Bank of Ireland v Connell and Others

• Jurisdiction: Ireland
• Court: Supreme Court
• Judgment Date: 25 February 1942
• Date: 25 February 1942

Bank of Ireland v. Connell and Others

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

Plaintiffs

and

JOHN CONNELL, LEO CHARLES and JOHN LEONARD, Defendants (1)

Supreme Court

Practice - Pleading - Summary summons - Special indorsement - Guarantee - Necessity for pleading demand for payment - Whether demand a part of cause of action or condition precedent - Whether must be for specific sum - Wrong demand pleaded - Amendment of pleading when Statutes of Limitations involved - Conditions precedent implied in pleading - Rules of Supreme Court (Ir.), 1905, Or. III, r. 6; Or. XIX, r. 4; Or. XIX, r. 15; Or. XXVIII, r. 1. - Rules of High and Supreme Court, 1926,Or. IV, r. 2.

By a contract of guarantee made between the plaintiff bank and the three defendants, the defendants guaranteed the payment of all the debts of J. C. up to a sum of £3,500, with costs, charges and interest from the date of demand; the defendants undertook to make due payment two days after demand (in writing) was made on them. On 21st November, 1934, the Bank's agent wrote to the defendants as follows: "As instructed by head office, I herewith demand payment from you of your liability on foot of your joint and several letter of guarantee for £3,500 for J. C.'s account." By previous correspondence the defendants had been informed that their liability on foot of the guarantee was £3,500. By letter of 4th April, 1940, the bank demanded "payment of the sum of £3,500, being the amount of your letter of guarantee to the bank for the liabilities of J. C. together with interest on the said sum from this date at 5 per cent. per annum." The money not having been paid, the bank issued a summary summons clamming the sum of £3,571 17s. 2d., the indorsement stating that the sum guaranteed was duly demanded by letter of demand, dated 4th April, 1940. Two of the defendants allowed judgment to go by default but the third defended the action.

Gavan Duffy J. dismissed the action, holding that an effective demand had been made on 21st November, 1934, and that the demand made in 1940 was not a good demand, and he stated that he would only allow the

plaintiffs to amend their pleadings if the defendant were allowed to rely on the Statute of Limitations, in which case the plaintiffs' claim would be barred by the statute. The plaintiffs appealed to the Supreme Court.

Held by the Supreme Court (Sullivan C.J., Murnaghan, Meredith, Geoghegan and O'Byrne JJ.) that no amendment should be allowed and that the appeal must be dismissed.

Per Murnaghan J. (Sullivan C.J., Geoghegan and O'Byrne JJ. concurring) that, though the demand made in 1934 did not demand a specific sum it was a good demand, as the amount of the liability under it had been communicated to the defendant in previous correspondence. Accordingly the summary summons was incorrect in being founded on the demand made in 1940, which was an inoperative demand, as by the terms of the guarantee the measure of liability depended upon the date of the demand. Until a demand was made no cause of action accrued under the Statute of Limitations.

In re Brown's Estate, Brown v. Brown, [1893] 2 Ch. 300, and Bradford Old Bank, Ltd. v. Sutcliffe, [1918], 2 K. B. 833, applied.

Summary Summons brought by the Bank of Ireland against the defendants, John Connell, Leo Charles and John Leonard on foot of a guarantee, under which they guaranteed all the debts, liabilities and engagements of one, John Callaghan.

The guarantee was as follows:—

To the Governor and Company of the Bank of Ireland.

1. The undersigned (hereinafter called "the guarantors")at the request of John Callaghan of Prospect Hill, Culmullen, Co. Meath (hereinafter called "the principal debtor"), hereby jointly and severally guarantee to the Governor and Company of the Bank of Ireland (hereinafter called"the Bank"), payment of—(a) all debts, liabilities and engagements of the principal debtor, alone, in partnership, or jointly with others, to the Bank on any account whatever (including liabilities on overdrafts, bills under discount or otherwise) now existing or incurred during the continuance of this guarantee, and whether matured or current at the date of the expiration of the notice hereinafter mentioned; (b) interest thereon at the Bank's current rate for overdrafts, commission, and usual Bank charges.

2. The total amount recoverable under this guarantee is limited to three thousand five hundred pounds (£3,500) with costs, charges, and interest at 5 per cent. per annum from date of demand.

3. [Not material.]

4. This guarantee is a continuing guarantee to the fullest extent of the term, and is available to secure the whole amount now due or owing, or which may hereafter from time to time until the expiration of the notice hereinafter mentioned become due or owing, or for which the principal debtor may be liable to the Bank, notwithstanding the payment or liquidation from time to time wholly or partly of any debt or liability hereby guaranteed.

5. No previous demand on the principal debtor or realisation of securities (if any) shall be necessary before resort to the guarantors, or any of them, who jointly and severally undertake to make due payment two days after demand (in writing) is made on them or any of them, or on their or any of their personal representatives. The demand (in writing) shall be deemed to have been duly made on the guarantors or their legal personal representatives by sending the same by post addressed to him or them at the respective addresses below written, and shall be effectual notwithstanding any change of address or death and notwithstanding notice thereof to the Bank, and such demand shall be deemed to be received by the guarantors or their legal personal representatives 24 hours after the posting thereof, and shall be sufficient if signed by any officer of the Bank, and in proving such service it shall be sufficient to prove that the letter containing the demand was properly addressed and put into the post office.

6. [Not material.]

7. The Bank may enforce all remedies, whether against the principal debtor or any or all of the guarantors, and take all steps and benefits in relation to all debts and liabilities hereby guaranteed, on this guarantee, whether by action, proceedings in bankruptcy, liquidation, or otherwise, simultaneously or in any succession whatever.

8. This guarantee shall only cease to be a continuing guarantee as from the expiration of one week after receipt by the Bank of notice in writing from the guarantors or their...