The Court of Appeal has set aside a €1.5 million summary judgment in favour of Allied Irish Banks against Sean Cuddy and sent the claim to a full hearing on one limited issue: whether the bank had agreed that its recourse under his guarantee would be confined to a warehouse in Oranmore, County Galway.
In a judgment delivered on 30 July 2020, Mr Justice Maurice Collins said Mr Cuddy had shown an arguable defence to the bank’s claim. The court granted him leave to defend on the limited-recourse issue only. It rejected his separate argument that the claim was barred by the Statute of Limitations. The appeal court did not decide whether AIB made the alleged promise or whether Mr Cuddy’s defence will succeed at trial.
AIB obtained summary judgment in the High Court in April 2019, based on a €1.5 million guarantee Mr Cuddy signed in September 2009 for debts owed by Cuddy Development Limited. The company had borrowed to fund development of a property at Barna, County Galway. The guarantee did not limit the bank’s recourse to the Oranmore warehouse, which Mr Cuddy later mortgaged to AIB.
Mr Cuddy’s evidence was that AIB officers assured him that any personal guarantee would be backed only by the warehouse and would not put his other assets at risk. His financial adviser, Tom Comerford, supported that account in an affidavit. AIB disputed that any such assurance was given, saying the officers lacked authority to agree to limit the bank’s recourse and that any request required credit committee approval. The bank also relied on the guarantee’s written terms and the absence of supporting documents.
The High Court had ruled that the alleged oral assurance could not support a defence because of the parol evidence rule. The Court of Appeal said the rule did not make the evidence inadmissible at the summary judgment stage. It held that a collateral contract may arguably be established by oral evidence, while leaving the broader legal question open. The court said the evidence, including Mr Comerford’s account, was more than a bare assertion for the purpose of deciding whether a full hearing was warranted. It noted there would be formidable obstacles at trial and made no finding on the disputed facts.
On limitation, the court said a demand under a guarantee payable on demand triggers the guarantor’s liability. Although the High Court had been shown a 2017 demand, additional evidence on appeal established that AIB had demanded payment on 7 April 2014. That was enough to defeat Mr Cuddy’s limitation argument; the court expressed no view on his separate public-policy challenge to a guarantee clause concerning limitation.
The court also noted that the Oranmore warehouse had been sold in 2014 and €213,941 in net proceeds paid to AIB. That credit had not been reflected in the High Court judgment for the full €1.5 million. The appeal court ordered that the claim proceed to a plenary hearing on the limited-recourse issue and said it would hear the parties on consequential orders.