Bank of Ireland v Curran

• Jurisdiction: Ireland
• Judge: Ms. Justice Irvine
• Judgment Date: 21 December 2016
• Neutral Citation: [2016] IECA 399
• Date: 21 December 2016
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2016] IECA 399 Appeal Nos. 2016/22

[2016] IECA 399

THE COURT OF APPEAL

Irvine J.

Ryan P.

Irvine J.

Hanna J.

Neutral Citation Number: [2016] IECA 399

Appeal Nos. 2016/22

BETWEEN/

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

PLAINTIFF / RESPONDENT

- AND -

MICHAEL CURRAN

FIRST NAMED DEFENDANT

- AND -

MAUREEN CURRAN

SECOND NAMED DEFENDANT / APPELLANT

Undue influence – Unconscionable bargain – Non est factum – Respondent seeking judgment against the appellant on foot of a guarantee – Whether trial judge erred in law when he concluded that the appellant had not established a bona fide credible defence to the respondent's claim

Facts: The plaintiff/respondent, the Governor and Company of Bank of Ireland, sought judgment against the second defendant/appellant, Mrs Curran, on foot of a guarantee dated 28th May, 2008, whereby she guaranteed the liabilities of a company, XL Fuels Group Ltd, to the extent of €1m plus interest. Mrs Curran set out to demonstrate that there were three grounds upon which she might arguably and credibly defend the proceedings: 1) the guarantee was unenforceable as one executed under undue influence; 2) the guarantee was unenforceable as an unconscionable bargain; and 3) a defence based on the doctrine of non est factum. On 21st December, 2015, the High Court (McGovern J) concluded that she had not established any arguable defence to the proceedings and granted the bank summary judgment against Mrs Curran for the sum of €1m. Mrs Curran appealed to the Court of Appeal against the judgment and order of the High Court arguing that the trial judge erred in law when he concluded that Mrs Curran had not established a bona fide credible defence to the bank's claim such that the proceedings ought to have been remitted to plenary hearing.

Held by Irvine J that the High Court judge could not be faulted for concluding that Mrs Curran had failed to demonstrate a bona fide or credible defence based upon acts of undue influence; there was no evidence that the bank should have been on inquiry to satisfy itself that she understood the nature of the guarantee proposed and that she was executing it otherwise than under her son's influence. Irvine J was satisfied that the trial judge was correct as a matter of law when he concluded that the facts advanced by Mrs Curran on affidavit were insufficient to demonstrate a credible defence based upon the doctrine of unconscionable bargain. Irvine J held that the conclusion of the trial judge that Mrs Curran, on the facts advanced, had not demonstrated an arguable defence based on non est factum was borne out by the decision of Clarke J in Ulster Bank Ireland Ltd v Roche and Buttimer [2012] 1 IR 765 when referring back to his own decision in ACC Bank plc v Kelly [2011] IEHC 7.

Irvine J held that McGovern J was correct when he concluded that Mrs Curran had not established an arguable or credible defence to the bank's claim. Irvine J held that she would dismiss the appeal.

Appeal dismissed.

JUDGMENT of Ms. Justice Irvine delivered on the 21st day of December 2016

1 This is an appeal by the second named defendant, Mrs. Maureen Curran, ('Mrs. Curran') against the judgment and order of the High Court (McGovern J.) of 21st December, 2015, whereby he granted the plaintiff / respondent, the Governor and Company of the Bank of Ireland ('the bank'), summary judgment against Mrs. Curran for the sum of €1m. The issue on this appeal is whether the trial judge erred in law when he concluded that Mrs. Curran had not established a bona fide credible defence to the bank's claim such that the proceedings ought to have been remitted to plenary hearing.

2 The bank, in its claim which was commenced by summary summons on 27th October, 2015, sought judgment against Mrs. Curran on foot of a guarantee dated 28th May, 2008, ('the guarantee') whereby she guaranteed the liabilities of a company, XL Fuels Group Ltd. ('the company'), to the extent of €1m. plus interest.

3 Following the issue of the bank's motion for summary judgment on 2nd November, 2015, affidavits were exchanged between the parties. Three in number were sworn on behalf of the bank detailing Mrs. Curran's dealings with the bank and the circumstances surrounding her execution of the guarantee. In response, Mrs. Curran swore two affidavits in which she advanced her intended defence. Mr. Michael Ryan, a solicitor who had acted on her behalf concerning other banking transactions concluded some weeks earlier, also swore an affidavit on her behalf.

4 In her affidavits Mrs. Curran set out to demonstrate that there were three grounds upon which she might arguably and credibly defend the proceedings; the first being that the guarantee was unenforceable as one executed under undue influence, the second that the guarantee was unenforceable as an unconscionable bargain and, thirdly, a defence based on the doctrine on non est factum.

5 In his detailed judgment delivered on 21st December, 2015, McGovern J. addressed the evidence upon which Mrs. Curran relied in support of her three potential grounds of defence before concluding that she had not established any arguable defence to the proceedings.

Relevant background facts

6 It is only possible to consider whether the trial judge erred in law in failing to refer the within proceedings to plenary hearing if the relevant background facts are known. For this reason I will try to summarise the more relevant aspects of the evidence that was before the High Court.

7 The company was incorporated in 2007. Mrs. Curran was a director of the company and was also its secretary. She received what was described as a 'stipend' in respect of such services.

8 By facility letter addressed to the company secretary dated 28th May, 2008, the bank agreed to make additional facilities available to the company on the terms and conditions therein proposed. These included the requirement that further security would be provided in the form of a letter of guarantee (limit of €1m.) to be executed by Mrs. Curran. The acceptance of that facility was signed by Mrs. Curran and her son, Michael Curran, the first named defendant.

9 On the same date, at her home which was at her request, Mrs. Curran signed the aforementioned guarantee in the presence of two bank officials, Vivien Rountree and Lorraine Kavanagh. Mr. Michael Curran was not in attendance.

10 It is not disputed that Mrs. Curran signed the guarantee in three places. The first signature appears beneath a warning advising that if the borrower failed to pay the guarantor would become liable to discharge the outstanding loan together with interest and which also advised that prior to signing the guarantee independent legal advice should be obtained. The second signature acknowledges receipt of a copy of the guarantee and indemnity. The third signature appears beneath a statement written by Mrs. Curran which advises that she understood the nature of the liability she was undertaking and that she did not wish to obtain the independent advice of a solicitor. It is accepted that the text of this last statement, whilst written in the hand of Mrs. Curran, was one which would have been read out to her by one of the bank officials present.

11 It is not disputed that the following day Mrs. Curran received a letter from the bank enclosing a copy of the guarantee. The same letter explained the reason for which the guarantee had been required and also advised her that the bank would review the ongoing facility in three months time.

12 On 22nd September, 2008, the bank wrote to Mrs. Curran asking her to confirm that she was amenable to permitting the bank to rely upon the guarantee as continuing security for the facility then being afforded to the company, a request accepted by Mrs. Curran as acknowledged by her signature which she duly appended to the acceptance form enclosed with the bank's letter.

General principles

13 The parties are not in dispute as to the threshold which a defendant must meet in order to avoid summary judgment. The question the Court must ask itself is that identified by Hardiman J. in Aer Rianta v. Ryanair [2001] 4 I.R. 607 at 623, namely:-

'...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?'

14 Further and more particular guidance as to the proper approach of the court on an application for summary judgment is to be found in the judgment of McKechnie J. in Harrisrange Limited v. Duncan [2003] 4 I.R. 1 where at para. 9 he identified twelve factors material to the court's consideration on such an application. It is clear from this decision, and indeed many more besides, that a mere assertion as to a given situation which is to form the basis of a defence is insufficient. The defendant must do better than bald assertions as was advised by Ackner L.J. in Banque de Paris v. de Naray [1984] 1 Lloyd's Law Reports 21, where he stated as follows::-

'...the mere assertion in an affidavit of a given situation which is to be the basis of a defence did not, ipso facto provide leave to defend; the court must look at the whole situation and ask itself whether the defendant has satisfied the court that there is a fair or reasonable probability of the defendants' having a real or bona fide defence.'

15 That last statement of Ackner L.J. has been approved of in this jurisdiction in many decisions including that of Murphy J. in First National Commercial Bank plc v. Anglin [1996] 1 I.R. 75 and more recently the judgment of Ryan J. in Bank of Scotland plc v. Hickey [2014] IEHC 202, the latter being a decision to which I will later return.

16 It is also well established law that there are issues that may conveniently be dealt with otherwise than on a plenary hearing. However these are relatively limited as was...