Allied Irish Banks Plc v Norton

• Jurisdiction: Ireland
• Judge: Ms. Justice Faherty
• Judgment Date: 23 October 2018
• Neutral Citation: [2018] IEHC 628
• Court: High Court
• Docket Number: [2015 No. 1575 S.]
• Date: 23 October 2018

[2018] IEHC 628

THE HIGH COURT

Faherty J.

[2015 No. 1575 S.]

BETWEEN

ALLIED IRISH BANKS PLC

PLAINTIFF

AND

EUGENE NORTON

FIRST NAMED DEFENDANT

AND

GRACE NORTON

SECOND NAMED DEFENDANT

Banking and finance – Debt – Loan facilities – Plaintiff seeking final judgment against the defendants – Whether the plaintiff's claim was statute-barred

Facts: The plaintiff, Allied Irish Banks plc, applied to the High Court for final judgment against the first defendant, Mr Norton in the amount of €3,500,441.41, and €3,324,933.34 against the second defendant, Ms Norton, on foot of a summary summons which was issued on 12th August, 2015. The plaintiff contended that the debt arose on foot of three facility letters whereby monies were advanced by the plaintiff to the defendants. Both defendants were parties to Facilities 2 and 3; the first Facility concerned the first defendant only. The defendants did not contest the fact that they benefitted from the monies the subject matter of the three loan facilities. However, they raised the following four grounds of defence for the purpose of remitting the proceedings to plenary hearing. The defendants contended that: 1) the plaintiff's claim was statute-barred; 2) the plaintiff was in breach of an agreement to provide further development funding to the defendants; 3) some, if not all, of the facilities in respect of which the plaintiff sued had not remained in the ownership of the plaintiff since their respective dates of issuance and had been transferred or assigned as between AIB group entities without express notice to the defendants; and 4) the plaintiff had overcharged interest in respect of the borrowings to which the proceedings related and that the defendants were lawfully entitled to a reduced interest rate or a tracker rate which was not afforded to them.

Held by Faherty J that, in all the circumstances, there was no fair or reasonable probability of the defendants having a bona fide defence based on the Statute of Limitations 1957, no arguable grounds had been made out as regards the defendants' second defence, the defendants had not reached the arguable grounds threshold in respect of their third defence and the defendants had not raised an arguable case for a tracker rate.

Faherty J held that the plaintiff was entitled to enter final judgment against the first defendant in the sum of €3,500,441.41 and against the second defendant in the sum of €3,324,933.34. Faherty J held that she would hear submissions with regard to a stay.

Relief granted.

JUDGMENT of Ms. Justice Faherty delivered on the 23rd day of October, 2018

1 This matter comes on for hearing by way of application by the plaintiff for final judgment against the first defendant in the amount of €3,500,441.41, and €3,324,933.34 against the second defendant, on foot of a summary summons which was issued on 12th August, 2015. The defendants entered an appearance thereto on 15th September, 2015.

2 The plaintiff contends that the debt arises on foot of three facility letters whereby monies were advanced by the plaintiff to the defendants. Both defendants were parties to Facilities 2 and 3; the first Facility concerns the first named defendant only.

Facility 1

3 By letter of sanction dated 1st November, 2006, the plaintiff advanced to the first defendant the sum of €151,297.00 for the purpose of providing bridging finance for an equity input into a development site at Waterford Road, Kilkenny. The said sum was to be repayable by a single payment on 1st May, 2007. The monies were in fact drawn down on 13th January, 2006 to account no. 12720894. In his grounding affidavit, Mr. David Coleman, bank official with the plaintiff in the Cork area, avers that the total amount due and owing by the first defendant as of 13th July, 2015 was €175,508.07, comprising €155,392.72 in principal debt and a further €20,115.35 in respect of interest accrued. He avers that by letter of demand dated 8th November, 2010, the plaintiff demanded repayment of Facility 1 which the first defendant has failed to repay. He further avers that the plaintiff is agreeable to waiving all further interest accruing on the loan from the date of issue of the summary summons. The plaintiff maintains this position also in respect of Facilities 2 and 3.

Facility 2

4 By letter of sanction dated 27th June, 2007, the plaintiff offered the first and second defendants on a joint and several basis a sum of €2,200,000.00. This loan was for the purpose of assisting in the purchase of a property, 'Mulhalls', situated at Pudding Lane in the City of Kilkenny. It was to be repayable on demand, subject to a moratorium on interest repayments for the first twelve months. The said monies were drawn down by the defendants on or about 15th October, 2007. Mr. Coleman avers that a loan account - COM35L2A054639 - was opened in respect of Facility 2. He avers that for internal administrative reasons the loan account number was changed on a number of occasions. I am satisfied that nothing turns on the fact that the account number was changed. Mr. Coleman avers that the total amount due and owing on Facility 2 as of 13th July, 2015 was €2,731,593.03, comprising €2,539,266.23 in principal debt and €192,326.80 in respect of interest. The plaintiff demanded repayment of the debt by way of letter of demand dated 8th November, 2010, which the defendants have failed to meet.

Facility 3

5 By letter of sanction dated 20th June, 2008, the plaintiff advanced to the defendants jointly and severally €490,100.00, which was the subject of loan account number 12720118. This loan replaced previous loan facilities to the defendants and it was to be repayable on demand. Mr. Coleman avers that the plaintiff demanded repayment of Facility 3 on 8th November, 2010, which the defendants have failed to repay. He avers that as of 13th July, 2015, the total amount due and owing on Facility 3, was €593,340.31, made up of the principal debt of €525,336.27 and interest of €68,004.04.

6 It is common case that the monies advanced to the defendants in respect of all three loan facilities were secured on properties owned by them.

7 As per the letter of sanction in respect of Facility 1, the monies lent to the first defendant were secured, by way of deed of charge dated 6th November, 2007, on properties owned by the defendants at Woodsgift, County Kilkenny (Folio 17807F) and at 6 New Road, Urlingford, County Kilkenny (Folio 22817F).

8 The monies advanced by way of Facility 2 and Facility 3 were, respectively, secured by way of deeds of charge on Folio 17807F, Folio 22817F, the property known as Mulhalls, Pudding Lane, Kilkenny (unregistered) and on property at 113 Fosterbrook, Stillorgan (unregistered).

9 By way of special summons proceedings bearing record numbers 2011/ 357 SP and 2014/ 188 SP against the defendants and others, the plaintiff sought possession of a number of the properties provided by the defendants by way of security for Facilities 1, 2 and 3. The repossession proceedings were contested by the defendants. The said proceedings came on for hearing on 3rd and 4th March, 2015. Judgment was delivered by Binchy J. on 4th March, 2015 granting the relief sought by the plaintiff.

Binchy J.'s judgment is referred to more particularly later in this judgment.

10 In the within proceedings, four affidavits have been sworn by the first defendant on behalf of both defendants. In essence, the defendants advance four defences to the plaintiff's application for final judgment, each one of which, the defendants assert, merits the within proceedings being adjourned to plenary hearing.

11 Overall, the defendants do not contest the fact that they benefitted from the monies the subject matter of the three loan facilities. However, they raise the following four grounds of defence for the purpose of remitting the proceedings to plenary hearing. The defendants contend:

1. The plaintiff's claim is statute-barred;

2. The plaintiff was in breach of an agreement to provide further development funding to the defendants;

3. Some, if not all, of the facilities in respect of which the plaintiff sues have not remained in the ownership of the plaintiff since their respective dates of issuance and have been transferred or assigned as between AIB group entities without express notice to the defendants; and

4. The plaintiff has overcharged interest in respect of the borrowings to which the within proceedings relate and that the defendants were lawfully entitled to a reduced interest rate or a tracker rate which was not afforded to them.

12 Each of these defences will be addressed in turn.

13 Before doing so, it is apposite to address the test for the adjournment of the within proceedings to plenary hearing. As set out by McGuinness J. in Aer Rianta v. Ryanair Ltd [2001] 4 I.R. 607, at p. 615, for the matter to be remitted to plenary hearing the Court must be satisfied that the ' defence set out in the affidavits of [the defendants], together with the documents exhibited therewith, is credible, or in other words, whether there is a fair or reasonable probability of the [defendants] having a real or bona fide defence.' Hardiman J. put it thus, at p. 623:

'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?'

14 As put by Charleton J. in National Asset Loan Management Ltd. v. Barden [2013] 2 I.R. 28, at p. 5:

'The mere assertion on affidavit of a defence is insufficient. A defence must, if the matter is to be remitted to plenary hearing, have some reasonable foundation. An assertion, for instance, that a cheque was paid in discharge of a debt means little if no bank statements are produced to show the...