Bank of Scotland Plc v Fergus

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan
• Judgment Date: 30 March 2012
• Neutral Citation: [2012] IEHC 131,[2019] IESC 91
• Docket Number: [2010 Nos. 900 S &90 COM]
• Court: High Court
• Date: 30 March 2012

Bank of Scotland Plc v Fergus

COMMERCIAL

BETWEEN

BANK OF SCOTLAND PLC.

PLAINTIFF

AND

CHARLES (OTHERWISE CHARLIE) FERGUS

DEFENDANT

[2012] IEHC 131

[No. 900 S/2010]

[No. 90 COM/2010]

THE HIGH COURT

BANKING LAW

Guarantees

Company debt - Guarantee and indemnity - Error in guarantee - Signature on guarantee - Note or memorandum - Liability - Receivership - Whether amount due - Whether guarantees valid - Whether enforceable - Whether agreement in writing contained all essential terms - Whether guarantee for particular facility or transaction - Moorview Developments v First Active plc [2010] IEHC 275, (Unrep, Clarke J, 9/7/2010); Analog Devices v Zurich Insurance [2005] IESC 12, [2005] 1 IR 274 and Investors Compensation Scheme Ltd v West Bromwich Building Society BS [1998] 1 WLR 896 followed - Boyle v Lee [1992] 1 IR 555; Triodos Bank NV v Dobbs [2005] EWCA Civ 630, (Unrep, CA, 24/5/2005) and Bank of Ireland v McCabe (Unrep, SC, 19/12/1994) considered - Statute of Frauds (Ireland) 1695 (7 Will 3, c 12), s 2 - European Communities (Cross-Border Mergers) Regulation 2008 (SI 157/2008), reg 19(1)(d) - Judgment granted (2010/900S - Finlay Geoghegan J - 30/3/2012) [2012] IEHC 131

Bank of Scotland plc v Fergus

EUROPEAN COMMUNITIES (CROSS-BORDER MERGER) REG SI 157/2008

MOORVIEW DEVELOPMENTS LTD v FIRST ACTIVE PLC UNREP HIGH 9.7.2010 2010/37/9346 2010 IEHC 275

ANALOG DEVICES v ZURICH INSURANCE 2005 1 IR 274

INVESTORS COMPENSATION SCHEME LTD v WEST BROMWICH BUILDING SOCIETY 1998 1 WLR 896 1998 1 AER 98

BOYLE v LEE 1992 1 IR 555

O'DONOVAN & PHILLIPS THE MODERN CONTRACT OF GUARANTEE 2010

TRIODOS BANK NV v DOBBS 2005 AER (D) 364

BANK OF IRELAND v MCCABE UNREP SUPREME 19.12.1994 1994/8/2105

1 1. The plaintiff now sues as successor to Bank of Scotland (Ireland) Ltd. ("the Bank") pursuant to Regulation 19(l)(d) of the European Communities (Cross-Border Merger) Regulation 2008. The Bank merged with the plaintiff on 31 ^st December, 2010.

2 2. The Bank commenced acting as bankers and granting various facilities to Fergus Haynes (Developments) Ltd. ("the Company") in 2003. That company was carrying out developments, particularly in Donegal. The defendant ("Mr. Fergus") was at all material times the Chief Executive and principal promoter of the Company and a director thereof.

3 3. On 4 ^th September, 2008, the Bank made demand on the Company for the repayment of all amounts then due and owing by the Company to the Bank pursuant to the existing loan facilities in the sum of €7,796,121.84. Repayment was not made, and on 6 ^th September, 2008, the Bank appointed a receiver over the Company. On 17 ^th September, 2008, an order for the winding up and the appointment of a liquidator was made.

4 4. On 15 ^th December, 2009, the solicitors for the Bank made a demand on Mr. Fergus on behalf of the Bank that he, as guarantor, pay all sums due by the Company to the Bank "pursuant to the terms of the various guarantees entered into" by him. The amount then alleged due was not stated in the letter of demand.

5 5. On 24 ^th February, 2010, these proceedings commenced by the issue of a summary summons in which it was pleaded that Mr. Fergus entered into 17 guarantees in respect of the Company's obligations to the Bank. Those guarantees were listed, several being referred to as undated with only a year specified. The amount then claimed as due and owing by the Company and Mr. Fergus, as guarantor, was €8,444,457.88.

6 6. The proceedings were admitted to the Commercial List on 22 ^nd March, 2010, and on 22 ^nd October, 2010, the matter remitted to plenary hearing. Mr. Fergus had made objection to the validity and/or enforceability of the guarantees.

7 7. A statement of claim was delivered by the Bank on 5 ^th November, 2010, in which it pleaded and listed the 17 guarantees and indemnities contended to have been entered into by Mr. Fergus with the Bank. However, it also pleaded that it was only now relying upon four guarantees which it pleaded are valid and capable of individual execution and enforcement as continuing security for all sums advanced to the Company, It also pleaded that by each of those guarantees, referred to as "plenary guarantees", Mr. Fergus guaranteed the indebtedness of the Company and indemnified the Bank against any default or loss suffered by the Bank having advanced monies to the Company.

8 8. Mr. Fergus, in the defence, firstly put the Bank on proof of the amount allegedly due and owing by the Company to the Bank. He also pleaded, inter alia, that none of the guarantees were enforceable against him and were not a note or memorandum for the purpose of the statute of frauds. Not all of the matters relied upon in the pleading were pursued at the hearing and, accordingly, I do not propose setting them out in detail. Similarly, a counterclaim was pleaded which was not pursued at the hearing.

9 9. Pre-trial procedure took place in accordance with practice in the Commercial List. Discovery was made by the Bank in February 2011, which included statements of the accounts under which the principal amounts were alleged to be due and owing by the Company to the banks. Witness statements were exchanged and a trial date set for the summer of 2011, which had to be adjourned. A new trial date was fixed for November 2011.

10 10. On the first day of the hearing, it became apparent that the Bank did not intend calling one of the witnesses in respect of whom a witness statement had been delivered. Further, the witness being called by the Bank was not a person who could properly give evidence of the amount of the indebtedness of the Company to the Bank. The Bank did not have a witness in respect of whom it had delivered a witness statement available to give admissible evidence of the indebtedness of the Company to the Bank.

11 11. On 9 ^th November, 2010, I made an order permitting the Bank to call an additional witness to give evidence of the amount due by the Company and confined the evidence of debt to the amounts due in accordance with the statements of accounts in respect of which discovery had been made by the Bank. I also directed the delivery of a witness statement and gave time to Mr. Fergus to examine the documents already discovered in relation to the amount claimed by the Bank to be due and owing by the Company.

12 12. At the adjourned hearing in December 2011, Mr. Julian Moroney, a manager in the Customer Debt Management Division of the property team in the Bank until 31 ^st December, 2010, and now a senior manager in the Customer Debt Management Division of Certus, which has been engaged by the Bank to provide customer support and administration services to the Bank in its management of its customers in Ireland and Northern Ireland, gave evidence. Mr. Moroney had sworn the affidavit of discovery delivered on 22 ^nd February, 2011, in these proceedings. Mr. Moroney gave evidence of checking the electronic records of the Bank in relation to the Company and identified three subsisting accounts in February 2011, copies of which had been discovered and were produced to the Court and stated, in his belief, to be correct and accurate as of those dates. His evidence was that the aggregate amount due by the Company to the Bank on those accounts in February 2011, as at the date of each statement of account, was €9,211,764. He also gave evidence that on the information available to him, the net amount realised in the receivership to date was €323,488, and expenses of the receiver shipped to date being €471,500 and a deficit in the receivership in the amount of €148,012. Mr. Moroney, in his oral evidence, also stated that he had made spot-checks on the Company's accounts with the Bank for the purposes of identifying that there were no unusual transactions and also that the rate of interest charged was in accordance with the amount specified in the relevant facility letter. He made clear, however, that he was relying upon the electronic records of the Bank to accurately state the amounts due.

13 13. It was submitted Mr. Moroney's evidence was sufficient evidence of the debt due by the Company to the Bank in accordance with the principles set out by Clarke J. in Moorview Developments and Others v. First Active plc. and Others [2010] IEHC 275. In that judgment, at p. 22, dealing with evidence given by a Mr. Collison on behalf of the bank, Clarke J. stated:

"What Mr. Collison gave evidence of was an analysis carried out by him of documents kept by the bank in the ordinary way as part of the bank's records. Business records of that type are prima facie evidence of a course of dealing between parties, although, of course, any party is free to challenge the accuracy of any such records. However, the idea that a bank wishing to prove its case in debt against a customer has to produce a separate bank official who was personally involved in each individual transaction which gives rise to the customer's current debt is, in my view, fanciful. A witness from a bank is entitled to give evidence of the bank's records showing the amount due by a customer of that bank. That evidence and those records provide prima facie evidence of the liability. If a specific element or elements of those records are challenged, then the bank might well have a problem if it could not produce a witness who could give personal evidence of the contested matter."

14 14. I respectfully agree with the above approach as being correct. In this case, Mr. Moroney, as a former official of the Bank, is entitled to give evidence of the Bank's records in relation to the indebtedness of the Company to the Bank. Those records include the electronic records of the Bank. That evidence is admissible evidence and is prima facie evidence of the liability of the Company to the Bank. As pointed out by Clarke J., if a...