Allied Irish Banks Plc v Meade

JudgeMr. Justice Hunt
Judgment Date03 October 2016
Neutral Citation[2016] IEHC 562
Docket NumberRecord No. 2014 No. 2784S
CourtHigh Court
Date03 October 2016

[2016] IEHC 562


Hunt J.

Record No. 2014 No. 2784S


Banking & Finance – Letter of guarantees – Liberty to enter final judgment – Absence of independent legal advice – Duty of care of the lender – Bona fide and arguable defence

Facts: Following an appearance in action entered by the defendants, the plaintiff sought liberty to enter final judgement against each of the three defendants. The plaintiff's claim against each of the defendants was for a sum, plus the appropriate interest on foot of guarantees in writing referable to an advance of money to the borrower. The plaintiff contended that the defendants had no bona fide defence to the proceedings and that the appearances entered were solely for the purpose of delay. The defendants raised many defences, including the absence of legal advice, personal issues, etc.

Mr. Justice Hunt held that the plaintiff would have liberty to enter the final judgement against each of the defendants. The Court found that the issues raised by the defendants were simple and easily determined and that the defendants failed to raise any bona fide and arguable defence to the claim of the plaintiff. The Court held that the absence of independent legal advice in commercial context did not establish an arguable defence as there was no duty of care on the lender to advise the borrower about the necessity of availing the legal advice prior to the execution of relevant documents. The Court held that mere difficulties would not be sufficient to avoid liability unless they were of a nature to adversely impact the capacity to contract.

JUDGMENT of Mr. Justice Hunt delivered on the 3rd day of October, 2016

The plaintiff's claim against each of the defendants is for the sum of €1,000,000 plus appropriate interest on foot of guarantees in writing dated 10th February 2011, referable to an advance of money to Unit 5 (Rosemount) Limited (‘the borrower’) on 7th February 2011. Each of the defendants entered an appearance in the action, and this was followed by the issue of a motion seeking liberty to enter final judgment by the plaintiff against the defendants. The affidavit grounding this motion exhibits copies of the facility letter, the guarantees in writing and subsequent letters of demand, and contains the customary assertion that the defendants have no bona fide defence to the proceedings, and that the appearances entered were solely for the purpose of delay. Each of the defendants delivered replying affidavits setting out matters relied upon by way of defence and generally disputing the plaintiff's entitlement to liberty to enter final judgment at this stage. The position of each defendant will be considered separately in due course.


The principles applicable to an application of this type have been set out many times and I do not propose to repeat them in detail in this case. It is sufficient to refer to the formulation adopted by the late Hardiman J. in Aer Rianta CPT v. Ryanair Limited (No. 1) [2001] 4 I.R. 607 where he held, at page 623, that the test to be applied on an application for summary judgment involved the court asking itself the answer to one simple question which he framed in the following terms:

‘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?’


The observations of the Court of Appeal in Close Invoice Finance Limited v. Matthews [2015] IECA 132 are also relevant. The Court of Appeal emphasised that the mere assertion in an affidavit of a given situation which is to form the basis of an intended defence does not of itself constitute a ground for granting leave to defend. Whether or not there is a fair and reasonable probability of the defendant having a real or bona fide defence has to be ascertained by looking at the situation as a whole, and assertions must be supported by some meaningful evidence such that a court could conclude that there is a fair or reasonable probability that the defendants have a bona fide defence based upon such assertion. I will now deal with the position of each defendant in turn, by summarising the matters set out in their replying affidavits.

Mr. Meade

In his initial replying affidavit, Mr. Meade provides a further exposition of the history of the dealings between the parties. It appears that the loan referred to in the summary summons was originally drawn down by the borrower in 2007 to fund the purchase of Unit 5, Rosemount Industrial Estate, Ballycullen, Dublin 11. At the time of the drawdown, Mr. Meade states that he was ‘ having serious personal difficulties and was not in a position to conduct an independent evaluation in respect of signing the purported personal guarantees, the subject matter of the within proceedings.’ He also states that he ‘ was not advised by an employee, servant or agent of the requirement, necessity or advisability to seek independent legal advice in respect of the purported obligations imposed or assumed under or on foot of such personal guarantees.’


Mr. Meade then states that repayment of the said loan had been extended by the plaintiff on a yearly basis since 2007 and that he required sight of all the documentation relating to this loan since 2007 in order to fully ascertain what, if any, liability the borrower had to the plaintiff. He also asserts that the letter of demand is ‘void for uncertainty’ and points to a discrepancy between the claim in the letter of demand for payment of the sum of €1,000,000 plus interest on this amount at the rate of 3.49% per annum (variable) from 6th July 2011 until full repayment, contrasting that with para. 14 of the special endorsement of claim whereby the sum claimed on foot of the aforesaid letter of demand is the sum of €1,000,000 including interest as of the date of the said demand. The matters raised by Mr. Meade in his affidavit were dealt with in a replying affidavit on behalf of the plaintiff by Linda Bermingham. This supplied details of the amount owed as of the 15th July 2014, which had been omitted from the original grounding affidavit. She stated that she was aware of some personal difficulties that Mr. Meade had at the time of the original transaction between the plaintiff and Mr. Meade, but she did not get the impression that these were so serious as to affect his ability to conduct business with the plaintiff, or otherwise. In relation to the topic of legal advice, she referred to the top of the letter of guarantee signed by Mr. Meade which contains a box, with a paragraph in bold font, which states as follows:-



Ms. Bermingham also stated that the letter of guarantee was accompanied by another letter which also advised him to obtain independent legal advice before signing the guarantee in 2011. Ms. Bermingham also referred to Mr. Meade's familiarity with guarantee documents, having signed similar documents in April 2007, October 2008 and December 2008, which were substantially similar to the document signed by Mr. Meade in 2011.


Mr. Meade subsequently delivered a supplemental replying affidavit in June 2016, adding that at the time he signed the letter of guarantee it was his understanding that the third named defendant (Mr. Campbell) had negotiated with the plaintiff that any potential liability on foot of the guarantee would be shared between the defendants in the same proportion as their shareholding in the borrower, which was 10% in the case of Mr. Meade. He also claimed that Mr. Campbell negotiated with the plaintiff to lower the guarantee sum to €1,000,000, and of his belief on the signing of the guarantee in 2011, that only one amount, a total of €1,000,000, would be claimed on any default by the defendants and that liability, if any, would be shared between the defendants, with Mr. Meade's liability being capped in proportion to his shareholding. Lastly, Mr. Meade stated that he was advised by ‘ staff of the plaintiff’ that individual signatures were required on separate guarantee forms because ‘ having three signatures of one form gave the plaintiff problems in the past and that this was for administrative and compliance purposes and for no other reason.’


On an overall view of the matters raised by Mr. Meade in his affidavits, I am not satisfied that all or any of these matters reach the modest threshold required in order to grant him leave to defend these proceedings. The fact that Mr. Meade had certain unfortunate personal difficulties in 2007 cannot, of itself, provide any legal defence to the plaintiff's claim based on documents signed at that time or subsequently. It is a fact of life that people are obliged to conduct serious and important business against a range of personal issues of variable nature and magnitude. In the contractual context, the mere existence of such difficulties is clearly insufficient to affect issues of liability, in the absence of credible evidence that the consequences of such difficulties were such as to affect the capacity to contract in a material manner. The matters referred to by Mr. Meade are so tentative, vague and limited as to fall well short of establishing an issue to be tried in the circumstances of this case.


Likewise, the issues raised in relation to the absence of independent legal advice prior to the execution of the letter of guarantee do not establish a fair or reasonable probability of Mr. Meade having a real or bona fide defence in this respect. The documents in question were signed by...

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