ACC Bank Plc v Byrne
| Jurisdiction | Ireland |
| Judge | Mr. Justice Cregan |
| Judgment Date | 31 July 2014 |
| Neutral Citation | [2014] IEHC 530 |
| Court | High Court |
| Date | 31 July 2014 |
[2014] IEHC 530
THE HIGH COURT
BETWEEN
AND
Loan Agreement – Guarantor Letter – Evidence – Bankers” Books Evidence Act 1879-1989 – Banking – Securities – Sureties – Contract
The facts of this case involve the plaintiff seeking summary judgment against the first named defendant in the sum of €250,000 on foot of a personal guarantee. The plaintiff agreed to loan a sum of €3.9m. to a company called China Girls Ltd, the bank would only make the facility available to the borrower if it obtained as security a letter of Guarantee from each of the defendants up to a maximum of €250,000. The defendants guaranteed the payment of all sums due and owing to the plaintiff by the borrower. The terms of the loan agreement were not honoured by the borrower and subsequently the plaintiff demanded payment from each of the defendants on foot of the personal guarantees. The defendants failed, refused or neglected to pay the said sums which prompted theses proceedings, brought before Cregan J. in the High Court.
Cregan J. carefully examined the guarantor agreement between the parties and the various submissions from both sides. The plaintiff sought payment of the agreement from the first named defendant. The first defendant submitted that that ADM Londis was a co-guarantor on the loan and insofar as the plaintiff released ADM Londis from the guarantee, that operates, as a matter of law, to release all other sureties under the contract of guarantee. Additionally the first named defendant submitted that the evidence produced by the plaintiff before the court does not satisfy the provisions of the Bankers” Books Evidence Act 1879-1989. Cregan J. concluded that on the facts the ADM Londis guarantee was a separate and distinct contract of guarantee to that entered into by the first defendant with the plaintiff and therefore the first defendant”s arguments about the release of one surety operating to release all other sureties is to no avail. In relation to the evidence no satisfying the provisions of the Bankers” Books Evidence Acts, Cregan J. assisted by case law such as Criminal Assets Bureau v. Hunt and Moorview Developments Ltd. and Ors v. First Active PLC, concluded that the affidavit evidence before the Court didn”t comply with the Bankers Books Evidence Act. Cregan J. ruled to hear further submissions from counsel on any further applications in respect of this matter. Summary Judgment was denied.
JUDGMENT of Mr. Justice Cregan delivered on the 31st day of July 2014
1. In these proceedings the plaintiff is seeking summary judgment against the first named defendant in the sum of €250,000 on foot of a personal guarantee entered into by the first named defendant in favour of the plaintiff.
2. The proceedings commenced by summary summons dated the 18 th June, 2013. An Appearance was entered on behalf of the first defendant on 25 th June, 2013. The plaintiff then issued a notice of motion seeking summary judgment on 24 th July, 2013 which was made returnable to 14 th October, 2013. This application was grounded on the affidavit of Niamh Kavanagh, an employee of ACC Bank PLC. sworn on 24 th July, 2013. A replying affidavit was sworn by the first defendant and a further affidavit was sworn by Ms Kavanagh on 19 th November, 2013.
3. The matter was heard before the Master on 23 rd January, 2014. The Master refused the application. This matter comes before this court by way of appeal against the Master's Order.
4. The factual background to this claim is set out in the grounding affidavit of Niamh Kavanagh. The sequence of events is as follows:
i (i) On 29 th September, 2003 (as amended on 4 th November, 2003 and as further amended on 25 th August, 2009) the plaintiff agreed to loan a sum of €3.9m. to a company called China Girls Ltd, ("the borrower").
ii (ii) It was a condition of the Letter of Sanction dated 29 th September, 2003 that the bank would only make the facility available to the borrower if it obtained as security a Letter of Guarantee from each of the defendants up to a maximum of €250,000 each.
iii (iii) On 24 th March, 2004 the first and second defendant entered into a contract of guarantee with the plaintiff wherein the defendants guaranteed the payment of all sums due and owing to the plaintiff by the borrower.
iv (iv) On 2 nd March, 2004 the plaintiff advanced the sums of €3.9m. to the borrower.
v (v) The terms of the loan agreement were not honoured by the borrower and on 29 th February, 2012 the plaintiff demanded repayment of the sum of €3.3m. (approximately) from the borrower but the borrower failed, refused and/or neglected to repay the said sum.
vi (vi) On 8 th March, 2012 the plaintiff demanded payment from each of the defendants on foot of the personal guarantees but the defendants failed, refused or neglected to pay the said sums. As result of the first defendant's refusal to pay the sum of €250,000 to the plaintiff, the plaintiff has issued these proceedings.
5. The first defendant put forward two defences to the claim. These are:
a (A) that ADM Londis was a co-guarantor on the loan and insofar as the plaintiff released ADM Londis from the guarantee, that operates, as a matter of law, to release all other sureties under the contract of guarantee.
b (B) that the evidence produced by the plaintiff before the court does not satisfy the provisions of the Bankers' Books Evidence Act 1879-1989.
6. I turn firstly to deal with the defence on the nature of the ADM Londis guarantee and its release.
7. The main lines of the first named defendant's defence in this regard are set out in para. 6.8 (a) - (e) of his replying affidavit of 19 th October, 2013. I will deal with each of these arguments in turn.
2 (1) The first argument is that the original 2003 facility agreement between the plaintiff and the borrower provided that, as security for the company's obligations to the plaintiff, the guarantee would be provided by the first defendant, the second defendant and ADM Londis.
3 (2) However, Mr. Byrne says, the plaintiff released ADM Londis from its guarantee after a period of two years without his knowledge or consent.
4 (3) Mr. Byrne also says that the plaintiff never disclosed to the first and/or the second defendant that it had released ADM Londis from its guarantee when the parties were negotiating a variation of the original 2003 facility in 2009.
5 (4) Mr. Byrne also submits that the standard form guarantee clauses do not give liberty to the plaintiff to release a co-guarantor without this impacting on the liability of any remaining surety.
6 (5) Mr. Byrne also submits that, as a matter of law, the release by a creditor of one of a number of co-sureties under a contract of guarantee discharges the other co-sureties.
8. However Ms. Niamh Kavanagh in her replying affidavit effectively undermines all these aguments.
2 (1) Firstly, Ms Kavanagh states that the plaintiff's guarantee with ADM Londis was an entirely separate and distinct guarantee from the contract of guarantee entered into between the plaintiff and the first and second defendant (and she exhibits this ADM Londis guarantee). Therefore she submits, in my view, correctly, that there can be no suggestion that there is a right of contribution as between the defendants and ADM Londis under the two different guarantees:
3 (2) Secondly, the plaintiff and ADM Londis amended the Londis guarantee on 8 th July, 2005 so that it provided, on its own terms, that it would expire on 5 th March, 2006. (Again this amended ADM Londis guarantee is exhibited with her affidavit).
4 (3) Thirdly, Ms Kavanagh states that the plaintiff does not accept that the first defendant (or indeed the second defendant) was unaware that the ADM Londis guarantee was limited for a period of two years for a number of reasons as follows:
1. On 4 th December, 2003 the plaintiff's solicitor at that time wrote to the solicitor for China Girls Ltd. (of which Mr. Byrne was a director) and informed them that the ADM Londis guarantee was only for two years.
2. Moreover, on 22 nd September, 2008 Smith Stapleton & Co. Solicitors (acting on behalf of both the borrower company and the defendants in relation to the variation of the loan facility in August, 2009) wrote to ACC Bank and specifically requested a copy of the ADM Londis guarantees. On 25 th September, 2008 ACC Bank replied to Smith Stapleton & Co. and enclosed a copy of the ADM Londis guarantee.
9. It is clear therefore, from all of the above, that the first named defendant was aware of the existence and terms of the ADM Londis guarantee through his solicitor. Therefore he had full knowledge of its existence, its terms and indeed its duration.
10. Moreover, Ms Kavanagh also avers to the fact that the relationship between the borrower and ADM Londis ended in or about 2009. Thereafter the borrower entered into a new agreement with a new company in respect of the supermarket premises and that new company operated the supermarket premises under the "Costcutters" brand from 1 st March, 2009. In those circumstances the plaintiff says there is no way in which Mr. Byrne could reasonably have believed that ADM Londis would have remained liable for the company's borrowings indefinitely in circumstances where Londis's link with the borrower had come to an end.
11. Finally, the plaintiff says that the terms of the guarantee itself (entered into with the first defendant) permits it, as a matter of agreement between the parties...
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