Neutral Citation Number: [2011] EWHC 1352 (TCC)
Case No: HT-10-212
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 26/05/2011

Before:

MR JUSTICE EDWARDS-STUART
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Between:

	CROWN ALUMINIUM LIMITED 	Claimant	
	- and -		
	(1)	NORTHERN & WESTERN INSURANCE COMPANY LIMITED
(2) CAMBRIDGE RISK ADVISORS LIMITED	Defendants	

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James Howells (instructed by Wright Hassall LLP) for the Claimants
Miss Laura John (instructed by Barlow Lyde & Gilbert LLP) for the Second Defendants 

Hearing dates: Monday 9th to Wednesday 11th May 2011 
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Judgment

Mr Justice Edwards-Stuart:
Introduction
1.	The Claimant, Crown Aluminium Limited (“Crown”), claims £187,268 under three trade credit supplier guarantees issued by the first defendant, Northern & Western Insurance Company Limited (“NWIC”).  Crown contends that the terms of the guarantees were varied by NWIC and that the calls under the guarantees complied with the terms of the guarantees as varied. Alternatively, if the guarantees were not varied and the calls were not compliant, it claims damages from the second defendant, Cambridge Risk Advisors Limited (“Camrisk”), for loss and damage resulting from negligent advice by Camrisk in relation to the form and content of the calls made by Crown under each of the guarantees. 
2.	Having indicated by a solicitor's letter dated 3 February 2010 that it was not prepared to meet the calls under the guarantees, NWIC subsequently failed to acknowledge service and serve a defence and was subsequently debarred from defending the claim following its failure to comply with an unless order dated 12 November 2010.  However, for reasons that will become clear later in this judgment Crown chose not to enter a judgment in default against NWIC but instead to continue the claim with a view to obtaining a judgment on the merits.
3.	So far as its claim against Camrisk is concerned, Crown contends that the form in which it made the calls under the guarantees was the subject of advice given to it by Camrisk which Crown followed. One of the grounds upon which NWIC declined liability under the guarantees was that the mode of delivery, form and content of the notices that constituted the calls under the guarantees did not comply with the terms of the guarantees. 
4.	Accordingly, the trial of the claim against NWIC has taken place in its absence. Crown's case, as pleaded and opened, was that the calls under the guarantees did not comply with the original terms of the guarantees so that, unless those terms were varied as it claimed, its claim against Crown would fail. Crown's case on the variation of the terms of the guarantees is based on the assertion that Camrisk acted as the agent of NWIC when instructing Crown as to the form and content of the notices required by the terms of the guarantees.  Alternatively, Crown asserts that when giving the advice in relation to the calls Camrisk owed Crown a duty of care. Crown contends that the advice was given in breach of that duty.
5.	Camrisk denies that it acted as the agent of NWIC in any relevant respect but it contends that the calls, as made, complied with the original terms of the guarantees. Accordingly, Camrisk submits that Crown has a good claim against NWIC so that Camrisk has no liability. But Camrisk also has a case on causation. It contends that from the time when NWIC failed to acknowledge service or put in a defence to the claim Crown could have entered judgment in default, which would have been enforceable in Nevis in the West Indies, where NWIC's registered office is situated, with the result that Crown could have made a full recovery from NWIC. To the extent that there might have been any shortfall in that recovery as a result of NWIC's inability or refusal to satisfy the judgment, that would not have been the result of any breach of duty by Camrisk.
The facts
6.	Crown supplies building products, particularly high-performance windows, doors and curtain walling.  One of its customers was Melayway Glass Assemblies ("MGA"), a subsidiary of the Metic Group, which was based in Dublin.
7.	As a matter of policy Crown obtains credit insurance against its trade debts wherever possible. Crown had supplied products to MGA over many years but in January 2008 MGA began placing orders with Crown of a much higher value. However, Crown's existing credit insurers were not willing to continue to insure MGA's debts and, by September 2008, their cover was finally withdrawn.  So Crown indicated to MGA that it was not prepared to continue making supplies to MGA on credit without the benefit of suitable insurance.
8.	Camrisk is a broker that specialised in the provision of various types of financial risk products, in particular credit and political risk insurance and financial bonds. In mid 2008 Camrisk was approached by the Metic Group which was then looking for trade credit supplier guarantees that would cover those supplying goods to its subsidiary, MGA. The introduction was made through Camrisk's associated company, Auckland Risk Advisers Ltd ("Auckland"), a company also based in Ireland. For the purposes of this judgment it is not necessary to distinguish between the roles of Auckland and Camrisk, apart from noting that it is Camrisk's case that at all material times it acted in its capacity as a consultant to Auckland, whose client was the Metic Group including, in particular, MGA.
9.	Camrisk became concerned at once to find a guarantor that would replace the insurers who had been previously providing Crown with cover against MGA’s debts.  Having identified a potentially suitable guarantor, Provident Capital Indemnity Ltd ("PCI"), Camrisk took a standard form of bond from those in its library and, on 6 August 2008, Mr Christopher Beattie, of Camrisk, sent to Mr Stuart Wood, of Metic, the proposed wording.  Camrisk thereafter negotiated amendments to the wording of the standard form that were acceptable to PCI, Crown and Metic/MGA. 
10.	As a result, in August and September 2008 two guarantees were issued by PCI to Crown covering MGA's debts to the value of approximately £169,000 and £225,000, respectively. However, Metic became concerned about PCI's suitability as a guarantor having heard various rumours in the market - whether they were true or not is irrelevant for the purposes of this judgment.  Accordingly, Metic decided to instruct Camrisk to find an alternative guarantor. 
11.	NWIC is an insurance company which, whilst registered in Nevis, was at all times effectively owned and controlled by a Mr and Mrs Harrison who are resident in Texas, from where they operated the business. The office in Nevis was described in evidence as being little more than a brass plate.  NWIC was an insurance company that was, so to speak, on Camrisk's books and with whom it had placed credit and surety risks since 2007. Camrisk therefore approached NWIC and offered it the Metic business.
12.	In September 2008 NWIC issued the first guarantee in favour of Crown in respect of credit provided to MGA, and thereafter a further 10 similar guarantees or bonds were issued by NWIC to Crown during the latter part of that year.  There was no default by MGA in paying the debts covered by the guarantees and the business ran fairly smoothly. There was only one problem and that was that it took up to two weeks to issue each guarantee.
13.	In late 2008 Metic asked Camrisk to explore the possibility of arranging a bill of exchange facility for the Metic Group. Through an agency called Whitmore Acceptances, managed by a Mr Robin Smith, a bank was found that was willing to provide such a facility but it was subject to NWIC's bankers providing a Stand By Letter of Credit ("SBLC"). In order to do this NWIC required Metic to pay a premium of £171,000, which Metic paid. This sum was apparently sent to the wrong bank account on 20 February 2009 and there was then an acrimonious dispute between NWIC and Camrisk as to the responsibility for the error.
14.	The advantage of the proposed new arrangement was that Metic would be able to discount the bill of exchange so that it could pay its suppliers straight away whilst obtaining credit for some 75 days. In addition, it would obviate the delays involved in setting up a separate bond/guarantee for each individual contract of sale with its suppliers.
15.	However, NWIC encountered difficulties in setting up the necessary account at Credit Suisse, which was the bank with whom arrangements were being made to issue the SBLC. In a letter dated 18 March 2009 NWIC expressed the hope that the SBLC would be issued on 23 March 2009. In fact, it was never issued.
16.	In the meantime, Crown had continued to supply goods to MGA but had been doing so without any guarantees in place because it had been assumed that the new arrangements would be in place in early 2009. As Mr Barnard, of Crown, put it when giving evidence, during February 2009 Crown was becoming increasingly "jumpy" about the lack of the required credit insurance.
17.	The first bill of exchange that was to be issued by the bank was designated CA1. This covered a number of invoices issued by Crown between 8 January and 4 February 2009 to the extent of £96,266.72. The bill provided for payment by MGA of this sum to Crown on 16 April 2009, whereas the invoices provided for payment within 30 days.
18.	In response to increasing pressure from Crown and Metic during February 2009 Camrisk decided to revert to the former system and arranged for the issue of a fresh guarantee by NWIC to cover the debts that were the subject of CA1. Camrisk also arranged at the same time for four similar guarantees to be issued by NWIC in respect of other clients. These guarantees were signed by NWIC on 26 February 2009 and the guarantee in favour of Crown was then sent to Metic and Crown for counter signature. It was in much the same terms as the previous guarantees, except for the fact that the guarantee was expressed to be "in respect of all sums due at 16 April 2009 as defined within Bill of Exchange CA1” from MGA.
19.	The relevant parts of the guarantees issued on 26 February 2009 (“the first guarantee”) are in the following terms:

“We Northern & Western Insurance Company of [address] and office for service in the United Kingdom at [Camrisk's address], (hereinafter known as Guarantor), an international insurance company . . . declare that in consideration of the advancement of credit referred to in the agreement forming part of and attached to this Guarantee and in consideration of the payment by the Trade Debtor (as hereinafter defined) of the guarantee fee, we hereby guarantee unconditionally and irrevocably to [Crown] and all associated and/or subsidiary companies, (hereinafter known as the Trade Creditor), in respect of all sums due at 16 April 2009 as defined within Bill of Exchange CA1 from [MGA] (hereinafter known as the Trade Debtor), under the terms of the Contract of Sale subject to the limit of this Guarantee of £96,266.72 . . .

"Default" is defined as the failure of the Trade Debtor to honour the contractual obligations as set forth in the Contract of Sale. 

Should the Trade Debtor default against payments to the Trade Creditor, the Trade Creditor must for the Guarantee to be effective, give notice within thirty (30) days to the guarantor in writing to cure the Trade Debtor’s default.  With the said notice the following documents must be included: copies of the Contract of Sale, the Guarantee, and an authorised statement detailing the non-payment by the Trade Debtor.

In the event of any notice from the Trade Creditor to the Guarantor that demands payment and requires resolution of the default, the Trade Creditor agrees to allow the Guarantor a period of thirty (30) business days from the receipt of notice in which the claim must be settled.

Following the resolution of any default demanded under this Guarantee, the Trade Creditor undertakes for the benefit of the Guarantor, to uphold the details of the Contract of Sale and all other security provided in direct proportion to the payments made by the Trade Debtor.

. . .

. . . All notices or other paper, which may be served on any party hereto, shall be sent either by e-mail, first class mail, postage prepaid, personally delivered, or delivered by a nationally recognised delivery service and addressed as follows:

If to the Guarantor: Northern & Western Insurance Co of 4 Evelyns Building, Main Street, Charlestown, Nevis, WI.”

20.	It is clear, therefore, that the terms of the guarantee did not mirror the terms of the various trade contracts so far as the date of payment was concerned. Crown’s conditions of contract required payment within "30 days nett (sic) from date of invoice". Crown's office manager, Mrs Deirdre Curr, explained that this was in fact treated as meaning that payment was due at the end of the month following the month in which the invoice was issued. Assuming this to be the case, the final invoice in CA1, which was dated 4 February 2009, would become due for payment on 31 March 2009, some two weeks before the date for payment stated in the guarantee.  This mismatch between the dates for payment stipulated in the various trade contracts and the date of payment stated in the guarantee is a fact relied on by Camrisk in these proceedings.
21.	There are a number of features about the form of this guarantee which are a little curious. First, there was no agreement attached to the guarantee as stated in the first paragraph. Second, since the “sums due” at 16 April 2009 were the amounts making up the total sum of £96,266.72, which was stated in CA1 to be payable on 16 April 2009, the terms of the original contracts under which those sums were originally payable were no longer relevant to the operation of the guarantee.  Third, "default", which was defined as the failure of the Trade Debtor to honour the obligations set out in the Contract of Sale, could, in this particular guarantee, refer only to the failure to pay the £96,266.72 that was due on 16 April 2009.
22.	None of the invoices that were the subject of CA1 was paid by MGA by 16 April 2009. As a result, Mr Barnard, the Finance Director of Crown, telephoned Mr Prymaka, of Camrisk, to tell him this and that Crown would therefore be making a claim under the guarantee.  In addition, he says that he wanted to check with Camrisk his understanding of the manner in which that claim should be made. There is no dispute that this telephone call took place, although there is some dispute as to exactly what was said by both Mr Barnard and Mr Prymaka.
23.	What is not in dispute is that on the following day, 17 April 2009, Crown wrote a letter addressed to Camrisk giving notice of its intention to claim under the guarantee.  That letter was in the following terms:
“Dear Sirs
Trade Credit Supplier Guarantee
NWIC/MGA/FG-02262009-02 – Value £96,266.72

Please accept this letter as formal notice of intention to claim on the above numbered Bond in respect of monies owing, due on 16 April 2009.

Please advise by return what further action or information is required to progress this claim.

Yours faithfully,
For CROWN ALUMINIUM LIMITED

[signature]

Wendy Phillips
Managing Director”

24.	There was a further telephone call between Mr Barnard and Mr Prymaka during the following week as a result of which Crown sent to Camrisk, for onward transmission to NWIC, a copy of the first guarantee together with copies of the invoices in respect of each of the supplies by Crown to MGA that were the subject of the guarantee. These, together with Crown’s letter of 17 April 2009, were scanned by Camrisk and sent by e-mail to NWIC on 28 April 2009.
25.	On the following day, NWIC sent an e-mail to Camrisk enclosing an undated letter from NWIC, which was addressed to Mr Beattie, in the following terms:
"Ref: Notice of Call - Wendy Phillips Memo (Crown Aluminium Ltd) 
Christopher,
This is to acknowledge the receipt of the "Notice of Call" on the Supplier Guarantee (NWIC/MGA/FG-0226 2009-02) which was attached from Crown Aluminium.
At this time, we request you invoke the Counter Indemnity Clause on the subject guarantee and provide us with a copy of your notice to Metic Plc. in this regard.
Please keep us advised of your progress.
Sincerely,
[signature]
Rob Harrison
Sr. underwriter”

26.	The reference to the Counter Indemnity Clause must have been a reference to the fourth paragraph in the guarantee which, in the event of a call under the guarantee, obliges Crown to "uphold the details of the Contract of Sale and all other security provided". What this means, in effect, is that Crown is obliged to enforce its remedies under the contract for the benefit of the guarantor and not allow the trade debtor to walk away from its obligations. Accordingly, the letter from NWIC was expressly requiring Crown to perform its obligations under the guarantee. This was inconsistent with any assertion by NWIC that the call under the guarantee was ineffective for want of compliance with the contractual requirements, at least to the extent that the defects in the notice were apparent on the face of it. I shall return to this point later in this judgment.
27.	In the meantime, on 2 March 2009 NWIC signed the second guarantee, which was subsequently countersigned by Crown and MGA on 1 April and 31 March 2009, respectively.  Whilst this guarantee was based on the same form as the first guarantee, there were some material differences. The operative words were:
“. . . we hereby guarantee unconditionally and irrevocably to [Crown]  . . . in respect of all sums due at 15th May 2009 as defined within invoices 6925, 6926, 6934, 6938, 6940, 6941, 6942, 6943 from [MGA] . . . under the terms of the Contract of Sale subject to the limit of this guarantee of £38,918.29 . . .”
28.	The effect of these words is, first, to define the sums the subject of the guarantee by reference to the identified invoices and, second, to make those sums the subject of the guarantee to the extent that, under the terms of the invoices, they were payable prior to 15 May 2009. The last invoice, 6943, was dated 19 February 2009 and so the amount stated in it became payable (according to Mrs Curr) at the end of March 2009. Accordingly, by the terms of the relevant invoices all the sums in question were payable well before 15 May 2009. Thus the practical effect of the invoices was, at first, to identify the sums due (which in fact added up to £38,918.29, but may not have done so) and, second, to show that they were all payable by the terms of the invoices prior to 15 May 2009 so that, if still unpaid, they would have been "sums due" as at 15 May 2009.
29.	On 18 May 2009 Camrisk sent NWIC by e-mail the notice from Crown dated 15 May 2009 which made a call on the second guarantee. This letter was in similar terms to the letter of 17 April 2009, except that the second paragraph read as follows:
"We enclose copies of the Bond and relevant invoices."
30.	Crown's case is that, having been told by Camrisk to send a copy of the guarantee and the invoices as the supporting documents for the call on the first guarantee, Crown simply adopted the same procedure without consulting Camrisk in relation to the second guarantee.  There is no document before the court by way of a response from NWIC to this notice, but it is clear from other documents that NWIC received it. Indeed, in a letter dated 11 June 2009 NWIC expressly agreed to pay it.
31.	Meanwhile, on 9 April 2009 NWIC signed the third guarantee, which was subsequently countersigned by Crown and MGA on 24 April and 8 May 2009, respectively.  Whilst this guarantee was again based on the same form as the first guarantee, there were also material differences. The operative words were:
“. . . we hereby guarantee unconditionally and irrevocably to [Crown]  . . . in respect of all sums due as listed in Schedule A to this document from [MGA] . . . under the terms of the Contract of Sale subject to the limit of this guarantee of £52,082.99 . . .”
	Schedule A was in these terms:
"Invoices [Crown] to [ MGA] due for payment on 14 June 2009.
Note that this bond covers the following [Crown] invoices:
6996, 6997, 7007, 7024, 7015, 7019, 7020, 7021, 7022, 7023”
The number 7024 was crossed out and it is common ground that it was a typing error for invoice 7014.
32.	Whilst the effect of the words in the guarantee and in Schedule A was again to define the sums the subject of the guarantee by reference to the identified invoices, this time it was to make the date of payment of those sums the date of 14 June 2009 irrespective of the dates on which the sums would otherwise have become due under the terms of the invoices.  As it happens, the last invoice, 7023, was dated 18 March 2009 and so the amount stated in it became payable (according to Mrs Curr) at the end of April 2009. So, in any event, all the sums in question were payable well before 14 June 2009. 
33.	It is clear, therefore, that the three guarantees that are the subject of these proceedings were intended to reflect the more generous terms of credit that was envisaged by the new arrangements involving bills of exchange and the SBLC instead of being tied to the terms of payment as defined in the underlying contracts of sale and as stated in the relevant invoices.
34.	On 11 June 2009 NWIC wrote to Camrisk setting out its position in relation to the claims to date, which was expressed to have been reached after "many weeks of lengthy meetings and discussions with the Directors and Council (sic) for NWIC". In that letter NWIC stated in unequivocal terms that it would pay the call made by Crown on 15 May 2009 in the net amount of “£36,441.09 (less the VAT)". The letter also stated that under separate cover NWIC would be issuing three notices of flat cancellation for non-payment as follows:
“1) Bond No. MGA/GB-040920. 2) Bond No. MGA/GB-040920. 3) Bond No. SDS/PB-051920.”
So far as I am aware, no such notices were issued.  In any event, the first two guarantees named have the same reference - which is in itself odd. Whilst it might be thought that one or other of them was intended to refer to the third guarantee in favour of Crown, the correct reference for that guarantee was in fact NWIC/MGA/GB-04092009.01.  To the extent that it matters, I conclude that this letter could not sensibly be understood as containing a reference to the third guarantee, if that is what was intended. 
35.	Finally, the letter concluded by asking Camrisk to make all parties aware of this response and position.  The letter was in due course forwarded to Crown and, presumably, to Metic also.
36.	On 15 June 2009 Crown sent an e-mail to NWIC saying that it understood from Camrisk that NWIC would be paying the outstanding claim on the first guarantee and asking for confirmation that the amount that NWIC would be paying was £96,266.72.  This e-mail also provided Crown's bank details.
37.	The response from Mrs Harrison at NWIC on the same day was to say that she had no record of any call being made on the first guarantee. On 16 June 2009 Mrs Curr replied that she had understood from Camrisk that a letter had been received from NWIC acknowledging the claim under the first guarantee.
38.	The following day, 17 June 2009, Camrisk sent NWIC by e-mail Crown's notice dated 16 June 2009 making the call under the third guarantee. Subject only to the reference number of the guarantee and the amount claimed, this letter was in identical form to the notice given under the second guarantee.
39.	In a separate e-mail on the same day, Camrisk sent NWIC a copy of its (NWIC’s) undated letter acknowledging receipt of the call on the first guarantee. In response NWIC said that it would set up the claim file and add it to the active claims for Metic. NWIC asked for the supporting documents to be resubmitted, which Camrisk did the following day.
40.	On 29 June 2009, in an e-mail from Mrs Harrison to Camrisk, NWIC repeated a concern that it had raised shortly before that Metic had been behaving fraudulently. NWIC said:
“If our legal team finds that Metic is not fraudulent NWIC will honor and pay the claims but I will say that they have already come back to use (sic) with great suspicion on the part of Metic otherwise I would have already sent payment."
41.	By this time NWIC had received the notices making the calls under each of the three guarantees and had had a reasonable time in which to consider them. This letter contains an unequivocal statement that, but for its suspicion of fraudulent conduct on the part of Metic, NWIC would have paid the various claims, including those made by Crown. It seems to me that the inescapable inference from this is that NWIC was taking no points on the form and contents of the notices made by the various claimants under NWIC's guarantees.
42.	On 8 July 2009 Camrisk sent an e-mail to NWIC, which was copied to, amongst others, Mrs Phillips at Crown, saying that Camrisk was disappointed not to have had the courtesy of a reply to its comprehensive e-mail sent the previous day and saying that the claims under the various guarantees were, in their opinion, valid and "have been accepted as such by NWIC, with undertakings by NWIC to pay them". The e-mail went on to point out that any questionable activity by Metic was a matter between Metic and NWIC.
43.	As far as I can tell, there was no response to this until a letter dated 14 July 2009 from a firm of attorneys, Robinson & Associates, addressed to the various claimants under the guarantees, including Crown. The letter said:
"Due to significant and disturbing circumstances, irregularities and inconsistencies that have come to light in regard to the issuance of the Bonds and the claims made against the Bonds, the Company has engaged legal counsel and instituted an in-depth, outside investigation of Metic, the Bonds and the claims against the Bonds.  Pending the outcome and analysis of such investigation, the processing, acceptance or denial and/or payment of claims against, or calls on, the Bonds are suspensed (sic).”
The crystallisation of the dispute 
44.	In due course, Crown instructed solicitors and on 21 December 2009 those solicitors, Wright Hassall LLP, wrote pre-action protocol letters to the London solicitors who by then had been instructed by NWIC, Fasken Martineau LLP, and to Camrisk.
45.	Fasken Martineau replied to this letter on 3 February 2010. The first point made in the letter was that the guarantees were issued by NWIC on the basis that Metic was a financially healthy going concern and that it was not intended that the facility would be used “to guarantee Metic and its subsidiaries debts which were already due”. The second point made in the letter was that the claims under the guarantees were without merit for three principal reasons. The first was that the notice of claim was defective. The second was that the form and content of the notice did not comply with the terms of the guarantees and, in particular, that the documents constituting the Contract of Sale between Crown and MGA had not been enclosed with the notices as the guarantees required. The third point made in the letter concerned variations to the underlying contracts and the extension of credit.
46.	In relation to the third point, NWIC's solicitors alleged that the decision to dispense with the bill of exchange resulted in NWIC's liability under the first guarantee being discharged. I have to confess that I am unable to understand this point. The arrangement in relation to the bill of exchange was dependent on the existence of the SBLC, which NWIC was unable to put into place. It was as a result of this that the first guarantee was entered into as a substitute form of security. NWIC's solicitors also contended that, because the latest date of payment under the relevant invoices was well before the date stipulated in the guarantee, the notices making a call under the guarantee should have been given by Crown within 30 days of MGA's default in making payment in accordance with the dates of payment specified in the invoices. This argument is simply misconceived. In my judgment, it is quite clear that on any view no call could be made under the guarantee unless payment under the relevant invoices (or some of them) was still outstanding on the date specified in the guarantee, namely 16 April 2009. However, as I have already explained, on a true construction of the guarantee NWIC’s obligation to pay under the guarantee arose only if the payment of the sum stated in CA1, £96,266.72, was not made on 16 April 2009, irrespective of any prior failure by MGA to make payment by reference to the dates on which the invoices were issued.
47.	Finally, in relation to NWIC's third point, it asserted that the use of the third guarantee to cover MGA's inability to pay an existing debt without disclosing that information to NWIC was such an unusual feature that it should have been disclosed.
48.	The first and third of these arguments are ones that it would have been open to NWIC to raise in any proceedings brought by Crown to recover payment under the guarantees. The second argument, by contrast, raises a pure point of construction. In the light of this, one might have thought that NWIC would defend any claim in the English courts on its merits. However, by an e-mail dated 24 May 2010, Fasken Martineau informed Wright Hassall that it no longer had instructions to accept service of proceedings on behalf of NWIC. Accordingly, Crown subsequently obtained permission to serve the proceedings on NWIC out of the jurisdiction, which it did. NWIC did not acknowledge service or serve a defence. In short, it took no part in the action. On 12 November 2010 I made an order barring NWIC from defending the claim unless it acknowledged service of the proceedings and served a defence within 14 days of the date of service of the order. It did not do so. From that point on it would have been open to Crown to enter judgment in default against NWIC if it wished to do so. In fact, it could have done so earlier following NWIC's failure to acknowledge service, but of course any such judgment would be subject to an application by NWIC to set it aside. Such an application would obviously have far less prospects of success if NWIC had been given a further opportunity to acknowledge service and serve a defence, as was done by means of the order dated 12 November 2010, and had not done so. 
49.	In the event, the trial took place without NWIC taking any part in it, but of course Crown still had to prove that it had served notices making the calls under the guarantees that were valid and in accordance with the contractual requirements. If Crown was unable to prove that it had issued compliant notices, its claims against NWIC would fail - irrespective of whether or not NWIC actively defended the proceedings.  I took the view that it was the duty of the court to satisfy itself that Crown had proved its claims under the guarantees in the absence of any defence by NWIC.
50.	If Crown's claims under the guarantees, or any of them, failed, then, as I have already indicated, it sought to recover damages from Camrisk on the grounds that it had been negligently advised by Camrisk as to the form and content of the notices making the calls under the guarantees. That claim in the alternative was vigorously defended by Camrisk.
The evidence 
51.	The evidence in the case consisted of the contemporaneous documents, including documents originating from NWIC, the authenticity of which was not in dispute (so that they stood as evidence of what the parties wrote or said at the time), and the witnesses called on behalf of Crown and Camrisk.
52.	Crown called its Financial Director, Mr Barnard, and its office manager, Mrs Curr, together with Mr Booth, a former director of the Metic Group. I found each of them to be an honest witness, whose evidence was generally reliable. There were some minor discrepancies between the evidence given by Mr Barnard and Mrs Curr, and where these occurred I prefer the evidence of Mrs Curr. I found her to be a reliable and transparently honest witness. Mr Booth gave evidence in his witness statement to the effect that he regarded Camrisk as the agent of NWIC, rather than the agent of Metic. I regard evidence of lay witnesses about the existence of an agency relationship as evidence which in some cases must be treated with caution, because the existence of an agency relationship is sometimes not easily discerned and may be the subject of considerable debate between lawyers. In fact, Mr Booth's evidence on this was plainly misconceived: for example, he said that it was his belief that "at all material times" Camrisk was the UK agent for NWIC. However, he then went on to explain how Camrisk then put together a trade credit supplier guarantee programme in respect of Metic's contracts involving PCI, which was of course a competitor of NWIC. However, in fairness to Mr Booth it must be pointed out that there was clearly a limited agency arrangement between Camrisk and NWIC in that Camrisk was appointed NWIC's agent for the service of notices within the United Kingdom (as was stated at the foot of NWIC's headed paper).
53.	Camrisk called two witnesses: Mr Christopher Beattie and Mr Mike Prymaka. Mr Beattie was Camrisk's Managing Director but, in the event, his evidence was not challenged and the only evidence that he gave, in addition to that in his witness statements, was in answer to a question from me. In relation to the e-mail dated 28 April 2009 by which Camrisk sent Crown's notice under the first guarantee to NWIC, I asked Mr Beattie whether Camrisk was doing that for claimants other than Crown and, if so, whether this was being done following any discussions with NWIC. Mr Beattie said that he had discussed the matter with NWIC before 28 April 2009 (which was confirmed to some extent by the e-mail which referred to a previous conversation) and that, since NWIC's office in Nevis was (as he put it) little more than a brass plate he and NWIC decided that it would be better if notices under the guarantees were sent in the first place to Camrisk, who could then forward them direct to NWIC's office in Texas from which the business was run. He said that he was concerned that if notices were sent to the registered address in Nevis there could be uncertainty about the reliability and promptness with which the relevant documents would be forwarded to Texas.
54.	I accept this evidence, although it appeared to come as something of a surprise to the parties, and in my judgment it completely disposed of NWIC's point about the notices being addressed to Camrisk, instead of NWIC, and not being sent to NWIC's office in Nevis. It is quite plain that NWIC expressly waived the requirement for service in Nevis and, by implication, must have accepted that the notices might be addressed to Camrisk if that was the party to whom they were to be sent. Accordingly, this ground of complaint by NWIC fails completely and I need say no more about it.
55.	Camrisk's other witness was Mr Prymaka, who no longer worked for Camrisk. He was concerned with the operational side of the business and reported directly to Mr Beattie. I found him to be an honest witness, even though he was a little inclined to agree with what was put to him whilst sometimes giving the impression that he might not have appreciated all the consequences of a particular question. However, be that as it may, in the end there was very little difference between the accounts given by Mr Barnard and by Mr Prymaka of the two telephone conversations about the service of the notice under the first guarantee.
56.	Mr Prymaka explained that he considered that the underlying contracts of sale that were relevant to the sums covered by the first guarantee were effectively superseded by the incorporation into the guarantee of CA1, in that the payment obligations stated in the invoices were replaced by a single obligation to make payment of the sums shown in the invoices by 16 April 2009 as stated in CA1. For this reason, he considered that the only documents that needed to be served with the notice were a copy of the guarantee and copies of the relevant invoices. In the light of this he accepted that he would have told Mr Barnard that these were the only documents that needed to be sent with the notice making the call under the first guarantee.
57.	In the end, the only real area of dispute between Mr Barnard and Mr Prymaka was the extent to which the documents that should be sent with the notice were discussed during the first telephone call on 16 April 2009. Since Mr Prymaka accepted that in the second telephone conversation, which Mr Barnard said took place on 23 or 24 April 2009, he advised, or would have advised, Mr Barnard that the only documents required were copies of the guarantee and the invoices, the extent to which this was discussed during the first telephone conversation is of no great importance.
58.	There was one aspect of Mr Prymaka’s evidence that was not explored in cross-examination and that was whether or not he told Mr Barnard during the second conversation that he had already forwarded the letter of 17 April 2009 to NWIC. Mr Barnard said in his witness statement that Mr Prymaka told him during the second conversation that he had forwarded the notice to NWIC and that NWIC had acknowledged receipt of it. Mr Barnard was cross-examined about this, but only at the conclusion of his cross-examination and after I had asked Miss John whether or not this aspect of Mr Barnard’s evidence was in issue. Mr Barnard did not change his evidence during this further cross-examination.
59.	As the course of Mr Howells’ cross examination of Mr Prymaka progressed, it became clear that the differences between the account of Mr Barnard and the account of Mr Prymaka were more apparent than real.  Mr Prymaka was not in fact cross-examined about when the letter of 17 April 2009 was sent to NWIC, perhaps because Mr Howells had reached the conclusion that his credibility was not really any longer in issue in the light of the evidence that he had already given. However, it is clear that Mr Prymaka asked Mr Barnard to send the letter giving notice of the claim as soon as possible because he wanted to get the claim “on to NWIC's radar”.  He accepted that what he had in mind was sending the letter to NWIC without any enclosures and then sending the other documents required by the guarantee at a later date. However, he said that he did not do this because he received the letter much more promptly than he expected and that he did not anticipate any significant delay in receiving the relevant supporting documents. It is possible, therefore, that since he had not done what he had initially intended to do he might have been a little embarrassed to confess this to Mr Barnard during the second conversation. However, since Mr Prymaka was not cross-examined on this point I do not consider that it would be either fair or appropriate to make any findings about it, and so I decline to do so.  In any event, so far as the issues that I have to decide are concerned, nothing turns on it.
60.	So far as what was said by Mr Prymaka to Mr Barnard during the two telephone conversations on 16 and 23/04 April 2009, I make the following findings:
(1)	Mr Barnard telephoned Mr Prymaka on 16 April 2009 for two reasons. First, to warn him that Crown intended to make a claim under the guarantee. Second, to check Mr Barnard's understanding of how the call under the guarantee should be made. Both he and Mr Prymaka had a copy of the guarantee in front of them during the telephone call.
(2)	Mr Prymaka told Mr Barnard during the first conversation that Crown should send a letter giving notice of the claim as soon as possible. That letter should be sent to Camrisk who would then forward it to NWIC. I find that Mr Prymaka did not say anything expressly as to which company should be the addressee of the letter, but he did tell Mr Barnard what the letter should say. Mr Prymaka expressly accepted that the first paragraph of the letter of 17 April 2009 accorded with the advice that he had given to Mr Barnard.
(3)	I find that the second paragraph of the letter reflected the fact that the discussion on 16 April 2009 had not descended into any detail about the supporting documents that would be required, which is why Mr Barnard asked for further advice in relation to that.
(4)	During the second telephone conversation Mr Prymaka indicated to Mr Barnard that the documents required to support the claim were a copy of the guarantee and copies of the relevant invoices. There was no discussion as to whether or not any other documents should be provided. Again, I find that Mr Prymaka told Mr Barnard that those documents should be sent to Camrisk who would then send them on to NWIC.
(5)	Mr Barnard was surprised by Mr Prymaka’s advice that only the invoices needed to be sent, because that did not appear to conform with his understanding of what the guarantee required. However, since Mr Barnard thought that Mr Prymaka was much more experienced in dealing with claims under guarantees, I find that Mr Barnard was, reasonably in the circumstances, prepared to defer to his advice.
61.	In addition, and more generally, I find that NWIC's response or responses to the various calls under the guarantees were conveyed to Crown, at least in general terms if not specifically.  It is quite clear, and I so find, that NWIC intended that what it told Camrisk in response to receipt of the notices was intended to be communicated to Crown.
The background to the issue of the first guarantee 
62.	I have to some extent already indicated my conclusions about the meaning and effect of the first guarantee. However, it is perhaps useful to consider the form of the earlier guarantees in contrast to that of the first guarantee. 
63.	I will take for convenience the guarantee that was issued by NWIC on 23 October 2008. The relevant words of that guarantee were as follows:
 “. . . we hereby guarantee unconditionally and irrevocably to [Crown]  . . . in respect of all sums due as listed in Schedule A to this document from [MGA] . . . under the terms of the Contract of Sale subject to the limit of this guarantee of £95,903.50 . . .”
	Schedule A was in these terms:
"Invoices summary [Crown] - [ MGA]
Note that this bond covers the invoices listed below.
[ Four invoices were then listed, giving for each invoice: the invoice number, date, project name and amount] 
64.	It can be seen that, unlike the first, second and third guarantees, the only dates for payment were those that could be derived from the invoices or contracts of sale themselves. In the case of this guarantee, one of the invoices was dated 29 September 2008 and the remaining three were dated 1 October 2008. Whilst there is room for dispute as to whether the provision in the invoices for payment within 30 days from date of invoice meant exactly that, or whether it meant the end of the following month, it is reasonably clear that the liability under the guarantee would arise at the moment that MGA failed to make payment of the amount shown on any of the invoices by the date required by that particular contract. However, since the date for payment is not apparent from the list of invoices in Schedule A, NWIC would not be able to discover what those dates of payment were without seeing the underlying contractual documentation.
65.	At this point it is necessary to digress and go back to the time when Camrisk was preparing the wording for the initial guarantee, being the guarantee that was subsequently placed with PCI. When Crown received the first draft of the guarantee from Camrisk it took instructions from its solicitors, who gave advice about the drafting of the guarantee and the process involved in making a call under the guarantee. In relation to making a call, the solicitors advised Crown in the following terms:
“You must give 30 days notice in writing to the Guarantor to cure the Trade Debtor’s default. You have to provide with the notice, copies of the contract of sale (if there is no formal contract then this will be the order and acceptance of order and any terms and conditions), the guarantee and "an authorised statement detailing the non-payment". Please clarify with the Bondsman what the definition of "an authorised statement" is or simply state that you regard a statement by a Director of your Company as an authorised statement.”
66.	In the context of the wording that was then being proposed and which was subsequently used for the first time in the first guarantee issued by PCI in September 2008, it seems to me that this advice about the documents that would have to be provided with a notice making a call under the guarantee was in principle correct. Where the guarantee was issued in respect of all sums due as listed in a schedule of invoices attached to the guarantee, as it was in the case of the first PCI guarantee and in the NWIC guarantee discussed at paragraph 63 above, it would be necessary when giving notice of a claim under the bond to provide copies of the relevant underlying documents. These would be likely to be purchase order, the acknowledgement of order and the invoice (if that was the document the date of which determined the date for payment) and, possibly, any standard terms and conditions.
67.	The relevant parts of this advice from Crown's solicitors were passed by Crown to Metic, and thereafter by Metic to Camrisk, by two e-mails dated 8 August 2008. The second e-mail was addressed to Mr Prymaka who printed it out and then passed it to Mr Beattie. Mr Beattie made a note on the e-mail addressed to Mr Prymaka which read "Plse discuss. Nothing contentious here". Mr Prymaka wrote back "I'll update the wording for you to check out". Mr Prymaka said in evidence that this is what he did, as evidenced by the tick across this note with the word "done" beside it. He said that he did this so that he would have a record for the future that he had done as Mr Beattie had asked.
The adequacy of the notice dated 17 April 2009 
68.	A point made by Camrisk in these proceedings is that it was negligent of Crown, and Mr Barnard in particular, to ignore the advice that had been given by the solicitors in relation to the manner of making a call under the guarantee when Crown came to make its first call in April 2009. It was submitted that Mr Barnard or Mrs Phillips, Crown’s Managing Director (with whom Mr Barnard shared an office when he was there), should have checked this advice before agreeing to the course of action suggested by Mr Prymaka in respect of the documents that were required to support the notice of 17 April 2009.
69.	It is perfectly true that if Crown had followed the advice given by their solicitors as well as the advice given by Mr Prymaka and sent not only the invoices, but also the purchase orders and acknowledgements of order, together with Crown’s standard terms and conditions, NWIC’s solicitors could not have taken the point about the documents that they took in their letter of 3 February 2010.
70.	However, for the reasons that I have given in paragraph 21 above, I consider that none of these documents was relevant in the case of the first NWIC guarantee because the only document that determined MGA’s, and hence NWIC's, liability under that guarantee was CA1. In my judgment the expression "Contract of Sale" in the guarantee must therefore be construed as referring to CA1, because there is no other document that is relevant to the Trade Debtor’s obligation to pay Crown and any subsequent default. It is true that this is a rather forced construction of the language of the guarantee, but any other reading would result in absurdity or incoherence.  
71.	There is high authority for the proposition that if a literal reading of the language of a contract leads to an absurd result, and one which reflects an intention which the parties could never have had, the law does not require a court to attribute to the parties such an intention: see, for example, the well known dictum of Lord Diplock in The Antaios [1984] AC 191 ("if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must yield to business common sense"), and the observations of Lord Hoffmann to similar effect in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, at 913.
72.	In my judgment, for the reasons given at paragraphs 28 and 32 above, similar conclusions follow in relation to the second and third NWIC guarantees, namely that the only obligation relating to payment was that MGA had to make payment of the sums stated in the invoices (up to the amount stated in the guarantee, if less) by the date stated in the guarantee or the attached schedule. Accordingly, I conclude that the advice given by Mr Prymaka to Mr Barnard, namely that the only documents that needed to be sent with the letter of 17 April 2009 making the call under the first guarantee were copies of the guarantee and of the invoices, was correct. Since those are the documents that were sent, the call under the first guarantee satisfied the requirements of the guarantee in so far as the supporting documents were concerned.
73.	However, I should add that Mr Prymaka’s suggestion that the letter giving notice of the claim could be sent to NWIC separately from the documents supporting the claim was not correct, but since that did not happen nothing turns on it.
74.	As to NWIC's point about the wording of the notice, I consider that there is nothing in it. The guarantee required Crown to give notice in writing "to cure the Trade Debtor’s default". That meant calling on NWIC to pay the sums that MGA had not paid. The requirement for "an authorised statement detailing the non-payment by the Trade Debtor" was, in my judgment, met by the letter of 17 April 2009. The letter gave notice of intention to claim on the guarantee "in respect of monies owing, due on the 16 April 2009". Since the guarantee required MGA to pay a stated sum by a particular date, a statement that the sum was owing, having been due for payment the previous day, was in my judgment a sufficient statement "detailing the non-payment" by MGA. Since it was signed by Mrs Phillips, Crown’s Managing Director, it was suitably authorised.
75.	The only point that might arguably be taken about the form of the letter of 17 April 2009 was that it did not state specifically what sum was being claimed. The title of the letter quoted the reference of the guarantee followed by "Value £96,266.72". This was ambiguous in that it could have meant the limit of the guarantee, which it was, or the value of the claim, which it was also. Since the purpose of the notice was to call upon NWIC to make good the amount unpaid, it seems to me that the only fair reading of the guarantee was that £96,266.72 was the sum being claimed (whether or not it happened also to be the limit of the guarantee). At any rate, in my judgment it cannot be said that the notice did not detail the non-payment by MGA, which is what the guarantee required the authorised statement to do. In this context, it seems to me relevant that NWIC never queried or sought confirmation of the amount being claimed.
Conclusions on the validity of the notices under the guarantees 
76.	It will be apparent from the conclusions that I have already reached, taken together with the evidence from Mr Beattie to which I have referred, that in my judgment the calls made by Crown on each of the three guarantees in suit were valid. In my judgment, the only arguable defect was in relation to the mode of service and that was clearly and expressly waived by NWIC, as I have already found.
77.	Accordingly, in relation to the first two guarantees Crown's case against NWIC succeeds in full. As to the third guarantee, I have already referred to the possibility that NWIC may have cancelled it, alternatively attempted to cancel it, for non-payment of the fee or premium. As a matter of construction, I do not consider that the payment of the fee is a condition precedent of liability under the guarantee. It is not expressed as such, and I see no reason for so construing it.
78.	In these circumstances, if non-payment of the fee is to afford a defence, whether whole or partial, to a claim under the guarantee, it seems to me that the burden of proof lies with NWIC to plead and prove it.
79.	However, in case I am wrong about this, I will consider whether the evidence that can be gleaned from the documents raises a prima facie case that the fee was not paid. In the letter from Fasken Martineau dated 3 February 2010, to which I have already referred, it is asserted that the guarantee was cancelled in June 2009 for non-payment of the premium. I have already explained why I consider that there was no valid cancellation by the letter of 11 June 2009, if that is the cancellation to which Fasken Martineau are referring. They assert also that the enforceability of the guarantee is conditional on the payment of the fee, but I have already indicated why I do not accept this argument.
80.	This issue is related to the payment of £171,000 by Metic which was demanded in order to establish the SBLC. The documents do not disclose how the dispute about this payment ended and whether or not it was resolved. It is not mentioned in the letter from Fasken Martineau of 3 February 2010. As I understand it, the position taken by Metic was that, since the SBLC was never provided, it was entitled to repayment of the £171,000.  When it became clear that NWIC was not prepared to refund the £171,000, because it claimed that it had never been received by it or on its behalf, Metic took the view that it was entitled to offset the premium for the guarantees, or the ones yet to be issued, against the £171,000. This is probably why Metic did not pay the fee for the third guarantee, if indeed it was not paid (as to which there is no evidence, save for the bare assertion in the letter from Fasken Martineau).
81.	On the basis of the material before me I am simply not in a position to form even a provisional view as to whether or not the fee for the third guarantee was paid or was validly offset against sums retained by NWIC that were owed to Metic.  Since, for the reasons that I have already given, I consider that the burden would be on NWIC to show that the fee had not been paid, if that was the position, this does not prevent Crown from recovering in full under the third guarantee. In my judgment, therefore, Crown has proved its case under the third guarantee as well.
82.	Crown is therefore entitled to judgment against NWIC for the full sum claimed, together with interest. This means that the claim over against Camrisk must fail. However, in case I am wrong about any of these conclusions, I will deal briefly with the issue as to waiver by NWIC of any defects in the notices and the allegations made by Crown against Camrisk.
The issue as to waiver by NWIC of any defects in the notices 
83.	I have already dealt with NWIC's allegation about the fact that the notice was addressed to Camrisk, not NWIC, and the fact that it was sent by e-mail to NWIC in Texas, and not delivered to the registered office in Nevis.
84.	In my view, the alleged defects in the form and content of the notice fall into two categories.  First, it is said that there were defects in the form of the notice itself and what it said. Second, it was asserted on behalf of NWIC that the notice did not include the underlying contracts of sale and, in particular, Crown's standard terms and conditions. The first category, in my judgment, consists of defects - if they were defects - that were apparent on the face of the notices. Anyone who read the notices at NWIC who was familiar with the form of the guarantee (which was, of course, attached to the notice) could or should have been able to form a view as to whether or not the notice complied with the terms of the guarantee as to its basic content.
85.	However, I consider that it is less obvious that such a person would have appreciated straight away that the attached invoices may not have represented the totality of the documentation constituting the contract of sale, although it would have been perfectly apparent that if Crown used standard terms and conditions in its contracts of sale to MGA, then those terms and conditions were not included with the invoices.
86.	When NWIC wrote in its letter of 11 June 2009, it had had the notice under the first guarantee for some 5-6 weeks, and the notice under the second guarantee for about 3 weeks. I consider that any reasonable person in the position of Crown would assume that NWIC had fully and carefully considered its position in relation to the notice under the second guarantee - the letter said that the claims had been discussed with its directors and counsel - and that it was asserting unequivocally that no points would be taken (if there were any to take) on the form or content of the notice and the accompanying documents.
87.	Further, since the documents supplied with the notice under the first guarantee were of exactly the same type as those provided under the second guarantee, a reasonable person in Crown's position would have been entitled to assume that NWIC was adopting the same position in relation to the notice under the first guarantee. As to any defects in the first guarantee that were apparent on its face, I consider that they were waived by NWIC's conduct in requiring Crown (through Camrisk) to enforce its rights under the guarantee. That requirement was fundamentally inconsistent with any decision to treat the notice as invalid. It therefore amounted to an express waiver of any defect in the form or content of the notice under the first guarantee that was apparent on the face of the notice.
88.	By 29 June 2009, when NWIC said that it would honour and pay the claims if its legal team found that Metic had not been fraudulent, it had had the notice under the third guarantee for about 10 days, and the notices under the first and second guarantee for considerably longer.
89.	I consider that, for much the same reasons, this statement also constituted an unequivocal assertion by NWIC that it was not taking any points on the form or content of the notice that had been served under the third guarantee.
90.	It seems to me that these conclusions are self evident as a matter of common sense given the facts as I have found them. However, I am acutely conscious that at least two legal concepts are involved, namely waiver by election and waiver by forbearance. 
91.	My attention was helpfully drawn by Miss John to various extracts from Wilken and Villiers on The Law of Waiver, Variation and Estoppel, 2nd Edn: in particular, paragraphs 4.02-4.27, 6.05-6.06 and 8.10-8.64. I consider that the statements of law in those passages, so far as they concern propositions relevant to this case, are in accordance with the cases cited by the authors.
92.	However, I should mention specifically certain passages in two cases. The first is an observation of Stevenson LJ in Bremer Handelsgesellschaft mbH v C Mackprang [1979] 1 Lloyd's Rep 221, at 229, where he said:
“I do not understand Lord Salmon's reference to the buyers waiving any defect in the notice under cl 22 "whether aware of it or not" as laying down any principle that there can be waiver or equitable estoppel on the part of someone who does not know that his rights have been infringed or has not, at least, such obvious means of knowing that his rights have been infringed that the other party can reasonably assume that the party waiving or estopped is acting with knowledge of their infringement.  Lord Salmon was, I think, referring to a patent defect which could only be missed by not reading the notice or not knowing the law.  Here again what matters is the conduct of the "waiving" or "estopped" party, these buyers, and its effect on a reasonable seller, or a reasonable person in the position of the other party, these sellers.  And if the buyer so acts as to lead a reasonable seller in these sellers’ shoes to believe that he was waiving his rights or accepting a non-contractual shipment as a fulfilment of their contract, and the seller does believe it, the buyer cannot be heard to say, "I did not notice the obvious breach of contract on your part which gave me a right to complain or refuse".”
93.	The second is the judgment of Mance LJ (as he then was) in Insurance Corporation of the Channel Islands v The Royal Hotel Ltd [1998] Lloyd's Rep IR 151, at 161-163.  He described the situation that he was considering as one where the type of affirmation in issue involves an informed choice (to treat the contract as continuing) made with knowledge of the facts giving rise to the right to avoid it. Whilst there are certain differences between an election that amounts to the avoidance of a voidable contract, and an election not to treat oneself as discharged from any further performance under a contract in the face of a breach of contract by the other party going to the root of the contract, I do not consider that those differences are relevant for present purposes. The Royal Hotel case was, of course, one involving the potential avoidance of a contract of insurance.
94.	At page 161 Mance LJ said:
“Provided that the party knows sufficient of the facts to know that he has that right [namely, whether to avoid a contract rather than to treat the contract as continuing], it is unnecessary that he should know all aspects or incidents of those facts. Although this point was not open in The Kanchenjunga [1990] 1 Lloyd's Rep 391, there is Court of Appeal authority in Peyman v Lanjani [1985] 1 Ch 457 that the party must generally also know that he has that right. The making of his choice must be communicated unequivocally to the other party before there can be a binding affirmation.” 
	He went on to say, at 162:
“Even so, a special problem may arise where a person has deliberately and knowingly decided not to investigate or confirm a matter about which he knows that he could acquire definite knowledge.”
95.	Mance LJ said that he considered that whether a person has knowledge is for lawyers essentially a jury question. But he then said, at 162:
“For practical purposes, knowledge pre-supposes the truth of the matters known, and a firm belief in their truth, as well as a sufficient justification for that belief in terms of experience, information and/or reasoning."
	He went on to say, later on the same page:
	“Is it sufficient for affirmation that there is knowledge and a communication (by words or conduct) which, assuming such knowledge, demonstrates an unequivocal choice?  Or must the communication itself or the surrounding circumstances demonstrate such knowledge to the other party?  In principle, it seems to me that the latter approach is correct in the context of affirmation.  The communication itself or the circumstances must demonstrate objectively or unequivocally that the party affirming is making an informed choice. In the context of estoppel, where knowledge is not a prerequisite (though reliance is), it is in contrast the appearance of choice with which the law is concerned.
	. . .
	Slade LJ's judgment in Peyman v Lanjani at pp 502-3 does however offer clear support for the latter approach. Whether there was an unequivocal communication of a choice depended, in his view, on whether the other party had reason to believe that the party allegedly affirming was aware of the facts and of his right to object or affirm . . .
	Whether conduct amounts to an unequivocal communication of a choice to affirm requires therefore, an objective assessment of the impact of the relevant conduct on a reasonable person in the position of the other party to the contract.  A reasonable person in that position must, it seems to me, be treated as having a general understanding of the possibility of choice between affirmation and objection. In affirmation (as distinct from estoppel), the actual state of mind of the other party is not the test.  Affirmation depends on the objective manifestation of a choice.”
96.	It should be noted that in the Royal Hotel case Mance LJ concluded that the insurer had elected to affirm the contract where, deliberately and for tactical reasons, it decided not to acquire definite knowledge of a matter which it believed it likely that it could confirm, because it was to be treated as having knowledge of that matter.
97.	To summarise, as to waiver by election what is required is an unequivocal communication, whether by express statement or by the assertion of an inconsistent right, by a person who has knowledge of the relevant facts and, probably, of his legal rights - at least, in general terms.  Once the relevant election has been made, it is good for all time and does not require any reliance or suffering of detriment by the other party.
98.	Basing myself largely on the passages from Wilken to which I have referred, as well as the passages from the two cases cited above, I consider that waiver by forbearance consists of conduct by one party, the promisor, that he will act in a particular way with the intention and the result that the other party, the promisee, should rely on that promise in circumstances where the revocation of the promise would result in the promisee suffering a detriment. The promise is not binding for all time, but can be revoked provided that the revocation is in terms that do not cause the promisee to suffer prejudice or detriment such that it would be unjust to allow the revocation to have effect. 
99.	Whilst waiver by forbearance does not require knowledge by the promisor of facts that would entitle him to exercise a legal right as against the promisee, it is necessary that a reasonable person in the position of the promisee would assume that the promisor was not intending to enforce the legal right in question. For example, using the facts of this case, if, well within the 30 day period for giving notice under the guarantee, NWIC promised Crown that it would pay a particular claim in circumstances where Crown could reasonably assume that NWIC would have had a proper opportunity to consider the notice and its accompanying documents, it would be unjust to allow NWIC to renege on that promise once the 30 day period had expired and at a time when Crown was no longer in a position to correct any defects in the notice that were then being relied on by NWIC.
100.	In the light of the authorities my conclusion on the facts of this case is that by the end of June 2009 NWIC had, by express election, waived its rights to object to any defects in the notices under the first three guarantees. As I have explained, the undated letter from NWIC that was sent on 29 April 2009 in response to the notice under the first guarantee, which required Crown to take steps to enforce the underlying contracts, amounted to the assertion of a contractual right that was wholly inconsistent with an intention to treat the notice as invalid. That must be taken to have been a waiver of any defects in the notice that were or should have been apparent on its face.
101.	On 30 April 2009 Mr Beattie sent an e-mail to Mr and Mrs Harrison at NWIC referring to a telephone conversation on the previous day and saying that "We will start proceedings to enforce the CCI’s (sic)”.  The rest of the message concerned the dispute about the £171,000 that was paid as their premium for the SBLC. On 12 May 2009 Mr Beattie sent an e-mail to representatives of the various trade debtors asking them to confirm by return that various invoices, including those of Crown, had been paid, in the absence of which he said that NWIC had given instructions to enforce the counter indemnities. It is apparent, therefore, that during this period NWIC had not altered the position that it had adopted on receipt of the first notice. By this stage Crown and Camrisk could reasonably have assumed that if NWIC intended to take any point on the adequacy of the documents attached to the notice, it would have said so. It was not difficult to see that all that had been sent by Camrisk with the notice under the first guarantee was a copy of the guarantee itself and a series of invoices. If NWIC thought that it was entitled to receive documents containing the terms of the underlying contracts, by then it had had plenty of time in which to appreciate that it did not have them - as would have been apparent to a reasonable person in the position of Crown.
102.	In relation to the second notice, my clear conclusion is that the unequivocal statement in the letter of 11 June 2009 left no room for argument in relation to the adequacy of the notice under the second guarantee.
103.	Against this background, Crown and Camrisk were reasonably entitled to assume that if the notice under the third guarantee was in the same terms as the notice under the second guarantee, it would be acceptable to NWIC as a compliant notice. The statement by NWIC that it would pay the claim under the second guarantee amounted to a representation, not only that it had no complaints in relation to the form or content of the notice under the second guarantee, but that it would treat any future notice made in the same manner under a similarly worded guarantee as compliant also. One would have thought that it would be obvious and self-evident to a reasonable businessman in the position of Crown that if a notice in a particular form was acceptable to NWIC, that a further notice in the same form under the same type of guarantee would be equally acceptable. Accordingly, whether one treats it as a case of waiver by election or waiver by estoppel, I consider that NWIC waived any defects in the form or content of the notice given under the third guarantee provided that the notice was in the same form as that given under the second guarantee.
The claim against Camrisk
104.	For the reasons that I have already given, the advice given to Crown by Mr Prymaka during the telephone calls in April 2009 was correct (save for any indication he may have given to the effect that the notice could be sent to NWIC by itself without the required supporting documents).
105.	The wording of the first paragraph of the letter of 17 April 2009, which Mr Prymaka effectively drafted, was in my judgment sufficient for the purpose of the call. The advice was also correct in that it was not necessary, in the light of the particular wording of the first three guarantees, to send any supporting documents with the notice other than a copy of the guarantee and copies of the relevant invoices. That is what happened.
106.	In the light of these conclusions, the question of whether or not Camrisk owed a duty of care at the time of the telephone calls becomes doubly irrelevant. However, since I have concluded that Camrisk did owe Crown a duty to take reasonable care when giving that advice, I shall say briefly why I have reached that conclusion.
107.	Mr Prymaka readily accepted that when he advised Metic on 12 August 2008 in relation to the meaning of "authorised statement", he assumed that his answer would be passed back to Crown and that he would have expected Crown to rely on his answer. Similarly, when later the same day he provided a brief explanatory note on the meaning of what became the sixth paragraph of the first guarantee, he said that he would have expected Crown to rely on that explanation.
108.	One of the classic statements of the law in relation to the assumption of a duty of care of by a professional man when giving information to someone who is not his client is that by Lord Morris in Hedley Byrne v Heller and Co [1964] AC 465, at 502:
“My Lords, I consider that it follows and that it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise."
	Lord Reid made observations to much the same effect at page 486.
109.	In my view, Mr Prymaka fell squarely within the situation described by Lord Morris. He was possessed of a special skill, as an experienced insurance broker, and he was in a far better position than Mr Barnard to judge what would be acceptable to NWIC. I can see no distinction between the situation in April 2009 and the situation in August 2008 so far as the assumption of a duty of care to Crown is concerned. In my judgment Mr Prymaka was clearly giving Mr Barnard advice in the anticipation that Mr Barnard would rely on it, as I find he did. But, as I have already explained, since Mr Prymaka’s suggestion about sending the letter of 17 April 2009 to NWIC separately from the supporting documents was never implemented, that aspect of his advice has no relevance.
110.	Accordingly, I find that when Mr Prymaka was discussing the manner of making the call under the first guarantee with Mr Barnard he anticipated that Mr Barnard would rely upon and act on the advice given by Mr Prymaka, with the result that Camrisk owed Crown a duty of care in relation to the advice that was given during the two telephone conversations in April 2009.
Camrisk's argument on causation 
111.	Again, in the light of my findings about the validity of Crown's notices and its claims under the guarantees, this is academic. However since the point was argued at considerable length, and was not one that I found straightforward, I shall briefly give my conclusions on it.
112.	Camrisk’s submission, summarised very shortly, is that since NWIC failed to acknowledge service or to serve a defence, and particularly after it failed to comply with the unless order made on 12 November 2010, it was open to Crown to enter judgment in default against NWIC and thereby gain the relief that it sought.  It would then be put back in the position that it would have been if it was suing NWIC in circumstances where Camrisk had not been negligent.
113.	Crown submits that the loss that it would suffer from Camrisk's advice, if negligent, would be the loss of the right to be paid under the guarantees as a result of the defective calls. It submits that, in respect of each guarantee, the loss is the amount guaranteed and that loss was suffered when Crown relied on Camrisk's advice (that is to say, either when the defective calls were made or within the 30 day limit for making such a call), and not at some later date such as when judgment on the merits is finally given.
114.	In a post hearing submission (made at my invitation) Crown's argument was put in the following terms by Mr Howells: 
4.	Thus the start point for the analysis is that the Court has decided after trial on the merits that Crown, from the time it made its calls, had no right to be paid by NWIC under the guarantees.  The learned Judge’s example of supervening insolvency of NWIC is, with respect, not apposite.  The question is whether or not NWIC was liable under the guarantees.  Taking the learned Judge’s example: if the Court finds that the calls were valid and Crown has a valid claim against NWIC, the fact that NWIC had become insolvent would be a matter for Crown.  Equally, if the Court finds that NWIC is not liable but that Camrisk is liable NWIC’s insolvency would be irrelevant.
5.	The loss suffered by Crown as a result of Camrisk’s negligent advice will be the loss of the right to be paid under the guarantee(s) as a result of defective calls having been made in reliance upon Camrisk’s negligent advice. In respect of each guarantee in respect of which Crown is unable to recover from NWIC that loss was the amount of the relevant guarantee.  That loss was suffered when Crown relied upon Camrisk’s advice (when the defective calls were made or the payment date: 30 days from the date of the defective calls), not when judgment on the merits is given.   
From this I understood Crown to submit that it would be entitled to recover against Camrisk the full amount of the guarantee, irrespective of the fact that it would not have been able to recover from NWIC owing to supervening insolvency shortly after the calls were made.  I find this a startling submission.
115.	As with any point of causation it is useful to start from first principles. In order to recover damages in respect of Camrisk's negligent advice as to the form or content of the calls under the guarantees Crown would have to prove:
(1)	the amount that it would have recovered from NWIC if the calls under the guarantees had been valid; and
(2)	the amount that it was able to recover from NWIC (if anything) following Camrisk's negligent advice.
The measure of damages is the difference between (1) and (2).  As in any case, where there has been no recovery from NWIC prior to the date of trial, the damages must be assessed as at the date of trial.  So, on the face of it, it would appear that if Crown had not recovered anything from NWIC because it refused to pay on the guarantees and any case against it was bound to fail (as a result of Camrisk's negligence), then Camrisk would be potentially liable for the full amount of each guarantee that NWIC would (it is assumed) otherwise have paid.
116.	I say “potentially” because it might transpire, for example, that NWIC was not in a position to pay (either at the time when the calls were payable or by the earliest time on which Crown could reasonably have been in a position to obtain and enforce a judgment) or because NWIC had some other defence to the claims that it would have asserted and which arose quite independently of any conduct on the part of Camrisk.  This is why Crown must prove limb (1) above.
117.	So the starting point for any assessment of damages following Camrisk's negligence is the amount that Crown would (or could) have recovered from NWIC, not the amount that it was entitled to recover from NWIC.  Unless Crown can prove - on the balance of probability - that it would have recovered a particular amount from NWIC, it can recover nothing from Camrisk. That is simply because it would have failed to prove the first ingredient of its claim.  The quantum of the claim is not "frozen" at the expiry of the 30 day period, as Mr Howells seems to be submitting.
118.	Having established that it could have recovered a sum from NWIC, Crown must then prove that its ability to recover from NWIC has been impaired as a result of Camrisk's negligent advice. So it must prove, again on the balance of probability, what the degree of that impairment is in money terms. This is where limb (2) comes in.  It may, for example, be clear on the evidence that NWIC would have been prepared to pay, say, 50% of the amount claimed, using Camrisk's negligence as the bargaining counter. If that was the case, and the court considers that Crown, acting reasonably, should have accepted that offer, then the loss recoverable from Camrisk would be the difference between Crown's offer and full value of the guarantee (assuming that NWIC was good for the money).
119.	But if, prior to trial, Crown had the opportunity to recover in full from NWIC in spite of Camrisk's negligence by entering judgment in default prior to the trial, then it can be argued that Camrisk's negligent advice ceased to be an effective cause of Crown’s loss (apart, possibly, from any additional costs that Crown has incurred and which would have been avoided if Camrisk had not been negligent).
120.	If this is correct, then it must follow that if Crown had the opportunity of recovering a significant sum from NWIC, but unreasonably failed to take it, then it cannot recover that sum as part of its claim against Camrisk. In this case, submits Camrisk, Crown would have been able to recover the full amount from NWIC if it had entered judgment in default, as it could have done, because it has been agreed between the parties that when enforcing a judgment obtained in England against a company in Nevis, there is no material difference between a judgment in default and a judgment on the merits.
121.	However, this does not mean - in principle at least - that Crown can recover nothing from Camrisk.  Crown may have been able to show that it had incurred other related losses as a result of Camrisk’s negligence that it cannot recover from NWIC.  However, no such claim is pleaded and so I will say no more about it.
122.	If I had to make a finding, I would have concluded on the evidence, albeit not without some hesitation, that Crown has proved that NWIC is good for the money.  Accordingly it should be able to recover the sums owed under the guarantees when this judgment is enforced in Nevis, or if it had entered judgment in default after NWIC was debarred from defending the claim and sought to enforce it.
123.	The question that is more difficult is whether Crown would have been able to prove the extent of the impairment of its ability to recover from NWIC as a result of Camrisk’s negligence.  It may be that NWIC would have stood firm on its other points and would still have refused to pay anything; on the other hand, it might have been prepared to settle for some lesser figure.  Whilst I mention these questions I do not have to decide them.

Conclusions 
124.	Crown’s case against NWIC succeeds in full.  It is therefore entitled to damages in the sum of £187,268, plus interest and costs.
125.	Crown’s case against Camrisk fails and is therefore dismissed.
126.	I will hear the parties on the question of the costs.  In particular, I will consider any application by Crown that some or all of any costs that it may have to pay Camrisk should be paid by NWIC.