ACC Bank Plc v Sam Deacon and Another

JurisdictionIreland
JudgeMr. Justice Ryan
Judgment Date28 June 2013
Neutral Citation[2013] IEHC 427
CourtHigh Court
Date28 June 2013

[2013] IEHC 427

THE HIGH COURT

[No. 2131 S./2011]
[No. 1 COM/2012]
ACC Bank PLC v Deacon
No Redaction Needed
COMMERCIAL

BETWEEN

ACC BANK PLC
PLAINTIFF

AND

SAM DEACON AND BEN DEACON
DEFENDANTS

CONSUMER CREDIT ACT 1995

CONSUMER PROTECTION ACT 2007

STEPSTONE MORTGAGE FUNDING LTD v FITZELL UNREP LAFFOY 30.3.2012 2012/43/12851 2012 IEHC 142

DONNELLY THE LAW OF CREDIT & SECURITY 2011 PARA 9.79

DONNELLY THE LAW OF CREDIT & SECURITY 2011 PARA 20.47

ARGYLE MICHAEL PHIPSON ON EVIDENCE 10ED 1963 PARA 41.05

ACC BANK IRL PLC v FAHEY & MCGRATH UNREP KELLY 12.2.2010 2010/2/257 2010 IEHC 41

CHITTY & ORS CHITTY ON CONTRACTS 29ED 2004 PARA 38.229

CHAPMAN v JAUME 2013 1 FCR 619 2012 EWCA CIV 476

ALLIED IRISH BANK PLC v HIGGINS & ORS UNREP KELLY 3.6.2010 2010/2/422 2010 IEHC 219

ZURICH BANK v MCCONNON UNREP BIRMINGHAM 4.3.2011 2011/50/14278 2011 IEHC 75

SELDON v DAVIDSON 1968 1 WLR 1083 1968 2 AER 755

VERITY & SPINDLER v LLOYDS BANK PLC 1995 CLC 1557 13 LDAB 147

CENTRAL BANK ACT 1989 S117

IRISH LIFE & PERMANENT PLC v DUFF UNREP HOGAN 31.1.2013 2013 IEHC 43

Loans - Loan agreements - Proof of contract - Loan facility letters - Pension backed loans - Default on repayments - Signature forgery - Misrepresentative financial advice - Breach of bank obligations

ACC Bank Plc sought a judgment for €3.495 million against the defendants in respect of six loans which were provided between April 2007 and August 2008. Five of the loans were made to Sam Deacon, the sixth being made to both Sam and Ben Deacon. The case made by the claimant bank was that the defendants defaulted on the joint loan, and that the first defendant defaulted in the five others. The bank argued that for each loan provided to the defendants, a facility letter was sent, and that for each of these, the letter was returned by the defendants” solicitors signed by Mr Deacon, which constituted acknowledgement and acceptance of each of the loans.

The defendants argued that the bank had not proved that they had formally entered into the six transactions in question. Moreover, calling on an expert witness, they submitted that many of the signatures present on the loan acceptances were not genuine. They also argued that the bank mis-sold the pension backed loans to Mr Sam Deacon, and that the bank failed to observe its obligations under the Central Bank and statutory consumer codes.

Ryan J held that the key issues in this case were whether the bank had proved its case with regard to the six loans, and, if so, had the defendants any grounds to challenge the case laid out.

Concerning the issue of whether the bank had proven its case, Ryan J assessed the relevance of the loan facility letters sent to the defendants in respect of each transaction. The defendants received loan packs which included the terms and conditions and a list of the other items requiring provision or performance prior to the completion of the transaction. One of these requirements was that the bank received back the facility letter signed by the client. This occurred for all transactions. It was decided therefore that there was undisputed evidence as to the contract Mr Deacon agreed to. On this issue, it was concluded that the bank had proved that it lent the money in question to Mr Deacon under the terms of the facility letters.

Concerning the second issue of whether any points were raised to undermine, disprove, or displace the case of the bank, Ryan J made reference to the expert evidence of Mr Sexton. On this matter, the court held that, as it was beyond dispute that Mr Deacon accepted the loans by way of solicitor correspondence, the evidence provided by Mr Sexton, even if taken at face value, was immaterial. On the question of the bank persuading Mr Deacon to enter into pension backed loans, there was no evidence that it was wrong for the bank to provide such advice, or that they misrepresented the loans to him. It was also decided that Mr Deacon failed to establish his argument that the bank acted in breach of its obligations under the Central Bank and statutory consumer codes.

The court therefore made judgment for the plaintiffs in respect of the loans numbered 1-6 against Sam Deacon, and in respect of loan number 1 against Ben Deacon.

1

JUDGMENT of Mr. Justice Ryan dated the 28th June 2013

Introduction
2

In this case the plaintiff bank seeks judgment in a total amount of €3.495 million due and owing on foot of six loans that were advanced between the 19 th April, 2007 and the 11 th August, 2008, five in the name of the first defendant and one made jointly and severally to both defendants. The case is that both defendants defaulted on loan 1 and that the first defendant, Sam Deacon, defaulted on all of the others, following which the bank served demand notices in March 2011 and then brought proceedings.

3

The claim is in respect of loans 1 to 6 as set out in the following table:

Facility

Date

Borrower/s

Amount

Loan 1

19 th April 2007

Ben & Deacon

€185,000

Loan 2

19 th April 2007

Sam Deacon

€210,000

Loan 3

13 th Aug. 2007

Sam Deacon

€500,000

Loan 4

1 st April 2008

Sam Deacon

€1.3 million

Loan 5

11 Aug. 2008

Sam Deacon

€500,000

Loan 6

11 th Aug. 2008

Sam Deacon

€800,000

4

The plaintiff's case in summary is that for each loan the bank sent out a facility letter, with its general terms and conditions attached, to the defendant and also at his request to his solicitors Ensor O'Connor of Enniscorthy. For each of the six loans plus two earlier pension backed loans that were replaced by loans 5 and 6, Ensor O'Connor sent back facility letters signed by Mr. Deacon. The defendant implicitly acknowledges that he did actually get the money but does not formally admit that he entered into the 6 transactions that are in question here. He disputes that he entered into loans 5 and 6, which paid down and replaced the two pension backed loans. The defendant used the money to buy land and the loans were secured by mortgages executed by Mr. Deacon in favour of the bank.

5

The second defendant Ben Deacon is concerned only with loan No. 1. He did not give evidence or participate individually in the case and references in this judgment to the defendant are to Mr. Sam Deacon. If the bank proves its case in respect of this facility, there must be judgment against the second defendant.

6

The defendant sets up a large number of defences. He alleges that the bank is unable to prove its case. Its documents and records are in a mess and cannot be relied on. A handwriting expert discovered instances where the signature of Mr. Sam Deacon is not genuine and other irregularities in the documents supplied by the bank to the defendant, according to his evidence. The bank it is said was indifferent to its obligations under the Central Bank and statutory consumer codes. The bank officials mis-sold the pension backed loans to Mr. Sam Deacon and lied about his accountant's attitude to those loans. The bank should be denied a contractual remedy and left to an equitable claim for restitution.

7

The defence traverses the statement of claim so as to put the plaintiff to proof of its case and pleads that the bank's general terms and conditions are unenforceable against the defendants, that the plaintiff acted unlawfully as a financial adviser to the defendant, that the plaintiff is in breach of the consumer protection code and the Central Bank code for lending to small and medium enterprises. The defence denies that loans 5 and 6 replaced the pension backed loans and pleads, at paragraph 6, that if such transactions occurred they were carried out by fraudulent means. Finally, at paragraph 18, it alleges that the plaintiff "has attempted to confuse the defendant by forging his signature and attempting to show that he entered into and approved various transactions". Particulars are given of six documents, each relating to one of the loans that are in issue, that are not genuine or are irregular.

8

By order of this court of the 11 th December, 2012 paragraphs 6 and 18 of the Defence were struck out for failure to comply with an order of the court to furnish further and better particulars.

Issues
9

The questions to be decided are:

10

(1) Has the bank proved its case in regard to the six loans?

11

(2) If so, is there anything in the points made by Mr. Giblin S.C. on behalf of Mr. Sam Deacon that undermines or disproves or displaces the case as made by the bank; i.e.: (a) have any of the factual allegations been made out? and (b) if and insofar as they have been made out, do they have any material bearing on the claim?

Evidence for the Plaintiff
12

The plaintiff called five witnesses to prove its case. Three were present or former employees and the others were the solicitors who acted for Mr. Deacon in his dealings with the bank in regard to the series of loans.

13

The evidence established the following. The eight transactions between ACC and Mr. Sam Deacon had all the essential features in common. The bank sent Mr. Deacon a facility letter to be signed and returned. This was a statement of the terms of the loan that the bank was offering him. The amount of the loan, the duration, the interest rate and other relevant details were stated. The letter had the bank's general terms and conditions attached. There was provision for mortgage of the lands Mr. Deacon was intending to buy with the money. This was the form of the loan offer to Mr. Deacon.

14

The bank also sent a loan pack including a copy of the bank's facility letter to Mr. Deacon's nominated solicitors, Messrs Ensor O'Connor of Enniscorthy. It may be more correct to say that the pack contained another similar facility letter rather than a copy. The reason for this quibble is that the...

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