Bank of Ireland v. Morton [2002] ScotCS 301 (22 November 2002)

Bank of Ireland v. Morton [2002] ScotCS 301 (22 November 2002)

The guarantee's express terms provided that the defender's liability was unaffected by any failure to perfect or maintain the ranking of security, and the pursuers were at liberty to release or abstain from perfecting any security without affecting their rights against the defender. No duty to inform the defender of the failure to obtain a first ranking security arose from law or contract. The defender was not released from liability under the guarantee by the pursuers' failure to obtain a first ranking security or to notify him of this failure.

Citation
[2002] ScotCS 301
Parties
Pursuer/respondent: The Governor and Company of the Bank of Ireland; Defender/appellant: Brian Morton
Jurisdiction
Scotland
Judgment Date
22 November 2002
Procedural Posture
Appeal / Appeal From Sheriff Court Decree Enforcing Personal Guarantee
Outcome
appeal refused
Legal Topics
Personal Guarantee Enforcement, Cautionary Obligations, Creditor Duties to Cautioner, Ranking of Securities, Misrepresentation, Essential Error, Rectification of Security Documents
Contract Law Banking Law Guarantee Law Scots Law Personal Guarantee Enforcement Cautionary Obligations Creditor Duties to Cautioner Ranking of Securities +3 more

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Parties

The Governor and Company of the Bank of Ireland

Pursuer/respondent

Brian Morton

Defender/appellant

Procedural Posture

Appeal / Appeal From Sheriff Court Decree Enforcing Personal Guarantee

Legal Issues

  1. 1 Whether the pursuers were under a duty to perfect a first ranking security over Hazelburn for the benefit of the defender as cautioner
  2. 2 Whether the pursuers' failure to obtain a first ranking security released the defender from liability under the guarantee
  3. 3 Whether the pursuers had a duty to inform the defender that a first ranking security had not been obtained

Ratio Decidendi

The guarantee's express terms provided that the defender's liability was unaffected by any failure to perfect or maintain the ranking of security, and the pursuers were at liberty to release or abstain from perfecting any security without affecting their rights against the defender. No duty to inform the defender of the failure to obtain a first ranking security arose from law or contract. The defender was not released from liability under the guarantee by the pursuers' failure to obtain a first ranking security or to notify him of this failure.

Court Disposition

appeal refused

Orders

  • Sheriff's third finding in fact and in law deleted
  • Additional finding in fact added: The defender would not have signed the guarantee had he thought that the pursuers would not get a first ranking security; the reason there was no ranking agreement was fault on the part of the pursuers' agents.