The High Court has allowed Mark Gordon to defend Bank of Ireland’s €1.512 million claim under two guarantees, finding that several issues required a plenary hearing. The court did not determine whether the guarantees were enforceable or whether Gordon was liable for the amount claimed.
The judgment, delivered by Mr Justice Fullam on 27 January 2016, concerned the bank’s application for summary judgment. Gordon, a former principal shareholder and director of VFM Healthcare (Ireland) Ltd, had guaranteed borrowings by the company, which operated St Francis private hospital in Mullingar. The judgment describes Mullingar as being in Co. Meath.
The guarantees were for €1 million in January 2011 and €512,000 in July 2012. Gordon argued that his guarantees were limited to his business assets in the company. He also contended that the bank’s actions and the involvement of consultants in the company’s finances affected his liability.
The court rejected Gordon’s argument that the claim was premature because the bank should wait for the receiver to realise the company’s assets. It held that a creditor could choose when to pursue recovery and found no evidence showing why that principle should not apply.
The court also ruled that an email sent by a bank agent more than 18 months after the first guarantee was made could not alter the construction of that guarantee. But it found there might be substance to Gordon’s argument that the email could support a claim that the second guarantee was limited to his business assets. That issue could not be resolved on the summary judgment application.
The court said questions also required fuller consideration about whether Gordon could be liable as guarantor for loans made under arrangements between the bank and an agent of the Steinberg Trust, a minority shareholder. It further found legitimate questions about the role and impact of BDO in the company’s operations, including the alleged failure to collect revenue from public healthcare providers in Ireland and the UK and from private health insurers. The court said evidence of the bank’s conduct on that issue could support a stateable equitable defence to enforcement, or full enforcement, of the guarantees.
The court directed that Gordon be permitted to defend the claim at a plenary hearing on three issues: whether the second guarantee was limited to his business assets; whether and to what extent he could be liable for loans made under agreements between the bank and a minority shareholder; and whether and to what extent the bank’s conduct, including BDO’s role, affected his liability under the guarantees.