The High Court has refused Danske Bank’s application for summary judgment against four former directors of Beocare Ltd, finding that they had raised an arguable defence to the bank’s claim under guarantees. The case will proceed to a plenary hearing, where it will be heard and determined.
The bank claimed €242,451.17 was due under guarantees dated 8 June 2006. The guarantees were given jointly and severally to cover Beocare’s liabilities under an overdraft facility, up to a total liability of €250,000. Beocare is now in liquidation.
In 2007, the bank offered Beocare a €250,000 term loan to restructure and amortise its current account. The offer letter listed a floating charge, new joint and several director guarantees and a postponement of a director’s loan as security. The judgment records that the new guarantees were not executed. A supplemental affidavit from the third defendant also said the floating charge and loan postponement were not put in place.
The defendants argued that the term loan replaced and redeemed the overdraft, bringing the 2006 guarantees to an end. The bank maintained that those guarantees were continuing obligations and that a clause in the 2007 offer letter preserved security for all of Beocare’s liabilities.
The judge considered whether the defendants had shown a fair or reasonable probability of a real defence. He said the issues included whether the term loan paid off the overdraft and, if it did, whether the 2006 guarantees were extinguished. Those questions involved inferences from facts and documents and legal consequences that were not clear on the papers.
The court found the defendants had raised a sufficient arguable case to warrant a plenary hearing. It noted that factual issues about the circumstances of the 2007 arrangement might affect how the transactions were interpreted, but left that question for consideration at a full hearing. The judge did not decide whether the guarantees remained in force or whether the bank was owed the claimed amount.
The application for summary judgment was refused, and the case was ordered to be heard and determined at plenary hearing.