The High Court has proposed granting an injunction to prevent Ennis Property Finance DAC and two receivers from dealing with a Waterford property while a dispute over guarantees and security documents proceeds to trial.
In a judgment delivered on 21 December 2018, Ms Justice Stewart said Catherine Barry had established serious questions to be tried about whether her son, Niall Barry, unduly influenced her when she signed guarantees for loans to his company, Niall Barry Plant Services Ltd (NBPSL), and a mortgage over the property. The judge stressed that the application was interlocutory: the allegations have not been finally tested, and the court made no final finding that undue influence occurred.
Barry said she had little business experience after her husband died and signed the guarantees because her son threatened to leave the family business. She also said she received no independent legal advice. Ennis disputed her account, pointing to her involvement in family businesses and documents recording that she had the opportunity to obtain legal advice.
The judge found an arguable case that Barry was under her son’s influence when financial transactions were arranged between 2006 and 2008. She also found that the original lender, Bank of Scotland (Ireland), was put on inquiry about the circumstances of her guarantees for two NBPSL transactions. Ennis had not produced evidence showing what steps the bank took to address those concerns. The judge said this part of Barry’s case was weaker and could be affected by evidence that emerges later.
The court rejected Barry’s consumer-law argument, finding that she acted in a commercial capacity when she entered the agreements. It also held that credit provided to NBPSL was sufficient consideration for her guarantees. Separately, the judge found that a third loan, made to the Barry Property Group, was due and could be called in: Barry had fallen into arrears, and termination of a later settlement agreement did not erase the earlier default.
However, the mortgage secured all three transactions, and the court found a serious question about whether it could remain valid for the third loan if it was tainted by undue influence in relation to the other transactions. That issue could affect Ennis’s claim to the property and its receivers’ authority.
The judge considered that the balance of convenience favoured Barry, including because she lived in a cottage on the secured property and said rent from it was her only income. The court did not order her to place any surplus rent in escrow; it suggested she could discuss her finances with Ennis and consider doing so. The judge proposed granting the requested injunction and said counsel would be heard on the precise wording of the order. The judgment therefore records a proposed grant, with the exact form of the order still to be settled.