Guarantee claim allowed against guarantor as no arguable defence of superseding contract or business transfer was proven.

THE HIGH COURT

[2025] IEHC 707

[Record No. 2022/186S]

BETWEEN

BWG FOODS UNLIMITED COMPANY

PLAINTIFF

AND

J.A.J. SUPERMARKETS LTD

AND

JOE MAHON

DEFENDANTS

JUDGMENT of Mr Justice Barr delivered ex tempore on the 8th day of December 2025.

Introduction.

1. In this application, the plaintiff seeks summary judgment against the second defendant on foot of a contract of guarantee signed on 7 May 2012, wherein the second defendant guaranteed the indebtedness of the first defendant to the plaintiff. The plaintiff seeks judgment against the second defendant on foot of that contract of guarantee in the sum of €355,573.48.

2. The second defendant resists judgment being marked summarily against him on the basis that he has five grounds of defence to the claim that is made by the plaintiff, as follows: that no evidence has been produced that the terms and conditions of trading and the price list that existed at the time of the signing of the contract of guarantee in 2012, were the same as those that applied at the time when the goods were allegedly supplied to the first defendant in the period October 2021/February 2022; that the contract of guarantee of 2012 was superseded by the contract that was entered into between the parties in 2016, which contract contained a clause known as a "whole agreement clause" which provided that that contract would constitute the totality of the legal relations between the parties; it was submitted that as there was no reference to the contract of guarantee in the 2016 agreement it therefore fell away and was not operative after 2016; thirdly, that the plaintiff had acted in breach of its own policy which provided that when contracts of guarantee were being entered into by parties in respect of the guaranteeing of debts of entities to whom goods would be supplied, they should be advised to take independent legal advice, it was submitted that that had not been done; fourthly, there was a challenge to the quantum of the amount claimed, in particular it was asserted that the plaintiff had not given credit for substantial payments that had been made on behalf of the first defendant in the relevant period; fifthly, that the first defendant had ceased trading effectively as and from 1 December 2021, at which time a new company had taken over operation of the shop premises, it was submitted that in these circumstances any indebtedness which arose after 1 December 2021 up to the termination of the agreement on 13 February 2022 was not recoverable against the first defendant and therefore did not come under the terms of the contract of guarantee of 2012. These grounds of defence will be dealt with in detail later in the judgment.

3. It was submitted on behalf of the second defendant that having regard to the defences that had been raised by him and having regard to the relatively low threshold that had to be crossed in that regard, as set down in the case law, the court should refuse the plaintiff's application for summary judgment and should remit the matter to plenary hearing.

The Evidence.

4. Save for the issue of quantum, there was not great dispute between the parties in relation to the essential facts in the case. Accordingly, it will suffice to give a brief resume of the evidence given on behalf of the plaintiff by Mr Don Kilmartin, a credit manager of the plaintiff company, as set out in the three affidavits sworn by him for the purposes of this application.

5. Mr Kilmartin stated that the parties had had a trading arrangement since in or about 2010. In 2012 the second defendant concluded a written contract of guarantee whereby he guaranteed the debts of the first defendant with the plaintiff company in respect of goods and materials that would be supplied to it in the operation of its business as a Spar supermarket. The contract of guarantee was stated to be a continuing guarantee for all debts whatsoever and whensoever contracted by the principal debtor in respect of goods to be supplied and capital contributions given to the principal debtor.

6. The contract of guarantee was dated 7 May 2012. It was signed by the second defendant and by Mr Sean Carter on behalf of the plaintiff. Mr Kilmartin exhibited a copy of the contract of guarantee in his affidavit.

7. Mr Kilmartin stated that in 2016 a formal agreement was drawn up between the plaintiff and the first defendant. This agreement was known as the Spar Trading Agreement. It had been set out in a letter from the plaintiff addressed to the second defendant and to his wife, Mary Mahon, and to the first defendant in a letter dated 28 September 2016.

8. The letter began by saying as follows: "We, BWG Foods (BWG), are delighted that you have decided to remain in the Spar group. We wish to outline our proposal for a trading agreement with your company as follows: …". The letter went on to set out the terms and conditions under which goods would be supplied by the plaintiff to the first defendant as part of the Spar group. That agreement was signed by the second defendant on behalf of the first defendant. It was also signed by his wife, Mary Mahon, on behalf of the first defendant and it was signed by an officer on behalf of the plaintiff. A copy of that agreement was exhibited to the affidavit. Along with that agreement, a copy of the terms and conditions of the plaintiff company dated April 2010 was annexed to the agreement.

9. Mr Kilmartin stated that as of 3 April 2022 there was due and owing by the first defendant to the plaintiff the sum of €355,573.48. In that regard he exhibited a statement of account. He stated that demands for payment were made of the first defendant, which were not complied with. He stated that by letter dated 1 June 2022, the plaintiff demanded payment from the second defendant of the said sum on foot of the contract of guarantee signed in 2012. A copy of the letter of demand was exhibited to the affidavit.

10. When no payment was made by either of the defendants on foot of the letters of demand, the summary summons herein issued on 16 June 2022. On 15 January 2024, the plaintiff obtained judgment in default of appearance in respect of the said sum, together with costs, against the first defendant. An appearance had been entered to the proceedings on behalf of the second defendant by his solicitor on 29 June 2022.

11. In his second affidavit, Mr Kilmartin dealt with an issue that had arisen in relation to certain correspondence that had been sent to the plaintiff by the second defendant's wife, asking for details surrounding the execution of the contract of guarantee, as the second defendant did not recall signing it or ever entering into such a contract. Mr Kilmartin stated that he had not mentioned that correspondence in his affidavit, as it did not appear relevant to the claim made by the plaintiff in the proceedings.

12. In that affidavit he exhibited the correct terms and conditions that applied when the contract of guarantee was executed, being the 2010 terms and conditions of the plaintiff company. He also exhibited a further statement of account in respect of the sum claimed by the plaintiff as being due and owing from the defendants. He went on to deal with certain arguments that had been raised by the second defendant in his replying affidavit. These are more properly the subject matter of legal submission and will be dealt with later in the judgment.

13. In his third affidavit, Mr Kilmartin dealt with the assertion that had been made by the defendant in his replying affidavits that proper account had not been given for substantial payments that had been made by the first defendant to the plaintiff during the relevant period. The deponent denied that payments in the sum of €263,674.15 had not been properly accounted for in the statement of account. He said that they had been reflected in the sum that was claimed in the proceedings herein. He took the opportunity to exhibit a fuller statement of account showing all payments that had been received by the plaintiff from the first defendant during the relevant period. He repeated that credit had been given for all such payments and that the sum claimed in the summary summons remained due and owing by the first defendant to the plaintiff and was also due and owing by the second defendant on foot of the contract of guarantee signed in 2012. He exhibited a third statement of account showing in detail all payments that had been made and all outstanding balances that were owing by the first defendant at the time that the trading account was closed in February 2022.

14. The affidavits that were sworn by the second defendant essentially raised the grounds of defence that have been summarised earlier in the judgment. He also exhibited extracts from his bank statements showing various payments made by the first defendant in the period 1 October 2021 to 15 February 2022. As the plaintiff has conceded that substantial payments were made it is not necessary to say anything more about this exhibit.

The Law.

15. Summary judgment procedure is only suitable when there is a clear prima facie legal entitlement on the part of the plaintiff to the sum claimed. Usually when such applications are being moved, the plaintiff has a very strong case that money is owed to him by the defendant and the real question before the court is whether the defendant has established sufficient evidence in his affidavit to cross the threshold that he has at least an arguable defence to the plaintiff’s claim, such that he should be allowed to resist judgment being marked against him in a summary manner and should be allowed to have the matter remitted to plenary hearing.

16. The approach which the court should take to an application such as this, is well settled in law. The relevant test was set down by the Supreme Court as far back as 1996 in First National Commercial Bank v Anglin [1996] 1 IR 75. In that case Murphy J, giving the judgment of the court, endorsed the following test laid down in Banque de Paris v DeNaray [1984] 1 Lloyd’s Law Rep 21, which had been referred to in the judgment of the President of the High Court and reaffirmed in National Westminster Bank PLC v Daniel [1993] 1 WLR 1453:- “The mere assertion in an affidavit of a given situation which was to be the basis of a defence did not of itself provide leave to defend; the Court had to look at the whole situation to see whether the defendant had satisfied the Court that there was a fair or reasonable probability of the defendants having a real or bona fide defence.”

17. The test set down in the Anglin case has been applied in a number of cases in the intervening years. The appropriate test was more recently set out in Aer Rianta CPT v Ryanair Limited [2001] 4 IR 607 in which case Hardiman J stated as follows at page 623:- “In my view the fundamental questions to be posed on an application such as this remain: is it ‘very clear’ that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendants affidavits fail to disclose even an arguable case?”

18. In Harrisrange Limited v Duncan [2003] 4 IR 1, McKechnie J having analysed the relevant case law, set out a helpful summary of the relevant principles. It is not necessary to set these out in this judgment, as they are very well known.

19. The court has also had regard to the dicta of Moriarty J in Allied Irish Banks v Killoran [2015] IEHC 850, where he warned that the court should not accord substantive relief to defendants in summary judgment motions who raise spurious, fanciful, or conjectural contentions to resist judgment. He advised that courts must be alert to defendants who seek merely to defer the evil day on the basis of arguments that do not pass muster, and must remain mindful of the de minimis rule in assessing summary judgment applications.

20. In Feniton Property Finance DAC v McCool [2022] IECA 217, the court noted that “the fundamental question to be addressed is whether there is a fair and reasonable probability of the defendant having a real bona fide defence, in law, on the facts or both”. The court stated that in addressing this question the court must proceed with caution. Murray J, delivering the judgment of the court, stated as follows at para. 11: “At the same time, while the court must be cautious in granting summary judgment, and while the requirement that a defendant establish a fair and reasonable probability of the defendant having a defence is a relatively low threshold, it is a threshold: it is neither in the public interest nor in the interests of the parties that straightforward claims for a debt or liquidated demands should require to be determined by plenary hearing, with the additional delay and cost that such a hearing involves and the additional burden thereby placed on the resources of the courts (see Promontoria (Aran) Ltd. v. Burns [2020] IECA 87 (‘Burns’ at para. 4). The defendant must, accordingly, lay a basis on which the court can conclude that there is in truth an issue to be tried, and that that issue is neither simple nor capable of being easily determined (see Prendergast v. Biddle, Unreported, Supreme Court, 31 July 1957). Thus, in IBRC Ltd. v. McCaughey [2014] 1 IR 749, Clarke J. (as he then was) stated that the type of factual assertions which may not provide an arguable defence are those that amount to a mere assertion unsupported either by evidence or by any realistic suggestion that evidence may be available, or which comprise facts which are in and of themselves inconsistent or contradictory.”

Discussion and Conclusions.

21. The court has carefully considered the pleadings in this case, comprising the affidavits sworn on behalf of the parties, together with the exhibits thereto. The court has also considered the legal submissions made by counsel.

22. The court is satisfied that the evidence given by Mr Kilmartin in his three affidavits, together with the exhibits thereto, establish that the second defendant entered into a contract of guarantee with the plaintiff on 7 May 2012. The court is satisfied that this was a guarantee in respect of the debts of the first defendant in relation to goods or materials that may be supplied either by the plaintiff to the first defendant or supplied by third parties to the first defendant for use in its shop, but which were paid for by the plaintiff company.

23. The court is satisfied from the terms of the contract of guarantee that it was a continuing guarantee in respect of future debts that would be accrued from that date onwards. The court is also satisfied that it was clear from the agreement that the indebtedness would arise on foot of goods supplied subject to the terms and conditions and price lists as applying at the time when the goods were supplied to the first defendant.

24. The court is satisfied that the Spar Trading Agreement of 28 September 2016 was an agreement covering the supply of goods and materials by or on behalf of the plaintiff to the first defendant. While the letter was addressed to three recipients, being the second defendant, his wife, and the first defendant, it is very clear from the content of the letter which contains the agreement that the agreement was between the plaintiff and the first defendant. The court is satisfied that the second defendant and his wife were merely addressees of the letter because they were the people with whom the plaintiff had been dealing on behalf of the first defendant over a number of years.

25. The court is also satisfied that the signatures which were appended to the agreement, which was signed by the first defendant and by his wife; that both of them did so on behalf of the first defendant. Accordingly, the court holds that this agreement was concluded between the plaintiff and the first defendant.

26. This brings the court to the first main ground of defence put forward on behalf of the second defendant, which was to the effect that the agreement of 2016 had a clause known as a "whole agreement clause" which provided that the 2016 agreement would supersede all previous agreements between the parties and that it would constitute the totality of the legal relations between the plaintiff and the first defendant. The court accepts that that submission is correct insofar as it goes. That agreement did govern the totality of the legal relationship between the plaintiff and the first defendant. However, as the court has already found that the second defendant was not a party to that agreement, but was merely one of the addressees to whom the letter had been sent so that he could act on behalf of the first defendant, the fact that there is no reference in the 2016 agreement to the pre-existing contract of guarantee of 2012, is of no relevance. The court rejects the submission made on behalf of the second defendant that the fact that there is a "whole agreement clause" in the 2016 agreement rendered the 2012 guarantee inoperative. There is no substance in this ground of defence.

27. Insofar as it had been argued on behalf of the second defendant that the terms and conditions which applied at the time that the contract of guarantee was entered into in 2012, had not been proven to be the same terms and conditions as applied at the time of the conclusion of the agreement in 2016, or at the time when the alleged indebtedness arose in the period October 2021 to February 2022; the court is satisfied that there is no substance in this point either. The contract of guarantee clearly related to a guarantee being given in respect of debts that would be incurred by the first defendant in respect of goods and materials supplied to it by the plaintiff or by others and paid for by the plaintiff and provided under the terms and conditions and subject to the price list then applying. Accordingly, there is no substance in this ground of defence.

28. Turning to the third ground of defence put forward on behalf of the second defendant which was to the effect that there was no evidence that the second defendant had been advised and that he should obtain independent legal advice prior to concluding the contract of guarantee in 2012;the court is satisfied that there is no substance in this ground of defence. The court accepts the submission made by Mr Brady BL on behalf of the plaintiff that the case law establishes that there is no duty at common law on a company that is proposing to enter into or obtain a contract of guarantee from a third party to either ensure that that third party has independent legal advice prior to entering into the contract, or that they should advise the guarantor to obtain such advice prior to concluding the contract. The decision in ACC Loan Management v Connelly [2017] IECA 119 establishes that no such duty rests upon the company or person in whose favour the guarantee will operate: see in particular the judgment of Finlay Geoghegan J at para. 28 and the judgment of Hogan J at para. 25.

29. While the court accepts that it may have been the policy of the plaintiff to advise persons who were intending to give a guarantee in respect of the potential indebtedness of the entity that would run the Spar shop to obtain legal advice; that does not mean that if the contract of guarantee was concluded by the second defendant in 2012 without having been advised to obtain independent legal advice, that that in some manner renders the contract of guarantee either unenforceable or invalid at law.

30. It is noteworthy that there is no claim made in the affidavits sworn by the second defendant either that he did not sign the contract of guarantee, or that he only did so while acting under the undue influence of some third party, or under duress. The court is satisfied that in these circumstances, there is no obligation on the plaintiff to ensure that the second defendant had independent legal advice prior to entering into the contract of guarantee, nor were they under a duty to advise him to get such advice prior to concluding the contract. Accordingly, there is no substance in this ground of defence.

31. It was submitted that the court should have regard to the fact that a request had been made by the plaintiff of Mrs Mahon in 2017 to provide a personal guarantee, which request had been denied. It was submitted that the making of such request indicated that the plaintiff considered that the original contract of guarantee had been superseded by the subsequent Spar Trading Agreement of 2016 and was therefore an attempt by the plaintiff to mend this lacuna by obtaining a personal guarantee from Mrs Mahon. The court does not accept that that proposition is tenable. While the plaintiff may well have requested Mrs Mahon to provide a personal guarantee in 2017, there are any number of reasons why they may have done so. They may have felt that the personal guarantee that they had from her husband was not sufficient to cover the likely or possible indebtedness of the first defendant to the plaintiff. Alternatively, they may have felt that Mrs Mahon was a substantial owner of assets and therefore they may have thought it prudent to seek to obtain an independent contract of guarantee from her. The court rejects the submission that the mere fact of asking for a personal guarantee from the second defendant's wife in 2017, in some way renders the former guarantee executed by the second defendant in 2012 either unlawful or inoperative.

32. Finally, two grounds of defence were raised in relation to the issue of quantum. It was submitted firstly that no account had been given in the statements of account that had been exhibited by Mr Kilmartin for the substantial payments that had been made by the first defendant to the plaintiff during the relevant period. There is some substance in this submission, insofar as the first two statements of accounts exhibited by Mr Kilmartin did not give the level of detail that was contained in the third statement of account. However, when one looks at the third statement of account which was exhibited in the final affidavit, it is clear that the substantial payments in the order of €263,674.15 were credited by the plaintiff as having been paid by the first defendant during the relevant period. The second defendant has not been able to point to any significant payments that appear in his bank statements that do not appear in the third statement of account.

33. The court must also have regard to the fact that a judgment in default of appearance was obtained by the plaintiff against the first defendant on 15 January 2024 in respect of the sum claimed in the summary summons. There are two consequences that flow from this. First, it is reasonable to assume that if the first defendant felt that it had not received credit for any substantial payments that had been made by it during the relevant period, it would not have allowed the judgment to be entered in default against it. Secondly and more importantly, where a creditor has obtained judgment against the principal debtor, it is not open to the surety to seek to go behind that judgment and question the accuracy of the figure that was obtained by the plaintiff on foot of the judgment against the principal debtor. In all the circumstances, I am not satisfied that the second defendant has demonstrated that he has any arguable defence either in relation to the totality of the sum claimed by the plaintiff in the proceedings herein or in relation to any portion thereof.

34. The second aspect on the issue of quantum was to the effect that since in or about 1 December 2021, the second defendant had transferred ownership of the shop premises and the carrying on of operations therein to another company. This aspect was pleaded in the following terms at para. 4 of the second affidavit sworn by the second defendant on 14 January 2025:

“Secondly, as and from 1 December 2021, the running and operation of the Spar shop in question was transferred, with the consent of the plaintiff, to a third party named Kiernan’s Retail South Donegal Limited. The transfer of the business arose in circumstances where the plaintiff advised your deponent that it would no longer supply product to the first defendant. As and from 1 December 2021 the first named defendant was not involved in the operation of this Spar franchise. A formal transfer of the lease in respect of the shop premises was effected from the first named defendant to Kiernan’s Retail South Donegal Limited. It is noted that 13 February 2022 is the date on which the statement of account ends but I say and believe that the first named defendant did not trade with the plaintiff for the last 75 days indicated on the statement of account. It is further noted that the total due and owing on 30 November 2021 was €113,153.63 and not the €355 573.48 claimed.”

35. The court is satisfied that there is no substance in this ground of defence for the following reasons: first, the first defendant did not raise this substantial ground of defence to the claim brought against it by the plaintiff. Instead, it allowed judgment for the entire sum claimed against it to be marked in default of appearance.

36. Secondly, no evidence was produced by the second defendant to support this assertion. He did not produce any contract showing the sale of the shop business by the first defendant to the third party. If there was a sale of a shop business from one entity to another, one would have expected that there would have been a detailed written contract setting out the price that would be paid and such provisions as would be applicable in relation to debts that were owing by the vendor entity at that time.

37. Furthermore, the second defendant has failed to produce any evidence of the lease that was allegedly entered into between the first defendant and the third party in relation to the shop premises. Again, it is highly likely that if a new company had taken over a lease on a shop premises, it would have insisted on obtaining a written lease to secure its position. At the very least, even if the tenancy was an oral tenancy agreement, there would be some evidence of the terms thereof having been reduced to writing, either between the principals, or between their legal advisers. It is noteworthy that no documentation was exhibited to establish the existence of any such lease.

38. Thirdly, the court accepts the submission made by Mr Kilmartin in his final affidavit that the plaintiff was unaware of any such relationship being in place prior to the closure of the trading account between the first defendant and the plaintiff on 13 February 2022. It was denied that the plaintiff had been informed that any third party had acquired the business formerly carried on by the first defendant. It is implicit from this that they had not consented to any such transfer prior to the date of closure of the trading account with the first defendant. No evidence of any such consent was produced by the second defendant.

39. Finally, it is also noteworthy from the bank statements that were exhibited by the second defendant that a significant number of payments were made by the first defendant to the plaintiff after 1 December 2021 and prior to closure of the trading account on 13 February 2022. The making of such payments by the first defendant to the plaintiff contradicts the assertion made by the second defendant that as and from 1 December 2021, the retail business had been taken over by the third party. Having regard to all these circumstances, the court is satisfied that what is asserted by the second defendant at para. 4 of his second affidavit, is merely an assertion. That does not establish an arguable defence.

40. In rejecting this ground of defence, the court has had regard to the dicta of McKechnie J in the Harrisrange case and in particular to principle 11 thereof, where he stated as follows:

“ (xi) leave should not be granted where the only relevant averment in the totality of the evidence, is a mere assertion of a given situation which is to form the basis of a defence….;”

41. The court has also had regard to the dicta of Moriarty J in the Killoran case referred to above.

42. Having regard to the findings made by the court in its judgment herein, the court is satisfied that the second defendant has not established an arguable defence either to the entirety of the claim made by the plaintiff against him, or to any part thereof. In these circumstances he has not crossed the threshold as set down in the Aer Rianta and Harrisrange cases. For this reason, the court refuses to remit the matter to plenary hearing.

43. The plaintiff is entitled to judgment against the second defendant in the sum of €355,573.48; and the court so orders.