Josife v Summertrot Holdings Ltd
2014
CHANCERY DIVISION
United Kingdom
CORAM
- MR JUSTICE NORRIS
Areas of Law
- Contract Law
- Civil Procedure
2014
CHANCERY DIVISION
United Kingdom
CORAM
AI Generated Summary
Christopher Josife suffered a stroke in 2003, impairing his cognitive faculties. Despite this, he granted power of attorney to his wife, Maria, who later defaulted on debts to Summertrot. In 2006, Christopher signed a guarantee, which was later contested on grounds of his incapacity. The court upheld the statutory demand from Summertrot, finding no substantial evidence that Summertrot knew or should have known about Christopher's incapacity and deemed the guarantee valid.
Judgment
Mr Justice Norris :
On 3 February 2003 Christopher Josife suffered an acute stroke. It impaired in his ability to comprehend verbal and written communication and his decision-making and general competence in everyday ordinary tasks involving communication. But those around him (including in particular his wife Maria and his solicitors Clifford Harris & Co) considered that he had sufficient capacity to grant an Enduring Power of Attorney on 5 July 2004. In that power of attorney he declared:-
“I intend that this power shall continue even if I become mentally incapable. I have read or have had read to me the notes in Part A which are part of, and explain, this form.”
On 4 August 2004 his son Andrew and his wife Maria entered into a Share Option Agreement with a Cypriot company (“Summertrot”) under which Andrew became the principal debtor in the sum of £1.3 million and Maria Josife became guarantor of that debt.
In due course both Andrew and Maria Josife defaulted on their obligations and Summertrot presented bankruptcy petitions against them. Their position was that all the assets of the family (consisting principally of shares in the family group of companies holding properties and hotels in England and Cyprus, as well as the matrimonial home) were in the name of Christopher Josife.
On 27 February 2006 in return for Summertrot (a) withdrawing the bankruptcy petitions (b) granting Andrew an extension of time for the payment of his debt until 31 December 2006 and (c) agreeing not to enforce the guarantee given by Maria Josife until 31 March 2007 Christopher Josife entered into a written Guarantee (under which he assumed the obligations of a primary obligor and not merely those of the surety). The sum due under the Guarantee was due three months after the date of demand. In the Guarantee Christopher Josife promised
“Sums payable under this guarantee shall continue to be enforceable and payable by the Guarantor notwithstanding any intermediate payment to Summertrot or waiver granted to [Andrew] or [Maria Josife] or my death or mental incapacity or any other matter whatsoever”
At the foot of the Guarantee and immediately above Christopher Josife’s signature in heavy black capital type was the endorsement:-
“BY EXECUTING THIS DEED THE GUARANTOR CONFIRMS THAT HE HAS READ AND CONSIDERED CAREFULLY THE TERMS OF THIS GUARANTEE AND FULLY UNDERSTANDS ITS LEGAL TERMS. HE FURTHER CONFIRMS THAT HE HAS RECEIVED INDEPENDENT LEGAL ADVICE ON THE PROVISION