AIB Mortgage Bank v Thompson

JurisdictionIreland
JudgeMs. Justice Baker
Judgment Date31 July 2017
Neutral Citation[2017] IEHC 515
CourtHigh Court
Docket Number[2016 No. 864 S]
Date31 July 2017
BETWEEN
AIB MORTGAGE BANK
PLAINTIFF
AND
NADINE THOMPSON
DEFENDANT

[2017] IEHC 515

Baker J.

[2016 No. 864 S]

THE HIGH COURT

Banking & Finance – S. 28 (6) of the Supreme Court of Judicature (Ireland) Act 1877 – Assignment of debt – Express notice – Summary judgment – Assignment in equity

Facts: The plaintiff sought an order for summary judgment against the defendant for non-payment of loan. The defendant raised an issue concerning non-compliance with the requirement to give express written notice of assignment as required under s. 28(6) of the Supreme Court of Judicature (Ireland) Act 1877 as the plaintiff was the assignee of the defendant's debt. The plaintiff relied on general waiver or the consent of the loan agreement that had done away with the express requirement to give notice.

Ms. Justice Baker granted an order for summary judgment to the plaintiff. The Court, however, held that there was a failure to comply with the requirement of s. 28 (6) of the 1877 Act. The Court noted that for a valid assignment, there must be absolute assignment in writing under the hand of the assignor with an express of notice in writing being given to the debtor. The Court found that the plaintiff had completed all the conditions except that it did not provide any notice to the defendant regarding that assignment. The Court held that the general waiver of consent did not itself operate to obviate the need to give express proof of notice. The Court found that except the requirement to serve express notice, the plaintiff's claim was valid, and thus, the Court entered judgment for the amount claimed.

JUDGMENT of Ms. Justice Baker delivered on the 31st day of July, 2017.
1

By loan offer made on 9th December, 2003, Allied Irish Banks plc agreed to lend to the defendant the sum of €240,000 to be secured by a mortgage for a term of 25 years. The proceedings have been commenced by a different entity, AIB Mortgage Bank which claims to have taken the benefit of the loan and security.

2

The plaintiff seeks summary judgment in the sum of €244,591.69.

3

The defendant argues that the proceedings are not properly constituted as the plaintiff has failed to show that it has taken a valid transfer from the original creditor.

She denies that the proceedings issued on 20th May, 2016 can succeed against her by reason of the failure to give her express written notice of the assignment as is required by s. 28(6) of the Supreme Court of Judicature (Ireland) Act 1877.

4

The matter came on before me as a motion for summary judgment but proceeded on the basis that the defendant argued that the proceedings are not validly brought and must fail.

5

Written legal submissions and supplemental submissions were prepared by both sides and the factual circumstances surrounding the loan facility are not disputed.

6

The matter accordingly is one suitable for determination without oral evidence.

7

In the third affidavit of John Basquille sworn on behalf of the plaintiff on 9th February, 2017, the specific loan and mortgage account with the plaintiff has been identified a shaving been transferred to the plaintiff. The loan facility, default and assignment have been shown to my satisfaction. The argument of the defendant that the plaintiff cannot prove the debt and default from its books and records must fail as the plaintiff took custody of these books and records, and became entitled to rely on them as proof of debt on the assignment.

8

A number of different questions fall to be considered.

Was there a valid assignment to the plaintiff?
9

The first question whether the original lender Allied Irish Banks plc validly assigned to the plaintiff the benefit of the debt.

10

The evidence in the form of three affidavits, the grounding affidavit of John Basquille sworn on 24th June, 2016, the affidavit of Gerry Gaffney sworn on 30th November, 2016, and a third affidavit of John Basquille sworn on 9th February, 2017, show to my satisfaction that the defendant's loan and the security therefor were assigned to the plaintiff on 13th February, 2006, the effective date of the transfer between Allied Irish Banks plc and AIB Mortgage Bank.

11

The assignment of the debt as between assignor and assignee has been shown in the circumstances. However because of the provisions of the Section 28(6) of the Supreme Court of Judicature (Ireland) Act 1877 certain formal requirements are to be met in order that an assignment of a chose in action is actionable at law.

12

Section 28(6) of the Supreme Court of Judicature (Ireland) Act 1877 provides in its relevant part as follows:

‘Any absolute assignment, by writing under the hand of the assignor, … of any debt or other legal chose in action, of which express notice in writing shall be given to the debtor trustee or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be and be deemed to have been effectual in law, … to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for for the same, without the concurrence of the assignor: ….’

The purpose of the subsection
13

The common law recognises the right of a person to contract with a person of his or her choosing, and prior to the enactment of the Supreme Court of Judicature (Ireland) Act 1877 the common law did not recognise the right of an assignee of a debt or chose in action to sue the original debtor or obligor. At common law a debt was looked upon as a strictly personal obligation and although over time the common law recognised the right of anyone with a pecuniary interest in a debt to sue in the name of the creditor, the common law did not recognise the right of the assignee to sue in his own name: Fitzroy v. Cave [1905] 2 K.B. 364.

14

An assignment may be valid under s. 28(6) as between assignor and assignee as it is an absolute assignment made by writing by the assignor. However, as between the assignee and the original debtor or obligor, the power to give a good discharge for the debt without the concurrence of the original of the original creditor vests in the assignee only and insofar when express notice in writing has been given to the debtor.

15

The statutory provision enabling the legal assignment of debt without the concurrence of the debtor or obligor is a recognition of the reality that a right to sue on debt is an asset capable of the being assigned either for value or otherwise, and the Act created a statutory means by which an assignment is actionable by an assignee at common law. It does not however create a statutory right to sue a common law without proof of prior notice to the original obligor and evidence must be shown that the obligor was formally and in writing notified of the assignment.

16

A debtor with notice of absolute assignment is entitled, and indeed bound, to treat the debt as transferred to the assignee. Payment by the debtor to the assignor will, therefore, not give him a good discharge and he will remain liable to pay the debt again: Jones v. Farrell [1857] 1 D&J 208, Chitty on Contracts (32nd Ed.) Vol. 1, para. 19-018.

17

In the absence of proof of notice an equitable assignment may still be operative. I consider this proposition later in the judgment.

The operation of the subsection
18

Finlay Geoghegan J. considered the statutory requirements in O'Rourke v. Considine & Ors. [2011] IEHC 191 and at para. 18 set out the four conditions to be met for a valid assignment under s. 28(6) as follows:

‘(a) The assignment was of a debt or other legal chose in action.

(b) The assignment was absolute and was not by way of charge only.

(c) It was in writing under the hand of the assignor.

(d) Express notice in writing thereof was given to the debtors.’

19

The assignment by Allied Irish Banks plc to the plaintiff was an absolute transfer and not by way of charge, and was done in writing under the hand of the assignor. It is the fourth element of that test that falls for consideration in the present case.

20

Costello J. further considered the matter in LSREF III Stone Investments Limited v. Morrissey [2015] IEHC 603. She dealt, inter alia, with the argument of the defendant regarding the validity of what purported to be a deed of assignment, and whether it is necessary to seal such assignment. She held that an assignment could be effected by writing under the hand of the assignor, a deed is not required, and accordingly there was no requirement of sealing. The fact that the notice of assignment was not dated was regarded by her as irrelevant, as the question was whether notice had, in fact, been given which she held to be the case.

21

At para. 41 of her judgment, having noted that the plaintiff was substituted in the proceedings by prior order of the High Court, she went on to say as follows:

‘It is submitted that the defendant, therefore, had notice of the assignment within the meaning of the Act long before the plaintiff was a party to the proceedings. I accept that this is correct and I hold that the defendant had notice of the assignment within the meaning of the Act prior to the plaintiff being substituted as plaintiff in the proceedings. The fact that the document headed “ NOTICE OF ASSIGNMENT” gave no date for the assignment does not mean that no proper notice of the assignment was given in this case as the plaintiff is entitled to rely upon the other documents which referred to above which clearly did identify the date of the assignment.’

Consent of debtor
22

An assignment may be binding between assignee and original obligor by the giving of consent to novation. There is no evidence that the debtor ever gave consent to the assignment of the debt. The plaintiff argues that...

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