The Court of Appeal has overturned a High Court summary judgment against the estate of deceased barrister Marcus Daly senior.
The appeal was against an order granting Bank of Ireland Mortgage Bank summary judgments totalling €675,000 against Mr Daly’s widow, Ethel Daly, as representative of his estate.
The sum arose from a loan made to the late senior counsel and his guarantee on another loan.
In a judgment on behalf of the three-judge court, Ms Justice Aileen Donnelly said the court may only grant summary judgment, which comes without a full trial of the action, where it is “very clear” there is no arguable defence.
In this case, it is “not very clear that there is no arguable defence” to the bank’s claims and the appeal should be allowed, she said.
Mr Daly, of Dalkey Avenue, Dalkey, Dublin, was 78 when he died in July 2016.
His guarantee, entered into in 2010 and limited to €300,000, was in relation to a €1.65 million loan to his son Marcus junior and his daughter-in-law Patricia.
Mr Daly snr also received a €350,000 loan from the bank in 2009 to assist with his son and daughter-in-law’s borrowings. This was secured on a mortgage on a property at Kirwan’s Lane, Galway. Interest-only repayments were kept up on this loan until his death and were extended after the expiration of the five-year interest-only period.
The bank demanded repayment over the guarantee in 2014, but no payment was made and proceedings were issued against him. Following his death, his widow was substituted as defendant as she was executrix of his estate.
The bank also demanded repayment of the €350,000 loan after Mr Daly had died, but it was not forthcoming. Proceedings were also initiated over this issue in 2018 against the estate, with Ms Daly as defendant and personal legal representative of the estate.
She opposed the December 2018 application for summary judgment in both cases.
A central argument of her appeal was that the judge had erred in holding that nothing turned on whether or not Mr Daly snr had seen a May 2010 loan offer to his son and daughter-in-law.
Ms Daly submitted her late husband had executed the guarantee having only seen a February 2010 loan offer which contained preconditions relating to the creditworthiness of the borrowers.
It was claimed Mr Daly snr was not informed his son and daughter-in-law did not meet some of these preconditions, including his salary and tax requirements, which, it was argued, would offer protection to a guarantor.
The bank had actively engaged with Mr Daly snr on the preconditions contained in the February 2010 offer but there had been no disclosure of the change to those preconditions which adversely affected him as guarantor, it was submitted.
Ms Justice Donnelly said it is “at least arguable” that the bank could have reasonably contemplated that Mr Daly snr would have relied upon the preconditions.
Where the bank was aware the potential guarantor was engaging with a certain view of the borrowers’ creditworthiness, it is arguable that a decision to proceed with the loan absent the previous conditions was prejudicial to Mr Daly snr.
It is also arguable that had the change been flagged to him, Mr Daly snr may not have entered into the guarantee, the judge added.
The defence pertaining to the loan agreement depends on the success of the argument relating to the guarantee, she said.
However, it is clear the estate would not be entitled to retain the principal received in respect of the loan, and Ms Daly must pay the €162,000 outstanding principal amount prior to being permitted to defend the matter in a plenary hearing, the court ruled.
Ms Justice Mary Faherty and Mr Justice Maurice Collins indicated their agreement with the decision.
