ADM Londis Plc v Arman Retail Ltd

• Jurisdiction: Ireland
• Judge: MR. JUSTICE CLARKE
• Judgment Date: 12 July 2006
• Neutral Citation: [2006] IEHC 309
• Docket Number: 2005/1152S
• Court: High Court
• Date: 12 July 2006

[2006] IEHC 309

THE HIGH COURT

2005/1152S

ADM LONDIS PLC v ARMAN RETAIL LTD & ARMAN

DUBLIN

ADM LONDIS PLC.

Plaintiff

ARMAN RETAIL LTD., AZAZ ARMAN & MARY ARMAN (NEE McEVOY)

Defendants

AER RIANTA v RYANAIR 2001 4 IR 607

MCGRATH v O'DRISCOLL UNREP CLARKE 13.6.2006

TEDCASTLE MCCORMACK v MCCRYSTAL UNREP MORRIS 15.3.1999 1999/24/7774

SAUNDERS v ANGLIA BUILDING SOCIETY 1971 AC 1

PRENDERGAST v BIDDLE UNREP SUPREME 31.7.1957

PRACTICE AND PROCEDURE:

Summary judgment

Leave to defend - Bona fide defence - Guarantee - Non est factum - Counterclaim - Connected series of transactions - Aer Rianta v Ryanair [2001] 4 IR 607 and McGrath v O'Driscoll [2006] IEHC 195, [2007] 1 ILRM 203 followed - Liberty to enter judgment for half of sum claimed granted and liberty to file defence on balance granted (2005/1552S - Clarke J -12/7/2006) [2006] IEHC 309 ADM Londis plc v Arman Retail Ltd

The plaintiff applied for summary judgment to be entered against the second and third named defendants on foot of guarantees relating to the liability of the first named defendant. The second and third named defendants were the proprietors of the first named defendant company and judgment was previously obtained against that company. The defendants raised a number of issues, including a counterclaim to support their argument that there were substantial grounds for defending the proceedings and therefore that the proceedings should proceed to plenary hearing.

Held by Clarke J. in awarding judgment to the plaintiff in the sum of Eur75,000:

1. That the defendants established a potential defence to the extent of Eur12,000 of the total amount sought by the plaintiff. Consequently, the defendants were entitled to liberty to defend in so far as the sum of Eur12,000 was concerned.

2. That it was arguable that a surety was entitled to rely, at least in some circumstances, upon a counterclaim which might have been available to the principal debtor. In this case there was no clear evidence as to the precise amount of the counterclaim but the justice of the case required the making of an approximate estimation of the extent to which the counterclaim might arise. The plaintiff was granted judgment in the sum of Eur75,000 out of a claim for Eur162,000. The defendants were given liberty to defend the remainder of the claim.

Reporter: L.O’S.

1 APPROVED JUDGMENT OF MR. JUSTICE CLARKE DELIVERED ON WEDNESDAY, 12TH JULY 2006

2 THE HEARING RESUMED AS FOLLOWS ON WEDNESDAY, 12TH JULY

3 JUDGMENT WAS DELIVERED AS FOLLOWS

4 MR. JUSTICE CLARKE: This matter comes before the court as an application for summary judgment as against the second and third-named Defendants on foot of guarantees relating to the liability of the first named Defendant.

5 The second and third-named Defendants were the proprietors of the first named Defendant company and judgment has already been obtained in relation to the first named Defendant company which, it is agreed, is insolvent, in the full sum claimed of €162,110.37. The liabilities arise from a course of trading between the Plaintiff and the first named Defendant company, which ran a retail outlet under the Londis banner in respect of which goods were supplied. The liability having been established as against the first named Defendant, the Plaintiff seeks judgment as against the second and third-named Defendants on foot of a guarantee.

6 Five separate issues are raised by the Defendants as suggesting that there are substantial grounds for defending the proceedings which should, it is said, allow the matter to go to plenary hearing. I will turn to those matters in early course, but it is necessary, firstly, to refer to the legal principles by reference to which an application such as this needs to be determined.

7 Firstly, it is well settled that the hurdle which a Defendant needs to meet in order to be given leave to defend is not a very high hurdle. The most recent decision of the Supreme Court is to be found in Aer Rianta -v- Ryanair, 2001, 4 IR 607 and the judgment of Hardiman J. in that case. In the recent case of McGrath -v- O'Driscoll (2006) IEHC, 195 I considered the judgment of the Supreme Court in Aer Rianta -v- Ryanair and other authority and expressed the following views at paragraphs 3.4 and 3.5:

"So far as factual issues are concerned it is clear, therefore, that a mere assertion of a Defence is insufficient. But any evidence of fact which would, if true, arguably give rise to a Defence will, in the ordinary way, be sufficient to require that leave to defend be given so that that issue of fact can be resolved.

So far as questions of law or construction are concerned the court can, on a motion for summary judgment, resolve such questions, including, where appropriate, questions of the construction of documents, but should only do so where the issues which arise are relatively straightforward and where there is no real risk of an injustice being done by determining those questions within the somewhat limited framework of a motion for summary judgment."

8 It seems to me that that is the appropriate test that I need to apply to the issues of defence raised. Can it be shown, insofar as the Defences raised are based on facts, that the Defendant has put forward facts which, if true, might arguably give rise to a Defence? And insofar as issues of law or construction are concerned, are those issues straightforward and capable of resolution on a motion such as this or are they complex and should await a full plenary hearing?

9 Five specific matters are relied upon by the Defendants. I propose dealing with each in turn. The first Defence put forward is a Defence of non est factum. The factual basis for such a Defence is a contention on the part of the Defendants that they were unaware of the contents of the guarantee, having signed a series of documents at the time when the contractual relations between the Plaintiffs and the various Defendants were entered into.

10 The law in relation to a Defence of non est factum is now, in my view, well settled and is to be found in Tedcastle McCormack & Co Ltd -v- McCrystal, a judgment of Morris J. of 15th March 1999 in which, relying on Saunders -v- Anglia Building Society, 1971 AC 1,004, it is stated that the following factual matters require to be established in order that the...