Forgery of Bank Sanction Letter Nullifies Enforcement Rights: Interlocutory Restraint on Sale Pending Trial

Introduction

This commentary examines the High Court of Ireland’s decision in McGuinness v Allied Irish Banks PLC & Ors [2025] IEHC 180, delivered by Mr. Justice Conor Dignam on April 1, 2025. The plaintiff, Charles McGuinness, sought interlocutory injunctions to restrain the second and third defendants (Everyday Finance DAC and receiver Damien Harper) from entering or selling his property at 32 Main Street, Cavan (“the Main Street Property”). The core disputes concerned the validity of a Letter of Sanction dated 18 December 2008—on which the bank and its assignee relied to demand repayment and appoint a receiver—and whether possession was taken peaceably. This case establishes the important principle that evidence of forgery in a sanction letter may found a “strong case” warranting interlocutory relief, even though the borrower’s general liability to repay remains.

Summary of the Judgment

The High Court held:

No injunction was granted against AIB plc, as it no longer claimed an interest in the Main Street Property after assignment to Everyday on 2 August 2018.
Charles McGuinness established a strong case (the higher interlocutory threshold for mandatory relief) that:

He never signed or accepted the terms of the 18 December 2008 sanction letter, with expert evidence suggesting the signature was forged.
The receiver’s agents did not obtain possession “peaceably” when they changed the locks, giving rise to wrongful entry.
The property might be sold on a misdescribed basis, risking an undervalue sale and depriving him of the best price.

On balance of justice, the Court refused to direct return of keys or to restore possession but granted a prohibitory injunction restraining Everyday and the receiver from advertising, selling or disposing of the Main Street Property pending trial.

Analysis

1. Precedents Cited

Campus Oil v Minister for Industry and Energy (No. 2) [1983] IR 88: Standard interlocutory injunction principles.
Okunade v Minister for Justice & Ors [2012] 3 IR 152 and Merck Sharpe & Dohme v Clonmel Healthcare [2019] IESC 65: Reformulated eight‐step test and clarified “fair question” threshold, with mandatory relief requiring a “strong case.”
Maha Lingham v Health Service Executive [2005] IEHC 186: Mandatory interlocutory relief demands a stronger threshold.
IBRC v Cambourne Investments [2014] 4 IR 54 and ACC Bank plc v Deacon [2013] IEHC 427: A borrower’s general obligation to repay survives the failure of a formal sanction letter, but does not validate enforcement steps taken on a forged document.
Gale v First National Building Society [1985] IR 609 and Charleton v Hassett [2021] IEHC 746: A mortgagee/chargee may only take possession “peaceably”; changing locks constitutes non-peaceable entry.
Bank of Ireland Mortgage Bank v Vogiatzi [2019] IESC: Section 97(1) of the Land and Conveyancing Law Reform Act 2009 does not apply retrospectively to mortgages executed before its commencement on 1 September 2009.

2. Legal Reasoning

The Court first excluded AIB from the interlocutory order, as it no longer retained any interest in the property. The focal point was whether McGuinness had shown a strong case on the forged‐signature allegation and wrongful possession, and whether the balance of justice favored injunctions.

Forged sanction letter: McGuinness produced a forensic handwriting report opining that his signature on the 18 December 2008 letter was not genuine. Internal bank emails showed ongoing negotiation of terms after the draft letter, supporting his claim he never agreed. Neither AIB nor Everyday adduced direct proof of his signature. The Court held these factors cumulatively established a strong case that the steps taken to demand repayment and appoint a receiver in reliance on that letter were wrongful.

Non-peaceable entry: By changing the locks without McGuinness’s consent or a court order, the receiver’s agents displaced the established occupier by force. In line with Gale and Charleton, lock-changing is not peaceable entry and therefore wrongful.

Restrictions on possession/sale: Although the 2009 Act now requires mortgagors’ consent or a court order for pre-emptive possession or sale (ss. 97–100), those sections do not apply to mortgages executed before the Act’s commencement. McGuinness nevertheless lacked consent and no court order issued, further buttressing his claim of wrongful enforcement.

Balance of justice: While the mainstream rule is that damages are an adequate remedy for a commercial borrower, and McGuinness remained generally liable to repay sums borrowed under earlier facility letters, the Court placed decisive weight on the public‐policy imperative against enforcing security through forgery and force. The potential unravelling of a property sale obtained through forged authority tilted the balance in favor of restraining any sale pending trial.

3. Impact

This decision will guide future cases in several respects:

Forgery as interlocutory ground: Borrowers can obtain interlocutory relief against security enforcement where they present cogent, expert‐supported allegations of forgery in sanction documents.
Peaceable possession requirement: Receivers or mortgagees must ensure any lock-changing is preceded by borrower consent or a court order; otherwise possession risks being characterized as forcible and wrongful.
Retrospective application of the 2009 Act: Section 97(1) (and related sale provisions) do not bind pre-2009 mortgages to the new consent/court-order requirement, but the absence of borrower consent still taints any forcible enforcement.
Sale injunctions: Even in purely commercial contexts, a strong case of wrongful enforcement (fraud plus force) can warrant interlocutory prohibitory injunctions against sale, notwithstanding the general adequacy of damages.

Complex Concepts Simplified

Interlocutory injunction: A temporary court order made before the full trial, intended to preserve the status quo. Mandatory injunctions (requiring action) demand a “strong case” threshold, whereas prohibitory injunctions (restraining action) require a “fair question.”
Letter of Sanction: A bank’s formal offer letter detailing loan amount, security requirements and repayment terms. If forged or unsigned, steps taken exclusively on its terms may be invalid.
Peaceable entry: Under Irish law, a mortgagee/receiver may take possession of property only if done without force—commonly by having keys—or with borrower consent or a court order. Cutting locks is “forcible entry.”
2009 Act, Section 97(1): Requires written borrower consent or court order before taking possession—applies only to mortgages executed after 1 September 2009.
Balance of justice: After a strong case/fair question is shown, the court weighs the adequacy of damages, prejudice to parties, delay, and public‐policy considerations to decide whether to grant relief pending trial.

Conclusion

McGuinness v Allied Irish Banks clarifies that where a borrower presents compelling evidence—supported by expert handwriting analysis—showing a sanction letter was forged, the bank or assignee cannot enforce security or appoint a receiver on that document alone. It reaffirms that any possession obtained by lock-changing without consent or court authorization is unlawful. Even in commercial disputes where damages are normally adequate, the public interest in preventing enforcement based on forgery and force justifies an interlocutory injunction restraining sale pending full trial on the merits. This precedent will shape how banks and receivers draft, authenticate, and enforce mortgage facilities and highlights the courts’ readiness to protect property rights against fraudulent and non-peaceful enforcement tactics.