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Max Lowry
Max Lowry, Advocate
Category: Law
Satisfied Customers: 1457
Experience:  LLB, 10 years post qualification experience
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I was a director of a ltd company and opened and account with

Customer Question

I was a director of a ltd company and opened and account with a hire company.

In april 2010 I ceased being a director and left the company completely and had no association to it whatsoever.

In April 2012 the hire company obtained a CCJ against the company for £10k however the director who was running the company after I left put it into liquidation in May 2012.

The items on the CCJ would have been for hired items after I left.

I recently received a letter from the hire companies legal department asking me to pay the money. I queried this with them and they past it to their solictors to have a look at. Today I received a letter stating that they still expect me to pay the full amount because I put a personal gaurantee on the account (I don't remember this). They have stated that they hold me liable because I did not tell them that I had resigned from the company.

I find it extremely unacceptable that I should be held liable for something that I was not part of.

Therefore I would like to know what my options are?? Can they really do this, can I get redress from the other director for fraudulently using an account I was personally liable for if the company didn't pay?

Many thanks.
Submitted: 4 years ago.
Category: Law
Expert:  Max Lowry replied 4 years ago.

Max Lowry :

Hi, welcome to Just Answer. I will help you with your question.

Max Lowry :

If they have a personal guarantee from you, then they might be able to come after you personally for the amount guaranteed.

Max Lowry :

However, that's the only basis on which they're likely to be able to do this. Leaving a company and not telling them is no reason to come after you for the company's debts.

Customer:

I would find it a bit odd if I had to pay it on the basis of leaving a company. Surely it would be unreasonable for them to expect me to think of the possibility that I may have a personal guarantee with them.

Max Lowry :

Yes, leaving is no reason to try and make you liable!

Customer:

I would understand if it was for items whilst I was a director but it isn't.

Max Lowry :

Ask them to produce the personal guarantee - they see whether you recall signing it?

Max Lowry :

Even if items whilst you were a director, you're not liable still. Thats the point of having a company.

Customer:

I will definately ask them to produce it. I remember signing the account application form and thats it. In fact they have an account form to download on their website I will take a quick look at it and see what it says.

Max Lowry :

Always worth doing - but what you signed is key!

Max Lowry :

Does this answer your question?

Customer:

this is what it says on their form


. I hereby, personally guarantee payment in respect
of all sums due from my company (“The Customer”) to Brandon Hire, together with all ancillary costs incurred. I have
retained a copy of this form for my records.”

Customer:

Being it wasnt my company at the time then surely it will not apply?

Max Lowry :

Well, it would likely still apply, it's often the case that owners don't give guarantees, other third parties do, even if they're not a director. So the wording "my company" isn't likely to be crucially detrimental to the company relying on the guarantee.

Customer:

Ok so supposing I signed this which it very much looks like I would have then what are my very best options of not having to pay and could I chase the other director etc for using an account that he failed to pay bills for something I personally guaranteed. Surely there must be something as if not it would make the law a little stupid in this instance for something quite clearly not my fault?

Max Lowry :

Has there been an agreement between the companies since you signed the guarantee for anything?

Max Lowry :

Like changing repayment dates of the monies due, or anything like that?

Customer:

I couldnt say for sure but certainly an address change, probably if I signed it then I would have been the main contact for account issues which I am sure they would have said I was no longer a part of the company. In terms of payment dates and amounts then it would have been for tool hire for different amounts each times depending on what was hired and then payment 30days from invoice.

Max Lowry :

Okay, I'm afraid I have to say that I think it's very likely that the guarantee will be valid from what you'e said.

Customer:

And I suppose I couldnt chase the director that would have been left to run the account and entire business?

Max Lowry :

You may have a cause of action against him, if you're a creditor of the company, which you would be. You might say he was guilty of misfeasance, and ran up debts willy nilly knowing you'd be liable for them. So, this kind of claim is possible.

Customer:

Ok well that sounds like a small but of hope. Would this claim be made against him personally because I know there wont be money from the liquidators because he ran it into the ground?

Customer:

?

Max Lowry :

Hello?

Customer:

I asked something else and didnt get a reply

Max Lowry :

Did you - sorry I had a disconnected internet, would you post your question again please?

Customer:

oh ok. yes the question was

Customer:

Ok well that sounds like a small but of hope. Would this claim be made against him personally because I know there wont be money from the liquidators because he ran it into the ground?

Max Lowry :

Yes, it would be, as it was him that was the one ignoring his duties to the company/creditors.

Max Lowry :

I'm just looking for something .. .

Max Lowry :

Sorry - another internet drop!

Customer:

ok

Max Lowry :

Okay - the section is 212 Insolvency Act 1986. This is the authority for the type of claim you're talking about. Have a look at this: http://www.purnells.co.uk/limited-company/dont-do-this/misfeasence.html

Max Lowry :

It gives you some idea of what the type of claim would be and what's needed to make it stick.

Customer:

ok thats excellent thanks ill take a read. almost there now but just a couple of things. On their letter it says Brandon Hire Limited -v- Mr Steven xxxxxx (personal guarentee) Claim No. xxxxxxx I guess they only have the CCJ against the company as I have heard nothing from a court. If so and they decide to chase me then do they have to start proceedings against me personally again?

Max Lowry :

Isn't Mr Stephen xxxx you? In which case, if the claim has been issued and judgment given in that case, then they would appear to have a judgment against you, no?

Customer:

No, I have nothing never had anything from the court stating that they are taking me to court. All I have had is the letters from the hire company. I know they have a CCJ against the company as I did a credit check on them. I checked my credit report last week when I got the letter because I thought the same but no CCJ shows up on me personally?

Customer:

I did think the same as you though because of how it is worded.

Max Lowry :

Check with the Court, they're not the best sometimes at sending things out - just make sure there is no claim against you.

Max Lowry :

Always worth a phone call!

Max Lowry :

Might save a lot of worry!

Max Lowry :

But yes, if judgment doesn't exist, they'd have to start again with you.

Customer:

Ok will do but if it does show that they havent got a CCJ against me then am I right in thinking that they would need to if they wanted to chase me. Also if I was personal guarantee then surely I should have been notified anyway (although I have moved address). Do I have a right to full disclosure for the case against the company from the court if I am personal guarantee and also can I ask for full account disclosure from the hire company invoices, dates, etc, etc if they expect me to pay?

Max Lowry :

Yes, you would have been notified if this was a PG as a demand needs to be made to rely on it - so a letter demanding payment.

Max Lowry :

You have a right to disclosure of information at this stage, yes. So you can ask for the background info that makes up the figures that they're seeking to rely on by the guarantee.

Customer:

Ok good. I am thinking that if I ask for account disclosure that it may show up that they have been told I left the company as well which might make a difference. Ok that just leaves the question of if they havent got a CCJ against me personally, then do they need to take me to court personally to chase the debt if the company has paid their CCJ?

Max Lowry :

Yes, they'd need to start again and get a CCJ against you personally before they could enforce against you.

Customer:

Ok brilliant, many thanks. I will do some digging and see what comes up. If I need help with this again can I easily come back to you and would you remember or have a record of this yourself?

Max Lowry :

Yes, just come back to this page, take a note of the website address from your browser - the chat never closes. I hope this answers your question. Please do remember to rate my answer as highly as you can.

Customer:

Ok many thanks for your help!!

Max Lowry and other Law Specialists are ready to help you
Customer: replied 4 years ago.

Hi, Sorry I have just thought of something else which may help with the misfeasance claim. Basically, the director remaining when I resigned started another company limited company with someones. I know for a fact that the original company was providing equipment etc to the newly started company and then simply invoicing between companies. I am pretty sure that stuff was hired through the my old company to the new one. They have since parted company and I believe that the newly started company paid back money for things to the original company. Sorry if that sounds confusing. I am 99% sure that, that is correct but how could I gather the evidence required. Would I need to goto court and ask the judge for disclosure of what the companies were invoices each other for or can I ask the liquidators?

Expert:  Max Lowry replied 4 years ago.
Always start by asking the liquidators for information.

If you don't get anywhere then you can make an application to the court for pre-action disclosure which is done on form n244 and is made under part 31.16 of the civil procedure rules which you can see on the Ministry of Justice website.

Max