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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Allied Irish Banks PLC v McGowan & Anor [2020] IEHC 148 (27 February 2020)
URL: http://www.bailii.org/ie/cases/IEHC/2020/2020IEHC148.html
Cite as: [2020] IEHC 148
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THE HIGH COURT
[2020] IEHC 148
[2018 No. 238 S]
BETWEEN
ALLIED IRISH BANKS PLC
PLAINTIFF
AND
MARTIN MCGOWAN AND PATRICIA MCGOWAN
DEFENDANTS
JUDGMENT of Mr. Justice Richard Humphreys delivered on the 27th day of February,
2020
1. The defendants, who are husband and wife, say that they acquired Scholars Townhouse
Hotel in Drogheda in or about 2005 and have operated that property since then. The
hotel was bought with a loan from Bank of Scotland (Ireland), but subsequently the
business needed an overdraft facility, so the defendants approached AIB. The date that
happened is not altogether clear, but seems to have been in 2005.
2. The defendants say that between 2005 and 2010, Bank of Scotland (Ireland) provided
AIB with a letter of credit, but was not prepared to renew that letter after 2010. The
business was struggling at that time. The plaintiff says that each of the defendants
entered into an overdraft facility on 1st June, 2010 for €100,000 with an interest rate of
7.95%. Both of the letters concerned were exhibited and both state that the overdraft is
repayable on demand. According to the defendants, they then entered into a debt
settlement arrangement with Bank of Scotland (Ireland). They say that had AIB called in
the letter of credit, then the overdraft would have been rolled up with the other debt to
Bank of Scotland (Ireland) and settled at that time, albeit that the exact time was
unspecified.
3. The plaintiff says that it was not clear to it that there would not be an extension of the
Bank of Scotland (Ireland) letter of credit. The defendants say that the overdraft facility
expired on 16th February, 2012 and have exhibited a letter from AIB supporting that. The
plaintiff has exhibited a letter dated 29th May, 2013 stating that the overdraft would
expire on 5th June, 2013, but it is hard to know what that means in circumstances where
there is previous correspondence indicating that the overdraft facility had already expired.
The plaintiff claims the defendants continued to draw down on the overdraft facility until
2013.
4. According to the plaintiff, the last payment made by the defendants in part-satisfaction of
the debt was on 26th February, 2015. That is said to be in the amount of €1,000 as
appears on p. 827 of an 832-page exhibit of statements. The natality of that particular
information is an exhibit to a misnamed “supplemenatal” affidavit of Mr. Gary Mulholland,
which exhibit the plaintiffs admit they did not serve on the defendants, through human
error, prior to the hearing of this motion.
5. The plaintiff contends that a default in payment occurred and it demanded the sum due
on 6th February, 2018; and again letters to each defendant are exhibited. On 27th
February, 2018 a summary summons was issued seeking judgment in the sum of
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€122,202. On 31st July, 2018 (although the year is blank in the copy furnished to me)
the plaintiff issued a notice of motion for summary judgment. That was returnable before
the Master on 25th October, 2018 as it was issued prior to the termination of his
jurisdiction in summary judgment matters under practice direction HC 84 in February,
2019. The motion was transferred to the common law motion list on 12th March, 2019
and from there on 27th May, 2019 to the non-jury list, given that the hearing was likely
to take over fifteen minutes.
6. I am now dealing with that motion and I have received helpful oral (and in the case of the
plaintiff, written) submissions from Mr. Conal Ellis B.L. for the plaintiff and from Mr. Ross
Gorman B.L. for the defendants.
Criteria for summary judgment
7. The law on the criteria for summary judgment has been rebalanced somewhat recently by
(Unreported, Supreme Court, Clarke C.J. (Charleton and Ní Raifeartaigh JJ. concurring),
29th November, 2019) in a manner that imposes somewhat more onerous requirements
on plaintiffs than was previously understood. That judgment was applied recently by that
Charleton J. (McKechnie and McGovern JJ. concurring), 18th December, 2019), and I
have had occasion to discuss the law in this area recently in Havbell Ltd v. Harris
(Unreported, High Court, 21st February, 2020). Essentially, there are four criteria:
(i). is the plaintiff’s claim sufficiently pleaded and particularised;
(ii). has the plaintiff adduced evidence establishing a prima facie case;
(iii). if so, whether there is a fair and reasonable probability of the defendant having a
real or bona fide defence; and
(iv). if so, has the defendant shown that this goes beyond mere assertion and is
supported by evidence or other indicators.
Is the plaintiff’s claim sufficiently pleaded and particularised?
8. Mr. Gorman submits that the plaintiff has not particularised the debt sufficiently in terms
of principal versus interest in line with O’Malley. Complaint is made by Mr. Ellis that this
point was not signalled in advance and that the defendants had not taken issue on
affidavit, or otherwise, with the amounts or the calculations in the plaintiff’s summary
summons or supporting affidavits. However, this point does not need to be signalled in
advance. It follows from O’Malley that this is a burden the plaintiff must overcome, and it
is always open to a defendant to submit at the close of a plaintiff’s application that the
plaintiff has not discharged such onus as is on it. That is all that happened in this
particular case, and under this heading I must hold that the plaintiff has failed to comply
with the onus on it to sufficiently particularise the sum claimed in accordance with
O’Malley, because the summary summons here merely offers a global sum without any
adequate or proper breakdown.
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Has the plaintiff produced evidence establishing a prima facie case?
9. While the matter goes to plenary hearing anyway on foot of the first point, it is worth
pointing out that there is a certain lack of clarity on the evidence adduced on behalf of the
plaintiff. The letter of 29th May, 2013 refers to a balance of €97,229.61 and also refers
to surcharge interest of 12% on the entire balance in addition to the annual interest rate
of almost 8%. The statement of 15th October, 2018 shows a balance of €90,079.51
excluding interest of over €38,000. The endeavour to furnish over 800 pages of
statements exhibited to a grounding affidavit seeking summary judgment does not
conveniently provide the appropriate level of clarity as to how much is principal and how
much is interest, and at what rate. It is no great surprise that Mr. Gorman says the
matter is unclear. The fact that the plaintiff did not serve the 800-plus pages of
statements on the defendants prior to the hearing date means it would be unfair to allow
the plaintiff to rely on this exhibit in any event. So, as the plaintiff has not overcome the
necessary onus to duly particularise the matter in evidence either, the case should be
adjourned to plenary hearing under this heading as well. I will consider the question of
the defendants’ defence in case I am wrong about the foregoing, but what follows is
obiter in those circumstances.
Is there a fair and reasonable probability of the defendant having a real or bona fide
defence?
10. Three elements of a possible defence have been positively identified:
(i). failure to call in the letter of credit;
(ii). the statute of limitations; and
(iii). the question of penal interest.
Failure to call in the letter of credit
11. There is a considerable lack of evidence on behalf of the defendants as to this point,
which is advanced at a certain level of generality. The problem for the defendants is that
a financial institution is not obliged to enforce its security in any particular way. As put by
been followed consistently, see e.g. Kotonou v. National Westminster Bank Plc
(Unreported, High Court, 15th March, 2019) per Simons J. I would view the China and
South Sea Bank approach as sufficiently established and as the appropriate approach in
law in this jurisdiction, so as to mean that the defendants haven’t demonstrated a viable
defence under this heading. Some sort of point about a collateral contract was mooted,
but that was insufficiently developed at this stage to see how it can even arguably get
around the China and South Sea Bank problem.
Statute of Limitations
12. The limitation period is six years from accrual of the cause of action: s. 11(1)(a) of the
Statute of Limitations 1957. The established law seems to be that the cause of action in
the case of a loan of indefinite duration, repayable on demand, is the date on which the
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loan is made: see Martin Canny, Limitation of Actions, 2nd ed., (Dublin, Round Hall 2016)
para. 10-14, p. 188. While I don’t have to decide this interesting legal point, the
traditional approach of time running from the date of the loan itself has a definite logic to
it and I should add that I probably would have upheld that as being the correct legal
position, as against the bank’s battery of alternative, later dates on which time
contendedly ran, such as the date of expiry of the facility or the date of the letter of
demand. I could add that it seems implausible that a belated letter of demand could start
the clock for statute purposes as this would give continuing life to debts of unlimited
antiquity.
13. The bank however also makes an alternative, and probably weightier, argument that
payment was made in part-satisfaction in 2015, thus re-starting the clock for statute
purposes. However, as I have said, it would be unfair to take any account of the
unserved exhibit; and shorn of that information Mr. Mulholland’s averment on this issue is
not much more than mere assertion. Merely making a payment, in any event, does not
automatically constitute acknowledgment of a debt, or all of it. One would need evidence
as to the circumstances, and in my view a one-line comment in Mr. Mulholland’s latest
affidavit is not sufficient to put the bank in a position where it can be said that it is very
clear that it will succeed on the statute point. The defendants rely on the fact that
Court, 19th December, 2018) gave leave to defend on a statute point, albeit in somewhat
different circumstances, but ultimately, as in Burke, I cannot say in the present case that
the defendants have no defence under this heading.
Penalty clause
14. Mr. Gorman submits that the imposition of the 12% surcharge rate in addition to the
standard rate of interest of 7.95% comes to almost 20%, and is at the level of an
Appeal, Finlay Geoghegan J. (Peart and Hogan JJ. concurring), 30th July, 2018). That
also seems to me to be an arguable defence. The plaintiff complains that it is not on
notice of this, but since the point arises from correspondence already exhibited, I do not
think the plaintiff can really complain.
Is the proposed defence mere assertion or is it supported by evidence or indicators?
15. In my view the defendants have adequately overcome this issue having regard to the fact
that the penal interest issue is stated in the bank’s own correspondence and the statute
point arises from the material exhibited.
Should the matter be remitted to plenary hearing on limited grounds?
16. Mr. Ellis submits that if I remit the matter to plenary hearing on the basis of O’Malley, I
should give leave to defend only on that ground. That, however, is a misunderstanding.
O’Malley relates to a defence to an application for summary judgment. If a matter is
going to plenary hearing, any lack of particularisation can be dealt with in the statement
of claim and replies to a notice for particulars. Any outstanding lack of particulars after
that process will be a matter for the court to assess in the light of all the evidence.
Where a plaintiff fails to overcome the threshold burden of adequately particularising and
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evidencing its case for the purposes of summary judgment, however, the court does not
get to the point of making a formally binding decision (as opposed to obiter comment) on
the strengths or otherwise of the defence. Therefore, it would not be appropriate to limit
the defence in any particular way under such circumstances. Where an application for
summary judgment fails on an O’Malley basis, therefore, the default order must be
general leave to defend. The fact that I have taken the view obiter that one of the
defence points is not of any great weight is not in itself a reason to depart from that
approach.
Order
17. Accordingly, the order will be:
(i). to dismiss the plaintiff’s motion;
(ii). to give the defendants leave to defend on any grounds that they may be advised;
and
(iii). to adjourn the matter to plenary hearing.
Result: Motion dismissed; defendants given leave to defend on any grounds that they may be advised; and adjourn matter to plenary hearing