Mullen v White [2017] EWHC 2796 (Ch) (13 November 2017)

Mullen v White [2017] EWHC 2796 (Ch) (13 November 2017)

The court held that the original £200,000 loan from Mr Mullen senior to the company was governed by the written agreement and guaranteed by Nicholas Mullen and Christopher White, but further advances were not guaranteed due to lack of documentation. Upon Nicholas Mullen proving the will as executor, the guarantee debt was deemed paid, extinguishing the estate's claim against the guarantors but entitling Nicholas Mullen to contribution from Mr White. Timothy Mullen was entitled to judgment for the unpaid legacy with interest. Accounting between shareholders was to be conducted per the equalisation provision, with specific adjustments as determined in the judgment.

Citation
[2017] EWHC 2796 (Ch)
Parties
Claimant/defendant/part 20 Claimant: Nicholas John Mullen; Defendant/part 20 Defendant: Christopher David Gordon White; Claimant: Simon Eadie; Claimant: Timothy Andrew Mullen
Jurisdiction
England and Wales
Judgment Date
13 November 2017
Procedural Posture
Chancery Multi Party Action (consolidated Claims) / Post Trial Judgment
Outcome
Judgment for Timothy Mullen for the legacy and interest; directions for accounting between Nicholas Mullen and Christopher White; contribution rights established; further hearing for costs and consequential matters.
Legal Topics
Guarantees, Contribution Between Co Guarantors, Executor's Release of Debt, Shareholder Loans, Accounting Between Shareholders, Legacy Payment, Interest on Legacies
Equity Company Law Trusts and Estates Guarantees Contribution Between Co Guarantors Executor's Release of Debt Shareholder Loans Accounting Between Shareholders +2 more

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Parties

Nicholas John Mullen

Claimant/defendant/part 20 Claimant

Christopher David Gordon White

Defendant/part 20 Defendant

Simon Eadie

Claimant

Timothy Andrew Mullen

Claimant

Procedural Posture

Chancery Multi Party Action (consolidated Claims) / Post Trial Judgment

Legal Issues

  1. 1 Terms and enforceability of loans and guarantees by company directors and family members
  2. 2 Effect of executor also being a guarantor on enforceability of debt
  3. 3 Entitlement to contribution between co-guarantors

Ratio Decidendi

The court held that the original £200,000 loan from Mr Mullen senior to the company was governed by the written agreement and guaranteed by Nicholas Mullen and Christopher White, but further advances were not guaranteed due to lack of documentation. Upon Nicholas Mullen proving the will as executor, the guarantee debt was deemed paid, extinguishing the estate's claim against the guarantors but entitling Nicholas Mullen to contribution from Mr White. Timothy Mullen was entitled to judgment for the unpaid legacy with interest. Accounting between shareholders was to be conducted per the equalisation provision, with specific adjustments as determined in the judgment.

Court Disposition

Judgment for Timothy Mullen for the legacy and interest; directions for accounting between Nicholas Mullen and Christopher White; contribution rights established; further hearing for costs and consequential matters.

Orders

  • Timothy Mullen to have judgment against Nicholas Mullen for the unpaid legacy (£100,000) with interest at 1.5% per annum compound from 15 July 2013.
  • Nicholas Mullen entitled to claim contribution from Christopher White for half the guarantee liability discharged.