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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> ACC Bank Plc -v- Mike O'Dwyer Motors Ltd & Ors [2013] IEHC 57 (12 February 2013)
URL: http://www.bailii.org/ie/cases/IEHC/2013/H57.html
Cite as: [2013] IEHC 57
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Judgment Title: ACC Bank Plc -v- Mike O'Dwyer Motors Ltd & Ors Neutral Citation: [2013] IEHC 57 High Court Record Number: 2012 1665 S & 2012 139 COM Date of Delivery: 12/02/2013 Court: High Court Composition of Court: Judgment by: Finlay Geoghegan J. Status of Judgment: Approved |
Neutral Citation [2013] IEHC 57 THE HIGH COURT COMMERCIAL [2012 No. 1665 S]
[2012 No. 139 COM] BETWEEN ACC BANK PLC. PLAINTIFF AND
MIKE O’DWYER MOTORS LIMITED, MICHAEL O’DWYER AND CAROLINE O’DWYER DEFENDANTS JUDGMENT of Ms. Justice Finlay Geoghegan delivered on the 12th day of February, 2013 1. The plaintiff seeks summary judgment in the sum of €1,959,678.79 and interest thereon from 1st May, 2012, against Mike O’Dwyer Motors Ltd., the first named defendant. It also seeks judgment against Michael O’Dwyer (“Mr. O’Dwyer) and Caroline O’Dwyer (“Mrs. O’Dwyer”) pursuant to contracts of guarantee and indemnity in respect of the debts of the Company on a summary basis in the sum of €1,945,273.87 and interest thereon from 1st May, 2012. 2. At the hearing of the application for summary judgment, the plaintiff (“ACC”) had filed affidavits and legal submissions and was represented by solicitor and counsel. Similarly, the first named defendant (“the Company”) and Mr. O’Dwyer were jointly represented by solicitor and counsel and had filed affidavits and legal submissions. Mrs. O’Dwyer initially had also been represented by the same solicitor and counsel, but prior to the date of the hearing had discharged same and represented herself. She also had filed an affidavit in the proceedings. Background to Claim 28th July 2003 T802713-2003 : €751,875.00 28th July 2003 T8022714-2003 : €751,875.00 21st December 2005 10035351-2006 : €320,000.00 10th December 2007 10045409-2007 : €106,000.00
4. The claim in the summary summons is made pursuant to a letter of demand dated 2nd November, 2011, in which it was contended that each of the said facilities were then in arrears; were repayable on demand and repayment was demanded with specified redemption figures which, as of that date, aggregated €1,925,463.25. Payment was sought within seven days. No payment was made pursuant to the letter of demand and the summons issued on 3rd May, 2012. 5. In the intervening period, letters of demand had been made on Mr. and Mrs. O’Dwyer as guarantors and indemnifiers. 6. An order was made on 30th July, 2012, admitting the proceedings to the Commercial List and giving directions in respect of the application for summary judgment. Several affidavits were sworn on behalf of the plaintiff and the defendants. One matter of some relevance is that ACC delivered and filed an affidavit from a Mr. Seamus Cleary who was an employee of the plaintiff and is one of the two persons with whom Mr. O’Dwyer states he dealt in relation to the first two facilities the subject matter of these proceedings. That affidavit was not before me at the hearing of the application for summary judgment. It was referred to in subsequent affidavits, and upon enquiry I was told that following the delivery of same, a notice to cross-examine was served in respect of Mr. Cleary and that the plaintiff was not now relying upon the affidavit of Mr. Cleary in the application for summary judgment. Summary Judgment 8. In Danske Bank, Denham J. at paragraphs 13 to 16 of her judgment, summarised the applicable law as follows:
‘Upon the hearing of any such motion by the Court, the Court may give judgement for the relief to which the plaintiff may appear to be entitled or may dismiss the action or may adjourn the case for plenary hearing as if the proceedings had been originated by plenary summons, with such directions as to pleadings or discovery or settlement of issues or otherwise as may be appropriate, and generally may make such order for determination of the questions in issue in the action as may seem just’. 14. Several cases were opened before the Court which have addressed this jurisdiction. These included Bank of Ireland v. Educational Building Society [1999] 1 IR 220 where Murphy J. emphasised that it was appropriate to remit a matter for plenary hearing to determine an issue which is primarily one of law where a defendant identified issues of fact which required to be explored and clarified before the issues of law could be dealt with properly. He stated at p.231:- ‘Even if the position was otherwise, once the learned High Court Judge was satisfied that the defendant had "a real or bona fide defence", whether based on fact or on law, he was bound to afford them an opportunity of having the issued tried in the appropriate manner’. 15. In Aer Rianta c.p.t. v. Ryanair Limited [2001] 4 IR 607, Hardiman J. reviewed Irish cases and concluded at p.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 defendant's affidavits fail to disclose even an arguable defence?’ 16. In McGrath v. O'Driscoll [2007] 1 ILRM 203, Clarke J. described the law as follows, at p.210:- ‘So far as questions of law or construction are concerned the court can, on a motion for summary judgment, resolve such questions (including, where appropriate, questions of the construction of documents), but should only do so where the issues which arise are relatively straightforward and where there is no real risk of an injustice being done by determining those questions within the somewhat limited framework of a motion for summary judgment’.” 10. In the present case, the defences contended for on behalf of the Company and also Mr. and Mrs. O’Dwyer rely on facts which appear to be in dispute. In considering whether the defendants have raised an arguable defence in such circumstances, the Court must also have regard to whether the evidence upon which the defendants rely is mere assertion or whether there is other evidence, particularly evidence contemporaneous to the facts in dispute which supports the credibility of the assertions made by or on behalf of the defendant. See inter alia Aer Rianta c.p.t. v. Ryanair Limited [2001] 4 IR 607,per McGuinness J at p.614 and per Hardiman J at p.622 and Harrisgrange Ltd. v Duncan [2003] 4 IR 1 at pp. 7, 8. 11. In this application, the only issue before the Court is whether the plaintiff is entitled to summary judgment against each of the three defendants or whether one or more of the defendants has raised an arguable defence in the sense outlined above such that the Court should exercise its discretion to remit the matter to plenary hearing and allow the issues in dispute be tried upon a full plenary hearing. Conclusion 13. I wish to emphasise that the decision I have reached does not involve the present determination of any issue between the parties. As those issues will have to be determined at a future date, I propose only shortly setting out the reasons for which I have formed the view on the affidavits and exhibits thereto and submissions made to me that the defendants have met the threshold of an arguable defence which entitles them to have the claim against them determined in a full plenary hearing. 14. ACC’s claim is that it is entitled to judgment in the amount sought in accordance with the express written contractual terms in the facility letters between it and the Company, as the person to whom the loans were made, and as between it and each of Mr. and Mrs. O’Dwyer pursuant to written contracts of guarantee and indemnity. It relies upon the fact that each of the facilities was in arrears on the date of the demand letter, 2nd November, 2011. The arrears specified in the letter of demand do not make clear whether they are alleged arrears of interest alone or of interest and principal, but having regard to the explanations given in the affidavits and statements of account referred to therein, it appears probable that the amount of the arrears in 2011 included alleged arrears of both principal and interest. For the purposes of this summary application, I am making that assumption. 15. The primary defence sought to be made out on behalf of the Company is that notwithstanding the terms of the written contracts between ACC and the Company, ACC is estopped from seeking repayment of principal prior to sale of the property purchased with the monies advanced pursuant to the two 2003 facilities. It is further contended that ACC is estopped from seeking repayment of principal on the third facility as it was advanced on the same terms, and the fourth facility which was, in reality, a refund of principal repaid by the Company on facilities numbers one and two in the years 2006 and 2007. 16. In reliance upon similar facts, counsel for the Company and Mr. O’Dwyer submitted that each has a counterclaim against the plaintiff for damages for negligent misrepresentation. 17. It is commoncase that the first two facilities of the same date in 2003 were treated as two separate facilities by reason only of two differing interest provisions. Collectively, it was a facility of €1.5m sought and agreed to for the purpose of the purchase of premises then being rented by the Company from which it operated its motor business. It appears to be commoncase that the employees of ACC with whom Mr. O’Dwyer dealt in connection with those facilities were Mr. Seamus Cleary and Mr. Ray Nicholas. Affidavits from neither were in evidence before me at the hearing of the application for summary judgment. As previously explained, an affidavit had been delivered from Mr. Cleary but was withdrawn after the service of a notice to cross-examine. 18. Mr. O’Dwyer, in the affidavit sworn by him in August 2012, avers that since 2002, the Company had been renting premises at the Dock Road in Limerick and that the revenues of the Company were just about sufficient to cover the rent on the premises. Further, he avers that the premises were for sale at that time. He states that the rent being paid approximated to interest payments on an interest only commercial mortgage, and on that basis he set about seeking finance to purchase the premises on the basis of an interest only commercial mortgage. He failed to obtain such financing from Bank of Ireland and Ulster Bank and then approached ACC through Mr. Cleary and Mr. Nicholas whom he had come to know. He avers at paragraphs 6 to 8 of that affidavit:
7. I say that the Plaintiff, it servants or agents, stated that this was not a problem and that that repayments on the loans would always be on an interest only basis until the property was sold. I say that I was somewhat concerned as the representations made by the Plaintiff, its servants or agent, appeared not to accord with the written terms produced, particularly when the Plaintiff sought this Deponent and the Third Named Defendant, as directors of the First Named Defendant, to act as guarantors on the loans. I raised this with the Plaintiff, its servants or agents, and was told not to worry that it would all be looked after and that the loans were interest only until such time as the property was sold. I say that the First Named Defendant, the Third Named Defendant and this Deponent relied on this representation and agreed to the loans and the guarantees on that basis. Had this Deponent known that the Plaintiff, its servants or agents, would not abide by the representations made or that payments of principal would be sought prior to the sale of the property, then the First Named Defendant would not have proceeded to draw down the loans and this Deponent and the Third Named Defendant would certainly not have agreed to guarantee same. 8. I say that, based on car sales, the First Named Defendant would not have been able to service the loans of the size granted, other than on the terms at all times sought by this Deponent. I further say that this Deponent and the Third Named Defendant would not have put my business or our family’s financial future or security in jeopardy by agreeing to accept or guarantee loans on terms other than those sought (that is, other than interest only with the principal to be repaid on the sale of the property) as there was no realistic prospect of the First Named Defendant being able to comply with anything else and this was at all times known to and accepted by the Plaintiff, its servants or agents.”
The Loan Facility is repayable on demand. Until demand is made or the Loan Facility (including both Principal and Interest) is repaid in full, repayments by the Borrower of Principal and Interest shall be payable by monthly instalment by direct debit on the first day of each month (the “Due Date”). Commencing on the first day of the first month following loan drawdown and on the first day of each month thereafter for a period of 12 months in total, repayments of Interest Only will be due and payable by direct debit. Thereafter, commencing on the first of the 13th month of the Loan facility, repayments of Principal and Interest will be payable as a monthly instalment by direct debit.” 21. First, is the evidence of ACC that it extended the interest only period in respect of the first two facilities for a further twelve-month period to 1st November, 2005. Mr. O’Dwyer disputes that there was any “decision to extend” and submits that the extension was pursuant to the original representation. At the summary hearing, there was no evidence before the Court of any decision by ACC to extend the interest only period in November 2004, nor any communication to the defendants to that effect. 22. Principal and interest was then paid on the loans by the Company for a period of approximately two years commencing at the end of 2005. 23. In the meantime, a third facility was granted in the sum of €320,000 upon the terms set out in a letter of loan sanction and agreement of 21st December, 2005. The term of the facility was again for twenty years. The purpose of the facility was stated to be to “restructure ACC Bank existing loans, reference no.’s 10012534 and 10025926”. It was agreed in the course of submissions that the existing loans were personal liabilities of Mr. O’Dwyer. The repayment clause again stated that the loan facility was repayable on demand. It also provided “until demand is made or the Loan Facility (including both Principal and Interest) is repaid in full, Principal and Interest shall be payable by monthly instalments by direct debit commencing one month from the date of drawdown of the Loan Facility”. This facility was drawn down in May 2006, and it appears probable that principal and interest was paid initially. 24. Mr. O’Dwyer at para. 9 of his affidavit of August 2012 states that this third loan was granted “by way of equity release on the same terms as the first two loans”. 25. The fourth facility is, ACC contends, a facility granted in accordance with the terms set out in a letter dated 10th December, 2007. That letter records the facility as for the sum of €106,000 and the term as sixteen years from the date of drawdown “unless a demand for earlier payment is made in accordance with clause 6 below”. The purpose is stated to be to provide working capital and the repayment clause provides:
The Facility shall be repayable immediately on demand being made by the Bank on the Borrower. Unless and until such demand is made (and without limiting the Bank’s right to make demand at any time) interest only shall be payable by monthly instalments by direct debit commencing one month from the date of draw down for a period of 24 months. Thereafter, principal and interest will be payable by monthly instalments by direct debit.”
28. The resolution of the disputes between the parties as to the reason and characterisation of the events of 2007 in relation to the refund of principal already paid, and the further extension of interest only provisions for a further two-year period are matters which will have to be resolved at a full plenary hearing. They have a direct bearing on the primary defence, which relies upon the alleged representations made on behalf of ACC at the time of advance of the first two facilities. 29. It is unclear whether ACC thereafter only sought interest for the full period of two years from October 2007. Mr. O’Dwyer, at paragraph 11 of the affidavit of August 2011, states that in early 2009, ACC sought repayments on a principal and interest basis. He avers that whilst the company could have continued to make interest only payments, that it had no ability to make repayments on a principal and interest basis and repeats the averment that that was at all times known to ACC. 30. Counsel for ACC sought, in the alternative, to obtain summary judgment upon the basis that in application of ACC’s general conditions applicable to each of the facilities, a default in interest payment alone permitted ACC to demand repayment of principal and interest due under the facility. On the evidence before the Court, it cannot be in dispute that the Company has failed to make interest payments since 2010. Mr. Crowe has deposed that the interest payments made on the first, second and third loan facilities in 2010 represented approximately 50% of the interest due and owing. In my judgment, if, and I emphasise the word if, the Company were to establish, following a full hearing, that ACC were estopped from seeking repayment of principal prior to the sale of the premises or termination of the loan, there would have to be a full consideration of the communications between the parties in 2009, and the impact of any alleged demands for repayment of principal prior to a determination as to whether ACC is entitled to rely upon its general conditions as contracted for. Hence, it follows that ACC is not entitled summary judgment on this alternative ground. 31. As I have determined that the Company has raised an arguable defence which requires the remission of ACC’s claim against the Company as principal debtor to be remitted to plenary hearing, it follows that the claims against Mr. and Mrs. O’Dwyer, as guarantors or indemnifiers, must also be remitted to plenary hearing. The fact that I have not considered the separate defences sought to be raised by Mrs. O’Dwyer does not mean that she is precluded from raising those defences in the plenary proceedings. Order |