The Court of Appeal has dismissed Maurice Connolly’s appeal against summary judgment on a €1.185 million guarantee for his son’s business debts, with one judge saying he did so because of binding precedent.
In a judgment delivered on 4 April 2017, Mr Justice Gerard Hogan said he agreed with the decision to dismiss the appeal in respect of the first guarantee, signed in 2005. The court had extended the time for bringing the appeal, and Hogan J also agreed with the conclusions concerning execution of the deed under seal.
The dispute concerned two guarantees given by Maurice Connolly for loans to his son, John Connolly. The High Court had found no arguable defence to the first guarantee because Maurice Connolly signed a declaration that he had waived the opportunity for independent legal advice. The solicitors who prepared it acted for his son. The High Court had treated the second guarantee, signed in 2009, differently, finding an arguable defence and adjourning that part of the claim.
Hogan J said the father had not sworn an affidavit setting out his defence, making the case more difficult. He considered that the circumstances could support an argument that the bank should have ensured the father received independent advice before guaranteeing large sums for a business from which he had no direct personal benefit. He noted that the son’s affidavit described a development venture involving land and alleged fraud over its title. The son was awaiting the outcome of a civil deceit action, while a criminal prosecution against two people alleged to have fabricated title documents remained pending. These were accounts and allegations described in the judgment, not findings in this appeal.
Hogan J said that, if the question were open, the father could have an arguable defence concerning both guarantees. But recent Court of Appeal majorities in de Kretser and Curran had held that a bank’s duty to make inquiries depended on the surety first establishing an arguable case of undue influence or misrepresentation. Since those decisions governed, Hogan J said he had to accept the court’s prevailing position. He therefore agreed that there was no arguable defence to the first guarantee and that the appeal should be dismissed.
The judgment addresses the first guarantee’s summary judgment and the appeal. It does not decide that the father would ultimately have succeeded at a full hearing on the proposed defence.