The High Court has sent Allied Irish Banks’ claim against Mary Geraghty over two personal guarantees to a plenary hearing, finding it was not clear that she had no arguable defence. The court did not decide the ultimate liability under the guarantees.
AIB sought summary judgment against Geraghty, who had guaranteed debts owed by Rostaff Property Development Limited. The guarantees were signed in July 2009 and February 2012, and each capped the amount recoverable. The judgment says credit facilities were granted to the company in September 2011 and February 2012, followed by repayment demands between May 2014 and May 2015. Judgment had already been obtained against the company and James Kearney, the third defendant.
Geraghty accepted that the signatures on the guarantees were hers but said she did not knowingly sign personal guarantees or understand their legal and financial implications. In affidavits, she described Kearney as her former romantic partner and said he had controlled the company, while she had been excluded from its day-to-day operations and company records. She said she had invested €17,500 in the business and signed paperwork because she was told it was needed to keep the company afloat. She also said she was not advised to seek independent legal advice.
In her later affidavit, Geraghty raised undue influence, unconscionable bargain, non est factum, misrepresentation and mistake. AIB maintained that the guarantees gave it a contractual right to recover and characterised her defence as lacking good faith and intended to delay proceedings. The judge observed that the bank’s affidavits did not meaningfully address the circumstances described in Geraghty’s evidence.
Applying the summary judgment test, the judge said it had to be “very clear” that the defendant had no case and that there was no issue to be tried, or only issues that were simple and easily determined. He found a dispute in the evidence about whether Geraghty had been subjected to undue influence or had entered the guarantees in circumstances involving alleged exploitation of vulnerability. The evidence did not allow him to conclude that she had no arguable defence on either undue influence or unconscionability.
The court therefore refused summary judgment and referred the claim against Geraghty to a plenary hearing. It did not go on to consider her other proposed defences. The judgment’s addendum gives general cautionary advice to people considering guarantees or company roles involving a loved one, including seeking independent legal advice.