Allied Irish Bank Plc v Fahey
 IEHC 182
THE HIGH COURT
[2013 No. 3244 S]
Banking & Finance – Non-payment of loan – Summary judgment – Bona fide defence – Non est factum
Facts: The plaintiff sought an order for summary judgment against the defendants for default in repayment of loan obligations. The second named defendant contended that since she did not recall signing the relevant loan agreement, the defence of non est factum was available to her.
Mr. Justice McDermott granted an order for summary judgment. The Court held that in order to grant summary judgment, the Court should determine as to whether there was an arguable case presented by the defendant. The Court observed that the power to grant summary judgment must be exercised sparingly by taking into account the cogency of evidence adduced. The Court held that the defence of non est factum was applicable to the cases where there was marked difference between what was signed and what the defendant thought was signing without lack of negligence on his part. The Court found that the concerned documents were signed by the second named defendant with the knowledge and effect of what she was signing; thus, the doctrine of non est factum would be of no benefit to her.
The plaintiff seeks summary judgment against the defendants for €2,771,745.27.
The plaintiff claims that by letter of sanction dated the 2nd December, 2008 the Bank agreed to provide two relevant loan facilities to the defendants. It is said that the letter of sanction was executed by the defendants on the 27th February, 2009.
The first facility, the subject of these proceedings was in the amount of €2,420,000.00 the purpose of which was to finance the purchase of the ‘Briar Rose Bar and Restaurant’, Douglas, Cork. The loan was repayable over 25 years by consecutive repayments of €13,775.00 per month commencing on the 2nd January, 2009. Any residual balance was repayable at the end of the period. The statement of account in respect of this loan facility is set out in loan account number 93608112440142 operated by the defendants at the plaintiff's Business Banking Department, 66 South Mall, Cork.
The next relevant facility in the letter of sanction was in the amount of €1,100,000.00 the purpose of which was to finance the purchase of a 9 acre site with dwelling house at Inchydoney, Co. Cork costing €1,000,000.00 plus stamp duty and costs. A statement in respect of this loan account number 93608112440225 operated by the defendants at the plaintiff's Business Banking Department at 66 South Mall, Cork was exhibited. Mr. Richard Stafford, a bank official employed by the plaintiff, submitted an affidavit as manager of the plaintiff's Financial Solutions Group based at Matthew House, Fr. Matthew Street, Cork. He made the affidavit on the plaintiff's behalf and upon their instructions and did so from facts within his own knowledge ‘and from inspection of the plaintiff's books and records pertaining to the defendants.’
At paragraph 8 of the affidavit he states that the defendants are in default of their repayment obligations in respect of each of the loan accounts and that the last payment made by them in respect of either account was the 6th January, 2012. He further deposes that by separate letters of the 29th August, 2013 the plaintiff, through its solicitors, demanded repayment of the aggregate sum of €3,431,995.27 from each of the defendants separately which they failed to discharge.
The letters of demand are in identical terms. They were issued by the solicitors on behalf of the Bank and state as follows:-
‘We confirm that we act as solicitors on behalf of Allied Irish Banks Plc who have instructed us to collect from you the sum of €3,431,995.27 due on foot of the above accounts as at the 27th August, 2013.
Kindly note that if the above sums due are not discharged to this office immediately, our instructions are to issue proceedings against you without further notice…’
The letter of sanction offering the loan facilities specifically stated that the offer was subject to the terms and conditions set out in the letter but also subject to the Bank's General Terms and Conditions Governing Business Lending, a current copy of which was enclosed.
The letter adds in bold type ‘these are legal documents and should be read very carefully’.
The relevant terms of the ‘General Terms and Conditions Governing Business Lending’ (June, 2008) relied upon are:-
Repayable on Demand
3.1.1 Loan account facilities are repayable on demand. However in normal circumstances, the bank expects that the loan will be available as stated in the letter of sanction.
3.1.2 Without prejudice to the Bank's right to demand repayment at anytime, the happening of any of the events set out in Clause 4.2 may lead to the Bank making demand for payment, with or without notice to the Borrower…
Events of Default
4.2 A term loan though expressed to be repayable over or within a specified period may be terminated by the Bank and the Bank may demand early repayment at any time with or without notice to the Borrower on the occurrence of any of the following events:
(i) On the failure by the Borrower to make any repayment of principal or interest on the date it is due…’
The application for judgment in default of defence was initially resisted on the basis of an affidavit sworn by Mr. Liam Fahey on 19th November, 2014. The merits of the plaintiff's claim are not addressed in any detail. The following assertions are made:
(1) It is said that the contents of Mr. Stafford's affidavit are hearsay and not admissible in evidence and that it does not explain his authorisation to swear an affidavit on behalf of the plaintiff.
(2) The plaintiff is put on full proof of any alleged agreement of loan or debt.
(3) It is said that copies of documents are inadmissible in evidence.
(4) It is said that the plaintiff has not proved any letter of demand and that any letter sent on the 29th August, 2013 did not comply with the terms of any alleged agreement and is not a letter of demand within the meaning of any alleged agreement. In the circumstances therefore it is averred that ‘any debt owed to the plaintiff may not be properly due as alleged’.
(5) It is claimed that Mr. Fahey has a bona fide defence to the plaintiff's claim. However, he declines to set that defence out. He says that he is prejudiced and embarrassed ‘in more fully setting out my defence to the within claim without an opportunity to seek discovery of the records in the possession of the defendant’. He states that his previous solicitors wrote to the plaintiff on the 14th November, 2013 requesting information and he awaited a reply. In the circumstances he claimed that it might be necessary to file a further affidavit once the relevant information was provided. No details of any proposed defence on the merits were advanced.
(6) He says that he is advised and believes that he ‘may be entitled to rely on the defence of contributory negligence on the part of the plaintiff and discovery is necessary to establish his defence more fully’. There is no indication as to any possible basis for the alleged contributory negligence.
At this time no affidavit had been filed on behalf of Mrs. Finola Fahey. A separate firm of solicitors came on record for Mrs. Fahey on the 4th June, 2015. An affidavit was filed on her behalf on the 12th October, 2015. This affidavit purports to place the Bank on ‘strict proof’ of any alleged loan agreement including strict compliance with the provisions of the Bankers Books Evidence Acts 1879 (as amended). The following points are made:-
(a) She alleges a failure to comply with the provisions of the Bankers Books Evidence Acts (as amended).
(b) She states that the signature on the execution of the letter of sanction ‘appears on a ‘blank’ page’. She requires sight of the full original documentation. She claims that she does not recall agreeing to a loan of this nature ‘nor would have I had any reason to borrow that kind of money in my own name’.
(c) She claims she has no business interest of her own ‘in respect of the alleged loan the subject matter of these proceedings’ and that she is a ‘consumer’ within the meaning of the Consumer Credit Act 1995 (as amended).
(d) She states that it was a provision of the plaintiff's general terms and conditions for mortgage loans that the plaintiff could not demand repayment of the alleged loan without giving prior ‘due notice’ to the Borrowers of any alleged breach and without complying with all statutory requirements. In that regard Mrs. Fahey claims that she was not given any prior ‘due notice’ as required nor did the plaintiff comply with the statutory requirements including the provisions of the Consumer Credit Act 1995 and the Consumer Protection Code for issuing the demand of the 29th August, 2013. She claims that she ‘may be able to rely on the provisions of s.44 of the Central Bank (Supervision and Enforcement) Act 2013 in relation to the plaintiff's failure to comply with its obligations under the Consumer Credit Act 1995 and the Consumer Protection Code.
(e) Mrs. Fahey claims therefore that she is wrongfully joined in these proceedings and that both defendants have a bona fide defence in the circumstances.
Mrs. Fahey does not offer any detailed defence to the merits of the claim made.
Both of the defendants' affidavits are...
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