A Court of Appeal judge has said that a woman who guaranteed her husband’s company debts has an arguable defence to Ulster Bank’s claim, because the bank took no affirmative steps to ensure she had independent legal advice. The ruling concerns whether the case can proceed to trial, not whether the guarantee is invalid.
Gerard Hogan J. delivered the judgment on 7 December 2016 in an appeal from a High Court decision granting Ulster Bank summary judgment for €89,391 plus interest against Walter de Kretser and Gillian Fox. The claim arose from a personal guarantee and indemnity signed in 2007 for obligations of Stones Finishes Supply Ltd., which later defaulted.
Hogan J. agreed that the husband’s appeal should be dismissed. He disagreed with his colleagues’ conclusion that the wife had no arguable defence. He said she had raised an arguable case that the bank was under an affirmative duty to ensure she was independently advised before guaranteeing her husband’s business debts. He stressed that he was expressing no further view on the defence’s merits.
The judgment records that Fox held a 1% share in the company, drew a monthly salary of about €2,000, ran her own business and had signed earlier guarantees. She had not seen the 2007 guarantee before signing it at the bank’s premises. Hogan J. considered these circumstances, but said the bank had taken no affirmative steps to protect her before execution.
The court also rejected a non est factum defence as not arguable. Hogan J. said Fox had executed documents whose general provenance, status and effect she was surely aware of, and that a bank could assume she had committed herself to the guarantee.
The High Court had found that the guarantee was executed under seal and that there was no evidence of duress or undue influence. Hogan J. noted that there was no evidence in this case of the kind of undue influence, including clinical evidence, found in an earlier case discussed in the judgment. He distinguished the present facts from that case, while concluding that authorities on lender duties and independent advice made Fox’s defence arguable at the summary judgment stage.
The judgment therefore leaves the merits of Fox’s defence unresolved. It does not determine the ultimate liability under the guarantee or finally dispose of the bank’s claim against her.