Irish Bank Resolution Corporation Ltd & Anor v Kempin

A guarantor’s pleaded defence must have a realistic prospect of success to avoid summary judgment. A longstanding banking relationship does not, without an assumption of responsibility, create a tortious duty to exercise reasonable care and skill towards the guarantor. Restrictions implied into contractual discretionary powers do not generally establish a freestanding duty of good faith or an estoppel. Clear contractual language may impose liability under a guarantee without a demand, notwithstanding overlapping provisions. Vague or inadequately particularised allegations of representation, bad faith and improper purpose will not prevent judgment where the evidence gives them no realistic prospect of success.

The claimants sought judgment against the defendant as guarantor of borrowings by Cathco. Following an earlier hearing, parallel proceedings were issued after a fresh demand, the actions were consolidated, and the defendant’s existing defence was treated as the defence in both proceedings. The claimants sought summary judgment, permission to amend the original claim to rely on clause 16.1(a) of the Loan Agreement, and strike-out of the defence and counterclaim.

The defence alleged negligence, breach of an implied duty of good faith, misrepresentation, estoppel and invalidity of the administration and guarantee enforcement decisions. The central questions were whether those allegations disclosed viable legal defences and whether clause 16.1(a) guaranteed monetary obligations without a demand.

1. Summary judgment and pleading. The defendant accepted that the fresh demand in the parallel proceedings was effective. The remaining defences and counterclaim had no realistic prospect of success. The court rejected the submission that consolidation required the parties to replead before summary judgment could be sought, applying the procedural approach illustrated by Lewis v The Daily Telegraph.
2. Negligence. The pleaded banking relationship and the defendant’s expectations did not establish an assumption of responsibility capable of giving rise to a duty of care owed personally to him. No supporting evidence showed any realistic prospect of proving negligent conduct.
3. Good faith and improper purpose. Paragon Finance and Meretz Investments v ACP Ltd concerned limits on the exercise of contractual powers, not a freestanding duty of good faith of the kind pleaded. They therefore provided little assistance. In any event, the evidence could not realistically establish that the decisions to appoint administrators and call the guarantee were motivated solely by personal animosity rather than, at least in part, by the claimants’ commercial interests. The pleading was also inadequately particularised.
4. Misrepresentation and estoppel. The alleged implied representation that the claimants could continue supporting the businesses was unclear and impermissibly vague. A future representation would not be actionable on the pleaded basis, while a representation confined to existing contractual lending added nothing. Rescission was unavailable because approximate restitutio in integrum was impossible, and clause 25.3 excluded any set-off or counterclaim against payment obligations.
5. Guarantee. Clause 16.1(a), by its clear general words, applied to the borrower’s monetary obligations. It guaranteed punctual performance and created liability in damages upon default without a demand. The surplusage argument did not justify restricting clause 16.1(a) by reference to clause 16.1(b).
6. The fresh claim was therefore suitable for summary judgment. The defence and counterclaim in the original proceedings were struck out, permission to amend was granted, summary judgment would have been granted on the amended claim, and the requested adjournment was refused.

First-instance decision. The judgment records an earlier hearing before the same judge but does not state any appellate decision.