ACC Bank Plc v Connolly & anor

Factual and Procedural Background

The Plaintiff, Company A, advanced two loans to the first Defendant, a businessman, for the acquisition and development of a site in The City. The loans, dated 28th October 2005 and 30th November 2007, were secured by guarantees from the second Defendant, also a businessman and the first Defendant's father, supported by legal charges over his agricultural lands. The first Defendant defaulted on the loans, and the Plaintiff demanded repayment from both Defendants. The Defendants failed to discharge the indebtedness, leading to the Plaintiff's application for summary judgment. Only the first Defendant swore a replying affidavit; the second Defendant did not, despite being given an opportunity by the court.

Legal Issues Presented

1. Whether the Plaintiff is entitled to summary judgment against the Defendants on the outstanding loan amounts and guarantees.
2. Whether the absence of independent legal advice to the second Defendant when executing the guarantees affects the enforceability of those guarantees.
3. Whether the second guarantee executed by the second Defendant is enforceable given the lack of evidence of independent legal advice and the absence of execution under seal.
4. Whether the first Defendant’s claim regarding alleged fraudulent title affecting repayment justifies adjournment of the summary judgment application.

Arguments of the Parties

First Defendant's Arguments

• He cannot repay the loans because he is unable to provide title to purchasers of the houses built, alleging the vendor’s title was fraudulently obtained.
• He has initiated separate proceedings against the vendors and requests an adjournment of the Plaintiff’s application pending those proceedings.
• Claims the second Defendant lacked independent legal advice when executing the guarantees, as the same solicitor advised both Defendants.
• Argues that the guarantees executed by the second Defendant were not under seal.

Second Defendant's Counsel's Arguments

• The second Defendant had no independent legal advice when signing the guarantees.
• The transaction was improvident, involving a vulnerable person in his late sixties with a history of heart surgery.

Plaintiff's Arguments Against the First Defendant

• The Plaintiff was not involved in any alleged fraud by the vendors.
• The Plaintiff had no obligation to ensure the first Defendant obtained good title to the site.
• The first Defendant delayed six years before initiating any action against the vendors, making adjournment unreasonable.

Plaintiff's Arguments Against the Second Defendant

• Lack of independent legal advice is not a defence under Irish law.
• There is no evidence of undue influence by the first Defendant on the second Defendant.
• The second Defendant failed to swear a replying affidavit despite being given time by the court.
• The second Defendant’s proceedings against the Plaintiff and its Receiver were struck out by the court.

Table of Precedents Cited

Court's Reasoning and Analysis

The court applied the established legal principles governing summary judgment, emphasizing the low threshold for defendants to show a bona fide defence. It examined the first Defendant’s claims regarding fraudulent title and found no sufficient basis to adjourn the application, especially given the six-year delay in pursuing the vendors. Regarding the second Defendant, the court focused on the issue of independent legal advice for the guarantees. The first guarantee was supported by a declaration from the second Defendant confirming independent legal advice was received, witnessed by an officer of the court. The absence of any contradictory affidavit from the second Defendant led the court to uphold this as sufficient.

However, for the second guarantee, there was no evidence that the Plaintiff took steps to ensure the second Defendant freely entered into the guarantee. The court also rejected the argument that the guarantees needed to be executed under seal, noting the statutory abolition of that requirement. The court found no evidence of undue influence or other circumstances that would invalidate the guarantees. The relationship between the Defendants placed the Plaintiff on inquiry, but the Plaintiff had taken reasonable steps concerning the first guarantee.

Consequently, the court granted summary judgment on the loans and the first guarantee but reserved the issue of the second guarantee for plenary hearing. The court also considered fairness and ordered a stay on the summary judgment orders for one year to allow the Defendants to seek advice on recent developments related to the vendors’ proceedings.

Holding and Implications

The court’s final decision was as follows:

• The Plaintiff is entitled to summary judgment against the first Defendant on both loan facilities.
• The Plaintiff is entitled to summary judgment against the second Defendant on the first guarantee.
• The Plaintiff’s claim against the second Defendant regarding the second guarantee is remitted to plenary hearing for further determination.
• A stay of one year is placed on the summary judgment orders to allow the Defendants time to obtain legal advice on related vendor proceedings.

The decision directly affects the parties by confirming enforceability of the first loan and guarantee but leaves the second guarantee’s enforceability unresolved pending full hearing. No new legal precedent was established; the court applied existing principles governing summary judgment and guarantees.