Allied Irish Banks Plc v Karl Mckenna and Others
| Jurisdiction | Ireland |
| Judge | Mr. Justice Birmingham |
| Judgment Date | 12 March 2014 |
| Neutral Citation | [2014] IEHC 122 |
| Judgment citation (vLex) | [2014] 3 JIC 1202 |
| Court | High Court |
| Date | 12 March 2014 |
[2014] IEHC 122
THE HIGH COURT
BETWEEN
AND
AER RIANTA CPT v RYANAIR LTD 2001 4 IR 607 2002 1 ILRM 381 2001/1/68
ZURICH BANK v MCCONNON UNREP BIRMINGHAM 4.3.2011 2011/50/14278 2011 IEHC 75
O'HARA v ALLIED IRISH BANKS LTD 1985 BCLC 52
TEDCASTLE MCCORMACK v MCCRYSTAL UNREP MORRIS 15.3.1999 1999/24/7774
SAUNDERS (EXECUTRIX OF WILL OF GALLIE) v ANGLIA BUILDING SOCIETY (NO 2) 1971 1 AER 243 1971 AC 1039 1971 2 WLR 349
ACC BANK PLC v KELLY UNREP CLARKE 10.1.2011 2011/2/396 2011 IEHC 7
MUSKHAM FINANCE LTD v HOWARD 1963 1 AER 81 1963 1 QB 904 1963 2 WLR 87
Joint and several guarantee – Independent legal advice – Non est factum – Plaintiff seeking summary judgment on foot of a guarantee – Whether defendants” have made an arguable case
Facts: The plaintiff was Allied Irish Banks. The defendants were directors and shareholders of the company Kapada Ltd. By a letter of sanction, Allied Irish Banks had agreed to extend to Kapada Ltd. an overdraft facility of €50,000 and loan facility of €140,000. The security for those facilities was a joint and several letter of guarantee from all three defendants limited to €190,500, signed by the defendants to indicate acceptance of the facilities. Allied Irish Banks agreed to extend to Kapada Ltd. a further loan facility of €191,671, with security being a further joint and several letter of guarantee from all three defendants. Allied Irish Banks then sought the summary judgment of the High Court against the second and third defendants, Mr Donlon and Mr Copeland respectively, on foot of the guarantee entered into, by virtue of which the liabilities of Kapada Ltd. to Allied Irish Banks were guaranteed to a limit of €250,000. The amount sought in these proceedings was €168,345. The plaintiff bank relied on the signed joint and several guarantee letter dated 11th December 2007. Mr Donlon claimed that he did not have independent legal advice in relation to the guarantee, that his signature was not witnessed, that the guarantee was not under seal, and that Allied Irish Banks had breached the provisions of the Consumer Protection Code 2006. Mr Copeland relied on the defence of non est factum, in that he did not realise that the guarantee he signed was a joint and several one, believing he was providing guarantee for only one third of Kapada Ltd.”s debt
Held by Birmingham J. that, having applied the principles relevant to the request for summary judgment found in Aer Rianta c.p.t. v. Ryanair (No. 1) [2001] 4 I.R. 607, that both the second and third defendants have failed to make an arguable case. Addressing Mr Donlon”s claims, Birmingham J. held that there is no requirement in law that and adult entering into a guarantee on behalf of a company of which he is a director and shareholder should have independent legal advice, relying upon O”Hara v. Allied Irish Banks [1985] B.C.L.C. 52. Nor was there a requirement in law for the guarantee to be witnessed. While Mr Donlon was factually correct that the guarantee was not under seal, Birmingham J. held that there was no requirement that it should be where the plaintiff provided consideration for the guarantee by way of loan and overdraft facilities. As this was a loan to a commercial entity guaranteed by its directors and shareholders, Mr Dolon was not dealing in the capacity of a consumer, therefore the 2006 Code had not been breached. Addressing Mr Copeland”s non est factum claim, Birmingham J. relied upon the requirements of the defence stipulated in Tedcastle McCormack and Company v. McCrystal (Unreported, High Court, Morris J., 15th March, 1999). Copeland had indicated he understood the essential nature of the document he had signed was that of a guarantee. Birmingham J. held that whether the guarantee was a joint or joint and several guarantee fell within the ambit of the legal effect of the document. The Court found that there was such a degree of carelessness on the part of Mr Copeland that he cannot now repudiate what he signed. He should take advice before signing or suffer the consequences of not doing so.
Birmingham J. held that neither defendant had made an arguable case and that Allied Irish Bank is entitled to the judgment sought.
Summary judgment granted.
JUDGMENT of Mr. Justice Birmingham delivered the 12th day of March 2014
1. In this case the plaintiff is now seeking summary judgment against the second and third named defendants, judgment having been obtained previously against the first named defendant, on foot of a guarantee entered into by all three defendants dated the 11 th December, 2007, by virtue of which the liabilities of a company known as Kapada Limited, of which all the defendants were directors and shareholders, to the plaintiff bank were guaranteed to a limit of €250,000. The amount sought in the present proceedings against both defendants is €168,345.
2. The application for a summary judgment is resisted both by the second named defendant, who appears as a litigant in person, and by the third named defendant who is represented by solicitor and counsel.
3. The principles applicable to a request for summary judgment have been considered by the Superior Courts in a number of cases in recent years, and are now well known. In the seminal case of Aer Rianta c.p.t. v. Ryanair (No. 1) [2001] 4 I.R. 607, Hardiman J. commented as follows at 623:-
"[T]he fundamental questions to be posed on an application such as this remain: is it 'very clear' that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant's affidavits fail to disclose even an arguable defence?"
Earlier, at p. 621 Hardiman J. pointed out:-
"The 'fair and reasonable probability of the defendants having a real or bona fide defence', is not the same thing as a defence which will probably succeed, or even a defence whose success is not improbable."
4. In Zurich Bank v. McConnon [2011] IEHC 75, (Unreported, High Court, Birmingham J., 4 th March, 2011), I commented that while the jurisdiction to refuse leave to defend and to grant summary judgment undoubtedly existed, that it was a jurisdiction to be exercised sparingly. I remain firmly of that view.
5. Accordingly, the test I will apply is that referred to by Hardiman J. Unless it is very clear that a particular defendant has no defence then leave to defend will be granted to him, only if it is very clear that one or other defendant has no defence will summary judgment be granted.
6. The factual background to the present application is that as I have indicated all three defendants were directors and shareholders of Kapada Limited, a company involved in project management in the construction sector. By letter of sanction dated the 2 nd May, 2007, the plaintiff agreed to extend to Kapada Limited an overdraft facility of €50,000 and a loan facility of €140,500. The security for those facilities was a joint and several letter of guarantee from all three defendants limited to €190,500. The defendants all signed the letter of sanction to indicate Kapada Limited's acceptance of the facilities and ratified that acceptance at a meeting of the directors on the 15 th May, 2007. The defendants all executed the agreed joint and several guarantee on the 2 nd May, 2007.
7. By letter of sanction dated the 5 th December, 2007, the plaintiff agreed to extend to Kapada Limited a further loan facility of €191,671. The plaintiff also continued to provide Kapada Limited with an existing overdraft facility of €50,000. The security for these facilities was a further joint and several letter of guarantee from all three defendants, this time limited to €250,000. The defendants all accepted these facilities by way of a form of acceptance signed on the 10 th December, 2007. The plaintiff now seeks to rely on the joint and several guarantee dated the 11 th December, 2007, which was executed and signed by all three defendants.
8. The second named defendant has sworn a number of affidavits in which he raises quite a number of issues. He says that he did not have independent legal advice in relation to the guarantee, that - despite...
To continue reading
Request your trial
-
Barry v Ennis Property Finance Dac
...Contract Law (2nd Ed.) at para. 3-05. Reference is made therein to Birmingham J.'s decision in Anglo Irish Bank plc v. McKenna [2014] IEHC 122. On its face, that decision can be distinguished from the case currently before the Court; the defendants in McKenna were directors and shareholder......
-
ACC Loan Management Ltd v Connolly
...Act there was no requirement that a guarantee be executed under seal to be valid. It refers to Anglo Irish Bank p.l.c. v. McKenna & Ors. [2014] IEHC 122 in which Birmingham J. found that the guarantee in question was not executed under seal, but held that there was no such requirement wher......
-
Fabri Clad v Stuart
...119, [2017] 3 I.R. 629 and McDonnell v. Ring [2016] IECA 16, and the decision of the High Court in Allied Irish Banks plc v. McKenna [2014] IEHC 122. 51 It was contended that the appellant first raised the issue of want of consideration in oral arguments at the hearing in the High Court: - ......
-
ACC Loan Management Ltd v Sheehan
...of the guarantee. In this regard the bank has referred to what is stated by Birmingham J. in Allied Irish Banks plc v. McKenna [2014] IEHC 122 as follows:- 'So far as independent legal advice or more specifically the alleged lack of it is concerned, there is no requirement in law that an a......