High Court: Bona fide defence raised by company director who claimed she did not read personal guarantee form before signing

About this case:

• Citation:
  [2025] IEHC 269
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Micheál O’Higgins

Delivering judgment for the High Court, Mr Justice Micheál O’Higgins determined that “the defendant has raised sufficient facts on affidavit which, if accepted by the trial court, may give rise to an arguable defence. In these circumstances, I find there is a risk of an injustice were the claim to be determined by way of a summary motion without the opportunity for evidence to be tested and cross examination to take place.”

Paul J. Brady BL appeared for the plaintiff instructed by Ivor Fitzpatrick & Co. Solicitors and Craig Phillips BL appeared for the defendant instructed by Coughlan White & Partners LLP.

Background

In 2014, the plaintiff company agreed to provide credit facilities to its customer, Postbrook Ltd, of which the defendant was a director.

The plaintiff’s Naas branch manager alleged that in September 2016, he met with representatives of Postbrook, one of whom is the defendant’s husband, who sought agreement to an increased credit limit for Postbrook. The defendant signed a personal guarantee in favour of the plaintiff. 

The plaintiff’s managing director asserted that he sought a personal guarantee from a company director as security for the proposed extension of credit. The representatives were allegedly given a personal guarantee form to take away with them for signing by a director of Postbrook. 

On 11 October 2016, the defendant attended the plaintiff’s Naas branch and signed a personal guarantee for Postbrook. 

The plaintiff subsequently brought summary proceedings against the defendant in the sum of €121,550.69 in respect of her obligations under the personal guarantee.

The defendant admitted to signing the guarantee and admitted that she did not read the guarantee form prior to signing it, but alleged that she had a stateable defence based on non est factum and/or misrepresentation.

Evidence

On affidavit, the plaintiff’s branch manager alleged that the defendant attended the Naas branch with the form previously given to Postbrook’s representatives and asked for him by name. He further alleged that the defendant indicated her intention to sign a personal guarantee for Postbrook and signed same in full knowledge of what she was doing having had every opportunity to read and consider the same prior to signing.

The defendant alleged that she had attended the Naas branch on 11 October 2016 in circumstances where the company’s account had been put on hold, and that she was asked by the branch manager to sign a document to get the account “back up and running”.

The defendant asserted inter alia that at no point was she informed that she was signing a personal guarantee and that she never received a letter of claim in relation to the guarantee dated 3 October 2017. She also suggested that she had not had sight of the form prior to signing, that her understanding was that she was signing in her capacity as a director rather than personally, and that she had not read the form nor was she given a copy of same thereafter.

The defendant’s husband alleged that he did not request a credit extension and instead met with the branch manager to discuss future forecasts of the company. He denied receiving a personal guarantee form from the branch manager at any point and suggested that both he and his wife had previously declined to give a personal guarantee for the company’s debts.

The High Court

Mr Justice O’Higgins noted that his task was to decide whether the defendant could show a reasonable probability of having a real or bona fide defence as set out in Aer Rianta Cpt (No. 1) v. Ryanair Ltd [2001] 4 IR 607, noting that the central question was whether the defendant ought to be bound by the guarantee having regard to the circumstances at the time she executed same.

The judge considered the plaintiff’s arguments that it should be inferred that the defendant was aware of the general character of the document she was signing and that she was negligent in failing to read same prior to signing, and so could not meet the test outlined in Saunders v. Anglia Building Society [1971] AC 1004.
 
The court agreed that by the defendant’s own case, she took no care in ascertaining such matters prior to signing and noted that the defendant “is not entitled to rely upon her own negligence and want of care in seeking to escape the obligations she agreed to under the guarantee”.

Mr Justice O’Higgins explained that the case law on non est factum encourages courts to take “a realistic and somewhat circumspect approach, as one might expect in the context of business people signing documents” and considered that at any plenary hearing, the defendant “would have to account for the fact that, in signing the document, it is likely that, even if only for a fleeting moment, she would at the very least have glanced at the document” which was “top and tailed” with the word ‘guarantee’ in bold print.

The court outlined that there were significant areas of factual dispute arising from the affidavits, including disputes concerning the purpose and outcome of the September 2016 and October 2016 meetings and as to whether the defendant brought the blank personal guarantee form with her to the latter meeting.

Mr Justice O’Higgins inter alia accepted the defendant’s averment that she never received the October 2017 letter concerning the guarantee, noting that “had she received the letter and failed to raise a complaint about its contents, that might be considered a creditability hurdle for her to overcome”.

Being satisfied that the defendant had shown a reasonable probability of having a real or bona fide defence to the plaintiff’s claim, the court found that this was “not a situation of a defendant putting forward no more than a bare denial of a plaintiff’s claim for summary judgment. Nor is it a situation of a defendant putting forward an evidently doomed or preposterous line of defence.”

The court continued: “Rather, her basic claim is that in the particular circumstances in which she signed the guarantee, viewed in the context of the earlier meeting and the previous dealings of the parties, she misunderstood and/or was misled about the nature and character of the document, and that in the circumstances, she should not be unduly criticised for not reading the document in advance of signing it.”

Mr Justice O’Higgins also determined that insofar as the plaintiff relied upon the defendant’s carelessness, the issue as to whether negligence is established and the extent of any negligence is one for trial.

Conclusion

Accordingly, the High Court refused the plaintiff’s application and sent the case to plenary hearing.

M. Kelliher 1998 Ltd v Jennifer Ashe [2025] IEHC 269