The Court of Appeal has dismissed Liam Hazel’s appeal against a judgment requiring him to pay Allied Irish Banks plc €290,225.17 under a guarantee for a company loan.
In a judgment delivered on 1 February 2019, Ms Justice Baker said the guarantee was a separate form of security and remained enforceable despite a failure to register a charge over land intended to secure the loan. The court also upheld the trial judge’s conclusion that Hazel’s counterclaim was not supported by the evidence.
AIB had lent €1 million to Emerald Isle Properties Ltd in August 2002 to fund holiday homes on a site in County Cork. Hazel, a company director, shareholder and secretary, signed a guarantee in October 2002, limited to €250,000 plus interest. A separate guarantee was given by co-defendant Alex Gibbons, who was then a solicitor and also a company director and shareholder. Judgment had already been obtained against Gibbons for €200,000 under an agreed compromise.
Hazel did not dispute signing his guarantee. He argued that AIB had been negligent in failing to monitor Gibbons’s undertaking to register the land security, and that the bank should have told him the charge had not been registered. He said the title problems affected the development and prevented him from completing the purchase of a residential unit. His counterclaim sought damages over alleged negligence and breach of duty.
The court found that the guarantee’s terms expressly provided that defects or failures in other security would not impair the guarantor’s liability. Baker J said the bank had no duty of care to Hazel to perfect its security or supervise Gibbons’s undertaking. She also accepted the bank’s position that it was entitled to rely on that undertaking.
The judgment noted that Hazel did not provide evidence that completing the title and security when he raised the issue could have enabled the company to repay the loan or allowed him to sell the unit. The court also cited his involvement in the company and his knowledge of the agreed security. AIB had demanded repayment from the company in July 2009 and under the guarantee the following month; judgment against the company followed in July 2011.
The court said the counterclaim had been opened and considered at trial, and that the trial judge had properly addressed its overlapping issues. A separate argument about bank-held title documents for other property at Lough Hyne had not been raised in the High Court and could not form the basis of the appeal.
The appeal was dismissed. The Court of Appeal did not disturb the €290,225.17 judgment against Hazel.