Judgment Title: Allied Irish Bank PLC & Ors -v- William Moran & Ors
Neutral Citation:  IEHC 323
High Court Record Number: 2012 1271S
Date of Delivery: 27/07/2012
Court: High Court
Composition of Court:
Judgment by: McGovern J.
Status of Judgment: Approved
NEUTRAL CITATION NUMBER  IEHC 323
THE HIGH COURT
[2012 No. 1271 S]
ALLIED IRISH BANKS PLC. AND AIB MORTGAGE BANK
WILLIAM MORAN AND SHEILA MORAN
JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 27th day of July, 2012
1. In these proceedings, the plaintiffs sought a total sum of €19,392,019.87 from the defendants on foot of a Summary Summons issued on 3rd April, 2012. In the Special Endorsement of Claim, the sum was broken down as follows: a claim by the first named plaintiff against the defendants in the sum of €14,848,290.06 together with interest on the said sum from 2nd December, 2011, until payment either pursuant to contract or Statute; and a claim by the second named plaintiff in the sum of €4,543,729.81 against the first and second named defendants together with interest on the said sum from 8th February, 2012, until the date of payment either pursuant to contract or Statute.
2. On 30th April, 2012, the case was admitted to the Commercial List by order of Kelly J. The defendants did not contest the claim made by the first named plaintiff and by order of Kelly J. made on 10th May, 2012, judgment was entered against the defendants jointly and severally in favour of the first named plaintiff in the sum of €14,848,290.06. The claim of the second named plaintiff was adjourned to a subsequent date. When the matter came before the court again on 14th May, 2012, the defendants accepted that they had no defence to a portion of the claim of the second named plaintiff, namely the sum of €2,776,290.18, and accordingly, judgment was entered by Kelly J. in that sum in favour of the second named plaintiff against the defendants jointly and severally. The second named plaintiff was also awarded costs coextensive with that part of the claim when taxed and ascertained, in default of agreement.
3. The balance of the claim by the second named plaintiff was adjourned to 5th July, 2012, for the hearing of the application for summary judgment, and the court noted that the parties agreed that the application for summary judgment will be treated as the trial of the action. That was confirmed by counsel when the matter opened before me. That being so, the hearing before me is a full hearing of the issues between the parties, albeit on affidavit.
4. The second named plaintiff is seeking judgment in respect of sums alleged to be due upon Loan Accounts Nos. 80789055, 21910181, 39431295, 80758081, 14211092, 67469264 and 74882055.
5. The defendants defend the claims on the basis that insufficient notice was given in respect of Mortgage Loan Accounts No. 80789055, 21910181 and 39431295. In respect of four further loans, namely, 80758081, 14211092, 67469264 and 74882055 they claim no notice was given to them at all prior to the Issue of Demand served on 8th February, 2012.
6. It is of significance that nowhere in the affidavits sworn on behalf of the defendants in the proceedings do they deny that the sums which are claimed were lent to them. Furthermore, they do not state that, if they were given the notice which they contend they ought to have been given, they would be in a position to repay the sums claimed.
7. The disputed sums were advanced by the second named plaintiff to the defendants on foot of separate loan agreements which are in identical terms. The purpose of the loan agreements was to enable the defendants to purchase property and the defendants entered into separate mortgages in respect of each property. Clause 8 of the loan agreements provides:-
9. The second named plaintiff argues that even if there was non-compliance with the provisions of Clause 8, this is not fatal to its claim. It says that the letter which was sent drew the defendants' attention to the fact that mortgage repayments had fallen into arrears and that this was sufficient notice to them for the purposes of Clause 8. The second named plaintiff also argues that Clause 8 does not, in any event, apply to its claim in these proceedings and that it relies on Clause 3.03 of the mortgage which states:
(a) if the Mortgagor fails to pay on the due date any money or discharge any obligation or liability payable by him from time to time to the Bank ... "
10. The loan agreements do not provide a definition of what constitutes "due notice". In view of the defence raised in this case, the court will have to determine what is due notice or what notice, if any, must be given before a demand for repayment can be made. The plaintiff relies on Cripps (Pharmaceuticals) Ltd. v. Wickenden and Another  2 ALL ER 606. That case concerned the appointment of a receiver on foot of a mortgage almost immediately after a demand for repayment of the sums due had been made. The plaintiff complained that it had been allowed insufficient time between the demand and the appointment of the receiver. The court held that the appointment could not be impugned on the ground that insufficient time had been allowed after demand for payment where it was clear that the plaintiff would not be in a position to repay the sum due. Goff J. stated at p. 616:-
'I agree that a debtor who is required to pay money on demand, or at a stated time, must have it ready, and is not entitled to further time in order to look for it'. "
'As it seems to me ... if the debtor admits that the debtor cannot pay, it is clearly unnecessary for the creditor to allow him time for the mechanics of payment which he knows cannot have any point. The law does nothing in vain and it will be pointless to require time to be allowed for an act that cannot happen'.
In my judgment, in so stating, Harman J was entirely correct. "
16. Both parties to the proceedings agree that neither the letter of loan offer nor the General Terms and Conditions provide that the loans were "demand loans". While Clause 8 of the Mortgage Agreement provides that the Bank shall give due notice of a breach to the customer, it does not specify what constitutes "due notice". But it does require due notice and the Bank can only exercise its right to demand early repayment of the mortgage if due notice has been given and the customer fails to remedy the breach.
17. Clause 18 states:
19. The terms of Clause 3.03 are clear on their face and apply in respect of the loans remaining in dispute. The defendants referred to an extract from Chitty on Contracts, 30th Ed. para 25-001, where the authors state:-
20. The defendants raise an interesting point concerning the Non-Merger clause to be found in General Condition 18 of the loan agreement. In the absence of Merger and Insofar as the two conditions standing side by side create an ambiguity as to whether or not notice is required, I think such ambiguity should be resolved in favour of the borrower.
21. Adopting that approach, what effect does that have on the claim, in circumstances where the defendants have not disputed that they borrowed the money and have indicated that they are not in a position to repay it even if given time?
22. Where the demand was made in respect of some of the loans, the defendants do not' have a good defence to the claim on the basis that the notice was insufficient, having regard to the fact that they are not in a position to repay the loans even if the notice they contend for was actually given.
23. With regard to the other loans, it seems to me that while the defendants may have a technical point, they have no defence on the merits as they do not have the funds to repay the outstanding loans. The question of notice becomes irrelevant in circumstances where the defendants are unable to pay the sums due. The law does nothing in vain and it would be pointless, in the circumstances of this case, to require further steps to be taken by the second named plaintiff before it can recover its debt where the claim would inevitably be brought again and the defendant would, on their own admission, have no answer to it. The inevitable reactivation of that part of the claim would result in further expense for the parties and would amount to a waste of court time. Nevertheless, the defendants should have been given notice of default before the letter of demand. In the absence of a fixed time, the notice should have been reasonable. In my view, this part of the claim can be dealt with by way of a stay and/or a suitable costs order without doing any injustice to the parties. If this was an application for summary judgment rather than the full hearing, I should have taken a different view, because the defendants• have raised an arguable defence on the technical point concerning the lack of notice. But I have heard the evidence on the agreed basis that this is the full hearing, and on the balance of probabilities, I am satisfied that the defendants have no answer to the second named plaintiff's claim in respect of these loans.
24. I will allow the plaintiffs' claim on the mortgage Loan Accounts Nos. 80789055, 21910181 and 39431295. In respect of the other loans, namely, 80758081, 14211092, 67469264 and 74882055, I will give the plaintiffs judgment but will put a stay on the judgment for a period of three months in order to give the defendants an opportunity to pay the sums due and to put them in the position they would have been in had a period of notice been given to them to repay the debt.