ACC Loan Management Designated Activity Company v Eugene McCool

• Jurisdiction: Ireland
• Judge: Ms. Justice Power
• Judgment Date: 24 June 2021
• Neutral Citation: [2021] IECA 180
• Court: Court of Appeal (Ireland)
• Docket Number: Record Number: 2018/22

Between/

ACC Loan Management Designated Activity Company

Plaintiff/Respondent

and

Eugene McCool

Defendant/Appellant

[2021] IECA 180

Faherty J.

Haughton J.

Power J.

Record Number: 2018/22

THE COURT OF APPEAL

Summary judgment – Arguable defence – Plenary hearing – Appellant appealing against an order of the High Court granting summary judgment to the respondent – Whether the appellant had established an arguable or bona fide defence to the respondent’s claim

Facts: The appellant, Mr McCool, appealed to the Court of Appeal against an order of the High Court, made on 16 November 2017 wherein Reynolds J granted summary judgment to the respondent, ACC Loan Management Designated Activity Company (the bank), against the appellant in the sum of €228,005.36: [2017] IEHC 704. The appellant claimed that he had a number of arguable defences, which the trial judge rejected in error, and that the matter ought to have been remitted for plenary hearing.

Held by Power J that the appellant’s claim that an error occurred when the bank established a 2-year bridging finance facility was not supported by the record and was incompatible with the history which gave rise to the loan agreement in issue and with what was written in the letter of loan and the variation letters. Power J held that the appellant’s contention in respect of the alleged error was punctuated by inconsistencies. Power J was equally unpersuaded as to the merits of what the appellant posited as his second arguable defence. Power J held that whereas surcharge interest was, initially, applied to his account, it was clear from the records exhibited that such charges were deducted and had not been pursued in the proceedings. Furthermore, Power J held that the appellant had not established the existence of a valid counter-claim such as would warrant either the remittal of the proceedings to plenary hearing or a stay upon the High Court order pending the resolution of such a counter-claim. Power J held that, in varying the repayment date of the original loan, the bank acted reasonably and afforded the appellant every opportunity to comply with the terms of its original facility letter. Power J held that the debt had not been discharged and none of the issues raised by the appellant amounted to an arguable defence to the bank’s claim; accordingly, he had failed to meet the test set out in Aer Rianta CPT v Ryanair Ltd [2001] 4 I.R. 607 and Harrisrange Ltd v Duncan [2003] 4 I.R. 1.

Power J held that the appeal would be dismissed. In view of the fact that the respondent had succeeded on all issues raised in defending the appeal, Power J could see no basis upon which the appellant might avoid the usual rule as to costs in the Court and in the Court below. As to the costs of the motion to join Cabot Financial (Ireland) Ltd as a party to the proceedings, Power J made an order in favour of the appellant limited to the expenses incurred by reason of his response to that application.

Appeal dismissed.

JUDGMENT of Ms. Justice Power delivered on the 24th day of June 2021

1 This is an appeal against an order of the High Court, made on 16 November 2017 wherein Reynolds J. granted summary judgment to the first named respondent (hereinafter ‘the bank’) against the appellant in the sum of €228,005.36 [2017] IEHC 704. The appellant claims that he had a number of arguable defences, which the trial judge rejected in error, and that the matter ought to have been remitted for plenary hearing. The issue in this appeal is whether he has established an arguable or bona fide defence to the bank's claim.

2 The appellant is a businessman of some experience. In addition to being the owner and Managing Director of ‘McCool Controls and Engineering Limited’, he had business interests in the property market in that he purchased, developed and sold many properties over the years. Some of these properties were rented out as student accommodation on the north side of Dublin. The appellant had several loans in respect of his various properties. For the purpose of these proceedings, there are four Dublin based properties and three corresponding loan accounts that are of particular importance. These are:

For ease of reference, I shall refer to these as the ‘Howth Road’, the ‘Clontarf Road’ and the ‘Shanard Road’ properties and, where necessary, will include, in brackets, the corresponding loan account numbers of (519), (811) and (815), respectively.

• (i) 145 Howth Road — in respect of which there existed a loan account ending with the numbers 519;

• (ii) 424 Clontarf Road — with a loan account ending in 811; and

• (iii) two adjacent properties at 49 and 51 Shanard Road — in respect of which the appellant had a loan account ending in 815.

Background Facts

3 By letter of sanction dated 30 May 2006, the bank offered the appellant a loan facility in the sum of €630,000 repayable over a term of 2 years from the date of draw down, together with interest thereon. The heading of the letter was printed in bold capitals and it stated: ‘LETTER OF LOAN SANCTION & AGREEMENT FOR BRIDGING FINANCE.’ The letter expressly stated that the purpose of the loan facility was ‘to restructure existing ACC Bank loan facilities, Reference Numbers 10002815 and 10000519’. Those account numbers referred to the appellant's existing loan facilities on the Shanard Road (815) and Howth Road (519) properties (see para. 2).

4 It was expressly stated on the same letter that the bank's security for restructuring the existing loans was ‘[a]n Extension of the Bank's First Legal Mortgage and Charge over properties located at 49 and 51, Shanard Road, Santry, Dublin 9.’ One of the conditions precedent to the drawdown of the approved funding was that the appellant's loan facility in respect of the Clontarf Road (811) property would be ‘cleared in full’.

5 The appellant's acceptance of the aforesaid offer of the loan is recorded on a document entitled ‘ACCEPTANCE OF BORROWER’ which is dated 15 July 2006 and which the appellant signed. His signature was witnessed by a Mary O'Donnell. The document further records that the borrower's solicitors acting in the matter were O'Grady Solicitors.

6 The first and only drawdown of the loan (in the sum of €624,696.81) occurred on 15 August 2006. This is recorded in an ‘Interim Statement of Loan Account’ dated 28 October 2015 and addressed to the appellant. It also records that the loan was drawn down into an account bearing the number 10037377 (hereinafter ‘377’).

7 It is common case between the parties that the appellant did not repay the loan as per the terms of the letter of loan sanction. When the 2-year term came to an end in August 2008, the bank sought repayment of the loan. According to the appellant, ‘a very bizarre incident’ occurred in that ACC Bank sent a direct debit demand for the full amount of the outstanding loan to the appellant's AIB account from which direct debits had, routinely, been paid to the bank.

8 The appellant claims that this direct debit demand was made without any notice to him. The first that he learned of it was when the AIB manager called him urgently on 18 August 2008 to inform him that AIB had received a demand for €628,289.40 from ACC Bank. A copy of an e-mail dated 18 August 2008 which the appellant then sent to the respondent bank is exhibited. The subject matter of the e-mail is entitled ‘Demand for return of funds 49–51 Shanard Road 18-8-08’. The e-mail states:-

“Pat

I have just received an urgent [sic] from the manager of AIB in the IFSC where I have my house accounts – he tells me that ACC have sent a Direct Debit demand for the immediate return of €628,289.40 which I assume is on the 49/51 houses.

This has alarmed the AIB obviously and is very embarrassing for me – can you advise what is happening with this account – obviously I do not keep that level of cash in my account and will need time to source new finance.

Please advice [sic].

Finn”

9 A few days later and in response to a request made by the appellant, the bank wrote to him on 21 August 2008 indicating its willingness to vary its original letter of loan of 30 May 2006. This 21 August 2008 letter stated that the bank was ‘agreeable to your request to extend your bridging loan facility to 30th September 2008’. It confirmed that in all other respects, the terms of the original letter of loan were reinstated and reaffirmed. The appellant signed his acceptance of this variation agreement on 27 August 2008. He did not repay the loan by the extended deadline of 30 September 2008.

10 There followed a second letter of variation sent by the bank on 6 October 2008, again in response to a request from the appellant. It stated ‘[t]he bank is agreeable to your request to extend your bridging loan facility by a further 2 months. Your final due date will now be 30th November 2008.’ The appellant did not repay the loan by that further extended date.

11 A third letter of variation was sent by the bank on 14 July 2009 extending the term of the bridging loan by an additional 12 months, that is, until 14 July 2010. That letter confirmed that the interest rate payable on the loan facility would be increased from 2.00% per annum to 2.75% per annum over Euribor by reference to three-month interest periods. On 27 July 2009, the appellant signed his acceptance of this third variation of the term of the original letter of sanction. The document which he signed contained a warning, in bold print, to the following effect that: ‘[t]he entire amount that you have borrowed will still be outstanding at the end of the interest only period.’ Once again, it is common case between the parties that the bridging loan facility was not repaid by the third extended due date of 14 July 2010.

12 On 23 September 2013, the bank wrote to the appellant. The heading of the letter stated, ‘Letter of Loan Sanction and Agreement dated 30 May 2006 between (i)...