High Court of Ireland Decisions

1. At the outset, on the application of Counsel for the Plaintiffs to which the Defendants did not object, I amended the title to these proceedings by substituting the name Ulster Bank Ireland Limited for the name Ulster Bank Limited as Plaintiffs.

2. The Plaintiffs claim herein, as against the First Named Defendant, is for the sum of £203,971.85, together with interest thereon, and, as against the Second Named Defendant, for the sum of £106,832.92, together with interest thereon. The said sums of money are alleged to be due and owing by the Defendants to the Plaintiffs; firstly, in respect of monies advanced by the Plaintiffs to and at the request of the Defendants and each of them on foot of a joint and several personal Current Account number 53631019 (hereinafter called the “Current Account”) maintained by the Defendants at the Tralee Branch of the Plaintiffs Bank situate at 43-44 Ash Street, Tralee in the County of Kerry, secondly being monies due and owing to the Plaintiffs by the Defendants for principal and interest under and by virtue of a guarantee in writing dated the 16th October, 1997 whereby the Defendants and each of them, in consideration of the Plaintiffs giving time, credit, banking facilities or other accommodation to Fernhill Developments Limited of 11 Denny Street, Tralee, County Kerry (hereinafter called “the Debtor”), guaranteed payment to the Plaintiffs on demand of all present or future or actual contingent liabilities of the Debtor to the Plaintiffs howsoever incurred and, thirdly, monies due and owing by the Defendants to the Plaintiffs for principal and interest under and by virtue of a guarantee in writing dated the 12th March, 1998 whereby the Defendants and each of them, in consideration of the Plaintiffs giving time, credit, banking facilities or other accommodation to the said Debtor guaranteed payment to the Plaintiffs on demand of all present or future or actual or contingent liabilities of the Debtor to the Plaintiffs howsoever arising.

3. By Order of this Honourable Court made herein on the 26th June, 2000, it was Ordered ( inter alia ) that the Plaintiffs do recover from the First Named Defendant a sum of £215,881.34 and the cost of these proceedings, when taxed and ascertained.

4. The Plaintiffs claim aforesaid against the Second Named Defendant came on for hearing before me on Wednesday 10th October, 2001. At the commencement of the hearing, Counsel for the Second Named Defendant indicated to me that, in accordance with paragraph 12 of an Affidavit sworn herein by the Second Named Defendant on the 4th February, 2000, she accepted liability to the Plaintiffs for the principal sum of £10,169.35, together with interest thereon amounting to £1,036.57, on foot of the Current Account aforesaid and, for their part, Counsel for the Plaintiffs indicated that they were satisfied to accept the said sums in satisfaction of their claim against the Second Named Defendant on foot of the said Current Account.

5. Insofar as the Plaintiff’s claims against the Second Named Defendant on foot of the said guarantees in writing, respectively dated the 16th October, 1997 and the 12th March, 1998, were concerned, the Second Named Defendant, through her Counsel, maintained that the said guarantees in writing were not enforceable against her for the reason that, while she accepted that the signatures to the said guarantees, which purported to be hers, were, in fact, made by her, she asserted; on the one hand, that she, personally, had no financial interest in either of the said guarantees and, on the other, that she had been persuaded to execute the said guarantees by an undue and wrongful influence exercised over her by the First Named Defendant who is her husband; a wrongful influence of which the Plaintiffs were aware, or are deemed to have been aware.

6. In the course of the hearing before me, I heard evidence from a number of witnesses and, in particular, I heard evidence from Mr. Teddy Reynolds, who was the Manager of the Branch office of the Plaintiff’s Bank situate at Ash Street, Tralee in the County of Kerry at the material time, and from the Second Named Defendant, Catherine Williams (otherwise Fitzgerald). Mr. Reynolds gave sworn testimony that he had witnessed the signatures of both of the Defendants to the said guarantees respectively dated the 16th October, 1997 and the 12th March, 1998 and he said that both guarantees were signed by each of the Defendants on the dates upon which each guarantee purported to have been signed and that they were signed by each of the Defendants in his presence and, in his office at the Plaintiff’s Bank at Ash Street aforesaid. He agreed that the Defendants were not present together, on the occasions upon which each of the said guarantees had been executed by them. However, he said that, before each of the Defendants had executed the said guarantees he had explained to each of them the meaning of the guarantees and the reason why they were required by the Plaintiff bank. Moreover, he was adamant that, before the Second Named Defendant had executed either of the said guarantees, he had told her that she could obtain legal advice with regard to the guarantees. However, notwithstanding that advice, she had signed the guarantees on the spot. Mr. Reynolds’ testimony was challenged on two grounds; firstly, it was put to him that, while the Second Named Defendant conceded that she had executed both of the said guarantees and while she conceded that she could not recall exactly when and where she had executed them, she would say that they had not been signed by her in his presence. Furthermore, it was put to him that the First Named Defendant could not, as Mr. Reynolds had asserted, have signed the said guarantee of the 16th October, 1997 in his office at the Defendant’s bank at Ash Street aforesaid because the fact of the matter was that, on that date, the First Named Defendant had attended a conference in Dublin and, accordingly, had not been physically present in the town of Tralee during banking hours. In that regard, the Second Named Defendant gave a sworn testimony that, while she accepted that she had executed both of the said guarantees and that she could not recall, precisely, when and where the said guarantees had been executed by her (she thought, perhaps, that she had signed them at her home), she was adamant that she had never signed either guarantee in the presence of Mr. Reynolds in his office. Moreover, the Second Named Defendant gave sworn testimony that, on the 16th October, 1997, her husband, the First Named Defendant, had attended a conference in Dublin and, accordingly, had been away from the town of Tralee for the entire of the day and, therefore, could not, as Mr. Reynolds had asserted, have signed a letter of guarantee on that date in Mr. Reynolds office. Furthermore, I heard evidence from a Ms. Renee McManus who, at the material time, was Personnel and Administration Manager of the C.I.F and who said that, on the 16th October, 1997, she had been responsible for organising a conference hosted by the C.I.F. in the city of Dublin; a conference which had commenced at 8 o’clock am. Ms. McManus produced a register purporting to the list the names of the persons who had attended that conference and, among those names, is that of Kenneth Fitzgerald. However, Ms. McManus could not say for how long the person named as Kenneth Fitzgerald on the said list, had attended the said conference; nor, indeed, did she ever say that she had actually seen the First Named Defendant at the said conference. The clear implication of the evidence of Ms. McManus, when taken in conjunction with that of the Second Named Defendant, was that the First Named Defendant could not having signed the said guarantee of the 16th October, 1997 in the office of Mr. Teddy Reynolds at the Plaintiff’s bank at Ash Street aforesaid, as Mr. Reynolds had asserted and that, therefore, Mr. Reynolds testimony in that behalf was, to say the least of it, unreliable and, accordingly, he could not be considered to be a credible witness. However, although I was advised by Counsel for the Second Named Defendant that the fact of the matter was that the First Named Defendant had been in Court at all material times throughout the hearing of these proceedings, he was never called as a witness to contradict Mr. Reynolds’ evidence that he had signed the said guarantee of the 16th October, 1997 on that date and that he had signed it in Mr. Reynolds office aforesaid. In those circumstances and, given that Mr. Reynolds positively denied the suggestion that Kenneth Fitzgerald had not signed the said guarantee dated the 16th October, 1997 on that date in his office, I do not accept that he did not do so. As judgment has already been obtained against Mr. Fitzgerald and, therefore, he could not be prejudiced by giving evidence and exposing himself to cross examination, I think that I am entitled to infer from his failure to do so that he is not prepared to give sworn testimony that he did not, as Mr. Reynolds has said that he did, sign the said guarantee of the 16th October, 1997 on that date in Mr. Reynolds’ office. Accordingly, notwithstanding the evidence of the Second Named Defendant and that of Ms. McManus, I accept Mr. Reynolds’ evidence that Kenneth Fitzgerald did indeed sign the said guarantee of the 16th October, 1997 on that date and in Mr. Reynolds office aforesaid. Moreover, as it follows that I consider that the evidence of Catherine Williams (Catherine Fitzgerald) in that behalf is, to say the least of it, unreliable, I also prefer the evidence of Mr. Reynolds that Ms. Williams (Fitzgerald) signed both of the guarantees aforesaid in Mr. Reynolds office, in his presence and upon the dates upon which each guarantee purports to have been executed to the evidence to the contrary given by Ms. Williams (Fitzgerald).

7. While, as I have already indicated, Catherine Williams (Catherine Fitzgerald) accepted in evidence that she had executed the said guarantees in writing respectively dated the 16th October, 1997 and the 12th March, 1998, she maintained that she could neither recall the dates upon which she had executed either of those documents or where she was at the time that she had executed them. Moreover, she was adamant that she had not executed them in an office at the Tralee Branch of the Plaintiff’s Bank at Ash Street aforesaid and that she had not executed them in the presence of Mr. Reynolds. As I have also indicated, I do not accept her evidence in that regard because I prefer the evidence of Mr. Reynolds with regard to when and where Ms. Williams (Fitzgerald) executed those guarantees. Ms. Williams (Fitzgerald) also asserted in evidence that, when she was signing the guarantees, she did not appreciate what she was signing but that she did so because her husband prevailed upon her to do so. In that regard, she said that, had she not signed the guarantees at the request of her husband, there would have been extra problems between them; particularly, as he had insisted that he knew what he was doing and that she should trust him. In that context, Ms. Williams (Fitzgerald) gave evidence that, towards the end of the year 1997 and early in the year 1998, her marriage to Mr. Fitzgerald was in difficulties, that he worked long hours and was rarely at home, and when he was, he was inclined to drink to excess, became intoxicated and verbally abusive to her. She maintained that the situation was compounded by the fact that, during that period, their daughter, Laura, was very unwell and spent some time in hospital with the result that she and her husband were kept further apart. Indeed, Ms. Williams (Fitzgerald) made it very clear to me that she believed that her marriage was breaking up but that, after her husband had made an appointment for marriage counselling for both of them, which in fact, he subsequently cancelled, the relationship between them improved and he reduced the extent of his drinking. This would have been in the month of March, 1998 and Ms. Williams (Fitzgerald) offered this improvement in the relationship as one of the reasons for acceding to her husbands’ insistence that she execute the said guarantee of the 12th March, 1998, in that, had she not done so, she was convinced that it would cause further trouble between them and again threaten their marriage. She also told me that her husband had told her that, had she not signed the guarantee of the 12th March, 1998 there would have been insufficient monies available to pay the staff of the creditor with the result that the business of the creditor would collapse. In that regard, I was persuaded by the evidence of Ms. Williams (Fitzgerald) that she and her husband and children were dependant on the income from the business of Fernhill Developments Limited for their daily living.

8. In the light of the foregoing, I am prepared to accept that Kenneth Fitzgerald may, indeed, have exercised inordinate pressure on his wife to execute the guarantees aforesaid and I am prepared to accept that she believed that she had little option but to sign them. Moreover, while I do not think it necessary for the purposes of this Judgment to determine whether or not the influence in that regard exercised by Kenneth Fitzgerald over his wife was unlawful, I think that it may well have been so. However, whether or not it was, I heard no evidence whatsoever to suggest that Mr. Reynolds, or, indeed, any other representative of the Plaintiff Bank had even an inkling that there were difficulties in the marriage of Kenneth Fitzgerald and Catherine Williams (Catherine Fitzgerald) or that there was any other reason why Catherine Williams (Catherine Fitzgerald) might not had been a free agent; in the sense that she not do so of her own free will, when she executed the said guarantees. Accordingly, if the Second Named Defendant executed the said guarantees as a result of undue influence exercised over her by her husband, which, as I have indicated, may well be so; although I do not think it necessary for me to come to any conclusion on that point, I am satisfied that the Plaintiffs were not aware of that fact. Moreover, as it is well settled that, where they are parties to the same contract, the relationship of husband and wife does not give rise to a presumption of undue influence and, accordingly, the burden of proving undue influence is on the party alleging it, I am not persuaded that the Plaintiffs had constructive notice that the Second Named Defendant executed the said guarantees as a result of undue influence exercised over her by her husband; if that be the case.

9. Apart from the foregoing, Counsel on behalf of Ms. Williams (Fitzgerald) submitted that, as she had no financial stake in the business of the Debtor and her husband, Kenneth Fitzgerald, had, the Plaintiffs were on notice that there was a risk that she may have been unduly influenced by her husband to execute the said guarantees and, accordingly, they were obliged to urge that she obtain independent legal advice before she executed them. In that regard, Counsel submitted that it was not sufficient that Ms. Williams (Fitzgerald) be advised by the Bank that she was entitled to seek independent legal advice before executing the guarantees, as Mr. Reynolds said that he had advised her. Counsel argued that, in this case, it was especially necessary that Ms. Williams (Fitzgerald) be urged to obtain independent legal advice before executing the said guarantees because, by executing them, she was putting her family home at risk. Insofar as these submissions are concerned, I have to say that, I do not accept that Ms. Williams (Fitzgerald) did not have a financial stake in the business of the creditor. Certainly, she gave sworn testimony to that effect and, in particular, she said that she was neither a shareholder, nor a director of Fernhill Developments Limited and, that, while she may have signed documents in which she is described as the secretary of the company, she was not aware that she was the secretary thereof. Apart from the fact that that evidence appears to me to be inconsistent with the contents of an Affidavit which Ms. Williams (Fitzgerald) swore herein on the 4th February, 2000 in which she seems to acknowledge she was a shareholder and director of Fernhill Developments Limited, as I have already indicated, I was persuaded by her evidence that her family, which included herself, relied on the income generated by the business of Fernhill Developments Limited for their day to day living and, accordingly, I have no doubt but that she had a financial stake in the business of the company. Moreover, there is absolutely no substance to the suggestion that, by signing the said guarantees, Ms. Williams (Fitzgerald) was putting her family home at risk because, in the event that the Plaintiffs enforced the said guarantees against her, their only relief would be a money Judgment which would not necessarily affect the family home.

10. In the circumstance thus I am satisfied that a presumption of undue influence does not arise merely because the two defendants (being husband and wife) executed the said guarantees respectively dated the 16th October 1997 and the 12th March 1998 and given that I am also persuaded that Catherine Williams (otherwise Fitzgerald) had a financial stake in the business of Fernhill Developments Limited, I do not consider that there was any obligation on the plaintiffs to urge on Ms. Williams (Fitzgerald) that she should obtain legal advice with regard to the said guarantees before she executed them. In that regard, there is no doubt but that the courts are not required to intervene to protect a contracting party from ill-advised action and, therefore, if it be the case that it was ill-advised for Ms. Williams (Fitzgerald) to execute the said guarantees (I am not convinced that it was) the court is not entitled to relieve her of her obligations thereunder merely because a more prudent person might not have signed them. Neither, in the absence of any actual or constructive knowledge that Ms. Williams (Fitzgerald) was not a free agent when she executed the said guarantees (if it be the case) were the Plaintiffs under any obligation to take any special steps to ensure that she obtained independent legal advice. Indeed, given that the actual forms of guarantee executed by Ms. Williams (Fitzgerald) contained a note at the top headed by the words “IMPORTANT” strongly recommended that any persons signing the guarantee should seek independent legal advice before doing so, I think that it was above and beyond the call of duty for Mr. Reynolds to advise Ms. Williams (Fitzgerald) to seek independent legal advice before signing those guarantees, as I am satisfied that he did. In this regard, I was referred to a number of authorities; the suggested import of which was that, in the particular circumstances of this case, there was an obligation on the part of the Plaintiffs to warn Ms. Williams (Fitzgerald), before she signed the said guarantees, that she and her matrimonial home were potentially liable for the debts of the creditor and that, therefore, it was essential that she obtain independent legal advice before so doing. In particular, I was referred to the cases of Barclays’ Bank Plc. .v. O’Brien and Anor. ([1994] 1 AC 180) and The Governor and Company of the Bank of Ireland .v. Michael Joseph Smyth and (by order) Una Smyth ([1995] 2 IR 459). However, both of those cases were concerned with a direct threat to a family home; the Barclays’ Bank .v. O’Brien case arising from a bank’s attempt to enforce a surety executed by a wife with regard to a transaction in which she had no financial stake and the Bank of Ireland .v. Smyth , arising from a bank’s attempt to recover possession of a family home in respect of which the wife was alleged to have executed a consent pursuant to the Family Home (Protection) Act 1976. In this case, however, as I have already indicated, I am satisfied that no threat to Ms. Williams’ (Fitzgerald) family home resulted from the guarantees aforesaid executed by her and, in any event, she had a financial stake in both of those guarantees. In those circumstances, I reject the contention that the said guarantees are not enforceable against her.

11. As I have already indicated, the Second Named Defendant has accepted liability to the Plaintiffs for a principal sum of £10,169.35 with interest thereon amounting to £1,036.57 on foot of the current account aforesaid and, in the light of the evidence which I heard, I am satisfied there is currently due and owing to the Plaintiffs by the Second Named Defendant on foot of the said guarantee dated the 16th day of October 1997 a sum of £50,000 for principal and accrued interest thereon calculated to the 21st day of September 2001 amounting to £12,021.39 together with continuing interest thereon from the 21st day of September 2001 at a rate of £13.36 per day and on foot of the said guarantee the 12th day of March 1998 a sum of £45,000 for principal and accrued interest thereon calculated to the 21st day of September 2001 amounting to £11,514.59 together with continuing interest on the said sum at a rate of £12.02 per day the date of payment. Accordingly, there will be judgment for the Plaintiffs against the Second Named Defendant for a sum of £129,741.90 together with continuing interest at a rate of £25.38 per day from the 21st day of September 2001 to date of payment.