Couple fail to overturn €1.36m judgment under loan guarantee

A couple have lost their appeal over a finding Danske Bank was entitled to summary judgment for some €1.36 million against them under a company loan guarantee.

The three-judge Court of Appeal said the evidence advanced by Martin and Pauline Shortt was insufficient to support their claims they had an "arguable" defence entitling them to a full hearing.

Giving the judgment, Ms Justice Úna Ní Raifeartaigh said Danske sought judgment under a July 2005 guarantee of the defendants to jointly and severally guarantee payment on demand of all sums due by Blackwood Taverns Ltd, of which both were directors. The total liability under the guarantee was not to exceed €1.5 million.

The bank issued a demand to the company on September 18th, 2013, giving it 24 hours to make the payment.

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The judge said the bank, apparently before the 24 hours had expired, appointed a receiver the following day over the assets of the company, including the premises known as Dagwelds Bar & Restaurant in Graigues, Co Kildare.

In October 2013, the bank demanded payment by the defendants, under their guarantee, of the sums due by the company.

In May 2014, the receiver sold the Dagwelds premises and the net profits were credited to the company’s account.

In 2015, the bank issued proceedings for summary judgment against the couple under their guarantee.

They opposed its application on grounds including claims bank officials had told Mr Shortt the guarantee would not be enforceable and he was a mentally vulnerable person at the time.

They appealed after the High Court found they had made out no arguable defence.

Dismissing their appeal on behalf of the court this week, Ms Justice Ní Raifeartaigh said this case could be easily decided on the ground of “sufficiency of evidence” without the need for the court to wade into “deeper waters” concerning issues regarding collateral contracts.

Credibility

This case fell into the category of cases where the evidence put forward by a defendant is so implausible, lacking credibility or otherwise thin that even the lesser standard of an arguable case has not been met, she said.

Mr Shortt had claimed two bank officials told him in late 2005 the guarantee would not be enforced, she said.

Mr Shortt’s own sworn statement said that conversation took place six months “after” the guarantee was signed in July 2005, she said. While the couple’s counsel had argued Mr Shortt had made a mistake in his sworn statement about the signing date, that mistake suggestion was not set out in sworn evidence.

Even if one accepted a mistake was made, it made “no difference” to the outcome for reasons including there was no written note of the conversation with the bank officials and Mr Shortt first raised this issue in response to the bank’s summary judgment application, having not raised it in the intervening years.

The evidence was “so scant” in relation to this alleged collateral contact it failed to meet the low threshold for a plenary hearing, she said.

The couple had also made out no defence on “extremely vague” grounds they had a counterclaim concerning the alleged sale of the pub premises by the receiver at a loss, she held.

Nor was there a defence on the basis of Mr Shortt’s “bare assertion”, at the time the guarantee was signed, he was a mentally vulnerable person suffering from an unspecified illness, she held.