The High Court has rejected Denis Collins and Michael Kiernan’s defence that changes made after they signed loan guarantees barred Anglo Irish Bank from recovering the sums claimed. It also dismissed their counterclaim alleging negligence in the sale of properties during a receivership. The performance bond claim was postponed for a later hearing.
The bank claimed €6,882,970.06 in connection with loan facilities and guarantees. The judgment records that the sums relating to the partnership and the amount due under the guarantees were not disputed, but the defendants argued that the bank could not recover because its solicitor had altered the guarantee documents after execution.
The solicitor admitted changing the word “Borrower” to “Guarantor” and replacing M.D.Z. Limited’s name with each defendant’s name on a page they had signed. The judge found that Collins and Kiernan intended to sign as guarantors, knew an unlimited guarantee was required, and had received independent legal advice. She concluded the changes reflected the parties’ intention and did not alter their rights or obligations, so they were not material.
The judge accepted that the changes were made after signing without the defendants’ consent and that the guarantees were not re-executed. But she found no evidence that the solicitor or bank had the intention required for the forgery and false-instrument offences alleged under the Criminal Justice (Theft and Fraud Offences) Act 2001. She also found no wrongdoing by the bank and held that the defendants’ reliance on the principle of ex turpi causa did not provide a defence. She did not determine criminal liability in a criminal proceeding.
The counterclaim concerned the receiver’s handling of a development at Glanerought, Co Kerry. The defendants alleged, among other matters, that properties were priced too low and that the marketing and handling of queries about the estate’s management company damaged sales. The judge found the proposed prices fair and reasonable and said the evidence did not establish negligence. She also found no evidence that the receiver’s actions caused the defendants a loss; the property market was severely depressed and only a small number of sales followed the open day.
The court therefore gave judgment for the bank for the sums claimed. It left the performance bond issue unresolved and said it would hear the parties on that matter later.