The High Court has ruled for National Asset Loan Management Ltd in two debt actions against former solicitor Séamus Downes, rejecting his defences over a €5.84 million guarantee and a separate loan secured on shops in Castletroy, Limerick. The court said the sums payable would be set out in its order; the judgment does not state those final amounts.
Mr Justice Charleton delivered the judgment on 16 January 2014. The cases were heard together. Downes was the only defendant remaining in them, after proceedings against other defendants had been compromised.
In one action, the company pursued Downes under a guarantee he signed in 2003 for debts of Mount Kennett Investment Company, an investment vehicle associated with three former solicitor partners. Downes argued that he had signed a blank guarantee intended to cover only a €3 million investment, and that the bank later inserted a higher limit. The judge rejected that account, citing bank manager Tommy Lenahan’s evidence and an earlier affidavit in which Downes said he had agreed to a €5.84 million composite guarantee covering various properties.
The judgment recorded outstanding company debts totalling €6,774,010 as of 5 November 2013, above the guarantee limit. It also found that the guarantee’s wording made the guarantors’ obligations joint and several and allowed the bank discretion over how to apply receipts. The judge rejected Downes’s arguments that later lending arrangements, his departure from the legal practice, or the bank’s conduct had released him from liability.
Downes also argued that the bank and the plaintiff had acted in a way that prevented them from enforcing the guarantee. The judge found no clear representation or shared understanding that the guarantee would not be enforced. He rejected a similar estoppel argument concerning the Castletroy debt. The judgment describes that loan as secured by a 2008 mortgage signed by Downes and two other borrowers, with terms charging the property for their joint and individual liabilities.
The court also dismissed challenges to the National Asset Management Agency Act 2009, including claims that sections 84 and 147 were unconstitutional. It held that challenges to the acquisition of the loans had been brought too late, and rejected the separate argument that the Castletroy loan could not be acquired under the legislation.
The court entered judgment for the plaintiff in both actions. It awarded the plaintiff reserved costs against Downes across the two proceedings, with one costs order to be made in the guarantee case, and also allowed the costs of pleading in the Castletroy action. The Attorney General was not awarded costs.