Mishcon wins appeal to secure guaranteed fees payment

Mishcon: Guarantee signed on second day of trial

Mishcon de Reya has won an appeal over a judge’s refusal to grant the London law firm summary judgment on more than £150,000 of fees payable under a guarantee.

Mr Justice Johnson ruled that His Honour Judge Monty QC had been wrong to refuse summary judgment on the ground that Mishcon had not adduced in evidence the executed counterpart of the guarantee.

The firm acted for the defendants in a claim for libel and harassment that involved the internal politics of Kazakhstan. The claimant was awarded damages of £80,000 in 2017.

The defendants were introduced to Mishcon by Arcanum Global Inc, which Johnson J said was described as “a global intelligence firm” and said to be a subsidiary of RJI (Middle East) Ltd.

Johnson J recorded that, as the trial approached, Mishcon became concerned about payment of its fees and so RJI offered to underwrite £800,000 of them. Mishcon provided a deed it called a standard form guarantee to be executed both by RJI and the firm.

The guarantee was reduced to £550,000 after RJI paid over £250,000, and signed on the second day of trial.

The key clauses were:

  • “8.7 This Agreement may be executed and delivered in any number of counterparts, each of which is an original and which together have the same effect as if each Party had signed the same document.
  • “8.8 Each Party shall (at its own expense) promptly execute and deliver all such documents, and take all such actions, or procure the execution and delivery of all documents and taking of all such actions as are required to give full effect to this Agreement.”

Five months after Mr Justice Warby’s ruling, RJI paid Mishcon £382,000 but has not paid any more, despite an invoice for another £478,000, with an email the same day suggesting that a further $89,000 (£72,000) was owed to Mishcon’s New York office.

Last November, HHJ Monty QC refused the firm’s summary judgment application on the basis that Mishcon had not provided the executed counterpart of the guarantee executed.

He ruled: “Clauses 8.7 and 8.8 indicate that enforceability is contingent upon mutual execution and delivery. Without that evidence, the application… for summary judgment fails.”

Mishcon appealed, although it accepted another of the judge’s decisions that, at best, the claim could only succeed to the extent of about a third of the amount claimed.

Johnson J said: “The language of clause 8.8 required each party to execute the guarantee. It did not state that the guarantee shall only come into effect once it has been executed by both parties. Nothing in the language of clause 8.8 suggests that this is its intended effect.

“The natural language of the clause therefore strongly suggests that it does not amount to a condition.”

He continued that the guarantee made “business and commercial sense” without interpreting the clauses as imposing a condition of execution.

He accepted Mishcon’s argument that clause 8.7 had the effect that each counterpart was to be treated as an original, “to avoid any potential argument arising out of the fact that the parties did not sign the same document”.

It followed that RJI’s unpleaded defence that the guarantee was unenforceable had no real prospect of success. “There is no other compelling reason why the case should be disposed of at trial. I therefore allow the appeal and grant summary judgment.”

He ordered RJI to pay Mishcon £168,279.

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