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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Ulster Bank Irl Ltd -v- Moyne & anor [2015] IEHC 483 (21 July 2015)
URL: http://www.bailii.org/ie/cases/IEHC/2015/H483.html
Cite as: [2015] IEHC 483
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Judgment
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Neutral Citation [2015] IEHC 483 THE HIGH COURT [2012 No. 944 S] BETWEEN: ULSTER BANK IRELAND LIMITED PLAINTIFF AND
ELENA MOYNE AND ALAN MOYNE DEFENDANTS JUDGMENT of Mr. Justice Noonan delivered the 21st day of July, 2015. 1. The defendants (“Mr. and Mrs. Moyne”) were shareholders and directors of a company called Take Stock Ltd. (“the company”) which was founded by Mr. Moyne in 1998. In mid-2007, Mr. Moyne negotiated certain facilities with the plaintiff (“the bank”) on behalf of the company. A facility letter was issued by the bank on the 23rd of May, 2007, which was signed on the 18th of June, 2007 by Mr. and Mrs. Moyne on behalf of the company in their capacity as directors. The facility letter provided for two separate facilities in favour of the company, the first described as an overdraft facility with a limit of €50,000 for the purpose of working capital and the second, a demand loan in the sum of €100,000 for the purpose of a stocking loan. Both facilities were unlimited as to time but payable on demand. The facilities were subject to terms and conditions set out in the letter. One of these was that the security required for the facility included, inter alia, the execution of a guarantee by Mr. and Mrs. Moyne in the sum of €150,000. This guarantee was duly signed on the 18th of June, 2007. 2. Various sums were drawn down on foot of these facilities by the company and there is no dispute but that on the 22nd of November, 2011, the sum of €114,976.22 was due by the company on foot of the facility. 3. Unfortunately, the business began to experience difficulty in or around 2009 and effectively ceased trading in early 2010. It would appear that the company was dissolved on the 25th of February, 2011. Letters of demand were issued by the bank to Mr. and Mrs. Moyne on the 24th of November, 2011 seeking payment of the above mentioned sum on foot of the guarantee. A summary summons was issued on the 12th of March, 2012, which was renewed on the 1st of July, 2013 and for a second time on the 9th of April, 2014. Following service of the summons, a motion for summary judgment issued on the 2nd of July, 2014 which came before the Master of the High Court and was subsequently transferred into the Judge’s list for hearing. 4. The bank’s application for judgment is grounded on an affidavit sworn by Eoin O’Shea, a senior manager in the bank’s group centre in Georges Quay, Dublin 2. He makes the usual averments as to his means of knowledge and that the sum claimed is due and he exhibits the guarantee and letters of demand. 5. A replying affidavit was sworn by Mr. Moyne, who appeared in person, on the 24th of September, 2014. He makes a number of averments and submissions which he claims disclose a bona fide defence to the bank’s claim. He suggests that the summary summons procedure is the incorrect mode of proceeding in this case. He alleges that the company was caused to default on the loan by the breach of contract of the bank in withholding the remainder of the loan. He alleges that the bank owed a duty of care to the defendants and he complains of the fact that documents relating to the company’s dealings with the bank were sought and not furnished. 6. A supplemental affidavit in response was sworn by Mr. O’Shea on the 13th of March, 2015 taking issue with the various averments made by Mr. Moyne. This was in turn replied to by Mr. Moyne in a further affidavit sworn on the 28th of May, 2015. 7. In his second affidavit, Mr. Moyne again alleges that the company failed because of the bank’s breach of contract. The breach complained of is alleged to have been a failure on the part of the bank to permit the company to draw down funds on presentation of an invoice. The invoice in question was from a creditor of the company called Secant, apparently a Canadian concern that supplied raw materials to the company to enable it to manufacture and produce its products for onward sale to customers. The invoice is dated the 24th of June, 2008 and is in the total amount of €44,350. It is a rather unusual document insofar as it does not identify the source from which it emanates and is simply produced on a blank piece of paper without any heading. It does not have the appearance of what one might expect in a normal commercial invoice. 8. Mr. Moyne alleges that the bank refused to permit a draw down of funds to pay this invoice with the result that the company could no longer supply its customers with its products leading to its ultimate failure. The underlying suggestion appears to be that had the company not failed as a result of the bank’s alleged breach of contract, it would have been in a position to repay the loans and thus the liability of the guarantors would never have arisen. 9. Mr. Moyne further alleges that instead of permitting the drawdown against this invoice, a sum of €10,000 was advanced on the 18th of March, 2009 which was not referable to any invoice. Mr. Moyne says that this constituted a breach of the terms of the agreement which permitted draw downs against invoices and consequently required ratification by the board of the company. Furthermore, he argued that the fact that this drawdown was permitted outside of the terms of the loan facility was done without notice to or the agreement of the guarantors and this had the effect of invalidating the guarantee in circumstances where the bank were not unilaterally entitled to increase the guarantors’ exposure in a manner not authorised by the contract. The relevant conditions precedent in the facility letter are stated to be as follows:
1. Audited accounts for the year ending 31/08/2006 to be forwarded to the bank prior to drawdown of facility. 2. Stocking loan to be drawn down against invoices. 3. Quarterly management accounts to be submitted to the bank. Unless the bank shall otherwise agree, all conditions precedent must be satisfied otherwise the facilities shall lapse and the banks shall have no further commitments of any kind to the borrower.” 11. He further submitted that even if it could be said that the €10,000 advance which was not against an invoice was in some manner an unauthorised departure from the strict terms of the facility letter, which again was refuted, that could not avail the guarantors having regard to the explicit terms of the guarantee. Thus, clause 3.1 of the guarantee provides as follows:
(b) Enter into renew vary or end any arrangement with the debtor… (e) Consent to or waive any breach of or any act omission or default under any agreement between the debtor and the bank or any one or more of them or otherwise amend any such agreement. (f) Do or omit to do anything which might but for this provision operate to exonerate or discharge the guarantor from any of their obligations.”
15. The bank further submits in reliance on IBRC v. Cambourne Investments [2012] IEHC 262 that even if it could be said that the condition precedent in the facility letter to the company was not satisfied, that could not avail the guarantors because the guarantee was not contained within the facility letter and was thus not subject to the condition precedent. 16. The test to be applied in applications for summary judgment is well settled since Aer Rianta v. Ryanair [2001] 4 IR 607 and Harrisrange v. Duncan [2003] 4 IR 1. In Aer Rianta, McGuinness J. said (at p. 615):
19. Secondly, even if there were any substance in the argument that there had been a breach in the condition precedent contained in the facility letter, which I do not believe there is, that is a matter as between the bank and the company and not one of which the guarantors can make complaint. That is clear from the terms of the guarantee itself and also from the judgment of Charleton J. in IBRC v. Cambourne Investments. 20. Thirdly, for the same reasons, the suggestion that the advance of €10,000 by the bank which was not against any particular invoice constituted a breach of the terms of the facility and a variation of same not authorised by the company, even if that were so, and again I do not believe it is, is not something of which the guarantors can complain as the terms of the guarantee itself make plain. 21. Fourthly, the suggestion that a duty of care was owed by the bank to the company which was breached is unsupported by any evidence and is again for the same reasons entirely immaterial to the terms of the guarantee. Finally, there is clearly no basis for the assertion that the summary summons procedure is inappropriate here. 22. The fundamental fact remains that the amount claimed was advanced to the company, has not been repaid and those facts are undisputed. 23. Accordingly, it seems to me that there is no basis upon which I could come to the conclusion that there is a fair or reasonable probability of Mr. and Mrs. Moyne having a real or bona fide defence to this claim. It is, to paraphrase Hardiman J., very clear that the defendants have no case. 24. In those circumstances, I must accede to the bank’s application for summary judgment in the amount claimed. |