Allied Irish Banks Plc v Maguire

• Jurisdiction: Ireland
• Judge: Mr. Justice McDermott
• Judgment Date: 09 October 2018
• Neutral Citation: [2018] IEHC 561
• Court: High Court
• Docket Number: [2016 No. 1907 S.]
• Date: 09 October 2018

[2018] IEHC 561

THE HIGH COURT

McDermott J.

[2016 No. 1907 S.]

BETWEEN

ALLIED IRISH BANKS PLC.

PLAINTIFF

AND

CATHERINA MAGUIRE, DERMOT MAGUIRE

AND

NIALL MAGUIRE

DEFENDANTS

Banking and finance – Loan facility – Past consideration – Plaintiff seeking summary judgment – Whether the defendants raised an arguable defence

Facts: The plaintiff, Allied Irish Banks plc, applied to the High Court for summary judgment in the sum of €341,856.55 against the first defendant, Ms Maguire, in respect of monies advanced by the plaintiff to her on foot of a loan facility agreement (account no. 932477/12119366). The plaintiff also sought judgment in the amount of €320,000.00 against the second and third defendants, Messrs Maguire, on foot of separate letters of guarantee signed by each of them dated 18th November 2009 as security for the above mentioned loan facility. The first defendant did not seek to defend these proceedings.

Held by McDermott J that the second and third defendants raised an arguable defence in respect of the issue of past consideration.

McDermott J held that he would refuse the plaintiff’s application for summary judgment and would direct that the case be sent for plenary hearing.

Application refused.

JUDGMENT of Mr. Justice McDermott delivered on the 9th day of October 2018

1 This is an application for summary judgment in the sum of €341,856.55 against the first named defendant in respect of monies advanced by the plaintiff to her on foot of a loan facility agreement (account no. 932477/12119366). The plaintiff also seeks judgment in the amount of €320,000.00 against the second and third named defendants on foot of separate letters of guarantee signed by each of them dated 18th November 2009 as security for the above mentioned loan facility. The first named defendant has not sought to defend these proceedings.

The Loan Facility

2 It is averred in the affidavit grounding this application by Mr. McGuinness on behalf of the plaintiff, that by letter dated 29th July 2010 the plaintiff made available to Ms. Catherina Maguire, the first named defendant, a loan facility in the amount of €320,000.00, subject to terms and conditions, which required the provision of certain securities including letters of guarantee for €320,000.00 from the second and third named defendants. The facility was accepted by the first named defendant on 11th August 2010. A letter of sanction dated 29th July 2010 was exhibited.

3 The loan facility was obtained for the purpose of purchasing 25 acres of land at Annie's, Clones, Co. Monaghan, Folio MN19030. The money was drawn down and the purchase of the lands was completed in 2007. The plaintiff claims that the first named defendant defaulted in respect of monies due and owing and letters of demand were sent to her by the plaintiff on the 6th November 2012, 12th February 2014, 7th January 2015 and 2nd August 2016 seeking repayment of the amount due.

4 The second and third named defendants did not execute guarantees as originally contemplated in the original loan facility letter. However, on the 18th November 2009 they each entered into guarantees in respect of all sums of money at any time owing to the Plaintiff from or by the first named defendant provided that the total amount recoverable from each should not exceed €320,000.00. By this stage, of course, the money had already been drawn down. Indeed the original agreement under which the time was limited for the repayment of the sum advanced had been renewed annually without further recourse to the second and third defendants but on substantially the same terms and subject to the same security. However, no guarantee was executed under any of these renewals. The last such renewal relied upon by the plaintiff was set out in the bank's facility letter of 29th July 2010 which post-dated the date upon which the guarantees were executed. The court notes that the history and purpose of this facility and the circumstances in which the guarantees were executed years after the advancement of the original amount have not been addressed by the plaintiff in the grounding affidavit of Mr. McGuinness. Letters of demand were issued by the plaintiff, its servants or agents to the second and third named defendants dated 20th September 2012, 12th February 2014, 7th January 2015 and 2nd August 2016.

Affidavits of Mr. Dermot Maguire and Mr. Niall Maguire

5 In a replying affidavit sworn on the 9th October 2017, Mr. Dermot Maguire, the Second Named Defendant, avers that Mr. McGuinness” affidavit is incomplete because it fails to describe the circumstances in which the loan facility was provided to the first named defendant.

6 Mr. Maguire states that the first named defendant, his cousin, did not first receive the loan from the plaintiff for the purpose of purchasing the 25 acres of land in July 2010 as stated in the affidavit of Mr. McGuinness but in September 2006 when the land in question was purchased. Mr. Maguire exhibited a copy of a credit agreement dated 25th September 2006 between the plaintiff and the first named defendant a special condition of which required that guarantees be obtained from him and his brother, Niall Maguire, the third named defendant. He states that he did not execute any such guarantee prior to the funds being advanced to the first named defendant. He states that the facility originally advanced to the first named defendant pursuant to the credit agreement of 25th September 2006 was for a term of 12 months and it was renewed on an annual basis. While he did not have copies of all correspondence relating to the loan facility, he exhibited a copy of a credit agreement dated 25th September 2009 by way of example. This credit agreement pre-dated the letters of guarantee by approximately two months. On this basis the second and third defendants wish to advance the defence that the guarantees were not supported by any consideration since the monies had been advanced a number of years prior to the execution of the guarantees, no further money was advanced thereafter, there was no evidence of an agreement by the plaintiff not to pursue the first defendant if the guarantees were executed and there was no contact with the second and third defendants before the annually renewed agreements with the first defendant were executed: it is said that the plaintiff is attempting to rely upon past consideration in seeking to enforce the guarantees.

7 Mr. Maguire also referred to a meeting that was held in November 2009 attended by him, the Third Named Defendant, a Ms. Moira Lynch and Mr. Enda Mulligan of the Monaghan branch of AIB, Ms. Maria Maguire and Ms. Susan McKenna. He states that the purpose of this meeting was to review the family business, Maguire International Limited's general borrowings with the plaintiff. He states that towards the end of the meeting Mr. Enda Mulligan, on behalf of the bank, stated that he required guarantees to be signed for the loan facility agreed between the Bank and Catherina Maguire, as no guarantees were in place. He states that after the meeting he and the third named defendant discussed whether they should sign the guarantees sought in light of the fact that the funds ‘had been advanced to the First Named Defendant several years previously.’ He states that ‘[g]iven the total reliance which our business had on AIB continuing to advance Maguire International Limited credit we very reluctantly signed these guarantees’. This is relied upon as the basis for a proposed defence of duress which is said to render the guarantees unenforceable.

8 Mr. Maguire also states that the loan was advanced by the plaintiff to the first named defendant in her capacity as a consumer and that the guarantees which were then sought from him and the third Named defendant were also sought in their capacities as consumers as they were each acting for purposes outside their respective businesses. As such, it is stated that the loan facility is subject to the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 and 2000. Mr. Maguire states that the contract for the loan facility contains several unfair terms including those which relate to interest calculation and variation; charging and surcharging; withholding, forbearance, securitisation and early redemption which are unfair and are unenforceable against the defendants within the meaning of Regulation 6 of the Regulations of 1995 and 2000. There is no specific unfairness identified. The guarantees are in a standard form.

9 In an affidavit sworn on the 9th October 2017, Mr. Niall Maguire, the Third Named Defendant endorses each of the points of defence raised in Mr. Dermot Maguire's affidavit and supports his recollection of the meeting which is said to have given rise to duress based upon the ‘total dependence which our business had on AIB continuing to advance Maguire International credit, we very reluctantly signed these guarantees’.

The Law

10 The principles applicable to the court's consideration of an application to grant summary judgment are well established and summarised by McKechnie J. in Harrisrange Ltd. v. Duncan [2003] 4 I.R. 1 as follows:-

‘9. … it seems to me that the following is a summary of the present position:-

(i) the power to grant summary judgment should be exercised with discernible caution;

(ii) in deciding upon this issue the court should look at the entirety of the situation and consider the particular facts of each individual case, there being several ways in which this may best be done;

(iii) in so doing the court should assess not only the defendant's response, but also in the context of that response, the cogency of the evidence adduced on behalf of the plaintiff, being mindful at all times of the unavoidable limitations which are inherent on any conflicting affidavit evidence;

(iv) where truly there are no issues or issues of simplicity only or issues...