Danske Bank a/s t/a Danske Bank v Shortt
| Jurisdiction | Ireland |
| Judge | Mr. Justice Noonan |
| Judgment Date | 05 June 2019 |
| Neutral Citation | [2019] IEHC 381 |
| Docket Number | [2015 No. 377 S] |
| Court | High Court |
| Date | 05 June 2019 |
[2019] IEHC 381
THE HIGH COURT
Noonan J.
[2015 No. 377 S]
AND
Banking & finance – Company debt – Guarantee provided by directors – Application for summary judgment
Facts: The plaintiff had granted loan facilities to a company, the defendants being directors and having provided personal guarantees. The defendants contended, inter alia, that they had been told that if they signed the guarantee it would not be enforced. The plaintiff now applied for summary judgment.
Held by Noonan J, that the application would be granted. The defendants had failed to show any reasonable probability of a genuine defence, and therefore the plaintiff was entitled to summary judgment.
In this application for summary judgment, the plaintiff (‘the bank’) seeks judgment against the defendants on foot of a guarantee in writing executed by the defendants on the 21st July, 2005. By the terms of the guarantee, the defendants agreed to jointly and severally guarantee payment on demand of all sums due by Blackwood Taverns Ltd (‘the company’) to the bank. The defendants are husband and wife and were at all material times directors of the company. The guarantee provides that the total liability of the defendants thereunder will not exceed €1,500,000. It is not in dispute that the guarantee was executed by the defendants.
Two subsequent facilities were granted by the bank to the company. The first arose on foot of a facility letter of the 6th April, 2010 and was for the sum of €50,000 being a renewal of an existing overdraft facility to assist with the general working capital requirements of the company. The security clause provided for, inter alia, the provision of a joint and several letter of guarantee from the defendants in the sum of €1.5 million. The facility letter was signed by the defendants as directors of the company.
The second facility was entered into a month later on the 6th May, 2010 and is for the sum of €1.5 million for the purpose of restructuring an existing loan. As in the first facility, the security requirements included the provision of a joint and several letter of guarantee in the amount of €1.5 million by the defendants. Those facilities also provided for various legal and equitable mortgages over certain properties including in particular a first legal mortgage over the premises known as Dagwells Bar and Restaurant, Blackwood, County Kildare. The second facility letter was also executed by the defendants as directors of the company.
There is no dispute about the fact that the moneys were drawn down on foot of the two facility letters by the company and have not been repaid. This ultimately resulted in a demand for payment from the company issued by the bank on the 18th September, 2013. This letter gave a period of 24 hours to make the payment.
On the next day, the 19th September, 2013, the bank appointed a receiver over the property and assets of the company. On the 18th October, 2013, the bank demanded payment of the sums due by the company from the defendants on foot of their guarantee. Dagwells Pub and Restaurant was sold by the receiver on the 16th May, 2014 and the net proceeds were credited to the account of the company.
These proceedings were issued by way of summary summons by the bank on the 25th February, 2015 and the motion for judgment now before the court issued on the 12th December, 2016. Two affidavits have been sworn by the first defendant in response to the claim but none by the second defendant. In his first affidavit, Mr. Shortt avers that he previously carried on business as an auctioneer and insurance broker in Oldcastle, County Meath. He said that most of his business was conducted through two employees of the bank, James Bradley and Jim Deeney. He claims to have introduced substantial business to the bank through his customers and discussed the issue of commission at various stages as far back as 2005 and 2006 with Mr. Bradley and Mr. Deeney.
Around that time the company wanted to purchase a large property portfolio to be financed by the bank. Mr. Shortt says that he recalls meeting with Mr. Bradley and Mr. Deeney to discuss the terms of the original facility letters which relate to earlier facilities than those currently before the court. Mr. Shortt says that during the course of these meetings he questioned the necessity for the personal guarantees being sought by the bank from the defendants and said that neither defendant would agree to sign them.
He says that ultimately, in view of the fact that he was introducing business to National Irish Bank, the plaintiff's predecessor, and was not receiving commission, it was agreed that in lieu of commission and on the strict basis that he signed up to the personal guarantees, that same would not be enforced against the defendants. He says he received this assurance directly from Mr. Bradley and Mr. Deeney and relied on it. On this basis, Mr. Shortt avers that the defendants have a full defence to the claim herein.
Without prejudice to that contention, Mr. Shortt goes on to aver that he is entitled to the benefit of any defence that the company has as principle debtor and in that regard relies on discussions that took place following the company's default with Mr. Neil Carter of the bank and the defendants” solicitor at the bank's premises at Harbourmaster Place in Dublin. He avers that arising out of this meeting it was agreed that he would voluntarily sell the premises known as Dagwells and his solicitor, Mr. Lyons, would have carriage of the sale.
He goes on to say that the bank breached the terms of this agreement by appointing a receiver over the company's assets. He complains that in fact even the 24 hours required by the letter of demand was not complied with because the receiver went into possession of Dagwells before it expired. On this basis, Mr. Shortt avers that the appointment of the receiver was defective and unlawful. He says that the consequence of this alleged breach of agreement is that the bank is liable to Mr. Shortt in damages and the receiver has therefore trespassed on the company's property. He says that he is entitled to exemplary damages against both the bank and the receiver arising from this breach of contract and trespass and that the damages due to the defendants will exceed the plaintiff's claim. All of this is disputed by the bank.
In his second affidavit, Mr. Shortt confirms that the meeting at which it was agreed that the bank would not enforce the guarantee against the defendants took place at the bank's Virginia branch on Monday the 19th December, 2005. It will be noted that the guarantee was signed five months earlier.
Mr. Shortt then goes on to allege in his affidavit that at the time of execution of the guarantee in July 2005, he was what he describes as a vulnerable person and a patient in St. Edmunsbury Mental Hospital in Lucan County Dublin. He says this was known to the bank and that by virtue of this, the guarantee is unenforceable. This is...
To continue reading
Request your trial