InstaGroup Ltd v Northwest Insulations Ltd & Anor
[2026] EWHC 819 (Ch)
InstaGroup makes insulation materials and subcontracts the installation of those materials to third parties, such as Northwest, who entered into creditors’ voluntary liquidation in August 2025. Mr Stansfield was a director of Northwest from 27 August 2008 until 19 April 2022. InstaGroup alleged that Northwest breached an agreement dating from 2013, and claimed over £3 million against Northwest. InstaGroup made a claim against Mr Stansfield based on the terms of a Guarantee entered into in 2008.
In 2008, InstaGroup had entered into an agreement with Northwest for the installation of cavity wall insulation. In October 2008, Northwest entered into a credit facility agreement. Mr Stansfield signed a pre-printed form entitled “Credit Account Application Form”, which included the following:
“In consideration for [the claimant] agreeing to supply goods on credit as requested I, [the second defendant] being a director of [the Company] agree that … the [Company] will make full settlement of all monies that are now or shall at any time in the future become due from [the Company] to [the claimant] howsoever arising”,
and
“I hereby personally guarantee payment in respect of all such sums as are now or shall in the future become due from [the Company] to [the claimant] including interest at the rate specified in your Conditions of Sale or which shall otherwise be payable by law. This guarantee is to be a continuing guarantee and my liability under it shall not be affected by your giving time or any other indulgence to [the Company] or to me by any credit limit which may have been imposed from time to time or by any other matter or event whereby I would but for this provision have been released”.
The purpose of the 2013 Agreement was set out in its recitals:
“… (B) On behalf of InstaGroup, the Supplier [Northwest] will be arranging surveys and/or installing a number of energy efficiency improvements for end users under the Green Deal Framework Regulations and shall be providing these services (including the supply of any related goods) in accordance with the terms of this agreement.
(C) InstaGroup wishes the Supplier to provide goods and services subject to the terms and conditions of this agreement and the Supplier agrees to do so”.
There was a wide-ranging indemnity clause, and the remedies included the right to require the immediate repayment by Northwest of all sums previously paid to them by InstaGroup. Mr Stansfield said that the Guarantee related to sums due from Northwest for goods supplied by InstaGroup on credit to it, and nothing more.
In her decision, Master Clark explained that the general principles of construction applicable to guarantees were summarised in Marley v Rawlings [2015] AC 129 by Lord Neuberger:
“…the court is concerned to find the intention of the party or parties, and it does this by identifying the meaning of the relevant words, (a) in light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time that the document was executed, and (v) common sense, but, (b) ignoring subjective evidence of any party’s intentions”.
The parties also referred to the rule in Holme v Brunskill (1878) L.R. 3 Q.B.D. 495, whereby any material variation of the terms of the principal contract (i.e. between the creditor and the principal) will discharge the guarantor. The meaning of “material variation” in law is summarised in Law of Guarantees at 9-024:
“A variation of the principal contract is material for the purposes of the rule in Holme v Brunskill where it is not necessarily beneficial to the surety or otherwise prejudices him, and where any lack of prejudice or benefit is not evident without enquiry. If the benefit or lack of prejudice is not self-evident, then the court will not embark on an enquiry as to whether the variation was indeed beneficial to the surety or otherwise unprejudicial”.
Master Clark considered the overall purpose of the 2008 Agreement, which was to enable Northwest to obtain credit from InstaGroup for goods supplied by it. The Guarantee was entered into in support of that purpose. The specific wording of the 2008 Agreement provided that Northwest would make full settlement of “all monies” that were or should at any time in the future become due from Northwest to InstaGroup “howsoever arising”.
Master Clark considered that the use of the expression “howsoever arising” was not sufficient of itself to extend Northwest’s liability to include transactions beyond the supply of goods covered by the 2008 Agreement. Further, the expression “all monies” did not have a fixed meaning, and there was nothing to suggest it referred to anything beyond the parameters of the 2008 Agreement.
The 2008 Agreement was a short, relatively informal document in a standard form to be used for all InstaGroup’s customers. By contrast, the 2013 Agreement was a detailed 32-page document containing carefully drafted provisions. The 2013 Agreement was not part of the factual matrix when the 2008 Agreement was entered into.
Mr Stansfield submitted that the 2008 Agreement did not restrict Northwest as to how it used the goods supplied; nor did it refer to services. If the 2008 Agreement were to apply to other liabilities arising from Northwest’s supply of services to InstaGroup, it could have said so.
Master Clark agreed, considering that Northwest’s obligations under the 2008 Agreement were limited to monies owing in respect of the supply of goods to it, and did not extend to financial liabilities arising out of agreements for it to provide services to InstaGroup, either in place at the time or, even more so, entered into afterwards.
The Guarantee was for all such sums which were now due or should in the future become due from Northwest to InstaGroup. This was a reference back to the 2008 Agreement, i.e. sums due for the supply of goods. On the proper construction of the Guarantee, it was limited to Northwest’s obligations for goods supplied to it by InstaGroup pursuant to the 2008 Agreement. It was not, therefore, necessary to consider whether the Guarantee was discharged by the 2013 Agreement.
However, if that was not correct, Master Clark considered that the Guarantee was discharged when the 2013 Agreement was entered into. If the 2013 Agreement was a variation of the 2008 Agreement, then InstaGroup had not shown it was beneficial to Mr Stansfield or that it did not increase the risk to him. It would therefore have been a material variation which discharged the Guarantee.
That said, given that the 2013 Agreement provided that it superseded all previous drafts, arrangements, understandings, or agreements, it was not a variation but a new agreement. The Guarantee was discharged upon Northwest and InstaGroup entering into the 2013 Agreement.
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