  1. 1 Whether the completion of an IVA by the principal debtor releases the surety absent an express reservation of rights by the creditor
  2. 2 Whether the legal charge over the sureties' property is unenforceable due to undue influence and/or misrepresentation

Ratio Decidendi

The Court of Appeal held that a creditor may reserve its rights against a surety upon the release of the principal debtor, and such reservation need not be in the surety contract itself but may be established by the circumstances and communications leading to the arrangement. In this case, Greene King effectively reserved its rights against Mr and Mrs Stanley through correspondence and the IVA proposal. On the undue influence issue, the Court found that the Stanleys were subject to presumed undue influence by their son, the transaction was manifestly disadvantageous, and the independent legal advice was inadequate; thus, the charge was unenforceable against them.

Court Disposition

Appeal dismissed

Orders

  • Claims against Mr and Mrs Stanley dismissed
  • Declaration that the legal charge over 22 Normandy Lane, East Preston, West Sussex is set aside as against Mr and Mrs Stanley