Allied Irish Banks PLC v Killeen & anor [2019] IEHC 689 (22 October 2019)

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JUDGMENT of Mr Justice Barr delivered on the 22nd day of October, 2019

1. In this action, the plaintiff seeks summary judgment against the defendants in the sum of

€194,454.97. It is alleged that this sum is due jointly and severally by the defendants on

foot of contracts of guarantee signed by the first defendant on 2nd February, 2009, and

by the second defendant on 27th of February, 2009, in respect of the present and future

indebtedness of a company called Hudson Killeen Ltd. (hereinafter referred to as "the

2. The plaintiff's application for summary judgment is based on the affidavit sworn by Mr.

Brian McGuinness on 4th April, 2018. Mr. McGuiness is a manager employed by the

plaintiff at Bank Centre, Ballsbridge, Dublin 4. In his affidavit, Mr. McGuinness avers that

pursuant to a Letter of Sanction dated 26th January, 2009 the bank offered an overdraft

facility to the company up to a limit of €200,000. This was for the purpose of providing

working capital for the company. It was subject to interest which was going to be charged

at the “AA overdraft rate varying", which was then standing at 9.2% per annum. Security

for the overdraft facility was stated to be a mortgage debenture over all fixed and floating

assets of the company, and a letter of guarantee from each of the defendants for the sum

of €200,000. That Letter of Sanction was signed by two managers on behalf of the

plaintiff and by each of the defendants on behalf of the company.

3. Mr. McGuinness went on to state that the company drew down the overdraft. By letter

dated 14th April, 2015 the plaintiff furnished a letter of demand addressed to the

liquidator of the company, the company having gone into liquidation in 2014. In that

letter the plaintiff bank demanded payment of €160,072.80, together with further interest

which may accrue. By letters of the same date, the bank called on each of the defendants

to pay the sum of €160,072.80 on foot of the guarantees furnished by them.

4. By further letter dated 11th October, 2016 from the plaintiff's solicitor addressed to each

of the defendants, they were again called upon to make payment under the contracts of

guarantee, this time in the sum of €200,000. Mr. McGuinness exhibited all of the above

5. When payment was not made by either the company or the defendants, the plaintiff

issued a summary summons against the defendants on 13th January, 2017 seeking

judgment on foot of the contracts of guarantee in the sum of €194,354.21. An

appearance was entered on behalf of the defendants on 8th June, 2017. By Notice of

Motion dated 4th October, 2017 the plaintiff sought an order from the Master of the High

Court for liberty to enter final judgment against the defendants in the sum claimed in the

summary summons. That motion was grounded upon an affidavit sworn by Mr.

McGuinness on 28th August, 2017. In that affidavit he incorrectly stated that the plaintiff

had advanced an overdraft facility to the defendants and that the defendants had signed

the loan facility agreement by way of acceptance of its terms. A replying affidavit was

sworn by the second defendant on 24th January, 2018 which, among other things,

6. The matter was adjourned when it came on for hearing before the Master of the High

Court to enable Mr. McGuinness to file a corrected affidavit. This he did by way of his

second affidavit sworn on 4th April, 2018. When the matter came back before the Master

of the High Court on 26th July, 2018, he struck out the plaintiff's summary summons and

awarded costs to the defendants. In a previous ruling, this Court has allowed the

plaintiff's appeal against the order made by the Master of the High Court. Hence the only

issue before the court, is whether the plaintiff is entitled to judgment against the

7. The defendants have sought to resist having judgment entered against them at this stage

on a number of grounds. Firstly, it was submitted on behalf of the defendants that the

proceedings were flawed because the plaintiff had never stated when there was a breach

or default by the company which allowed the plaintiff to call in the debt owed to it. They

further submitted that this was a relevant consideration because if the default arose when

the company went into liquidation in 2014, this meant that there was a delay of

approximately three years before the summons was issued in January 2017. This had the

result that the defendants were exposed to an extra accrual of three years of interest

from the time when the default may have arisen and the time when the proceedings were

issued. Alternatively, if the default arose at the time when the letter of demand was sent

to the company on 14th April, 2015, this meant that there was almost two years delay

before the summons was issued and during which time interest accrued. It was pointed

out by the defendants that the sums allegedly due at the date of the letters of demand,

which were sent to the company and to the defendants in April 2015, was €160,072.08,

which had grown to €194,354.21 by the time the summary summons was issued in

8. The defendants also submitted that there was a discrepancy between the rate of interest

charged according to the statements of account at 7.85% and the rate of interest stated

in the Letter of Sanction of 9.2%. There was also a discrepancy between the amount

claimed in the summary summons, the original Notice of Motion and in the first affidavit

sworn by Mr. McGuinness, wherein the sum claimed was €194,354.21 and the amount

sought in the second affidavit sworn by Mr. McGuinness of €194,454.97.

9. The defendants further submitted that there was a lack of detail in relation to the sums

claimed by the plaintiff. While the defendants had statements of account in respect of the

overdraft facility from its inception to 31st May, 2017, there were no details as to what

part of the sum claimed was due for principal and what part was due for interest, nor

were the calculations given, which gave rise to the interest payments which appeared on

10. Finally, counsel for the defendants submitted that it was significant that there was no

mention by Mr. McGuinness in his affidavits of the other security provided under the

Letter of Sanction, being the mortgage debenture over the company's assets. It was

submitted that having regard to the errors made in the first affidavit sworn by Mr.

McGuinness, having regard to the lack of clarity on the matters referred to above and the

absence of any mention of the mortgage debenture, the Court could not be certain that

the plaintiff was entitled to judgment in the sum claimed. In such circumstances it was

appropriate for the court to remit the matter to plenary hearing.

11. In response, counsel for the plaintiff stated that there was no specific date of breach or

default by the company. This was an overdraft facility which was provided further to the

Letter of Sanction, which made it clear that the overdraft was being provided subject to

the banks General Terms and Conditions Governing Business Lending, which terms were

furnished with the Letter of Sanction and which clearly stated at clause 2.1.1 that the

overdraft facility was repayable on demand. In these circumstances the bank was entitled

to call in the debt whenever it chose. It called in the debt from the company by the letter

12. In relation to the submission that the bank ought to have allowed the company some time

to pay the money which had been demanded by virtue of the letter dated 14th April,

2015, before making a similar demand of the guarantors, counsel pointed out that there

was no such obligation contained in the contracts of guarantee which had been signed by

the defendants. Having regard to the fact that the company had been in liquidation for a

year prior to April 2015, it was reasonable for the bank to presume that they were

unlikely to obtain payment from the principal debtor and to make a demand on the same

date for payment from the guarantors. It could not be argued that a valid demand had

not been made for payment from the defendants pursuant to the contracts of guarantee.

This had been done by the letters issued to the defendants on 14th April, 2015. Even if

there was some merit in the point made by the defendants, no payment was in fact made

by the company and a further letter of demand issued to the defendants from the

plaintiff's solicitor on 11th October, 2016, so the company had in fact been given time to

13. In relation to the delay point raised on behalf of the defendants, counsel submitted that

the bank was entitled to call in the debt from the company at any time, which it had done

by the letter that issued in April 2015. At the same time it had also sought payment from

the defendants pursuant to the contracts of guarantee. There was no obligation on the

plaintiff bank to issue proceedings at any particular time when payment was not

forthcoming either from the company or the guarantors. If the defendants had wished to

avoid exposure to interest leading to the larger amount they ultimately owed, they could

have made payment when initially demanded of them in April 2015. However, as is

clearly stated in the affidavit sworn by Mr. McGuinness, no payments have been made by

14. In relation to the interest rate issue, counsel pointed out that the overdraft facility was

subject to interest at the AA Overdraft rate, which was a variable rate. As such, the rate

varied from time to time. The rate of 9.2% mentioned in the Letter of Sanction dated

26th January, 2009 was only a statement of the variable rate applicable at that time. The

fact that the company was charged the lower rate of 7.85% on the overdraft, was merely

due to the fact that that was the applicable variable rate at the relevant time.

15. In relation to the allegation that sufficient details of the debt hasve not been given,

counsel for the plaintiff submitted that the usual practice was for an appropriate official in

the bank to swear an affidavit that from his perusal of the bank's books and records a

certain amount was due, and to exhibit the statements of account showing how that sum

had arisen over the relevant period of time. The defendants had possession of all the

relevant statements of account. It was unnecessary and unreasonable to expect that the

plaintiff should set out the background calculations which showed how the interest rate

was calculated on a day-to-day basis during the periods between the dates on which the

16. Counsel accepted that there was an overstatement in the letter of demand issued by the

plaintiff’s solicitors in October 2016, wherein the demand had been for the total sum

allowable under the overdraft of €200,000. It was submitted that this was not fatal to the

plaintiff's application for final judgment in the sum claimed in the affidavit sworn by Mr.

McGuinness on 4th April, 2018. In support of that proposition counsel referred to the

decision of Cregan J. in Flynn v. National Asset Loan Management Ltd [2014] IEHC 408,

where, having referred to English and Australian authorities, the learned judge stated as

“Applying those principles to the facts of this case it seems clear that the letter of

demand, even if it did overstate the amount due from the defendants to NALM it is

still a valid letter of demand. In the circumstances, the submission of the

defendants that the letter of demand is invalid is not well founded.”

17. In relation to the point that there was no mention in the grounding affidavit of the

mortgage debenture, counsel submitted that it was totally irrelevant what other security

the bank may have had in respect of the overdraft facility afforded by it to the company.

The bank was entitled to enforce any or all of its securities as it saw fit. In conclusion,

counsel submitted that the bank's case had been clearly set out in the Special

Indorsement of Claim and in the corrective affidavit sworn by Mr. McGuinness. There had

been no prejudice to the defendants caused by the fact that his first affidavit had been

incorrect. In these circumstances it was submitted that there was no lack of clarity and

the plaintiff had clearly established a right to judgment in the sum claimed.

18. The test which the court must apply where a defendant seeks to resist summary

judgment and have the matter remitted to plenary hearing has been long established in

Irish law. The relevant principles were set out with clarity by Hardiman J. in Aer Rianta

cpt v. Ryanair (No.1) [2001] 4 IR 607, where he set out the test in the following terms:

“Was it ‘very clear’ that the defendant had no case? Was there either no issue to be

tried or only issues which were simple and easily determined? Did the defendant's

19. In Harrisrange Ltd v. Duncan [2003] 4 IR 1, McKechnie J. also set down a number of

relevant principles, of which the following are the most pertinent in this case:

“(7) the test to be applied, as now formulated, is whether the defendant has satisfied

the court that he has a fair or reasonable probability of having a real or bona fide

defence; or as it is sometimes put, ‘is what the defendant says credible?’, which

latter phrase I would take as having as against the former an equivalence of both

(8) this test is not the same as and should not be elevated into a threshold of a

defendant having to prove that his defence would probably succeed or that success

is not improbable, it being sufficient if there is an arguable defence;

(9) leave to defend should be granted unless it is very clear that there is no defence.”

20. In the present case a number of things are clear: the defendants do not dispute that an

overdraft facility was given to the company; nor that they signed the contracts of

guarantee in respect of the indebtedness of the company with the plaintiff. They accept

that letters of demand were sent to the company and to them on 14th April, 2015. They

also received the further letters of demand from the plaintiff's solicitor dated 11th

October, 2016. They do not allege that the company does not owe money to the bank on

foot of the overdraft, nor do they assert that the company or they, have paid anything on

21. Turning to the specific issues raised by the defendants, I do not see that there is any

substance to the assertion that the plaintiff has not specified when there was a breach or

default by the company. This was an overdraft facility to provide working capital for the

company up to a maximum amount of €200,000. Under the terms and conditions

attached to that facility, the bank was entitled to seek repayment on demand. This it did

of both the company and of the defendants pursuant to the contracts of guarantee by

letters dated 14th April, 2015. There was no specific date of default by the company and

even if there was, the plaintiff was not obliged to specify same before making a valid

22. In relation to the point that the plaintiff did not allow any time to the company to make a

payment on foot of the letter of demand issued on 14th April, 2015 before they called in

payment from the defendants pursuant to the contracts of guarantee, there is no

substance to this point either. Under the contracts of guarantee the bank was entitled to

call in payment from the guarantors on demand. Furthermore, given that there was no

payment made by the company after the letter of demand in April 2015 and prior to the

second letter of demand sent to the guarantors by the plaintiff's solicitor in October 2016,

the fact that the letters of demand to the guarantors issued simultaneously with the initial

23. In relation to the delay point, the fact that the company had been in liquidation since

2014, may or may not have had a bearing on the decision made by the bank to call in the

debt in April 2015. Be that as it may, under the terms of the overdraft facility the debt

was repayable on demand. The bank was entitled to call in the debt whenever it chose to

do so. They cannot be criticised, nor were they in breach of contract by calling in the debt

when they did in April 2015. The fact that there was a delay between the letters of

demand sent in April 2015 and the issuance of the summary summons in January 2017,

does not affect the entitlement of the plaintiff to seek repayment of the debt through

legal means when both the company and the guarantors failed to make payment on foot

of the letters of demand which had issued from the plaintiff. It is undoubtedly true that

the sum due increased from the date of the initial demand to the time when the summary

summons was issued. If the defendants had wished to avoid the accrual of interest on the

amount which had been due in April 2015, they could have made payment on foot of their

obligations under the contracts of guarantee. They chose not to do so, so they cannot

24. In relation to the allegation that the bank has not provided sufficient detail in relation to

how the sum claimed is computed, I accept the submission made by counsel on behalf of

the bank that the averments contained in the affidavit sworn by Mr. McGuinness, together

with the statements of account which have been exhibited to his affidavits and in the

affidavit sworn by the second defendant, constitute the usual method of proof of debt

which is acceptable before the courts. I am satisfied that there is sufficient proof that the

sum claimed in the second affidavit sworn by Mr. McGuinness in the sum of €194,454.97

is adequately particularised. That sum is clearly set out in the statements of account

furnished with his grounding affidavit sworn on 4th April, 2018. While there is a slight

discrepancy between the sum claimed in the summary summons, in the original Notice of

Motion and in the original grounding affidavit and the sum claimed in his second affidavit,

the later sum is supported by the statements of account and is only very slightly greater

than the sums claimed earlier, such that this discrepancy is not of any consequence.

25. In relation to the point that there was a variation between the interest charged at the rate

of 7.85% and the rate specified in the Letter of Sanction of 9.2%, I am satisfied that the

reference in the Letter of Sanction was merely a statement of what the then current rate

of variable interest was. As it was a variable rate it would fluctuate over time. I am

satisfied that the rate of 7.85% is explicable as being the variable rate of interest

26. Finally, in relation to the point that a greater sum was claimed in the letter of demand

sent by the plaintiff's solicitor in October 2016, than was actually due by the defendants

as set out in the summary summons issued in January 2017, I accept the submission

made by counsel on behalf of the plaintiff, that having regard to the decision in Flynn v

National Asset Loan Management Ltd, that that state of affairs is not fatal to the plaintiff's

claim herein. I am satisfied that the sum which has been claimed in the affidavit sworn by

Mr. McGuinness on 4th April, 2018 is the correct sum lawfully due and owing by the

defendants to the plaintiff on foot of the contracts of guarantee. There was no prejudice

or injustice caused to the defendants by virtue of the incorrect sum having been sought in

the letter of demand issued by the plaintiff's solicitor in October 2016.

27. Having regard to the findings made by me herein, I am not satisfied that the defendants

have crossed the admittedly low threshold provided for in the Aer Rianta and Harrisrange

cases. Accordingly, I refuse to remit the matter to plenary hearing. I am satisfied having

regard to the matters set out in the affidavit sworn by Mr. McGuinness on 4th April, 2018

and having regard to the exhibits referred to therein, that the plaintiff is entitled to

judgment against the defendants in the sum of €194,454.97. I award the plaintiff

judgment in that sum jointly and severally against the defendants.

Result: Plaintiff's application for summary judgment against the defendants granted

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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Allied Irish Banks PLC v Killeen & anor [2019] IEHC 689 (22 October 2019) URL: http://www.bailii.org/ie/cases/IEHC/2019/2019_IEHC_689.html Cite as: [2019] IEHC 689

High Court of Ireland Decisions