ACC Bank Plc v Walsh

• Jurisdiction: Ireland
• Judge: MR. JUSTICE MICHAEL PEART
• Judgment Date: 23 May 2017
• Neutral Citation: [2017] IECA 166
• Date: 23 May 2017
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2017] IECA 166 RECORD NO. 2016/109

BETWEEN/

ACC BANK PLC.

PLAINTIFF / RESPONDENT

- AND–

MICHAEL WALSH

AND

MARY WALSH

DEFENDANTS / APPELLANTS

[2017] IECA 166

Peart J.

FINLAY GEOGHEGAN J.

PEART J.

STEWART J.

Neutral Citation Number: [2017] IECA 166

RECORD NO. 2016/109

THE COURT OF APPEAL

Undue influence – Joint loan – Bona fide defence – Appellant seeking to resist motion for summary judgment – Whether appellant established an arguable case that she acted in relation to a joint loan under the undue influence of her husband

Facts: The High Court (McDermott J), by order made on the 12th February 2016 on foot of the motion of the respondent, ACC Bank plc, for summary judgment, granted judgment against the appellants, Mr and Mrs Walsh, jointly and severally in the sum of €938,957.37, and gave the bank liberty to re-enter the matter in respect of the balance of the claim for interest. In the High Court, both appellants appeared in person, but for the most part it was Mr Walsh who spoke for himself and the second appellant. She had wished to resist the motion for summary judgment and to have the matter adjourned to a plenary hearing, as she considered that she had a bona fide defence to the bank’s claim for judgment against her. In pursuit of that aim she had filed a number of affidavits which were sworn jointly with Mr Walsh. She had sought to defend the claim against her for summary judgment essentially on the basis that she never made any application to the bank for the loan on foot of which the bank sought to recover judgment, that her signature to some of the bank documents was not her signature, that she did not benefit in any way from the proceeds of the loan which were used solely in connection with her estranged husband’s business in which she had no interest, beneficial or otherwise, and that in so far as she did actually sign any loan documentation such as an acceptance of the loan facility offered in 2004 or any documents in relation to it, she did so under the undue influence or duress of her husband. She maintained that the bank failed to advise her to seek, or otherwise ensure that she received independent legal advice. Her evidence was that at no stage did she ever visit the bank and that no member of the bank’s staff ever even spoke to her. Mrs Walsh appealed to the Court of Appeal against the High Court judgment.

Held by Peart J that the second appellant established on affidavit by her own assertions and by reference to the surrounding facts at least an arguable case that she acted in relation to the joint loan under the undue influence of her husband. Peart J held that the second appellant had put forward a sufficient case for the Court to conclude that, having established a prima facie case of undue influence by her husband, that as a matter of law it was arguable firstly that the bank had constructive notice of that undue influence in all the circumstances of the case, and was therefore on inquiry such that it was required to ensure that the second appellant entered into the loan transaction fully understanding the obligations she was undertaking, and freely doing so. Peart J noted that one of the ways in which the bank could have discharged that onus upon it would be by ensuring that she received independent legal advice; there was no evidence that they did so, or indeed took any other step which might be considered reasonable in all the circumstances.

Peart J held that the appeal should be allowed, and that the Court should direct a plenary hearing and grant the second appellant leave to defend the claim by the bank on the basis that she did not enter into an agreement for the loan and did not sign acceptance of the offer letter as contended or that if she did so it was by reason of the undue influence upon her by her husband, and direct the delivery of a defence on those grounds alone.

Appeal allowed.

JUDGMENT OF MR. JUSTICE MICHAEL PEART DELIVERED ON THE 23RD DAY OF MAY 2017

Introduction

1 While the notice of appeal filed in this case names both defendants as the appellants, only Mary Walsh appeared at the hearing of the appeal. In truth she is the only appellant. I will therefore refer to her as ‘the appellant’.

2 By order made on the 12 ^th February 2016 on foot of the respondent bank's motion for summary judgment the High Court (McDermott J.) granted judgment against Michael Walsh and the appellant jointly and severally in the sum of €938,957.37, and gave the bank liberty to re-enter the matter in respect of the balance of the claim for interest.

3 In the High Court, both defendants appeared in person, but for the most part it was Michael Walsh who spoke for himself and the appellant. She had wished to resist the motion for summary judgment and to have the matter adjourned to a plenary hearing, as she considers that she has a bona fide defence to the bank's claim for judgment against her. In pursuit of that aim she had filed a number of affidavits which were sworn jointly with Michael Walsh.

4 Michael Walsh and Mary Walsh are married but the Court has been informed by the appellant that they are no longer living together as husband and wife, and in her submissions he is referred to by her as her estranged husband. According to a note on one of the emails before the Court they separated in November 2006.

5 She had sought to defend the claim against her for summary judgment essentially on the basis that she never made any application to the bank for the loan on foot of which the bank seek to recover judgment, that her signature to some of the bank documents is not her signature, that she did not benefit in any way from the proceeds of the loan which were used solely in connection with her estranged husband's business in which she had no interest, beneficial or otherwise, and that in so far as she did actually sign any loan documentation such as an acceptance of the loan facility offered in 2004 or any documents in relation to it, she did so under the undue influence or duress of her husband. She maintains that the bank failed to advise her to seek, or otherwise ensure that she received independent legal advice. Her evidence is that at no stage did she ever visit the bank and that no member of the bank's staff ever even spoke to her. It appears to be the case also that the loan in question was used at least in part to pay off a previous loan made to her husband alone for the purchase of a property in his sole name. That is the essence of what she sought to put forward by way of a bona fide defence to the bank's claim against her. It is worth noting at least that none of the deponents of affidavits filed on behalf of the bank were the bank staff who dealt with Mr Walsh at the relevant times.

6 As I have mentioned already, it was Michael Walsh who made submissions on their joint behalf in the High Court, and the appellant considers that she was prevented therefore from making her case properly and fully to Mr Justice McDermott.

7 The motion was heard in the High Court on Monday 8th February 2016. An ex tempore judgment was given by McDermott J. on Friday 12th February 2016, and this Court has been provided with a transcript of both days.

Some factual background

8 Before summarising the reasons given by McDermott J. for refusing to adjourn the proceedings to a plenary hearing I will give a brief factual summary of relevant facts and events. I do so from the affidavits filed by the bank and by Mr and Mrs Walsh.

9 Mr Walsh owned a business engaged in the manufacture and supply of fitted windows. In 2003 he on his own (not jointly with Mrs Walsh) had applied for and was granted a loan from ACC Bank in the sum of €676,000 for the purpose of refinancing an existing IPBS loan with which he had purchased some property in his sole name, and in order to provide funding for the purchase a factory premises at Kerlogue Industrial Estate, Wexford. The security for that loan was stated to be a first charge over 2 factory units at that location. It appears that additional security was provided in the form of an undertaking given by Michael Walsh to assign the benefit of a pension policy to the bank. The loan was an interest only loan, and the expectation was that upon the expiry of the loan the proceeds of the policy would be sufficient to discharge the principal owing at that time. This however is not the loan facility on foot of which the present proceedings have been brought.

10 The appellant has sworn that she had no knowledge that her husband at the time had sought this loan with a view to buying the factory premises. She says that she was not consulted by him nor by the financial consultant, Mr Barden, whom her husband had approached in connection with the loan. She says that she never visited the offices of ACC Bank, nor spoke to anybody from the bank.

11 By letter of loan sanction dated 5th July 2004, this time issued to both Michael Walsh and Mary Walsh, a term loan in the sum of €926,000 was offered. The term of the loan was 15 years from drawdown. It was an interest only loan like the previous loan, and was backed by the assignment of the same pension policy. Its stated purpose was to refinance the 2003 borrowings and to provide finance in order to renovate the factory unit at Kerlogue Industrial Estate.

12 Again, the appellant has sworn on affidavit that she was not aware that her husband was seeking to top-up the 2003 loan. She says that she never made any application for a top-up loan, never spoke to her husband's accountant about the loan, and neither did she ever visit the bank, or speak to anybody from the bank.

13 The 2004 loan was accepted. On the acceptance page there is a signature by Michael Walsh, and what at least purports to be the signature of Mary Walsh. But she says that she did not sign the document. She has remained adamant that she did not sign an acceptance of this loan, and has sworn...