The Court of Appeal has allowed Ethel Daly’s appeal against summary judgment obtained by Bank of Ireland Mortgage Bank in two proceedings over a guarantee and a separate loan taken out by her late husband, Marcus Daly Senior. The court held that the estate had an arguable defence, but did not decide whether the guarantee or loan liability was valid. It directed that €162,663.85 be paid before the estate can defend the loan claim in a plenary hearing.
The dispute arose from lending to Daly Senior’s son and daughter-in-law. In February 2010, the Bank offered the borrowers a €1.65 million loan and set conditions concerning the son’s income, accounts and tax affairs. Daly Senior’s estate argued that he knew of those conditions, which reflected concerns he had raised with the Bank, but was not told that they were absent from a revised offer issued in May 2010. That later offer was accepted by the borrowers, and the Bank advanced the loan. Daly Senior had signed a guarantee capped at €300,000.
The High Court had granted the Bank summary judgment on both the guarantee and a separate €350,000 loan to Daly Senior. On appeal, the Court of Appeal said there was at least an arguable basis to find that he had seen the February offer but had not seen the May offer before signing the guarantee. It also found it arguable that the Bank knew the borrower’s creditworthiness mattered to him and that the removal of the conditions could have affected his decision to guarantee the debt.
The court stressed that these were questions for a trial, including whether the circumstances could discharge the estate from the guarantee. It did not find that the Bank had made a misrepresentation or that the conditions had legally been breached. It said the general rule is that a lender has no general duty to disclose a borrower’s creditworthiness to a guarantor, while finding the specific circumstances here could support an arguable defence.
The separate loan claim was also left for trial because it was arguable that Daly Senior would not have drawn down his own loan had he known the May offer omitted the conditions. The court said the principal received remained repayable. The €162,663.85 payment is without prejudice to either side’s position, including the Bank’s contention that the liability is higher.
The Bank was directed to deliver a statement of claim within 21 days. The court also set deadlines for any request for particulars and the subsequent defence, and directed the parties to seek case management in the High Court. The proposed costs order would give Daly the costs of the appeals, subject to any application by the Bank for a supplemental hearing within 14 days.