Stapleford Finance D.A.C. v McEvoy

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice MacGrath
• Judgment Date: 22 February 2018
• Neutral Citation: [2018] IEHC 99
• Docket Number: [2016 No. 2434 S]
• Date: 22 February 2018

BETWEEN

STAPLEFORD FINANCE D.A.C.

PLAINTIFF

AND

BERNARD MCEVOY

AND

COLUM BUTLER

DEFENDANTS

[2018] IEHC 99

MacGrath J.

[2016 No. 2434 S]

THE HIGH COURT

Banking & Finance – Personal guarantee – Letter of demand – Bona fide defence – Summary judgment – Plenary hearing

Facts: The plaintiff sought an order for summary judgment against the second defendant for the sum owed by the first defendant on foot of a facility letter and a personal guarantee executed by the second defendant. The key issue was whether the plaintiff was entitled to summary judgment against the second defendant for the amount sought or whether the second defendant had established a bona fide defence. The second defendant contended that the characterisation of the guarantee signed by him was radically different from the actual wording contained in the facility letter exhibited in the affidavit presented by an officer of the plaintiff. The second defended also raised the issue that the plaintiff's claim was statute barred in circumstances where the guarantee was of a pre-existing debt.

Mr. Justice MacGrath refused the order sought in the notice of motion by the plaintiff and held that the defendants had established a bona fide defence which ought to be dealt with by way of a plenary hearing. The Court found that the points raised by the second defendant involved substantial issues of fact and law which should not have been disposed of or disregarded without further hearing.

JUDGMENT of Mr. Justice MacGrath delivered on the 22nd day of February, 2018.

1 The plaintiff is a designated activity company. The first named defendant is a solicitor and was at the relevant time a solicitor in McEvoy Partners. The second named defendant is a businessman and, the Court has been informed, is a brother-in-law of the first named defendant.

2 By notice of motion dated 8th March, 2017, the plaintiff seeks an order granting liberty to enter final judgment against the second named defendant in the sum of €1,048,713.49. In the summary summons issued on 15th December, 2016, the plaintiff claims that by facility letter of 1st August, 2007, the plaintiff's predecessors in title (Anglo Irish Bank) offered the first named defendant two facilities of €630,000 each to enable him and the firm in which he was a partner, McEvoy Partners, to part fund and fit out premises at Connaught House, Burlington Road, Dublin 4. By agreement dated 28th March, 2014, made between the Irish Bank Resolution Corporation Limited (in special liquidation) and the special liquidators to Irish Bank Resolution Corporation Limited (in special liquidation), the plaintiff acquired certain loans and assets including, as pleaded, all rights and obligations of the defendants in respect of certain loan facilities and personal guarantees. The plaintiff also pleads:-

‘By a Personal Guarantee in writing dated the 1st August, 2007, the Defendants, in consideration of the Plaintiff's predecessors in title making or continuing advances or otherwise giving credit or affording bank facilities to the first named Defendant and/or McEvoy Partners for as long as the Plaintiff's predecessor in title should think fit, agreed to pay to the Plaintiff's predecessor in title, its successors and assigns on demand all sums of money then owing or which at any time be owing or remain unpaid to the Plaintiff or its predecessor in title by the said first named Defendant and/or McEvoy Partners whether as principal or surety and whether solely or jointly with any other party whether for actual or contingent liability or on any account whatsoever, together with all interest and other bank charges including legal charges occasioned by or incidental to this or any other security held by or offered to the Plaintiff's predecessor in title for the ultimate balance due plus interest from the date of demand or earlier determination of the Personal Guarantee.’

The application is grounded on the affidavit of Mr. Donal O'Sullivan, an officer of the plaintiff, sworn on 6th March, 2017. It appears from Mr. O'Sullivan's affidavit that he had no personal dealings with the defendants at the time of the loan or the execution of the guarantees. Mr. O'Sullivan avers that the second named defendant executed the personal guarantee on or about 1st August, 2008. The Court notes that the pleadings refer to a facility letter and guarantee dated 1st August, 2007.

3 In his affidavit, Mr. O'Sullivan exhibits three documents, the facility letter and personal guarantee, a letter of demand dated 5th September, 2016 (the letter to Mr. Butler does not refer to 2016, but this is an accepted date), and statements of two accounts, in respect of the sums outstanding on foot of the facility provided.

4 The facility letter of 1st August, 2007 is addressed to ‘ The Partners, McEvoy Partners, Connaught House, Burlington Road, Dublin 4’. Appended to the facility letter is a section entitled ‘ Borrower's Acceptance’ of the terms and conditions of the said facility letter. This was signed by Ms. June Hynes, and Mr. Bernard McEvoy, the first named defendant. The borrower's acceptance refers to the facility letter, the bank's general conditions and the bank's terms of business, which are stated to form part of the agreement between the borrower and the bank. The guarantee, which was signed by Mr. McEvoy on 1st August, 2007 and by Mr. Butler on 1st August, 2008, is in the following form:-

‘We have read the Facility Letter of 1st August 2007 to McEvoy Partners and the Bank's General Conditions which form part of the agreement between the Borrower and the Bank (the “Agreement”) and confirm that we fully understand the terms of the Agreement and acknowledge that we are guaranteeing the performance by the Borrower of its obligations under the Agreement to the Bank. We acknowledge that we have been given due opportunity to take independent legal advice of the effect of the Agreement and have taken/waived (delete one) the opportunity to take such legal advice.’

The option of ‘ taken/waived’ is not deleted. The guarantee contained a warning that, as guarantor of the loan:-

‘…you will have to pay off the loan, the interest and all associated charges if the borrower does not. Before you sign this Agreement, you should get independent legal advice.’

The final paragraph of the guarantee states that:-

‘In relation to the warning above, the “loan” means all amounts owing from the borrower to the Bank from time to time not only amounts owing under the Agreement.’

5 The letters of demand issued to both Mr. Butler and Mr. McEvoy are in identical terms. No distinction is made in those letters between the demand made of Mr. McEvoy (who is a borrower and guarantor) and Mr. Butler (who is a guarantor only). The letter advised that full particulars of the amounts outstanding had previously been furnished to Mr. Butler but that the balance had not been discharged. No previous letter of demand has been exhibited.

6 By letter dated 27th April, 2017, solicitors acting on behalf of Mr. Butler sought a copy of the general conditions which were referred to in the facility letter of 1st August, 2007 and referred to in Mr. O'Sullivan's affidavit. They also sought confirmation that the guarantee upon which the plaintiff was relying was in fact a one page document. In a response of 2nd May, 2017, the plaintiff declined to provide this information. The solicitors for the plaintiff replied that as the request amounted to the raising of particulars, it was not appropriate in the context of summary proceedings.

7 Mr. Butler, in his affidavit, sworn on 12th May, 2017, raises a number of issues:-

(a) The absence of proof that the rights and obligations under the guarantee were in fact transferred to the plaintiff.

(b) The partners of McEvoy Solicitors (to whom the facilities had been afforded) had a primary liability for same. He queried why those partners had not been pursued in respect of the debt.

(c) The characterisation of the guarantee signed by him was radically different to the actual wording contained in the facility letter exhibited to in the affidavit of Mr. O'Sullivan.

(d) The absence of evidence that the borrowers had complied with conditions precedent, described in the facility letter. Mr. Butler avers that the lender was under a duty to perfect and maintain the security to ensure protection of the surety. There was no evidence that this had been done.

(e) That if he has a liability under the facility letter, he is entitled to indemnity from the partners, to whom his solicitor had written.

(f) That the plaintiff's claim was statute barred in circumstances where the guarantee was of a pre-existing debt.

(g) That he is entitled to raise any defence which the principal debtors may have, and that he was not in a position to ascertain and assert any such defences in the absence of discovery.

8 In reply, Mr. O'Sullivan, in an affidavit sworn on 13th June, 2017, exhibited the loan sale deed between Irish Bank Resolution Corporation Limited, the special liquidators, and Stapleford Finance Limited. Mr. O'Sullivan maintains that as Mr. Butler had unequivocally acknowledged executing the guarantee, there is simply no merit to his complaints. Further, in the light of the acknowledgement of the execution of the guarantee, he avers to his belief, from a review of the file, that contemporaneous to executing the guarantee, the defendants executed a document entitled ‘ Guarantee and Indemnity’ which prescribed the terms and conditions attached to the guarantee. This document is exhibited in the second affidavit of Mr. O'Sullivan. It is undated but it is signed by the first and second named defendant. Mr. O'Sullivan avers that even if it is the case that one or more of the conditions precedent to the granting of the facility was not met, it merely permitted the bank to refuse to advance the moneys, as the conditions were...