AIB Mortgage Bank v Hayden

• Jurisdiction: Ireland
• Judge: Mr. Justice Meenan
• Judgment Date: 12 June 2020
• Neutral Citation: [2020] IEHC 442
• Docket Number: [2016 NO. 275 S]
• Court: High Court
• Date: 12 June 2020

BETWEEN

AIB MORTGAGE BANK

AND

ALLIED IRISH BANK PLC

PLAINTIFFS

AND

PAUL HAYDEN

AND

SHOSHANNA HAYDEN

DEFENDANTS

[2020] IEHC 442

Meenan J.

[2016 NO. 275 S]

THE HIGH COURT

Summary judgment – Loan agreements – Questions of law – Plaintiffs seeking summary judgment arising out of five loan agreements with the defendants – Whether there was an agreement that if certain properties were sold and the proceeds applied to the fifth loan agreement any residual debt would be written off

Facts: The plaintiffs, AIB Mortgage Bank and Allied Irish Bank PLC, applied to the High Court seeking summary judgment arising out of five separate loan agreements with the defendants, Mr and Ms Hayden. The defendants put forward a number of defences which involve questions of law and, to a lesser extent, the construction of documents. What was not in dispute was that monies were advanced under the various loan agreements and not repaid.

Held by Meenan J that, in the various replying affidavits filed on behalf of the defendants, no complaint was made that the plaintiffs had not put sufficient evidence before the Court concerning the alleged debts or that there was a lack of particularity as would be sufficient to allow the defendants to know whether or not to concede or resist the claim. He was therefore satisfied that the defendants had not established any defence in that regard. He was of the view that the defendants’ alleged wrongful removal from the Mortgage Arrears Resolution Process under the Central Bank’s Code of Conduct on Mortgage Arrears does not afford a defence to the defendants. The defendants alleged a breach of the provisions of the Consumer Credit Act 1995 and in Meenan J’s view, the defendants had raised no defence under that heading. The defendants also maintained that in respect of the first and second loans they should have been offered a tracker mortgage rate on the expiry of the initial rate. Meenan J held that the clear wording of the relevant terms in the letters of offer, for both the first loan and the second loan, does not support such a defence. By reason of the foregoing, he held that the plaintiffs were entitled to judgment against the defendants in respect of the first, second, third and fourth loan agreements; counsel would provide to the Court amounts in respect of these which were outstanding.

Meenan J held that he would direct a plenary hearing in respect of the fifth loan agreement, solely on the issue raised by the defendants, namely, as to whether there was an agreement that if certain properties were sold and the proceeds applied to the fifth loan agreement any residual debt would be written off; further, if this was the case, what are the legal consequences of same.

Judgment granted in respect of the first four loan agreements; the fifth remitted to plenary.

JUDGMENT of Mr. Justice Meenan delivered on the 12th day of June, 2020

Introduction

1 The plaintiffs are seeking summary judgment arising out of five separate loan agreements with the defendants. The details of the various loan agreements are as follows: -

I. First Loan Agreement

2 The first loan agreement was made on 27 July 2004 whereby the second named plaintiff advanced a sum of €735,000.00 to the defendants', payable over a term of 25 years. The interest rate was fixed for one year at 2.75% and the second named plaintiff's variable rate would apply thereafter. This loan agreement was mortgaged against 35 The Woodlands, Greystones, County Wicklow. The defendants accepted and signed this loan agreement on 6 August 2004. The second named plaintiff transferred all its rights and obligations pursuant to this loan agreement to the first named plaintiff. The defendants defaulted on this loan agreement and, as of 16 January 2020, there was due and owing the amount of €820,146.40 together with continuing interest.

II. The Second Loan Agreement

3 Pursuant to a loan agreement made on 27 July 2004, the second named plaintiff advanced a sum of €425,000.00 to the defendants to be repayable over a period of 25 years. The interest rate was fixed for the first year at 3.5% and the second named plaintiff's variable buy-to-let interest rate would apply thereafter. This loan agreement was secured against 18 Delgany Glen, Delgany, County Wicklow, a buy-to-let property. The second named plaintiff transferred all its rights and obligations under this loan agreement to the first named plaintiff. The defendants defaulted on this agreement and, as of 16 January 2020, there was due and owing the amount of €660,980.20 together with continuing interest.

III. The Third Loan Agreement

4 Pursuant to a loan agreement made on 23 July 2004, the second named plaintiff agreed to grant overdraft facilities in respect of the defendants’ current account (No. 933554-[—]5090). By letter, dated 16 November 2015, addressed to the defendants, the second named plaintiff demanded repayment of the sum outstanding. As of 16 January 2020, the total balance outstanding for this account was in the amount of €104,389.86.

IV. The Fourth Loan Agreement

5 Pursuant to a loan agreement made on 23 July 2004, the second named plaintiff agreed to grant overdraft facilities in respect of the defendants’ current account (No. 933554-[—]4063). By letter, dated 16 November 2015, addressed to the defendants, the secondqw named plaintiff demanded repayment of the sum then outstanding. As of 16 January 2020, there was due the amount of €20,620.71.

V. The Fifth Loan Agreement

6 Pursuant to a loan agreement made on 17 February 2006, the first named plaintiff advanced a sum of £354,000.00 to the first named defendant, to be repayable over a period of 25 years. The interest rate was fixed for one year at 3.70%. This loan agreement was secured against 50 Church Avenue, Eden Court, Delgany, County Wicklow, a buy-to-let property. The first named defendant defaulted on this loan agreement on 2 October 2008. By letter, dated 25 June 2014, addressed to the first named defendant, the first named plaintiff demanded repayment of the sum then outstanding. As of 16 January 2020, there was due and owing the amount of €321,604.45 together with continuing interest.

7 The total judgments being sought by the plaintiffs are in the following amounts, together with continuing interest, as of 16 January 2020: -

(i) The first named plaintiff against the first named defendant: -

• First loan agreement – account no. 930350-[—]5024 - €820,146.40

• Second loan agreement – account no. 930350-[—]6007 - €660,980.20

• Fifth loan agreement – account no. 930350-[—]3038 - €321,604.45

• Total: €1,802,731.05

(ii) The second named plaintiff against the first named defendant: -

• First loan agreement (account no. as above) - €820,146.40

• Second loan agreement (account no. as above) - €660,980.20

• Total: €1,481,126.60

(iii) The first named plaintiff against the second named defendant: -

• Third loan agreement - account no. 933554-[—]5090 - €104,389.86

• Fourth loan agreement - account no. 933554-[—]4063 - €20,620.71

• Total: €125,010.57

(iv) The second named plaintiff against the second named defendant: -

• Third loan agreement (account no. as above) - €104,389.86

• Fourth loan agreement (account no. as above) - €20,620.71

• Total: €125,010.57

8 There was a further loan agreement (the sixth loan agreement) which the plaintiffs are, at present, not pursuing. Currently there is an issue concerning the tracker interest rates involved.

Principles to be applied

9 Over the last number of years, the Superior Courts have set out the principles which a court should apply in considering whether to grant summary judgment or to remit a matter to a plenary hearing. I will start with the oft cited passage from the judgment of Hardiman J. in Aer Rianta c.p.t. v. Ryanair Ltd [2001] 4 I.R. 607 where, at p. 623, he states: -

“In my view, the fundamental questions to be posed on an application such as this remain: is it ‘very clear’ that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant's affidavits fail to disclose even an arguable defence?

First National Commercial Bank v. Anglin [1996] 1 I.R. 75 and the cases cited therein seem to me to focus on a specific aspect of these questions, that of credibility. It is indeed true that ‘the mere assertion in an affidavit of a given situation which was to be the basis of a defence did not of itself provide leave to defend’ ( National Westminster Bank v. Daniel [1993] 1 W.L.R. 1453). Equally, ‘it is not sufficient that the court should have reason to doubt the bona fides of the defendant or to doubt whether the defendant has a genuine cause of action’ ( First National Commercial Bank v. Anglin).”

10 I also refer to the following passage from the judgment of Irvine J. in Harrahill v. Swaine [2015] IECA 36, where she states: -

“30. In Harrisrange Limited v. Duncan McKechnie J. advised that the power to grant summary judgment should be exercised with discernible caution and he advised that a defendant should be considered to have a bona fide defence if he demonstrated ‘a fair or reasonable probability of having a real or bona fide defence.’

31. In McGrath v. O'Driscoll the High Court laid out the basic test as to whether a legal dispute should be decided on summary proceedings or not:

‘So far as questions of law and 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 were 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.’”

11 In this case, the defendants have put forward a number of defences which involve questions of law and, to a lesser...