The Court of Appeal has dismissed an appeal by six defendants who sought to prevent Allied Irish Bank plc from pursuing more than €1.1 million against them in summary proceedings over personal guarantees for a company loan.
In a judgment delivered on 11 June 2021, Mr Justice Woulfe said the defendants had not established that the bank made a clear and unequivocal promise to settle its claim for €1.1 million. The proposed compromise remained conditional on the bank’s Credit Committee approving it, and that approval was never obtained.
The dispute arose from a €2.28 million loan made in 2008 to G.R.O. Oil Limited to buy a site in County Tipperary for a proposed biodiesel plant. The individual defendants signed personal guarantees. The company’s project became unviable after government policy changed and grant schemes were cancelled, alongside a downturn in the economy and farming. The loan fell into arrears, and the bank made demands in 2013.
The bank’s 2014 summary summons sought €2.18 million from the individual defendants on a joint and several basis. Six defendants later brought a separate application, arguing that negotiations had resulted in an agreement to settle their liability for €1.1 million. They said they had provided sworn statements of means and taken steps to raise the money, including selling land or arranging finance. They alleged the bank had negotiated in bad faith and that they had relied to their detriment on the proposed deal.
The bank denied that any binding settlement had been reached. It said the proposal was conditional on receiving financial information and then on Credit Committee approval. A draft agreement was discussed and revised, but it was not executed by both sides. In March 2017, the bank’s solicitors told the defendants’ solicitors that the bank was not in a position to accept the proposal.
The High Court refused the defendants’ application in November 2017, finding there was no clear and unequivocal promise on which an estoppel could be based. The Court of Appeal held that the affidavit evidence supported that conclusion: although the parties had agreed on a settlement figure and negotiations had progressed, there was no concluded overall agreement. The court said the bank had given only a conditional indication that the claim might be compromised, subject to Credit Committee approval.
The appeal court also queried whether a final declaration was properly sought by a motion during the summary proceedings, but no party had raised that procedural issue below. It therefore noted the concern and decided the appeal on its merits. It did not decide whether the bank had any duty to give reasons for rejecting the proposal, saying that issue had not been pleaded or fully argued.
The court dismissed the appeal and affirmed the High Court decision. It directed that a brief supplemental hearing be held on costs; the judgment did not determine those costs.