Bank of Ireland v Balford Construction Ltd and Bank of Ireland v McNicholas & Anor (Approved)

Factual and Procedural Background

Plaintiff, a banking institution, advanced loan facilities to Defendant Company A, a construction company managed by Mr. and Mrs. Appellant, who are also directors and shareholders. Mr. and Mrs. Appellant provided guarantees for the company’s borrowings. The company mortgaged property in The City as security for these loans. The Plaintiff sought summary judgment against Company A for €2,661,194 and against Mr. and Mrs. Appellant jointly and severally for €1,082,501, and against Mr. Appellant alone for €250,000.

The proceedings involved two related High Court cases: one against Company A and another against the guarantors. The applications were heard together after a protracted procedural history marked by delays, non-compliance with court directions, and multiple adjournments. The court considered an adjournment application by Mr. Appellant, which was refused. Mr. Appellant was represented in submissions by a non-qualified individual with the court’s exceptional permission. Company A was represented by solicitors connected to the Appellants.

The Bank’s claim arises from two loan facilities entered into in 2009 and 2010, both signed by Mr. and Mrs. Appellant. The company’s mortgage over property in The City was subject to a receivership appointment in 2015. The secured property was sold in 2018, with proceeds credited to the company’s loan accounts. The Bank seeks judgment on outstanding debts as of 30 April 2018, following all credits and allowances.

Legal Issues Presented

1. Whether summary judgment should be granted against Company A and the guarantors on the basis that no arguable defence exists to the Bank’s claims.
2. Whether the 2009 and 2010 loan facilities are enforceable agreements supported by valid consideration.
3. Whether the Bank adequately particularised the debt claimed in compliance with procedural requirements.
4. Whether the appointment of a receiver over the secured property was valid.
5. Whether the Bank breached any duty in selling the secured property, specifically regarding an alleged undervalue sale.
6. Whether the Bank’s petition to wind up Company A constituted an abuse of process.
7. Whether certain guarantees signed by Mrs. Appellant were invalid under the Statute of Frauds due to alleged forgery or lack of authority.

Arguments of the Parties

Appellant's Arguments

• Contended there was no valid consideration for the 2009 and 2010 loan facilities, as the Bank had pre-existing obligations under a 2008 facility, rendering the later facilities void.
• Asserted the Bank failed to adequately particularise the debt claimed, impeding the ability to mount a defence.
• Challenged the validity of the receiver’s appointment, alleging prior deeds of discharge on parts of the property invalidated it.
• Argued the Bank sold the secured property at an undervalue by failing to procure a right of way to enhance value.
• Claimed the Bank’s winding up petition was a malicious abuse of process intended to pressure payment.
• Alleged that several guarantees signed by Mrs. Appellant were forged or signed without her authority, thus invalid under the Statute of Frauds.

Plaintiff's Arguments

• Asserted that the 2009 and 2010 facilities were valid and supported by consideration, evidenced by actual advances made after their execution.
• Maintained that all relevant bank statements and particulars of debt were provided and that the Bank was entitled to amend pleadings to incorporate these details following Supreme Court authority.
• Contended the receiver was validly appointed over the property remaining in the folio after partial transfers, and that challenges to the appointment were untimely and irrelevant to the summary judgment application.
• Presented independent valuation evidence showing the secured property was sold at market value, taking into account its landlocked status.
• Explained that the winding up petition was withdrawn voluntarily to facilitate negotiations and denied any actionable abuse of process.
• Denied forgery allegations, noting the absence of any affidavit from Mrs. Appellant and the lack of expert evidence supporting the claim of unauthorized signatures.

Table of Precedents Cited

Court's Reasoning and Analysis

The court applied the well-established summary judgment test requiring a fair or reasonable probability of a bona fide defence. It examined each ground of defence raised by the defendants:

• No consideration defence: The court found this argument unarguable because the Bank advanced funds pursuant to the 2009 and 2010 facilities, which replaced the earlier 2008 facility. The fact that the entire 2008 facility was not drawn down did not negate the consideration supporting the later facilities.
• Failure to particularise debt: The court accepted the Bank’s amendment application to incorporate detailed bank statements in the pleadings, satisfying the requirements set out in authoritative case law. Defendants had ample information to understand the claims and no prejudice arose from the timing of the amendments.
• Validity of receiver appointment: The court found no merit in the argument that prior deeds of discharge invalidated the appointment. The receiver was appointed over the remaining property in the folio. Challenges to the appointment were untimely and irrelevant to the Bank’s entitlement to summary judgment.
• Sale of secured property at undervalue: The Bank produced an independent valuation reflecting the landlocked status of the property. The sale price matched this valuation. The defendants’ assertion of a substantially higher value was unsupported by evidence and thus unpersuasive.
• Alleged abuse of process in winding up petition: The petition was struck out on the Bank’s application to facilitate negotiations. No evidence demonstrated malicious intent or damage from the petition.
• Forgery and Statute of Frauds defence: Mr. Appellant’s assertions of unauthorized signatures lacked evidential support, including expert handwriting analysis. Mrs. Appellant filed no affidavit to support the claims. Given her role as director and secretary and her prior dealings with the Bank acknowledging the guarantees, the court found no arguable defence.

Overall, the court concluded that none of the defendants raised any arguable or credible defence to the Bank’s claims.

Holding and Implications

The court GRANTED SUMMARY JUDGMENT in favour of Plaintiff as follows:

• Against Company A in the sum of €2,661,194;
• Against Mr. and Mrs. Appellant jointly and severally in the sum of €1,082,501;
• Against Mr. Appellant alone in the sum of €250,000.

The decision results in immediate enforceable judgments for the Plaintiff against the defendants in the specified sums. No new legal precedent was established; the judgment applied established principles relating to summary judgment, consideration, pleadings, and evidential requirements for defences such as forgery and procedural challenges.