There was a time when some solicitors advising banks on negotiating settlements were very nervous about the implications of the Civil Liability Act 1961. However, as a recent High Court case has indicated, provided the Settlement Agreement is properly crafted, there should be no such concerns.

In Bank of Ireland – v- Doyle a borrower pleaded a Defence that a Settlement Agreement that the bank negotiated with other borrowers was a release or accord for the purposes of s. 17 of the Civil Liability Act 1961, and that he therefore had no further liability to the bank.

Section 17 of the Act of 1961 provides:-

  • “The release of, or accord with, one concurrent wrongdoer shall discharge the others if such release or accord indicates an intention that the others are to be discharged.(2) If no such intention is indicated by such release or accord, the other wrongdoers shall not be discharged but the injured person shall be identified with the person with whom the release or accord is made in any action against the other wrongdoers in accordance with paragraph (h) of subsection (1) of section 35; and in any such action the claim against the other wrongdoers shall be reduced in the amount of the consideration paid for the release or accord, or in any amount by which the release or accord provides that the total claim shall be reduced, or to the extent that the wrongdoer with whom the release or accord…”

In this case, the Court concluded that the terms of clause 10.1, titled “Reservation of Rights”, of the “Debt Resolution Agreement” addressed the issue. Clause 10.1(a) provides:-“For the avoidance of doubt, each Borrower acknowledges and accepts that:-

  • (a) this Agreement shall not in any way impair or prejudice, or be construed as constituting a waiver or release or satisfaction of, any of the Bank’s rights or remedies or in connection with the Finance Documents whether arising under their terms, at law or equity or otherwise…”

“Finance Documents” are defined in the said agreement as including the facility letter pursuant to which the plaintiff made available the loan facility to the defendant and the borrowers. Further, clause 9, entitled “Absolute Bar”, provides that:-“This Agreement may be pleaded and tendered by the Bank as an absolute bar to any defence offered by any defaulting Borrower in any proceedings brought by the Bank in relation to this Agreement or the Finance Documents …”

It was clear to the Court that, based on the wording of the “Debt Resolution Agreement”, that it could not constitute a release or accord for the purposes of s. 17 of the Act of 1961.

The judgment is a welcome clarification of the law in this area.

The judgement itself may be viewed by clicking on the link below.

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/a1065b10b0e435ea802583380036e1ab?OpenDocument