The High Court has refused Allied Irish Banks plc’s application for summary judgment against two guarantors of a €320,000 loan, sending the case to a plenary hearing because they raised an arguable defence about whether the guarantees were supported by fresh consideration.
Mr Justice McDermott delivered the judgment on 9 October 2018. The bank sought €341,856.55 from the borrower and €320,000 from each of the two guarantors under separate guarantees. The borrower had not sought to defend the proceedings.
The bank’s evidence said the loan facility was made available in July 2010 to fund the purchase of 25 acres at Annie’s, Clones, County Monaghan. The judge noted, however, that the land had been purchased and the money drawn down in 2007. The guarantors said the original loan dated to September 2006 and had been renewed annually. They argued that they signed guarantees in November 2009, after the funds had been advanced, with no further advance or agreed forbearance in return.
The judge found that this raised an arguable defence. The bank had not fully explained why the guarantees were sought years after the money was drawn down, how the annual renewals occurred, or what part the guarantors played in those arrangements. The judge stressed that sending the case to trial did not mean the defence would succeed; it meant only that the threshold for a full hearing had been met.
The guarantors also said they had signed reluctantly because a family business depended on the bank’s continued credit. The judge found no evidence that the bank had threatened to withdraw or refuse credit if the guarantees were not signed, and held that this did not amount to an arguable defence of economic duress.
The guarantors further relied on consumer-protection rules and alleged unfair terms in the loan and guarantee documents. The judge found their assertions insufficiently supported and held that they had not established an arguable defence on that basis.
The order refused the bank’s summary judgment application and directed that the case proceed to a plenary hearing. The judgment did not determine the underlying claim or whether the guarantees are ultimately enforceable.