The High Court has allowed former company director Declan O’Donoghue to defend Allied Irish Banks plc’s €1.541 million guarantee claim on one ground: whether the guarantee was supported by consideration. The court transferred the case to plenary hearing, where that issue can be examined with fuller evidence and argument.
AIB had applied for summary judgment, claiming the amount was due under a guarantee dated 10 February 2009 for debts owed by Lodge Gaven Limited. The bank said the guarantee was among the security for renewed and extended lending facilities. Its evidence included the guarantee, company resolutions and facility letters signed by O’Donoghue, as well as an earlier guarantee for the company’s borrowings.
O’Donoghue denied recalling that he signed the 2009 guarantee and questioned whether the signature was his. He also argued that the bank had not provided consideration for it. He pointed to the stated purpose of a €1.25 million business credit line—assisting with property acquisition—and said the company had not acquired property after the guarantee. The bank’s evidence was that the final drawdown on that credit line occurred in June 2007, before the guarantee was signed. AIB argued that consideration was provided through the new guarantee as security in the context of extended and restructured facilities.
Mr Justice MacGrath found that the proposed defence that O’Donoghue had not signed the guarantee was not tenable for the purposes of the application. He said the bank’s documents, including the earlier guarantee and company facility documents, contradicted that account. The judge also said the bank had explained why the guarantee amount exceeded the facility amount: it allowed for interest up to the specified review date.
However, the judge concluded that an arguable defence had been raised on consideration. That issue would involve questions of fact and law, and the court could not conclude at this stage that O’Donoghue had no defence. The ruling did not determine whether consideration was in fact absent or whether the guarantee was enforceable. It granted liberty to defend on that ground and transferred the case for plenary hearing; it did not enter summary judgment for AIB.