ACC Loan Management Ltd v Dolan

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 09 February 2016
• Neutral Citation: [2016] IEHC 69
• Docket Number: [2011 No. 5039 S]
• Court: High Court
• Date: 09 February 2016

BETWEEN

ACC LOAN MANAGEMENT LTD

PLAINTIFF

AND

SEAMUS DOLAN,

JOHN WALDRON,

AND

JOHN A. WALDRON

DEFENDANTS

[2016] IEHC 69

Baker J.

[2011 No. 5039 S]

THE HIGH COURT

Banking & Finance – Summary Judgment – Non-payment of loan – Bona fide defence – Contract of guarantee – Bankers' Books Evidence Acts 1879-1989

Facts: The plaintiff sought an order for summary judgment against the defendants with interest for non payment of loan facilities taken by the defendants for the company of which they were the directors and the shareholders. The defendants submitted several grounds of defence including inadmissibility of evidence presented by the plaintiff in relation to debt owed by the company, appointment of receiver, application of the doctrine of estoppel and the nature of relationship between the bank and the defendants.

Ms. Justice Baker granted an order for summary judgment against the defendants. The Court held that in order to prove a claim, there was no need for a Bank to present proof by reference to the Bankers' Books Evidence Act and the Court could draw inferences from admissions, an absence of contradiction or denial by a defendant. The Court observed that since the appointment of the receiver had been challenged by the defendants in the separate proceedings, that issue could not be raised in the present matter. The Court rejected the contention that there existed a joint venture between the plaintiff and the defendants as evidenced by a correspondence between the plaintiff and the solicitor for the Company indicating that the plaintiff desired to obtain maximum benefit from the sale of the units developed by the company. The Court held that the doctrine of estoppel had no application in the present case as the documents and evidence on affidavit presented by the plaintiff showed that there was no representation or assurance made by the plaintiff to the effect that the repayment of loan would be extended indefinitely, and hence, the plaintiff could not be estopped from forcing a contractual liability.

JUDGMENT of Ms. Justice Baker delivered on the 9th day of February, 2016.

1 This judgment is given in the claim by the plaintiff for summary judgment against the defendants in the sum of €3,893,135.06, together with interest, on foot of five separate guarantees of the liabilities of a company DW Developments Ltd. (hereafter ‘the Company’), of which the three defendants are directors and shareholders,.

2 The defendants were represented by counsel and seek to defend the proceedings on eight identified grounds. Before dealing with those grounds, I will briefly outline the relevant sequence of events.

The facility letters

3 The plaintiff claims on foot of five contracts of guarantee and indemnity made by the defendants in respect of the liabilities of the Company arising out of the facilities next described. The guarantees were executed by them on diverse dates, and the final guarantee was executed on 28th August 2008.

4 By letter dated 18th July 2007 the bank made available to the Company a loan facility in the amount of up to €1,105,000 for the fixed term of one year, and the amounts agreed to be thereby advanced were drawn down on various dates between 10th October 2007 and 13th May 2008.

5 By a second facility letter, also dated 18th July 2007, the plaintiff made available to the Company the sum of €883,000 for the term of one year for the purpose of funding the construction of units at a development in Co. Mayo on land in title of the defendants. The monies agreed to be advanced were drawn down on various dates between July 2007 and July 2008.

6 By a third facility letter, also dated 18th July 2007, the plaintiff made available to the Company a loan facility in the sum of €402,000 for the purpose of funding a community centre and associated works at the development in Co. Mayo. The monies agreed to be advanced were drawn down in one lump sum on 30th July 2007.

7 By a fourth facility, the plaintiff made available to the Company a loan facility in the sum of €502,000 to fund the purchase of a land bank. The monies agreed to be advanced were drawn down in one lump sum on 9th January 2008.

8 By a fifth facility letter dated 15th August 2008, the plaintiff agreed to make available to the Company an overdraft facility in the sum of €100,000 for providing working capital.

9 The Master of the High Court gave liberty to the plaintiff to enter final judgment in respect of part of the claim on 6th December 2013. Judge Ryan on 7th July 2014 discharged the order of the Master, and adjourned the motion to the non-jury list for mention. It was agreed by the parties, having regard to the procedural history of the matter, that I am to treat the application as a motion for summary judgment in which the defendants seek leave to defend.

10 On 26th November 2015, I made an order substituting ACC Loan Management Ltd as the plaintiff in the proceedings, evidence having been adduced of a change of name of the plaintiff on 27th June 2014. No real contest arose with respect to that order.

The grounds of defence

11 The defendants seek to assert that they have a prima facie defence on six grounds which I set out now for convenience:

a. That the proofs purported to be advanced by the Bank in support of its application are hearsay, and not within the exceptions contained in the Bankers' Books Evidence Act.;

b. That the receiver appointed by the Bank on foot of its charge was not properly appointed;

c. That the guarantees are procedurally defective and have not been proven;

d. That the Bank and the defendants and/or the Company entered into a joint venture to develop the lands at Knock, Co. Mayo. In the alternative a collateral oral agreement was entered into between the Bank and the defendants by which it was agreed that the loans to the Company would be repaid from the sale of the units to be developed on the lands in Co. Mayo, and that the Bank would not seek to enforce until a reasonable opportunity to complete the development and sell was afforded.

e. That a reasonable period to pay was required to be, but was not in fact, given by the Bank to the principal debtor before the Bank could proceed to enforce against the guarantors.

f. That the Bank acted mala fides in requiring the Company to accept further finance in 2011 when it ought to have known that the Company was already in some degree of financial difficulties.

12 I will deal with each ground of defence in turn, although some overlap does arise.

First defence: the affidavit evidence is hearsay

13 The defendant's assert that the affidavit evidence of the plaintiff contains hearsay evidence. It is argued that Eoghan Gavigan, who has sworn four affidavits on behalf of the Bank, was not an ‘officer’ of the Bank as a consequence of which the Bank may not rely on the exceptions to the hearsay rule contained in the Bankers' Books Evidence Acts 1879 – 1989.

14 Documents exhibited in the affidavits include the facility letters, various letters of demand, a statement of account showing that the monies advanced were not repaid by the Company, the five guarantees, and the certificate from the Bank which identifies the amount claimed to be due by the principal debtor at the relevant date.

15 The defendants argue that the evidence is of the same category as that criticised by Cregan J. in ACC Bank Plc v. Byrne [2014] IEHC 530 where he identified six proofs required to be given by an officer of a bank in order that the enabling provisions of the Acts were properly engaged.

16 The plaintiff argues that the Bank does not need to engage the statutory exceptions, and that the matter may be dealt with under the principles identified in the recent decision of the Supreme Court in Ulster Bank Ireland Limited v. O'Brien & Ors [2015] IESC 96.

17 Before I deal with this argument, I briefly outline the basis on which the court can engage the question of the adequacy of proof at the summary hearing.

18 It is established that a court hearing a motion for summary judgment must remit to plenary hearing matters in which the defendant has raised a bona fide or credible defence. However the authorities suggests that a court hearing a summary motion may make a determination on a legal argument on which a defence is asserted to arise, unless it is considered that more lengthy legal argument may be required.

19 There is logic to that proposition, in that no oral evidence or cross-examination of evidence is required for the court to determine that a point of defence based on a proposition of law is made out.

20 I consider that I may at the hearing of the summary motion determine the legal issue whether the necessary proofs are met as a matter of the law of evidence, and that no issue requiring more comprehensive legal argument has been identified.

21 O'Malley J. in Ulster Bank Ireland Limited v Dermody [2014] IEHC 140 is clear authority for the proposition that Mr. Gavigan, as an employee of the Bank, is an ‘officer’ within the meaning of s.4 of the Bankers' Books Evidence Acts 1879 and he is competent to make an affidavit for the purposes of the Acts and thereby avail of the statutory exception to the hearsay rule. I reject the argument to the contrary.

22 The Supreme Court in Ulster Bank (Ireland) Ltd. v. O'Brien & Ors. has recently considered the question of proof in these circumstances. Judgments were given by Charleton J., Laffoy J. and McMenamin J.

23 In their judgments, Laffoy J. and Charleton J. expressly leave over the resolution of a difference in approach to the Bankers Books Evidence Acts in recent High Court judgments, Charlton J. dealt with the appeal on a different basis entirely, one found in the general law of evidence, and in particular in the well-established exception to the hearsay rule that a court can draw inference from...