Dómhnal Slattery v Friends First Life Assurance Company Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Brian J. McGovern
• Judgment Date: 14 May 2013
• Neutral Citation: [2013] IEHC 213
• Court: High Court
• Date: 14 May 2013

[2013] IEHC 213

THE HIGH COURT

[No. 2092 P/2012]

[No. 51 COM/2012]

Slattery v Friends First Life Assurance Co Ltd

COMMERCIAL

BETWEEN

D ÓMHNAL SLATTERY

PLAINTIFF

AND

FRIENDS FIRST LIFE ASSURANCE COMPANY LIMITED

DEFENDANT

DAWSON v RAYNES 1826 2 RUSS 466

VEOLIA WATER UK PLC v FINGAL CO COUNCIL (NO 2) 2007 2 IR 81

ACC v JOHNSTON UNREP CLARKE 24.10.2011 2011/2/349 2011 IEHC 500

MCALEENAN v AIG (EUROPE) LTD UNREP FINLAY-GEOGHEGAN 16.7.2010 2010/30/7665 2010 IEHC 279

NATIONAL IRISH BANK v MCFADDEN UNREP CLARKE 2.4.2010 2010/10/2439 2010 IEHC 119

Practice and procedure - Supplemental judgment - Ancillary issues - Default interest clause - Costs - Counterclaim - Whether the defendant was entitled to interest and whether the defendant was entitled to costs

Facts: A guarantee was agreed between the parties on the basis that the default interest clause would be agreed later. The question had arisen as to whether an amendment was initialled. The plaintiff contended that he was not aware of the insertion of a default rate. The plaintiff had succeeded on a discrete issue concerning breach of confidence. The Court had delivered judgment in the proceedings and a supplemental judgment was delivered by the Court in order to deal with ancillary orders including costs. The Court considered whether the default interest clause in the Guarantee was properly executed, whether the defendant was properly entitled to claim interest, the amount of the judgment to which the defendant was entitled to counterclaim and the extent to which the plaintiff was entitled to costs.

Held by McGovern J. that the defendant was entitled to interest but this would not include default rate interest and the plaintiff was entitled to 15% costs, with the defendant being disentitled to the same percentage of its costs. Setting off these figures, the defendant should be entitled to recover 70% costs.

1 SUPPLEMENTAL Judgment of Mr. Justice Brian J. McGovern delivered on the 14th, day of May 2013

2 1. On 15 ^th March, 2013, I delivered judgment in the above matter and adjourned it to 16 ^th April, 2013, in order to deal with ancillary orders including costs.

3 2. Having heard the parties, the following issues appear to the court to arise:-

4 (a) Whether the default interest clause contained in the Guarantee was properly executed on behalf of the plaintiff, and accordingly, whether the defendant is entitled to rely upon same in obtaining judgment on foot of the Guarantee as ordered by the court;

5 (b) whether the defendant is properly entitled to claim interest in any event, given the purported delay on its part in seeking to recover on foot of the Guarantee;

6 (c) the amount of the judgment to which the defendant is entitled on the counterclaim;

7 (d) the extent to which the plaintiff is entitled to costs on the issue of breach of confidence and the extent to which the defendant is entitled to costs in the claim and on the counterclaim;

8 (e) the plaintiff's application for a stay.

The Default Interest Clause

9 3. The evidence disclosed that the Guarantee was entered into on the basis that the default interest clause would be agreed between the parties at a later date. Through an exchange on 18 ^th March, 2008, between Mr. Max Doyle, a principal in Claret Capital, and Ms. Susie Nolan, an officer of the defendant, the rate of 2% above three month LIBOR was inserted as the default interest rate and initialled by Mr. Doyle. Mr. Max Doyle, together with the plaintiff and other directors of Claret Capital, had signed joint and several guarantees, but the plaintiff never initialled the default interest rate which was inserted.

10 4. In her witness statement, Ms. Nolan had stated her belief that the amendment had been initialled by the plaintiff. However, under cross-examination, the plaintiff absolutely denied that he had initialled the amendment. It appeared to have been done by Mr. Doyle. This was subsequently confirmed. Ms. Nolan ultimately conceded in evidence that the amendment had in fact been initialled by Mr. Doyle.

11 5. Ms. Nolan went on to contend that in her view, it was of little importance whether the amendment to the Guarantee had been initialled by Mr. Doyle rather than the plaintiff, as the former had been acting as authorised agent on behalf of all guarantors and was, as she put it, the "point man". The defendant contends that Mr. Doyle was entitled, based on his actual or ostensible authority as agent, to bind by his initials each of the guarantors including the plaintiff.

12 6. It was contended on behalf of the plaintiff that he was not aware of nor did he consent to the insertion of the default rate. There was no evidence called on behalf of the defendant to challenge that assertion. While the evidence establishes that Mr. Doyle was acting as a key representative of Claret Capital in its engagement with the defendant, there was no evidence to show that he had any express or ostensible authority to vary the Personal Guarantee in a way which would be capable of binding his fellow principals in their personal capacity. The plaintiff is liable on foot of the Personal Guarantee because it was signed by him even though he claimed to have been unaware of what he was signing at the time. In my view, he cannot be held liable for an amendment to the terms of the Guarantee or the insertion of a default rate of interest if he did not indicate his assent to this addition. If an amendment or addition is being made to a guarantee which is intended to bind the guarantor in his personal capacity, then it is necessary for the defendant to prove that the guarantor (plaintiff) consented to the amendment or additional term, whether by way of his signature or...