The High Court has rejected Ulster Bank Ireland Limited’s claim to enforce a guarantee against Sorcha Buttimer, finding that she signed it under Louis Roche’s undue influence and that the bank failed to take steps to ensure she was agreeing freely.
The judgment, delivered by Mr Justice Clarke on 29 March 2012, followed a plenary hearing of the bank’s claim against Buttimer. Ulster Bank sought €50,000, the guarantee’s maximum amount, plus interest from 27 July 2007. The judge said the amount due was not disputed; the question was whether Buttimer was liable under the guarantee.
Roche ran Louis Roche Motors Ltd, whose banking business moved to Ulster Bank’s Midleton branch in 2006. Buttimer, who was Roche’s partner and worked as a hairdresser, was a company director but had no material involvement in the business and was not a shareholder. The bank required guarantees from the directors. Buttimer accepted that the signature on her guarantee was hers, but disputed the circumstances in which she signed it.
The judge found that the signature was more likely witnessed by a bank employee, despite Buttimer’s evidence that she had not attended the branch. He held that a disputed witnessing procedure did not itself give her a defence: the guarantee did not have to be witnessed by law, and she signed without checking the document’s contents. He was also satisfied, based on Buttimer’s evidence and that of her clinical psychologist, that Roche exerted undue influence over her when she signed.
The central issue was whether that influence could defeat the bank’s claim, given that Roche, rather than the bank, exerted it. The judge said there was no evidence that Ulster Bank actually knew of the undue influence. However, he found the bank was aware of Roche and Buttimer’s personal relationship and that she had no direct interest in the company apart from being a director. Those circumstances put the bank on inquiry about whether the guarantee had a non-commercial element and whether Buttimer was agreeing freely.
The judge did not decide that the full approach in the UK House of Lords’ *Etridge* ruling applied in Ireland, or specify the precise steps banks must take when put on inquiry. He held that some steps were required to check that a proposed guarantor was acting freely. Ulster Bank had taken none. The claim against Buttimer therefore failed. The judgment did not alter the separate judgment already obtained against Roche, on which the judge said no sums had been paid.