The High Court has adjourned Anglo Irish Bank Corporation Limited’s claims against three solicitors for plenary hearing, refusing the bank’s application for summary judgment on guarantees and partnership borrowings totalling €21,460,077.38, including interest to 29 June 2010.
Mr Justice Kelly’s 20 July 2010 judgment dealt with three sets of proceedings heard together. The defendants, Michael Sherry, Dermot O’Donovan and Adrian Frawley, admitted that the money had been lent to three companies and two partnerships, and that they had signed the guarantees. They did not dispute the amount claimed or the demands made by the bank.
On the guarantee claims, the defendants said they believed the guarantees would not be enforced. They attributed assurances to Michael Daly, a fellow shareholder and partner in the property businesses. They said Daly had told them the guarantees were a formality, based on assurances he claimed to have received from senior Anglo figures. The judge noted that Daly was not an Anglo officer, official or employee, and that there was no document from the bank supporting the alleged assurances.
Anglo argued that the defence was not credible, pointing to the unconditional wording of the guarantees and the absence of contemporaneous notes. The judge identified additional difficulties for the defendants, including amendments they had made to limit their guarantee liability to 12.5% of the relevant company debt.
However, the defendants relied on a separate case in which Anglo was suing Daly over the same transactions. In that case, Mr Justice Charleton had refused summary judgment and adjourned the claims against Daly for plenary hearing. Mr Justice Kelly said the defendants’ case had additional difficulties, but considered that denying them a trial could risk perceived injustice if Daly succeeded at trial on overlapping issues. He therefore adjourned the guarantee claims.
The defendants also alleged that Anglo had negligently advanced partnership funds despite knowing, suspecting, or having reason to suspect that the businesses were being run fraudulently or irregularly. Anglo said it did not become aware of concerns about fraud or unlawful activity until June 2009, after most facilities had been drawn down. The defendants relied on a review commissioned from accountants Cooney Carey, whose report had not been disclosed to them or the court. The judge said the report’s contents could be important and were unknown at that stage, and adjourned this part of the case too.
The court’s decision was procedural: it sent the action to plenary hearing because the judge could not confidently conclude that the defendants had no case. He expressly said the order was no warranty about the strength of their case or their eventual prospects of success.