Court of Appeal: 81-year-old woman must satisfy €1m guarantee in respect of son’s loan

About this case:

• Judgment:
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Delivering the judgment of the three-judge Court, Ms Justice Irvine was satisfied that the woman had failed to establish a credible defence to the bank’s claim, and that in all the circumstances, neither the woman’s “age or ignorance” precluded her from understanding the guarantee.

Background

Mrs Maureen Curran appealed against a judgment and order of the High Court granting granted the Governor and Company of the Bank of Ireland summary judgment against Mrs Curran for the sum of €1m.

BOI in its claim sought judgment against Mrs Curran on foot of a guarantee dated 28th May 2008, whereby she guaranteed the liabilities of a company, XL Fuels Group Ltd, to the extent of €1m. plus interest.

XL Fuels was incorporated in 2007 by Mrs Curran’s son, Mr Michael Curran, and Mrs Curran was both a director and its secretary, receiving a “stipend” in respect of such services.

On the 28th May 2008, the bank agreed to make additional facilities available to the company on the condition that further security would be provided in the form of a letter of guarantee (limit of €1m.) to be executed by Mrs. Curran. On this date, Mrs. Curran signed the aforementioned guarantee in the presence of two bank officials

The issue in the Court of Appeal was whether the trial judge erred in law when he concluded that Mrs Curran had not established a bona fide credible defence to the bank’s claim, such that the proceedings ought to have been remitted to plenary hearing.

Counsel for Mrs Curran submitted that the trial judge erred in law insofar as he could not have been satisfied, as was required of him to grant summary judgment, that Mrs. Curran had no arguable defence to the proceedings; and maintained that there were issues of law which were complex and were not capable of being determined in the course of an interlocutory hearing.

There were three grounds upon which Mrs Curran argued that she could credibly defend the proceedings:

Undue influence

Mrs Curran’s claim of undue influence was made against Michael Curran, “who had an interest in procuring the execution of the guarantee”.

At the outset of considering this defence, Justice Irvine emphasised that “a bald assertion as to the existence of circumstances which might afford a defence is insufficient for the purposes of resisting summary judgment”.

Considering Ulster Bank (Ireland) Ltd v Roche and Buttimer 1 I.R. 765, Justice Irvine stated that “in order to establish a defence of undue influence at a plenary hearing Mrs. Curran would first have to satisfy the court that but for the undue influence exerted upon her by her son she would not have executed the guarantee and second that the bank, i.e. the creditor, had actual or constructive notice that the guarantee was procured by the undue influence”.

Justice Irvine added that “evidence to demonstrate that any undue influence was brought to bear upon her by her son, Michael Curran, or indeed by the bank itself” was “glaringly absent from her affidavits”.

In the circumstances, Justice Irvine was satisfied that the High Court judge was correct to conclude that there was no bona fide or credible defence based upon acts of undue influence.

Unconscionable bargain

Considering Carroll v. Carroll 2 ILRM 218, IEHC 42; Justice Irvine stated that there were three factors establishing an unconscionable bargain:

Justice Irvine was satisfied that Mrs Curran’s “age or ignorance had not precluded her from carrying out her obligations as company secretary which included signing its annual accounts” and that “six weeks prior to the execution of the guarantee she borrowed jointly with her son, Joseph Curran, €1.7m. and executed two deeds of mortgage to support those borrowings”.

It was clear from the facts that the condition of Mrs Curran signing the guarantee “could never be considered extortionate” and in all the circumstances, the defence of unconscionable bargain was bound to fail.

Non est factum

As per Saunders v. Anglia Building Society A.C. 1004, the plea of non est factum “cannot be available to anyone who was content to sign without taking the trouble to try to find out at least the general effect of the document.”

Further, in Irish Bank Resolution Corporation Limited v. Quinn IEHC 470, it was held that “….A person who signs a document which may well have significant legal effect and does so, either without reading the document or without applying themselves to the content of the document, “must accept the consequences of having signed a commercially binding agreement in those circumstances” and will, prima facie, be bound by what they have signed.”

Dismissing Mrs Curran’s appeal, Ms Justice Irvine stated that the trial judge had correctly granted BOI summary judgment, and concluded that Mrs Curran had not established an arguable or credible defence to BOI’s claim.