Bank of Ireland has secured summary judgment for €4 million against Mervyn Walsh under a guarantee of debts owed by property company Largreen Ltd, which owned property in Portlaoise.
Mr Walsh, a director of Largreen, signed a guarantee in September 2006 covering up to €4 million of the company’s liabilities to the bank, plus interest. By December 2008, Largreen owed Bank of Ireland €22,439,632.42. The bank appointed a receiver on December 12 and later demanded payment from Mr Walsh under the guarantee.
Mr Walsh resisted immediate judgment by arguing that Largreen itself had a damages claim against Bank of Ireland. He alleged that the bank had wrongfully refused to allow a €1.9 million facility to be drawn down to complete part of a Portlaoise development in September 2008.
His case was that those damages could be set off against Largreen’s debt. If the company’s debt was sufficiently reduced or extinguished, he argued, his liability as guarantor would also fall away.
Ms Justice Finlay Geoghegan accepted that this was legally arguable despite a clause in the guarantee waiving defences based on set-off or counterclaim. The wording was not sufficiently clear, at summary-judgment stage, to exclude a defence based on a set-off belonging to the principal debtor rather than to Mr Walsh personally.
However, that did not save the defence. Because Largreen owed more than €22.4 million, Mr Walsh needed to demonstrate an arguable damages claim exceeding about €18.4 million before the €4 million guarantee could be displaced.
The judge found he had not met even the relatively low threshold required to obtain leave to defend. His estimates changed from €26.5 million to €23.39 million, included an acknowledged double count and were unsupported by sufficient evidence. Some assertions were also inconsistent with contemporaneous correspondence.
The court therefore granted summary judgment for the €4 million principal sum. The precise order for interest was left for further submissions.