Allied Irish Banks Plc v G.R.O. Oil Ltd
|Mr. Justice Twomey
|27 March 2019
| IEHC 189
|[2014 No. 2228 S]
|27 March 2019
 IEHC 189
THE HIGH COURT
[2014 No. 2228 S]
Summary judgment – Guarantee – Undue influence – Plaintiff seeking summary judgment on foot of a guarantee against the defendant – Whether the guarantee was signed under undue influence
Facts: The plaintiff, Allied Irish Banks plc (AIB), applied to the High Court seeking summary judgment on foot of a guarantee in the sum of €2.18 million against the seventh defendant, Ms Corkery, in her capacity as personal representative of Mr Corkery, deceased, formerly of Ovens, Co. Cork. Ms Corkery had two key defences to the summary proceedings. First, it was claimed that Mr Corkery signed the guarantee under undue influence and secondly, it was claimed that Mr Corkery’s estate had a counter-claim against AIB for breach of fiduciary duty and negligence, although at the hearing of the action, the emphasis was on the existence of a fiduciary duty, rather than any alleged negligence.
Held by Twomey J that, in all the circumstances, Ms Corkery’s claims amounted to mere assertions unsupported by any cogent evidence which forced the Court to conclude that there was not a fair or reasonable probability of Ms Corkery having a real or bona fide defence.
Twomey J held that he would grant the summary judgment sought in this case.
This is a case in which the plaintiff (‘AIB’) seeks summary judgment on foot of a guarantee in the sum of €2.18 million against the seventh named defendant (‘Ms. Corkery’) in her capacity as personal representative of Mr. Gerard Corkery Deceased (‘Mr. Corkery’), formerly of Ovens, Co. Cork.
Mr. Corkery was a director and shareholder of the first defendant (‘G.R.O. Oil’) and in that capacity executed a Guarantee (the ‘Guarantee’) on the 4th of April, 2008 along with the other defendants (but not G.R.O. Oil), who were also directors and shareholders of G.R.O. Oil. The Guarantee was limited to €2.18 million and was a joint and several guarantee of the liabilities of G.R.O. Oil to AIB pursuant to a Letter of Sanction (‘Letter of Sanction’) dated 12th of March, 2008 in respect of a loan to G.R.O. Oil in the amount of €2.18 million.
G.R.O. Oil was a company involved in converting rapeseed oil into diesel and the AIB loan was taken out in connection with its plan to acquire a site in Thurles, Co. Tipperary in order to build a manufacturing plant.
Mr. Corkery died on the 29th of December, 2015. However, he swore an affidavit in these summary proceedings on the 11th of April, 2015. His wife, Ms. Corkery, in her capacity as personal representative, also swore two affidavits in this case.
There is no dispute regarding the fact that the loan fell into arrears and that demand was duly made on Mr. Corkery under the Guarantee. Indeed, judgment has been obtained against G.R.O. Oil arising from default under the Letter of Sanction.
Judgment has also been obtained against the sixth and eleventh defendants for €2.18 million on foot of the Guarantee. Judgment in default was obtained against the second named defendant. Proceedings in relation to the Guarantee are ongoing against the remaining defendants, as their motion that judgment under the Guarantee should not exceed €1.1 million was rejected by O'Regan J. and is under appeal.
Ms. Corkery has two key defences to these summary proceedings. First, it is claimed that Mr. Corkery signed the Guarantee under undue influence and secondly, it is claimed that Mr. Corkery's estate has a counter-claim against AIB for breach of fiduciary duty and negligence, although at the hearing of the action, the emphasis was very much on the existence of a fiduciary duty, rather than any alleged negligence.
The law on summary judgments is well established and was summarised by Hedigan J. in :
‘The principles applicable to this type of application are well established. To proceed to plenary hearing a legally statable defence must be identified. Assertion of a ground for defence is not enough. See McKechnie J. Is there a fair or reasonable probability of the defence having a real or bona fide defence? See Ban que de Paris et des approved by the Supreme Court Denham J. in .’
In the Supreme Court decision of , Clarke J. (as he then was) stated at para. 6.5.5 in relation to factual assertions that purport to provide a defence:
‘Insofar as facts are put forward, then, subject to a very narrow limitation, the Court will be required, for the purposes of the summary judgment application, to accept that facts of which the defendant gives evidence, or facts in respect of which the defendant puts forward a credible basis for believing that evidence may be forthcoming, are as the defendant asserts them to be. The sort of factual assertions, which may not provide an arguable defence, are facts which amount to a mere assertion unsupported either by evidence or by any realistic suggestion that evidence might be available, or, facts which are in themselves contradictory and inconsistent with uncontested documentation or other similar circumstances such as those analysed by Hardiman J. in Aer Rianta. it needs to be emphasised again that it is no function of the Court on a summary judgment motion to form any general view as to the credibility of the evidence put forward by the defendant.’
It is clear therefore that mere assertion of a ground of defence is not sufficient to resist an application for summary judgment. Similarly, where facts are asserted without cogent evidence or any realistic suggestion that there might be such evidence, then this does not amount to a defence to summary judgment.
In this case, therefore, where Mr. Corkery has signed a guarantee of his part-owned company's loan, assertions that he was under undue influence to sign that guarantee and that AIB breached its fiduciary duty in asking him to sign it, must be analysed to see if they are simply mere assertions and if there is any cogent evidence or any realistic suggestion of such evidence which would lead this Court to conclude that there is a fair or reasonable probability of a real or bona fide defence.
In relation to the claim of undue influence, the law is clearly set out in the judgment of Irvine J. in the Court of Appeal case of , where she stated that:
‘[…] it is clear that in order to establish a defence of undue influence at a plenary hearing Mrs. Curran would first have to satisfy the court that but for the undue influence exerted upon her by her son she would not have executed the guarantee and second that the bank, i.e. the creditor, had actual or constructive notice that the guarantee was procured by the undue influence. That being so, in order to resist summary judgment, Mrs. Curran had to satisfy the low threshold standard by establishing on affidavit that she might credibly argue in the course of a plenary hearing that she had executed the guarantee as a result of the undue influence. It is only relevant to consider whether it is arguable that the bank was obliged to make inquiries to ascertain whether, having regard to her connection with the company, she fully understood and was freely entering into the guarantee, if she could first establish a credible or arguable case on the facts that she executed the guarantee in circumstances of undue influence. In turn, that required her to set out on affidavit the type of facts, details and circumstances upon which she would rely at the trial to establish that her will was overborne by her son, Michael Curran, when she executed the guarantee.’
Thus, for Mr. Corkery's estate to have a defence of undue influence at the plenary hearing, it would have to prove, inter alia, that Mr. Corkery would not have executed the Guarantee but for the undue influence of AIB or its agents.
The case of , is relevant to the consideration of Mr. Corkery's allegation that AIB owed him a fiduciary duty. It is clear from this case that this is not an easy defence for Mr. Corkery to mount, since at para. 44 Hogan J. stated:
‘One common theme running through this- and, indeed, the other appeals- was that the Bank owed no fiduciary duty to advise its customers and that it had, not, in fact done so. There is no doubt but that the lender/borrower relationship does not generally impose fiduciary duties on the lender. The whole object of a fiduciary is based upon a recognition that certain categories of persons owe duties to others over and above conventional contractual obligations by virtue of the special nature of their profession, occupation or position, so that, in...
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