Personal guarantees and Irish law – Cork
Adm Londis Plc -V- Stephen Gibson And Tanya Gibson Judgment of Mr. Justice Hedigan delivered on the 7th day of December, 2010. This was an application by the plaintiff for summary judgment in the amount of €171,399.94 together with Courts Act interest from the 29th May, 2009.
The plaintiffs’ claim was on foot of a guarantee. it was claimed by the defendants that they did not know they were signing a guarantee. It was not explained to them that it was a guarantee and they did not have any independent legal advice on same. They thought they were signing an account opening form. They said that one of the directors names was not printed in block letters though it was agreed the signatures were theirs. For all these reasons they argued that the guarantee was not a valid one and did not bind them.
Rejecting these arguments, Mr. Justice Hedigan referred to an earlier case of Tedcastle McCormack and Co. Ltd. v. McCrystal where the following test was set out in relation to a claim that a party was not bound by a document signed by them: (a) That there was a radical or fundamental difference between what was signed and what it was thought was being signed; (b) That the mistake was as to the general character of the document as opposed to its legal effect; and (c) That there was a lack of negligence. That is, that the person concerned took all reasonable precautions in the circumstances to find out what the document was. Applying those principles to an essentially identical set of circumstances in ADM v. Arman, Clarke J. stated; “On the facts of this case it is manifestly clear that the Defendants signed a document which is clearly, on its face, a guarantee. In those circumstances, even a cursory reading of the document would have brought to the Defendants’ attention the fact that they were signing a guarantee. In those circumstances, it seems to me that the Defendants could not be said to have established any Defence under the non est factum doctrine.
On that basis, it does not seem to me that that ground gives rise to any possible Defence or should lead to liberty to defend.” Mr. Justice Hedigan said “The same applies here. There is no conceivable way that a person could sign the guarantee document relied on herein without knowing it was a guarantee. It says so repeatedly throughout and is headed Guarantee. To sign such a document without discovering it was a guarantee, fails utterly the third test set out above even were the first two met by the defendants…. As the CV of the first named defendant which is exhibited herein shows, he is a very experienced and well qualified businessman…. Moreover the defendants in entering this contract of guarantee were acting as business people capable of contracting on their own without independent legal advice or any cooling off period. The guarantee was signed by both as directors of the company and they were free to contract or not as they wished. The fact that Mrs. Gibson’s name did not appear in block letters opposite her admitted signature is of no substance.”
It is clear that any person seeking to avoid liability under a guarantee signed by them faces severe difficulties in convincing a court to assist them.
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