The Governor and Company of The Bank of Ireland v Dunne

• Jurisdiction: Ireland
• Judge: Ms. Justice Irvine
• Judgment Date: 25 July 2018
• Neutral Citation: [2018] IECA 271
• Date: 25 July 2018
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2018] IECA 271

BETWEEN

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

PLAINTIFF/RESPONDENT

AND

NOEL DUNNE

DEFENDANT/APPELLANT

[2018] IECA 271

Irvine J.

Birmingham P.

Irvine J.

Hogan J.

Neutral Citation Number: [2018] IECA 271

[2016 No. 428]

THE COURT OF APPEAL

Banking and finance – Guarantees – Plenary hearing – Respondent seeking sum allegedly due by the appellant for principal and interest on foot of guarantees – Whether the High Court impermissibly found as a fact that the company December 2005 mandate did not countermand the earlier telephone mandate of November 2005

Facts: The defendant/appellant, Mr Dunne, appealed to the Court of Appeal against the judgment and order of the High Court (White J) of the 12th May 2016. By his order the High Court judge granted judgment in favour of the plaintiff/respondent, the Governor and Company of the Bank of Ireland, for the total sum of €384,699.66. That was the sum allegedly due by Mr Dunne on the 25th November 2015 for principal and interest, on foot of guarantees in writing dated the 11th November 2005 and the 30th May 2006. The guarantees had been provided by Mr Dunne to support certain loan facilities advanced by the bank to Leinster Broadband Ltd of which company Mr Dunne was then a director. The first of the guarantees, limited to the principal sum of €300,000 plus interest, was a joint and several guarantee executed by Mr Dunne and his co-director, Mr Gilligan. The latter, which secured the company’s liabilities to the extent of €50,000 plus interest, was executed solely by Mr Dunne. The principal submissions advanced by Mr Dunne on the hearing of the appeal were as follows: (i) based upon the new evidence admitted pursuant to the order of the Court of Appeal dated the 12th December 2016, the bank had not established its entitlement to claim the sum of €48,882.77 in respect of surcharge interest and in respect of which judgment had been granted; (ii) the delay on the part of the bank in bringing its application for summary judgment to a full hearing was such that the court ought not to have granted judgment in respect of the sum of €78,167.30 claimed in respect of interest from the date of demand; (iii) based upon the decision of the Court of Appeal in Ulster Bank Limited v Grimes [2015] IECA 346, the evidence of the bank concerning the sums claimed did not reach the standard required such that judgment should not have been granted in favour of the bank; (iv) the court erred in law in determining an issue of credibility arising from the affidavits; (v) the High Court judge impermissibly found as a fact that the company December 2005 mandate did not countermand the earlier telephone mandate of November 2005.

Held by Irvine J that the High Court judge should not have resolved the factual dispute and the credibility issue concerning whether or not Mr Dunne likely made the telephone call authorising the transfer of funds to Mr Gilligan’s account on the 30th August 2006; that was a matter that could only be resolved at a plenary hearing, given that Mr Dunne’s evidence on the issue was not contradictory and was not inconsistent with other uncontested documents. Irvine J held that the trial judge should not have concluded that the December 2005 authority did not interfere with the validity of the telephone mandate of the 16th November 2005 having regard to the incomplete nature of the December 2005 mandate, as exhibited, and bank’s e-mail of the 12th May 2011.

Irvine J held that she would remit those two issues to a plenary hearing.

Appeal allowed.

JUDGMENT of Ms. Justice Irvine delivered on the 25th day of July 2018

1 This is the appeal of Mr. Noel Dunne against the judgment and order of the High Court, White J., of the 12th May 2016.

2 By his order the High Court judge granted judgment in favour of the Governor and Company of the Bank of Ireland (‘the bank’) for the total sum of €384,699.66. That was the sum allegedly due by Mr. Dunne on the 25th November 2015 for principal and interest, on foot of guarantees in writing dated the 11th November 2005 and the 30th May 2006. The bank did not make any claim for further interest.

3 It is not disputed that the guarantees had been provided by Mr. Dunne to support certain loan facilities advanced by the bank to Leinster Broadband Limited (‘the company’) of which company Mr. Dunne was then a director. The first of the guarantees, limited to the principal sum of €300,000 plus interest, was a joint and several guarantee executed by Mr. Dunne and his co director, Mr. Declan Gilligan. The latter, which secured the company's liabilities to the extent of €50,000 plus interest, was executed solely by Mr. Dunne.

4 By letter dated the 22nd February 2008 the bank made demand of Mr. Dunne for repayment of the sum of €306,532.36 after which it commenced the within proceedings by summary summons issued on the 8th July 2008. The bank's notice of motion seeking summary judgment issued on the 1st April 2009 and this spawned no less than eight affidavits which were exchanged over what can only be described as a rather leisurely six year time frame, an issue to which I will later return.

5 The principal argument advanced by Mr. Dunne in support of his applications that the proceedings be referred to plenary hearing, concerned the circumstances in which, on the 30th August 2006, two withdrawals were made from the company's account which he maintains were not validly sanctioned. The first was a withdrawal of €50,000 and the second for €30,855. These sums had been transferred by the bank into accounts in the name of his co director, Mr. Gilligan. The bank maintained that he, Mr. Dunne, had telephoned the bank and had authorised the transactions. It further contended that it had carried out the transactions in accordance with a telephone/telex/facsimile authority and indemnity (the ‘telephone mandate’) from the company dated the 16th November 2005 which authorised it to operate its account on foot of telephone instructions furnished by Mr. Dunne until notified of any change to that instruction.

6 Mr. Dunne maintained that he did not make any telephone call to the bank on the 30th August 2006 sanctioning the withdrawal of the aforementioned sums. He also claimed that at the time the bank withdrew the funds from the company's account it had no valid telephone mandate to carry out that transaction. In support of his position Mr. Dunne exhibited three documents each of which was authored by an employee of the bank. They are so brief it is convenient to quote their contents in full.

E-mail from Mary Tuohy of the 9th December 2008:

‘Hi Noel,

Just to confirm the transfers on the 30th August 2006 relate to a telephone instruction from yourself to transfer €50K and €30,855 to the accounts of Declan Gilligan.

Regards’

E-mail from Orla Fagan dated 12th May 2011:

‘Noel,

Per our telephone conversation, I confirm that the bank mandate, Form 1/21 dated the 1st December 2005 is the instruction the bank rely on regarding signing instructions on Leinster Broadband limited. We do not hold a ‘fax/telephone indemnity’ form.

I trust this is the information you require’

E-mail from Libby Kelly on the 24th September 2012:

‘To whom it may concern,

Please accept this as confirmation that according to the mandate held by Bank of Ireland Newbridge Mr. Noel Dunne is authorised to sign cheques on this account as a sole authorised signatory.

At present there is no telephone / fax indemnity in place which would allow the bank to accept payment instructions via phone/fax.

I trust you will find this in order.’

7 In its response, the bank contended that the e-mails relied upon by Mr. Dunne did not represent the true situation. Mr. Gerry Laheen, in his affidavit of the 28th May 2014, maintained that the transactions dated the 30th August 2006 had been authorised by Mr. Dunne as per the e-mail of the 9th December 2008 earlier referred to. Further, contrary to what had been asserted by Mr. Dunne, he claimed that the bank did indeed hold a telephone mandate from Mr. Dunne which he had signed on the 16th November 2005. Thus, according to Mr. Laheen, the e-mails that Mr. Dunne had exhibited were incorrect insofar as they stated that no telephone mandate existed.

8 In his further affidavits, Mr. Dunne, for a second time, explicitly denied sanctioning the withdrawal of funds from the company's account by telephone instruction on the 30th August 2006. He also maintained that the telephone mandate relied upon by the bank had been countermanded by a resolution of the company dated the 1st December 2005 (‘the December 2005 authority) which required both directors to sign in respect of any transaction on the company's bank account.

9 While Mr. Dunne maintained that he was unaware that the impugned transfer had been made or to what use the funds had been applied, he nonetheless contended that the transfer of the funds had precipitated the downfall of the company as they had been earmarked to support the expansion of the business at a critical time. Further, the diversion of the funds had, according to Mr. Dunne, complicated the potential sale of the company to another broadband company as the proposed purchaser did not want to assume liability for the repayment of funds which had disappeared without explanation. So prejudicial to his interests had been the transfer of these funds that Mr. Dunne maintained that the bank's negligence called into question its entitlement to rely upon the guarantee to recover any of the sum claimed.

10 Insofar as the bank maintained that the telephone mandate remained valid, notwithstanding the December 2005 authority, which required the consent of both directors, Mr. Dunne relied upon the fact that the second page of the company's resolution had not been produced by the bank notwithstanding the fact that he had sought sight of the same during the currency of the proceedings....