The High Court ruled that Niall McFadden remained bound by a 2005 guarantee for borrowing by RQB Limited after proposed restructured facilities were never drawn down. It held that the later guarantees would replace the earlier one only when the new facilities became operative and the required security was in place.
Danske Bank, trading as National Irish Bank, sought judgment against Mr McFadden for €8,876,803.16, with contractual interest, under the guarantee dated 23 December 2005. The company had received a €12 million overdraft facility in 2005 and later went into liquidation. The bank had already obtained summary judgment against RQB and two other guarantors. Mr McFadden’s case had been adjourned for a plenary hearing.
The dispute concerned whether guarantees signed in September 2008 replaced the 2005 guarantee. The 2008 documents included handwritten terms stating that they replaced the earlier guarantee. The bank’s witness, Kenneth Dobson, testified that the replacement would take effect only if the proposed restructuring was completed and the facilities drawn down. Mr McFadden challenged that account but did not give evidence. Another RQB director, Declan Cassidy, who was involved in the relevant telephone conversation, was not called as a witness.
The proposed restructuring involved an €8 million loan and a €2 million overdraft. The facility letters required personal asset statements and other security arrangements, and provided that the offers would be subject to renegotiation if utilisation had not begun by 30 September 2008. The court accepted Mr Dobson’s evidence that the outstanding issue was a personal asset statement from another guarantor. The facilities were not drawn down by the deadline or at any later time.
The judge held that the 2008 guarantee would supplant the 2005 guarantee only after the restructured facilities were drawn down and the security was in place. Because that did not happen, the original borrowing remained secured by the 2005 guarantee. The court also noted that the original facility terms required any variation to be made in writing by an authorised bank signatory, and no such written variation had been made.
The court found for the bank and ruled that it was entitled to judgment against Mr McFadden for the sum claimed under the 2005 guarantee. The judgment does not specify a separate award of contractual interest in its concluding order.