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:-
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:-
“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.