The Court of Appeal has dismissed Donal O’Sullivan’s appeal against a High Court decision holding him liable as guarantor for Revolution Workwear Ltd.’s obligations to SRI Apparel Ltd. The High Court had entered judgment against Revolution for €114,951 and found that O’Sullivan had not been discharged from his guarantee. The appeal concerned only O’Sullivan’s liability as guarantor; the Court of Appeal did not revisit the full dispute between the companies.
O’Sullivan and Paul Bond formed Revolution in 2009. Under a distribution agreement with SRI Apparel, both men guaranteed Revolution’s obligations for the agreement’s initial term. Bond was also a director of SRI, a fact O’Sullivan said had not been disclosed to him when he signed. The Court of Appeal upheld the finding that this was not an unusual feature of the commercial arrangement requiring disclosure, and that Bond’s directorship did not change the risk O’Sullivan accepted as co-guarantor. O’Sullivan retained the right to seek contribution from Bond, an issue that remained to be determined.
SRI and Revolution varied their agreement in February 2011. The variation stated that unchanged terms of the 2009 agreement remained in force. O’Sullivan signed the letter on Revolution’s behalf, although he had refused during negotiations to provide a new personal guarantee. He argued that he should be released because SRI had not told him it had breached the 2009 agreement by selling CAT merchandise to retailers in France and the UK in late 2010.
The appeal court accepted that SRI had breached the agreement, but said the High Court had found those breaches were not fundamental or the cause of Revolution’s financial difficulties, and that SRI had not acted in bad faith or deliberately concealed the breaches. The court found no legal basis to discharge O’Sullivan’s guarantee because he was not informed of the breaches before the variation. It also held that the January 2011 email in which SRI’s principal said a personal guarantee would be needed did not alter the contractual position: the 2011 letter carried forward the existing guarantee.
The Court of Appeal rejected all three grounds of appeal and dismissed the appeal. The High Court judgment against Revolution and the finding that O’Sullivan remained liable as guarantor therefore stood. The court noted that O’Sullivan’s claim for contribution or indemnity from Bond remained unresolved.