The High Court has ordered a guarantee given by Bruce Blake to KBC Bank Ireland to be amended, finding that a €50,000 limit in the document was included by mistake. It also ordered judgment against Mr Blake for the debt outstanding under a loan facility, but left the amount to be determined after the debt under a separate ISDA Master Agreement is subtracted.
KBC had sought correction of the guarantee, which Mr Blake signed in February 2006, or alternatively specific performance of an earlier agreement. It also sought judgment for €5,737,941.65. The bank said the loan documents required an all-sums guarantee, but a drafting error by its former solicitors resulted in a €50,000 cap appearing in the signed guarantee. Mr Blake maintained that the cap reflected the agreement he had made and denied agreeing to guarantee all sums due.
Justice Stewart found that the 2005 facility letter provided for a guarantee supported by Mr Blake’s interest in two properties, without limiting the guarantee to those interests. She also relied on a January 2006 letter from the bank’s solicitors to Mr Blake’s solicitor, which expressly described the guarantee as covering the full loan, interest, costs and expenses. The judge found that Mr Blake’s solicitor had held himself out as representing both Mr Blake and the borrower, and that Mr Blake proceeded with the loan after that communication.
The judge accepted Mr Blake’s evidence that he read the guarantee and saw the €50,000 cap before signing. She therefore found the parties did not share a continuing intention about the guarantee’s terms when the document was executed. Instead, she found KBC had made a unilateral mistake and that Mr Blake knew the cap conflicted with the agreement set out in the facility letter. In the circumstances, she found it unconscionable for him to sign without drawing the discrepancy to the bank’s attention. The court ordered Clause 5(e) amended to state that the guarantee covered all sums due.
The judge rejected Mr Blake’s consumer-protection argument, finding the transaction was commercial rather than for private consumption. She also found that the other arguments raised—including lack of independent legal advice, reckless lending, undue influence and non est factum—did not provide a defence to KBC’s claim for the facility-letter debt. KBC had stated it was not seeking to enforce the separate ISDA debt against Mr Blake. The court ordered judgment for the outstanding facility-letter debt and said it would hear the parties on the precise sum after the ISDA debt was deducted.