AIB Mortgage Bank v Heffernan

JudgeMr. Justice Woulfe
Judgment Date14 December 2022
Neutral Citation[2022] IECA 288
CourtCourt of Appeal (Ireland)
Docket NumberCourt of Appeal Record No.: 2018/132
AIB Mortgage Bank and Everday Finance DAC
Elaine Heffernan
Allied Irish Banks Plc and Everyday Finance DAC
Elaine Heffernan

[2022] IECA 288

Woulfe J.

Murray J.

Ní Raifeartaigh J.

Court of Appeal Record No.: 2018/132

High Court Record No.: 2015/594S


JUDGMENT of Mr. Justice Woulfe delivered on the 14 th day of December, 2022


. These are the appellant's appeals against the judgment of the High Court (Noonan J.) delivered on the 14 th March, 2018, and his orders made in consequence thereof on the same date. By his order in the above first entitled proceedings (“the Mortgage Bank proceedings”) the learned trial judge acceded to the first named respondent's motion for liberty to enter final judgment against the appellant in the sum of €844,737.54, and also granted the first named respondent the costs of that motion. This was subsequently amended by further order of Noonan J. dated the 16 th May, 2018, by substituting the sum of €602,883.95 in place of the sum of €844,737.54. By his order in the above second entitled proceedings (“the PLC proceedings”), the learned trial acceded to the first named respondent's motion for liberty to enter final judgment against the appellant in the sum of €242,292.98, and again granted the first named respondent the costs of that motion.


. The appellant was a litigant in person at the time the two motions came on for hearing before the High Court, but she instructed solicitor and counsel prior to her appeals coming on for hearing before this Court.


. By orders of this Court dated the 19 th March, 2021, Everyday Finance DAC (“Everyday”) was added as a co-respondent to the within appeals, on the grounds that the facilities the subject of the High Court judgment and of these appeals had been transferred and assigned to it by the first named respondent in each case.


. The appellant was previously a part-time teacher and also involved in health and safety training. In or about 1994 her father gifted her approximately 22 acres of agricultural lands at Corrogemore, County Tipperary, which adjoined lands that were being used as a quarry by a concrete company. In or about January, 2006 her accountant contacted a bank official, Mr. Declan Ryan, who worked at the AIB branch at Cashel, County Tipperary, with a view to the AIB (“the bank”) granting facilities to the appellant for a project to develop a quarry on her lands.


. The appellant met with Mr. Ryan on a number of occasions to discuss the project. She commissioned a “sand and gravel resource assessment” from Fehily Timoney & Co., which was issued to her on 1 st June, 2006. The report concluded that as the probable working area for the site was under five hectares, a full environmental impact assessment should not be necessary. It recommended that an assessment of the economic viability of the resource should be made, further to which a planning application and environmental report should be prepared.


. The Fehily Timoney & Co report appears to have inspired great confidence with the bank, and to have triggered the first loan facility which was made available to the appellant. The appellant exhibited a note from Mr. Ryan recommending sanction of facilities, which is undated but clearly follows that report. In his note Mr. Ryan states that “full planning permission will be granted”. He adds that on receipt of full planning permission the land will be worth “min 5M” with the appellant keeping her options open at that stage as to which way she would then proceed, either in terms of selling the land, retaining and leasing the land as a quarry for a five to seven year period, or developing the quarry herself.


. The above was the background to the first loan facility made available to the appellant by the bank, on foot of a facility letter dated the 13 th June, 2006, which facility appears to have been restructured by way of a credit agreement dated the 27 th October, 2006. Under this agreement the bank agreed to advance the amount of €350,000.00 until the 26 th April, 2008, the expiry date, on which date the credit facility was to be repayable by a single payment of €376,425.11. A special condition provided that drawdown for quarry development was to be by way of stage payments against engineer's certificates for work completed.


. It appears that the appellant regularly drew down sums on foot of this loan facility to discharge debts arising from the property, including engineer's fees and solicitor's fees and costs of reports, up to a sum of approximately €201,500.00. This loan facility was subsequently restructured on a number of occasions, including in November 2007, August 2008 and September 2010. By the summer of 2010 the entire property market had collapsed, including the market for quarries. The appellant avers on affidavit that by late 2010 the bank had made it clear that they would not advance her the monies necessary to finish the quarry development, and that without the further monies which the bank had previously agreed to advance to her she was unable to complete the works required to complete the quarry development. The bank denies this and states that if the appellant was unable to complete the quarry development, this was due to her own failure to meet her repayment obligations under the restructured facility.


. No further repayments were made in respect of the restructured facility after October, 2013, and the bank called in the loan by letter of demand dated the 28 th July, 2014.


. Returning back to 2006, it appears that during their initial meetings Mr. Ryan suggested to the appellant that she should look at other investments, and that the bank considered her to be a good risk, as she owned approximately 22 acres which could have a value of up to €5M as a quarry. The appellant avers on affidavit that the bank advised that she borrow the monies on an interest only basis, and that she could repay all the monies once planning permission was obtained for the quarry. She states that it was on foot of these representations by the bank that she borrowed monies to buy three investment properties during the period from January to November, 2007.


. These three buy to let mortgages were each for a period of 25 years, and were repayable on a tracker buy to let interest only basis for the first three years. The appellant avers on affidavit that it was always accepted by the bank that her only capacity to repay these loans on a long term and ongoing basis was going to be by obtaining planning permission and ultimately selling the quarry. She states that on one occasion she did question Mr. Ryan as to what would happen if she did not obtain planning permission, and he assured her that the bank would always work with her, that they viewed her as a shrewd operator, and even without planning permission the bank was well covered and she did not need to worry. She avers that she absolutely relied upon this assurance and promise, as her real concern was that by then she was the primary provider for her infant daughter.


. Following the recession and the property crash the appellant was unable to meet the repayments on these buy to let mortgage loans, and ultimately AIB Mortgage Bank called in these loans by letters of demand dated the 28 th July, 2014.


. The last facility the subject of these proceedings is an overdraft facility, which the bank made available to the appellant by letter of sanction dated the 18 th August, 2009, in the sum of €3,000.00, subject to certain terms and conditions. The bank called for repayment of the amount then due and owing by letter of demand dated the 28 th July, 2014.

The High Court Proceedings
The Mortgage Bank Proceedings

. The Mortgage Bank proceedings were commenced by summary summons dated the 30 th March, 2015, wherein AIB Mortgage Bank claimed judgment in the sum of €843,462.44 pursuant to the three mortgage loans referred to above. The matter came before the Master of the High Court pursuant to a notice of motion issued on the 22 nd May, 2015, seeking liberty to enter final judgment, and was transferred to the Judge's list.


. A series of affidavits were exchanged between the parties during the course of the proceedings, and in the course of same the appellant sought to raise an arguable defence and have the proceedings sent forward for plenary hearing. In her first affidavit sworn on the 18 th November, 2015, the appellant refers to the representations allegedly made by the Bank before she borrowed these monies, as set out at para. 10 above. She states that obtaining planning permission for the quarry formed the basis for the investment mortgage funds which were released to her, and she refers to promises made to her in 2007 that the property loans would only be repaid once she had secured planning and/or the sale of the quarry.


. In a replying affidavit sworn on the 23 rd March, 2016, Declan Ryan denies these assertions. He states that the mortgage funds were released based on the terms and conditions set out in the letters of sanction. While he accepts that the bank was enthusiastic about the appellant's plans to develop a quarry, he wished to make it perfectly clear that the loans, the subject matter of the within proceedings, have nothing whatsoever to do with the development of a quarry. On the contrary, the three loans in suit are mortgage loans which were offered to the appellant to fund the acquisition of investment properties.

The PLC Proceedings

. The PLC proceedings were also commenced by summary summons dated the 30 th March, 2015, wherein Allied Irish Banks PLC claimed judgment in the sum of €241,054.94, being the total sum claimed due and owing by the appellant pursuant to the quarry loan facility and...

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    ...the balance for plenary hearing where an arguable defence is demonstrated”. 22 In AIB Mortgage Bank and Everyday Finance DAC v Heffernan [2022] IECA 288, the Court of Appeal (Woulfe J., Murray J. and Ní Raifeartaigh J.; judgment delivered by Woulfe J.). at paragraph 30 of the court's judgme......

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