Bank of Ireland Mortgage Bank v Daly

• Jurisdiction: Ireland
• Judge: Mr. Justice Heslin
• Judgment Date: 10 December 2020
• Neutral Citation: [2020] IEHC 667
• Date: 10 December 2020
• Court: High Court
• Docket Number: [2015/1741 S]

BETWEEN

BANK OF IRELAND MORTGAGE BANK

PLAINTIFF

AND

ETHEL DALY (AS LEGAL PERSONAL REPRESENATIVE OF THE LATE MARCUS JOHN ALBERT DALY, DECEASED)

DEFENDANT

AND

BETWEEN

BANK OF IRELAND MORTGAGE BANK

PLAINTIFF

AND

ETHEL DALY (AS LEGAL PERSONAL REPRESENATIVE OF THE LATE MARCUS JOHN ALBERT DALY, DECEASED)

DEFENDANT

[2020] IEHC 667

Heslin

[2015/1741 S]

[2018/1505 S]

THE HIGH COURT

Judgment of Mr. Justice Heslin delivered on the 10th day of December 2020

Introduction

1 The plaintiff, Bank of Ireland Mortgage Bank (hereinafter “the Bank”) seeks summary judgment against the defendant in respect of two sets of proceedings. The defendant is the widow and the legal personal representative of the late Marcus John Albert Daly (hereinafter “Marcus Daly Snr.”, or “MDS”) who died on 18 July 2016.

2 The first in time of the two sets of related proceedings were commenced by means of a summary summons which was issued on 09 September 2015 (High Court Record Number 2015/1741S). These proceedings relate to a guarantee which was executed by MDS on 05 August 2010 in favour of the bank whereby, in consideration of the bank making or continuing banking facilities to Marcus F. Daly (hereinafter referred to as “Marcus Daly Jr.” or “MDJ”) and his wife, Patricia Daly (hereinafter, collectively, “the borrowers”), MDS guaranteed to pay to the plaintiff, on demand, all monies owing to the bank in respect of facilities granted by the bank to the Borrowers on loan account no. 13129997. It is not in dispute that the guarantee in favour of the plaintiff bank was limited to a principal sum of €300,000, plus interest. It is not in dispute that on or about 01 November 2010 the bank advanced the sum of €1.65 million to the Borrowers through loan account number 13129997. It is also common case that on 03 February 2014 a demand was made on the borrowers for repayment of the said loan facility and that, on the same date, the bank made a demand of MDS for payment of the sum of €300,000 on foot of the guarantee. No payment having been made by MDS in response the said demand, the plaintiff issued the summary summons to which I have referred on 09 September 2015 bearing High Court Record Number 2015/1741S (the “guarantee proceedings”). Following the passing of MDS, on 18 July 2016, and the issuing, on 16 March 2017, of a grant of probate to Mrs. Ethel Daly, as his legal personal representative, the defendant was substituted into the guarantee proceedings as defendant, in her capacity as executrix of the estate of MDS.

3 The second set of proceedings commenced by means of a summary summons which issued on 19 November 2018, bearing High Court Record Number 2018/1505S (the “loan proceedings”). These concern a loan facility provided by the plaintiff to MDS on foot of a letter of loan offer, dated 30 October 2009, which MDS accepted on the same date, pursuant to which the bank agreed to provide a loan facility of €350,000 to MDS (hereinafter “the Galway loan facility”) for a term of five years. It is not in dispute that MDS agreed to repay the foregoing by means of monthly repayments which would be “interest only” for the first five years, repayment being secured by means of a mortgage on property at Kirwan's Lane, Galway, owned by MDS. It is also common case that in December 2015 the term of the facility was extended, by agreement between MDS and the plaintiff bank. It is not in dispute that the bank advanced the sum of €350,000 to MDS, through loan account number 41326787. All repayments required under the aforesaid loan facility were made to the bank, by MDS, from drawdown of the said loan, in late October 2010, until his death, on 18 July 2016. It is not in dispute that on 07 August 2018 a demand was made on the estate of MDS seeking repayment of the aforesaid loan. In circumstances where repayment was not made, the plaintiff bank issued the loan proceedings against the estate of MDS, the defendant being named as legal personal representative in the summary summons which issued on 19 November 2018.

4 On 17 December 2018 the plaintiff issued motions for judgment in both the guarantee proceedings and the loan proceedings. In an affidavit sworn by Mr. Emmet Pullan on behalf of the bank on 14 December 2018, grounding the application for judgment in the guarantee proceedings, it was averred that, in addition to the principal of €300,000.00, interest from 04 February 2014 to 21 November 2018 had accrued in the sum of €65,224.76 and the plaintiff sought judgment for €365,2224.76 together with further interest on the principal sum of €300,000 from 22 November 2018. In an affidavit sworn by Mr. Pullan on 04 December 2018 to ground the application for summary judgment in the loan proceedings, it was averred that the principal owing was €291,918.62 and that interest on the principal from 22 September 2018 to 26 November 2018 amounted to €2,533.70 and the plaintiff bank sought judgment in the sum of €294,452.32 together with further interest on the principal sum of €291,918.62 from 27 November 2018.

5 In opposing both of the plaintiff's applications for summary judgment, Mrs. Ethel Daly swore two affidavits, in the guarantee proceedings, being affidavits sworn by the defendant on 25 February 2019 and 14 November 2019, respectively. The defendant also swore one affidavit on 25 February 2019 in opposition to the plaintiff's motion for judgment in the loan proceedings. In the latter affidavit the defendant alleges that the plaintiff's claim in the proceedings under record number 2018/1505 S is statute barred. It is important to note that, at the commencement of the hearing of this matter on 10 November 2020, senior counsel for the defendant made it clear that the defendant was no longer seeking to rely on any statute of limitations arguments.

6 It is fair to say that there is a great deal of commonality as between the two replying affidavits which were sworn by the defendant on 25 February 2019 and it is also fair to say that the basis upon which the defendant opposes both of the plaintiff's claims is what the defendant characterises as the plaintiff's waiver of compliance with certain pre – conditions which were set out in a loan offer to the borrowers dated 19 February 2010. It is the defendant's case that these pre – conditions, which related to the financial position of MDJ were pre – conditions which inured, not only the benefit of the plaintiff bank, but also for the benefit of MDS. The defendant argues that the bank waived compliance with these pre – conditions and that the waiver of compliance was not communicated to MDS before he executed the guarantee or before he drew down the €350,000 loan facility. It is the defendant's case that if, what it describes as the true factual position regarding non – compliance with the said pre – conditions had been made known to MDS at the relevant time, he would not have executed the guarantee and would not have drawn down the €350,000. In short, the same grounds of defence are advanced by the defendant in relation to both applications and this can be seen from the averments made by the defendant in both sets of proceedings.

The defendant's 25 February 2019 Affidavit in the guarantee proceedings

7 Mrs. Daly makes, inter alia, the following averments in her 25 February 2019 affidavit (in respect of the guarantee proceedings under record no. 1741 S: -

• “The plaintiff had a longstanding banking relationship with my husband, Marcus Sr. and the plaintiff agreed to lend Marcus Sr. €350,000 to enable Marcus Sr. to lend the money to Marcus Jr., so as to help Marcus Jr. to reduce his indebtedness …”. (Para 9);

• “The loan offer to Marcus Jr. had a number of pre – conditions, one of which was the reduction in the debt. Subsequently, the plaintiff required Marcus Sr. to sign a guarantee in its favour (Guarantee) as a condition of the loan facility to Marcus Jr. for €300,000. The guarantee for €300,000 was in addition to the payment of €350,000 which he was being asked to make to the plaintiff to reduce the sums due on foot of the 2006 Facilities. In other words, the plaintiff was improving its own financial position to the tune of €650,000 at the expense of its loyal customer, Marcus Sr.”. (Para.10);

• I am advised that the February 2010 pre – conditions were not only for the benefit of the plaintiff, but also for the benefit of the guarantor, namely Marcus Sr., who was entitled to assume that the plaintiff would not advance a customer (Marcus Jr.), monies that he was being asked to guarantee without first ensuring that the February 2010 pre – conditions were properly satisfied”. (Para. 14);

• “ Marcus Sr. would not in reality have assisted our son by paying the plaintiff €650,000, as he was (absent a very significant positive change in his financial position) not going to be able to repay the loan advanced to refinance the 2006 facilities. This information was not made clear to Marcus Sr. in 2009 by the plaintiff but I now believe the plaintiff was fully aware of this position in 2009 and it took advantage of Marcus Sr.'s relationship with his son” (Para 22);

The defendant asserts that none of what she describes as pre-conditions in the February 2010 Loan Offer to MDJ were satisfied and, in paragraphs 15 – 28, she sets out why she takes that view. In respect of the element of the pre-condition which related to audited or certified accounts for the prior two years confirming MDJ's capacity to earn a personal income in a specific sum, the defendant avers that no audited or certified accounts were provided and the statement of income and expenditure account which was provided related to 2009 only and did not verify that MDJ had the capacity to derive a personal income of the amount specified. Regarding the part of the precondition which referred to management figures to be provided for the current financial year supported by the last six months bank statements to confirm MDJ's...